G.R. No.

109976             April 26, PNOC, in another letter, dated 14 October 1986, reiterated its proposal to settle its tax liability through the set-
2005 off of the said tax liability against NAPOCOR'S pending claim for tax refund/credit.   The BIR replied on 11
10 

November 1986 that the proposal for set-off was premature since NAPOCOR's claim was still under process. 
PHILIPPINE NATIONAL OIL COMPANY, Petitioner, vs. THE HON. COURT OF APPEALS, THE Once more, BIR requested PNOC to settle its tax liability in the total amount of P385,961,580.82, consisting
COMMISSIONER OF INTERNAL REVENUE and TIRSO SAVELLANO, Respondents. of P303,343,765.32 final tax, plus P82,617,815.50 interest computed until 15 November 1986. 11

x--------------------x On 09 June 1987, PNOC made another offer to the BIR to settle its tax liability.  This time, however, PNOC
proposed a compromise by paying P91,003,129.89, representing 30% of the P303,343,766.29 basic tax, in
accordance with the provisions of Executive Order (E.O.) No. 44. 12

G.R. No. 112800             April 26,

2005
Then BIR Commissioner Bienvenido A. Tan, in a letter, dated 22 June 1987, accepted the compromise.  The
BIR received a total tax payment on the interest earnings and/or yields from PNOC's money placements with
PHILIPPINE NATIONAL BANK, Petitioner, vs. THE HON. COURT OF APPEALS, COURT OF TAX PNB in the amount of P93,955,479.12, broken down as follows:
APPEALS, TIRSO B. SAVELLANO and COMMISSIONER OF INTERNAL REVENUE, Respondents.
Previous payment made by PNB P        2,952,349.23
DECISION
Add: Payment made by PNOC pursuant to the P      91,003,129.89
compromise agreement of June 22, 1987
CHICO-NAZARIO, J.: Total tax payment P      93,955,479.12 13

This is a consolidation of two Petitions for Review on Certiorari filed by the Philippine National Oil Company Private respondent Savellano, through four installments, was paid the informer's reward in the total amount
(PNOC) and the Philippine National Bank (PNB),< assailing the decisions of the Court of Appeals in CA-G.R.
1  2 
of P14,093,321.89, representing 15% of the P93,955,479.12 tax collected by the BIR from PNOC and PNB. 
SP No. 29583 and CA-G.R. SP No. 29526, respectively, which both affirmed the decision of the Court of Tax
3  4 
He received the last installment on 01 December 1987. 14

Appeals (CTA) in CTA Case No. 4249. 5

On 07 January 1988, private respondent Savellano, through his legal counsel, wrote the BIR to demand
The Petitions before this Court originated from a sworn statement submitted by private respondent Tirso B. payment of the balance of his informer's reward, computed as follows:
Savellano (Savellano) to the Bureau of Internal Revenue (BIR) on 24 June 1986.  Through his sworn
statement, private respondent Savellano informed the BIR that PNB had failed to withhold the 15% final tax on
interest earnings and/or yields from the money placements of PNOC with the said bank, in violation of BIR tax assessment P    385,961,580.82
Presidential Decree (P.D.) No. 1931.  P.D. No. 1931, which took effect on 11 June 1984, withdrew all tax Final tax rate 0.15
exemptions of government-owned and controlled corporations. Informer's reward due (BIR deficiency tax assessment x P      57,894,237.12
Final tax rate)
In a letter, dated 08 August 1986, the BIR requested PNOC to settle its liability for taxes on the interests Less: Payment received by private respondent Savellano P      14,093,321.89
earned by its money placements with PNB and which PNB did not withhold.   PNOC wrote the BIR on 25
6 
Outstanding balance P   43,800,915.25 15

September 1986, and made an offer to compromise its tax liability, which it estimated to be in the sum
of P304,419,396.83, excluding interest and surcharges, as of 31 July 1986.  PNOC proposed to set-off its tax
BIR Commissioner Tan replied through a letter, dated 08 March 1988, that private respondent Savellano was
liability against a claim for tax refund/credit of the National Power Corporation (NAPOCOR), then pending with
already fully paid the informer's reward equivalent to 15% of the amount of tax actually collected by the BIR
the BIR, in the amount of P335,259,450.21.  The amount of the claim for tax refund/credit was supposedly a
pursuant to its compromise agreement with PNOC.  BIR Commissioner Tan further explained that the
receivable account of PNOC from NAPOCOR. 7

compromise was in accordance with the provisions of E.O. No. 44, Revenue Memorandum Order (RMO) No.
39-86, and RMO No. 4-87. 16

On 08 October 1986, the BIR sent a demand letter to PNB, as withholding agent, for the payment of the final
tax on the interest earnings and/or yields from PNOC's money placements with the bank, from 15 October
Private respondent Savellano submitted another letter, dated 24 March 1988, to BIR Commissioner Tan,
1984 to 15 October 1986, in the total amount of P376,301,133.33.   On the same date, the BIR also mailed a
8 

seeking reconsideration of his decision to compromise the tax liability of PNOC.  In the same letter, private
letter to PNOC informing it of the demand letter sent to PNB.
9

