GENATO COMMERCIAL CORPORATION, Petitioner, v.

THE COURT OF TAX APPEALS, ET

AL., Respondents.
Arturo A. Alafriz & Associates for Petitioner.
Solicitor General Ambrosio Padilla, Assistant Solicitor General Jose P. Alejandro and Special
Attorney Imelda de Leon-Reyes for Respondents.
SYLLABUS
1. TAXATION; PERCENTAGE TAX ON IMPORTATION CHARGES TO BE INCLUDED IN THE
ASSESSMENT. Under Section 183 (B) of the National Internal Revenue Code, an importer is
required to pay in advance the necessary percentage tax on the articles imported "based on the
import invoice value thereof, certified to as correct by the Philippine Consul at the port of origin if
there is any, including freight, postage, insurance, commission, customs duty, and all similar
charges." In other words, the law requires that it be included in the assessment not only the
import invoice value of the merchandise, which includes freight, etc., but all other similar charges
which would necessarily increase the landed cost of the merchandise imported, which should
include the difference of P0.15 paid by petitioner to a local bank in the purchase of foreign
exchange to carry out the importation. Indeed, the intention of Congress in enacting the
aforesaid section is to include in the assessment all charges whether specified or otherwise,
which an importer has to pay to complete his importation.
2. Ejusdem Generis; WHEN PRINCIPLE MAY BE INVOKED. The doctrine of ejusdem
generis is but a rule of construction adopted as an aid to ascertain and give effect to the
legislative intent when that intent is uncertain or ambiguous, but the same should not be given
such wide application that would operate to defeat the purpose of the law. In other words, the
doctrine is not of universal application. Its application must yield to the manifest intent of
Congress (State v. Prather, 21 LRA 23, 25).
DECISION
BAUTISTA ANGELO, J.:
This is a petition for review of a decision of the Court of Tax Appeals affirming the assessment
made by the Collector of Internal Revenue against petitioner in the amount of P4,519.53 for
certain deficiency advance sales tax on its importations from 1951 to 1954.
Petitioner is a domestic corporation engaged in the business of importing general merchandise
from abroad. From February, 1951 to December, 1954 petitioner imported merchandise from
abroad and paid the advance sales taxes due thereon as provided for in Section 183 (B) of the
National Internal Revenue Code. On said importations, the Collector of Internal Revenue
assessed against petitioner the sum of P4,519.53 as deficiency advance sales tax on the
difference of P0.15 between the banks rate of exchange paid by petitioner and the legal rate of
exchange for every U.S. dollar contending that the same comes within the phrase "all similar
charges" found in said section, as amended, and demanded payment thereof. Petitioner asked
for a reconsideration of the assessment made by the Collector of Internal Revenue, and when
the same was denied, petitioner filed a petition for review of the ruling of said Collector.
The issue under consideration hinges on whether the difference of P0.15 paid by petitioner to a
local bank in the purchase of foreign exchange for its importations comes within the phrase "all
similar charges" mentioned in Section 183 (B) of the National Internal Revenue Code. The
pertinent provisions of said section read:
"(B)
Sales tax on imported articles. When the articles are imported, the percentage
taxes established in sections one hundred eighty-four, one hundred eighty-five, and one hundred
eighty-six of this Code shall be paid in advance by the importer, in accordance with regulations
promulgated by the Secretary of Finance and prior to the release of such articles from customs
custody, based on the import invoice value thereof, certified to as correct by the Philippine
Consul at the port of origin if there is any, including freight, postage, insurance, commission,
customs duty, and all similar charges, plus one hundred per centum of such total value in the
case of articles enumerated in section one hundred and eighty-four; fifty per centum in the case
of articles enumerated in section one hundred and eighty-five; and twenty-five per centum in the
case of articles enumerated in section one hundred and eighty-six. . . ."cralaw virtua1aw library
As may be seen, an importer is required to pay in advance the necessary percentage tax on the
articles imported "based on the import invoice value thereof, certified to as correct by the
Philippine Consul at the port of origin if there is any, including freight, postage, insurance,
commission, customs duty, and all similar charges." In other words, the law requires that it be
included in the assessment not only the import invoice value of the merchandise, which includes

freight, postage, insurance, commission, and customs duty, but all other similar charges which
would necessarily increase the landed cost of the merchandise imported, which, in our opinion,
should include the difference of P0.15 paid by petitioner to a local bank in the purchase of
foreign exchange to carry out the importation. Indeed, the intention of Congress in enacting the
abovequoted provision is to include in the assessment all charges, whether specified or
otherwise, which an importer has to pay to complete his importation.
Invoking the rule of ejusdem generis which provides that "where, in a statute, general words
follow a designation of particular subjects or classes of persons, the meaning of the general
words will ordinarily be presumed to be restricted by the particular designation, and to include
only things or persons of the same kind, class or nature as those specifically enumerated," 1
petitioner contends that the difference of P0.15 which it paid to a local bank in the purchase of
foreign exchange to cover the importations in question cannot be included in the assessment for
the purpose of determining the advance sales tax because they are not similar to the charges
specifically enumerated in the law.
With this we disagree, for it cannot be denied that the intention of the law is to include all
charges that may be paid by the importer to bring the importation into the country. In other
words, all items of expense that may be incurred by the importer in bringing the importation into
the country and which would necessarily increase the landed cost must be deemed included in
the phrase "all similar charges" mentioned in the law. The doctrine of ejusdem generis is but a
rule of construction adopted as an aid to ascertain and give effect to the legislative intent when
that intent is uncertain or ambiguous, but the same should not be given such wide application
that would operate to defeat the purpose of the law. 2 In other words, the doctrine is not of
universal application. Its application must yield to the manifest intent of Congress (State v.
Prather, 21 LRA 23, 25).
But it is contended that, even assuming that the difference of P0.15 paid by petitioner be
considered as a proper charge to be included in the assessment of the advance sales tax, still
the same can no longer be included for that purpose for the same should be deemed as covered
and absorbed by the corresponding mark-up prescribed by law. This contention is erroneous as
being contrary to the clear import of the law. Thus, the law requires that the importer should pay
the advance sales tax based on the import invoice value of the merchandise, including those
charges therein enumerated, "plus one hundred per centum of such total value in the case of
articles enumerated in section one hundred and eighty-four; fifty per centum in case of articles
enumerated in section one hundred and eighty-five; and twenty-five per centum in the case of
articles enumerated in section one hundred and eighty-six." In other words, the mark-up
prescribed by law is to be considered in addition to the invoice value and all incidental expenses
of importation.
There is no dispute that in the Parity Exchange Law (Republic Act No. 77) the legal rate of
exchange is P2.00 for every U.S. dollar and that this rate has always been maintained by the
government through various proclamations of the President of the Philippines, but the existence
of such legal rate does not preclude the government from including in the landed cost the
difference paid by the importer in the purchase of foreign exchange if such difference has
actually been paid in carrying out the importation. The importer could have paid the legal rate in
purchasing the foreign exchange but if he chooses to pay a different rate he should declare the
difference for that goes to increase the cost in completing the importation.
Considering that the advance sales tax paid by the importer in carrying out the importation in
question was so paid following a circular issued by the Collector of Internal Revenue dated
February 19, 1951 implementing the changes introduced by Republic Act No. 594, it is
contended that said payment made on the strength of the same circular should now be
considered final and conclusive and, hence, it is improper for the Collector to now collect from
petitioner the deficiency tax in question. And in making such advocacy, petitioner invokes the
ruling of the Collector in the case of Isaac Gun Store wherein said Collector withdrew the
assessment for deficiency advance sales tax he has made on the ground of "equitable
estoppel."cralaw virtua1aw library
In answering this claim of petitioner, the Court of Tax Appeals makes the following explanation,
to which we agree:jgc:chanrobles.com.ph
"Petitioner, in support of its second argument that the payment of the sales tax prior to the
release from customs custody of imported goods should be considered final, and no credit,
refund, or adjustment of the tax paid should be allowed, quotes a portion of the decision of this

Court in the case of Candido Montales v. Collector of Internal Revenue, B.T.A. No. 183,
promulgated September 13, 1954, and General Circular No. V-106 dated February 19, 1951, of
the Bureau of Internal Revenue. Petitioner has obviously misunderstood the opinion of the Court
in the aforesaid Montales Case and General Circular No. V-106. The pertinent portion of General
Circular No. V-106, cited by petitioner reads as follows:chanrob1es virtual 1aw library
It is significant to note that, before the amendment the advance sales tax paid on imported
articles by the importer was considered only as a deposit which was to be subsequently credited
against the sales tax due from him for each calendar quarter. Under the amendment, the
payment of the advance sales tax on imported articles by the importer thereof is final and shall
be accounted for as internal revenue collection, without the benefit of tax credit or adjustment,
irrespective of whether the imported articles are sold below or above the landed cost plus the
mark-ups established by law. The importer need not also file a quarterly return.
"An analytical and unbiased study of the aforesaid decision and circular will show that the
finality of payment of the advance sales tax, referred to in both instances, simply means that
under the present law, Section 133 (B) of the Revenue Code, as amended by Republic Act No.
594, payment by the importer of the sales tax prior to the release of the goods from customs
custody is no longer deemed as a mere deposit, subject to adjustment when the goods are
actually sold, as was true before Republic Act No. 594 took effect. It is regarded as a final
payment, and not subject to adjustment, irrespective of whether or not the goods are sold for
more or less than the value used in the computation of the tax paid before release of the goods
from customs. Finality of payment does not mean that even if there was error or mistake in the
amount of the tax paid by the importer the Government can not collect the deficiency, or if there
was overpayment no refund can be made. In enacting Republic Act No. 594 amending Section
183 (B) of the Revenue Code, Congress is presumed not to have intended such an absurd
result."cralaw virtua1aw library
Indeed, the view entertained by petitioner cannot be sustained for it would be tantamount to
condoning a mistake or sanctioning an irregularity committed in violation of law. Moreover, even
if there is such ruling or the government agents failed to use the correct conversion rate in
processing the papers of petitioner in previous years, the government cannot be precluded from
collecting the proper tax if it is discovered later that an error was committed. Only prescription
can prevent it. The government is never estopped to collect legitimate taxes by the error
committed by its agents (Pineda v. Court of First Instance of Tayabas, 52 Phil., 803).
Wherefore, the decision appealed from is affirmed, with costs against petitioner.

Likewise subject of the same sworn complaint was respondent Valeras brother-in-law Ariel
Manongdo for violation of Section 4 of R.A. No. 3019.

