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ADMINISTRATIVE LAW-5th SET 1

G.R. No. 179844 March 23, 2011

EMERSON B. BAGONGAHASA, GIRLIE B.BAGONGAHASA, DEPARTMENT OF AGRARIANREFORM - PROVINCIAL AGRARIAN REFORMOFFICER OF LAGUNA, and REGISTER OF DEEDS OFSINOLOAN, LAGUNA, Petitioners,vs.

JOHANNA L. ROMUALDEZ, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

SPOUSES CESAR M. CAGUIN and GERTRUDESCAGUIN, SPOUSES TEODORO MADRIDEJOS andANICETA IBANEZ MADRIDEJOS, DEPARTMENT OFAGRARIAN REFORM - PROVINCIAL AGRARIANREFORM OFFICER OF LAGUNA, and REGISTER OFDEEDS OF SINOLOAN, LAGUNA, Petitioners,vs.

DIETMAR L. ROMUALDEZ, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

SOTELA D. ADEA, SPOUSES ESPERANZA andLEONCIO MARIO, SPOUSES DELIA and DANILOCACHOLA, SPOUSES MA. ALICIA and REYMUNDOCAINTO, EDUARDO B. DALAY, SPOUSES JOSELEVITICO and EPIFANIA DALAY, SPOUSES JIFFY andFAUSTINO DALAY, SPOUSES MA. RUTH andMELCHOR PACURIB, MA. JERIMA B. DALAY,SPOUSES CLEOFAS and TERESITA VITOR, SPOUSESCELESTINA and ALEJANDRO COSICO, SPOUSES

AUREA and ANTONIO HERNANDEZ, SPOUSES JULIAand RAFAEL DELA CRUZ, SPOUSES RAQUEL andSEBASTIAN SAN JUAN, SPOUSES MARGARITA andPABLITO LLANES, SR., FIDEL M. DALAY, SPOUSESJAIME and MELVITA DALAY, SPOUSES EMILY andFLORENCIO PANGAN, SPOUSES FELIPE and ROSALIEDALAY, SPOUSES MARCELO and CATALINA B.DALAY, and SPOUSES RENATO and ELIZABETHDALAY, DEPARTMENT OF AGRARIAN REFORM -PROVINCIAL AGRARIAN REFORM OFFICER OFLAGUNA, and REGISTER OF DEEDS OF SINOLOAN,LAGUNA, Petitioners,

vs.

SPOUSES DANIEL and ANA ROMUALDEZ, andJACQUELINE L. ROMUALDEZ, Respondents.

D E C I S I O N

NACHURA, J.:

Before this Court is a Consolidated Petition for Review

on Certiorar i1 under Rule 45 of the Rules of Civil Procedure,

seeking the reversal of the Court of Appeals (CA)

Decision2 dated May 31, 2007 and its Amended Decision

(Partial)3 dated September 25, 2007.

The facts, as summarized by the Department of Agrarian Reform

Adjudication Board (DARAB) and as quoted by the CA, are as

follows:

It appears that Complainants Johanna L. Romualdez; Dietmar L.

Romualdez; Sps. Daniel and [Ana] Romualdez and Jacquelin[e]

C. (sic) Romualdez are absolute and lawful owners of separate

parcels of lands, each parcel with an area of 36,670 square

meters, 47,187.50 square meters and 55,453 square meters,

respectively, all situated [in] Sitio Papatahan, Paete, Laguna.

Johanna and Dietmar purchased their properties from Roberto

Manalo on January 6, 1994; while Sps. Daniel and [Ana], as well

as Jacqueline bought their landholdings from Leonisa A. Zarraga

on August 5, 1998. They allege that the said properties are

planted [with] different fruit-bearing trees. They and their

predecessors-in-interest have been paying realty taxes due on the

properties up to the present. However, sometime in 1994 and

1995, the then Secretary of Agrarian Reform declared the

property to be part of the public domain, awarded the same to theDefendants and forthwith issued Certificates of Land Ownership

Award (CLOAs) to the respective defendants as follows:

CLOA

NO.BENEFICIARIES

Date of

Registration

In Registry of Deeds of Laguna

1. Emerson April 10, 1995 et

00155653 Bagongahasa, al.

2.

00155652Cesar Caguin, et al. April 10, 1995

3.

00119810Sotela Adea, et al. June 30, 1994

It was only in 1998 when the complainants learned of the

issuance of said CLOAs by the Register of Deeds of Siniloan,

Laguna.