respondent Savellano questioned the legality of the compromise agreement entered into by the BIR and
PNOC and claimed that the tax liability should have been collected in full. 17
On 08 April 1988, while the aforesaid Motion for Reconsideration was still pending with the BIR, private
respondent Savellano filed a Petition for Review ad cautelam with the CTA, docketed as CTA Case No. 4249.  April 1991. The BIR denied PNB's protest on the ground that it was filed out of time and, thus, the assessment
He claimed therein that BIR Commissioner Tan acted "with grave abuse of discretion and/or whimsical
exercise of jurisdiction" in entering into a compromise agreement that resulted in "a gross and unconscionable
diminution" of his reward.  Private respondent Savellano prayed for the enforcement and collection of the total
tax assessment against taxpayer PNOC and/or withholding agent PNB; and the payment to him by the BIR
Commissioner of the 15% informer's reward on the total tax collected. He would later amend his Petition to
18 
implead PNOC and PNB as necessary and indispensable parties since they were parties to the compromise
agreement. 19
In his Answer filed with the CTA, BIR Commissioner Tan asserted that the Petition stated no cause of action
against him, and that private respondent Savellano was already paid the informer's reward due him.  Alleging
that the Petition was baseless and malicious, BIR Commissioner Tan filed a counterclaim for exemplary
damages against private respondent Savellano. 20
PNOC and PNB filed separate Motions to Dismiss, both arguing that the CTA lacked jurisdiction to decide the
case. In its Resolution, dated 28 November 1988, the CTA denied the Motions to Dismiss since the question
21 
of lack of jurisdiction and/or cause of action do not appear to be indubitable. 22
After their Motions to Dismiss were denied by the CTA, PNOC and PNB filed their respective Answers to the
amended Petition.  PNOC averred, among other things, that (1) it had no privity with private respondent
Savellano; (2) the BIR Commissioner's discretionary act in entering into the compromise agreement had legal
basis under E.O. No. 44 and RMO No. 39-86 and RMO No. 4-87; and (3) the CTA had no jurisdiction to
resolve the case against it. On the other hand, PNB asserted that (1) the CTA lacked jurisdiction over the
23 
case; and (2) the BIR Commissioner's decision to accept the compromise was discretionary on his part and,
therefore, cannot be reviewed or interfered with by the courts. PNOC and PNB later filed their amended
24  pending appeal before the DOJ. On 04 July 1991, PNB filed with the CTA a Motion for Reconsideration of its
Answer invoking an opinion of the Commission on Audit (COA) disallowing the payment by the BIR of
informer's reward to private respondent Savellano. 25
The CTA, thereafter, ordered the parties to submit their evidence, to be followed by their respective
26  On 17 July 1991, PNB filed a Motion to Suspend the Collection of Tax by the BIR.  It alleged that despite its
Memoranda. 27
On 23 November 1990, private respondent Savellano, filed a Manifestation with Motion for Suspension of
Proceedings, claiming that his pending Motion for Reconsideration with the BIR Commissioner may soon be
resolved. Both PNOC and PNB opposed the said Motion.
28  29
Subsequently, the new BIR Commissioner, Jose U. Ong, in a letter to PNB, dated 16 January 1991,
demanded that PNB pay deficiency withholding tax on the interest earnings and/or yields from PNOC's money
placements, in the amount of P294,958,450.73, computed as follows:
Withholding tax, plus interest under the letter of demand P     385,961,580.82
dated November 11, 1986
Less: Amount paid under E.O. No. 44 P       91,003,129.89
Amount still due and collectible P     294,958,450.7330
This BIR letter was received by PNB on 06 February 1991, and was protested by it through a letter, dated 11
31 
32 
had already become final. 33
Private respondent Savellano, on 22 February 1991, filed an Omnibus Motion moving to withdraw his previous
Motion for Suspension of Proceeding since BIR Commissioner Ong had finally resolved his Motion for
Reconsideration, and submitting by way of supplemental offer of evidence (1) the letter of BIR Commissioner
Ong, dated 13 February 1991, informing private respondent Savellano of the action on his Motion for
Reconsideration; and (2) the demand-letter of BIR Commissioner Ong to PNB, dated 16 January 1991. 34
Despite the oppositions of PNOC and PNB, the CTA, in a Resolution, dated 02 May 1991, resolved to allow
private respondent Savellano to withdraw his previous Motion for Suspension of Proceeding and to admit the
supplementary evidence being offered by the same party. 35
In its Order, dated 03 June 1991, the CTA considered the case submitted for decision as of the following day,
04 June 1991. 36
On 11 June 1991, PNB appealed to the Department of Justice (DOJ) the BIR assessment, dated 16 January
1991, for deficiency withholding tax in the sum of P294,958,450.73.  PNB alleged that its appeal to the DOJ
was sanctioned under P.D. No. 242, which provided for the administrative settlement of disputes between
government offices, agencies, and instrumentalities, including government-owned and controlled
corporations. 37
Three days later, on 14 June 1991, PNB filed a Motion to Suspend Proceedings before the CTA since it had a
38 
Order, dated 03 June 1991, submitting the case for decision as of 04 June 1991, and prayed that the CTA
hold its resolution of the case in view of PNB's appeal pending before the DOJ. 39
request for reconsideration of the deficiency withholding tax assessment, dated 16 January 1991, BIR
Commissioner Ong sent another letter, dated 23 April 1991, demanding payment of the P294,958,450.73
deficiency withholding tax on the interest earnings and/or yields from PNOC's money placements.  The same
letter informed PNB that this was the BIR Commissioner's final decision on the matter and that the BIR
Commissioner was set to issue a warrant of distraint and/or levy against PNB's deposits with the Central Bank
of the Philippines.  PNB further alleged that the levy and distraint of PNB's deposits, unless restrained by the
CTA, would cause great and irreparable prejudice not only to PNB, a government-owned and controlled
corporation, but also to the Government itself.
40
Pursuant to the Order of the CTA, during the hearing on 19 July 1991, the parties submitted their respective
41 
Memoranda on PNB's Motion to Suspend Proceedings. 42
On 20 September 1991, private respondent Savellano filed another Omnibus Motion calling the attention of
the CTA to the fact that the BIR already issued, on 12 August 1991, a warrant of garnishment addressed to
the Central Bank Governor and against PNB.  In compliance with the said warrant, the Central Bank issued,
on 23 August 1991, a debit advice against the demand deposit account of PNB with the Central Bank for the
amount of P294,958,450.73, with a corresponding transfer of the same amount to the demand deposit-in-trust
of BIR with the Central Bank.  Since the assessment had already been enforced, PNB's Motion to Suspend
Proceedings became moot and academic.  Private respondent Savellano, thus, moved for the denial of PNB's
Motion to Suspend Proceedings and for an order requiring BIR to deposit with the CTA the amount
of P44,243,767.00 as his informer's reward, representing 15% of the deficiency withholding tax collected. 43
Both PNOC and PNB opposed private respondent Savellano's Omnibus Motion, dated 20 September 1991,
arguing that the DOJ already ordered the suspension of the collection of the tax deficiency.  There was
therefore no basis for private respondent Savellano's Motion as the same was premised on the erroneous
assumption that the tax deficiency had been collected. When the DOJ denied the BIR Commissioner's Motion
to Dismiss and required him to file his answer, the DOJ assumed jurisdiction over PNB's appeal, and the CTA
should first suspend its proceedings to give the DOJ the opportunity to decide the validity and propriety of the
tax assessment against PNB. 44
The CTA, on 28 May 1992, rendered its decision, wherein it upheld its jurisdiction and disposed of the case as
follows:
WHEREFORE, judgment is rendered declaring the COMPROMISE AGREEMENT between the
Bureau of Internal Revenue, on the one hand, and the Philippine National Oil Company and
Philippine National Bank, on the other, as WITHOUT FORCE AND EFFECT;
The Commissioner of Internal Revenue is hereby ordered to ENFORCE the ASSESSMENT of
January 16, 1991 against Philippine National Bank which has become final and unappealable by
collecting from Philippine National Bank the deficiency withholding tax, plus interest totalling
(sic) P294,958,450.73;
Petitioner may be paid, upon collection of the deficiency withholding tax, the balance of his
entitlement to informer's reward based on fifteen percent (15%) of the deficiency withholding total tax
collected in this case or P44,243.767.00 subject to existing rules and regulations governing payment
of reward to informers. 45
In a Resolution, dated 16 November 1992, the CTA denied the Motions for Reconsideration filed by PNOC
and PNB since they substantially raised the same issues in their previous pleadings and which had already
been passed upon and resolved adversely against them. 46
PNOC and PNB filed separate appeals with the Court of Appeals seeking the reversal of the CTA decision in
CTA Case No. 4249, dated 28 May 1992, and the CTA Resolution in the same case, dated 16 November
1992.  PNOC's appeal was docketed as CA-G.R. SP No. 29583, while PNB's appeal was CA-G.R. SP No.
29526.  In both cases, the Court of Appeals affirmed the decision of the CTA.
In the meantime, the Central Bank again issued on 02 September 1992 a debit advice against the demand
deposit account of PNB with the Central Bank for the amount of P294,958,450.73, and on 15 September
47 
1992, credited the same amount to the demand deposit account of the Treasurer of the Republic of the
Philippines.   On 04 November 1992, the Treasurer of the Republic issued a journal voucher
48 
transferring P294,958,450.73 to the account of the BIR.   PNB, in turn, debited P294,958,450.73 from the
49 
deposit account of PNOC with PNB. 50
PNOC and PNB then filed separate Petitions for Review on Certiorari with this Court, praying that the
decisions of the Court of Appeals in CA-G.R. SP No. 29583 and CA-G.R. SP No. 29526, respectively, both
affirming the decision of the CTA in CTA Case No. 4249, be reversed and set aside.  These two Petitions
were consolidated since they involved identical parties and factual background, and the resolution of related, if
not exactly, the same issues.
In its Petition for Review, PNOC alleged the following errors committed by the Court of Appeals in CA-G.R. SP
No. 29583:
1.  The Court of Appeals erred in holding that the deficiency taxes of PNOC could not be the subject
of a compromise under Executive Order No. 44; and
2.  The Court of Appeals erred in holding that Savellano is entitled to additional informer's reward. 51
PNB, in its own Petition for Review, assailed the decision of the Court of Appeals in CA-G.R. SP No. 29526,
assigning the following errors:
1.  Respondent Court erred in not finding that the Court of Tax Appeals lacks jurisdiction on the
controversy involving BIR and PNB (both government instrumentalities) regarding the new
assessment of BIR against PNB;
2.  The respondent Court erred in not finding that the Court of Tax Appeals has no jurisdiction to
question the compromise agreement entered into by the Commissioner of Internal Revenue; and
3.  The respondent Court erred in not ruling that the Commissioner of Internal Revenue cannot
unilaterally annul tax compromises validly entered into by his predecessor. 52
The decisions of the Court of Appeals in CA-GR SP No. 29583 and CA-G.R. SP No. 29526, affirmed the
decision of the CTA in CTA Case No. 4249.  The resolution, therefore, of the assigned errors in the Court of
Appeals' decisions essentially requires a review of the CTA decision itself.
In consolidating the present Petitions, this Court finds that PNOC and PNB are basically questioning the (1)
Jurisdiction of the CTA in CTA Case No. 4249; (2) Declaration by the CTA that the compromise agreement
was without force and effect; (3) Finding of the CTA that the deficiency withholding tax assessment against
PNB had already become final and unappealable and, thus, enforceable; and (4) Order of the CTA directing
payment of additional informer's reward to private respondent Savellano.
I
Jurisdiction of the CTA
 A. The demand letter, dated 16 January 1991 did not constitute a new assessment against PNB.
The main argument of PNB in assailing the jurisdiction of the CTA in CTA Case No. 4249 is that the BIR
demand letter, dated 16 January 1991, should be considered as a new assessment against PNB.  As a new
53 
assessment, it gave rise to a new dispute and controversy solely between the BIR and PNB that should be
administratively settled or adjudicated, as provided in P.D. No. 242.
This argument is without merit.  The issuance by the BIR of the demand letter, dated 16 January 1991, was
merely a development in the continuing effort of the BIR to collect the tax assessed against PNOC and PNB
way back in 1986.
BIR's first letter, dated 08 August 1986, was addressed to PNOC, requesting it to settle its tax liability.  The
BIR subsequently sent another letter, dated 08 October 1986, to PNB, as withholding agent, demanding
payment of the tax it had failed to withhold on the interest earnings and/or yields from PNOC's money
placements.  PNOC wrote the BIR three succeeding letters offering to compromise its tax liability; PNB, on the
other hand, did not act on the demand letter it received, dated 08 October 1986.  The BIR and PNOC
eventually reached a compromise agreement on 22 June 1987.  Private respondent Savellano questioned the
validity of the compromise agreement because the reduced amount of tax collected from PNOC, by virtue of
the compromise agreement, also proportionately reduced his informer's reward.  Private respondent Savellano
then requested the BIR Commissioner to review and reconsider the compromise agreement.  Acting on the
request of private respondent Savellano, the new BIR Commissioner declared the compromise agreement to
be without basis and issued the demand letter, dated 16 January 1991, against PNB, as the withholding agent
for PNOC.
It is clear from the foregoing that the BIR demand letter, dated 16 January 1991, could not stand alone as a
new assessment.  It should always be considered in the factual context summarized above.
In fact, the demand letter, dated 16 January 1991, actually referred to the withholding tax assessment first
issued in 1986 and its eventual settlement through a compromise agreement.  In addition, the computation of
the deficiency withholding tax was based on the figures from the 1986 assessments against PNOC and PNB,
and BIR no longer conducted a new audit or investigation of either PNOC and PNB before it issued the
demand letter on 16 January 1991.
These constant references to past events and circumstances demonstrate that the demand letter, dated 16
January 1991, was not a new assessment, but rather, the latest action taken by the BIR to collect on the tax
assessments issued against PNOC and PNB in 1986.
PNB argues that the demand letter, dated 16 January 1991, introduced a new controversy.  We see it
differently as the said demand letter presented the resolution by BIR Commissioner Ong of the previous
controversy involving the compromise of the 1986 tax assessments.  BIR Commissioner Ong explicitly
declared therein that the compromise agreement was without legal basis, and requested PNB, as the
withholding agent, to pay the amount of withholding tax still due.
B. The CTA correctly retained jurisdiction over CTA Case No. 4249 by virtue of Republic Act No.
1125.
Having established that the BIR demand letter, dated 16 January 1991, did not constitute a new assessment,
then, there could be no basis for PNB's claim that any dispute arising from the new assessment should only
be between BIR and PNB.
Still proceeding from the argument that there was a new dispute between PNB and BIR, PNB sought the
suspension of the proceedings in CTA Case No.  4249, after it contested the deficiency withholding tax
assessment against it and the demand for payment thereof before the DOJ, pursuant to P.D. No. 242.  The
CTA, however, correctly sustained its jurisdiction and continued the proceedings in CTA Case No. 4249; and,
in effect, rejected DOJ's claim of jurisdiction to administratively settle or adjudicate BIR's assessment against
PNB.
The CTA assumed jurisdiction over the Petition for Review filed by private respondent Savellano based on the
following provision of Rep. Act No. 1125, the Act creating the Court of Tax Appeals:
SECTION 7.  Jurisdiction. – The Court of Tax Appeals shall exercise exclusive appellate
jurisdiction to review by appeal, as herein provided -
(1)   Decisions of the Collector of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in
relation thereto, or other matters arising under the National Internal Revenue Code or other
law or part of law administered by the Bureau of Internal Revenue; . . . (Underscoring ours.)
In his Petition before the CTA, private respondent Savellano requested a review of the decisions of then BIR
Commissioner Tan to enter into a compromise agreement with PNOC and to reject his claim for additional
informer's reward.  He submitted before the CTA questions of law involving the interpretation and application
of (1) E.O. No. 44, and its implementing rules and regulations, which authorized the BIR Commissioner to
compromise delinquent accounts and disputed assessments pending as of 31 December 1985; and (2)
Section 316(1) of the National Internal Revenue Code of 1977 (NIRC of 1977), as amended, which granted to
the informer a reward equivalent to 15% of the actual amount recovered or collected by the BIR. These 54 
should undoubtedly be considered as matters arising from the NIRC and other laws being administered by the
BIR, thus, appealable to the CTA under Section 7(1) of Rep. Act No. 1125.
PNB, however, insists on the jurisdiction of the DOJ over its appeal of the deficiency withholding tax
assessment by virtue of P.D. No. 242.  Provisions on jurisdiction of P.D. No. 242 read:
SECTION 1.  Provisions of law to the contrary notwithstanding, all disputes, claims and controversies
solely between or among the departments, bureaus, offices, agencies, and instrumentalities of the
National Government, including government-owned or controlled corporations, but excluding
constitutional offices or agencies, arising from the interpretation and application of statutes, contracts
or agreements, shall henceforth be administratively settled or adjudicated as provided
hereinafter; Provided, That this shall not apply to cases already pending in court at the time of the
effectivity of this decree.
SECTION 2.  In all cases involving only questions of law, the same shall be submitted to and settled
or adjudicated by the Secretary of Justice, as Attorney General and ex officio legal adviser of all
 government-owned or controlled corporations and entities, in consonance with Section 83 of the
Revised Administrative Code.  His ruling or determination of the question in each case shall be
conclusive and binding upon all the parties concerned.
SECTION 3.  Cases involving mixed questions of law and of fact or only factual issues shall be
submitted to and settled or adjudicated by:
(a)  The Solicitor General, with respect to disputes or claims controversies between or
among the departments, bureaus, offices and other agencies of the National Government;
(b)  The Government Corporate Counsel, with respect to disputes or claims or controversies
between or among government-owned or controlled corporations or entities being served by
the Office of the Government Corporate Counsel; and
(c)  The Secretary of Justice, with respect to all other disputes or claims or controversies
which do not fall under the categories mentioned in paragraphs (a) and (b).
The PNB and DOJ are of the same position that P.D. No. 242, the more recent law, repealed Section 7(1) of
Rep. Act No. 1125, based on the pronouncement of this Court in Development Bank of the Philippines v.
55 
Court of Appeals, et al., 56]  quoted below:
The Court … expresses its entire agreement with the conclusion of the Court of Appeals — and the
basic premises thereof — that there is an "irreconcilable repugnancy…between Section 7(2) of R.A.
No. 1125 and P.D. No. 242," and hence, that the later enactment (P.D. No. 242), being the latest
expression of the legislative will, should prevail over the earlier.
In the said case, it was expressly declared that P.D. No. 242 repealed Section 7(2) of Rep. Act No. 1125,
which provides for the exclusive appellate jurisdiction of the CTA over decisions of the Commissioner of
Customs.  PNB contends that P.D. No. 242 should be deemed to have likewise repealed Section 7(1) of Rep.
Act No. 1125, which provide for the exclusive appellate jurisdiction of the CTA over decisions of the BIR
Commissioner. 57
After re-examining the provisions on jurisdiction of Rep. Act No. 1125 and P.D. No. 242, this Court finds itself
in disagreement with the pronouncement made in Development Bank of the Philippines v. Court of Appeals, et
al., and refers to the earlier case of Lichauco & Company, Inc. v. Apostol, et al., for the guidelines in
58  59 
determining the relation between the two statutes in question, to wit:
The cases relating to the subject of repeal by implication all proceed on the assumption that if the act
of later date clearly reveals an intention on the part of the law making power to abrogate the prior
law, this intention must be given effect; but there must always be a sufficient revelation of this
intention, and it has become an unbending rule of statutory construction that the intention to repeal a
former law will not be imputed to the Legislature when it appears that the two statutes, or provisions,
with reference to which the question arises bear to each other the relation of general to
special.  (Underscoring ours.)
When there appears to be an inconsistency or conflict between two statutes and one of the statutes is a
general law, while the other is a special law, then repeal by implication is not the primary rule applicable.  The
following rule should principally govern instead:
Specific legislation upon a particular subject is not affected by a general law upon the same subject
unless it clearly appears that the provisions of the two laws are so repugnant that the legislators must
have intended by the later to modify or repeal the earlier legislation. The special act and the general
law must stand together, the one as the law of the particular subject and the other as the general law
of the land. (Ex Parte United States, 226 U. S., 420; 57 L. ed., 281; Ex Parte Crow Dog, 109 U. S.,
556; 27 L. ed., 1030; Partee vs. St. Louis & S. F. R. Co., 204 Fed. Rep., 970.)
Where there are two acts or provisions, one of which is special and particular, and certainly includes
the matter in question, and the other general, which, if standing alone, would include the same matter
and thus conflict with the special act or provision, the special must be taken as intended to constitute
an exception to the general act or provision, especially when such general and special acts or
provisions are contemporaneous, as the Legislature is not to be presumed to have intended a
conflict. (Crane v. Reeder and Reeder, 22 Mich., 322, 334; University of Utah vs. Richards, 77 Am.
St. Rep., 928.)60
It has, thus, become an established rule of statutory construction that between a general law and a special
law, the special law prevails – Generalia specialibus non derogant. 61
Sustained herein is the contention of private respondent Savellano that P.D. No. 242 is a general law that
deals with administrative settlement or adjudication of disputes, claims and controversies between or among
government offices, agencies and instrumentalities, including government-owned or controlled corporations.
Its coverage is broad and sweeping, encompassing all disputes, claims and controversies.  It has been
incorporated as Chapter 14, Book IV of E.O. No. 292, otherwise known as the Revised Administrative Code of
the Philippines. On the other hand, Rep. Act No. 1125 is a special law dealing with a specific subject matter –
62  63 
the creation of the CTA, which shall exercise exclusive appellate jurisdiction over the tax disputes and
controversies enumerated therein.
Following the rule on statutory construction involving a general and a special law previously discussed, then
P.D. No. 242 should not affect Rep. Act No. 1125.  Rep. Act No. 1125, specifically Section 7 thereof on the
jurisdiction of the CTA, constitutes an exception to P.D. No. 242.  Disputes, claims and controversies, falling
under Section 7 of Rep. Act No. 1125, even though solely among government offices, agencies, and
instrumentalities, including government-owned and controlled corporations, remain in the exclusive appellate
jurisdiction of the CTA.  Such a construction resolves the alleged inconsistency or conflict between the two
statutes, and the fact that P.D. No. 242 is the more recent law is no longer significant.
Even if, for the sake of argument, that P.D. No. 242 should prevail over Rep. Act No. 1125, the present
dispute would still not be covered by P.D. No. 242.  Section 1 of P.D. No. 242 explicitly provides that only
disputes, claims and controversies solely between or among departments, bureaus, offices, agencies, and
instrumentalities of the National Government, including constitutional offices or agencies, as well as
government-owned and controlled corporations, shall be administratively settled or adjudicated.  While the BIR
is obviously a government bureau, and both PNOC and PNB are government-owned and controlled
corporations, respondent Savellano is a private citizen.  His standing in the controversy could not be lightly
brushed aside.  It was private respondent Savellano who gave the BIR the information that resulted in the
investigation of PNOC and PNB; who requested the BIR Commissioner to reconsider the compromise
agreement in question; and who initiated CTA Case No. 4249 by filing a Petition for Review.
In Bay View Hotel, Inc. v. Manila Hotel Workers' Union-PTGWO, et al.,64] this Court upheld the jurisdiction of
the Court of Industrial Relations over the ordinary courts and justified its decision in the following manner:
We are unprepared to break away from the teaching in the cases just adverted to.  To draw a
tenuous jurisdictional line is to undermine stability in labor litigations.  A piecemeal resort to one court
and another gives rise to multiplicity of suits.  To force the employees to shuttle from one court to
another to secure full redress is a situation gravely prejudicial.  The time to be lost, effort wasted,
anxiety augmented, additional expense incurred – these are considerations which weigh heavily
against split jurisdiction.  Indeed, it is more in keeping with orderly administration of justice that all the
causes of action here "be cognizable and heard by only one court:  the Court of Industrial Relations."
The same justification is used in the present case to reject DOJ's jurisdiction over the BIR and PNB, to the
exclusion of the other parties.  The rights of all four parties in CTA Case No. 4249, namely the BIR, as the tax
collector; PNOC, the taxpayer; PNB, the withholding agent; and private respondent Savellano, the informer
claiming his reward; arose from the same factual background and were so closely interrelated, that a
pronouncement as to one would definitely have repercussions on the others.  The ends of justice were best
served when the CTA continued to exercise its jurisdiction over CTA Case No. 4249.  The CTA, which had
assumed jurisdiction over all the parties to the controversy, could render a comprehensive resolution of the
issues raised and grant complete relief to the parties.
II
Validity of the Compromise Agreement
A. PNOC could not apply for a compromise under E.O. No. 44 because its tax liability was not a
delinquent account or a disputed assessment as of 31 December 1985.
PNOC and PNB, on different grounds, dispute the decision of the CTA in CTA Case No. 4249 declaring the
compromise agreement between BIR and PNOC without force and effect.
PNOC asserts that the compromise agreement was in accordance with E.O. No. 44, and its implementing
rules and regulations, and should be binding upon the parties thereto.
E.O. No. 44 granted the BIR Commissioner or his duly authorized representatives the power to compromise
any disputed assessment or delinquent account pending as of 31 December 1985, upon the payment of an
amount equal to 30% of the basic tax assessed; in which case, the corresponding interests and penalties shall
be condoned.  E.O. No. 44 took effect on 04 September 1986 and remained effective until 31 March 1987.
The disputed assessments or delinquent accounts that the BIR Commissioner could compromise under E.O.
No. 44 are defined under Revenue Regulation (RR) No. 17-86, as follows:
a)   Delinquent account – Refers to the amount of tax due on or before December 31, 1985 from a
taxpayer who failed to pay the same within the time prescribed for its payment arising from (1) a self
assessed tax, whether or not a tax return was filed, or (2) a deficiency assessment issued by the BIR
which has become final and executory.
Where no return was filed, the taxpayer shall be considered delinquent as of the time the tax on such
return was due, and in availing of the compromise, a tax return shall be filed as a basis for computing
the amount of compromise to be paid.
b)  Disputed assessment – refers to a tax assessment disputed or protested on or before December
31, 1985 under any of the following categories:
1)       if the same is administratively protested within thirty (30) days from the date the taxpayer
received the assessment, or
2.)      if the decision of the BIR on the taxpayer's administrative protest is appealed by the taxpayer
before an appropriate court.
PNOC's tax liability could not be considered a delinquent account since (1) it was not self-assessed, because
the BIR conducted an investigation and assessment of PNOC and PNB after obtaining information regarding
the non-withholding of tax from private respondent Savellano; and (2) the demand letter, issued against it on
08 August 1986, could not have been a deficiency assessment that became final and executory by 31
December 1985.
The dissenting opinion contends, however, that the tax liability of PNOC constitutes a self-assessed tax, and
is, therefore, a delinquent account as of 31 December 1985, qualifying for a compromise under E.O. No. 44.  It
anchors its argument on the declaration made by this Court in Tupaz v. Ulep, that internal revenue taxes are
65 
self-assessing.
It is not denied herein that the self-assessing system governs Philippine internal revenue taxes.  The
dissenting opinion itself defines self-assessed tax as, "a tax that the taxpayer himself assesses or computes
and pays to the taxing authority."  Clearly, such a system imposes upon the taxpayer the obligation to conduct
an assessment of himself so he could determine and declare the amount to be used as tax basis, any
deductions therefrom, and finally, the tax due.
E.O. No. 44 covers self-assessed tax, whether or not a tax return was filed.  The phrase "whether or not a tax
return was filed" only refers to the compliance by the taxpayer with the obligation to file a return on the dates
specified by law, but it does not do away with the requisite that the tax must be self-assessed in order for the
taxpayer to avail of the compromise.  The second paragraph of Section 2(a) of RR No. 17-86 expressly
commands, and still imposes upon the taxpayer, who is availing of the compromise under E.O. No. 44, and
who has not previously filed any return, the duty to conduct self-assessment by filing a tax return that would be
used as the basis for computing the amount of compromise to be paid.
Section 2(a)(1) of RR No. 17-86 thus involves a situation wherein a taxpayer, after conducting a self-
assessment, discovers or becomes aware that he had failed to pay a tax due on or before 31 December 1985,
regardless of whether he had previously filed a return to reflect such tax; voluntarily comes forward and admits
to the BIR his tax liability; and applies for a compromise thereof.  In case the taxpayer has not previously filed
any return, he must fill out such a return reflecting therein his own declaration of the taxable amount and
computation of the tax due.  The compromise payment shall be computed based on the amount reflected in
the tax return submitted by the taxpayer himself.
Neither PNOC nor PNB, the taxpayer and the withholding agent, respectively, conducted self-assessment in
this case.  There is no showing that in the absence of the tax assessment issued by the BIR against them, that
PNOC and/or PNB would have voluntarily admitted their tax liabilities, already amounting to P385,961,580.82,
as of 15 November 1986, and would have offered to compromise the same.  In fact, both PNOC and PNB
were conspicuously silent about their tax liabilities until they were assessed thereon.
Any attempt by PNOC and PNB to assess and declare by themselves their tax liabilities had already been
overtaken by the BIR's conduct of its audit and investigation and subsequent issuance of the assessments,
dated 08 August 1986 and 08 October 1986, against PNOC and PNB, respectively.  The said tax
assessments, uncontested and undisputed, presented the results of the BIR audit and investigation and the
computation of the total amount of tax liabilities of PNOC and PNB.  They should be controlling in this case,
and should not be so easily and conveniently ignored and set aside.  It would be a contradiction to claim that
the tax liabilities of PNOC and PNB are self-assessed and, at the same time, BIR-assessed; when it is clear
and simple that it had been the BIR that conducted the assessment and determined the tax liabilities of PNOC
and PNB.
That the BIR-assessed tax liability should be differentiated from a self-assessed one, is supported by the
provisions of RR No. 17-86 on the basis for computing the amount of compromise payment.  Note that where
tax liabilities are self-assessed, the compromise payment shall be computed based on the tax return filed by
the taxpayer. On the other hand, where the BIR already issued an assessment, the compromise payment
66  issued between 01 January to 21 August 1986 could still be compromised by payment of 30% of the basic tax
shall be computed based on the tax due on the assessment notice. 67
For instances where the BIR had already issued an assessment against the taxpayer, the tax liability could still
be compromised under E.O. No. 44 only if: (1) the assessment had been final and executory on or before 31
December 1985 and, therefore, considered a delinquent account as of said date; or (2) the assessment had
68  the payment of any internal revenue tax under the following circumstances: (1) there exists a reasonable
been disputed or protested on or before 31 December 1985. 69
RMO No. 39-86, which provides the guidelines for the implementation of E.O. No. 44, does mention different
types of assessments that may be compromised under said statute (i.e., jeopardy assessments, arbitrary
assessments, and tax assessments of doubtful validity).  RMO No. 39-86 may not have expressly stated any
qualification for these particular types of assessments; nonetheless, E.O. No. 44 specifically refers only to
assessments that were delinquent or disputed as of 31 December 1985.
E.O. No. 44 and all BIR issuances to implement said statute should be interpreted so that they are
harmonized and consistent with each other.  Accordingly, this Court finds that the different types of
assessments mentioned in RMO No. 39-86 would still have to qualify as delinquent accounts or disputed
assessments as of 31 Dcember 1985, so that they could be compromised under E.O. No. 44.
The BIR had first written to PNOC on 08 August 1986, demanding payment of the income tax on the interest
earnings and/or yields from PNOC's money placements with PNB from 15 October 1984 to 15 October 1986. 
This demand letter could be regarded as the first assessment notice against PNOC.
Such an assessment, issued only on 08 August 1986, could not have been final and executory as of 31
December 1985 so as to constitute a delinquent account.  Neither was the assessment against PNOC an
assessment that could have been disputed or protested on or before 31 December 1985, having been issued
on a later date.
Given that PNOC's tax liability did not constitute a delinquent account or a disputed assessment as of 31
December 1985, then it could not be compromised under E.O. No. 44.
The assessment against PNOC, instead, was more appropriately covered by Revenue Memorandum Circular
(RMC) No. 31-86.  RMC No. 31-86 clarifies the scope of availment of the tax amnesty under E.O. No. 41 and
70 
compromise payments on delinquent accounts and disputed assessments under E.O. No. 44.  The third
paragraph of RMC No. 31-86 reads:
[T]axpayers against whom assessments had been issued from January 1 to August 21, 1986 may
settle their tax liabilities by way of compromise under Section 246 of the Tax Code as amended by
paying 30% of the basic assessment excluding surcharge, interest, penalties and other increments
thereto.
The above-quoted paragraph supports the position that only assessments that were disputed or that were final
and executory by 31 December 1985 could be the subject of a compromise under E.O. No. 44.  Assessments
assessed, not anymore pursuant to E.O. No. 44, but pursuant to Section 246 of the NIRC of 1977, as
amended.
Section 246 of the NIRC of 1977, as amended, granted the BIR Commissioner the authority to compromise
doubt as to the validity of the claim against the taxpayer; or (2) the financial position of the taxpayer
demonstrates a clear inability to pay the assessed tax.
71
There are substantial differences in circumstances under which compromises may be granted under Section
246 of the NIRC of 1977, as amended, and E.O. No. 44.  Although PNOC and PNB have extensively argued
their entitlement to compromise under E.O. No. 44, neither of them has alleged, much less, has presented any
evidence to prove that it may compromise its tax liability under Section 246 of the NIRC of 1977, as amended.
B. The tax liability of PNB as withholding agent also did not qualify for compromise under E.O. No.
44.
Before proceeding any further, this Court reconsiders the conclusion made by BIR Commissioner Ong in his
demand letter, dated 16 January 1991, that the compromise settlement executed between the BIR and PNOC
was without legal basis because withholding taxes were not actually taxes that could be compromised, but a
penalty for PNB's failure to withhold and for which it was made personally liable.
E.O. No. 44 covers disputed or delinquency cases where the person assessed was himself the taxpayer
rather than a mere agent.   RMO No. 39-86 expressly allows a withholding agent, who failed to withhold the
72 
