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G.R. No. L-13428 November 27, 1959

YAO LIT (YAO DIT), petitioner-appellee, vs. HON. A. M. GERALDEZ, ET AL., respondents-appellants.

City Fiscal Edilberto Barot and Asst. Fiscal Eulogio S. Serrano for appellants. Vicente R. Formoso, Jr. for appellee.

MONTEMAYOR, J.:

This is an appeal from the order of the Court of First Instance of Manila, dated December 26, 1957, granting the petition for certiorari with injunction filed with it, and annulling the order of respondent Judge Geraldez of the Municipal Court of Manila, denying the motion to quash the information filed with him against the petitioner, restraining said Judge from further taking cognizance of the case.

The facts in this case are not in dispute. Petitioner Yao Lit (Yao Dit) was found by members of the Manila Police Department on August 15, 1957 at Salazar-Benavides streets in Manila, acting suspiciously, and he was placed under arrest. In his possession, they found a Chinese jueteng list. To establish his identity and other personal circumstances, he was required to produce hi alien certificate of registration, which he failed to do, as a result of which, the Office of the City of Fiscal filed two complaints against him: one for violation of the Gambling Law, Article 195 (c) Revised Penal Code in the Court of First Instance of Manila, and another complaint for violation of Section 7 of Republic Act 562, as amended in the Municipal Court of the same city. On September 25, 1957, the petitioner filed a motion to quash the second complaint in the Municipal Court on the ground that said court had no jurisdiction over the offense charged and that the Fiscal had no authority to file the complaint or information. Acting upon said motion to quash, respondent Judge denied the motion as well as the motion to reconsider his order of denial. Dissatisfied with said orders of the municipal Judge, petitioner filed in the Court of First Instance of Manila, the present case for certiorari with injunction against the respondent Judge and the Assistant City Fiscal, seeking to annul the said orders of the respondent Judge and to restrain the latter from trying the case against him.

Appellants take the position that the City Fiscal, under Section 38 (b) of Republic Act No. 1201, is charged with the prosecution of all crimes and violations of the city ordinances, in the Court of First Instance and in the Municipal Court of the City of Manila; that he is equally charged with the investigation of all crimes and violations of ordinances committed within the said city and that this includes offenses and violations of the law by aliens.

Section 7 of Republic Act No. 562, as amended by Section 3 of Republic Act No. 751, provides as follows:

SEC. 7. Every alien subject to the provisions of this Act shall, on demand of any immigration officials, or a member of the Philippine Constabulary, police, or other peace officer, exhibit his certificate of registration. In the case of an a lie for whom a parent or legal guardian has applied for the registration of such alien, the exhibition of the certificate herein required shall be made by such parent or legal guardian. Every alien, or parent or legal guardian of such alien, violating this section, at the option of the Commissioner of Immigration, be subject to the

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administrative fine not exceeding one hundred pesos, or be prosecuted and upon conviction be punished by a fine not exceeding two hundred pesos, or imprisonment for not more than thirty days, or both.

It is significant to note that the original provisions of Section 7 of Republic Act 562, provided for the punishment of violation of its provisions, namely, failure to exhibit his certificate of registration when demanded by any immigration official or member of the Philippine Constabulary, police, or other peace officer, with a fine not exceeding P200 or imprisonment for not more than thirty days, or both, that is to say, that any such violation may immediately be followed by prosecution by the prosecuting official. However, the amendment as above-reproduced, introduces the intervention of the Commissioner of Immigration in the sense that he has the choice or option to either subject the erring alien to an administrative fine or indorse his prosecution before the court. The logical conclusion is that the prosecuting official may not initiate prosecution until and unless the Commissioner of Immigration has elected and decided upon said prosecution in lieu of an administrative charge and fine. In the well prepared appealed decision of Judge Antonio Canizares, he correctly discusses and resolves this question, and we reproduce with favor the pertinent portion of said decision:

A cursory reading of the original provision (Sec. 7, Republic Act No. 562), shows that a violation thereof subjects the offender to prosecution before the court and if found guilty be punished by a fine not exceeding two hundred pesos, or imprisonment for not more than 30 days, or both, while the amendatory provision (Sec. 3, Rep. Act No. 751) gives the Commissioner of Immigration having first exercised such discretion. This is obviously the intention of Congress, as can be gleaned from a reading of the Explanatory Note to House Bill No. 2138 (Exh. 'H'), which is the bill that seeks to amend the Alien Registration Law of 1950 (Rep. Act No. 562), the Congressional Record of the proceedings and consideration thereof by the Senate (Exhs. "1-2", "I-3"), and also the appropriation of the sum of P50,000 for the employment of additional personnel for the Bureau of Immigration to carry out the provisions of Republic Act No. 751 considering the thousands of violation thereof expected to be investigated by said office. It is also clear that Congress intended to bestow upon the Commissioner of Immigration the duty of investigating and imposing administrative fines upon violators of the provisions of Republic Act No. 751, before their prosecution before the courts, for the reason that said official has better facilities than the prosecuting officials to carry out the provisions of said Act, the former official being the keeper of records pertaining to aliens. Moreover, as indicated in the explanatory note to House Bill No. 2138, the alien violator may have valid reasons for his failure to comply with the law, and for such light misdemeanor he would be more disposed to pay an administrative fine assessed by the Commissioner of Immigration in accordance with the facts of the particular case, rather than undergo the trouble and expense of facing criminal prosecution. It can also be inferred that Congress, in enacting Republic Act No 751, intended that the prosecuting officials give their attention to more serious offenses than to violations of this act, which can properly be handled by the Commissioner of Immigration. Furthermore, the Revised Charter of Manila, which has the nature of a general law, under which the Fiscal maintains that he has the duty and authority to investigate and prosecute all crimes and violations of the city ordinances, cannot prevail over Republic Act No. 751, which is a special law, specially when the Charter of Manila does not contain any provision specifically repealing said special law. Consequently, the prosecuting fiscal, in immediately prosecuting the petitioner in court without first affording the Commissioner of

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Immigration an opportunity to exercise his discretion over the matter involved in the offense charged against the petitioner, clearly acted in excess of his authority.

In view of the foregoing, the decision appealed from is affirmed. The motion to quash should have been granted by respondent Judge. No costs.

Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Reyes, Endencia, Barrera, and Gutierrez David, JJ.,concur.

Cecilio de Villa vs. CA [G.R. No. 87416. April 08, 1991] FACTS: [P]etitioner Cecilio S. de Villa was charged before the Regional Trial Court of the National Capital Judicial Region (Makati, Branch 145) with violation of Batas Pambansa Bilang 22. Petitioner moved to dismiss the Information on the following grounds: (a) Respondent court has no jurisdiction over the offense charged; and (b) That no offense was committed since the check involved was payable in dollars, hence, the obligation created is null and void pursuant to Republic Act No. 529 (An Act to Assure Uniform Value of Philippine Coin and Currency). A petition for certiorari seeking to declare the nullity of the RTC ruling was filed by the petitioner in the Court of Appeals. The Court of Appeals dismissed the petition with costs against the petitioner. A motion for reconsideration of the said decision was filed by the petitioner but the same was denied by the Court of Appeals, thus elevated to the Supreme Court.

ISSUES: Whether or not:

(1) The Regional Trial Court of Makati City has jurisdiction over the case; and, (2) The check in question, drawn against the dollar account of petitioner with a

foreign bank, is covered by the Bouncing Checks Law (B.P. Blg. 22). HELD: YES on both cases. Petition was dismissed for lack of merit.

RATIO: For the first issue: The trial courts jurisdiction over the case, subject of this review, can not be questioned, as Sections 10 and 15(a), Rule 110 of the Rules of Court specifically provide. The information under consideration specifically alleged that the offense was committed in Makati, Metro Manila and therefore, the same is controlling and sufficient to vest jurisdiction upon the Regional Trial Court of Makati. The Court acquires jurisdiction over the case and over the person of the accused upon the filing of a complaint or information in court which initiates a criminal action (Republic vs. Sunga, 162 SCRA 191 [1988]). For the second issue: Exception in the Statute. It is a cardinal principle in statutory construction that where the law does not distinguish courts should not distinguish. Parenthetically, the rule is that where the law does not make any exception, courts may not except something unless compelling reasons exist to justify it (Phil. British Assurance Co., Inc. vs. IAC, 150 SCRA 520 [1987]). The records of the Batasan, Vol. III, unmistakably show that the intention of the lawmakers is to apply the law to whatever currency may be the subject thereof. The discussion on the floor of the then Batasang Pambansa fully sustains this view.