The Complainants pointed out that while the Defendants’

respective CLOAs describe a property purportedly located in

Sitio Lamao, San Antonio, Municipality of Kalayaan, Province

of Laguna, each of the Complainants’ tax declaration describes a

property located [in] Sitio Papatahan, Municipality of Paete,

Province of Laguna. Inspite of the discrepancy in the

municipality and sitio of the respective documents, the lotsdescribed in the CLOAs and in the Tax Declarations are almost

identical, except that the property described in Defendants’ title

covers a larger area, but the title and the tax declaration refer to

the same lot; that they and their predecessors-in-interest have

been in possession of the properties for more than thirty years;

that the Defendants have never been in possession of the same;

that they have not paid any real estate taxes and have not caused

the issuance of a tax declaration over the property in their names;

that there is no basis for the award of certificates of land

ownership to the Defendants by the Secretary of Agrarian

Reform, for the lands have already become private properties by

virtue of the open, continuous, exclusive and notorious possession of the property by the Complainants and/or their

predecessors-in-interest which possession was in the concept of

an owner. As absolute and lawful owners thereof, the

complainants also maintain that they have not been notified of

any intended coverage thereof by the DAR; that to the best of

their knowledge, there is no valuation being conducted by the

Land Bank of the Philippines and the DAR involving the

property; that there was no compensation paid and that the DAR-

CENRO Certification shows that the landholdings have 24-32%

slopes and therefore exempt from CARP coverage.

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The complainants[,] thus, pray for the reconveyance of their

respective landholdings; cancellation of the CLOAs and payment

of litigation fee.

On the other hand, the Defendants specifically denied the

allegations of the Plaintiff, maintaining in their Affirmative

Defenses that they are farmer beneficiaries of the subject

properties, covered by Proclamation No. 2280 (sic) which

reclassifies certain portion of the public domain as agriculturalland and declares the same alienable and disposable for

agricultural and resettlement purposes of the Kilusang

Kabuhayan at Kaunlaran Land Resource Management Program

of the KKK, Ministry of Human Settlements and the area

covered is Barangay Papatahan, Paete; that the Plaintiffs’ act of

questioning the issuance of title is an exercise in futility because

Defendants were already in possession of the properties prior to

said Proclamation; that upon the issuance of the CLOAs, they

became the owners of the landholdings and that the

complainants’ claim for damages has no basis.

On the part of public Respondent PARO, he invoked thedoctrine of regularity in the performance of their official

functions and their adherence in pursuing the implementation of

CARP. He claims that DAR received from the National

Livelihood Support Fund (NLSF) portions of the public domain

covered by Presidential Proclamation No. 2282, Series of 1983

and has been mandated to implement the agrarian reform laws

by distributing alienable and disposable portions of the public

domain, to which the subject lands fall; that actual investigation,

proper screening of applicants-beneficiaries, survey and proper

evaluation were conducted, warranting the generation of the

CLOAs and that the registration of the CLOAs with the Registry

of Deed brought the same under the coverage of the TorrensSystem of land registration and have already become

indefeasible or uncontestable.4

On December 28, 2000, the Provincial Agrarian Reform

Adjudicator (PARAD) of Laguna rendered his decision,5f inding

that the Department of Agrarian Reform (DAR) Secretary

committed a mistake in placing the subject properties under the

Comprehensive Agrarian Reform Program (CARP). Moreover,

the PARAD found that no notice of coverage was sent to

respondents and that they were also not paid any just

compensation. The dispositive portion of the said decision reads:

WHEREFORE, premises considered, judgment is hereby

rendered:

1. Ordering the cancellation of Certificate of Land Ownership

Award (CLOA) NOS. 00155653, 00155652 and 00119810

issued to herein private respondents; [and]

2. Ordering the Register of Deeds of Siniloan, Laguna to cause

the cancellation of the Certificate of Land Ownership Award

(CLOA) to herein named defendants.

SO ORDERED.6

Aggrieved, petitioners appealed to the DARAB.

In its decision7 dated May 3, 2005, the DARAB held that the

complaints filed were virtual protests against the CARP

coverage, to which it has no jurisdiction. The DARAB further

held that, while it has jurisdiction to cancel the Certificate of

Land Ownership Awards (CLOAs), which had been registered

with the Register of Deeds (RD) of Laguna, it cannot pass upon

matters exclusively vested in the DAR Secretary. Moreover, the

DARAB ruled that the assailed CLOAs having been registered in

1994 and 1995 became incontestable and indefeasible. Thus:

WHEREFORE, premises considered, the appealed decision is

hereby REVERSED and/or SET ASIDE. A new judgment is

hereby entered:

1. Sustaining the validity of the subject Certificates of Land

Ownership Award (CLOAs) Nos. 00155653, 00155652 and

00119810 issued to the herein Defendants-Appellants: and

2. Dismissing the instant complaints for lack of merit.

No costs.

SO ORDERED.8

Respondents filed a Motion for Reconsideration, which the

DARAB, however, denied for lack of merit.9 Thus, respondents

sought recourse from the CA.

On May 31, 2007, the CA, invoking Section 1 (1.6), Rule II of

the 2003 DARAB Rules of Procedure,10 held that the DARAB

has the exclusive original jurisdiction to determine and

adjudicate cases involving correction, partition, and cancellation

of Emancipation Patents and CLOAs which are registered with

the Land Registration Authority (LRA), as in this case. The CA

ratiocinated that other than the registration of the assailed

CLOAs, the RD already issued Original Certificate of Title No.

OCL-474 in favor of respondents. Moreover, the CA relied on

the PARAD’s finding that respondents were deprived of due

process when no notice of coverage was ever furnished and no just compensation was paid to them. The CA disposed of the

case in this wise:

WHEREFORE, premises considered, the petition is GRANTED.