required tax because of neglect, ignorance of the law, or his belief that he was not required by law to withhold
tax, to apply for a compromise settlement of his withholding tax liability under E.O. No. 44.  A withholding
agent, in such a situation, may compromise the withholding tax assessment against him precisely because he
is being held directly accountable for the tax.
73
RMO No. 39-86 distinguishes between the withholding agent in the foregoing situation from the withholding
agent who withheld the tax but failed to remit the amount to the Government.  A withholding agent in the latter
situation is the one disqualified from applying for a compromise settlement because he is being made
accountable as an agent, who held funds in trust for the Government. 74
Both situations, however, involve withholding agents.  The right to compromise under these provisions should
have been claimed by PNB, the withholding agent for PNOC.  The BIR held PNB personally accountable for
its failure to withhold the tax on the interest earnings and/or yields from PNOC's money placements with PNB.  would be unreasonable to expect the BIR to process and approve the taxpayer's application within the same
The BIR sent a demand letter, dated 08 October 1986, addressed directly to PNB, for payment of the
withholding tax assessed against it, but PNB failed to take any action on the said demand letter.  Yet, all the
offers to compromise the withholding tax assessment came from PNOC and PNOC did not claim that it made
the offers to compromise on behalf of PNB.
Moreover, the general requirement of E.O. No. 44 still applies to withholding agents – that the withholding tax
liability must either be a delinquent account or a disputed assessment as of 31 December 1985 to qualify for
compromise settlement.  The demand letter against PNB, which also served as its assessment notice, had
been issued on 08 October 1986 or two months later than PNOC's.  PNB's withholding tax liability could not
be considered a delinquent account or a disputed assessment, as defined under RR No. 17-86, for the same
reasons that PNOC's tax liability did not constitute as such.  The tax liability of PNB, therefore, was also not
eligible for compromise settlement under E.O. No. 44.
C. Even assuming arguendo that PNOC and/or PNB qualified under E.O. No. 44, their application for
compromise was filed beyond the deadline.
Despite already ruling that the tax liabilities of PNOC and PNB could not be compromised under E.O. No. 44,
this Court still deems it necessary to discuss the finding of the CTA that the compromise agreement had been
filed beyond the effectivity of E.O. No. 44, since the CTA made a declaration in relation thereto that paragraph
2 of RMO No. 39-86 was null and void for unduly extending the effectivity of E.O. No. 44.
Paragraph 2 of RMO No. 39-86 provides that:
2. Period for availment. – Filing of application for compromise settlement under the said law shall be
effective only until March 31, 1987.  Applications filed on or before this date shall be valid even if the
payment or payments of the compromise amount shall be made after the said date, subject,
however, to the provisions of Executive Order No. 44 and its implementing Revenue Regulations No.
17-86.
It is well-settled in this jurisdiction that administrative authorities are vested with the power to make rules and
regulations because it is impracticable for the lawmakers to provide general regulations for various and
varying details of management. The interpretation given to a rule or regulation by those charged with its
execution is entitled to the greatest weight by the court construing such rule or regulation, and such
interpretation will be followed unless it appears to be clearly unreasonable or arbitrary.75
RMO No. 39-86, particularly paragraph 2 thereof, does not appear to be unreasonable or arbitrary.  It does not
unduly expand the coverage of E.O. No. 44 by merely providing that applications for compromise filed until 31
March 1987 are still valid, even if payment of the compromised amount is made on a later date.
It cannot be expected that the compromise allowed under E.O. No. 44 can be automatically granted upon
mere filing of the application by the taxpayer.  Irrefutably, the applications would still have to be processed by
the BIR to determine compliance with the requirements of E.O. No. 44.  As it is uncontested that a taxpayer
could still file an application for compromise on 31 March 1987, the very last day of effectivity of E.O. No. 44, it
date considering the volume of applications filed and pending approval, plus the other matters the BIR
personnel would also have to attend to.  Thus, RMO No. 39-86 merely assures the taxpayers that their
applications would still be processed and could be approved on a later date.  Payment, of course, shall be
made by the taxpayer only after his application had been approved and the compromised amount had been
determined.
Given that paragraph 2 of RMO No. 39-86 is valid, the next question that needs to be addressed is whether
PNOC had been able to submit an application for compromise on or before 31 March 1987 in compliance
thereof.  Although the compromise agreement was executed only on 22 June 1987, PNOC is claiming that it
had already written a letter to the BIR, as early as 25 September 1986, offering to compromise its tax liability,
and that the said letter should be considered as PNOC's application for compromise settlement.
A perusal of PNOC's letter, dated 25 September 1986, would reveal, however, that the terms of its proposed
compromise did not conform to those authorized by E.O. No. 44.   PNOC did not offer to pay outright 30% of
the basic tax assessed against it as required by E.O. No. 44; and instead, made the following offer:
(2) That PNOC be permitted to set-off its foregoing mentioned tax liability of P304,419,396.83 against
the tax refund/credit claims of the National Power Corporation (NPC) for specific taxes on fuel oil sold
to NPC totaling P335,259,450.21, which tax refunds/credits are actually receivable accounts of our
Company from NPC. 76
PNOC reiterated the offer in its letter to the BIR, dated 14 October 1986. The BIR, in its letters to PNOC,
77 
dated 8 October 1986 and 11 November 1986, consistently denied PNOC's offer because the claim for tax
78  79 
refund/credit of NAPOCOR was still under process, so that the offer to set-off such claim against PNOC's tax
liability was premature.
Furthermore, E.O. No. 44 does not contemplate compromise payment by set-off of a tax liability against a
claim for tax refund/credit.  Compromise under E.O. No. 44 may be availed of only in the following
circumstances:
 SEC. 3.  Who may avail. – Any person, natural or juridical, may settle thru a compromise any
delinquent account or disputed assessment which has been due as of December 31, 1985, by
paying an amount equal to thirty percent (30%) of the basic tax assessed.
… NAPOCOR), to those in its letter, dated 09 June 1987 (payment of the compromise amount representing 30%
SEC. 6.  Mode of Payment. – Upon acceptance of the proposed compromise, the amount offered as
compromise in complete settlement of the delinquent account shall be paid immediately in cash or
manager's certified check.
Deferred or staggered payments of compromise amounts over P50,000 may be considered on a
case to case basis in accordance with the extant regulations of the Bureau upon approval of the
Commissioner of Internal Revenue, his Deputy or Assistant as delineated in their respective
jurisdictions.
If the Compromise amount is not paid as required herein, the compromise agreement is automatically
nullified and the delinquent account reverted to the original amount plus the statutory increments,
which shall be collected thru the summary and/or judicial processes provided by law.
E.O. No. 44 is not for the benefit of the taxpayer alone, who can extinguish his tax liability by paying the
compromise amount equivalent to 30% of the basic tax.  It also benefits the Government by making collection
of delinquent accounts and disputed assessments simpler, easier, and faster.  Payment of the compromise
amount must be made immediately, in cash or in manager's check.  Although deferred or staggered payments
may be allowed on a case-to-case basis, the mode of payment remains unchanged, and must still be made
either in cash or in manager's check.
PNOC's offer to set-off was obviously made to avoid actual cash-out by the company. The offer defeated the
purpose of E.O. No. 44 because it would not only delay collection, but more importantly, it would not
guarantee collection.  First of all, BIR's collection was contingent on whether the claim for tax refund/credit of
NAPOCOR would be subsequently granted.  Second, collection could not be made immediately and would
have to wait until the resolution of the claim for tax refund/credit of NAPOCOR.  Third, there is no proof, other
than the bare allegation of PNOC, that NAPOCOR's claim for tax refund/credit is an account receivable of
PNOC.  A possible dispute between NAPOCOR and PNOC as to the proceeds of the tax refund/credit would
only delay collection by the BIR even further.
It was only in its letter, dated 09 June 1987, that PNOC actually offered to compromise its tax liability in
accordance with the terms and circumstances prescribed by E.O. No. 44 and its implementing rules and
regulations, by stating that:
Consequently, we reiterate our previous request for compromise under E.O. No. 44, and convey our
preparedness to settle the subject tax assessment liability by payment of the compromise amount
of P91,003,129.89, representing thirty percent (30%) of the basic tax assessment
of P303,343,766.29, in accordance with E.O. No. 44 and its implementing BIR Revenue
Memorandum Order No. 39-86. 80
PNOC claimed in the same letter that it had previously requested for a compromise under the terms of E.O.
No. 44, but this Court could not find evidence of such previous request.  There are stark and substantial
differences in the terms of PNOC's offer to compromise in its earlier letters, dated 25 September 1986 and 14
October 1986 (set-off of the entire amount of its tax liability against the claim for tax refund/credit of
of the basic tax assessed against it), making it difficult for this Court to accept that the letter of 09 June 1987
merely reiterated PNOC's offer to compromise in its earlier letters.
This Court likewise cannot give credence to PNOC's allegation that beginning 25 September 1986, the date of
its first letter to the BIR, there were continuing negotiations between PNOC and BIR that culminated in the
compromise agreement on 22 June 1987.  Aside from the exchange of letters recounted in the preceding
paragraphs, both PNOC and PNB failed to present any other proof of the supposed negotiations.
After the BIR denied the second offer of PNOC to set-off its tax liability against the claim for tax refund/credit
of NAPOCOR in a letter, dated 11 November 1986, there is no other evidence of subsequent communication
between PNOC and the BIR.  It was only after almost seven months, or on 09 June 1987, that PNOC again
wrote a letter to the BIR, this time offering to pay the compromise amount of 30% of the basic tax assessed
against.  This letter was already filed beyond 31 March 1987, after the lapse of the effectivity of E.O. No. 44
and the deadline for filing applications for compromise under the said statute.
Evidence of meetings between PNOC and the BIR, or any other form of communication, wherein the parties
presented their offer and counter-offer to the other, would have been very valuable in explaining and
supporting BIR Commissioner Tan's decision to accept PNOC's third offer to compromise after denying the
previous two.  The absence of such evidence herein negates PNOC's claim of actual negotiations with the
BIR.
Therefore, even assuming arguendo that the tax liabilities of PNOC and PNB qualify as delinquent accounts or
disputed assessments as of 31 December 1985, the application for compromise filed by PNOC on 09 June
1987, and accepted by then BIR Commissioner Tan on 22 June 1987, was still filed way beyond 31 March
1987, the expiration date of the effectivity of E.O. No. 44 and the deadline for filing of applications for
compromise under RMO No. 39-86.
D. The BIR Commissioner's discretionary authority to enter into a compromise agreement is not
absolute and the CTA may inquire into allegations of abuse thereof.
The foregoing discussion supports the CTA's conclusion that the compromise agreement between PNOC and
the BIR was indeed without legal basis.  Despite this lack of legal support for the execution of the said
compromise agreement, PNB argues that the CTA still had no jurisdiction to review and set aside the
compromise agreement.  It contends that the authority to compromise is purely discretionary on the BIR
Commissioner and the courts cannot interfere with his exercise thereof.
It is generally true that purely administrative and discretionary functions may not be interfered with by the
courts; but when the exercise of such functions by the administrative officer is tainted by a failure to abide by
the command of the law, then it is incumbent on the courts to set matters right, with this Court having the last
say on the matter.81
The manner by which BIR Commissioner Tan exercised his discretionary power to enter into a compromise
was brought under the scrutiny of the CTA amidst allegations of "grave abuse of discretion and/or whimsical
exercise of jurisdiction." The discretionary power of the BIR Commissioner to enter into compromises cannot
82 
be superior over the power of judicial review by the courts.
The discretionary authority to compromise granted to the BIR Commissioner is never meant to be absolute,
uncontrolled and unrestrained.  No such unlimited power may be validly granted to any officer of the
government, except perhaps in cases of national emergency. In this case, the BIR Commissioner's authority
83 
to compromise, whether under E.O. No. 44 or Section 246 of the NIRC of 1977, as amended, can only be
exercised under certain circumstances specifically identified in said statutes.  The BIR Commissioner would
have to exercise his discretion within the parameters set by the law, and in case he abuses his discretion, the
CTA may correct such abuse if the matter is appealed to them. 84
Petitioners PNOC and PNB both contend that BIR Commissioner Tan merely exercised his authority to enter
into a compromise specially granted by E.O. No. 44.  Since this Court has already made a determination that
the compromise agreement did not qualify under E.O. No. 44, BIR Commissioner Tan's decision to agree to
the compromise should have been reviewed in the light of the general authority granted to the BIR
Commissioner to compromise taxes under Section 246 of the NIRC of 1977, as amended.  Then again,
petitioners PNOC and PNB failed to allege, much less present evidence, that BIR Commissioner Tan acted in
accordance with Section 246 of the NIRC of 1977, as amended, when he entered into the compromise
agreement with PNOC.
E. The CTA may set aside a compromise agreement that is contrary to law and public policy.
PNB also asserts that the CTA had no jurisdiction to set aside a compromise agreement entered into in good
faith.  It relies on the decision of this Court in Republic v. Sandiganbayan that a compromise agreement
85 
cannot be set aside merely because it is too one-sided.  A compromise agreement should be respected by the
courts as the res judicata between the parties thereto.
This Court, though, finds that there are substantial differences in the factual background of Republic v.
Sandiganbayan and the present case.
The compromise agreement executed between the Presidential Commission on Good Government (PCGG)
and Roberto S. Benedicto in Republic v. Sandiganbayan was judicially approved by the Sandiganbayan.  The
Sandiganbayan had ample opportunity to examine the validity of the compromise agreement since two years
elapsed from the time the agreement was executed up to the time it was judicially approved.  This Court even
stated in the said case that, "We are not dealing with the usual compromise agreement perfunctorily submitted
to a court and approved as a matter of course. The PCGG-Benedicto agreement was thoroughly and, at
times, disputatiously discussed before the respondent court. There could be no deception or
misrepresentation foisted on either the PCGG or the Sandiganbayan." 86
In addition, the new PCGG Chairman originally prayed for the re-negotiation of the compromise agreement so
that it could be more just, fair, and equitable, an action considered by this Court as an implied admission that
the agreement was not contrary to law, public policy or morals nor was there any circumstance which had
vitiated consent.
87
The above-mentioned circumstances strongly supported the validity of the compromise agreement in Republic
v. Sandiganbayan, which was why this Court refused to set it aside.  Unfortunately for the petitioners in the
present case, the same cannot be said herein.
The Court of Appeals, in upholding the jurisdiction of the CTA to set aside the compromise agreement, ruled
that:
We are unable to accept petitioner's submissions.  Its formulation of the issues on CIR and CTA's
lack of jurisdiction to disturb a compromise agreement presupposes a compromise
agreement validly entered into by the CIR and not, when as in this case, it was indubitably shown
that the supposed compromise agreement is without legal support.  In case of arbitrary or capricious
exercise by the Commissioner or if the proceedings were fatally defective, the compromise can be
attacked and reversed through the judicial process (Meralco Securities Corporation v. Savellano, 117
SCRA 805, 812 [1982]; Sarah E. Ramsay, et. al. v. U.S. 21 Ct. C1 443, aff'd 120 U.S. 214, 30 L. Ed.
582; Tyson v. U.S., 39 F. Supp. 135 cited in page 18 of decision) ….
88
Although the general rule is that compromises are to be favored, and that compromises entered into in good
faith cannot be set aside, this rule is not without qualification.  A court may still reject a compromise or
89 
settlement when it is repugnant to law, morals, good customs, public order, or public policy.
90
The compromise agreement between the BIR and PNOC was contrary to law having been entered into by BIR
Commissioner Tan in excess or in abuse of the authority granted to him by legislation.  E.O. No. 44 and the
NIRC of 1977, as amended, had identified the situations wherein the BIR Commissioner may compromise tax
liabilities, and none of these situations existed in this case.
The compromise, moreover, was contrary to public policy.  The primary duty of the BIR is to collect taxes,
since taxes are the lifeblood of the Government and their prompt and certain availability are imperious
needs. In the present case, however, BIR Commissioner Tan, by entering into the compromise agreement
91 
that was bereft of any legal basis, would have caused the Government to lose almost P300 million in tax
revenues and would have deprived the Government of much needed monetary resources.
Allegations of good faith and previous execution of the terms of the compromise agreement on the part of
PNOC would not be enough for this Court to disregard the demands of law and public policy.  Compromise
may be the favored method to settle disputes, but when it involves taxes, it may be subject to closer scrutiny
by the courts.  A compromise agreement involving taxes would affect not just the taxpayer and the BIR, but
also the whole nation, the ultimate beneficiary of the tax revenues collected.
F. The Government cannot be estopped from collecting taxes by the mistake, negligence, or
omission of its agents.
The new BIR Commissioner, Commissioner Ong, had acted well within his powers when he set aside the
compromise agreement, dated 22 June 1987, after finding that the said compromise agreement was without
legal basis.  When he took over from his predecessor, there was still a pending motion for reconsideration of
the said compromise agreement, filed by private respondent Savellano on 24 March 1988.  To resolve the
said motion, he reviewed the compromise agreement and, thereafter, came upon the conclusion that it did not
comply with E.O. No. 44 and its implementing rules and regulations.
It had been declared by this Court in Hilado v. Collector of Internal Revenue, et al., that an administrative
92 
officer, such as the BIR Commissioner, may revoke, repeal or abrogate the acts or previous rulings of his
predecessor in office.  The construction of a statute by those administering it is not binding on their successors
if, thereafter, the latter becomes satisfied that a different construction should be given.
It is evident in this case that the new BIR Commissioner, Commissioner Ong, construed E.O. No. 44 and its
implementing rules and regulations differently from that of his predecessor, former Commissioner Tan, which
led to Commissioner Ong's revocation of the BIR approval of the compromise agreement, dated 22 June
1987.  Such a revocation was only proper considering that the former BIR Commissioner's decision to
approve the said compromise agreement was based on the erroneous construction of the law (i.e., E.O. No.
44 and its implementing rules and regulations) and should not give rise to any vested right on PNOC. 93
Furthermore, approval of the compromise agreement and acceptance of the compromise payment by his
predecessor cannot estop BIR Commissioner Ong from setting aside the compromise agreement, dated 22
June 1987, for lack of legal basis; and from demanding payment of the deficiency withholding tax from PNB.  earnings and/or yields from PNOC's money placements with the bank.  It had 30 days from receipt to protest
As a general rule, the Government cannot be estopped from collecting taxes by the mistake, negligence, or
omission of its agents because:
94 
. . . Upon taxation depends the Government ability to serve the people for whose benefit taxes are
collected.  To safeguard such interest, neglect or omission of government officials entrusted with the
collection of taxes should not be allowed to bring harm or detriment to the people, in the same
manner as private persons may be made to suffer individually on account of his own negligence, the
presumption being that they take good care of their personal affairs. This should not hold true to
government officials with respect to matters not of their own personal concern. This is the philosophy
behind the government's exception, as a general rule, from the operation of the principle of estoppel.
(Republic vs. Caballero, L-27437, September 30, 1977, 79 SCRA 177; Manila Lodge No. 761,
Benevolent and Protective Order of the Elks, Inc. vs. Court of Appeals, L-41001, September 30,
1976, 73 SCRA 162; Sy vs. Central Bank of the Philippines, L-41480, April 30, 1976, 70 SCRA
571; Balmaceda vs. Corominas & Co., Inc., 66 SCRA 553; Auyong Hian vs. Court of Tax Appeals, 59
SCRA 110; Republic vs. Philippine Rabbit Bus Lines, Inc., 66 SCRA 553; Republic vs. Philippine
Long Distance Telephone Company, L-18841, January 27, 1969, 26 SCRA 620; Zamora vs. Court of
Tax Appeals, L-23272, November 26, 1970, 36 SCRA 77; E. Rodriguez, Inc. vs. Collector of Internal
Revenue, L-23041, July 31, 1969, 28 SCRA 119). 95
III
Finality of the Tax Assessment
A. The issue on whether the BIR complied with the notice requirements under RR No. 12-85 is raised
for the first time on appeal and should not be given due course.
PNB, in another effort to block the collection of the deficiency withholding tax, this time raises doubts as to the
validity of the deficiency withholding tax assessment issued against it on 16 January 1991.  It submits that the
BIR failed to comply with the notice requirements set forth in RR No. 12-85. 96
Whether or not the BIR complied with the notice requirements of RR No. 12-85 is a new issue raised by PNB
only before this Court.  Such a question has not been ventilated before the lower courts.  For an appellate
tribunal to consider a legal question, it should have been raised in the court below. If raised earlier, the matter
97 
would have been seriously delved into by the CTA and the Court of Appeals. 98
B. The assessment against PNB had become final and unappealable, and therefore, enforceable.
The CTA and the Court of Appeals declared as final and unappealable, and thus, enforceable, the
assessment against PNB, dated 16 January 1991, since PNB failed to protest said assessment within the 30-
day prescribed period.  This Court, though, finds that the significant BIR assessment, as far as this case is
concerned, should be the one issued by the BIR against PNB on 08 October 1986.
The BIR issued on 08 October 1986 an assessment against PNB for its withholding tax liability on the interest
the BIR's assessment. PNB, however, did not take any action as to the said assessment so that upon the
99 
lapse of the period to protest, the withholding tax assessment against it, dated 8 October 1986, became final
and unappealable, and could no longer be disputed. The courts may therefore order the enforcement of this
100 
assessment.
It is the enforcement of this BIR assessment against PNB, dated 08 October 1986, that is in issue in the
instant case.  If the compromise agreement is valid, it would effectively bar the BIR from enforcing the
assessment and collecting the assessed tax; on the other hand, if the compromise agreement is void, then the
courts can order the BIR to enforce the assessment and collect the assessed tax.
As has been previously discussed by this Court, the BIR demand letter, dated 16 January 1991, is not a new
assessment against PNB.  It only demanded from PNB the payment of the balance of the withholding tax
assessed against it on 08 October 1986.  The same demand letter also has no substantial effect or impact on
the resolution of the present case.  It is already unnecessary and superfluous, having been issued by the BIR
when CTA Case No. 4249 was already pending before the CTA.  At best, the demand letter, dated 16 January
1991, constitute a useful reference for the courts in computing the balance of PNB's tax liability, after applying
as partial payment thereon the amount previously received by the BIR from PNOC pursuant to the
compromise agreement.
IV
Prescription
A. The defense of prescription was never raised by petitioners PNOC and PNB, and should be
considered waived.
The dissenting opinion takes the position that the right of the BIR to assess and collect income tax on the
interest earnings and/or yields from PNOC's money placements with PNB, particularly for taxable year 1985,
had already prescribed, based on Section 268 of the NIRC of 1977, as amended.
Section 268 of the NIRC of 1977, as amended, provides a three-year period of limitation for the assessment
and collection of internal revenue taxes, which begins to run after the last day prescribed for filing of the
return.
101
The dissenting opinion points out that more than four years have elapsed from 25 January 1986 (the last day
prescribed by law for PNB to file its withholding tax return for the fourth quarter of 1985) to 16 January 1991
(the date when the alleged final assessment of PNB's tax liability was issued).
The issue of prescription, however, was brought up only in the dissenting opinion and was never raised by
PNOC and PNB in the proceedings before the BIR nor in any of their pleadings submitted to the CTA and the
Court of Appeals.
Section 1, Rule 9 of the Rules of Civil Procedure lays down the rule on defenses and objections not pleaded,
and reads:
SECTION 1.  Defenses and objections not pleaded.  – Defenses and objections not pleaded either in
a motion to dismiss or in the answer are deemed waived.  However, when it appears from the
pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that
there is another action pending between the parties for the same cause, or that the action is barred
by prior judgment or by the statute of limitations, the court shall dismiss the claim.
The general rule enunciated in the above-quoted provision governs the present case, that is, the defense of
prescription, not pleaded in a motion to dismiss or in the answer, is deemed waived.  The exception in same
provision cannot be applied herein because the pleadings and the evidence on record do not sufficiently show
that the action is barred by prescription.
It has been consistently held in earlier tax cases that the defense of prescription of the period for the
assessment and collection of tax liabilities shall be deemed waived when such defense was not properly
pleaded and the facts alleged and evidences submitted by the parties were not sufficient to support a finding
by this Court on the matter. In Querol v. Collector of Internal Revenue, this Court pronounced that
102  103  as amended:
prescription, being a matter of defense, imposes the burden on the taxpayer to prove that the full period of the
limitation has expired; and this requires him to positively establish the date when the period started running
and when the same was fully accomplished.
In making its conclusion that the assessment and collection in this case had prescribed, the dissenting opinion
took liberties to assume the following facts even in the absence of allegations and evidences to the effect that:
(1) PNB filed returns for its withholding tax obligations for taxable year 1985; (2) PNB reported in the said
returns the interest earnings of PNOC's money placements with the bank; and (3) that the returns were filed
on or before the prescribed date, which was 25 January 1986.
It is not safe to adopt the first and second assumptions in this case considering that Section 269 of the NIRC
of 1977, as amended, provides for a different period of limitation for assessment and collection of taxes in
case of false or fraudulent return or for failure to file a return.  In such cases, the BIR is given 10 years after
discovery of the falsity, fraud, or omission within which to make an assessment. 104
It is also not safe to accept the third assumption since there can be a possibility that PNB filed the withholding
tax return later than the prescribed date, in which case, following the dictates of Section 268 of the NIRC of
1977, as amended, the three-year prescriptive period shall be counted from the date the return was actually
filed.
105
PNB's withholding tax returns for taxable year 1985, duly received by the BIR, would have been the best
evidence to prove actual filing, the date of filing and the contents thereof.  These facts are relevant in
determining which prescriptive period should apply, and when such prescriptive period should begin to run
and when it had lapsed.  Yet, the pleadings did not refer to any return, and no return was made part of the
records of the present case.
This Court could not make a proper ruling on the matter of prescription on the mere basis of assumptions;
such an issue should have been properly raised, argued, and supported by evidences submitted by the parties
themselves before the BIR and the courts below.
B. Granting that this Court can take cognizance of the defense of prescription, this Court finds that
the assessment of the withholding tax liability against PNOC and collection of the tax assessed were
done within the prescriptive period.
Assuming, for the sake of argument, that this Court can give due course to the defense of prescription, it finds
that the assessment against PNB for its withholding tax liability for taxable year 1985 and the collection of the
tax assessed therein were accomplished within the prescribed periods for assessment and collection under
the NIRC of 1977, as amended.
If this Court adopts the assumption made by the dissenting opinion that PNB filed its withholding tax return for
the last quarter of 1985 on 25 January 1986, then the BIR had until 24 January 1989 to assess PNB.  The
original assessment against PNB was issued as early as 08 October 1986, well-within the three-year
prescriptive period for making the assessment as prescribed by the following provisions of the NIRC of 1977,
SEC. 268.  Period of limitation upon assessment and collection. – Except as provided in the
succeeding section, internal revenue taxes shall be assessed within three years after the last day
prescribed by law for the filing of the return, and no proceeding in court without assessment for the
collection of such taxes shall be begun after the expiration of such period…
SEC. 269.  Exceptions as to period of limitation of assessment and collection of taxes. –
…
 (c) Any internal revenue tax which has been assessed within the period of limitation above-
prescribed may be collected by distraint or levy or by a proceeding in court within three years
following the assessment of the tax.
Sections 268 and 269(c) of the NIRC of 1977, as amended, should be read in conjunction with one another.  Supposing that CTA Case No. 4249 is not a collection case which stops the running of the prescriptive period
Section 268 requires that assessment be made within three years from the last day prescribed by law for the
filing of the return.  Section 269(c), on the other hand, provides that when an assessment is issued within the
prescribed period provided in Section 268, the BIR has three years, counted from the date of the assessment,
to collect the tax assessed either by distraint, levy or court action.  Therefore, when an assessment is timely
issued in accordance with Section 268, the BIR is given another three-year period, under Section 269(c),
within which to collect the tax assessed, reckoned from the date of the assessment.
In the case of PNB, an assessment was issued against it by the BIR on 08 October 1986, so that the BIR had
until 07 October 1989 to enforce it and to collect the tax assessed.  The filing, however, by private respondent
Savellano of his Amended Petition for Review before the CTA on 02 July 1988 already constituted a judicial
action for collection of the tax assessed which stops the running of the three-year prescriptive period for
collection thereof.
A judicial action for the collection of a tax may be initiated by the filing of a complaint with the proper regular
trial court; or where the assessment is appealed to the CTA, by filing an answer to the taxpayer's petition for
review wherein payment of the tax is prayed for. 106
The present case is unique, however, because the Petition for Review was filed by private respondent
Savellano, the informer, against the BIR, PNOC, and PNB.  The BIR, the collecting government agency;
PNOC, the taxpayer; and PNB, the withholding agent, initially found themselves on the same side.  The prayer
in the Amended Petition for Review of private respondent Savellano reads:
WHEREFORE, in view of the foregoing, petitioner respectfully prays that the compromise agreement
of June 22, 1987 be reviewed and declared null and void, and that this Court directs:
a) respondent Commissioner to enforce and collect and respondents PNB and/or PNOC to
pay in a joint and several capacity, the total tax liability of P387,987,785.73, plus interests
from 31 October 1986; and
b) respondent Commissioner to pay unto petitioner, as informer's reward, 15% of the tax
liability collected under clause (a) hereof.
Other equitable reliefs under the premises are likewise prayed for. (Underscoring ours.)
107 
Private respondent Savellano, in his Amended Petition for Review in CTA Case No. 4249, prayed for (1) the
CTA to direct the BIR Commissioner to enforce and collect the tax, and (2) PNB and/or PNOC to pay the tax –
making CTA Case No. 4249 a collection case.  That the Amended Petition for Review was filed by the
informer and not the taxpayer; and that the prayer for the enforcement of the tax assessment and payment of
the tax was also made by the informer, not the BIR, should not affect the nature of the case as a judicial action
for collection.  In case the CTA grants the Petition and the prayer therein, as what has happened in the
present case, the ultimate result would be the collection of the tax assessed.  Consequently, upon the filing of
the Amended Petition for Review by private respondent Savellano, judicial action for collection of the tax had
been initiated and the running of the prescriptive period for collection of the said tax was terminated.
for the collection of the tax, CTA Case No. 4249, at the very least, suspends the running of the said
prescriptive period.  Under Section 271 of the NIRC of 1977, as amended, the running of the prescriptive
period to collect deficiency taxes shall be suspended for the period during which the BIR Commissioner is
prohibited from beginning a distraint or levy or instituting a proceeding in court, and for 60 days
thereafter. Just as in the cases of Republic v. Ker & Co., Ltd. and Protector's Services, Inc. v. Court of
108  109 
Appeals, this Court declares herein that the pendency of the present case before the CTA, the Court of
110 
Appeals and this Court, legally prevents the BIR Commissioner from instituting an action for collection of the
same tax liabilities assessed against PNOC and PNB in the CTA or the regular trial courts.  To rule otherwise
would be to violate the judicial policy of avoiding multiplicity of suits and the rule on lis pendens.
Once again, that CTA Case No. 4249 was initiated by private respondent Savellano, the informer, instead of
PNOC, the taxpayer, or PNB, the withholding agent, would not prevent the suspension of the running of the
prescriptive period for collection of the tax.  What is controlling herein is the fact that the BIR Commissioner
cannot file a judicial action in any other court for the collection of the tax because such a case would
necessarily involve the same parties and involve the same issues already being litigated before the CTA in
CTA Case No. 4249.  The three-year prescriptive period for collection of the tax shall commence to run only
after the promulgation of the decision of this Court in which the issues of the present case are resolved with
finality.
Whether the filing of the Amended Petition for Review by private respondent Savellano entirely stops or
merely suspends the running of the prescriptive period for collection of the tax, it had been premature for the
BIR Commissioner to issue a writ of garnishment against PNB on 12 August 1991 and for the Central Bank of
the Philippines to debit the account of PNB on 02 September 1992 pursuant to the said writ, because the case
was by then, pending review by the Court of Appeals.  However, since this Court already finds that the
compromise agreement is without force and effect and hereby orders the enforcement of the assessment
against PNB, then, any issue or controversy arising from the premature garnishment of PNB's account and
collection of the tax by the BIR has become moot and academic at this point.
V
Additional Informer's Reward
Private respondent Savellano is entitled to additional informer's reward since the BIR had already collected
the full amount of the tax assessment against PNB.
PNOC insists that private respondent Savellano is not entitled to additional informer's reward because there
was no voluntary payment of the withholding tax liability.  PNOC, however, fails to state any legal basis for its
argument.
Section 316(1) of the NIRC of 1977, as amended, granted a reward to an informer equivalent to 15% of the
revenues, surcharges, or fees recovered, plus, any fine or penalty imposed and collected. The provision was
111 