Office of the Ombudsman vs Valera

Before the Court is the petition for review on certiorari filed by the Office of the Ombudsman and
Dennis M. Villa-Ignacio, in his capacity as the Special Prosecutor, Office of the Ombudsman,
seeking the reversal of the Decision[1] dated June 25, 2004 of the Court of Appeals (CA) in CAG.R. SP No. 83091. The assailed decision set aside the Order dated March 17, 2004 issued by
petitioner Special Prosecutor Villa-Ignacio in OMB-C-A-03-0379-J placing respondent Atty. Gil A.
Valera, Deputy Commissioner, Office of the Revenue Collection Monitoring Group, Bureau of
Customs, under preventive suspension for a period of six months without pay.

1) Appropriate preliminary investigation be conducted with the end-in-view of filing the necessary
information before the Sandiganbayan;

The sworn complaint alleged that:

On January 30, 2002, while in the performance of his official functions, Atty. Gil A. Valera had
compromised the case against the Steel Asia Manufacturing Corporation in Civil Case No. 01102504 before Branch 39, RTC, Manila without proper authority from the Commissioner of the
Bureau of Customs in violation of Section 2316 TCCP (Authority of Commission to make
Compromise) and without the approval of the President, in violation of Executive Order No. 156
and Executive Order No. 38. Such illegal acts of Atty. Gil A. Valera, indeed, caused undue injury
to the government by having deprived the government of its right to collect the legal interest,
surcharges, litigation expenses and damages and gave the Steel Asia unwarranted benefits in
the total uncollected amount of FOURTEEN MILLION SEVEN HUNDRED SIXTY-TWO
THOUSAND FOUR HUNDRED SIXTY-SEVEN PESOS AND SEVENTY CENTAVOS
(P14,762,467.70), which is violative of Sections 3(e) and (g) respectively of RA 3019.
Further investigation disclosed that Atty. Gil A. Valera while being a Bureau of Customs official
directly and indirectly had financial or pecuniary interest in the CACTUS CARGOES SYSTEMS
a brokerage whose line of business or transaction, in connection with which, he intervenes or
takes part in his official capacity by way of causing the employment of his brother-in-law, Ariel
Manongdo, thus, violating Section 3(h) of RA 3019 and RA 6713 and Section 4, RA 3019 as
against Ariel Manongdo.
Finally, investigation also disclosed that on April 21, 2002 Atty. Gil A. Valera traveled to
Hongkong with his family without proper authority from the Office of the President in violation of
Executive Order No. 298 (foreign travel of government personnel) dated May 19, 1995, thus, he
committed an administrative offense of Grave Misconduct.[6]

The sworn complaint prayed that:

2) Pending investigation, Atty. Gil A. Valera be indefinitely suspended from public office in order
to prevent him from further committing acts of irregularity in public office;
3) This Group be furnished a copy of the Resolution of this (sic) cases.[7]

Factual and Procedural Antecedents

Respondent Valera was appointed Deputy Commissioner of the Bureau of Customs by
President Gloria Macapagal-Arroyo on July 13, 2001. He took his oath of office on August 3,
2001 and assumed his post on August 7, 2001. He is in charge of the Revenue Collection
Monitoring Group.
On August 20, 2003, the Office of the Ombudsman received the Sworn Complaint dated July 28,
2003 filed by then Director Eduardo S. Matillano of the Philippine National Police Criminal
Investigation and Detection Group (PNP-CIDG). In the said sworn complaint, Director Matillano
charged respondent Valera with criminal offenses involving violation of various provisions of
Republic Act (R.A.) No. 3019,[2] the Tariff and Customs Code of the Philippines (TCCP),
Executive Order No. 38,[3] Executive Order No. 298[4] and R.A. No. 6713[5] as well as
administrative offenses of Grave Misconduct and Serious Irregularity in the Performance of Duty.

At about the same time as the filing of the complaint against respondent Valera, Director
Matillano also filed charges against other officials of the Department of Public Works and
Highways (DPWH) and Bureau of Customs. The Philippine Daily Inquirer featured a news article
on them with the title More govt execs flunk lifestyle check.[8]
Prior to Director Matillanos sworn complaint, criminal and administrative charges were also filed
with the Office of the Ombudsman by Atty. Adolfo Casareo against respondent Valera. The
complaint of Atty. Casareo contained similar allegations as those in the complaint of Director
Matillano in that respondent Valera, without being duly authorized by the Commissioner of
Customs, entered into a compromise agreement with Steel Asia Manufacturing Corp. in Civil
Case No. 01-102504 to the prejudice of the government.
The cases against respondent Valera before the Ombudsman were docketed as follows:

OMB-C-C-02-0568-I (For: Violation of Sec. 3(e), R.A. 3019, as amended, and Section 3604 of
the Tariff and Customs Code) entitled Alfredo Casareo v. Gil A. Valera and Antonio M. Lorenzana
OMB-C-C-03-0547-J (For: Violation of Sec. 3(e), (g) and (h) of R.A. 3019, as amended) entitled
PNP-CIDG v. Gil A. Valera and Ariel N. Manongdo
OMB-C-A-0379-J (For: Grave Misconduct and Serious Irregularity in the Performance of Duty)
entitled PNP-CIDG v. Gil A. Valera

On November 12, 2003, Ombudsman Simeon V. Marcelo issued a Memorandum[9] inhibiting

himself from the foregoing criminal cases as well as the related administrative case and directing
petitioner Special Prosecutor Villa-Ignacio to act in his (the Ombudsmans) stead and place. The
said memorandum reads:
MEMORANDUM
TO : HON. DENNIS M. VILLA-IGNACIO
Special Prosecutor
Office of the Special Prosecutor
SUBJECT : OMB-C-C-02-0568-I entitled Alfredo Casareo
vs. Gil Valera, et al., CPL No. C-03-1829 entitled
PNP-CIDG vs. Atty. Gil Valera and Ariel Manongdo and OMB-C-A-0379-J entitled PNP-CIDG vs.
Atty. Gil Valera
DATE : November 12, 2003
____________________________________________________________
The undersigned is inhibiting himself in the above-captioned cases. Please act in his stead and
place.
(Sgd.) SIMEON V. MARCELO
Tanodbayan
(Ombudsman)

Petitioner Special Prosecutor Villa-Ignacio made the finding that by entering into the said
compromise agreement whereby Steel Asia Manufacturing Corp. shall pay the overdue taxes
and duties in thirty (30) monthly installments of P1,239,862 from January 2002 to June 2004,
respondent Valera may have made concessions that may be deemed highly prejudicial to the
government, i.e., waiver of the legal interest from the amount demanded, penalty charges
imposed by law, litigation expenses and exemplary damages. Further, by the terms of the
compromise agreement, respondent Valera had virtually exonerated Steel Asia Manufacturing
Corp. of its fraudulent acts of using spurious tax credit certificates.
Petitioner Special Prosecutor Villa-Ignacio concluded the Order dated March 17, 2004 by stating
that [c]onsidering the strong evidence of guilt of respondent Deputy Commissioner Valera and
the fact that the charges against him consist of Grave Misconduct and/or Dishonesty which may
warrant his removal from the service, it is hereby declared that the requirements under Section
24 of R.A. No. 6770, in relation to Sec. 9, Rule III of Administrative Order No. 7, on the Rules of
Procedure of the Office of the Ombudsman, as amended, are present, and placing respondent
Deputy Commissioner Valera under preventive suspension pending administrative investigation
on the matter for a period of six (6) months without pay is clearly justified.[11]
The decretal portion of the March 17, 2004 Order reads:
WHEREFORE, pursuant to Sec. 24 of R.A. No. 6770, otherwise known as the Ombudsman Act
of 1989, in relation to Sec. 9, Rule III of Administrative Order No. 7, respondent ATTY. GIL A.
VALERA, Deputy Commissioner, Office of the Collection and Monitoring Group, Bureau of
Customs, is hereby placed under preventive suspension for SIX (6) MONTHS WITHOUT PAY.
Pursuant to Sec. 27(1) of R.A. No. 6770, this Order of Preventive Suspension is deemed
immediately effective and executory.
The Honorable Commissioner Antonio M. Bernard, Bureau of Customs, is hereby directed to
implement the Order immediately upon receipt hereof and to promptly inform this Office of
compliance herewith.
Respondent Atty. Gil A. Valera, Deputy Commissioner, Office of the Collection and Monitoring
Group, Bureau of Customs, is hereby ordered to file his counter-affidavit and other controverting
evidence to the complaint, copy of which together with the annexes, is hereto attached, within
ten (10) days from receipt hereof in three (3) legible copies addressed to the Central Records
Division, Office of the Ombudsman, Ombudsman Building, Agham Road, Government Center,
North Triangle, Diliman, Quezon City, furnishing the complainant with a copy of said counteraffidavit.

On March 17, 2004, pursuant to the above memorandum, petitioner Special Prosecutor VillaIgnacio, in the administrative case OMB-C-A-0379-J, issued the Order placing respondent
Valera under preventive suspension for six months without pay. In the said order, petitioner
Special Prosecutor Villa-Ignacio found that respondent Valera entered into the compromise
agreement with Steel Asia Manufacturing Corp. in Civil Case No. 01-102504 without being duly
authorized to do so by the Commissioner of Customs and without the approval of the Secretary
of Finance in violation of Section 2316[10] of the TCCP.

Further, respondent is also ordered to submit proof of service of his counter-affidavit to the
complaint, who may file its reply thereto within a period of ten (10) days from receipt of the
same.

As earlier mentioned, Civil Case No. 01-102504 was a collection suit filed by the Republic of the
Philippines represented by the Bureau of Customs against Steel Asia Manufacturing Corp. for
payment of duties and taxes amounting to P37,195,859.00. The said amount was allegedly paid
by Steel Asia Manufacturing Corp. with spurious tax credit certificates. In addition to the principal
amount, the government likewise demanded payment of penalty charges (25% thereof), legal
`interest from date of demand, litigation expenses and exemplary damages.

This Order is being issued by the undersigned in view of the inhibition of the Honorable
Tanodbayan Simeon Marcelo from his case as contained in a Memorandum dated 12 November
2003.

Failure to comply as herein directed within the period prescribed by the rules shall be deemed
as a waiver of the right to submit the partys counter-affidavit or reply, nonetheless, despite said
non-filing, the investigation shall proceed pursuant to existing rules.

SO ORDERED.[12]

Respondent Valera sought reconsideration of the said Order claiming denial of due process. He
averred that he had already submitted his counter-affidavit refuting the charges leveled against
him by the PNP-CIDG way back on November 6, 2003. He pointed out that Director Matillanos
sworn complaint was filed on August 20, 2003 and it was only two months later or on October
22, 2003 that the Ombudsman found enough basis to proceed with the administrative
investigation of the case by requiring respondent Valera to file his counter-affidavit. He did so on
November 6, 2003. During the said period of two months, the Preliminary Investigation and
Administrative Adjudication Bureau-A (PIAB-A) of the Office of the Ombudsman did not find
enough bases to preventively suspend him. According to respondent Valera, he was at a loss as
to why it was only then (March 17, 2004) that he was being placed under preventive suspension.