The assailed Decision dated May 3, 2005 and the Resolution

dated October 10, 2006 are hereby REVERSED and SET

ASIDE. The Joint Decision of the Provincial Adjudicator dated

December 28, 2000 is hereby REINSTATED with

MODIFICATION as follows:

"WHEREFORE, premises considered, judgment is hereby

rendered:

1. Ordering the cancellation of the Certificate of Land

Ownership Award (CLOA) NOS. 00155653, 00155652 and

00119810 issued to herein private respondents [petitioners in the

instant case];


the cancellation of OCT No. OCL-474 to herein named private

respondents [petitioners in the instant case].

SO ORDERED."

SO ORDERED.11

Both parties filed their respective Motions for Reconsideration.

The CA held, to wit:

Finding petitioners’ arguments meritorious, We PARTIALLY

AMEND our previous decision in this case by ordering the

Register of Deeds of Siniloan, Laguna to cancel OCT No. OCL-

475 and OCT No. OCL-395 and to issue new certificates of title

deducting the area of 47,187.50 square meters claimed by

petitioner Dietmar L. Romualdez and 55,453.50 square meters

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claimed by Spouses Daniel and Ana Romualdez and Jacqueline

[L.] Romualdez, respectively.

WHEREFORE, premises considered, private respondents’

Motion for Reconsideration is hereby DENIED. Petitioners’

Motion for Partial Reconsideration is hereby GRANTED. The

Decision dated May 31, 2007 is hereby PARTIALLY

AMENDED to read as follows:

"WHEREFORE, premises considered, judgment is hereby

rendered:

1. Ordering the cancellation of the Certificate of Land

Ownership Award (CLOA) NOS. 00155653, 00155652 and

00119810 issued to herein private respondents.


the cancellation of OCT No. OCL-474 to herein named private

respondents.


the cancellation of OCT No. OCL-475 and to issue a new one


petitioner Dietmar L. Romualdez.


the cancellation of OCT No. OCL-395 and to issue a new one


petitioners Spouses Daniel and Ana Romualdez and Jacqueline

L. Romualdez.

SO ORDERED."

SO ORDERED.12

Hence, this Petition, assigning the following as errors:

I.

The Honorable Court of Appeals has no basis in REVERSING

the DECISION of the Department of Agrarian Reform

Adjudication Board in upholding the validity of Certificate of

Land Ownership Award Nos. 00155653, 00155652 and

00119810 issued to herein petitioners; [and]

II.

The Honorable Court of Appeals erred in undermining [the]

ISSUE OF JURISDICTION as this is cognizable by the

Regional Director and not by the PARAD and/or the DARAB.13

Petitioners Cesar Caguin, Cleofas Vitor, Teresita Vitor, Jose

Levitico Dalay, Marcelo Dalay, Esperanza Mario, Celestina

Cosico, Ma. Ruth Pacurib, and Raquel San Juan, through the

Legal Assistance Division of the DAR, claim that findings of

fact of the DARAB should have been respected by the CA; that

the CLOAs covering the subject properties were registered in

1994 and 1995 but respondents only assailed the validity of the

same in 2000; and that the said CLOAs are already incontestable

and indefeasible. Moreover, petitioners highlight the fact that the

parties in this case are not partners to any tenancy venture.

Invoking this Court’s ruling in Heirs of Julian dela Cruz v. Heirs

of Alberto Cruz,14 petitioners submit that the DAR Secretary has

jurisdiction in this case, not the DARAB.15

On the other hand, respondents prefatorily manifest that out ofthe 44 respondents before the CA, only 9 signed the petition

filed before this Court, and that petitioners’ counsel failed to

indicate the full names of petitioners in the petition. Respondents

argue that the errors assigned by petitioners are matters not

pertaining to questions of law but rather to the CA’s factual

findings. Respondents rely on the CA’s findings that their

constitutional right to due process was violated because no

notice of coverage was sent to them and that they were deprived

of payment of just compensation. Moreover, respondents claim

that they are not barred by prescription and petitioners cannot

raise this issue for the first time on appeal; that they have been

paying the real property taxes and are actually in possession ofthe subject properties; and that documents, which petitioners

failed to refute, show that the said properties are private lands

owned by respondents and their predecessors-in-interest.

Respondents stress that the action initially filed before the

PARAD was not a protest considered as an Agrarian Law

Implementation (ALI) case, but for quieting and cancellation of

title, reconveyance, and damages; that the 2003 DARAB Rules

of Procedure clearly states that the DARAB has jurisdiction to

cancel CLOAs registered with the LRA; and that the assailed

CLOAs were already registered with the RD of Laguna.16

The petition is impressed with merit.