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HON. RICARDO T. GLORIA, in his capacity as Secretary of the Department of Education, Culture, and Sports, petitioner, vs. COURT OF APPEALS, AMPARO A. ABAD, VIRGILIA M. BANDIGAS, ELIZABETH A. SOMEBANG and NICANOR MARGALLO, respondents.

D E C I S I O N

MENDOZA, J.:

This case arose out of the unfortunate strikes and walk-outs staged by public school teachers on different dates in September and October 1990. The illegality of the strikes was declared in our 1991 decision in Manila Public School Teachers Association v. Laguio, Jr.,[1] but many incidents of those strikes are still to be resolved. At issue in this case is the right to back salaries of teachers who were either dismissed or suspended because they did not report for work but who were eventually ordered reinstated because they had not been shown to have taken part in the strike, although reprimanded for being absent without leave.

The facts are as follows:

Private respondents are public school teachers. On various dates in September and October 1990, during the teachers strikes, they did not report for work. For this reason, they were administratively charged with (1) grave misconduct, (2) gross neglect of duty, (3) gross violation of Civil Service Law Rules and Regulations and reasonable office regulations, (4) refusal to perform official duty, (5) gross insubordination, (6) conduct prejudicial to the best interest of the service, and (7) absence without leave (AWOL), and placed under preventive suspension. The investigation was concluded before the lapse of their 90-day suspension and private respondents were found guilty as charged. Respondent Nicanor Margallo was ordered dismissed from the service effective October 29, 1990, while respondents Amparo Abad, Virgilia Bandigas, and Elizabeth Somebang were ordered suspended for six months effective December 4, 1990.[2]

Respondent Margallo appealed to the Merit Systems and Protection Board (MSPB) which found him guilty of conduct prejudicial to the best interest of the service and imposed on him a six-month suspension.[3] The other respondents also appealed to the MSPB, but their appeal was dismissed because of their failure to file their appeal memorandum on time.[4]

On appeal, the Civil Service Commission (CSC) affirmed the decision of the MSPB with respect to Margallo, but found the other three (Abad, Bandigas, and Somebang) guilty only of violation of reasonable office rules and regulations by failing to file applications for leave of absence and, therefore, reduced the penalty imposed on them to reprimand and ordered them reinstated to their former positions.

Respondents filed a petition for certiorari under Rule 65 in this Court. Pursuant to Revised Administrative Circular No. 1-95, the case was referred to the Court of Appeals which, on September 3, 1996, rendered a decision (1) affirming the decision of the CSC with respect to Amparo Abad, Virgilia Bandigas, and Elizabeth Somebang but (2) reversing it insofar as the CSC ordered the suspension of Nicanor Margallo. The

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appellate court found him guilty of violation of reasonable office rules and regulations only and imposed on him the penalty of reprimand.[5]

Private respondents moved for a reconsideration, contending that they should be exonerated of all charges against them and that they be paid salaries during their suspension. In its resolution, dated July 15, 1997, the Court of Appeals, while maintaining its finding that private respondents were guilty of violation of reasonable office rules and regulations for which they should be reprimanded, ruled that private respondents were entitled to the payment of salaries during their suspension beyond ninety (90) days. Accordingly, the appellate court amended the dispositive portion of its decision to read as follows:

WHEREFORE, IN VIEW OF THE FOREGOING, petition is hereby DENIED. CSC Resolution Nos. 93-2302 dated June 24, 1993 and 93-3124 dated August 10, 1993 (In re: Amparo Abad), CSC Resolution Nos. 93-2304 dated June 24, 1993 and 93-3227 dated August 17, 1993 (In re: Virgilia Bandigas) and CSC Resolution Nos. 93-2301 undated and 93-3125 dated August 10, 1993 (In re: Elizabeth Somebang) are hereby AFFIRMED while CSC Resolution Nos. 93-2211 dated June 21, 1993 are hereby MODIFIED finding petitioner Nicanor Margallo guilty of a lesser offense of violation of reasonable office rules and regulations and meting upon him the penalty of reprimand. Respondent DECS is ordered to pay petitioners Amparo Abad, Virgilia Bandigas, Elizabeth Somebang and Nicanor Margallo their salaries, allowances and other benefits during the period of their suspension/dismissal beyond the ninety (90) day preventive suspension. No pronouncement as to costs.[6]

Petitioner Ricardo T. Gloria, then Secretary of Education, Culture, and Sports, moved for a reconsideration insofar as the resolution of the Court of Appeals ordered the payment of private respondents salaries during the period of their appeal.[7] His motion was, however, denied by the appellate court in its resolution of October 6, 1997.[8] Hence, this petition for review on certiorari.

Petitioner contends that the administrative investigation of respondents was concluded within the 90-day period of preventive suspension, implying that the continued suspension of private respondents is due to their appeal, hence, the government should not be held answerable for payment of their salaries. Moreover, petitioner lays so much store by the fact that, under the law, private respondents are considered under preventive suspension during the period of their appeal and, for this reason, are not entitled to the payment of their salaries during their suspension.[9]

Petitioners contentions have no merit.

I. Preventive Suspension and the Right to Compensation in Case of Exoneration

The present Civil Service Law is found in Book V, Title I, Subtitle A of the Administrative Code of 1987 (E.O. 292). So far as pertinent to the questions in this case, the law provides:

SEC. 47. Disciplinary Jurisdiction. -

. . . .

(2) The Secretaries and heads of agencies and instrumentalities, provinces, cities and municipalities shall have jurisdiction to investigate and decide matters involving

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disciplinary action against officers and employees under their jurisdiction. Their decisions shall be final in case the penalty imposed is suspension for not more than thirty days or fine in an amount not exceeding thirty days salary. In case the decision rendered by a bureau or office head is appealable to the Commission, the same may be initially appealed to the department and finally to the Commission and pending appeal, the same shall be executory except when the penalty is removal, in which case the same shall be executory only after confirmation by the Secretary concerned.

. . . .

(4) An appeal shall not stop the decision from being executory, and in case the penalty is suspension or removal, the respondent shall be considered as having been under preventive suspension during the pendency of the appeal in the event he wins an appeal.

SEC. 51. Preventive Suspension. - The proper disciplining authority may preventively suspend any subordinate officer or employee under his authority pending an investigation, if the charge against such officer or employee involves dishonesty, oppression or grave misconduct, or neglect in the performance of duty, or if there are reasons to believe that the respondent is guilty of charges which would warrant his removal from the service.

SEC. 52. Lifting of Preventive Suspension. Pending Administrative Investigation. - When the administrative case against the officer or employee under preventive suspension is not finally decided by the disciplining authority within the period of ninety (90) days after the date of suspension of the respondent who is not a presidential appointee, the respondent shall be automatically reinstated in the service: Provided, That when the delay in the disposition of the case is due to the fault, negligence or petition of the respondent, the period of delay shall not be counted in computing the period of suspension herein provided.

There are thus two kinds of preventive suspension of civil service employees who are charged with offenses punishable by removal or suspension: (1) preventive suspension pending investigation (51) and (2) preventive suspension pending appeal if the penalty imposed by the disciplining authority is suspension or dismissal and, after review, the respondent is exonerated (47(4)).

Preventive suspension pending investigation is not a penalty.[10] It is a measure intended to enable the disciplining authority to investigate charges against respondent by preventing the latter from intimidating or in any way influencing witnesses against him. If the investigation is not finished and a decision is not rendered within that period, the suspension will be lifted and the respondent will automatically be reinstated. If after investigation respondent is found innocent of the charges and is exonerated, he should be reinstated.