clear and uncomplicated – an informer was entitled to a reward of 15% of the total amount actually recovered
or collected by the BIR based on his information.  The provision did not make any distinction as to the manner
the tax liability was collected – whether it was through voluntary payment by the taxpayer or through
garnishment of the taxpayer's property.  Applicable herein is another well-known maxim in statutory
construction – Ubi lex non distinguit nec nos distinguere debemos – when the law does not distinguish, we
should not distinguish.
112

Pursuant to the writ of garnishment issued by the BIR, the Central Bank issued a debit advice against the
demand deposit account of PNB with the Central Bank for the amount of P294,958,450.73, and credited the
same amount to the demand deposit account of the Treasurer of the Republic of the Philippines.  The
Treasurer of the Republic, in turn, already issued a journal voucher transferring P294,958,450.73 to the
account of the BIR.

Since the BIR had already collected P294,958,450.73 from PNB through the execution of the writ of
garnishment over PNB's deposit with the Central Bank, then private respondent Savellano should be awarded
15% thereof as reward since the said collection could still be traced to the information he had given.

WHEREFORE, in view of the foregoing, the Petitions of PNOC and PNB in G.R. No. 109976 and G.R. No.
112800, respectively, are hereby DENIED.  This Court AFFIRMS the assailed Decisions of the Court of
Appeals in CA-G.R. SP No. 29583 and CA-G.R. SP No. 29526, which affirmed the decision of the CTA in CTA
Case No. 4249, with modifications, to wit:

(1)    The compromise agreement between PNOC and the BIR, dated 22 June 1987, is declared void
for being contrary to law and public policy, and is without force and effect;

(2)Paragraph 2 of RMO No. 39-86 remains a valid provision of the regulation;

(3)The withholding tax assessment against PNB, dated 08 October 1986, had become final and
unappealable.  The BIR Commissioner is ordered to enforce the said assessment and collect the
amount of P294,958,450.73, the balance of tax assessed after crediting the previous payment made
by PNOC pursuant to the compromise agreement, dated 22 June 1987; and

(4)    Private respondent Savellano shall be paid the remainder of his informer's reward, equivalent to
15% of the deficiency withholding tax ordered collected herein, or P 44,243,767.61.

SO ORDERED.
 (b) Resolution3 (May 6, 2010 Resolution) issued on May 6, 2010, relative to SPA Case No. 10-002
(MP) LOCAL, denying Ibrahim’s opposition4 to Resolution No. 09-0946.

Antecedent Facts

On December 1, 2009, Ibrahim filed his certificate of candidacy to run as Vice-Mayor of Datu-Unsay in the
May 10, 2010 elections. Thereafter, respondent Rolan G. Buagas (Buagas), then Acting Election Officer in the
said municipality, forwarded to the COMELEC’s Law Department (Law Department) the names of 20
candidates who were not registered voters therein. The list 5 included Ibrahim’s name, along with those of two
candidates for mayor, one for vice-mayor and 16 for councilor.

In a Memorandum6 dated December 10, 2009, the Law Department brought to the attention of the COMELEC
en banc the names of 56 candidates running for various posts in Maguindanao and Davao del Sur who were
not registered voters of the municipalities where they sought to be elected. The Law Department
recommended the retention of the said names in the Certified List of Candidates, but for the COMELEC to
motu propio institute actions against them for disqualification and for violation of election laws. Thereafter, the
COMELEC en banc issued the herein assailed December 22, 2009 Resolution approving, but with
modification, the Law

Department’s recommendation in the following wise:

1. to disqualify the foregoing candidates for not being registered voters of the respective
municipalities where they seek to be elected without prejudice to their filing of an opposition within
two (2) days from publication hereof; and

2. to file election offense cases against said candidates for violation of Sec. 74 in relation to Sec. 262
G.R. No. 192289               January 8, 2013 of the Omnibus Election Code.7 (Italics ours)