Verily, our ruling in Heirs of Julian dela Cruz v. Heirs of Alberto

Cruz17 is instructive:

The Court agrees with the petitioners’ contention that, under

Section 2(f), Rule II of the DARAB Rules of Procedure, the

DARAB has jurisdiction over cases involving the issuance,

correction and cancellation of CLOAs which were registered

with the LRA. However, for the DARAB to have jurisdiction in

such cases, they must relate to an agrarian dispute between

landowner and tenants to whom CLOAs have been issued by the

DAR Secretary. The cases involving the issuance, correction and

cancellation of the CLOAs by the DAR in the administrative

implementation of agrarian reform laws, rules and regulations to

parties who are not agricultural tenants or lessees are within the

jurisdiction of the DAR and not of the DARAB.18

It is established and uncontroverted that the parties herein do not

have any tenancy relationship. In one case, this Court held that

even if the parties therein did not have tenancy relations, theDARAB still has jurisdiction. However, the said case must be

viewed with particularity because, based on the material

allegations of the complaint therein, the incident involved the

implementation of the CARP, as it was founded on the question

of who was the actual tenant and eventual beneficiary of the

subject land. Hence, this Court held therein that jurisdiction

should remain with the DARAB and not with the regular

courts.19

However, this case is different. Respondents’ complaint was

bereft of any allegation of tenancy and/or any matter that would

place it within the ambit of DARAB’s jurisdiction.

While it is true that the PARAD and the DARAB lack

jurisdiction in this case due to the absence of any tenancy

relations between the parties, lingering essential issues are yet to

be resolved as to the alleged lack of notice of coverage to

respondents as landowners and their deprivation of just

compensation. Let it be stressed that while these issues were

discussed by the PARAD in his decision, the latter was precisely

bereft of any jurisdiction to rule particularly in the absence of

any notice of coverage for being an ALI case.20 Let it also be

stressed that these issues were not met head-on by petitioners. At

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this juncture, the issues should not be left hanging at the expense

and to the prejudice of respondents.

However, this Court refuses to rule on the validity of the CARP

coverage of the subject properties and the issuance of the

assailed CLOAs. The doctrine of primary jurisdiction precludes

the courts from resolving a controversy over which jurisdiction

was initially lodged with an administrative body of special

competence.

21

The doctrine of primary jurisdiction does notallow a court to arrogate unto itself authority to resolve a

controversy, the jurisdiction over which is initially lodged with

an administrative body of special competence.22 The Office of

the DAR Secretary is in a better position to resolve the particular

issue of non-issuance of a notice of coverage – an ALI case –

being primarily the agency possessing the necessary expertise on

the matter .23 The power to determine such issue lies with the

DAR, not with this Court.

A final note.

It must be borne in mind that this Court is not merely a Court oflaw but of equity as well.1avvphil Justice dictates that the DAR

Secretary must determine with deliberate dispatch whether

indeed no notice of coverage was furnished to respondents and

payment of just compensation was unduly withheld from them

despite the fact that the assailed CLOAs were already registered,

on the premise that respondents were unaware of the CARP

coverage of their properties; hence, their right to protest the same

under the law was defeated. Respondents’ right to due process

must be equally respected. Apropos is our ruling in Heir of

Nicolas Jugalbot v. Court of Appeals:24

[I]t may not be amiss to stress that laws which have for theirobject the preservation and maintenance of social justice are not

only meant to favor the poor and underprivileged. They apply

with equal force to those who, notwithstanding their more

comfortable position in life, are equally deserving of protection

from the courts. Social justice is not a license to trample on the

rights of the rich in the guise of defending the poor, where no act

of injustice or abuse is being committed against them.

As the court of last resort, our bounden duty to protect the less

privileged should not be carried out to such an extent as to deny

justice to landowners whenever truth and justice happen to be on

their side. For in the eyes of the Constitution and the statutes,

EQUAL JUSTICE UNDER THE LAW remains the bedrock

principle by which our Republic abides.

WHEREFORE, the instant petition is GRANTED. Theassailed Decision dated May 31, 2007 and Amended Decision

(Partial) dated September 25, 2007 of the Court of Appeals in

CA-G.R. SP No. 97768 are herebyREVERSED and SET

ASIDE. The case is DISMISSED for lack of jurisdiction of theDepartment of Agrarian Reform Adjudication Board. Thisdecision is without prejudice to the rights of respondents

Johanna L. Romualdez, Dietmar L. Romualdez, Jacqueline L.

Romualdez, and Spouses Daniel and Ana Romualdez to seek

recourse from the Office of the Department of Agrarian Reform

Secretary. No costs.

SO ORDERED.

NESTLE PHILIPPINES, INC. G.R. No. 174674

and NESTLE WATERS PHILIPPINES,

INC. (formerly HIDDEN SPRINGS & Present:

PERRIER, INC.),

Petitioners,

- versus -

UNIWIDE SALES, INC.,

UNIWIDE HOLDINGS, INC.,

NAIC RESOURCES AND

DEVELOPMENT CORPORATION,

UNIWIDE SALES REALTY

AND RESOURCES CLUB, INC.,

FIRST PARAGON CORPORATION,

and UNIWIDE SALES WAREHOUSE Promulgated:

CLUB, INC.,

Respondents. October 20, 2010

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - - - x

R E S O L U T I O N

CARPIO, J .:

The Case

This is a petition for review[1] of the 10 January 2006

Decision[2] and the 13 September 2006 Resolution[3] of the Court

of Appeals in CA-G.R. SP No. 82184. The 10 January 2006

Decision denied for lack of merit the petition for review filed by

petitioners. The 13 September 2006 Resolution denied

petitioners' motion for reconsideration and referred to the

Securities and Exchange Commission petitioners' supplemental

motion for reconsideration.