A. No Right to Compensation for Preventive Suspension

Pending Investigation

Even if

Employee is Exonerated

Is he entitled to the payment of salaries during the period of suspension? As already stated, the Court of Appeals ordered the DECS to pay private respondents their salaries, allowances, and other benefits beyond the ninety (90) day preventive suspension. In other words, no compensation was due for the period of the preventive

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suspension pending investigation but only for the period of preventive suspension pending appeal in the event the employee is exonerated.

The separate opinion of Justice Panganiban argues that the employee concerned should be paid his salaries after his suspension.

The Civil Service Act of 1959 (R.A. No. 2260) provided for the payment of such salaries in case of exoneration. Sec. 35 read:

Sec. 35. 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 Commissioner of Civil Service within the period of sixty (60) days after the date of suspension of the respondent, the respondent shall be reinstated in the service. If the respondent officer or employee is exonerated, he shall be restored to his position with full pay for the period of suspension.[11]

However, the law was revised in 1975 and the provision on the payment of salaries during suspension was deleted. Sec. 42 of the Civil Service Decree (P.D. No. 807) read:

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.

This provision was reproduced in 52 of the present Civil Service Law. It is noteworthy that the Ombudsman Act of 1989 (R.A. No. 6770) categorically provides that preventive suspension shall be without pay. Sec. 24 reads:

Sec. 24. Preventive Suspension. The Ombudsman or his Deputy may preventively suspend any officer or employee under his authority pending an investigation, if in his judgment the evidence of guilt is strong, and (a) the charge against such officer or employee involves dishonesty, oppression or grave misconduct or neglect in the performance of duty; (b) the charges would warrant removal from the service; or (c) the respondents continued stay in office may prejudice the case filed against him.

The preventive suspension shall continue until the case is terminated by the Office of the Ombudsman but not more than six months, without pay, except when the delay in the disposition of the case by the Office of the Ombudsman is due to the fault, negligence or petition of the respondent, in which case the period of such delay shall not be counted in computing the period of suspension herein provided.

It is clear that the purpose of the amendment is to disallow the payment of salaries for the period of suspension. This conclusion is in accord with the rule of statutory construction that -

As a rule, the amendment by deletion of certain words or phrases in a statute indicates that the legislature intended to change the meaning of the statute, for the presumption is that the legislature would not have made the deletion had the intention been not in effect

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a change in its meaning. The amended statute should accordingly be given a construction different from that previous to its amendment.[12]

The separate opinion of Justice Panganiban pays no heed to the evident legislative intent to deny payment of salaries for the preventive suspension pending investigation.

First, it says that to deny compensation for the period of preventive suspension would be to reverse the course of decisions ordering the payment of salaries for such period. However, the cases[13] cited are based either on the former rule which expressly provided that if the respondent officer or employee is exonerated, he shall be restored to his position with full pay for the period of suspension[14] or that upon subsequent reinstatement of the suspended person or upon his exoneration, if death should render reinstatement impossible, any salary so withheld shall be paid,[15] or on cases which do not really support the proposition advanced.

Second, it is contended that the exoneration of employees who have been preventively suspended is proof that there was no reason at all to suspend them and thus makes their preventive suspension a penalty.

The principle governing entitlement to salary during suspension is cogently stated in Floyd R. Mechems A Treatise on the Law of Public Offices and Officers as follows:

864. Officer not entitled to Salary during Suspension from Office. - An officer who has been lawfully suspended from his office is not entitled to compensation for the period during which he was so suspended, even though it be subsequently determined that the cause for which he was suspended was insufficient. The reason given is that salary and perquisites are the reward of express or implied services, and therefore cannot belong to one who could not lawfully perform such services.[16]

Thus, it is not enough that an employee is exonerated of the charges against him. In addition, his suspension must be unjustified. The case of Bangalisan v. Court of Appeals itself similarly states that payment of salaries corresponding to the period [1] when an employee is not allowed to work may be decreed if he is found innocent of the charges which caused his suspension and [2] when the suspension is unjustified.[17]

The preventive suspension of civil service employees charged with dishonesty, oppression or grave misconduct, or neglect of duty is authorized by the Civil Service Law. It cannot, therefore, be considered unjustified, even if later the charges are dismissed so as to justify the payment of salaries to the employee concerned. It is one of those sacrifices which holding a public office requires for the public good. For this reason, it is limited to ninety (90) days unless the delay in the conclusion of the investigation is due to the employee concerned. After that period, even if the investigation is not finished, the law provides that the employee shall be automatically reinstated.

Third, it is argued in the separate opinion that to deny employees salaries on the frivolous ground that the law does not provide for their payment would be to provide a tool for the oppression of civil servants who, though innocent, may be falsely charged of grave or less grave administrative offenses. Indeed, the possibility of abuse is not an argument against the recognition of the existence of power. As Justice Story aptly put it, It is always a doubtful course, to argue against the use or existence of a power, from the possibility of its abuse. . . . [For] from the very nature of things, the absolute right of decision, in the last resort, must rest somewhere - wherever it may be vested it is susceptible of abuse.[18] It may be added that if and when such abuse occurs, that would

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be the time for the courts to exercise their nay-saying function. Until then, however, the public interest in an upright civil service must be upheld.

Finally, it is argued that even in the private sector, the law provides that employees who are unjustly dismissed are entitled to reinstatement with full pay. But that is because R.A. No. 6715 expressly provides for the payment to such employees of full backwages, inclusive of allowances, and . . . other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.[19] In the case of the public sector, as has been noted, the provision for payment of salaries during the preventive suspension pending investigation has been deleted.

B. Right to Compensation for Preventive Suspension

Pending Appeal

if Employee is

Exonerated

But although we hold that employees who are preventively suspended pending investigation are not entitled to the payment of their salaries even if they are exonerated, we do not agree with the government that they are not entitled to compensation for the period of their suspension pending appeal if eventually they are found innocent.

Preventive suspension pending investigation, as already discussed, is not a penalty but only a means of enabling the disciplining authority to conduct an unhampered investigation. On the other hand, preventive suspension pending appeal is actually punitive although it is in effect subsequently considered illegal if respondent is exonerated and the administrative decision finding him guilty is reversed. Hence, he should be reinstated with full pay for the period of the suspension. Thus, 47(4) states that respondent shall be considered as under preventive suspension during the pendency of the appeal in the event he wins. On the other hand, if his conviction is affirmed, i.e., if he is not exonerated, the period of his suspension becomes part of the final penalty of suspension or dismissal.

It is precisely because respondent is penalized before his sentence is confirmed that he should be paid his salaries in the event he is exonerated. It would be unjust to deprive him of his pay as a result of the immediate execution of the decision against him and continue to do so even after it is shown that he is innocent of the charges for which he was suspended. Indeed, to sustain the governments theory would be to make the administrative decision not only executory but final and executory. The fact is that 47(2) and (4) are similar to the execution of judgment pending appeal under Rule 39, 2 of the Rules of Court. Rule 39, 5 provides that in the event the executed judgment is reversed, there shall be restitution or reparation of damages as equity and justice may require.