KAMARUDIN K. IBRAHIM, Petitioner, vs. COMMISSION ON ELECTIONS and ROLAN G. On January 8, 2010, Ibrahim and 50 other candidates filed a Petition/Opposition8 to assail the Resolution
BUAGAS, Respondents. dated December 22, 2009. In the Petition/Opposition, which was docketed as SPA 10-002 (MP) LOCAL, it
was stressed that some of those affected by the Resolution dated December 22, 2009 had participated as
candidates in the 2004 and 2007 elections. If indeed they were not registered voters, they should have been
DECISION
disqualified then. Further, it was emphasized that the candidates who filed the Petition/Opposition were
permanent residents and were domiciled at the place where they sought to be elected.
REYES, J.:
The COMELEC en banc denied the Petition/Opposition through the herein assailed Resolution dated May 6,
Before us is a Petition for Certiorari and Prohibition with Prayer for the Issuance of a Writ of Preliminary 2010. The COMELEC declared that the Resolution dated December 22, 2009 was anchored on the
Injunction and/or Temporary Restraining Order1 filed under Rule 64 of the Rules of Court assailing the certification, which was issued by Buagas and Acting Provincial Election Supervisor of Maguindanao, Estelita
following resolutions of the public respondent Commission on Elections (COMELEC): B. Orbase, stating that Ibrahim, among other candidates, were not registered voters of Datu Unsay,
Maguindanao. The certification was issued in the performance of official duty, hence, the presumption of
(a) Minute Resolution No. 09-09462 (December 22, 2009 Resolution), dated December 22, 2009, regularity attached to it in the absence of contrary evidence. Ibrahim and company failed to adduce evidence
disqualifying the petitioner herein, Kamarudin K. Ibrahim (Ibrahim), from the 2010 Vice-Mayoralty proving their allegations of registration and residence.
race in Datu Unsay, Maguindanao for supposedly not being a registered voter of the said
municipality; and In the May 10, 2010 elections, during which time the Resolution dated May 6, 2010 had not yet attained
finality, Ibrahim obtained 446 votes, the highest number cast for the Vice-Mayoralty race in Datu
Unsay.9 However, the Municipal Board of Canvassers (MBOC), which was then chaired by Buagas,
suspended Ibrahim’s proclamation on the basis of Section 5, Rule 2510 of the COMELEC Rules of Procedure.11
Issue
Whether or not the COMELEC en banc acted with grave abuse of discretion amounting to lack or excess of
jurisdiction when it issued the Resolutions dated December 22, 2009 and May 6, 2010.
Arguments in Support of the Instant Petition
Ibrahim posits that the MBOC is a ministerial body created merely "to take the returns as made from the
different voting precincts, add them up and declare the result." 12 As long as the returns are on their face
genuine and are signed by the proper officers, sans indications of being spurious and forged, they cannot be
rejected on the ground of alleged questions on the qualifications of voters and the existence of electoral frauds
and irregularities. Further, since Ibrahim received the highest number of votes for Vice-Mayor, all possible
doubts should be resolved in favor of his eligibility, lest the will of the electorate, which should be the
paramount consideration, be defeated.13
In its Manifestation and Motion in Lieu of Comment, 14 the Office of the Solicitor General (OSG) proposes for
the instant Petition to be granted. The OSG points out that in Cipriano v. Commission on Elections, 15 this court
nullified, for lack of proper proceedings before their issuance, the resolutions issued by the COMELEC relative
to the cancellation of a certificate of candidacy. The OSG emphasizes that similarly, Ibrahim was disqualified
as a candidate without prior notice and hearing and he was given the chance to file an opposition only after
the issuance of the Resolution dated December 22, 2009.
Further citing Bautista v. Comelec,16 the OSG argues that jurisdiction over petitions to cancel a certificate of
candidacy pertains to the COMELEC sitting in division and not to the COMELEC en banc. The COMELEC en
banc can only take cognizance of petitions to cancel a certificate of candidacy when the required number of
votes for a division to reach a decision, ruling, order or resolution is not obtained, or when motions for
reconsideration are filed to assail the said issuances of a division.
The OSG likewise refers to Section 4(B)(3)17 of Resolution No. 869618 to stress that generally, the COMELEC
cannot motu propio file petitions for disqualification against candidates. Section 5 19 of the same resolution,
however, provides the only exception to the foregoing, to wit, that certificates of candidacy of those running for
the positions of President, Vice-President, Senator and Party-List maybe denied due course and canceled
motu propio by the COMELEC based on grounds enumerated therein. While there was a Petition for
Disqualification20 filed by Bai Reshal S. Ampatuan against Ibrahim and company, it was not the basis for the
COMELEC en banc’s issuance of the Resolutions dated December 22, 2009 and May 6, 2010. Instead, the
certification issued by Buagas was the basis for the subsequent actions of the Law Department and the
COMELEC en banc leading to the issuance of the herein assailed resolutions.
The OSG also invokes Section 1621 of COMELEC Resolution No. 867822 to assert that the MBOC had no
authority to order the suspension of Ibrahim’s proclamation. Upon motion, the suspension of a winning
candidate’s proclamation can be ordered during the pendency of a disqualification case before the
COMELEC. However, only the COMELEC, as a tribunal, has the authority to issue orders relative to cases
pending before it. The MBOC cannot substitute its own judgment for that of the COMELEC’s. The MBOC can
suspend a winning candidate’s proclamation only when an actual issue within the Board’s jurisdiction arises in
the course of conducting a canvass. The aforementioned issues include the commission of violent and
terrorist acts or the occurrence of a calamity at the canvassing site. Absent any determination of irregularity in
the election returns, as well as an order enjoining the canvassing and proclamation of the winner, it is a
mandatory and ministerial duty of the MBOC concerned to count the votes based on such returns and declare
the result.23
It is also the OSG’s position that Section 5, Rule 25 24 of the COMELEC Rules of Procedure was irregularly
worded for using the word "shall" when Section 625 of Republic Act (R.A.) No. 6646,26 which the rules seek to
implement, merely employed the word "may". The use of the word "may" indicates that the suspension of a
proclamation is merely directory and permissive in nature and operates to confer discretion.27
The COMELEC’s Contentions
In the Compliance28 filed with the court, the COMELEC assails as improper Ibrahim’s immediate resort to the
instant Petition for Certiorari under Rule 64 of the Rules of Court. Despite the issuance of the herein assailed
resolutions, Ibrahim’s name was not stricken off from the certified list of candidates during the May 10, 2010
elections and the votes cast for him were counted. Hence, no actual prejudice was caused upon him as the
COMELEC did not even direct the MBOC to suspend his proclamation. It was the MBOC’s ruling which
resulted to the suspension of his proclamation. Such being the case, Ibrahim should have instead filed a pre-
proclamation controversy before the COMELEC anchored on the supposed illegality of the MBOC’s
proceedings. Section 241 of Batas Pambansa Blg. 881 (BP 881), otherwise known as the Omnibus Election
Code (OEC), defines pre-proclamation controversies as referring to any questions "pertaining to or affecting
the proceedings of the board of canvassers which may be raised by any candidate or by any registered
political party or coalition of political parties before the board or directly with the Commission, or any matter
raised xxx in relation to the preparation, transmission, receipt, custody and appreciation of the election
returns." Had Ibrahim instituted instead a pre-proclamation controversy, the COMELEC could have corrected
the MBOC’s ruling, if indeed, it was erroneous.
The COMELEC further argues that Ibrahim was not denied due process as he and the other candidates
referred to in the Resolutions dated December 22, 2009 and May 6, 2010 were given the opportunity to file
their opposition. Ibrahim did file his Petition/Opposition and sought reliefs from the COMELEC en banc. Now,
he should not be allowed to repudiate the proceedings merely because the result was adverse to him.
Moreover, the OSG’s invocation of the doctrines enunciated in Bautista v. Comelec29 is misplaced because in
the said case, there was a total absence of notice and hearing.
The COMELEC emphasizes that Ibrahim was undeniably not a registered voter in Datu Unsay when he ran as
Vice-Mayor in the May 10, 2010 elections. He cannot possess any mandate to serve as an elected official as
by his act and willful misrepresentations, he had deceived the electorate.
Our Ruling
We grant the instant Petition.
Before resolving the merits of the petition, the court shall first dispose of the procedural issue raised by the
COMELEC.
Ibrahim properly resorted to the instant Petition filed under Rule 64 of the Rules of Court to assail the
Resolutions dated December 22, 2009 and May 6, 2010 of the COMELEC en banc.
The COMELEC seeks the dismissal of the instant Petition on the basis of a technical ground, to wit, that
Ibrahim’s resort to a petition for certiorari filed under Rule 64 of the Rules of Court to challenge the
Resolutions dated December 22, 2009 and May 6, 2010 is improper. Ibrahim should have instead filed before
the COMELEC a pre-proclamation controversy to allow the latter to correct the MBOC’s ruling if it was indeed
erroneous.
The claim fails to persuade.
Section 7, Article IX of the 1987 Constitution in part substantially provides that any decision, order or ruling of
any of the Constitutional Commissions may be brought for review to the Supreme Court on certiorari within 30
days from receipt of a copy thereof. The orders, ruling and decisions rendered or issued by the COMELEC en
banc must be final and made in the exercise of its adjudicatory or quasi-judicial power. 30 Further, Section 1,
Rule 64 of the Rules of Court states that it shall govern the review of final judgments and orders or resolutions
of the COMELEC and the Commission on Audit.
A pre-proclamation controversy is defined in Section 241 of the OEC as referring to "any question pertaining to
or affecting the proceedings of the board of canvassers which may be raised by any candidate or by any
registered political party or coalition of parties before the board or directly with the Commission, or any matter
raised under Sections 233,31 234,32 23533 and 23634 in relation to the preparation, transmission, receipt, custody
and appreciation of the election returns." Section 243 of the OEC restrictively enumerates as follows the
issues which can be raised in a pre-proclamation controversy:
(a) Illegal composition or proceedings of the board of canvassers;
(b) The canvassed election returns are incomplete, contain material defects, appear to be tampered
with or falsified, or contain discrepancies in the same returns or in other authentic copies thereof as
mentioned in Sections 233, 234, 235 and 236 of this Code;
(c) The election returns were prepared under duress, threats, coercion, or intimidation, or they are
obviously manufactured or not authentic; and
(d) When substitute or fraudulent returns in controverted polling places were canvassed, the results
of which materially affected the standing of the aggrieved candidate or candidates.
The illegality of the proceedings of the board of canvassers is the first issue which may be raised in a pre-
proclamation controversy. To illustrate, the proceedings are to be considered as illegal when the board is
constituted not in accordance with law, or is composed of members not enumerated therein, or when business
is transacted sans a quorum.
In the case at bar, the now assailed Resolutions dated December 22, 2009 and May 6, 2010 were issued with
finality by the COMELEC en banc. Under the Constitution and the Rules of Court, the said resolutions can be
reviewed by way of filing before us a petition for certiorari. Besides, the issues raised do not at all relate to
alleged irregularities in the preparation, transmission, receipt, custody and appreciation of the election returns
or to the composition and proceedings of the board of canvassers. What the instant Petition challenges is the
authority of the MBOC to suspend Ibrahim’s proclamation and of the COMELEC en banc to issue the assailed
resolutions. The crux of the instant Petition does not qualify as one which can be raised as a pre-proclamation
controversy.
The COMELEC en banc is devoid of authority to disqualify Ibrahim as a candidate for the position of Vice-
Mayor of Datu Unsay.
Section 3(C), Article IX of the 1987 Constitution explicitly provides:
Sec. 3. The Commission on Elections may sit en banc or in two divisions, and shall promulgate its rules of
procedure in order to expedite disposition of election cases, including pre-proclamation controversies. All such
election cases shall be heard and decided in division, provided that motions for reconsideration of decisions
shall be decided by the Commission en banc. (Italics ours)
Further, the circumstances obtaining in Bautista v. Comelec 35 cited by the OSG in its Manifestation are similar
to those attendant to the instant Petition. In Bautista, the election officer reported to the Law Department that
Bautista was ineligible to run as a candidate by reason of his being an unregistered voter. The Law
Department recommended to the COMELEC en banc to deny due course or cancel Bautista’s certificate of
candidacy. The COMELEC en banc adopted the recommendation and consequently issued a resolution. In
the said case, this Court discussed the COMELEC en banc’s jurisdiction over petitions for disqualification, for
denial of due course, or cancellation of certificates of candidacy in the following wise:
In Garvida v. Sales, Jr., the Court held that it is the COMELEC sitting in division and not the COMELEC en
banc which has jurisdiction over petitions to cancel a certificate of candidacy. The Court held:
The Omnibus Election Code, in Section 78, Article IX, governs the procedure to deny due course to or cancel
a certificate of candidacy, viz:
"Sec.78. Petition to deny due course to or cancel a certificate of candidacy.   A verified petition seeking to
1âwphi1
deny due course or to cancel a certificate of candidacy may be filed by any person exclusively on the ground
that any material representation contained therein as required under Section 74 hereof is false. The petition
may be filed at any time not later than twenty-five days from the time of filing of the certificate of candidacy
and shall be decided, after due notice and hearing, not later than fifteen days before election."
In relation thereto, Rule 23 of the COMELEC Rules of Procedure provides that a petition to deny due course
to or cancel a certificate of candidacy for an elective office may be filed with the Law Department of the
COMELEC on the ground that the candidate has made a false material representation in his certificate. The
petition may be heard and evidence received by any official designated by the COMELEC after which the case
shall be decided by the COMELEC itself.
Under the same Rules of Procedure, jurisdiction over a petition to cancel a certificate of candidacy lies with
the COMELEC sitting in Division, not en banc. Cases before a Division may only be entertained by the
COMELEC en banc when the required number of votes to reach a decision, resolution, order or ruling is not
obtained in the Division. Moreover, only motions to reconsider decisions, resolutions, orders or rulings of the
COMELEC in Division are resolved by the COMELEC en banc.
xxxx
Under Section 3, Rule 23 of the 1993 COMELEC Rules of Procedure, a petition for the denial or cancellation
of a certificate of candidacy must be heard summarily after due notice. It is thus clear that cancellation
proceedings involve the exercise of the quasi-judicial functions of the COMELEC which the COMELEC in
division should first decide. More so in this case where the cancellation proceedings originated not from a
petition but from a report of the election officer regarding the lack of qualification of the candidate in the
barangay election. The COMELEC en banc cannot short cut the proceedings by acting on the case without a
prior action by a division because it denies due process to the candidate.36 (Citation omitted and italics ours)
In the case at bar, the COMELEC en banc, through the herein assailed resolutions, ordered Ibrahim’s
disqualification even when no complaint or petition was filed against him yet. Let it be stressed that if filed
before the conduct of the elections, a petition to deny due course or cancel a certificate of candidacy under
Section 78 of the OEC is the appropriate petition which should have been instituted against Ibrahim
considering that his allegedly being an unregistered voter of Datu Unsay disqualified him from running as
Vice-Mayor. His supposed misrepresentation as an eligible candidate was an act falling within the purview of
Section 78 of the OEC. Moreover, even if we were to assume that a proper petition had been filed, the
COMELEC en banc still acted with grave abuse of discretion when it took cognizance of a matter, which by
both constitutional prescription and jurisprudential declaration, instead aptly pertains to one of its divisions.
Ibrahim is not estopped from challenging the COMELEC en banc’s jurisdiction to issue the assailed
resolutions.
In Republic v. Bantigue Point Development Corporation,37 we stated:
The rule is settled that lack of jurisdiction over the subject matter may be raised at any stage of the
proceedings. Jurisdiction over the subject matter is conferred only by the Constitution or the law. It cannot be
acquired through a waiver or enlarged by the omission of the parties or conferred by the acquiescence of the
court. Consequently, questions of jurisdiction may be cognizable even if raised for the first time on appeal.
The ruling of the Court of Appeals that "a party may be estopped from raising such jurisdictional question if he
has actively taken part in the very proceeding which he questions, belatedly objecting to the court’s jurisdiction
in the event that the judgment or order subsequently rendered is adverse to him" is based on the doctrine of
estoppel by laches. We are aware of that doctrine first enunciated by this Court in Tijam v. Sibonghanoy. In
Tijam, the party-litigant actively participated in the proceedings before the lower court and filed pleadings
therein. Only 15 years thereafter, and after receiving an adverse Decision on the merits from the appellate
court, did the party-litigant question the lower court’s jurisdiction. Considering the unique facts in that case, we
held that estoppel by laches had already precluded the party-litigant from raising the question of lack of
jurisdiction on appeal. In Figueroa v. People, we cautioned that Tijam must be construed as an exception to
the general rule and applied only in the most exceptional cases whose factual milieu is similar to that in the
latter case.38 (Citations omitted and italics ours)
As enunciated above, estoppel by laches can only be invoked in exceptional cases with factual circumstances
similar to those in Tijam.39 In the case now before us, the assailed resolutions were issued on December 22,
2009 and May 6, 2010. The instant Petition, which now raises, among others, the issue of the COMELEC en
banc’s jurisdiction, was filed on June 3, 2010. With the prompt filing of the instant Petition, Ibrahim can hardly
be considered as guilty of laches.
Ibrahim was not denied due process.
Interminably, we have declared that deprivation of due process cannot be successfully invoked where a party
was given the chance to be heard on his motion for reconsideration.40
In the case before us, Ibrahim was afforded the chance to file an opposition to the assailed resolutions.
Nonetheless, even if due process was substantially observed, the assailed resolutions remain null and void for
want of authority on the part of the COMELEC en banc to take cognizance of a matter which should have
instead been referred to one of its divisions.
The MBOC has no authority to suspend Ibrahim’s proclamation especially since the herein assailed
resolutions, upon which the suspension was anchored, were issued by the COMELEC en banc outside the
ambit of its jurisdiction.
Mastura v. COMELEC41 is emphatic that:
(T)he board of canvassers is a ministerial body. It is enjoined by law to canvass all votes on election returns
submitted to it in due form. It has been said, and properly, that its powers are limited generally to the
mechanical or mathematical function of ascertaining and declaring the apparent result of the election by
adding or compiling the votes cast for each candidate as shown on the face of the returns before them, and
then declaring or certifying the result so ascertained. x x x.42 (Italics ours)
The simple purpose and duty of the canvassing board is to ascertain and declare the apparent result of the
voting while all other questions are to be tried before the court or other tribunal for contesting elections or in
quo warranto proceedings.43
In the case at bar, the MBOC motu propio suspended Ibrahim’s proclamation when the issue of the latter’s
eligibility is a matter which the board has no authority to resolve. Further, under Section 644 of R.A. 6646, the
COMELEC and not the MBOC has the authority to order the suspension of a winning candidates’s
proclamation. Such suspension can only be ordered upon the motion of a complainant or intervenor relative to
a case for disqualification, or a petition to deny due course or cancel a certificate of candidacy pending before
the COMELEC, and only when the evidence of the winning candidate’s guilt is strong. Besides, the COMELEC
en banc itself could not have properly ordered Ibrahim’s disqualification because in taking cognizance of the
matter, it had already exceeded its jurisdiction.
WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is GRANTED. The December 22, 2009
and May 6, 2010 Resolutions issued by the COMELEC en banc is ANNULLED and SET ASIDE.
Consequently, the suspension by the MBOC of Ibrahim’s proclamation on the basis of the herein assailed
resolutions is likewise ANNULLED and SET ASIDE. In the absence of a judgment, order or resolution relative
to another action or petition finally disqualifying Ibrahim, denying due course or cancelling his certificate of
candidacy, the MBOC of Datu Unsay is directed to convene within ten (10) days from receipt hereof and to
proclaim Ibrahim as the duly-elected Vice-Mayor of the said municipality.
SO ORDERED.
G.R. No. 109093 November 20,
1995
LOPE MACHETE, NICASIO JUMAWID, SANTIAGO JUMAWID, JOHN JUMAWID, PEDRO GAMAYA,
RENATO DELGADO, FERNANDO OMBAHIN, MATIAS ROLEDA, PASIANO BARO, IGNACIO BARO,
MAMERTO PLARAS and JUSTINIANO VILLALON, petitioners, vs. COURT OF APPEALS and CELESTINO
VILLALON, respondents.
BELLOSILLO, J.:
Are Regional Trial Courts' vested with jurisdiction over cases for collection of back rentals from leasehold
tenants?
On 21 July 1989 private respondent Celestino Villalon filed a complaint for collection of back rentals and
damages before the Regional Trial Court of Tagbilaran City against petitioners Lope Machete, Nicasio
Jumawid, Santiago Jumawid, John Jumawid, Pedro Gamaya, Renato Delgado, Fernando Ombahin, Matias
Roleda, Pasiano Baro, Ignacio Baro, Mamerto Plaras and Justiniano Villalon. The complaint alleged that the
parties entered into a leasehold agreement with respect to private respondent's landholdings at Poblacion
Norte, Carmen, Bohol, under which petitioners were to pay private respondent a certain amount or percentage
of their harvests. However, despite repeated demands and with no valid reason, petitioners failed to pay their
respective rentals. Private respondent thus prayed that petitioners be ordered to pay him back rentals and
damages.
Petitioners moved to dismiss the complaint on the ground of lack of jurisdiction of the trial court over the
subject matter. They contended that the case arose out of or was connected with agrarian relations, hence,
the subject matter of the complaint fell squarely within the jurisdiction of the Department of Agrarian Reform
(DAR) in the exercise of its quasi-judicial powers under Sec. 1, pars. (a) and (b), Rule II of the Revised Rules
of the Department of Agrarian Reform Adjudication Board (DARAB).
On 22 August 1989 the trial court granted the motion to dismiss,  and on 28 September 1989 denied the
1
motion for reconsideration.2
Private respondent sought annulment of both orders before respondent Court of Appeals which on 21 May
1992 rendered judgment reversing the trial court and directing it to assume jurisdiction over the case  on the
3
basis of its finding that —
. . . The CARL (RA 6657) and other pertinent laws on agrarian reform cannot be seen to
encompass a case of simple collection of back rentals by virtue of an agreement, as the one
at bar, where there is no agrarian dispute to speak of (since the allegation of failure to pay
the agreed rentals was never controverted in the motion to dismiss) nor the issue raised on
application, implementation, enforcement or interpretation of these laws. 4
On 18 January 1993 the appellate court rejected the motion for reconsideration. 5
Petitioners maintain that the alleged cause of action of private respondent arose from an agrarian relation and
that respondent appellate court failed to consider that the agreement involved is an agricultural leasehold
contract, hence, the dispute is agrarian in nature. The laws governing its execution and the rights and
obligations of the parties thereto are necessarily R.A. 3844,  R.A. 6657  and other pertinent agrarian laws.
6 7
Considering that the application, implementation, enforcement or interpretation of said laws are matters which
have been vested in the DAR, this case is outside the jurisdiction of the trial court.
The petition is impressed with merit. Section 17 of E.O. 229  vested the DAR with quasi-judicial powers to
8
determine and adjudicate agrarian reform matters as well as exclusive original jurisdiction over all matters
involving implementation of agrarian reform except those falling under the exclusive original jurisdiction of the
Department of Agriculture and the Department of Environment and Natural Resources in accordance with law.
Executive Order 129-A, while in the process of reorganizing and strengthening the DAR, created the DARAB
to assume the powers and functions with respect to the adjudication of agrarian reform cases.  Section 1, 9
pars. (a) and (b), Rule II of the Revised Rules of the DARAB explicitly provides —
Sec. 1. Primary, Original and Appellate Jurisdiction. — The Agrarian Reform Adjudication
Board shall have primary jurisdiction, both original and appellate, to determine and
adjudicate all agrarian disputes, cases, controversies, and matters or incidents involving the
implementation of the Comprehensive Agrarian Reform Program under Republic Act No.
6657, Executive Orders Nos. 229, 228 and 129-A, Republic Act No. 3844 as amended by
Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their
implementing rules and regulations. Specifically, such jurisdiction shall extend over but not