Acting on respondent Valeras motion for reconsideration, petitioner Special Prosecutor VillaIgnacio issued the Order dated April 5, 2004 explaining that the delay in the issuance of the
preventive suspension order was due to the inhibition of the Ombudsman from the case and for
which reason, he (petitioner Special Prosecutor Villa-Ignacio), by virtue of the Memorandum
dated November 12, 2003, had to act in his place and stead. Petitioner Special Prosecutor VillaIgnacio averred that contrary to respondent Valeras assertion, his counter-affidavit would not
justify the reversal of the March 17, 2004 Order since he failed to show that he had the requisite
authority from the Commissioner of Customs to enter into the said compromise agreement with
respect to the Steel Asia Manufacturing Corp. case. It was not shown under what authority and
on what basis respondent Valera entered into the said compromise agreement.
In light of the foregoing ratiocination, petitioner Special Prosecutor Villa-Ignacio denied
respondent Valeras motion for reconsideration. The decretal portion of his Order dated April 5,
2004 reads:

Deputy, and at least one Deputy each for Luzon, Visayas and Mindanao. A separate Deputy for
the military establishment may likewise be appointed.
Relying on these two provisions of law, the CA declared that petitioner Special Prosecutor VillaIgnacio has no authority to issue a preventive suspension order since he is neither the
Ombudsman nor one of the Deputy Ombudsmen.
The CA was not persuaded by petitioner Special Prosecutor Villa-Ignacios contention that his
authority to issue the March 17, 2004 Order of preventive suspension could be found in Section
11(4)(c) of R.A. No. 6770 which provides that the Office of the Special Prosecutor shall, in
addition to those powers expressly enumerated in the said provision, perform such other duties
assigned to it by the Ombudsman. The CA held that the grant of such power to the Office of the
Special Prosecutor is subject to the condition that it shall be under the supervision and control
and upon the authority of the Ombudsman.
However, according to the CA, by virtue of the Memorandum dated November 12, 2003 of
Ombudsman Marcelo where he stated that he was inhibiting himself and directing petitioner
Special Prosecutor Villa-Ignacio to act in his place and stead, the latter (petitioner Special
Prosecutor) officially stepped into the position of the Ombudsman insofar as the subject case is
concerned. In effect, petitioner Special Prosecutor Villa-Ignacio would act as the Ombudsman.
The CA opined that this is not the kind of duties contemplated under Section 11(4)(c) of R.A. No.
6770.
Ombudsman Marcelos Memorandum dated November 12, 2003 was declared null and void by
the appellate court for the following reasons:

WHEREFORE, the undersigned finds no cogent reason to reconsider the suspension order
previously issued dated 17 March 2004 but considers the Counter-Affidavit received by the
Office of the Ombudsman 06 November 2003 as sufficient compliance to the portion of the
assailed Order directing him to file his counter-affidavit. Consequently, the Order insofar as it
requires him to file counter-affidavit contained in the 17 March 200[4] Order is SET ASIDE.[13]

1. The issuance of that kind of a memorandum effectively stretched (or over-stretched) the
limited powers of the special prosecutor under R.A. No. 6770 and the Constitution;

Even before his motion for reconsideration was acted upon, however, respondent Valera already
filed with the Court of Appeals a special civil
action for certiorari and prohibition as he sought to nullify the March 17, 2004 Order of
preventive suspension issued by petitioner Special Prosecutor Villa-Ignacio and to enjoin
Commissioner of Customs Antonio M. Bernardo from implementing the said Order.

3. To put it lightly, the Ombudsman, in issuing that kind of a memorandum, has, wittingly or
unwittingly, permitted the Office of the Special Prosecutor to perform the administrative
adjudicative powers of the Ombudsman not only to issue preventive suspension but to perform,
without qualification, any and all other administrative adjudicative powers, duties functions and
responsibilities pertaining to the former as provided under R.A. No. 6770 and the Constitution.
[14]

On April 16, 2004, the appellate court heard the parties on oral arguments on the prayer for
injunction. On even date, it issued a temporary restraining order against the implementation of
the preventive suspension order.
On June 25, 2004, the appellate court rendered the assailed Decision setting aside the March
17, 2004 Order of preventive suspension and directing petitioner Special Prosecutor VillaIgnacio to desist from taking any further action in OMB-C-A-03-0379-J.
In so ruling, the CA held mainly that petitioner Special Prosecutor Villa-Ignacio is not authorized
by law to sign and issue preventive suspension orders. It cited Section 24 of R.A. No. 6770,
otherwise known as The Ombudsman Act of 1989, which vests on the Ombudsman and his
Deputy the power to preventively suspend any government officer or employee under the
Ombudsmans authority pending investigation subject to certain conditions. In relation thereto,
Section 5, Article XI of the Constitution was also cited as it states that the Office of the
Ombudsman is composed of the Ombudsman to be known as the Tanodbayan, one overall

2. The issuance of that kind of a memorandum has effectively placed the special prosecutor over
and above all of the five (5) deputies of the Ombudsman in terms of hierarchy with respect to
administrative adjudication;

In addition, the CA refuted the finding of petitioner Special Prosecutor Villa-Ignacio that the
evidence of guilt against respondent Valera is strong to warrant his preventive suspension. The
CA proffered the following circumstances as negating the said finding of petitioner Special
Prosecutor Villa-Ignacio: (1) Unlike the other four government officials who were simultaneously
charged with him, respondent Valera was not immediately placed under preventive suspension;
hence, indicating that there was no strong evidence against him; (2) Petitioner Special
Prosecutor Villa-Ignacios comment filed with the appellate court did not make any reference to
respondent Valeras supposed foreign travel violation which was alleged in the sworn complaint
of Director Matillano; and (3) The admission of petitioner Special Prosecutor Villa-Ignacios
counsel during the oral arguments on the preliminary injunction that the PIAB-A recommended
against placing respondent Valera under preventive suspension.
Finally, the CA strongly denounced petitioner Special Prosecutor Villa-Ignacio for issuing the
preventive suspension order without even considering respondent Valeras counter-affidavit and,
worse, not knowing that he had already filed it as early as November 5, 2003. The CA opined

that had petitioner Special Prosecutor Villa-Ignacio duly considered the said counter-affidavit, he
would have reached a different conclusion, i.e., there is no strong evidence against respondent
Valera. Further, that the latter, in entering into the compromise agreement with Steel Asia
Manufacturing Corp., is authorized to do so under Section 2401[15] of the TCCP and Section
2316 thereof, cited by petitioner Special Prosecutor Villa-Ignacio, is inapplicable. The CA
concluded that petitioner Special Prosecutor Villa-Ignacio acted with grave abuse of discretion in
issuing the March 17, 2004 placing respondent Valera under preventive suspension for six
months without pay in connection with the administrative case OMB-C-A-03-0379-J.

suspension because the Ombudsman, in directing petitioner Special Prosecutor Villa-Ignacio to

act in his place and stead insofar as OMB-C-A-03-0379-J was concerned, fully clothed the latter
with delegated authority to act thereon. Since under Section 24 of R.A. No. 6770, the
Ombudsman may preventively suspend respondent Valera in the subject administrative case, it
follows that with the delegation of his authority to petitioner Special Prosecutor Villa-Ignacio, he
had full authority to preventively suspend respondent Valera. Petitioner Special Prosecutor VillaIgnacio, upon finding that all the elements for preventive suspension in Section 24 of R.A. No.
6770 are present, accordingly placed respondent Valera under preventive suspension for six
months without pay in connection with the subject administrative case.

The decretal portion of the decision of the appellate court reads:

WHEREFORE, the petition is hereby GRANTED, and the assailed order of March 17, 2004,
issued by respondent Dennis Villa-Ignacio in OMB-C-A-03-0379-J is SET ASIDE.
Respondent Special Prosecutor is DIRECTED to desist from taking any further action in OMB-CA-03-0379-J.
SO ORDERED.[16]
Hence, the recourse to this Court by petitioners Special Prosecutor Villa-Ignacio and the Office
of the Ombudsman.
The Petitioners Case
They submit the following as grounds for the allowance of their petition:
IN ITS DECISION DATED 25 JUNE 2004, THE COURT OF APPEALS COMMITTED SERIOUS
ERROR IN FINDING THAT THE PETITIONER SPECIAL PROSECUTOR COMMITTED GRAVE
ABUSE OF DISCRETION, AND IN SETTING ASIDE THE MARCH 17, 2004 ORDER OF
PREVENTIVE SUSPENSION ISSUED BY THE PETITIONER SPECIAL PROSECUTOR,
CONSIDERING THAT:
I
[PETITIONER] SPECIAL PROSECUTOR ACTED WITH FULL AUTHORITY CONSIDERING
THAT THE OMBUDSMAN EXPRESSLY ASSIGNED TO [PETITIONER] SPECIAL
PROSECUTOR THE SPECIFIC FUNCTION OF ACTING IN HIS (OMBUDSMANS) PLACE AND
STEAD IN OMB-C-A-030379-J, AND THIS DELEGATION OF AUTHORITY SUFFERS FROM
NO VICE OR DEFECT AND, ON THE CONTRARY, HAS THE FULL MANDATE OF THE LAW.
II
NO GRAVE ABUSE OF DISCRETION HAS BEEN COMMITTED BY THE PETITIONERS IN
FINDING, AT THAT STAGE, THE EVIDENCE OF GUILT TO BE STRONG ON THE PART OF
PRIVATE RESPONDENT, FOR GRAVE MISCONDUCT AND/OR DISHONESTY.
III
PRIVATE RESPONDENTS PETITION FILED BEFORE THE COURT A QUO SHOULD HAVE
BEEN DISMISSED FOR VIOLATION OF THE RULE ON FORUM SHOPPING.[17]

The petitioners vigorously maintain that no grave abuse of discretion attended the issuance by
petitioner Special Prosecutor Villa-Ignacio of the March 17, 2004 Order placing respondent
Valera under preventive

The petitioners defend the validity of the Ombudsmans delegation of his authority to petitioner
Special Prosecutor Villa-Ignacio with respect to the administrative case OMB-C-A-03-0379-J
contending that: a) the authority to preventively suspend is not insusceptible to delegation to an
alter ego of the Ombudsman; b) the petitioner Special Prosecutor possessed the necessary
qualifications and competence to exercise the delegated functions; c) no law or rule was violated
with the said delegation.[18]
Nothing in Section 24 of R.A. No. 6770 allegedly prohibits the delegation by the Ombudsman of
his authority to preventively suspend to his alter ego. The petitioners point out that under R.A.
No. 6770, the Special
Prosecutor, like the Deputy Ombudsmen, heads a major office in the Office of the Ombudsman;
[19] he is appointed in the same manner as the Deputy Ombudsmen;[20] he shares the same
qualifications[21] and enjoys the same rank and privilege as the latter.[22] As such, the Special
Prosecutor, like any of the other Deputy Ombudsmen, has the competence and capability to
preventively suspend any officer or employee under the authority of the Ombudsman.
The petitioners invoke, in particular, Section 11(4)(c) of R.A. No. 6770:
Sec. 11. Structural Organization.
(4) The Office of the Special Prosecutor shall, under the supervision and control and upon the
authority of the Ombudsman, have the following powers:

(c) To perform such other duties assigned to it by the Ombudsman.