Sec. 47 of the present law providing that an administrative decision meting out the penalty of suspension or dismissal shall be immediately executory and that if the respondent appeals he shall be considered as being merely under preventive suspension if eventually he prevails is taken from 37 of the Civil Service Decree of 1975 (P.D. No. 807). There was no similar provision in the Civil Service Act of 1959 (R.A. No. 2260), although under it the Commissioner of Civil Service could order the immediate execution of an administrative decision in the interest of the public service.[20] Nor was there provision for immediate execution of administrative decisions ordering dismissal or suspension in 695 of the Administrative Code of 1917, as amended by C.A. No. 598, 1.[21] Nonetheless, under R.A. No. 2260 the payment of salaries was ordered in cases in which employees were found to be innocent of the charges[22] or their suspension was

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held to be unjustified, because the penalty of suspension or dismissal was executed without a finding by the Civil Service Commissioner that it was necessary in the interest of the public service.[23] On the other hand, payment of back salaries was denied where it was shown that the employee concerned was guilty as charged and the immediate execution of the decision was ordered by the Civil Service Commissioner in the interest of the public service.[24]

Nothing in what has thus far been said is inconsistent with the reason for denying salaries for the period of preventive suspension. We have said that an employee who is exonerated is not entitled to the payment of his salaries because his suspension, being authorized by law, cannot be unjustified. To be entitled to such compensation, the employee must not only be found innocent of the charges but his suspension must likewise be unjustified. But though an employee is considered under preventive suspension during the pendency of his appeal in the event he wins, his suspension is unjustified because what the law authorizes is preventive suspension for a period not exceeding 90 days. Beyond that period the suspension is illegal. Hence, the employee concerned is entitled to reinstatement with full pay. Under existing jurisprudence, such award should not exceed the equivalent of five years pay at the rate last received before the suspension was imposed.[25]

II. Private Respondents Entitled to Back Salaries Although Found Guilty of Violation of

Office Rules and Regulations and Reprimanded

Private respondents were exonerated of all charges against them for acts connected with the teachers strike of September and October 1990. Although they were absent from work, it was not because of the strike. For being absent without leave, they were held liable for violation of reasonable office rules and regulations for which the penalty is a reprimand. Their case thus falls squarely within ruling in Bangalisan, which likewise involved a teacher found guilty of having violated reasonable office rules and regulations. Explaining the grant of salaries during their suspension despite the fact that they were meted out reprimand, this Court stated:

With respect to petitioner Rodolfo Mariano, payment of his backwages is in order. A reading of the resolution of the Civil Service Commission will show that he was exonerated of the charges which formed the basis for his suspension. The Secretary of the DECS charged him with and he was later found guilty of grave misconduct, gross neglect of duty, gross violation of the Civil Service Law, rules and regulations and reasonable office regulations, refusal to perform official duty, gross insubordination, conduct prejudicial to the best interest of the service, and absence without official leave, for his participation in the mass actions on September 18, 20 and 21, 1990. It was his alleged participation in the mass actions that was the basis of his preventive suspension and, later, his dismissal from the service.

However, the Civil Service Commission, in the questioned resolution, made a finding that Mariano was not involved in the mass actions but was absent because he was in Ilocos Sur to attend the wake and interment of his grandmother. Although the CSC imposed upon him the penalty of reprimand, the same was for his violation of reasonable office rules and regulations because he failed to inform the school of his intended absence and neither did he file an application for leave covering such absences.

Under Section 23 of the Rules Implementing Book V of Executive Order No. 292 and other pertinent civil service laws, in violations of reasonable office rules and regulations,

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the first offense is punishable by reprimand. To deny petitioner Mariano his back wages during his suspension would be tantamount to punishing him after his exoneration from the charges which caused his dismissal from the service.[26]

In Jacinto v. Court of Appeals,[27] a public school teacher who was found guilty of violation of reasonable office rules and regulations for having been absent without leave and reprimanded was given back salaries after she was exonerated of the charge of having taken part in the strikes.

Petitioner Secretary of Education contends, however, that respondents Abad, Bandigas, and Somebang signed a letter in which they admitted having taken part in the mass action. This question cannot be raised now. The Civil Service Commission gave no weight to this letter in view of individual letters written by the three citing reasons for their absences, to wit: Abad, because she decided to stay home to correct student papers; Bandigas, because she had to accompany her brother to the Commission on Immigration, and Somebang because of economic reasons. Petitioner did not appeal from this ruling. Hence, he is bound by the factual findings of the CSC and the appellate court.

WHEREFORE, the decision, dated September 3, 1996, as amended by the resolutions, dated July 15, 1997 and October 6, 1997, of the Court of Appeals, is hereby AFFIRMED with the MODIFICATION that the award of salaries to private respondents shall be computed from the time of their dismissal/suspension by the Department of Education, Culture, and Sports until their actual reinstatement, for a period not exceeding five years.

SO ORDERED.

Romero, Bellosillo, Vitug, Kapunan, Quisumbing, Purisima, and Gonzaga-Reyes, JJ., concur.

Davide, C.J., concurs in the result and subject to the modification expressed in the separate opinion of Justice Panganiban.

Panganiban, J., please see separate opinion. Puno, Pardo, Buena, and Ynares-Santiago, join Justice Panganiban's separate

opinion. Melo, J., in the result.

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ENERGY REGULATORY BOARD, petitioner, vs. MANILA ELECTRIC COMPANY, respondent.

[G.R. No. 141369. April 9, 2003]

LAWYERS AGAINST MONOPOLY AND POVERTY (LAMP) consisting of CEFERINO PADUA, Chairman, G. FULTON ACOSTA, GALILEO BRION, ANATALIA BUENAVENTURA, PEDRO CASTILLO, NAPOLEON CORONADO, ROMEO ECHAUZ, FERNANDO GAITE, ALFREDO DE GUZMAN, ROGELIO KARAGDAG, JR., MA. LUZ ARZAGA-MENDOZA, ANSBERTO PAREDES, AQUILINO PIMENTEL

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III, MARIO REYES, EMMANUEL SANTOS, RUDEGELIO TACORDA, members, and ROLANDO ARZAGA, Secretary-General, JUSTICE ABRAHAM SARMIENTO, SENATOR AQUILINO PIMENTEL, JR. and COMMISSIONER BARTOLOME FERNANDEZ, JR., Board of Consultants, and Lawyer GENARO LUALHATI, petitioners, vs. MANILA ELECTRIC COMPANY (MERALCO), respondent.

R E S O L U T I O N

PUNO, J.:

The business and operations of a public utility are imbued with public interest. In a very real sense, a public utility is engaged in public service-- providing basic commodities and services indispensable to the interest of the general public. For this reason, a public utility submits to the regulation of government authorities and surrenders certain business prerogatives, including the amount of rates that may be charged by it. It is the imperative duty of the State to interpose its protective power whenever too much profits become the priority of public utilities.

For resolution is the Motion for Reconsideration filed by respondent Manila Electric Company (MERALCO) on December 5, 2002 from the decision of this Court dated November 15, 2002 reducing MERALCOs rate adjustment in the amount of P0.017 per kilowatthour (kwh) for its billing cycles beginning 1994 and further directing MERALCO to credit the excess average amount of P0.167 per kwh to its customers starting with MERALCOs billing cycles beginning February 1994.[1]

First, we leapfrog through the facts. On December 23, 1993, MERALCO filed with the Energy Regulatory Board (ERB) an application for revised rates, with an average increase of P0.21 per kwh in its distribution charge. On January 28, 1994 the ERB granted a provisional increase ofP0.184 per kwh subject to the condition that in the event the ERB determines that MERALCO is entitled to a lesser increase in rates, all excess amounts collected by MERALCO shall be refunded to its customers or credited in their favor. The Commission on Audit (COA) conducted an examination of the books of accounts and records of MERALCO and thereafter recommended, among others, that: (1) income taxes paid by MERALCO should not be included as part of MERALCOs operating expenses and (2) the net average investment method or the number of months use method should be applied in determining the proportionate value of the properties used by MERALCO during the test year.

In its decision dated February 16, 1998, the ERB adopted the recommendations of the COA and authorized MERALCO to adopt a rate adjustment of P0.017 per kilowatthour (kwh) for its billing cycles beginning 1994. The ERB further directed MERALCO to credit the excess average amount of P0.167 per kwh to its customers starting with MERALCOs billing cycles beginning February 1994. The said ruling of the ERB was affirmed by this Court in its decision dated November 15, 2002.