be limited to the following: (a) Cases involving the rights and obligations of persons engaged
in the cultivation and use of agricultural land covered by the Comprehensive Agrarian
Reform Program (CARP) and other agrarian laws, (b) Cases involving the valuation of land,
and determination and payment of just compensation, fixing and collection of lease rentals,
disturbance compensation, amortization payments, and similar disputes concerning the
functions of the Land Bank . . .
In Quismundo v. Court of Appeals,  this Court interpreted the effect of Sec. 17 of E.O. 229 on P.D. 946, which
10
amended R.A. 3844, the agrarian law then in force —
The above quoted provision (Sec. 17) should be deemed to have repealed  Sec. 12 (a) and
11
(b) of Presidential Decree No. 946 which invested the then courts of agrarian relations with
original exclusive jurisdiction over cases and questions involving rights granted and
obligations imposed by presidential issuances promulgated in relation to the agrarian reform
program.
Formerly, under Presidential Decree No. 946, amending Chapter IX of Republic Act No.
3844, the courts of agrarian relations had original and exclusive jurisdiction over "cases
involving the rights and obligations of persons in the cultivation and use of agricultural land
except those cognizable by the National Labor Relations Commission" and "questions
involving rights granted and obligations imposed by laws, Presidential Decrees, Orders,
Instructions, Rules and Regulations issued and promulgated in relation to the agrarian
reform program," except those matters involving the administrative implementation of the
transfer of land to the tenant-farmer under Presidential Decree No. 27 and amendments
thereto which shall be exclusively cognizable by the Secretary of Agrarian Reform. 12
In 1980, upon the passage of Batas Pambansa Blg. 129, otherwise known as the Judiciary
Reorganization Act, the courts of agrarian relations were integrated into the regional trial
courts and the jurisdiction of the former was vested in the latter courts.
13
However, with the enactment of Executive Order No. 229, which took effect on August 29,
1987, fifteen (15) days after its release for publication in the Official Gazette,  the regional
14
trial courts were divested of their general jurisdiction to try agrarian reform matters. The said
jurisdiction is now vested in the Department of Agrarian Reform.
On 15 June 1988 R.A. 6657 was passed containing provisions which evince and support the intention of the
legislature to vest in the DAR exclusive jurisdiction over all agrarian reform matters.  Section 50 thereof
15
substantially reiterates Sec. 17 of E.O. 229 thus —
Sec. 50. Quasi-Judicial Powers of the DAR. — The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation of agrarian reform, except
those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR) . . .
Section 3, par. (d), thereof defines the term "agrarian dispute" as referring to any controversy relating
to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted
to agriculture, including disputes concerning farm workers' associations or representation of persons
in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial
arrangements.
However it may be mentioned in passing that the Regional Trial Courts have not been completely divested of
jurisdiction over agrarian reform matters. Section 56 of R.A. 6657 confers "special jurisdiction" on "Special
Agrarian Courts," which are Regional Trial Courts designated by this Court — at least one (1) branch within
each province — to act as such. These Regional Trial Courts designated as Special Agrarian Courts have,
according to Sec. 57 of the same law, original and exclusive jurisdiction over: (a) all petitions for the
determination of just compensation to landowners, and (b) the prosecution of all criminal offenses under the
Act. 16
Consequently, there exists an agrarian dispute in the case at bench which is exclusively cognizable by the
DARAB. The failure of petitioners to pay back rentals pursuant to the leasehold contract with private
respondent is an issue which is clearly beyond the legal competence of the trial court to resolve. The doctrine
of primary jurisdiction  does not warrant a court to arrogate unto itself the authority to resolve a controversy the
jurisdiction over which is initially lodged with an administrative body of special competence. 17
Thus, respondent appellate court erred in directing the trial court to assume jurisdiction over this case. At any
rate, the present legal battle is "not altogether lost" on the part of private respondent because as this Court
was quite emphatic in Quismundo v. Court of Appeals,  the resolution by the DAR is to the best advantage of
18
the parties since it is in a better position to resolve agrarian disputes, being the administrative agency
presumably possessing the necessary expertise on the matter. Further, the proceedings therein are summary
in nature and the department is not bound by the technical rules of procedure and evidence, to the end that
agrarian reform disputes and other issues will be adjudicated in a just, expeditious and inexpensive
proceeding. 19
WHEREFORE, the decision of respondent Court of Appeals as well as its resolution denying reconsideration
is REVERSED and SET ASIDE. The orders of the Regional Trial Court of Tagbilaran City dated 22 August
and 28 September 1989 are REINSTATED. Consequently, let the records of this case be immediately
transmitted to the appropriate Department of Agrarian Reform Adjudication Board (DARAB) for proper
adjudication in accordance with the ruling in Vda. de Tangub v. Court of Appeals  20 and reiterated in Quismundo v. Court of
Appeals,21 as well as pertinent agrarian laws.
SO ORDERED.
G.R. No. 128305             March 28, 2005
FELINO QUIAMBAO, Petitioner, vs. THE COURT OF APPEALS, NATIONAL APPELLATE BOARD,
Represented by its CHAIRMAN FEDERICO S. COMANDANTE and MEMBERS, ATTYS. ROBERTO T.
AGAGON and ADELAIDA T. AGUILOS of the NATIONAL POLICE COMMISSION, RAUL S. IMPERIAL,
Police Chief, Philippine National Police and ESPIE S / L CATOLICO, Respondents.
DECISION
TINGA, J.:
This petition assails the Resolution1 dated 10 January 1997 of the Court of Appeals which affirmed the
Decision2 dated 25 October 1993 and the Resolution3 dated 27 December 1993 of National Appellate Board
(Board), Third Division, National Police Commission (NAPOLCOM). The Board’s ruling in turn, which likewise
affirmed the Decision4 dated 31 October 1992 of Acting PNP Chief and Police Deputy Director General
dismissing PO3 Felino Quiambao from the police service.
The operative facts of the case follow:
On 22 December 1990, at around 8:00 in the evening, Espie Catolico (Catolico) was walking along Capulong
Street in Tondo, Manila, inquiring as to the whereabouts of her housemaid Gynalin Garais who left the house
the day before. After having asked her neighbors and bystanders to no avail, an old woman told her that a
certain policeman was looking for her as her housemaid was in his custody. She went to the area as directed
by the old woman but there she was allegedly accosted by petitioner, PO3 Felino Quiambao, a member of the
Philippine National Police (PNP), Western Police District Command, and five (5) other persons. Quiambao
and his companions forcibly took Catolico’s handbag and carried away its contents consisting of precious
assorted merchandise, jewelry and other personal items worth approximately Nine Thousand Pesos
(P9,000.00). Thereafter, petitioner forcibly herded Catolico to his owner-type jeep and brought her to the dimly
lit portion of North Harbor and, while thereat, he slapped her on the face several times and warned her not to
look anymore for her housemaid.5
In view of the incident, Catolico filed a sworn statement on 24 June 1991 with the PNP Inspectorate Division,
accusing petitioner and six (6) others, with robbery-holdup and mauling committed on 22 December
1990.6 The complaint was corroborated by Grace Commendador who witnessed the actual incident and
confirmed the statement of Catolico.7
On 22 August 1991, Catolico filed another administrative complaint with the Office of the Hearing Officer at
NAPOLCOM, Western Police District, Manila, charging petitioner with grave misconduct for the same incident
which occurred on 22 December 1990.8 An investigation was conducted on this administrative charge by the
Office of the Hearing Officer of NAPOLCOM. On 30 March 1993, the case was forwarded to the City of
Manila’s People’s Law Enforcement Board (PLEB) for adjudication.9
The PNP Inspectorate Division likewise conducted an investigation on the charges filed. On 31 October 1992,
the Summary Dismissal Hearing Officer (SDHO) recommended the dismissal of petitioner. This
recommendation was approved by Acting PNP Chief and Police Deputy Director General, Raul S. Imperial
(Acting PNP Chief).10
Petitioner appealed the 31 October 1992 resolution to the National Appellate Board (NAB) of the NAPOLCOM.
On 25 October 1993, the Third Division of the NAB, rendered a decision affirming the dismissal of petitioner
from police service.11 The motion for reconsideration filed by petitioner was denied in a Resolution dated 27
December 1993.12 But it was only on 23 September 1996 when petitioner received a certified xerox copy of
the Resolution of the NAB denying his petition for reconsideration.13
On 7 October 1996, petitioner filed a petition for review with the Court of Appeals. 14 On 10 January 1997, the
appellate court dismissed the petition for review for lack of merit.
The appellate court ruled that the petition did not state all the specific material dates showing that it was filed
within the reglementary period provided by law as it failed to state the date when petitioner received a copy of
the Resolution of NAB dated 27 December 1993, denying his motion for reconsideration of NAB’s decision
dated 25 October 1993. It found out that NAB’s decision dated 25 October 1993 was received by petitioner on
22 November 1993, and on 2 December 1993, he filed his motion for reconsideration. The said motion,
however, was denied on 27 December 1993, but according to the appellate court, petitioner did not disclose
the date when he received such denial. The fifteen-day reglementary period for filing a petition for review with
the Court of Appeals started to run from such date.15
Further, the appellate court ruled that the issue of which administrative disciplinary authority had jurisdiction
over the case was raised by petitioner only for the first time before it. He did not raise it before the SDHO nor
before the NAB. More importantly, it found that the PNP Inspectorate Division had original, exclusive and
summary jurisdiction over the instant case, and that NAB did not commit any reversible error in deciding the
appealed case without a priori pronouncement as to which among the disciplinary authorities under Republic
Act No. 6975 had jurisdiction over the case. 16 It also added that NAB’s not having all the records requested by
petitioner after it had rendered its decision did not necessarily mean that it did not have such documents at the
time it rendered its decision.17 Petitioner’s claim was further belied by the fact that Catolico was able to obtain
certified true copies of the relevant documents which the PNP Chief transmitted to the NAPOLCOM.
Additionally, the appellate court found that a perusal of the annexes to the comment of Catolico would readily
show that NAB resolved petitioner’s case based on substantial evidence appearing on the record before it. 18 It
observed that petitioner’s claim that his case was decided on the basis of an incomplete record was merely an
afterthought. Said defense was not raised by petitioner in his motion for reconsideration of NAB’s decision
dated 25 October 1993.19 Likewise, petitioner was not denied due process as he was afforded reasonable
opportunity to be heard and to submit his evidence before the SDHO and to appeal to NAB the decision of the
Acting PNP Chief dismissing him from the police service, the Court of Appeals ruled.20
On 27 January 1997, petitioner filed a Motion for Extension of Time to File Motion for
Reconsideration followed by the filing of his Motion for Reconsideration on 17 February 1997. On the same
day, the appellate court issued a Resolution denying petitioner’s motion for extension of time. On 5 March
1997, it issued a resolution stating that the Motion for Reconsideration was merely "NOTED,"
the Resolution dated 10 January 1997 being already final.21 Hence, the instant judicial recourse.
The primordial thrust of the petition seeks the reversal of the decisions and resolutions of Acting PNP Chief,
the NAB and the Court of Appeals, all upholding the validity of the dismissal of petitioner from police service,
and his corresponding reinstatement in the police service.
Petitioner argues that the appellate court erred and acted without or in excess of jurisdiction and/or with grave
abuse of discretion in holding that the petition is not meritorious. 22 He specifically assigns the following as
errors which need to be rectified, to wit: (1) that the appellate court ruled that petition did not state the date
when petitioner received a copy of the Resolution of NAB dated 27 December 1993 to determine if it was filed
within the reglementary period;23 (2) that the appellate court sustained the findings of the Acting PNP Chief
and the NAB without first resolving and/or giving a reason why it was the Acting PNP Chief and neither the
NAPOLCOM Hearing Officer nor the PLEB that had the power to hear and decide the case; 24 (3) that the
appellate court sustained, through misapprehension of facts and/or contrary to evidence, the decision of NAB
which was not based on the complete records of the case; 25 (4) that the appellate court ruled that the petition
was not meritorious and sustained the findings of the Acting PNP Chief and the NAB although such findings
were arrived at without a hearing and absent substantial evidence;26 (5) that the appellate court’s denial of the
motion for reconsideration was based on purely technical considerations; 27 and (6) that the appellate court had
been passive to Catolico’s surreptitious introduction into the records of the case evidentiary documents of
which petitioner was not furnished and to the latter’s prejudice.28
The petition is not imbued with merit.
Readily glaring upon examination of the petition filed by petitioner is its title "Petition for Review
on Certiorari."29 The title would immediately lead us to conclude that the petition is primarily anchored on Rule
45 of the 1997 Revised Rules of Civil Procedure. Under this mode of appeal, only questions of law may be
entertained by this Court and factual issues raised are beyond the ambit of this review. Yet, the issues raised
by petitioner in the petition are fundamentally factual in nature which are inappropriate for resolution via the
mode of review he availed of.
However, a perusal of issues in the petition would indicate that the petition is actually anchored on Rule 65 as
the issues principally sought to assail the resolution rendered by the appellate court on the ground of grave
abuse of discretion amounting to lack or excess of jurisdiction.30
Nonetheless, even assuming that the petition was brought under Rule 65, the petition would still not lie as the
implausibility of the grounds on which the petition rests are convincingly manifest and the grave abuse of
discretion amounting to lack or excess of jurisdiction as the core of this mode of review is strikingly wanting.
Grave abuse of discretion means such capricious and whimsical exercise of judgment which is equivalent to
an excess, or a lack of jurisdiction, and the abuse of discretion must be so patent and gross as to amount to
an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law as where the power is exercised in an arbitrary and despotic manner by reason of
passion or hostility.31 In certiorari proceedings under Rule 65, questions of fact are not generally permitted, the
inquiry being limited essentially to whether or not the respondent tribunal had acted without or in excess of its
jurisdiction or with grave abuse of discretion. 32 These grounds under Rule 65 are not attendant in the instant
case. Even if we take this case as so exceptional as to permit a factual review, the petition at bar fails to
persuade us to rule in favor of petitioner.
Petitioner contends that the appellate court acted with grave abuse of discretion amounting to lack or excess
of jurisdiction in holding that the petition was not meritorious since the petition filed with the appellate court did
not state the date when petitioner received a copy of the Resolution of NAB dated 27 December 1993 to
determine if the petition was indeed filed within the reglementary period. There is reason basis for such
contention.
The petition with the appellate court by petitioner substantially complied with Revised Administrative Circular
No. 1-9533. The pertinent portion of the circular reads,
 SECTION 6. Contents of the petition. – The petition for review shall (a) state the full names of the
parties to the case, without impleading the court or agencies either as petitioners or respondents; (b)
contain a concise statement of the facts and issues involved and the grounds relied upon for the
review; (c) be accompanied by a clearly legible duplicate original or a certified true copy of the award,
judgment, final order or resolution appealed from, together with certified true copies of such material
portions of the record as are referred to therein and other supporting papers; and (d) contain a sworn
certification against forum shopping as provided in Revised Circular No. 28-91. The petition shall
state the specific material dates showing that it was filed within the period fixed herein. 34
The records reveal that the petition filed with the Court of Appeals by petitioner provides the following,
18. On December 27, 1993, respondent National Appellate Board rendered its Resolution denying
the motion in this manner:
WHEREFORE, finding no merit on this instant petition, the same is hereby denied.
A certified xerox copy thereof, duly RECEIVED BY PETITIONER ON SEPTEMBER 23, 1996 is
hereto attached as ANNEX "M."35
A reading of the foregoing allegation, however, disclosed the fact that on 27 December 1993, NAB rendered a
resolution denying petitioner’s motion for reconsideration. Although it would seem anomalous as it is unnatural
that the purported resolution was received only by petitioner on 23 September 1996, we are inclined to sustain
petitioner’s assertion for the same is supported by the certified xerox copy of the resolution36 and the evidence
is bereft of any showing that will warrant a contrary conclusion. Thus, the aforecited allegation substantially
complied with the requirements under Section 6. The appellate court believed that petitioner had already been
served with a copy of the resolution prior to 23 September 1996.37 Such a conclusion, however, is bereft of any
evidentiary basis and, thus, has no leg to stand on. It is noteworthy that the date when petitioner received
NAB’s resolution denying his motion for reconsideration is material in determining when the fifteen (15)-day
reglementary period for filing a petition for review with the Court of Appeals starts to run.38
The failure to specifically state in the petition on material dates such as the date when the resolution or order
denying a motion for reconsideration was received is a ground for dismissal in accordance with Section 7 of
the administrative circular and Rule 43.39 But the scenario is not present in the case at bar for the aforecited
paragraph 18 of the petition filed with the appellate court reflected the date when petitioner actually received
the resolution denying his motion for reconsideration, which is 23 September 1996. Procedural rules must be
liberally interpreted and applied so as not to frustrate substantial justice that this Court seeks to achieve.
Now, on substantial issues rather than on mere technicality. The pivotal questions posed in this petition are
whether the Acting Chief of the PNP had authority to conduct summary dismissal proceedings over members
of the PNP and whether the summary dismissal of petitioner was sufficiently established by the evidence on
record.
Republic Act (R.A.) No. 6975 or the Department of the Interior and Local Government Act of 1990, which took
effect on 1 January 1991, defines the structural components, powers and functions of the PNP as the citizens’
guardian of peace and order and enforcer of the law. The statute likewise delineates the procedural framework
in pursuing administrative complaints against erring members of the police organization. Section 41 of the law
enumerates the authorities to which a complaint against an erring member of the PNP may be filed, thus;
Section 41. (a) Citizen’s Complaints. – Any complaint by an individual person against any member of
the PNP shall be brought before the following:
(1) Chiefs of police, where the offense is punishable by withholding of privileges, restriction to
specified limits, suspension or forfeiture of salary, or any combination thereof, for a period not
exceeding fifteen (15) days;
(2) Mayors of cities or municipalities, where the offense is punishable by withholding of privileges,
restriction to specified limits, suspension or forfeiture of salary, or any combination thereof, for a
period of not less than sixteen (16) days but not exceeding thirty (30) days;
(3) People’s Law Enforcement Board, as created under Section 43 hereof, where the offense is
punishable by withholding of privileges, restriction to specified limits, suspension or forfeiture of
salary, or any combination thereof, for a period exceeding thirty (30) days; or by dismissal. . . .
(Emphasis added)40
It is readily apparent that a complaint against a PNP member which would warrant dismissal from service is
within the jurisdiction of the PLEB. However, Section 41 should be read in conjunction with Section 42 of the
same statute which reads, thus:
Sec. 42. Summary Dismissal Powers of the PNP Chief and Regional Directors. - The Chief of the
PNP and regional directors, after due notice and summary hearings, may immediately remove or
dismiss any respondent PNP member in any of the following cases:
(a) When the charge is serious and the evidence of guilt is strong;
(b) When the respondent is a recidivist or has been repeatedly charged and there are reasonable
grounds to believe that he is guilty of the charges; and
(c) When the respondent is guilty of conduct unbecoming of a police officer. (Emphasis ours)
Evidently, the PNP Chief and regional directors are vested with the power to summarily dismiss erring PNP
members if any of the causes for summary dismissal enumerated in Section 42 is attendant. Thus, the power
to dismiss PNP members is not only the prerogative of PLEB but concurrently exercised by the PNP Chief and
regional directors. This shared power is likewise evident in Section 45.
SEC. 45. Finality of Disciplinary Action. – The disciplinary action imposed upon a member of the PNP
shall be final and executory: Provided, That a disciplinary action imposed by the regional
director or by the PLEB involving demotion or dismissal from the service may be appealed to
the regional appellate board within ten (10) days from receipt of the copy of the notice of decision:
Provided, further, That the disciplinary action imposed by the Chief of the PNP involving
 demotion or dismissal may be appealed to the National Appellate Board within ten (10) days
from receipt thereof: Provided, furthermore, That the regional or National Appellate Board, as the
case may be, shall decide the appeal within sixty (60) days from receipt of the notice of
appeal: Provided, finally, That failure of the regional appellate board to act on the appeal within said
period shall render the decision final and executory without prejudice, however, to the filing of an
appeal by either party with the Secretary. (Emphasis ours)
Once a complaint is filed with any of the disciplining authorities under R.A. No. 6975, the latter shall acquire
exclusive original jurisdiction over the case although other disciplining authority has concurrent jurisdiction
over the case. Paragraph (c) of Section 41 explicitly declares this point.
(c) Exclusive Jurisdiction – A complaint or a charge filed against a PNP member shall be heard
and decided exclusively by the disciplining authority who has acquired original jurisdiction
over the case and notwithstanding the existence of concurrent jurisdiction as regards the
offense; Provided, That offenses which carry higher penalties referred to a disciplinary authority shall
be referred to the appropriate authority which has jurisdiction over the offense. (Emphasis ours)
Clearly, the PLEB and the PNP Chief and regional directors have concurrent jurisdiction over administrative
cases filed against members of the PNP which may warrant dismissal from service.
This Court in Summary Dismissal Board and the Regional Appellate Board, PNP, Region VI, Iloilo City v.
Torcita41 recognized the authority of both the Summary Dismissal Board and the Regional Appellate Board of
the PNP, Region VI, Iloilo City, to act on twelve (12) administrative complaints filed against C/Insp. Lazaro
Torcita, even though the controversy occurred in 1994, after the effectivity of R.A. No. 6975. The Court further
declared that R.A. No. 6975 defines the summary dismissal powers of the PNP Chief and regional directors,
among others in cases, "where the respondent is guilty of conduct unbecoming of a police officer."
Memorandum Circular No. 92-006 prescribes the rules and regulations in the conduct of summary dismissal
proceedings against erring PNP members and defines conduct unbecoming of a police officer under Section
3(c), Rule II, as follows:
Conduct unbecoming of a police officer refers to any behavior or action of a PNP member,
irrespective of rank, done in his official capacity, which, in dishonoring or otherwise disgracing himself
as a PNP member, seriously compromise his character and standing as a gentleman in such a
manner as to indicate his vitiated or corrupt state of moral character; it may also refer to acts or
behavior of any PNP member in an unofficial or private capacity which, in dishonoring or disgracing
himself personally as a gentleman, seriously compromises his position as a PNP member and
exhibits himself as morally unworthy to remain as a member of the organization.42
The same Memorandum Circular also defines the phrase "serious charge" as a ground for summary dismissal
of PNP members. This includes charges for commission of heinous crimes and those committed by
organized/syndicated crime groups wherein PNP members are involved, gunrunning, illegal logging, robbery,
kidnapping for ransom, white slave trade, illegal recruitment, carnapping, smuggling, piracy, drug trafficking,
falsification of land title and other government forms, large scale swindling, film piracy, counterfeiting, and
bank frauds. Clearly, the robbery-holdup and mauling incident which occurred on 22 December 1990 fall
under the summary dismissal power of PNP Chief and regional directors.
In the case at bar, the complaint for grave misconduct against petitioner was first filed by Catolico before the
PNP Inspectorate Division on 24 June 1991. However, another case was filed by Catolico with the Office of
the Hearing Officer, NAPOLCOM, WPD, on 22 August 1991. The charges filed with the PNP Inspectorate