By this provision, the Ombudsman may allegedly validly delegate to the Special Prosecutor such
other functions that he cannot, otherwise, perform by himself and that he (the Ombudsman) is
not obliged to always make such delegation to the Overall Deputy Ombudsman. In the exercise
of quasi-judicial functions, there is no law which mandates that the Ombudsman can only inhibit
himself in favor of the Deputy Ombudsmen.
The petitioners assert that the evidence of respondent Valeras guilt for serious administrative
infractions is strong. According to them, the facts that have so far been established show that
respondent Valera entered into the compromise agreement with Steel Manufacturing Asia Corp.
to unduly shield and promote its interests and to the prejudice of the government. It is allegedly
suspicious that he (respondent Valera) simply allowed the said company to redeem the spurious
tax credit certificates with a 30-month staggered payment when sufficient properties of the said
company had already been attached to satisfy not only the P37 million principal amount of taxes
owed by the said company but the penalty charges and damages as well. He further unjustifiably
exonerated the said companys officers of any criminal wrongdoing when they are conclusively
liable for the procurement of these spurious tax credit certificates. Further, respondent Valera
was never authorized by the Customs Commissioner to enter into such compromise agreement
nor was it approved by the Secretary of Finance as required by Section 2316 of the TCCP.
Neither was it approved by the President of the Philippines as further required by E.O. No. 38.

Respondent Valera thus committed an act of misrepresentation when he signed the compromise
agreement under the clause By authority of the Commissioner.

Prosecutor is not named therein as vested with the said power, then petitioner Special
Prosecutor Villa-Ignacio has no authority to issue a preventive suspension.

The petitioners posit that conclusively at the given stage respondent Valera appeared to have
committed Grave Misconduct and Dishonesty to warrant his preventive suspension. They also
aver that the evidence strongly show that respondent Valera obtained employment for his
brother-in-law, Ariel Manongdo, with Cactus Cargo Systems, Inc., a customs brokerage firm
whose business principally involves dealing on a regular basis with the Bureau of Customs, in
contravention of R.A. No. 6713 and R.A. No. 3019.

In relation thereto, the Special Prosecutors powers is allegedly limited to the conduct of
preliminary investigation and prosecution of criminal cases within the jurisdiction of the
Sandiganbayan. Respondent Valera cites the enumeration of the Special Prosecutors powers in
Section 11(4) of R.A. No. 6770:
Sec. 11. Structural Organization.

To refute the appellate courts statement that there was inordinate delay in the issuance of the
March 17, 2004 Order of preventive suspension, the petitioners explain that the same was due
to, among others, the inhibition of the Ombudsman from the case, the delay in the transmittal of
the case records and the amount of time that it took petitioner Special Prosecutor Villa-Ignacio to
study the recommendation of the PIAB-A and the divergent recommendation of the Assistant
Ombudsman for Preliminary Investigation, Adjudication and Monitoring Office (PAMO).

(4) The Office of the Special Prosecutor shall, under the supervision and control and upon the
authority of the Ombudsman, have the following powers:

Moreover, even if the PIAB-A recommended against placing respondent Valera under preventive
suspension, petitioner Special Prosecutor Villa-Ignacio was not bound to adopt the same. With
respect to respondent Valeras counter-affidavit, the petitioners insist that the same failed to rebut
the strong evidence against him; hence, justifying his preventive suspension.

(b) To enter into plea bargaining agreement; and

Finally, the petitioners fault the appellate court for not dismissing outright respondent Valeras
petition for certiorari. They charge him with violation of the rule on non-forum shopping as he
filed his petition for certiorari with the CA even when his motion for reconsideration had yet to be
acted upon by petitioner Special Prosecutor Villa-Ignacio.
The Respondents Counter-Arguments
Respondent Valera mainly argues that petitioner Special Prosecutor Villa-Ignacio has no
authority to issue the March 17, 2004 Order placing him under preventive suspension. While
Section 11(4)(c) of R.A. No. 6770 grants the Office of the Special Prosecutor the power to
perform such other duties assigned to it by the Ombudsman, the performance of such other
duties should still be under the supervision and control and upon the authority of the
Ombudsman. Respondent Valera echoes the ratiocination of the CA that the Memorandum
dated November 12, 2003 issued by Ombudsman Marcelo directing petitioner Special
Prosecutor Villa-Ignacio to act in his place and stead in OMB-C-A-03-0379-J produced the effect
of making him (petitioner Special Prosecutor) step into the position of the Ombudsman. This is
not the kind of assignment of duties contemplated by Section 11(4)(c) of R.A. No. 6770 because,
in such a case, the Ombudsmans power of supervision and control over the Special Prosecutor
is undermined.
Respondent Valera submits that the Ombudsmans memorandum designating petitioner Special
Prosecutor Villa-Ignacio to act in his place and stead has destroyed the hierarchy of command
within the Office of the Ombudsman because it put the Special Prosecutor over and above the
Office of the Overall Deputy Ombudsman. Such designation infringes on Section 11(2) of R.A.
No. 6770 which provides that the Overall Deputy Ombudsman shall oversee and administer the
operations of the different offices under the Office of the Ombudsman. The Overall Deputy
Ombudsman is next in line to the Ombudsman as shown by the fact that he assumes as Acting
Ombudsman in case of vacancy in the Office of the Ombudsman due to death, resignation,
removal or permanent disability of the incumbent Ombudsman.
Respondent Valera stresses that the power to preventively suspend any officer or employee
under the authority of the Ombudsman pending investigation is exclusively vested on the
Ombudsman or his Deputy pursuant to Section 24 of R.A. No. 6770. Since the Special

(a) To conduct preliminary investigation and prosecute criminal cases within the jurisdiction of
the Sandiganbayan;

(c) To perform such other duties assigned to it by the Ombudsman.

Applying the rule of ejusdem generis, respondent Valera theorizes that since the first two powers
relate to criminal complaints and criminal cases, then the last power to perform such other duties
assigned to it by the Ombudsman can only refer to other duties related to criminal complaints
and criminal cases and not to administrative complaints, investigation, adjudication and
administrative preventive suspension. While he concedes that the Ombudsman may inhibit
himself in certain cases, respondent Valera is of the view that when the Ombudsman does inhibit
himself in an administrative investigation pending before the Office of the Ombudsman, he may
not designate the Special Prosecutor to act in his place and stead.
Respondent Valera also harps on petitioner Special Prosecutor Villa-Ignacios alleged failure to
consider his (respondent Valeras) counter-affidavit before issuing the preventive suspension
order. This omission coupled with the delay in issuing the same allegedly renders the March 17,
2004 Order null and void.
On the evidence against him, respondent Valera claims that the same is not strong. He cites the
delay in placing him under preventive suspension as he alleges that the first complaint involving
the Steel Manufacturing Asia Corp. case was filed against him by Atty. Casareo as early as
August 26, 2002. However, it was only on March 17, 2004 that he was placed under preventive
suspension by petitioner Special Prosecutor Villa-Ignacio. The strength of the evidence against
him is also belied by the fact that the PIAB-A recommended against placing him under
preventive suspension.
On the procedural point, respondent Valera states that he filed the petition for certiorari with the
CA without awaiting the resolution of his motion for reconsideration because, at the time,
petitioner Special Prosecutor Villa-Ignacio still had not resolved the same despite the lapse of
the period provided by the Ombudsmans rules of procedure.
Issue
The basic issue for the Courts resolution is whether petitioner Special Prosecutor Villa-Ignacio
has the authority to place respondent Valera under preventive suspension in connection with the
administrative case OMB-C-A-03-0379-J pending before the Office of the Ombudsman.

The Courts Ruling

The Court holds that the Special Prosecutor has no such authority.
Preliminarily, it is noted that petitioner Special Prosecutor Villa-Ignacio anchors his authority to
conduct the administrative investigation in OMB-C-A-03-0379-J on the Memorandum dated
November 12, 2003 issued by Ombudsman Marcelo inhibiting himself therefrom and directing
petitioner Special Prosecutor Villa-Ignacio to act in his place and stead.
Significantly, Ombudsman Marcelo did not state in the said memorandum the reason for his
inhibition. On this point, the rule on voluntary inhibition of judges finds application to the
Ombudsman in the performance of his functions particularly in administrative proceedings like
OMB-C-A-03-0379-J. Like judges, the decision on whether or not to inhibit is admittedly left to
the Ombudsmans sound discretion and conscience.[23] However, again similar to judges,
Ombudsman Marcelo has no unfettered discretion to inhibit himself. The inhibition must be for
just and valid causes.[24] No such cause was proffered by Ombudsman Marcelo for his
inhibition in OMB-C-A-03-0379-J.