In its Motion for Reconsideration, respondent MERALCO contends that: (1) the deduction of income tax from revenues allowed for rate determination of public utilities is part of its constitutional right to property; (2) it correctly used the average investment method or the simple average in computing the value of its properties entitled to a return instead of the net average investment method or the number of months use method; and (3) the decision of the ERB ordering the refund of P0.167 per kwh to its customers should not be given retroactive effect.[2]

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The Republic of the Philippines through the ERB, now Energy Regulatory Commission (ERC), represented by the Office of the Solicitor General, filed its Comment on March 7, 2003. Surprisingly, in its Comment, the ERC proffered a divergent view from the Office of the Solicitor General. The ERC submits that income taxes are not operating expenses but are reasonable costs that may be recoverable from the consuming public. While the ERC admits that there is still no categorical determination on whether income tax should indeed be deducted from revenues of a public utility, it agrees with MERALCO that to disallow public utilities from recovering its income tax payments will effectively lower the return on rate base enjoyed by a public utility to 8%. The ERC, however, agrees with this Courts ruling that the use of the net average investment method or the number of months use method is not unreasonable.[3]

The Office of the Solicitor General, under its solemn duty to protect the interests of the people, defended the thesis that income tax payments by a public utility should not be recovered as costs from the consuming public. It contended that: (1) the foreign jurisprudence cited by MERALCO in support of its position is not applicable in this jurisdiction; (2) MERALCO was given a fair rate of return; (3) the COA and the ERB followed the National Accounting and Auditing Manual which expressly disallows the treatment of income tax as operating expense; (4) Executive Order No. 72 does not grant electric utilities the privilege of treating income tax as operating expense; (5) the COA and the ERB have been consistent in not allowing income tax as part of operating expenses; (6) ERB decisions allowing the application of a tax recovery clause are inapropos; (7) allowing MERALCO to treat income tax as an operating expense would set a dangerous precedent; (8) assuming that the disallowance of income tax as operating expense would discourage foreign investors and lenders, the government is not precluded from enacting laws and instituting measures to lure them back; and (9) the findings and conclusions of the ERB carry great weight and should be binding on the courts in the absence of grave abuse of discretion. The Solicitor General agrees with the ERC that the net average investment method is a reasonable method for property valuation. Finally, the Solicitor General argues that the ERB decision may be applied retroactively and the use of a test period to determine the rate base and allowable rates to be collected by a public utility is an accepted practice.[4]

We shall discuss the main issues in seriatim.

I

MERALCO argues that deduction of all kinds of taxes, including income tax, from the gross revenues of a public utility is firmly entrenched in American jurisprudence. It contends that the Public Service Act (Commonwealth Act No. 146) was patterned after Act 2306 of the Philippine Commission, which, in turn, was borrowed from American state public utility laws such as the New Jersey Public Utility Act. Hence, it maintains that American jurisprudence on the inclusion of income taxes as a lawful charge to operating expenses should be controlling. It cites the rule on statutory construction that a statute adopted from a foreign country will be presumed to be adopted with the construction placed upon it by the courts of that country before its adoption.[5]

We are not persuaded. American decisions and authorities are not per se controlling in this jurisdiction. At best, they are persuasive for no court holds a patent on correct decisions. Our laws must be construed in accordance with the intention of our own lawmakers and such intent may be deduced from the language of each law and the context of other local legislation related thereto. More importantly, they must be construed to serve our own public interest which is the be-all and the end-all of all our laws. And it need not be stressed that our public interest is distinct and different from others.

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Rate regulation calls for a careful consideration of the totality of facts and circumstances material to each application for an upward rate revision. Rate regulators should strain to strike a balance between the clashing interests of the public utility and the consuming public and the balance must assure a reasonable rate of return to public utilities without being unreasonable to the consuming public. What is reasonable or unreasonable depends on a calculus of changing circumstances that ebb and flow with time. Yesterday cannot govern today, no more than today can determine tomorrow.

Prescinding from these premises, we reject MERALCOs insistence that the non-inclusion of income tax payments as a legitimate operating expense will deny public utilities a fair return of their investment. This stubborn stance is belied by the report submitted by the COA on the audit conducted on MERALCOs books of accounts and the findings of the ERB.[6]

Upon the instructions of the ERB, the COA conducted an audit of the operations of MERALCO covering the period from February 1, 1994 to January 31, 1995, or the period immediately after the implementation of the provisional rate increase.[7] Hence, amounts culled by the COA from its examination of the books of MERALCO already included the provisional rate increase of P0.184 granted by the ERB.

From the figures submitted by the COA, the ERB was able to determine that MERALCO derived excess revenue during the test year in the amount of P2,448,378,000.[8] This means that during the test year, and after the rates were increased by P0.184, MERALCO earned P2,448,378,000 or 8.15% more than the amount it should have earned at a 12% rate of return on rate base. Accordingly, based on this amount of excess revenue, the ERB determined that the provisional rate granted by it to MERALCO was P0.167 per kwh more than the amount MERALCO ought to charge its customers to obtain the prescribed 12% rate of return on rate base. Thus, the ERB correspondingly lowered the provisional increase by P0.167 per kwh and ordered MERALCO to increase its rates at a reduced amount of P0.017 per kwh, computed as follows:[9]

At appraised value

Total Invested Capital Entitled P 30,059,614,000[10] to Return

12% return thereon P 3,607,154,000

Add: Total Operating expenses P 38,260,420,000[11] for Rate Determination Purposes

Computed Revenue P 41,867,573,000

Actual Revenue P 44,315,951,000

Excess Revenue P 2,448,378,000

Percent of Excess Revenue to 8.15% Invested Capital

Authorized Rate of Return 12.00%

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Actual Rate of Return 20.15%

Total kwh sold 14,640,094,000

Ratio of Excess Revenue to Total kwh Sold P 0.167

In fact, even if MERALCOs income tax liability would be included as an operating expense, MERALCO would still enjoy excess revenue of P312,738,000.00 or 1.04% above the authorized rate of return of 12%. Based on its audit, the COA determined that the provision for income tax liability of MERALCO amounted to P2,135,639,000.00.[12] Thus, even if such amount of income tax liability would be included as operating expense, the amount of excess revenue earned by MERALCO during the test year would be more than sufficient to cover the additional income tax expense. Thus:

At appraised value

Total Invested Capital Entitled P 30,059,614,000 to Return

12% return thereon P 3,607,154,000

Add: Total Operating expenses P 40,396,059,000[13] for Rate Determination Purposes

Computed Revenue P 44,003,213,000

Actual Revenue P 44,315,951,000

Excess Revenue P 312,738,000

Percent of Excess Revenue to Invested Capital 1.04%

Authorized Rate of Return 12.00%

Actual Rate of Return 13.04%

It is crystal clear, therefore, that even if income tax is to be included as an operating expense and hence, recoverable from the consuming public, MERALCO would still enjoy a rate of return that is above the authorized rate of 12%. Public utilities cannot be allowed to overcharge at the expense of the public and worse, they cannot complain that they are not overcharging enough.

Be that as it may, MERALCO contends that considering income tax payments of public utilities constitute one-third of their net income, public utilities will effectively get, not the 12% rate of return on rate base allowed them, but only about 8%.[14] Again, we are not persuaded.

The foregoing argument assumes that the 12% return allowed to public utilities is equivalent to its taxable income which will be subject to income tax. The 12% rate of

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return is computed only for the purpose of fixing the allowable rates to be charged by a public utility and is in no way determinative of the income subject to income tax of the public utility. The computation of a corporations income tax liability is an altogether different matter, with the corporations taxable income derived by taking into account the corporations gross revenues less allowable deductions.[15]

At any rate, even on the assumption that in the test year involved (February 1, 1994 to January 31, 1995), MERALCOs computed revenue of P 41,867,573,000 or the amount that it is allowed to earn based on a 12% rate of return is its taxable income, after payment of its income tax liability ofP2,135,639,000.00, MERALCO would still obtain an 11.38% rate of return or a return that is well within the 12% rate allowed to public utilities.[16]

MERALCO also contends that even the successor of the ERB or the ERC created under the Electric Power Industry Reform Act of 2001 (EPIRA)[17] adheres to the principle that income tax is part of operating expense.[18] To bolster its argument, MERALCO cites Article 36 of the EPIRA which charges the ERC with the responsibility of unbundling the rates of the National Power Corporation (NPC) and each distribution utility coming within the coverage of the law.[19] MERALCO alleges that pursuant to said provision, the ERC issued a set of Uniform Rate Filing Requirements (UFR) containing guidelines to be followed with respect to rate unbundling applications to be filed. MERALCO asserts that under the UFR, the enumeration of the expenses which are to be recovered through the rates, and which are to be separated or allocated for the purpose of unbundling of these rates include income tax expenses.