The Facts

The petitioners in this case are Nestle Philippines, Inc. and

Nestle Waters Philippines, Inc., formerly Hidden Springs &

Perrier Inc. The respondents are Uniwide Sales, Inc., Uniwide

Holdings, Inc., Naic Resources and Development Corporation,

Uniwide Sales Realty and Resources Club, Inc., First Paragon

Corporation, and Uniwide Sales Warehouse Club, Inc.

On 25 June 1999, respondents filed in the Securities and

Exchange Commission (SEC) a petition for declaration of

suspension of payment, formation and appointment ofrehabilitation receiver, and approval of rehabilitation plan. The

petition was docketed as SEC Case No. 06-99-6340.[4] The SEC

approved the petition on 29 June 1999.

On 18 October 1999, the newly appointed Interim Receivership

Committee filed a rehabilitation plan in the SEC. The plan was

anchored on return to core business of retailing; debt reduction

via cash settlement and dacion en pago; loan restructuring;

waiver of penalties and charges; freezing of interest payments;

and restructuring of credit of suppliers, contractors, and private

lenders.

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On 14 February 2000, the Interim Receivership Committee filed

in the SEC an Amended Rehabilitation Plan (ARP). The ARP

took into account the planned entry of Casino Guichard

Perrachon, envisioned to infuse P3.57 billion in fresh capital. On

11 April 2001, the SEC approved the ARP.

On 11 October 2001, the Interim Receivership Committee filed

in the SEC a Second Amendment to the Rehabilitation Plan

(SARP) in view of Casino Guichard Perrachon's withdrawal. In

its Order dated 23 December 2002, the SEC approved the SARP.

Petitioners, as unsecured creditors of respondents, appealed to

the SEC praying that the 23 December 2002 Order approving the

SARP be set aside and a new one be issued directing the Interim

Receivership Committee, in consultation with all the unsecured

creditors, to improve the terms and conditions of the SARP.

The Ruling of the SEC

In its 13 January 2004 Order, the SEC denied petitioners' appeal

for lack of merit. Petitioners then filed in the Court of Appeals a

petition for review of the 13 January 2004 Order of the SEC.

The Ruling of the Court of Appeals

In its assailed 10 January 2006 Decision, the Court of Appeals

denied for lack of merit the petition for review filed by

petitioners, thus:

In reviewing administrative decisions, the findings of fact made

therein must be respected as long as they are supported by

substantial evidence, even if not overwhelming or preponderant;

that it is not for the reviewing court to weigh the conflicting

evidence, determine the credibility of the witnesses, or otherwise

substitute its own judgment for that of the administrative agency

on the sufficiency of the evidence; that the administrative

decision in matters within the executive jurisdiction can only be

set aside on proof of grave abuse of discretion, fraud, or error of

law.

WHEREFORE, the petition for review is DENIED for lack of

merit.

SO ORDERED.[5]

Petitioners moved for reconsideration. They also filed a

supplemental motion for reconsideration alleging that they

received a letter on 25 January 2006, from the president of the

Uniwide Sales Group of Companies, informing them of the

decision to transfer, by way of full concession, the operation of

respondents' supermarkets to Suy Sing Commercial Corporation

starting 1 March 2006.

In its questioned 13 September 2006 Resolution, the Court of

Appeals denied for lack of merit petitioners' motion for

reconsideration and referred to the SEC petitioners' supplemental

motion for reconsideration.

Dissatisfied, petitioners filed in this Court on 3 November 2006

the present petition for review.

The Issue

Before us, petitioners raise the issue of whether the SARP

should be revoked and the rehabilitation proceedings terminated.

The Court's Ruling

The petition lacks merit.

Petitioners contend that the transfer of respondents' supermarket

operations to Suy Sing Commercial Corporation has made the

SARP incapable of implementation. Petitioners point out that

since the SARP may no longer be implemented, the

rehabilitation case should be terminated pursuant to Section 4-

26, Rule IV of the SEC Rules of Procedure on Corporate

Recovery. Petitioners claim that the terms and conditions of theSARP are unreasonable, biased in favor of respondents,

prejudicial to the interests of petitioners, and incapable of a

determination of feasibility.

Respondents maintain that the SARP is feasible and that the SEC

Hearing Panel did not violate any rule or law in approving it.

Respondents stress that the lack of majority objection to the

SARP bolsters the SEC's findings that the SARP is feasible.

Respondents insist that the terms and conditions of the SARP are

in accord with the Constitution and the law.

The Court takes judicial notice of the fact that from the time of

the filing in this Court of the instant petition, supervening events

have unfolded substantially changing the factual backdrop of this

rehabilitation case.

As found by the SEC, several factors prevented the realization of

the desired goals of the SARP, to wit: (1) unexpected refusal of

some creditors to comply with all the terms of the SARP; (2)

unexpected closure of Uniwide EDSA due to the renovation of

EDSA Central Mall; (3) closure of Uniwide Cabuyao and

Uniwide Baclaran; (4) lack of supplier support for supermarket

operations; and (5) increased expenses.[6]

On 11 July 2007, the rehabilitation receiver filed in the SEC a

Third Amendment to the Rehabilitation Plan (TARP). But before

the SEC could act on the TARP, the rehabilitation receiver filed

on 29 September 2008 a Revised Third Amendment to the

Rehabilitation Plan (revised TARP).