(7) Determine the causes of inefficiency, red tape, mismanagement, fraud and corruption in the
Government and make recommendations for their elimination and the observance of high
standards of ethics and efficiency; and
(8) Promulgate its rules of procedure and exercise such other powers or perform such functions
or duties as may be provided by law.[25]

R.A. No. 6770 was enacted to provide for the functional and structural organization of the Office
of the Ombudsman. It substantially reiterates the constitutional provisions relating to the Office of
the Ombudsman. In addition, R.A. No. 6770 granted to the Office of the Ombudsman
prosecutorial functions[26] and made the Office of the Special Prosecutor an organic component
of the Office of the Ombudsman.[27] As such, R.A. No. 6770 vests on the Office of the Special
Prosecutor, under the supervision and control and upon the authority of the Ombudsman, the
following powers:
(a) To conduct preliminary investigation and prosecute criminal cases within the jurisdiction of
the Sandiganbayan;

The Court shall now proceed to resolve the basic issue of the case.
(b) To enter into plea bargaining agreement; and
The Ombudsman, pursuant to his power of
supervision and control over the Special
Prosecutor, may authorize the latter to
conduct administrative investigation

The Office of the Ombudsman is vested by the Constitution with the following powers, functions
and duties:
(1) Investigate on its own, or on complaint by any person, any act or omission of any public
official, employee, office or agency, when such act or omission appears to be illegal, unjust,
improper, or inefficient;
(2) Direct, upon complaint or at its own instance, any public official or employee of the
Government, or any subdivision, agency or instrumentality thereof, as well as of any
government-owned and controlled corporation with original charter, to perform and expedite any
act or duty required by law, or to stop, prevent and correct any abuse or impropriety in the
performance of duties;
(3) Direct the officer concerned to take appropriate action against a public official or employee at
fault, and recommend his removal, suspension, demotion, fine, censure, or prosecution, and
ensure compliance therewith;
(4) Direct the officer concerned, in any appropriate case, and subject to such limitations as may
be provided by law to furnish it with copies of documents relating to contracts or transactions
entered into by his office involving the disbursement or use of public funds or properties, and
report any irregularity to the Commission on Audit for appropriate action;
(5) Request any government agency for assistance an information necessary in the discharge of
its responsibilities, and to examine, if necessary, pertinent and records and documents;
(6) Publicize matters covered by its investigation when circumstances so warrant and with due
prudence;

(c) To perform such other duties assigned to it by the Ombudsman.[28]

Based on the pertinent provisions of the Constitution and R.A. No. 6770, the powers of the
Ombudsman have generally been categorized into the following: investigatory power;
prosecutory power; public assistance functions; authority to inquire and obtain information; and
function to adopt, institute and implement preventive measures.[29] The Ombudsmans
investigatory and prosecutory power has been characterized as plenary and unqualified:
The power to investigate and to prosecute granted by law to the Ombudsman is plenary and
unqualified. It pertains to any act or omission of any public officer or employee when such act or
omission appears to be illegal, unjust, improper or inefficient[30]

On the other hand, the authority of the Office of the Special Prosecutor has been characterized
as limited:
Moreover, the jurisdiction of the Office of the Ombudsman should not be equated with the limited
authority of the Special Prosecutor under Section 11 of R.A. 6770. The Office of the Special
Prosecutor is merely a component of the Office of the Ombudsman and may act only under the
supervision and control and upon the authority of the Ombudsman. Its power to conduct
preliminary investigation and prosecute is limited to criminal cases within the jurisdiction of the
Sandiganbayan. Certainly, the lawmakers did not intend to confine the investigatory and
prosecutory power of the Ombudsman to these types of cases. The Ombudsman is mandated
by law to act on all complaints against officers and employees of the government and to enforce
their administrative, civil and criminal liability in every case where the evidence warrants. To
carry out this duty, the law allows him to utilize the personnel in his office and/or designate any
fiscal, state prosecutor or lawyer in the government service to act as special investigator or
prosecutor to assist in the investigation and prosecution of certain cases. Those designated or
deputized to assist him work under his supervision and control. The law likewise allows him to
direct the Special Prosecutor to prosecute cases outside the Sandiganbayans jurisdiction in
accordance with Section 11(4c) of R.A. 6770.[31]

The Court has consistently held that the Office of the Special Prosecutor is merely a component
of the Office of the Ombudsman and may only act under the supervision and control and upon
authority of the Ombudsman.[32]
Section 38(1), Chapter 7, Book IV of the Administrative Code of 1987 defines supervision and
control thus:
(1) Supervision and Control. Supervision and control shall include authority to act directly
whenever a specific function is entrusted by law or regulation to a subordinate; direct the
performance of duty; restrain the commission of acts; review, approve, reverse or modify acts
and decisions of subordinate officials or units; determine priorities in the execution of plans and
programs; and prescribe standards, guidelines, plans and programs. Unless a different meaning
is explicitly provided in the specific law governing the relationship of particular agencies, the
word control shall encompass supervision and control as defined in this paragraph.
The power of supervision and control has been likewise explained as follows:
In administrative law, supervision means overseeing or the power or authority of an officer to see
that subordinate officers perform their duties. If the latter fail or neglect to fulfill them, the former
may take such action or step as prescribed by law to make them perform such duties. Control,
on the other hand, means the power of an officer to alter or modify or nullify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the judgment of
the former for that of the latter.[33]

Pursuant to its power of supervision and control, the Office of the Ombudsman is empowered
under Section 15(10) of R.A. No. 6770 to:
(10) Delegate to the Deputies, or its investigators or representatives such authority or duty as
shall ensure the effective exercise or performance of the powers, functions, and duties herein or
hereinafter provided;

Complementary thereto, Section 11(4)(c) thereof requires the latter to:

(c)
[p]erform such other duties assigned to it by the Ombudsman.

Hence, under the foregoing provisions, the Ombudsman may delegate his investigatory function,
including the power to conduct administrative investigation, to the Special Prosecutor.
Section 24 of R.A. No 6770, however, grants
the power to preventively suspend only to the
Ombudsman and the Deputy Ombudsmen

Section 24 of R.A. No. 6770 reads:

Sec. 24. Preventive Suspension. The Ombudsman and 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 observed that R.A. No. 6770 has invariably mentioned the Special Prosecutor alongside the
Ombudsman and/or the Deputy Ombudsmen with respect to the manner of appointment,[34]
qualifications,[35] term of office,[36]
grounds for removal from office,[37] prohibitions and disqualifications[38] and disclosure of
relationship requirement.[39] However, with respect to the grant of the power to preventively
suspend, Section 24 of R.A. No 6770 makes no mention of the Special Prosecutor. The obvious
import of this exclusion is to withhold from the Special Prosecutor the power to preventively
suspend. It is a basic precept of statutory construction that the express mention of one person,
thing, act or consequence excludes all others as expressed in the familiar maxim expressio
unius est exclusio alterius.[40]
The petitioners contention that since the Special Prosecutor is of the same rank as that of a
Deputy Ombudsman, then the former can rightfully perform all the functions of the latter,
including the power to preventively suspend, is not persuasive. Under civil service laws, rank
classification determines the salary and status of government officials and employees.[41]
Although there is substantial equality in the level of their respective functions, those occupying
the same rank do not necessarily have the same powers nor perform the same functions.

The Ombudsman and the Deputy Ombudsmen, as they are expressly named in Section 24 of
R.A. No. 6770, have been granted the power to preventively suspend as the same inheres in
their mandate under the Constitution:
Sec. 12. The Ombudsman and his Deputies, as protectors of the people, shall act promptly on
complaints filed in any form or manner against public officials or employees of the Government,
or any subdivision, agency, or instrumentality thereof, including government-owned or controlled
corporations, and shall, in appropriate cases, notify the complainants of the action taken and the
result thereof.[42]
While R.A. No. 6770 accords the Special Prosecutor the same rank as that of the Deputy
Ombudsmen, Section 24 thereof expressly grants only to the Ombudsman and the Deputy
Ombudsmen the power to place under preventive suspension government officials and
employees under their authority pending an administrative investigation.[43]
However, if the Ombudsman delegates his authority to conduct administrative investigation to
the Special Prosecutor and the latter finds that the preventive suspension of the public official or
employee subject thereof is warranted, the Special Prosecutor may recommend to the
Ombudsman to place the said public officer or employee under preventive suspension.
Pertinently, the investigation of OMB-C-A-03-0379-J was initially conducted by the PIAB-A, a
panel composed of two Special Prosecution Officers III[44] and Graft Investigation and
Prosecution Officers II.[45] The said investigating panel submitted to the Ombudsman the
Memorandum dated November 5, 2003 which contained its initial findings stating in part thus:
After a careful evaluation of the complaint, it appears that the evidence of guilt in the case under
review, in the context of Sec. 24, R.A. 6770, are not strong enough to warrant the imposition of
preventive suspension of respondent Atty. Gil A. Valera. The evidence on record fall short of the
quantum of evidence necessary to establish the necessary weight to preventively suspend him.
However, the Investigating Panel finds enough basis to proceed with the administrative
investigation of this case.[46]
It appears in the signatory page of the said memorandum that the findings and recommendation
therein were reviewed by the Director[47] of the PIAB-A. Further, the memorandum was,
likewise, reviewed by the Assistant Ombudsman,[48] Preliminary Investigation, Adjudication and

Monitoring Office (PAMO) with the notation recommending disapproval. This demonstrates that
in the conduct of administrative investigation, the PIAB-A exercises merely recommendatory
powers particularly with respect to whether to place the public official or employee subject
thereof under preventive suspension.
Ombudsman Marcelo designated the Special Prosecutor to conduct the administrative
investigation. In the course thereof, petitioner Special Prosecutor Villa-Ignacio found that the
preventive suspension of respondent Valera was warranted under Section 24 of R.A. No. 6770.
However, since under the said provision only the Ombudsman or his Deputy may exercise the
power of preventive suspension, petitioner Special Prosecutor VillaIgnacio could only recommend to the Ombudsman or, in this case because of the latters
inhibition, to the designated Deputy Ombudsman to place respondent Valera under preventive
suspension.
Stated differently, with respect to the conduct of administrative investigation, the Special
Prosecutors authority, insofar as preventive suspension is concerned, is akin to that of the PIABA, i.e., recommendatory in nature. It bears stressing that the power to place a public officer or
employee under preventive suspension pending an investigation is lodged only with the
Ombudsman or the Deputy Ombudsmen.
Consequently, petitioner Special Prosecutor Villa-Ignacio had no authority to issue the March 17,
2004 Order placing respondent Valera under preventive suspension for six months without pay
in connection with the administrative case OMB-C-A-03-0379-J. The appellate court thus
correctly nullified and set aside the said assailed order.
Considering the finding that petitioner Special Prosecutor Villa-Ignacio had no authority to issue
the March 17, 2004 preventive suspension order, the resolution of the issue of whether or not
the evidence of respondent Valeras guilt is strong to warrant his preventive suspension need not
be passed upon at this point. Anent respondent Valeras alleged non-compliance with the rule on
non-forum shopping when he filed the petition for certiorari with the appellate court, suffice it to
state that the appellate court correctly overlooked this procedural lapse. The merits of
respondent Valeras case are special circumstances or compelling reasons which justified the
appellate courts relaxing the rule requiring certification on non-forum shopping.[49]
It is well to mention, at this point, that after the appellate court rendered its decision nullifying the
March 17, 2004 Order of petitioner Special Prosecutor Villa-Ignacio and directing him to desist
from taking any further action in OMB-C-A-03-0379-J, the said case was next assigned to the
Office of the Deputy Ombudsman for the Military and Other Law Enforcement Offices (MOLEO),
headed by Mr. Orlando C. Casimiro.[50] The hearings in OMB-C-A-03-0379-J were, thus,
continued by the Deputy Ombudsman for MOLEO. On August 30, 2004, a Decision was
rendered in the said administrative case finding petitioner Valera guilty of grave misconduct and
decreeing his dismissal from the service. On appeal, the Court of Appeals affirmed the decision
of the Deputy Ombudsman for MOLEO. Petitioner Valera subsequently filed a petition for review
with this Court assailing the said decision of the appellate court. The said petition, docketed as
G.R. No. 167278, is now pending with the Court.
WHEREFORE, the petition is DENIED. The Decision dated June 25, 2004 of the Court of
Appeals in CA-G.R. SP No. 83091, insofar as it set aside the March 17, 2004 Order issued by
petitioner Special Prosecutor Villa-Ignacio in OMB-C-A-03-0379-J, is AFFIRMED.
Caltex vs PalomarFACTS:
In the year 1960, Caltex Philippines conceived and laid the ground work for a
promotional scheme calculated to drum up patronage for its oil products. The contest was
entitled Caltex Hooded Pump Contest, which calls for participants to estimate the actual
number of liters as hooded gas pump at each Caltex station will dispense during a specific
period.