Under Section 36 of the EPIRA, the NPC and every distribution facility covered by the law is mandated to unbundle, segregate or itemize its rates according to the various sectors of the electric power industry identified in the law, namely: generation, transmission, distribution and supply.[20] The law further directs the ERC to regulate and facilitate the unbundling of rates prescribed by Section 36. Thus, on October 30, 2001, the ERC issued guidelines prescribing the uniform rate filing requirements to be followed by distribution facilities for the purposes of unbundling rates.[21]

A proper appreciation of the UFR shows that it simply specifies a uniform accounting system to be complied with by a distribution facility when filing an application for revised rates under the EPIRA. As the EPIRA requires the unbundling or segregation of rates according to the different sectors of the electric power industry, the UFR seeks to facilitate this process by properly identifying the accounts or information required for proper evaluation by the ERB. Thus, the introductory statements of the UFR provide:

These uniform rate filing requirements are intended to promote consistency and completeness in the rate filings required by Republic Act No. 9136 (RA 9136), Section 36. To that end, the filing requirements only specify minimum form and content. A rate application in all its aspects continues to be subject to subsequent Commission review and deliberation.[22]

At the onset, it is clear that the UFR does not seek to determine which accounting method will be used by the ERC for determination of rate base or the items of expenses that may be recovered by a public utility from its customers. The UFR only seeks to prescribe auniform system or format to standardize or facilitate the process of unbundling of rates mandated by the EPIRA. At best, the UFR prescribes the set of raw data or figures to be disclosed by a distribution facility that the ERC will need to determine the authorized rates that a distribution

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facility may charge. The UFR does not, in any way, determine the manner by which the set of data or figures indicated in the rate application will be evaluated by the ERC for rate determination purposes.

II

MERALCO also challenges the use of the net average investment method or the number of months use method on the ground that MERALCO and the Public Service Commission (PSC) have been consistently applying the average investment method or simple average, which it alleged was also affirmed by this Court in the case of MERALCO v. PSC[23] and Republic v. Medina.[24]

It is true that in MERALCO v. PSC,[25] the issue of the proper valuation method to be used in determining the value of MERALCOs utility plants for rate fixing purposes was brought to fore. In the said case, MERALCO applied the average investment method or simple average by obtaining the average value of the utility plants, using its values at the beginning and at the end of the test year. In contrast, the General Auditing Office used the appraisal method which fixes the value of the utility plants by ascertaining the cost of production per kilowatt and multiplying the same by the total capacity of said plants, less the corresponding depreciation.[26] In upholding the average investment method used by MERALCO, this Court adopted the findings of the PSC for being by and large, supported by the records of the case.[27] This Court did not make an independent assessment of the validity or applicability of the average investment method but simply did not disturb the findings of the PSC for being supported by substantial evidence. To conclude that the said decision affirmed the use of the average investment method thereby implying that the said method is the only method to be applied in all instances, is a strained reading of the decision.

In fact, in the case of Republic v. Medina,[28] also cited by MERALCO to have affirmed the use of the average investment method, this Court ruled:

The decided weight of authority, however, is to the effect that property valuation is not to be solved by formula but depends upon the particular circumstances and relevant facts affecting each utility as to what constitutes a just rate base and what would be a fair return, just to both the utility and the public.[29]

Further, Mr. Justice Castro in his concurring opinion in the same case elucidated:

A regulatory commissions field of inquiry, however, is not confined to the computation of the cost of service or capital nor to a mere prognostication of the future behavior of the money and capital markets. It must also balance investor and consumer expectations in such a way that broad requirements of public interest may be meaningfully realized. It would hence appear in keeping with its public duty if a regulatory body is allowed wide discretion in the choice of methods rationally related to the achievement of this end.[30]

Thus, the rule then as it is now, is that rate regulating authorities are not hidebound to use any single formula or combination of formulas for property valuation purposes because the rate-making process involves the balancing of investor and consumer interests which takes into account various factors that may be unique or peculiar to a particular rate revision application.

We again stress the long established doctrine that findings of administrative or regulatory agencies on matters which are within their technical area of expertise are generally accorded not only respect but at times even finality if such findings and

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conclusions are supported by substantial evidence.[31] Rate fixing calls for a technical examination and a specialized review of specific details which the courts are ill-equipped to enter, hence, such matters are primarily entrusted to the administrative or regulating authority.[32]

Thus, this Court finds no reversible error on the part of the COA and the ERB in adopting the net average investment method or the number of months use method for property valuation purposes in the cases at bar.

III

MERALCO also rants against the retroactive application of the rate adjustment ordered by the ERB and affirmed by this Court. In its decision, the ERB, after authorizing MERALCO to adopt a rate adjustment in the amount of P0.017 per kwh, directed MERALCO to refund or credit to its customers future consumption the excess average amount of P0.167 per kwh from its billing cycles beginning February 1994[33] until its billing cycles beginning February 1998.[34] In the decision appealed from, this Court likewise ordered that the refund in the average amount of P0.167 per kwh be made to retroact from MERALCOs billing cycles beginning February 1994.

MERALCO contends that the refund cannot be given retroactive effect as the figures determined by the ERB only apply to the test year or the period subject of the COA Audit, i.e., February 1, 1994 to January 31, 1995. It reasoned that the amounts used to determine the proper rates to be charged by MERALCO would vary from year to year and thus the computation of the excess average charge of P0.167 would hold true only for the test year. Thus, MERALCO argues that if a refund of P0.167 would be uniformly applied to its billing cycles beginning 1994, with respect to periods after January 31, 1995, there will be instances wherein its operating revenues would fall below the 12% authorized rate of return. MERALCO therefore suggests that the dispositive portion be modified and order that the refund applicable to the periods after January 31, 1995 is to be computed on the basis of the excess collection in proportion to the excess over the 12% return.[35]

The purpose of the audit procedures conducted in a rate application proceeding is to determine whether the rate applied for will generate a reasonable return for the public utility, which, in accordance with settled laws and jurisprudence, is 12% on rate base or the present value of the assets used in the operations of a public utility. For audit purposes, however, there is a need to obtain a sample set of data-- usually derived from figures within a designated period of time-- to determine the amount of returns obtained by a public utility during such period. In the cases at bar, the COA conducted an audit for the test year beginning February 1, 1994 and ending January 31, 1995 or a 12-month period immediately after the order of the ERB granting a provisional increase in the amount of P0.184 per kwh was issued. Thus, the ultimate issue resolved by the COA when it conducted its audit was whether the provisional increase granted by the ERB generated an amount of return well within the rates authorized by law. As stated earlier, based on the findings of the ERB, with the increase of P0.184 per kwh, MERALCO obtained a rate of return which was 8.15% more than the authorized rate of return of 12%.[36] Thus, a refund in the amount of P0.167 was determined and ordered by ERB.

The essence of the use of a test year for auditing purposes is to obtain a sample or representative set of figures to enable the examining authority to arrive at a conclusion or finding based on the gathered data. The use of a test year does not mean that the information and conclusions so derived would only be correct for that year and would be incorrect on the succeeding years. The use of a test year assumes that within a reasonable period after such test year, figures used to determine the amount of return would only vary slightly from the figures culled during the test year such that the impact

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on the utilitys rate of return would not be very significant. Thus, in the event that there is a substantial change in circumstances significantly affecting the variable amounts that would determine the reasonableness of a return, an event which would normally occur after a certain period of time has elapsed, the public utility may subsequently apply for a rate revision.

We agree with the Solicitor General that following MERALCOs reasoning that the figures culled from a test year would only be relevant during such year, there would be a need for public utilities to apply for a rate adjustment every year and perform an audit examination on a public utilitys books of accounts every year as the amount of a utilitys revenue may fall above or below the authorized rates at any given year. Needless to say, the trajectory of MERALCOs arguments will lead to an absurdity.

From the time the order granting a provisional increase was issued by the ERB, nowhere in the records does it appear that the subsequent refund of P0.167 per kwh ordered by the ERB was ever implemented or executed by MERALCO.[37] Accordingly, from January 28, 1994 MERALCO imposed on its customers a charge that is P0.167 in excess of the proper amount. In fact, any application for rate adjustment that may have been applied for and/or granted to MERALCO during the intervening period would have to be reckoned from rates increased by P0.184 per kwh as these were the rates prevailing at the time any application for rate adjustment was made by MERALCO.