A majority of the secured creditors strongly opposed the revised

TARP, which focused on the immediate settlement of all the

obligations accruing to the unsecured creditors through

a dacion of part of respondents' Metro Mall property.[7] Since

some creditors claimed that the value of the Metro Mall property

had gone down since 1999, the Hearing Panel issued its 30 July

2009 Order directing the reappraisal of the Metro Mall

property.[8]

In its 17 September 2009 Order, the Hearing Panel directed

respondents to show cause why the rehabilitation case should not

be terminated considering that the rehabilitation plan had

undergone several revisions. The Hearing Panel also directed the

creditors to manifest whether they still wanted the rehabilitation proceedings to continue.

Respondents moved for reconsideration of the 30 July 2009 and

the 17 September 2009 Orders. The Hearing Panel, in its 6

November 2009 Order, denied the motion for reconsideration for

being a prohibited pleading.

Respondents then filed in the SEC a petition for certiorari

assailing the 30 July 2009, the 17 September 2009, and the 6

November 2009 Orders of the Hearing Panel. The petition was

docketed as SEC En Banc Case No. 12-09-183.

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Meanwhile, in its 13 January 2010 Resolution, the Hearing Panel

disapproved the revised TARP and terminated the rehabilitation

case as a consequence. The dispositive portion of the Resolution

reads:

WHEREFORE, premises considered:

1. Petitioners' Motion to Approve Revised Third Amendment to

the Group Rehabilitation Plan (Revised TARP) is DENIED.

2. The motions to declare petitioners' rehabilitation plan not

feasible are GRANTED. Consequently, the instant rehabilitation

case is TERMINATED and the stay order is lifted and dissolved.

This case is deemed finally disposed of pursuant to Section 5.2

of Republic Act No. 8799.[9]

On 22 January 2010, respondents filed another petition appealing

the Hearing Panel's 13 January 2010 Resolution. The petition

was docketed as SEC En Banc Case No. 01-10-193. In order to

preserve the parties' rights during the pendency of the appeal, the

SEC en banc in its Order dated 18 March 2010 directed the

parties to observe the status quo prevailing before the issuance of

the 13 January 2010 Resolution of the Hearing Panel.

Meanwhile, on 27 April 2010, the SEC en banc issued an Order

directing the rehabilitation receiver, Atty. Julio C. Elamparo, to

submit a comprehensive report on the progress of the

implementation of the SARP.

Finally, in its 30 September 2010 Order, the SEC consolidated

SEC En Banc Case No. 01-10-193 with SEC En Banc Case No.

12-09-183, the parties being identical and the issues in both

petitions being in reference to the same rehabilitation case.

Considering the pendency of SEC En Banc Case No. 12-09-183

and SEC En Banc Case No. 01-10-193, recently filed in the

SEC, involving the very same rehabilitation case subject of this

petition, the present petition has been rendered premature.

SEC En Banc Case No. 12-09-183 deals with the Order of the

Hearing Panel directing respondents to show cause why the

rehabilitation case should not be terminated and the creditors to

manifest whether they still want the rehabilitation proceedings to

continue. On the other hand, SEC En Banc Case No. 01-10-193

is an appeal of the Hearing Panel's Resolution disapproving the

revised TARP and terminating the rehabilitation proceedings.

In light of supervening events that have emerged from the time

the SEC approved the SARP on 23 December 2002 and from the

time the present petition was filed on 3 November 2006, any

determination by this Court as to whether the SARP should be

revoked and the rehabilitation proceedings terminated, would be

premature.

Undeniably, supervening events have substantially changed the

factual backdrop of this case. The Court thus defers to the

competence and expertise of the SEC to determine whether,

given the supervening events in this case, the SARP is no longer

capable of implementation and whether the rehabilitation case

should be terminated as a consequence.

Under the doctrine of primary administrative juri sdiction, courts

will not determine a controversy where the issues for resolution

demand the exercise of sound administrative discretion requiring

the special knowledge, experience, and services of the

administrative tribunal to determine technical and intricate

matters of fact.[10]

In other words, if a case is such that its determination requires

the expertise, specialized training, and knowledge of an

administrative body, relief must first be obtained in an

administrative proceeding before resort to the court is had even

if the matter may well be within the latter's proper

jurisdiction.[11]

The objective of the doctrine of primary jurisdiction is to guide

the court in determining whether it should refrain from

exercising its jurisdiction until after an administrative agency has

determined some question or some aspect of some question

arising in the proceeding before the court .[12]

It is not for this Court to intrude, at this stage of the

rehabilitation proceedings, into the primary administrative

jurisdiction of the SEC on a matter requiring its

technical expertise. Pending a decision of the SEC on SEC En

Banc Case No. 12-09-183 and SEC En Banc Case No. 01-10-

193, which both seek to resolve the issue of whether the

rehabilitation proceedings in this case should be terminated, we

are constrained to dismiss this petition for prematurity.