Division were investigated, and on 31 October 1992, the SDHO recommended the dismissal of petitioner
which was approved by the Acting PNP Chief. Petitioner appealed the case to the NAB which affirmed the
decision of the Acting PNP Chief. The motion for reconsideration was also denied. Thus, in accordance with
paragraph (c) of Section 41, the PNP Inspectorate Division had acquired exclusive original jurisdiction over the
complaint of Catolico to the exclusion of other investigating body. It is as if the second complaint filed by
Catolico with the Office of the Hearing Officer, NAPOLCOM, WPD, had not been filed.
Even assuming ex gratia argumenti that the Acting PNP Chief and the NAB were bereft of jurisdiction to rule
on the complaint filed by Catolico, petitioner, at the earliest opportunity, neither raised the issue of lack of
jurisdiction before the PNP Inspectorate Division nor with the NAB but only before the appellate
court.43 Despite the existence of a jurisprudential rule44 that jurisdictional question may be raised at any stage
of the proceedings, an equitable exceptional rule has also been laid down by this Court bars a party from
raising jurisdictional question on ground of laches or estoppel.45 Although the lack of jurisdiction of a court may
be raised at any stage of the action, a party may be estopped from raising such questions if he has actively
taken part in the very proceedings which he questions, belatedly objecting to the court’s jurisdiction in the
event that the judgment or order subsequently rendered is adverse to him.46
Petitioner also argues that the appellate court erred in affirming the findings of the Acting PNP Chief and the
NAB, which was arrived at without hearing and substantial evidence. We are not persuaded.
Summary dismissal proceedings are governed by specific requirements of notification of the charges together
with copies of affidavits and other attachments supporting the complaints, and the filing of an answer, together
with supporting documents. It is true that consistent with its summary nature, the duration of the hearing is
limited, and the manner of conducting the hearing is summary, in that sworn statements may take the place of
oral testimonies of witnesses, cross-examination is confined only to material and relevant matters, and
prolonged arguments and dilatory proceedings shall not be entertained.47
Notably, the recommendation of the SDHO was approved by the Acting PNP Chief whose decision was
affirmed by the NAB. The findings of the NAB was also affirmed by the Court of Appeals. The unanimity in
their conclusions cannot just be disregarded and their factual determinations are conclusive upon this Court
for the records show that petitioner was afforded reasonable opportunity to defend his side, as he filed position
papers to substantiate his defense and arguments and even filed motions for reconsideration to set aside
adverse decisions rendered against him. This opportunity to defend himself was more than sufficient to
comply with due process requirements in administrative proceedings
Well-entrenched is the rule that courts will not interfere in matters which are addressed to the sound discretion
of the government agency entrusted with the regulation of activities coming under the special and technical
training and knowledge of such agency. Administrative agencies are given a wide latitude in the evaluation of
evidence and in the exercise of their adjudicative functions, latitude which includes the authority to take judicial
notice of facts within their special competence.48
The instant case filed by Catolico is an administrative case for grave misconduct against petitioner for the
alleged robbery-holdup and mauling incident that took place on 22 December 1990. In resolving administrative
cases, conduct of full-blown trial is not indispensable to dispense justice to the parties. The requirement of
notice and hearing does not connote full adversarial proceedings. 49 Submission of position papers may be
sufficient for as long as the parties thereto are given the opportunity to be heard. In administrative
proceedings, the essence of due process is simply an opportunity to be heard, or an opportunity to explain
one’s side or opportunity to seek a reconsideration of the action or ruling complained of.50 This constitutional
mandate is deemed satisfied if a person is granted an opportunity to seek reconsideration of an action or a
ruling.51 It does not require trial-type proceedings similar to those in the courts of justice. Where opportunity to
be heard either through oral arguments or through pleadings is accorded, there is no denial of procedural due
process.52
In administrative proceedings, only substantial evidence or that amount of relevant evidence that a reasonable
mind might accept as adequate to support a conclusion is required.53 Thus, findings of fact of quasi-judicial
agencies are generally accorded respect and even finality by the Supreme Court, if supported by substantial
evidence, in recognition of their expertise on the specific matters under their consideration.54 Thus, factual
determinations made by the SDHO and the NAB as affirmed by the Court of Appeals are undoubtedly beyond
review and conclusive upon this Court, they being triers of facts. The congruence in their conclusion
forecloses any possibility of reversible error or misappreciation of facts. Such being the case, we cannot but
affirm their common conclusion as petitioner failed to advance substantial and convincing evidence and
arguments that will merit the reversal of prior decisions on the case.
Finally, petitioner also argues that the appellate court erred in being passive to Catolico’s surreptitious
introduction into the records of the case evidentiary documents of which petitioner was not furnished and to
the latter’s prejudice. Sad to say, the matter is a factual one which is outside the ambit of this mode of review.
Besides, this issue was not even raised in the motion for reconsideration filed by petitioner with the Court of
Appeals.55
WHEREFORE, foregoing premises considered, the Petition is hereby DISMISSED and the Decision of the
Court of Appeals dated 10 January 1997 AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 170626             March 3, 2008
THE SANGGUNIANG BARANGAY OF BARANGAY DON MARIANO MARCOS, MUNICIPALITY OF
BAYOMBONG PROVINCE OF NUEVA VISCAYA represented by BARANGAY KAGAWAD JOSE CENEN
SANTOS, MARIO BACUD, WALTER FRANCISCO, ROSITA SEBASTIAN, LAURETA CABAUATAN,
CECILIA ALINDAYU and MELY SIMANGAN, petitioners, vs. PUNONG BARANGAY SEVERINO
MARTINEZ, respondent.
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Orders dated 20
October 20051 and 30 November 20052 of the Regional Trial Court (trial court), Branch 27, of Bayombong,
Nueva Vizcaya, in Special Civil Action No. 6727. In its assailed Orders, the trial court ruled that the
Sangguniang Bayan of Bayombong, Neuva Vizcaya (Sangguniang Bayan), exceeded its jurisdiction when it
imposed upon respondent Severino Martinez the administrative penalty of removal from office.
Petitioner Sangguniang Barangay is the legislative body of Barangay Don Mariano Marcos, Bayombong,
Nueva Vizcaya, a local government unit created, organized and existing as such under pertinent laws of the
Republic of the Philippines. Respondent Martinez is the incumbent Punong Barangay of the said local
government unit.3
On 5 November 2004, Martinez was administratively charged with Dishonesty and Graft and Corruption by
petitioner through the filing of a verified complaint before the Sangguniang Bayan as the disciplining authority
over elective barangay officials pursuant to Section 614 of Rep. Act No. 7160, otherwise known as the Local
Government Code. Petitioner filed with the Sangguniang Bayan an Amended Administrative Complaint
against Martinez on 6 December 2004 for Dishonesty, Misconduct in Office and Violation of the Anti-Graft and
Corrupt Practices Act.5 Petitioner alleged that Martinez committed the following acts:
1. Failure to submit and fully remit to the Barangay Treasurer the income of their solid waste
management project since 2001 particularly the sale of fertilizer derived from composting.
2. Failure to submit/remit to the barangay treasurer the sale of recyclable materials taken from
garbage collection.
3. Using the garbage truck for other purposes like hauling sand and gravel for private persons without
monetary benefit to the barangay because no income from this source appears in the year end report
even if payments were collected x x x.
4. Using/spending barangay funds for repair, gasoline, lubricants, wheels and other spare parts of the
garbage truck instead of using the money or income of said truck from the garbage fees collected as
income from its Sold Waste Management Project. x x x.
5. Unliquidated traveling expenses for Seminar/Lakbay-Aral in 2003 because although a cash
advance was made by the respondent for the said purpose, he, however, did not attend said seminar
because on the dates when he was supposed to be on seminar they saw him in the barangay. x x x.
6. That several attempts to discuss said problem during sessions were all in vain because
respondent declined to discuss it and would adjourn the session.x x x.6
Upon his failure to file an Answer to the Amended Administrative Complaint dated 6 December 2004, Martinez
was declared by the Sangguniang Bayan as in default. Pending the administrative proceedings, Martinez was
placed under preventive suspension for 60 days or until 8 August 2005.7
On 28 July 2005, the Sangguniang Bayan rendered its Decision which imposed upon Martinez the penalty of
removal from office.8
The Decision dated 28 July 2005 was conveyed to the Municipal Mayor of Bayombong, Nueva Ecija, Severino
Bagasao, for its implementation. On 3 August 2005, Municial Mayor Bagasao issued a Memorandum, wherein
he stated that the Sanggunaing Bayan is not empowered to order Martinez’s removal from service. However,
the Decision remains valid until reversed and must be executed by him. For the meantime, he ordered the
indefinite suspension of Martinez since the period of appeal had not yet lapsed.9 The dispositive portion of the
said Memorandum states that:10
The FOREGOING considered come AUGUST 8, 2005, respondent SEVERINO D. MARTINEZ is
hereby directed NOT to ASSUME and DISCHARGE the functions of the Office of the Punong
Barangay of Barangay Don Mariano Marcos, Bayombong, Nueva Vizcaya and for complainant JOSE
CENEN SANTOS to CONTINUE assuming and discharging the functions of the said office in
ACTING CAPACITY pursuant to the provisions of Sections 67 and 68 of Republic Act No. 7160.
On 26 August 2005, Martinez filed a Special Civil Action for Certiorari with a prayer for Temporary Restraining
Order and Preliminary Injunction before the trial court against petitioner, the Sangguniang Bayan and Mayor
Bagasao questioning the validity of the Decision dated 28 July 2005 of the Sangguniang Bayan. This case
was docketed as Special Civil Action No. 6727, which was initially heard by Branch 28, but later raffled to
Branch 27 of the trial court.11
On 20 October 2005, the trial court issued an Order declaring the Decision of the Sangguniang Bayan and the
Memorandum of Mayor Bagasao void. It maintained that the proper courts, and not the petitioner, are
empowered to remove an elective local official from office, in accordance with Section 60 of the Local
Government Code. Thus, the Order of the Sangguniang Bayan removing Martinez from service is void. As a
consequence, Mayor Bagasao cannot prevent Martinez from assuming his office on the basis of a void order.
The trial court further ruled that Martinez properly availed himself of the remedy of Special Civil Action, where
the order assailed was a patent nullity.12
On 10 November 2005, petitioner filed a Motion for Reconsideration13 of the trial court’s Order dated 10
October 2005. The trial court denied the said motion in another Order dated 30 November 2005.14
Hence, the present petition was filed.
Although Martinez’s term as Punong Baranggay expired upon the holding of the 29 October 2007
Synchronized Barangay and Sangguniang Kabataan elections and, thus, rendering this petition moot and
academic, the Court will nevertheless settle a legal question that is capable of repetition yet evading review.15
The pivotal issue in this case is whether or not the Sangguniang Bayan may remove Martinez, an elective
local official, from office. The pertinent legal provisions and cases decided by this Court firmly establish that
the Sanggunaing Bayan is not empowered to do so.
Section 60 of the Local Government Code conferred upon the courts the power to remove elective local
officials from office:
Section 60. Grounds for Disciplinary Actions.—An elective local official may be disciplined,
suspended, or removed from office on any of the following grounds:
x x x x.
An elective local official may be removed from office on the grounds enumerated above by order of
the proper court. (Emphasis provided.)
During the deliberations of the Senate on the Local Government Code, 16 the legislative intent to confine to the
courts, i.e., regional trial courts, the Sandiganbayan and the appellate courts, jurisdiction over cases involving
the removal of elective local officials was evident:
Senator Pimentel. This has been reserved, Mr. President, including the issue of whether or not the
Department Secretary or the Office of the President can suspend or remove an elective official.
Senator Saguisag. For as long as that is open for some later disposition, may I just add the following
thought: It seems to me that instead of identifying only the proper regional trial court or the
Sandiganbayan, and since we know that in the case of a regional trial court, particularly, a
case may be appealed or may be the subject of an injunction, in the framing of this later on, I
would like to suggest that we consider replacing the phrase "PROPER REGIONAL TRIAL
COURT OR THE SANDIGANBAYAN" simply by "COURTS." Kasi po, maaaring sabihin nila na
mali iyong regional trial court o ang Sandiganbayan.
Senator Pimentel. "OR THE PROPER COURT."
Senator Saguisag. "OR THE PROPER COURT."
Senator Pimentel. Thank you. We are willing to accept that now, Mr. President.
Senator Saguisag. It is to be incorporated in the phraseology that we will craft to capture the other
ideas that have been elevated. (Emphasis provided.)
In Salalima v. Guingona, Jr.,17 the Court en banc categorically ruled that the Office of the President is without
any power to remove elected officials, since the power is exclusively vested in the proper courts as expressly
provided for in the last paragraph of Section 60 of the Local Government Code. It further invalidated Article
125, Rule XIX of the Rules and Regulations Implementing the Local Government Code of 1991, which
provided that:
 Article 125. Grounds for Disciplinary Actions. x x x.
x x x x.
(b) An elective local official may be removed from office on the grounds enumerated in paragraph (a)
of this Article by order of the proper court or the disciplining authority whichever first acquires
jurisdiction to the exclusion of the other.
The Court nullified the aforequoted rule since the Oversight Committee that prepared the Rules and
Regulations of the Local Government Code exceeded its authority when it granted to the "disciplining
authority" the power to remove elective officials, a power which the law itself granted only to the proper courts.
Thus, it is clear that under the law, the Sangguniang Bayan is not vested with the power to remove Martinez.
Petitioner contends that administrative cases involving elective barangay officials may be filed with, heard and
decided by the Sangguniang Panlungsod or Sangguniang Bayan concerned, which can, thereafter, impose a
penalty of removal from office. It further claims that the courts are merely tasked with issuing the order of
removal, after the Sangguniang Panlungsod or Sangguniang Bayan finds that a penalty of removal is
warranted.18
The aforementioned position put forward by the petitioner would run counter to the rationale for making the
removal of elective officials an exclusive judicial prerogative. In Pablico v. Villapando,19 the court declared that:
It is beyond cavil, therefore, that the power to remove erring elective local officials from service is
lodged exclusively with the courts. Hence, Article 124 (sic 125)20 (b), Rule XIX, of the Rules and
Regulations Implementing the Local Government Code, insofar as it vests power on the "disciplining
authority" to remove from office erring elective local officials, is void for being repugnant to the last
paragraph of Section 60 of the Local Government Code of 1991. The law on suspension or removal
of elective public officials must be strictly construed and applied, and the authority in whom such
power of suspension or removal is vested must exercise it with utmost good faith, for what is involved
is not just an ordinary public official but one chosen by the people through the exercise of their
constitutional right of suffrage. Their will must not be put to naught by the caprice or
partisanship of the disciplining authority. Where the disciplining authority is given only the power
to suspend and not the power to remove, it should not be permitted to manipulate the law by
usurping the power to remove. (Emphasis supplied.)
The rule which confers to the proper courts the power to remove an elective local official from office is
intended as a check against any capriciousness or partisan activity by the disciplining authority. Vesting the
local legislative body with the power to decide whether or not a local chief executive may be removed from
office, and only relegating to the courts a mandatory duty to implement the decision, would still not free the
resolution of the case from the capriciousness or partisanship of the disciplining authority. Thus, the
petitioner’s interpretation would defeat the clear intent of the law.
Moreover, such an arrangement clearly demotes the courts to nothing more than an implementing arm of the
Sangguniang Panlungsod, or Sangguniang Bayan. This would be an unmistakable breach of the doctrine on
separation of powers, thus placing the courts under the orders of the legislative bodies of local governments.
The courts would be stripped of their power of review, and their discretion in imposing the extreme penalty of
removal from office is thus left to be exercised by political factions which stand to benefit from the removal
from office of the local elective official concerned, the very evil which Congress sought to avoid when it
enacted Section 60 of the Local Government Code.
Congress clearly meant that the removal of an elective local official be done only after a trial before the
appropriate court, where court rules of procedure and evidence can ensure impartiality and fairness and
protect against political maneuverings. Elevating the removal of an elective local official from office from an
administrative case to a court case may be justified by the fact that such removal not only punishes the official
concerned but also, in effect, deprives the electorate of the services of the official for whom they voted.
As the law stands, Section 61 of the Local Government Code provides for the procedure for the filing of an
administrative case against an erring elective barangay official before the Sangguniang Panlungsod or
Sangguniang Bayan. However, the Sangguniang Panlungsod or Sangguniang Bayan cannot order the
removal of an erring elective barangay official from office, as the courts are exclusively vested with this power
under Section 60 of the Local Government Code. Thus, if the acts allegedly committed by the barangay official
are of a grave nature and, if found guilty, would merit the penalty of removal from office, the case should be
filed with the regional trial court. Once the court assumes jurisdiction, it retains jurisdiction over the case even
if it would be subsequently apparent during the trial that a penalty less than removal from office is appropriate.
On the other hand, the most extreme penalty that the Sangguniang Panlungsod or Sangguniang Bayan may
impose on the erring elective barangay official is suspension; if it deems that the removal of the official from
service is warranted, then it can resolve that the proper charges be filed in court.
Petitioner alleged that an interpretation which gives the judiciary the power to remove local elective officials
violates the doctrine of separation of powers. This allegation runs contrary to the 1987 Constitution itself, as
well as jurisprudence.
The 1987 Constitution is explicit in defining the scope of judicial power. It establishes the authority of the
courts to determine in an appropriate action the validity of acts of the political departments. It speaks of judicial
prerogative in terms of duty.21 Paragraph 2, Section 1, Article VIII of the 1987 Constitution, provides that:
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government. (Emphasis provided.)
The doctrine of separation of powers is not absolute in its application; rather, it should be applied in
accordance with the principle of checks and balances. The removal from office of elective officials must not be
tainted with partisan politics and used to defeat the will of the voting public. Congress itself saw it fit to vest
that power in a more impartial tribunal, the court. Furthermore, the local government units are not deprived of
the right to discipline local elective officials; rather, they are prevented from imposing the extreme penalty of
dismissal.
Petitioner questions the Decision dated 20 October 2005 of the trial court for allowing the petition filed before it
as an exception to the doctrine of exhaustion of administrative remedies. If, indeed, the Sangguniang Bayan
had no power to remove Martinez from office, then Martinez should have sought recourse from the
Sangguniang Panlalawigan. This Court upholds the ruling of the trial court.
The doctrine of exhaustion of administrative remedies calls for resort first to the appropriate administrative
authorities in the resolution of a controversy falling under their jurisdiction before the same may be elevated to
the courts of justice for review. Non-observance of the doctrine results in lack of a cause of action, which is
one of the grounds allowed by the Rules of Court for the dismissal of the complaint.22
The doctrine of exhaustion of administrative remedies, which is based on sound public policy and practical
consideration, is not inflexible. There are instances when it may be dispensed with and judicial action may be
validly resorted to immediately. Among these exceptions are: 1) where there is estoppel on the part of the
party invoking the doctrine; 2) where the challenged administrative act is patently illegal, amounting to
lack of jurisdiction; 3) where there is unreasonable delay or official inaction that will irretrievably prejudice
the complainant; 4) where the amount involved is relatively small as to make the rule impractical and
oppressive; 5) where the question raised is purely legal and will ultimately have to be decided by the
courts of justice; 6) where judicial intervention is urgent; 7) where its application may cause great and
irreparable damage; 8) where the controverted acts violate due process; 9) when the issue of non-exhaustion
of administrative remedies has been rendered moot; 10) where there is no other plain, speedy and adequate
remedy; 11) when strong public interest is involved; and 13) in quo warranto proceedings.23
As a general rule, no recourse to courts can be had until all administrative remedies have been exhausted.
However, this rule is not applicable where the challenged administrative act is patently illegal, amounting to
lack of jurisdiction and where the question or questions involved are essentially judicial.
In this case, it is apparent that the Sangguniang Bayan acted beyond its jurisdiction when it issued the
assailed Order dated 28 July 2005 removing Martinez from office. Such act was patently illegal and, therefore,
Martinez was no longer required to avail himself of an administrative appeal in order to annul the said Order of
the Sangguniang Bayan.24 Thus, his direct recourse to regular courts of justice was justified.
In addition, this Court in Castro v. Gloria25 declared that where the case involves only legal questions, the
litigant need not exhaust all administrative remedies before such judicial relief can be sought. The reason
behind providing an exception to the rule on exhaustion of administrative remedies is that issues of law cannot
be resolved with finality by the administrative officer. Appeal to the administrative officer would only be an
exercise in futility. A legal question is properly addressed to a regular court of justice rather than to an
administrative body.26
In the present case, Martinez raised before the trial court the sole issue of whether the Sangguniang Bayan
has jurisdiction over a case involving the removal of a local elective official from office. 27 In Martinez’s petition
before the trial court, only a legal question was raised, one that will ultimately be resolved by the courts.
Hence, appeal to the administrative officer concerned would only be circuitous and, therefore, should no
longer be required before judicial relief can be sought.
IN VIEW OF THE FOREGOING, the instant Petition is DENIED and the assailed Decision of the Bayombong
RTC in Special Civil Action No. 6727 is AFFIRMED.
SO ORDERED.
G.R. No. 100579            June 6, 2001
LEANDRO P. GARCIA, petitioner, vs. THE HONORABLE COURT OF APPEALS, THE PHILIPPINE
COCONUT AUTHORITY GOVERNING BOARD, and JOSEFEL P. GRAJEDA, respondents.
VITUG, J.:
The instant petition is one of the old cases recently re-raffled, pursuant to A.M. No. 00-9-03-SC, dated 27
February 2001, to the herein ponente. The case involves a petition for review of the decision, dated 17
September 1990, of the Court of Appeals in CA-G.R. SP No. 20384, entitled "Philippine Coconut Authority
(PCA), et al., vs. Honorable Pedro Santiago, et al.," setting aside the orders, dated 29 June 1989 and 25
September 1989, of the Regional Trial Court ("RTC") of Quezon City, Branch 101, in Civil Case No. Q-89-
2695 and the subsequent resolution of 16 May 1991 denying petitioner's motion for reconsideration.
On 18 October 1988, the PCA Governing Board (the "Board" for brevity) passed Resolution No. 109-88,
creating an "Investigation Committee" which would look into the complaint made by one Antonio Pua against
petitioner, then administrator of the Philippine Coconut Authority, for supposed irregularities committed by him.
On 07 February 1989, the Board passed its Resolution No. 011-89, amending Resolution No. 109-88, that
changed the composition of the members of the Investigation Committee. 1 On 14 February 1989, further
changes were made on the composition of the Investigation Committee.2
On 28 February 1989, the Investigation Committee, after conducting formal hearings on the charges against
petitioner by complainant Antonio Pua, submitted its findings which, among other things, stated thusly:
"After a cursory perusal of the records on hand and the testimonies of all aforenamed witnesses, this
Board finds:
"1. A prima facie case against respondent Garcia with respect to the first issue. Complainant
Pua presented the original copy of the certification dated July 24, 1987 in favor of
Westmont, the genuineness and due execution of which respondent does not dispute as in
fact said document is being adopted as part of his defense. Photocopy of the same is hereto