While we agree that the amounts used to determine the utilitys rate of return would vary from year to year, we are unable to subscribe to the view that the refund applicable to the periods after January 31, 1995 should be computed on the basis of the excess collection in proportion to the excess over the 12% return. MERALCOs contention that the refund for periods after January 31, 1995 should be computed on the basis of revenue of each year in excess of the 12% authorized rate of return calls for a year-by-year computation of MERALCOs revenues and assets which would be contrary to the essence of an audit examination of a public utility based on a test year. To grant MERALCOs prayer would, in effect, allow MERALCO the benefit of a year-by-year adjustment of rates not normally enjoyed by any other public utility required to adopt a subsequent rate modification. Indeed, had the ERB ordered an increase in the provisional rates it previously granted, said increase in rates would apply retroactively and would not have varied from year to year, depending on the variable amounts used to determine the authorized rates that may be charged by MERALCO. We find no significant circumstance prevailing in the cases at bar that would justify the application of a yearly adjustment as requested by MERALCO.

WHEREFORE, in view of the foregoing, the petitioners Motion for Reconsideration is DENIED WITH FINALITY.

SO ORDERED.

Adasa v. Abalos Feb. 19, 2007 Facts:

Respondent alleged that petitioner, through deceit, received and encashed 2 checks

issued in the name of respondent without his knowledge and consent and that despite

repeated demands by the respondent, petitioner failed and refused to pay the proceeds of

the checks.

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Petitioner filed a counter-affidavit admitting that she received and encashed the 2

checks. Then she alleged in a Supplemental affidavit claiming that it was instead Bebie

Correa who received the 2 checks, but that Correa had already left the country.

On April 2001, the City Prosecutor of Iligan ordered the filing of 2 separate Informations

for Estafa through Falsification of Commercial Document by a Private Individual.

Consequently, 2 separate criminal cases were filed against petitioner. This instant

petition concerns only one of these criminal cases (Criminal Case No. 8782).

The trial court then issued an order directing the Office of the City Prosecutor to conduct

a reinvestigation. Afterwards, they issued a resolution affirming the finding of probable

cause against petitioner.

During her arraignment, petitioner entered an unconditional plea of not guilty. The, she

filed a Petition for Review before the DOJ, with regard to the findings of the Office of the

City Prosecutor.

DOJ reversed and set aside the resolution and directed the Office of the City Prosecutor

to withdraw the Information for Estafa against petitioner. Said Officed filed a Motion to

Withdraw Information.

Respondent filed a motion for reconsideration arguing that DOJ should have dismissed

outright the petition for review since Sec. 7 of DOJ Circular NO. 70 mandates that when

an accused has already been arraigned and the aggrieved party files a petition for review

before the DOJ, the Secretary of Justice cannot, and should not take cognizance of the

petition, or even give due course thereto, but instead deny it outright.

On Feb. 2003, the trial court granted petitioners Motion to Withdraw Information and

dismissed Criminal Case No. 8782. No action was taken by respondent regarding this.

Respondent filed a Petition for Certiorari before the Court of Appeals regarding the DOJ

resolution. CA granted the petition and reversed the resolution of the DOJ. CA

ruled that since petitioner was arraigned before she filed the petition for

review with the DOJ, it was imperative for the DOJ to dismiss such

petition, that when petitioner pleaded to the charge, she was deemed to

have waived her right to reinvestigation and right o question any

irregularity that surrounds it, and that the order of the trial court

dismissing the case pursuant to the assailed resolutions of the DOJ did not

render the petition moot and academic. Since the trial courts order rested solely

on the resolutions, it is void since it violated the rules which enjoins the trial court to

assess the evidence presented before it in a motion to dismiss and not to rely solely on

the prosecutors averment that the Secretary of Justice had recommended the dismissal.

Petitioner filed a Motion for Reconsideration, on the grounds that 1) the language of Sec.

7 and 12 of Circular No. 70 is permissive and directory such that the Secretary of Justice

may entertain an appeal despite the fact that the accused had been arraigned; and that

the contemporaneous construction by the Secretary of Justice be given great weight and

respect.

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CA stood by its decision, construing Sec. 7 side by side with Sec. 12 and attempted to

reconcile them. It stated that the word shall not in par. 2, sentence 1 of Sec. 7 denotes a

positive prohibition. It renders the provision mandatory, meaning that the Secretary of

Justice had no other course of action but to deny or dismiss a petition before him when

arraignment of an accused had already taken place prior to the filing of the petition for

review. Sec. 12, which read that the Secretary may reverse, affirm or modify the

appealed resolution, should be read together with Sec. 7. Together, they meant that

when an accused was already arraigned when the aggrieved party files a petition for

review, the Secretary of Justice cannot, and should not take cognizance of the petition, or

even give due course thereto, but instead dismiss or deny it outright.CA added that

may in Sec. 12 should be read as shall or must since such construction is necessary

to give effect to the apparent intention of the rule.

As to the other grounds presented by petitioner, CA found them to be erroneous/without

merit/without evidence.

Petitioner remained unconvinced and thus filed this current petition.

Issue: Can the DOJ give due course to an appeal or petition for review despite its having

been filed after the accused had already been arraigned?

Held: NO. Petition denied. Decision of the CA is affirmed.

Reasoning:

1) Petitioner contends that yes, DOJ can give due course to an appeal despite its

having been filed after the accused had already been arraigned. Petitioner relied

on statements from other cases, Crespo v. Mogul, and Roberts v. CA, and

Marcelo v. CA, all of which basically stated that it was still within the discretion of

the DOJ to decide what to do with petitions presented to it, regardless of whether

it was done before or after an arraignment.

- The Court is unconvinced by this argument. It states that the cases

cited arent really talking about the same issue as the current case and

that the given circumstances arent the same.

2) Petitioner asserts that the CA interpretation of the DOJ Circular violated 3 basic

rules of statutory construction. 1) That the provision that appears last in the order

of position in the rule or regular must prevail, 2) that contemporaneous

construction of a statute or regulation by the officers who enforce it should be

given great weight, 3) that the word shall had been construed as a permissive,

and not a mandatory language (from Agpalos Statutory Construction).

- Court cites the rule that when a statute or rules is clear and

unambiguous, interpretation need not be resorted to. Since Sec. 7

clearly and categorically directs the DOJ to dismiss outright an appeal

or a petition for review filed after arraignment, no resort to

interpretation is necessary.

- Court states that Petitioners reliance on the aforementioned 1st

violated principle is not applicable because there is no

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irreconcilable conflict between Sec. 7 and Sec. 12 of the DOJ

Circular No. 70.

o Sec. 7 states that If an information is filed in court pursuant to

the appealed resolution, the petition shall not be given due

course if the accused had already been arraigned.

o Sec. 12 states that He (Secretary of Justice) may, motu

proprio or upon motion, dismiss the petition for review on any

of the ff. grounds:

e) That the accused had already been arraigned when the

appeal was taken.

- Sec. 7 pertains to the action that the DOJ must take, while Sec. 12

enumerates the options the DOJ has with regard to the disposition of a

petition for review or of an appeal

- Sec. 7 specifically applies to a situation on what the DOJ must do when

confronted with an appeal or a petition for review that is either clearly

without merit, manifestly intended to delay, or filed after an accused

has already been arraigned.

- Sec. 12 applies generally to the disposition of an appeal. Under said

section, the DOJ may reverse, modify, affirm or dismiss the appealed

resolution. The grounds are provided for in Sec. 12 as to the dismissal

of an appeal.

- The DOJ, noting that the arraignment of an accused prior to the filing

of an appeal or petition is a ground for dismissal under Sec. 12, must

go back to Sec. 7 and act as mandated therein. Thus, it must not give

due course to, and must necessarily dismiss the appeal.