WHEREFORE, we DISMISS the instant petition for having been rendered premature pending a decision of the Securities and

Exchange Commission (SEC) in SEC En Banc Case No. 12-09-

183 and SEC En Banc Case No. 01-10-193.

No pronouncement as to costs.

SO ORDERED.

[G.R. No. 138381. November 10, 2004]

GOVERNMENT SERVICE INSURANCESYSTEM, petiti oner, vs. COMMISSION ONAUDIT, respondent .

[G.R. No. 141625. November 10, 2004]

GOVERNMENT SERVICE INSURANCE

SYSTEM, petiti oner, vs. ALFREDO D. PINEDA, DANIELGO, FELINO BULANDUS, FELICIMO J. FERRARIS, JR.,BEN HUR PORLUCAS, LUIS HIPONIA, MARIA LUISAA. FERNANDEZ, VICTORINA JOVEN, CORAZON S.ALIWANAG, SILVER L. MARTINES, SR., RENATOPEREZ, LOLITA CAYLAN, DOUGLAS VALLEJO andLETICIA ALMAZAN, on their own behalf and on behalf ofall GSIS retirees with all of whom they share a common andgeneral interest, respondents .

R E S O L U T I O N

YNARES-SANTIAGO, J .:

On April 16, 2002, the Court promulgated a decision on these

two consolidated cases partially granting the petition in G.R. No.

138381 (first petition) thereby reversing the Commission on

Audits (COA) disallowance of certain fringe benefits granted to

GSIS employees. As a result, the Court ordered the refund of

amounts representing fringe benefits corresponding to those

allowed in the first petition in favor of the respondents in G.R.

No. 141625 (second petition).

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The benefits which the Court ordered to be refunded included

increases in longevity pay, childrens allowance and management

contribution to the Provident Fund as well as premiums for

group personal accident insurance. On the other hand, the Court

affirmed the COA disallowance of loyalty and service cash

award as well as housing allowance in excess of that approved

by the COA. Amounts corresponding to these benefits were

previously deducted by GSIS from respondents retirement

benefits in view of the COA disallowance in the first petition. COA did not seek reconsideration of the judgment

ordering said refund, which thus became final and executory.

On August 7, 2002, the respondents in the second petition, all

GSIS retirees, filed a motion for amendatory and clarificatory

judgment (amendatory motion).[1] They averred that we did not

categorically resolve the issue raised in the second petition,

namely: whether or not the GSIS may lawfully deduct any

amount from their retirement benefits in light of Section 39 of

Republic Act No. 8291.

According to respondents, said provision of law clearly statesthat no amount whatsoever could be legally deducted from

retirement benefits, even those amounts representing COA

disallowances. They posit that we should have ordered refund

not only of benefits allowed in the first petition, but all amounts

claimed, regardless of whether or not these were allowed by the

COA. These include items which were correctly disallowed by

the COA in the first petition, as well as disallowed benefits

under the second petition. The latter consists of initial payment

of productivity bonus, accelerated implementation of the new

salary schedule effective August 1, 1995, 1995 mid-year

financial assistance and increase in clothing, rice and meal

allowances. Respondents further insist that we should haveawarded damages in their favor, citing the GSIS alleged bad

faith in making the deductions.

GSIS filed a comment[2] to respondents amendatory motion, as

directed by the Court in a resolution dated September 3,

2002. GSIS posited that the other benefits not passed upon in the

main judgment should be understood by respondents as having

been impliedly denied by this Court. It also sought clarification

of our decision insofar as it declared that there was no identity of

subject matter between the COA proceedings, from which the

first petition stemmed, and respondents claim under the second

petition, which emanated from an order of the GSIS Board of

Trustees (Board). As for the damages claimed by respondents,

GSIS insists that it made the deductions in good faith for these

were done in accordance with COA directives.

Respondents filed a reply[3] to the comment of GSIS

on September 9, 2002.

Meanwhile, respondents filed a second motion, this time for

leave to file a motion for discretionary and partial

execution[4] (motion for execution). They prayed that GSIS be

ordered to effect the refund, as finally adjudged in our decision,

pending resolution of their amendatory motion as to the other

deducted amounts. We granted the motion for execution on

September 3, 2002.

Subsequently, on December 26, 2002, counsel for respondents,

Atty. Agustin Sundiam, filed a motion for entry and enforcement

of attorneys lien[5] (motion for charging lien) and a

supplement[6] to this motion on January 10, 2003. He sought

entry of a charging lien in the records of this case pursuant to

Section 37 of Rule 138. He prayed for an order directing the

GSIS to deduct, as his professional fees, 15% from respondents

refund vouchers since the GSIS was already in the process of

releasing his clients checks in compliance with our judgment in

the first petition. The payment scheme was allegedly authorized

by the Board of Directors of his clients, the GSIS Retirees

Association, Inc. (GRIA), through a board resolution[7] that he

has attached to the motion.