Foreseeing the extensive use of the mails not only as amongst the media for publicizing
the contest but also for the transmission of communications, representations were made by
Caltex with the postal authorities for the contest to be cleared in advance for mailing. This was
formalized in a letter sent by Caltex to the Post master General, dated October 31, 1960, in
which Caltex, thru its counsel, enclosed a copy of the contest rules and endeavored to justify its
position that the contest does not violate the The Anti-Lottery Provisions of the Postal Law.
Unfortunately, the Palomar, the acting Postmaster General denied Caltexs request
stating that the contest scheme falls within the purview of the Anti-lottery Provision and
ultimately, declined Clatexs request for clearance.
Caltex sought reconsideration, stressing that there being no consideration involved in
part of the contestant, the contest was not commendable as a lottery. However, the Postmaster
General maintained his view that the contest involves consideration, or even it does not involve
any consideration it still falls as Gift Enterprise, which was equally banned by the Postal Law.
ISSUE:
Whether the petition states a sufficient cause of action for declaratory relief?
Whether or not the scheme proposed by Caltex the appellee is within the coverage of the
prohibitive provisions of the Postal Law?
HELD:
I.
By express mandate of Section 1 of Rule 66 of the old Rules of Court which deals with the
applicability to invoke declaratory relief which states: Declaratory relief is available to person
whose rights are affected by a statute, to determine any question of construction or validity
arising under the statute and for a declaration of rights thereunder.
In amplification, conformably established jurisprudence on the matter, laid down certain
conditions:
There must be a justiciable controversy.
The controversy must be between persons whose interests are adverse.
The party seeking declaratory relief must have a legal interest in the controversy.
The issue involved must be ripe for judicial determination.
With the appellees bent to hold the contest and the appellants threat to issue a fraud order if
carried out, the contenders are confronted by an ominous shadow of imminent and inevitable
litigation unless their differences are settled and stabilized by a declaration. And, contrary to the
insinuation of the appellant, the time is long past when it can rightly be said that merely the
appellees desires are thwarted by its own doubts, or by the fears of others which admittedly
does not confer a cause of action. Doubt, if any there was, has ripened into a justiciable
controversy when, as in the case at bar, it was translated into a positive claim of right which is
actually contested.
Construction

Is the art or process of discovering and expounding the meaning and intention of the
authors of the law with respect to its application to a given case, where that intention is rendered
doubtful, amongst others, by reason of the fact that the given case is not explicitly provided for in
the law.
It is not amiss to point out at this juncture that the conclusion we have herein just reached is not
without precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a
corporation engaged in promotional advertising was advised by the county prosecutor that its
proposed sales promotion plan had the characteristics of a lottery, and that if such sales

promotion were conducted, the corporation would be subject to criminal prosecution, it was held
that the corporation was entitled to maintain a declaratory relief action against the county
prosecutor to determine the legality of its sales promotion plan.

In the end, the Supreme Court ruled out that under the prohibitive provision of the Postal Law,
gift enterprise and similar schemes therein contemplated are condemnable only if, like lotteries,
they involve the element of consideration. Finding non in the contest, it was ruled out that the
appellee may not be denied the use of the mails for the purpose thereof.

II.
Is the Contest Scheme a Lottery?
Lottery

Extends to all schemes for the distribution of prizes by chance

e.g. policy playing, gift exhibitions, prize concerts, raffles and fairs as well as various forms of
gambling.

McGEE vs REPUBLIC
Appellee Clyde E. McGee, an American citizen is married to Leonardo S. Crisostomo by whom
he has one child. The minors Maria and Amada, both surnamed Magpayo are Leonarda's
children by her first husband Ernesto Magpayo who was killed by the Japanese during the
occupation. McGee filed a petition in the Court of First Instance of Manila to adopt his two minor
step-children Maria and Amada.
At the hearing, the Government filed its opposition to the petition on the ground that petitioner
has a legitimate child and consequently, is disqualified to adopt under article 335, paragraph 1,
of the new Civil Code which provides:

Three Essential Elements:

ART. 335. The following cannot adopt:
Consideration
Prize
3. Chance
No, according to the Supreme Court, the contest scheme is not a lottery but it appears to
be more of a gratuitous distribution since nowhere in the rules is any requirements that any fee
be paid, any merchandise be bought, any services be rendered, or any value whatsoever be
given for the privilege to participate. Since, a prospective contestant has to do is go to a Caltex
Station, request for the entry form which is available on demand and accomplish and submit the
same for the drawing of the winner. Because of this, the contest fails to exhibit any discernible
consideration which would brand it as a lottery.
Moreover, the law does not condemn the gratuitous distribution of property by chance, if no
consideration is derived directly or indirectly from the party receiving the chance, but it does
condemn as criminal scheme in which a valuable consideration of some kind is paid directly or
indirectly for the chance to draw a prize.
Is the scheme, as sales promotion which would benefit the sponsor in the way of increased
patronage be considered as a consideration and thus violates the Postal Law?
No, the required element of consideration does not consist of the benefit derived by the
sponsors of the contest. The true test lies on whether or not the participant pays a valuable
consideration for the chance of winning and not whether or not those conducting the enterprise
receiver something of value for the distribution of the prize.
Is the Contest Scheme a Gift Enterprise?
Even if the term Gift Enterprise is not yet defined explicitly, there appears to be a
consensus among lexicographers and standard authorities that the term is common applied to a
sporting artifice of under which goods are sold for their market value but by way of inducement
to purchase the product, the purchaser is given a chance to win a prize.
And thus, the term of gift enterprise cannot be established in the case at bar since there
is not sale of anything to which the chance offered is attached as an inducement to the
purchaser. The contest is open to all qualified contestant irrespective of whether or not they buy
the appellees products.
The lesson that we derive from this state of the pertinent jurisprudence is that every case must
be resolved upon the particular phraseology of the applicable statutory provision. It is only
logical that the term under a construction should be accorded no other meaning than that which
is consistent with the nature of the word associated therewith.

(1) Those who have legitimate, legitimated, acknowledged natural children, or natural children by
legal fiction;
ART. 338. The following may be adopted:
xxxxxxxxx
(3) A step-child, by the step-father or step-mother.
The Government is appealing from that decision. Only recently (December 21, 1953), and during
the pendency of the present appeal, we have had occasion to decide a similar case wherein the
same question was involved,[[1]] namely, whether a husband having a legitimate child may
adopt a step-child. Applying the provisions of article 335, we held that it cannot be done for the
reason that although article 338 of the new Civil Code permits the adoption of a step-child by the
step-father or the step-mother, nevertheless, because of the negative provisions of article 335,
said permission is confined to those step-fathers and step-mothers who have no children of their
own.
With the doctrine laid down in the Ball vs. Republic case, we could stop right here and sustain
the appeal of the Government in the present case. However, it may not be unprofitable to further
elaborate on the relation between the two articles 335 and 338, new Civil Code. The
strongest argument of the trial court and of the appellee in support of the decision granting the
adoption is that to hold that a step-father having a legitimate child may not adopt a step-child
would be to render article 338, paragraph 3, meaningless and a surplusage inasmuch as without
said article 338, a husband without a legitimate child may adopt a step-child anyway; or worse,
article 338 contradicts article 335. At first blush, that is a formidable argument because the
Legislature in enacting a law is supposed and presumed not to insert any section or provision
which is unnecessary and a mere surplusage; that all provisions contained in a law should be
given effect, and that contradictions are to be avoided. Futhermore, it is contended by appellee
that article 335 prohibiting adoption by a parent who already has a child of his own should not be
considered exclusively but rather in relation with article 338 so as to regard the latter as an
exception to an exception. To meet and dispose of this argument we have to go into the
philosophy of adoption.
The purpose of adoption is to establish a relationship of paternity and filiation where none
existed before. Where therefore the relationship of parent and child already exists whether by
blood or by affinity as in the case of illegitimate and step-children, it would be unnecessary and
superfluous to establish and superimpose another relationship of parent and child through
adoption. Consequently, an express authorization of law like article 338 is necessary, if not to
render it proper and legal, at least, to remove any and all doubt on the subject-matter. Under this