attached and made a part hereof as Annex `A'. Director Joaquin Roces likewise presented
to the Committee a photocopy of another certification also dated July 24, 1987 in favor of
Westmont which, as testified to under oath, he secured from the Board of Foreign Trade.
Director Roces further testified that he actually saw the original of this latter document at the
Board of Foreign Trade in Taiwan on 21 February 1989 – the day he had this photocopied;
that this was the very document his Office authenticated on 17 August 1987; that he is
certain that what he saw was the original copy of the authenticated certificate taking into
account the signature of respondent Garcia (of which he is familiar) affixed therein in blue
ink, the seal on the left bottom portion, the heading of PCA with the distinct color of yellow.
Photocopy of the document is hereto attached as part hereof and marked as Annex `B'.
 "2. A prima facie case against respondent Garcia as regards the second issue in view of the
categorical testimony of Mr. Jesus Cabalza that he (Cabalza) and Director Rodriguez met
only on July 27, 1987 or thereafter – thereby negating the claim of respondent Garcia that it
was Director Rodriguez who designated I.Q. as importer on suggestion of Mr. Cabalza when
the two allegedly met in his (Garcia) office on 24 July 1987 – the day the certification in
favor of Westmont was first issued.
"x x x           x x x           x x x
"In view of the foregoing, this Committee recommends:
"1. That formal charges be filed against Administrator Leandro Garcia for dishonesty,
falsification of official document, grave misconduct and violation of RA 3019, Sec. 3e, f and
j.
"2. That respondent Garcia be placed under preventive suspension upon the filing of the
formal charge until such time that the case shall have been terminated and a decision on
the case has become final and executory."3
On 01 March 1989, the PCA, through its then Acting Board Chairman, Apolonio B. Bautista, filed an
administrative complaint, docketed Special PCA Administrative Case No. 01-89, against herein petitioner
Leandro P. Garcia for dishonesty, falsification of official documents, grave misconduct and violation of
Republic Act No. 3019 in connection with his grant of export quota for "fresh young coconuts" or "buko."
The Board, pursuant to its Resolution No. 021-89 of 28 February 1989, placed petitioner under preventive
suspension effective upon receipt, or on 06 March 1989, of notice thereof.
On 08 March 1989, petitioner, through counsel, requested a period of fifteen (15) days from receipt of the
transcript of stenographic notes of the preliminary investigation within which to file his answer. On 30 March
1989, petitioner, through counsel, again requested a further extension of thirty (30) days within which to
submit his answer. Both requests for extension were granted; the grant, however, of the second request
carried the caveat that no further extension would be given.
On 20 April 1989, the Investigation Committee scheduled hearings on the administrative case for 04, 05, 09,
10, 17, 18, 26 May and 01 and 02 June 1989. Petitioner was duly notified of these settings. On 03 May 1989,
petitioner's counsel, Atty. Narciso Tadeo, requested a resetting of the hearings on the ground that he was not
available. On the same date, however, he submitted petitioner's answer. The Investigation Committee granted
Atty. Tadeo's request for postponement, and it reset the hearings to 09, 15, 18, 19, 26 May, then 05 and 06
June 1989.
On 09 May 1989, neither petitioner nor his counsel appeared. The Investigation Committee received, instead,
a letter from petitioner's counsel, through one Asteria Felicen, informing the committee that Atty. Tadeo was
physically indisposed and could not attend that day's hearing. At the scheduled hearing on 15 May 1989, Atty.
Tadeo appeared without petitioner. Again, he moved for the deferment of the proceedings pending resolution
of a motion, which he meanwhile filed, requesting the Board to create a new investigating committee to hear
his case. The request was denied. Atty. Tadeo forthwith left and did not participate in the day's scheduled
hearing. Similarly, at the scheduled hearings on 18 May 1989 and subsequent dates, neither petitioner nor
counsel appeared despite notice.
On 30 May 1989, the Board issued Resolution No. 046-89, the dispositive portions of which read:
"RESOLVED, that consistent with the pertinent provisions of Presidential Decree No. 807, the
recommendation of the Board Investigation Committee that the period of delay in the disposition of
the case resulting from the petitions/requests for extension of time, postponement/cancellation of the
scheduled hearings and related requests filed by the counsel of respondent Administrator Leandro P.
Garcia, shall not be counted in computing the period of preventive suspension, be and is hereby
approved;
"RESOLVED FURTHER, that Administrator Leandro P. Garcia who is under preventive suspension,
shall be advised that his re-assumption of office as Administrator of PCA shall require prior notice of
reinstatement as may be issued by the Governing Board."4
On 07 June 1989, following receipt of the above resolution, petitioner filed with the Regional Trial Court of
Quezon City a petition for certiorari, mandamus and prohibition, with prayer for a writ of preliminary injunction,
docketed Civil Case No. Q-89-2625, wherein petitioner sought to enjoin -
(a) Public respondent Josefel P. Grajeda and his committee from proceeding with the hearing of the
administrative charges against him;
(b) The Board and all persons acting in its behalf from implementing its Resolution No. 046-89; and
(c) The Board and persons acting in its behalf to defer its action/decision on the charges against
petitioner pending hearing on the merits of his petition.
On 09 June 1989, the trial court issued a status quo order enjoining the Board and all persons acting in its
behalf from "implementing its Resolution No. 046-89 extending petitioner's preventive suspension."
On 29 June 1989, after respondents had submitted their opposition and after a hearing on the incidents
relative to petitioner's petition, the trial court issued a writ of preliminary injunction restraining the PCA
Governing Board from implementing its Resolution No. 046-89.
"The decisive question therefore is whether the postponements sought by petitioner before the PCA
Board is devoid of merit and merely intended to delay the proceedings before that body. This
question hinges around the provisions of PD No. 807, Civil Service Law, particularly Sec. 42, which
states that:
"x x x           x x x           x x x
 "The ultimate justice springs from the heart and mind of a judge. It is he who determines from
conflicting evidence what are the facts of a case; what and how the laws are to be interpreted and
applied. Thus, it can not be lightly brushed aside that when a party raises the question of impartiality
of a judge, as in this case the investigating committee headed by respondent Josefel P. Grajeda, that
it only unduly and unnecessarily delays a case.
"Moreover, for the petitioner to continue being suspended after the reglementary 90-day suspension
would tantamount to already penalizing him even when the charges against him are yet being heard.
The constitutional mandate and statutory juris tantum is that a person is presumed innocent until his
guilt is proved."5
Subsequently, petitioner filed a motion, dated 04 July 1989, praying for the creation of a new investigating
committee and that, pending resolution thereof, the Investigation Committee be prevented from conducting
further proceedings.
On 14 July 1989, the trial court issued an order to the following effect:
"After an exhaustive discussion on petitioner's prayer for the immediate issuance of a temporary
restraining order, the Court, in respect to the Investigating Committee of the PCA, will not grant the
same but rather evidence of petitioner will be received on whether a temporary restraining order shall
issue.
"By agreement, the reception of such evidence on the incident is scheduled on July 20, 1989, at 8:30
A.M. Parties are notified of this order in open Court."6
At the scheduled hearing on 20 July 1989, petitioner submitted various documents in support of his motion.
PCA and Josefel P. Grageda submitted their comment thereon on 25 July 1989.
On 26 July 1989, the trial court issued an order enjoining the Investigation Committee from further conducting
investigation "within a period of twenty (20) days from receipt (of the order) and until (after) respondents
(would have been) heard," and setting the reception of respondents' evidence on 03 August 1989 at 8:30 in
the morning.
On 08 August 1989, respondents filed their Submission of Evidence (With Ex-parte Motion to Lift Temporary
Restraining Order).
On 21 August 1989, the Grageda Investigation Committee submitted to the Board its resolution finding
petitioner guilty as charged and so recommended the penalty of forced resignation. Acting thereon, on 25
August 1989, the Board passed Resolution No. 070-89, adopting and approving the Committee's
recommendation and imposing, effective 31 August 1989, the penalty of forced resignation on petitioner.
On 28 August 1989, petitioner filed a supplemental petition with the trial court praying for a writ of preliminary
injunction to stop the Board from implementing Resolution No. 070-89 and, after hearing on the merits, to
annul the resolution of the Investigation Committee of 21 August 1989, as well as PCA Board Resolution No.
070-89, and to order the Board to create a new investigating body to hear the formal charges against him.
Respondents filed their comment on the supplemental petition on 02 September 1989.
On 11 September 1989, the trial court issued a temporary restraining order stopping respondent Board from
implementing its resolution of 21 August 1989 for a period of twenty (20) days from receipt thereof until the
question of whether or not the issue of petitioner's alleged deprivation of due process would have been
resolved. The same order set the reception of respondents' evidence on 19 September 1989. At the
scheduled hearing on 19 September 1989, respondents sought a reconsideration of the court order, on the
ground, among other things, that the resolution sought to be enjoined had, in fact, been already implemented.
On 25 September 1989, the trial court issued an order directing the issuance of a writ of preliminary injunction
restraining the PCA Governing Board from enforcing its Resolution No. 070-89. The Board moved for a
reconsideration of the order, as well as the writ of preliminary injunction of 02 October 1989, which the trial
court denied in its order of 14 December 1989.
Respondents elevated the aforesaid orders to this Court via a petition, docketed G.R. No. 92435,
for certiorari with prayer for a temporary restraining order. In its resolution of 27 March 1990, the Court issued
a temporary restraining order enjoining the implementation of the trial court's questioned orders and referred
the case to respondent Court of Appeals, therein docketed CA-G.R. SP No. 20384, for proper disposition.
On 17 September 1990, the Court of Appeals promulgated a decision, its dispositive portion reading -
"WHEREFORE, the petition is hereby granted, and the assailed Orders of June 29, 1989 and
September 25, 1989 granting the writ of preliminary injunction in favor of respondent Garcia are
hereby SET ASIDE."7
Petitioner moved for reconsideration; the appellate court denied the motion in its resolution of 16 May 1991.
Hence, the instant petition, petitioner submitting that the Court of Appeals committed the following errors, viz:
"1. THE COURT OF APPEALS ERRED IN DECLARING THAT RTC JUDGE PEDRO SANTIAGO
COMMITTED GRAVE ABUSE OF DISCRETION BY HIS ISSUANCE OF THE QUESTIONED
ORDERS;
"2. THE COURT OF APPEALS ERRED IN DISREGARDING RESPONDENT PCA'S VIOLATION OF
ADMINISTRATIVE DUE PROCESS;
"3. THE COURT OF APPEALS ERRED IN NOT CONSIDERING RESPONDENT PCA'S PATENT
ILLEGAL ACTS AS EXCEPTIONS TO THE PRINCIPLE OF EXHAUSTION OF ADMINISTRATIVE
REMEDIES."8
The petition is not meritorious. Particularly, the Court finds no cogent reason for deviating from the rule on the
primacy of administrative jurisdiction.
The records would show that petitioner filed the petition for certiorari, mandamus and prohibition with the trial
court even while the administrative investigation was yet ongoing. Petitioner's immediate recourse to the trial
court was premature and precipitate. From the decision of the PCA Board, once rendered, an administrative
remedy of appeal to the Civil Service Commission would still be available to him.
Under the doctrine of exhaustion of administrative remedies, recourse through court action, cannot prosper
until after all such administrative remedies would have first been exhausted. The doctrine does not warrant a
court to arrogate unto itself the authority to resolve, or interfere in, a controversy the jurisdiction over which is
lodged initially with an administrative body, like the PCA Board and its Investigation Committee, of special
competence.9 The rule is an element of petitioner's right of action, and it is too significant a mandate to be just
waylaid by the courts.
The Court seconds the appellate court in its observation that the trial court, indeed, gravely abused its
discretion in issuing its assailed orders. Thus:
"The records show that on July 26, 1989, the court issued a temporary restraining order restraining
Grajeda and his committee from further conducting an investigation of the petitioner. The temporary
restraining order was good for 20 days. On August 21, 1989, respondent Grajeda and his committee
finalized their resolution in Special Case No. 01-89, finding petitioner guilty of the charges filed
against him; the committee's recommendation was approved by the Board on August 25, 1989. The
petitioner sought a temporary restraining order to enjoin the respondents from implementing the said
Board Resolution, which was granted by the court in its order dated September 11, 1989, which also
set for September 19, 1989, the reception of respondents' evidence or explanation why a preliminary
injunction should not issue. The court directed the issuance of a writ of preliminary injunction in its
order dated September 25, 1989, wherein respondent judge stated:
"`The question before this Court is whether due process was violated by respondents in the
course of arriving at their resolution. The power of the Court on this question is explicit in
Art. VIII, Sec. 1 of the Constitution that, `Judicial power includes whether or not these has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government.'
`The factual synopsis of the incidents are: On July 26, 1989 the Court issued a TRO,
`restraining the respondent Josefel P. Grajeda and his Investigating Committee from further
conducting an investigation of herein petitioner within 20 days from receipt hereof'.
Respondents received this Order on July 25, 1989. The evidence of the respondents was
scheduled for reception on August 3, 1989.
`On August 3, 1989, respondents manifested that their evidence are documentary and they
were given until August 7, 1989 to submit the same and petitioner was given until August
11, 1989 to submit his comment as the 20-day TRO would expire on September 18, 1989.
Respondents submitted their documentary exhibits on August 8, 1989 and mailed the same
to petitioner. What with the mail service, petitioner received respondents' evidence only on
August 21, 1989. There was no more time for the petitioner to comment; there was also no
more time for the Court to resolve and worse, the TRO already expired on September 18,
1989.
`It was within these interregnum periods when the above incident was pending before this
Court that respondent Grajeda and his Investigating Committee issued on August 21, 1989
their resolution finding petitioner guilty of dishonesty, etc. and imposing a penalty of Forced
Resignation and the respondent PCA Board approved said resolution on August 25, 1989.
This is now the subject of petitioner's supplemental Petition.
`There is much to be asked on the question of due process of law on the proceedings in the
investigation conducted by respondent. WAS THE PETITIONER ACCORDED HIS RIGHT
TO CONFRONT HIS WITNESSES; WAS HE ABLE TO PRESENT HIS DEFENSE?
`These were not answered by the respondent. Instead, they claim that their resolution has
already been implemented. The resolution seemed to be hurriedly arrived at. It was done at
a time when the case was still before the Court. Respondents' claim that their resolution was
already implemented cannot defeat the paramount constitutional mandate that due process
should be accorded the petitioner.'
"We agree with the Solicitor-General that the respondent judge acted with grave abuse of discretion
amounting to lack of jurisdiction when he issued a writ of preliminary injunction on September 25,
1989 despite the fact that the temporary restraining order dated July 26, 1989 bearing on the same
subject matter had long become functus oficio.
"The temporary restraining order issued on July 26, 1989, which enjoined the petitioners from
proceeding with the administrative case involving private respondent, had a limited life of twenty days
(Section 5, BP Blg. 224) and automatically expired on August 15, 1989, not September 18, 1989, as
found by the respondent judge. When the Grajeda committee submitted their Resolution to the Board
on August 21, 1989, and the Board approved the same in its Resolution No. 0070-89, dated August
25, 1989, there was no longer any legal restraint from proceeding with the investigation. Accordingly,
the allegation of [respondent] Garcia that the investigating Committee committed grave abuse of
discretion in finalizing and submitting its resolution to the PCA Board while the court's resolution on
the prayer for preliminary injunction against the said Committee was pending is without merit. To say
that the Committee and the Board cannot act despite the lapse of the restraining order and before the
preliminary injunction is heard and granted, is to extend the life of the temporary restraining order
beyond its statutory life.
"The respondent court admits that the merits of the questioned Resolutions of August 21, 1989 and
August 25, 1989 are not in issue, as `the question is within the ambit of respondents' authority and if
petitioner is not in accord therewith, his proper recourse is an appeal before the Civil Service'."10
This Court has also said in a number of cases11 that -
"When an adequate remedy may be had within the Executive Department of the government, but
nevertheless, a litigant fails or refuses to avail himself of the same, the judiciary shall decline to
interfere. This traditional attitude of the courts is based not only on convenience but likewise on
respect: convenience of the party litigants and respect for a coequal office in the government. If a
remedy is available within the administrative machinery, this should be resorted to before resort can
be made to (the) courts."12
Petitioner would insist that the Grageda Investigation Committee defied the restraining order ("TRO") issued
by the trial court when it submitted to the Board on 21 August 1989 its resolution finding petitioner guilty of the
administrative charges and recommending the penalty of forced resignation, later adopted and approved by
the Board in its Resolution No. 070-89 on 25 August 1989. There was no such defiance. The trial court issued
the TRO on 26 July 1989, and it became functus oficio after 15 August 1989. Thus, when the Grageda
Investigation Committee submitted its recommendation to the Board on 21 August 1989, which the latter
adopted and approved on 25 August 1989 in its Resolution No. 070-89, respondents were no longer under
any legal restraint.
The second issue of alleged violation by the PCA of administrative due process must also be dealt with
against petitioner. The factual scenario of the case, heretofore narrated, would indicate that petitioner was
afforded ample opportunity to submit his case at the administrative level. He filed an answer to the
administrative complaint and his refusal to attend the scheduled hearings, despite due notice, was at his own
peril. The essence of due process to him was that opportunity to be heard.13
The Court quotes with approval the ruling of the Court of Appeals, rejecting petitioner's claim of denial of due
process, viz:
"Exhibits `9' and `10' in particular will show that the committee reluctantly granted Garcia's requests
for postponement in view of his `right to due process and in the interest of substantial justice'. There
is no question that petitioner was accorded the right to confront his witnesses; and that he was able
to present his defense. Respondent Garcia actually filed his answer but he refused to attend the
scheduled hearings on the case despite due notice when the Grajeda Committee refused his request
for the creation of a new committee that would hear his case. As enunciated in Tajonera vs.
Lamaroza (110 SCRA 438), what due process abhors is the absolute lack of an opportunity to be
heard, a vice We cannot impute to the proceedings before the Committee. Respondent was given full
opportunity to be heard on his defense, and his failure to appear before the committee was due to his
own desistance."14
Petitioner imputes violation by the PCA of administrative due process for having conducted a hearing to
determine a "prima facie case" against him when no such hearing is required. The proceedings, he
asseverates, reflects PCA's departure from the administrative procedures set forth in Section 38, paragraph
(b) of P.D. 807, which provides:
"SEC. 38. Procedure in Administrative Cases Against Non-Presidential Appointees. – (a)
Administrative proceedings may be commenced against a subordinate officer or employee by the
head of department or office of equivalent rank, or head of local government, or chiefs of agencies, or
regional directors, or upon sworn, written complaint of any other persons.
"(b) In the case of a complaint filed by any other persons, the complainant shall submit sworn
statements covering his testimony and those of his witnesses together with his documentary
evidence. If on the basis of such papers a prima facie case is found not to exist, the disciplining
authority shall dismiss the case. If a prima facie case exists, he shall notify the respondent in writing,
of the charges against the latter, to which shall be attached copies of the complaint, sworn
statements and other documents submitted, and the respondent shall be allowed not less than
seventy-two hours after receipt of the complaint to answer the charges in writing under oath, together
with supporting sworn statements and documents, in which he shall indicate whether or not he elects
a formal investigation if his answer is not considered satisfactory. If the answer is found satisfactory,
the disciplining authority shall dismiss the case."
Petitioner's stance is patently bereft of merit. There is nothing in the law which prohibits the conduct of a
formal hearing or investigation to ascertain whether or not a "prima facie case indeed exists to warrant the
filing of a formal administrative charges."
Nor could petitioner rightly claim that the Investigation Committee was biased against him. It should be noted
that the composition of the Investigation Committee was repeatedly changed, per PCA Board Resolution No.
039-89, No. 109-88, No. 011-89 and No. 017-89, all because of petitioner's claim of partiality. The PCA
demonstrated its objectivity in proceeding with the investigation by accommodating petitioner to the fullest. An
endless request for the recomposition of the Committee would be to unduly prolong the investigation and the
PCA should not be faulted when it finally denied the subsequent like requests of petitioner.
Parenthetically, evidence submitted by respondents consisted almost exclusively of documentary evidence,
the authenticity of which had not been questioned by petitioner before the trial court or before the Court of
Appeals, nor even at this stage of the proceedings.
Petitioner, lastly, would fault the Court of Appeals for not viewing the instant case as an exception from the
principle of exhaustion of administrative remedies.
As already foretold, the conduct of administrative disciplinary cases are outlined in the Civil Service Law or
P.D. 807 vesting it in the heads of agencies subject to appeal to the Civil Service Commission under the
circumstances outlined in the law. The Court is in complete agreement in its observation that –
"x x x. There is no question that the petitioner Committee and PCA Board acted in the exercise of
their jurisdiction in conducting the administrative investigation of private respondent Garcia. Under
Civil Service Law and Rules exclusive original jurisdiction is lodged in the administrative agency, and
appeal is available to the Commission on Civil Service. The rule is that where a law has delineated
the procedure by which administrative appeal or remedy could be effected, the same should be
followed before recourse to judicial action can be initiated (Pascual vs. Provincial Board, 106 Phil.
466 and several other cases). While there are recognized exceptions to this rule (Cortes, Philippine
Administrative Law, pp. 394-395), We find none of the reasons for excepting this case from the
rule."15
In MPSTA vs. Laguio, Jr.,16 this Court has laid down the proper recourse in cases of this nature; thus:
"x x x. The petitioners' obvious remedy was NOT to halt the administrative proceedings but, on the
contrary, to take part, assert and vindicate their rights therein, see those proceedings through to
judgment and if adjudged guilty, appeal to the Civil Service Commission."17
PCA Board Resolution No. 046-89 has expressed that "the period of delay in the disposition of the case,
resulting from petitioner's requests for extension of time, postponement/cancellation of the scheduled hearings
and related requests filed by counsel of respondent Administrator Leandro P. Garcia, shall not be counted in
computing the period of preventive suspension." This holding accords with the provisions of Section 42 of P.D.
807; thus:

"SEC. 42. 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."

In the case at bar, petitioner cannot deny that he has been able to effectively, if not deliberately, delayed the
resolution of the administrative case against him due to his repeated requests for extension of time to file
answer and his inexcusable refusal to attend the scheduled hearings thereon despite due notice. Petitioner's
invocation that his failure to exhaust administrative remedies should be EXCEPTED by the fact that
irreparable damage would ensue upon his overdue suspension and illegal ouster from office cannot thus be
countenanced.

The observance of the mandate regarding exhaustion of administrative remedies is a sound practice and
policy which should not be ignored. The doctrine insures an orderly procedure and withholds judicial
interference until the administrative process would have been allowed to duly run its course. Even comity
dictates that unless the available administrative remedies have been resorted to and appropriate authorities
given an opportunity to act and correct the errors committed in the administrative forum, judicial recourse must
be held to be inappropriate and impermissible.18

WHEREFORE, the petition for review is DENIED and the decision of the Court of Appeals, dated 17
September 1990 and its resolution of 16 May 1991 are AFFIRMED. No costs.

SO ORDERED.