3) Petitioner relies on the principle of contemporaneous construction

- However, Court affirmed CA reasoning that contemporaneous

construction by the officers charged with the enforcement of

the rules and regulations it promulgated is entitled to great

weight by the court in the latters construction of such rules

and regulations. That does not, however, make such a

construction necessarily controlling or binding. Equally settled

is the rule that courts may disregard contemporaneous construction in

instances where the law or rule construed possesses no ambiguity,

where the construction is clearly erroneous, where strong reason to the

contrary exists, and where the court has previously given the statute a

different interpretation. Also that If a contemporaneous construction

is found to be erroneous, the same must be declared null and void.

4) Petitioner contends that Sec. 12 is permissive and thus the mandate in Sec. 7 is a

transformed into a matter within the discretion of the DOJ. He cites a passage

from Agpalos Statutory Construction which did not use shall as mandatory.

- However, the cited passage was connected to certain conditions

(subject to availability, etc). No such conditions are found in Sec. 7 and

hence, shall remains mandatory.

- CA reasoning: If the intent of the Dept. Circular No. 70 were to give

the Secretary of Justice a discretionary power to dismiss or to entertain

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a petition for review despite its being outrightly dismissible, the result

would not only be incongruous but also irrational and even unjust. For

then, the action of the Secretary of Justice of giving due course to the

petition would serve no purpose and would only allow a great waste of

time. Also, giving said section a directory application would not only

subvert the objectives of the circular, but also render its other

mandatory provisions nugatory.

5) Petitioner contends that the issue of whether the DOJ rightfully acted had been

rendered moot and academic by the order of dismissal of the trial court.

- Trial court dismissed the case precisely because of the Resolutions of

the DOJ, after it had, in grave abuse of discretion, took cognizance of

the petition for review. Thus, having been rendered in grave abuse, the

Resolutions of the DOJ are void. The order of dismissal of the trial

court, pursuant to the void resolutions, is likewise void.

- Rule is that a void judgment is a complete nullity and without

legal effect, and that all proceedings or actions founded

thereon are themselves regarded as invalid and ineffective

for any purpose.

6) Petitioner asserts that Sec. 7 of said Circular applies only to appeals from original

resolution of the City Prosecutor and does not apply in this case.

- Sec. 7 does not give a qualification to limit its application to

appeals from original resolutions.

- Rule is that when the law does not distinguish, we must not

distinguish.

7) Petitioner asserts that her arraignment was null and void

- Contention is without merit because the arraignment was without any

restriction, condition, or reservation.

- Rule is that when an accused pleads to the charge, he is deemed to

have waived the right to preliminary investigation and the right to

question any irregularity that surrounds it.

- In this case, when petitioner unconditionally pleaded to the charge, she

effectively waived the reinvestigation of the case by the Prosecutor as

well as the right to appeal the result thereof to the DOJ Secretary

Bernadette Adasa vs. Cecille Abalos G.R. No. 168617 February 19, 2007 Chico-Nazario, J.: Facts: Respondent Cecille Abalos alleged in the complaints-affidavits that petitioner Bernadette Adasa, through deceit, received and encashed two checks issued in the name of respondent without respondents knowledge and consent and that despite repeated demands by the latter, petitioner failed and refused to pay the proceeds of the checks. A resolution was issued by the Office of the City Prosecutor of Iligan City finding probable cause against petitioner and ordering the filing of two separate Informations for Estafa Thru Falsification of Commercial Document by a Private Individual, under Article 315 in relation to Articles 171 and 172 of the Revised Penal Code, as amended.

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Dissatisfied with the finding of the Office of the City Prosecutor of Iligan City, petitioner later filed a Petition for Review before the DOJ. In a Resolution, the DOJ reversed and set aside the resolution of the Office of the City Prosecutor of Iligan City and directed the said office to withdraw the Information for Estafa against petitioner. The said DOJ resolution prompted the Office of the City Prosecutor of Iligan City to file a Motion to Withdraw Information.

Respondent Abalos thereafter filed a motion for reconsideration of said resolution of the DOJ arguing that the DOJ should have dismissed outright the petition for review since Section 7 of DOJ Circular No. 70 mandates that when an accused has already been arraigned and the aggrieved party files a petition for review before the DOJ, the Secretary of Justice cannot, and should not take cognizance of the petition, or even give due course thereto, but instead deny it outright. Respondent claimed Section 12 thereof mentions arraignment as one of the grounds for the dismissal of the petition for review before the DOJ.

In another resolution, the DOJ denied the Motion for Reconsideration opining that under Section 12, in relation to Section 7, of DOJ Circular No. 70, the Secretary of Justice is not precluded from entertaining any appeal taken to him even where the accused has already been arraigned in court. This is due to the permissive language may utilized in Section 12 whereby the Secretary has the discretion to entertain an appealed resolution notwithstanding the fact that the accused has been arraigned.

Issue: Is the over-all language of Sections 7 and 12 of Department Circular No. 70 permissive and directory such that the Secretary of Justice may entertain an appeal despite the fact that the accused had been arraigned? Held: No. When an accused has already been arraigned, the DOJ must not give the appeal or petition for review due course and must dismiss the same. If the intent of Department Circular No. 70 were to give the Secretary of Justice a discretionary power to dismiss or to entertain a petition for review despite its being out rightly dismissible, such as when the accused has already been arraigned, or where the crime the accused is being charged with has already prescribed, or there is no reversible error that has been committed, or that there are legal or factual grounds warranting dismissal, the result would not only be incongruous but also irrational and even unjust. For then, the action of the Secretary of Justice of giving due course to the petition would serve no purpose and would only allow a great waste of time. Moreover, to give the second sentence of Section 12 in relation to its paragraph (e) a directory application would not only subvert the avowed objectives of the Circular, that is, for the expeditious and efficient administration of justice, but would also render its other mandatory provisions Sections 3, 5, 6 and 7, nugatory.

ABS-CBN v. CTA

FACTS:

ABS-CBN is engaged in the business of telecasting local as well as foreign films acquired

from foreign corporations not engaged in trade or business within the Philippines. The

applicable law wrt the income tax of non-resident corporations is section 24 (b) of the

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National Internal Revenue Code, as amended by Republic Act No. 2343 dated June 20,

19598.

On April 12, 1961, in implementation of said provision, the CIR issued General Circular

No. V-3349.Pursuant to the foregoing, ABS-CBN dutifully withheld and turned over to

the BIR the amount of 30% of one-half of the film rentals paid by it to foreign

corporations not engaged in trade or business within the Philippines. The last year that

ABS-CBN withheld taxes pursuant to the foregoing Circular was in 1968.

On June 27, 1968, RA 5431 amended Section 24 (b) 10 of the Tax Code increasing the tax

rate from 30 % to 35 % and revising the tax basis from "such amount" referring to rents,

etc. to "gross income."

On February 8, 1971, the CIR issued Revenue Memorandum Circular No. 4-71, revoking

General Circular No. V-334, and holding that the latter was "erroneous for lack of legal

basis," because "the tax therein prescribed should be based on gross income without

deduction whatever.

On the basis of this new Circular, CIR issued against ABS- CBN a letter of assessment

and demand requiring them to pay deficiency withholding income tax on the remitted

film rentals for the years 1965 through 1968 and film royalty as of the end of 1968 in the

total amount of P525,897.06.

ISSUE:

Whether or not respondent can apply General Circular No. 4-71 retroactively and issue a

deficiency assessment against petitioner in the amount of P 525,897.06 as deficiency

withholding income tax for the years 1965, 1966, 1967 and 1968.

DECISION:

No. Sec. 338-A11 (now Sec. 327) of the Tax Code applies in this case. Rulings or circulars

promulgated by the CIR have no retroactive application where to so apply them would be

prejudicial to taxpayers. The retroactive application of Memorandum Circular No. 4-71

prejudices ABS-CBN since:

a) it was issued only in 1971, or 3 years after 1968, the last year that petitioner had

withheld taxes under General Circular No. V-334.

b) the assessment and demand on petitioner to pay deficiency withholding income tax

was also made three years after 1968 for a period of time commencing in 1965.

c) ABS-CBN was no longer in a position to withhold taxes due from foreign corporations

because it had already remitted all film rentals and no longer had any control over them

when the new Circular was issued.

And in so far as the enumerated exceptions (to non- retroactivity) are concerned, ABS-

CBN does not fall under any of them.