view, article 338 may not be regarded as a surplusage. That may have been the reason why in
the old Code of Civil Procedure, particularly its provisions regarding adoption, authority to adopt
a step-child by a step-father was provided in section 766 notwithstanding the general
authorization in section 765 extended to any inhabitant of the Philippines to adopt a minor child.
The same argument of surplusage could plausibly have been advanced as regards section 766,
that is to say, section 766 was unnecessary and superfluous because without it a step-father
could adopt a minor step-child anyway. However, the insertion of section 766 was not entirely
without reason. The Code of Civil Procedure was of common law origin. It seems to be an
established principle in American jurisprudence that a person may not adopt his own relative, the
reason being that it is unnecessary to establish a relationship where such already exists (the
same philosophy underlying our codal provisions on adoption). So, some states have special
laws authorizing the adoption of relatives such as a grandfather adopting a grandchild and a
father adopting his illegitimate or natural child.
Another possible reason for the insertion of section 766 in the Code of Civil Procedure and
article 338, paragraph 3, in the new Civil Code, authorizing the adoption of a step-child by the
step-father or step-mother is that without said express legal sanction, there might be some doubt
as to the propriety and advisability of said adoption due to the possibility, if not probability, of
pressure brought to bear upon the adopting step-father or mother by the legitimate and natural
parent.
One additional reason for holding that article 338 of the new Civil Code should be subordinated
and made subject to the provisions of article 335 so as to limit the permission to adopt granted in
article 338, to parents who have no children of their own, is that the terms of article 335 are
phrased in a negative manner the following cannot be adopted, while the phraseology of
article 338 is only affirmative the following may be adopted. Under the rule of statutory
construction, negative words and phrases are to be regarded as mandatory while those in the
affirmative are merely directory.
. . . negative (prohibitory and exclusive words or terms are indicative of the legislative intent that
the statute is to be mandatory, . . . (Crawford, Statutory Construction, sec. 263, p. 523.)
Ordinarily ... the word "may" is directory, . . . (Crawford, op. cit., sec. 262, p. 519.)
Prohibitive or negative words can rarely, if ever, be directory, or, as it has been aptly stated,
there is but one way to obey the command "thou shalt not", and that is to completely refrain from
doing the forbidden act. And this is so, even though the statute provides no penalty for
disobedience. (Crawford, op. cit., sec. 263, p. 523.)
The principal reason behind article 335, paragraph 1 denying adoption to those who already
have children is that adoption would not only create conflicts within the family but it would also
materially affect or diminish the successional rights of the child already had. This objection may
not appear as formidable and real when the child had by the adopting parent is by the very
spouse whose child is to be adopted, because in that case, the legitimate child and the adopted
one would be half-brothers or half-sisters, would not be total strangers to each other, and the
blood relationship though half may soften and absorb the loss of successional rights and the
possible diminution of the attention and affection previously enjoyed. But as not infrequently
happens, the step-father or step-mother adopting a child of his or her second wife or husband
already may have a child of his or her own by a previous marriage, in which case, said child and
the adopted one would be complete strangers to each other, with no family ties whatsoever to
bind them, in which event, there would be nothing to soften and reconcile the objection and
resentment, natural to the legitimate child.
In conclusion, we hold that pursuant to the provisions of article 335, paragraph 1, a step-father
who already has a child may not adopt a step-child regardless of the provisions of article 338,
paragraph 3 of the same Code, the latter provisions being confined and applicable to those stepfathers and step-mothers who have no children of their own. The decision appealed from is
hereby reversed, and the petition for adoption is denied. No pronouncement as to costs.

People vs. Terrado, G.R. No. 23625, November 25, 1983

Strict and Liberal Construction: Mandatory and Directory
Facts:
On November 1951 and May 1952, Obo, Gundran, and Terrado applied for, and were issued
freepatents for contiguous parcels of land situated in Camarines Sur. The said parcels of land
were allegedlyforest land and, hence, not disposable. On March 1962, three separate
informations for falsification of public document were filed against the Appellees for having
conspired with one another through false andfraudulent misrepresentations alleging that they
possessed all the necessary qualifications and had complied with all the requirements of law to
entitle them to a free patent, when in truth and in fact, as theyall fully well knew, all their
manifestations were false and fraudulent and that the said applicants had not complied with any
or all of the requirements of the law to entitle them to a free patent. While the informations
sufficiently alleged the commission of falsification of public documents under Art. 171 of the
Revised Penal Code, lands of the public domain is also punishable as perjury under Sec. 129 of
Commonwealth Act No. 141, as amended, which reads, as follows:
Sec. 129. Any person who present or causes to be presented, or cooperates in the presentation
of,any false application, declaration, or evidence, or makes or causes to be made or cooperates
in the making of a false affidavit in support of any petition, claim, or objection respecting lands of
the public domain, shall be deemed guilty of perjury and punished as such.
Appellees claim that the crime has already prescribed according to Public Act No. 3326, as
amended, butthe State argues that the crime has not prescribed under the RPC where the crime
of perjury prescribes in10 years.
Under the Revised Penal CodePublic Act No. 3326, as amended by Act 3585and Act 3763
Perjury is punishable by arresto mayor in itsmaximum period to prision correccional in its
minimum period, or from four (4) months andone (1) day to two (2) years and four (4)months,
which is correctional in nature, andprescribes in ten (10) years.violations penalized by special
laws shall, unlessotherwise provided in such acts, prescribe inaccordance with the following
rules: xxx (c) after eight years for those punished byimprisonment for two years or more, but less
than six years;xxx
Issue:
Whether the prescriptive period to be applied should be 10 years under the RPC or 8 years
under Act No. 3585.
Held:
The 8 year prescriptive period under Section 129 of Commonwealth Act 141 and Act 3326
should beapplied. Penal statutes must be strictly applied.
Ratio:
Penal statutes, substantive and remedial or procedural are, by consecrated rule, to be strictly
appliedagainst the government and liberally in favor of the accused.
As it would be more favorable to the herein accused to apply Section 129 of Commonwealth Act
141 and Act 3326, as amended, in connection withthe prescriptive period of the offenses
charged, the same should be applied. Since the the informations were filed only on March 1962,
or more than eight (8) years after the said offenses were allegedly committed, the lower court
correctly ruled that the crimes in question had already prescribed.
DIZON VS ENCARNACION
Plaintiff Amando M. Dizon seeks the review of an order of the Court of FirstInstance of
Pampanga dismissing the complaint herein, without costs, upon the ground that venue had been
improperly laid..chanroblesvirtualawlibrarychanrobles virtual law library

In a complaint filed with said court, plaintiff, a resident of Pampanga, seeks to recover from
defendant Demetrio B. Encarnacion the aggregate sum of P50,000.00, by way of damages
allegedly suffered by the former in consequenceof the filing by the latter, in Special Proceeding
No. 2025 of the Court of First Instance of Zambales, entitled "Inestate Estate of the Deceased
AgustinN. Medina," of a pleading captioned "Manifestation and Refutation,"
containingstatements which are said to be libelous and deragatory to dignity, integrity,reputation
and standing of the former, as well as irrelevant to the issues in said special
proceeding..chanroblesvirtualawlibrarychanrobles virtual law library

in the first, clearlysuggest that Congress meant the second sentence to be merely permissive,
notmandatory. Indeed, when the libelous imputation has not been published or circulated in the
locality wherein either of the parties resides, the offendedparty may not wish to initiate the action
therein, for the same would have the the effect of giving the additional publicity to the derogatory,
and of increasing the harm already caused to the complainant. As a consequence, he "may"
prefer to file suit where the libel had actually been published or circulated. Hence, the provision
of this effect has been established, in our opinion, for his benefit, which he may
waive..chanroblesvirtualawlibrarychanrobles virtual law library

In due course, the defendant moved to dismiss the case upon the theory that, pursuant to Art.
360 of the revised Penal Code, as ammended by Republic ActNo. 1289, plaintiff's action should
be instituted in the Court of First Instance of Zambales, in which said "Manifestation and
Refutation", had been filed. The motion was granted by the Court of First Instance of
Pampanga,which accordingly dismissed the present case, without prejudice to its renewalin the
"proper court." A reconsideration of the order to this effect havingbeen denied, plaintiff has
brought the case to us by record on appeal..chanroblesvirtualawlibrarychanrobles virtual law
library

Otherwise, if the complainant were a resident of Jolo and the defendant,residing in Cebu, had
defamed him in Batanes, it would be necessary to bringthe action in the latter province, thereby
imposing upon the average memberof the community a serious hindrance to the vindication of
his most preciouspossession - his good name and reputation. In fact, if the theory advanced by
the appellee were upheld, the defendants could purposely choose to publish and circulate their
defamatory imputations in a place far away from where they and the offended parties resides in
order to make it convenient, if not well-nigh impossible for the letter to sue the former for redress
of the wrongcommitted them. Neither the language of the law nor the adduced by herein
appellee warrant the belief that Congress intended to create such obstacles to the prosecution
of those guilty of the crime of libel..chanroblesvirtualawlibrarychanrobles virtual law library

The appeal hinges on said provision of the Revised Penal Code, as ammended by Republic Act.
No. 1289, the pertinent part of which reads: ... The criminal and civil action for damages in cases
of written defamation as provided for in this chapter, shall be filed simultaneously or separately
with the court of First instance of the province or city where any of the accused or any of the
offended parties resides at the time of the commission of the offense: Provided, however, That
where the libel is published, circulated, displayed, or exhibited in a province or a citywherein
neither the offender or nor the offended the party resides the civil and criminal actions may be
brought in the court of first Instance thereof:Provided, furthermore, That the court where the
criminal action or civil action for damages is first filed, shall acquire jurisdiction to the exclusion
of other courts; And provided, finally, That this ammendmentshall not apply to cases of written
defamations, the civil and/or criminalactions to have been filed in court at the time of the
effectivity of hislaw..chanroblesvirtualawlibrarychanrobles virtual law library
which, as contendent by the defendant, was constuend by the lower court to mean:
.chanroblesvirtualawlibrarychanrobles virtual law library
... that when any of the accused or any of the offended of the parties resides in a province or city
where a written defamation is published,circulated, displayed or exhibited, the action, civil or
criminal, shall be filed simultaneously or separately with the court of first instance of said
province or but when the offender or any of the offenders or the offended party or any of the
offended parties does not reside in a province or city, where the publication, circulation, display
or exhibition were made, such action must be interposed
therein..chanroblesvirtualawlibrarychanrobles virtual law library
We find ourselves unable to concur in this view. The language of the above quoted provision is,
to our mind, plain and clear. It establishes a general rule and an exception thereto. Civil actions
for damages in cases of written defamation "shall" be filed with the court of first instance of the
province or city in which "any of the accused or "any of the offended paries resides."In other
words, the plaintiff is limited in his choice of venue to the court of first instance of his residence
or to that of any of the accused. Plaintiffmay not file the action elsewhere, unless the libel is
published, circulated,displayed, or exhibited in a province or city wherein neither the offender
northe offended party resides, in which case "the civil criminal actions may be brought in the
court of first instance thereof." The verb "may" is permissive.Hence, it does not necessarily imply
a complete abrogation of the general rule laid down in the preceeding sentence, except in sofar
as it broadens thetwo (2) alternatives therein set forth, by giving the plaintiff a third choiceof
venue. .chanroblesvirtualawlibrarychanrobles virtual law library
Although the term "may" should be taken as "must" or "shall" when the intention of the law
maker to give thereto a mandatory or compolsary meaningis patent or manifest, no such intent
appears insofar as the above provisionis concerned. On the contrary, the use of the word "may"

WHEREFORE, the order appealed from is set aside and the case hereby remanded to the lower
court further proceedings, with the costs of this instance against the appellee. It is so ordered..
De Mesa vs Mencias
Facts:
Opponents for Mayoralty of Muntinlupa, Rizal in the 1963 elections were Francisco De Mesa
and Maximino Argana. The electorates choice, as tallied by the local board of Canvassers was
de Mesa. Elected vice mayor was Loresca. Meanwhile, Argana protested the election of De
Mesa. On March 18, 1964, however, an assassins bullet felled De Mesa, and, forthwith Loresca
was, by operation of law, duly installed as his successor. In the election case, the protestant
Argana moved for the constitution of committees on revision of ballots.
On May 6, 1964, the court a quo required the protestees widow and children to appear within 15
days from notice in order to be substituted for the said protestee, if they so desired. They did not,
however, comply. The trial court did not order the opposing party to procure the appointment of
the legal representative of the deceased litigant stated under Rule 3 of the Rules of Court.
SEC. 17. Death of party.After a party dies and the claim is not thereby extinguished, the court
shall order, upon proper notice, the legal representative of the deceased to appear and to be
substituted for the deceased, within a period of thirty (30) days, or within such time as may be
granted. If the legal representative fails to appear within said time, the court may order the
opposing party to procure the appointment of a legal representative of the deceased within a
time to be specified by the court, and the representative shall immediately appear for and on
behalf of the interest of the deceased. . . . (Rule 3.)
Argana reiterated his move for the appointment of commissioner on revision of ballots, but this
time, without proposing any provision for representation for the protestee whose widow and
children he sought to be declared non suited.
On June 23, 1964, without notice of the protestee and / or his legal representative, the trial court
granted the motion aforesaid. The trial court adjudged the protestant Argana as the duly elected
Mayor of Muntinlupa, Rizal in the 1963 elections, and taxed the costs of expenses of the protest
against the estate of the deceased protestee De Mesa.
Issue: Whether or not the requirement for the procurement of a legal representative of a
deceased litigant is couched in the permissive term may instead of the mandatory character of
statutory provisions.

Rulings:

Couples who are separated in fact are covered within the term separation.

Where the statute provides for the doing of some act which is required by justice or public duty,
or where it vests a public body, municipality, or public officer with power and authority to take
some actions which concerns the public interests or rights of individuals, the permissive
language will be construed as mandatory and the execution of the power may be insisted upon
as duty.

The Family Code in reverting to the provision of the Civil Code that a child below seven years
old shall not be separated from the mother (Article 363), has expressly repealed the earlier
Article 17, par 3 of the Child and youth Welfare Code which reduced the childs age to 5 years.

ACCORDINGLY, the judgment under review is reversed and in lieu thereof, another is rendered

(1)
Declaring null and void the judgment of the Court of First Instance of Rizal in election
case 7924 thereof, dated August 10, 1964, which proclaimed the protestant Maximino A. Argana
the duly elected mayor of Muntinlupa, Rizal in the 1963 elections, for having been rendered
without jurisdiction over the person of the legal representative of the deceased protestee
Francisco de Mesa and all other proceedings taken by said court in said election case
subsequent to the death of the said protestee;
(2)
Ordering the protestant Maximino A. Argana, without delay, to vacate the office of the
mayor of Muntinlupa, Rizal and to relinquish the same in favor of Demetrio R. Loresca; and
(3)
Ordering the Court of First Instance of Rizal to forthwith appoint the petitioner
Demetrio R. Loresca as the legal representative of the deceased protestee Francisco de Mesa
and allow his appearance as such in substitution of the said deceased for purposes of said
election case 7924 of said court, to conduct a new trial in said election case, and thereafter to
render judgment therein as the evidence may warrant.
Perez vs CA
(Special Proceedings Custody: A child under seven years shall not be separated from his
mother)
Facts: Respondent father, a doctor of medicine and petitioner mother, a registered nurse
working in the US are married couples who are separated in fact with only one child.
Petitioner filed a petition for habeas corpus asking respondent to surrender the custody of their
son. The RTC issued an Order awarding custody of the one-year old child to his mother, citing
the second paragraph of Article 213 of the Family Code.
Upon appeal by the father, the Court of Appeals reversed the trial courts order and awarded
custody of the boy to him ruling that there were enough reasons to deny petitioner custody over
the child even under seven years old. It held that granting custody to the boys father would be
for the childs best interest and welfare.
Article 213, par 2, provides in case of separation of parents that no child under 7 years of age
shall be separated from the mother, unless the court finds compelling reasons to order
otherwise.
Rule 99, Section 6 of the Revised Rules of Court also states that No child under seven years of
age shall be separated from the mother, unless the court finds there are compelling reasons
therefore.
Issue: WON custody of the child is to be given to the father.
Held: No. The provisions of the law clearly mandate that a child under seven years of age shall
not be separated from his mother unless the court finds compelling reasons to order otherwise.
The use of the word shall in Article 213 of the Family Code and Rule 99, Sec 6 of the Revised
Rules of Court connotes a mandatory character.

Romulo, et.al vs HDMF

Facts: petitioner Romulo, Mabanta, Buenaventura, Sayoc and De Los Angeles (hereafter
PETITIONER), a law firm, was exempted for the period 1 January to 31 December 1995, from
the Pag-IBIG Fund coverage by respondent HDMF because of a superior retirement plan.
The HDMF Board of Trustees, pursuant to Section 5 of Republic Act No. 7742, issued Board
Resolution No. 1011, Series of 1995, amending and modifying the Rules and Regulations
Implementing R.A. No. 7742. As amended, Section 1 of Rule VII provides that for a company to
be entitled to a waiver or suspension of Fund coverage, 3 it must have a plan providing for both
provident/retirement and housing benefits superior to those provided under the Pag-IBIG Fund.
PETITIONER submitted to the HDMF a letter explaining that the Amendments to the Rules are
invalid. In that the amendments are void insofar as they abolished the exemption granted by
Section 19 of P.D. 1752, as amended. The repeal of such exemption involves the exercise of
legislative power, which cannot be delegated to HMDF.
HDMF disapproved PETITIONERs application on the ground that the requirement that there
should be both a provident retirement fund and a housing plan is clear in the use of the phrase
and/or, and that the Rules Implementing R.A. No. 7742 did not amend nor repeal Section 19 of
P.D. No. 1752 but merely implement the law. The respondent Board was merely exercising its
rule-making power under Section 13 of P.D. No. 1752. It had the option to use and only instead
of or in the rules on waiver in order to effectively implement the Pag-IBIG Fund Law. By
choosing and, the Board has clarified the confusion brought about by the use of and/or in
Section 19 of P.D. No. 1752, as amended.
PETITIONER filed a petition for review before the Court of Appeals but was dismissed.
Issue: Whether or not the board of HDMF exceeded its delegated power.
Held: YES. The controversy lies in the legal signification of the words and/or.
It seems to us clear from the language of the enabling law that Section 19 of P.D. No. 1752
intended that an employer with a provident plan or an employee housing plan superior to that of
the fund may obtain exemption from coverage. If the law had intended that the employee [sic]
should have both a superior provident plan and a housing plan in order to qualify for exemption,
it would have used the words and instead of and/or.
Notably, paragraph (a) of Section 19 requires for annual certification of waiver or suspension,
that the features of the plan or plans are superior to the fund or continue to be so. The law
obviously contemplates that the existence of either plan is considered as sufficient basis for the
grant of an exemption; needless to state, the concurrence of both plans is more than sufficient.
To require the existence of both plans would radically impose a more stringent condition for
waiver which was not clearly envisioned by the basic law. By removing the disjunctive word or
in the implementing rules the respondent Board has exceeded its authority.
It is without doubt that the HDMF Board has rule-making power as provided in Section 51 17 of
R.A. No. 7742 and Section 13 18 of P.D. No. 1752. However, it is well-settled that rules and
regulations, which are the product of a delegated power to create new and additional legal
provisions that have the effect of law, should be within the scope of the statutory authority
granted by the legislature to the administrative agency. 19 It is required that the regulation be
germane to the objects and purposes of the law, and be not in contradiction to, but in conformity
with, the standards prescribed by law.
In the present case, when the Board of Trustees of the HDMF required in Section 1, Rule VII of
the 1995 Amendments to the Rules and Regulations Implementing R.A. No. 7742 that
employers should have both provident/retirement and housing benefits for all its employees in
order to qualify for exemption from the Fund, it effectively amended Section 19 of P.D. No. 1752.
And when the Board subsequently abolished that exemption through the 1996 Amendments, it
repealed Section 19 of P.D. No. 1752. Such amendment and subsequent repeal of Section 19

are both invalid, as they are not within the delegated power of the Board. The HDMF cannot, in
the exercise of its rule-making power, issue a regulation not consistent with the law it seeks to
apply. Indeed, administrative issuances must not override, supplant or modify the law, but must
remain consistent with the law they intend to carry out. Only Congress can repeal or amend the
law.
Bonnevie vs CA
Facts:
December 6, 1966: Spouses Jose M. Lozano and Josefa P. Lozano secured their loan of P75K
from Philippine Bank of Commerce (PBC) by mortgaging their property
December 8, 1966: Executed Deed of Sale with Mortgage to Honesto Bonnevie where P75K is
payable to PBC and P25K is payable to Spouses Lanzano.
April 28, 1967 to July 12, 1968: Honesto Bonnevie paid a total of P18,944.22 to PBC
May 4, 1968: Honesto Bonnevie assigned all his rights under the Deed of Sale with Assumption
of Mortgage to his brother, intervenor Raoul Bonnevie
June 10, 1968: PBC applied for the foreclosure of the mortgage, and notice of sale was
published
January 26, 1971: Honesto Bonnevie filed in the CFI of Rizal against Philippine Bank of
Commerce for the annulment of the Deed of Mortgage dated December 6, 1966 as well as the
extrajudicial foreclosure made on September 4, 1968.

CFI: Dismissed the complaint with costs against the Bonnevies

CA: Affirmed
ISSUE: W/N the forclosure on the mortgage is validly executed.
HELD: YES. CA affirmed
A contract of loan being a consensual contract is perfected at the same time the contract of
mortgage was executed. The promissory note executed on December 12, 1966 is only an
evidence of indebtedness and does not indicate lack of consideration of the mortgage at the
time of its execution.
Respondent Bank had every right to rely on the certificate of title. It was not bound to go behind
the same to look for flaws in the mortgagor's title, the doctrine of innocent purchaser for value
being applicable to an innocent mortgagee for value.
Thru certificate of sale in favor of appellee was registered on September 2, 1968 and the one
year redemption period expired on September 3, 1969. It was not until September 29, 1969 that
Honesto Bonnevie first wrote respondent and offered to redeem the property.
loan matured on December 26, 1967 so when respondent Bank applied for foreclosure, the loan
was already six months overdue. Payment of interest on July 12, 1968 does not make the earlier
act of PBC inequitous nor does it ipso facto result in the renewal of the loan. In order that a
renewal of a loan may be effected, not only the payment of the accrued interest is necessary but
also the payment of interest for the proposed period of renewal as well. Besides, whether or not
a loan may be renewed does not solely depend on the debtor but more so on the discretion of
the bank.