Atty. Sundiams motion for charging lien was opposed by

petitioner GSIS on the ground that it was through its efforts, and

not Atty. Sundiams, that the retirees were able to obtain arefund.[8] Meanwhile, the GRIA confirmed the payment scheme

it adopted with Atty. Sundiam and prayed for its approval.[9]

Thereafter, on January 10, 2003, respondents filed another

manifestation and motion as well as supplement thereto,

claiming that GSIS was deducting new and unspecified sums

from the amount it was refunding to respondents. These new

deductions purportedly pertain to another set of COA

disallowances.[10]

On January 21, 2003, respondents again filed a

motion[11] praying for the inclusion in the refundable amount of

dividends on the management contribution to the Provident Fund

(motion for payment of dividends). Respondents claimed that the

contribution, which amounted to Fifty Million Pesos (P50M),

was retained by GSIS for more than five years and thus earned a

considerable sum of income while under its control. GSIS

declared and paid dividends on said contribution to incumbent

officials and employees, but refused to extend the same benefitsto respondents/retirees.

On March 6, 2003, GSIS filed a joint comment[12] to respondents

two foregoing motions contending that the new deductions are

legitimate. The deductions pertain to car loan arrearages,

disallowed employees compensation claims and the like. As for

the dividends on the Provident Fund contributions, respondents

are not entitled to the same because while the first petition was

pending, the contributions were not actually remitted to the fund

but were withheld by COA pursuant to its earlier disallowance.

On October 2, 2003, respondents filed another motion

[13]

for anorder to compel the GSIS to pay dividends on the Provident

Fund contributions pending resolution of their other motions.

They also sought refund of Permanent Partial Disability (PPD)

benefits that GSIS supposedly paid to some of the respondents,

but once again arbitrarily deducted from the amount which the

Court ordered to be refunded.

In a minute resolution[14] dated November 11, 2003, we denied

the last motion for lack of merit. We likewise denied with

finality respondents motion for reconsideration from the denial

of said motion.[15]

We now resolve the matters raised by the parties.

On the amendatory motion, it must be clarified that the question

raised before this Court in the second petition was the issue of

the Boards jurisdiction to resolve respondents claim for refund

of amounts representing deductions from their retirement

benefits. What was assailed in the second petition was the

appellate courts ruling that the Board had jurisdiction over

respondents claim since there was no identity of subject matter

between the proceedings then pending before the COA and the

petition brought by respondents before the Board. The Court of

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Appeals did not rule on the main controversy of whether COA

disallowances could be deducted from retirement benefits

because the Board ordered the dismissal of respondents claim for

alleged lack of jurisdiction, before it could even decide on the

principal issue.

Consequently, the only matter that was properly elevated to this

Court was the issue of whether or not the Board had jurisdiction

over respondents demands. We did not resolve the i ssue of

whether or not the deductions were valid under Section 39 of RA

8291, for the simple reason that the Board, as well as the

appellate court, did not tackle the issue. The doctrine of primary

jurisdiction[16] would ordinarily preclude us from resolving the

matter, which calls for a ruling to be first made by the Board. It

is the latter that is vested by law with exclusive and original

jurisdiction to settle any dispute arising under RA 8291, as well

as other matters related thereto.[17]

However, both the GSIS and respondents have extensively

discussed the merits of the case in their respective pleadings and

did not confine their arguments to the issue of jurisdiction. Respondents, in fact, submit that we should resolve

the main issue on the ground that it is a purely legal question.

Respondents further state that a remand of the case to the Board

would merely result in unnecessary delay and needless expense

for the parties. They thus urge the Court to decide the main

question in order to finally put an end to the controversy.

Indeed, the principal issue pending before the Board does not

involve any factual question, as it concerns only the correct

application of the last paragraph of Section 39, RA 8291. The

parties agreed that the lone issue is whether COA disallowances

could be legally deducted from retirement benefits on the groundthat these were respondents monetary liabilities to the GSIS

under the said provision. There is no dispute that the amounts

deducted by GSIS represented COA disallowances. Thus, the

only question left for the Board to decide is whether the

deductions are allowed under RA 8291.

Under certain exceptional circumstances, we have taken

cognizance of questions of law even in the absence of an initial

determination by a lower court or administrative body. In China

Banking Corporation v. Court of Appeals,[18] the Court held:

At the outset, the Courts attention is drawn to the fact that since

the filing of this suit before the trial court, none of the substantial

issues have been resolved. To avoid and gloss over the issues

raised by the parties, as what the trial court and respondent Court

of Appeals did, would unduly prolong this litigation involving a

rather simple case of foreclosure of mortgage. Undoubtedly, this

will run counter to the avowed purpose of the rules, i.e., to assist

the parties in obtaining just, speedy and inexpensive

determination of every action or proceeding. The Court,therefore, feels that the central issues of the case, albeit

unresolved by the courts below, should now be settled specially

as they involved pure questions of law. Furthermore, the

pleadings of the respective parties on file have amply ventilated

their various positions and arguments on the matter necessitating

prompt adjudication.

In Roman Catholic Archbishop of Manila v. Court of

Appeals,[19] the Court likewise held that the remand of a case is

not necessary where the court is in a position to resolve the

dispute based on the records before it. The Court will decide

actions on the merits in order to expedite the settlement of acontroversy and if the ends of justice would not be subserved by

a remand of the case.

Here, the primary issue calls for an application of a specific

provision of RA 8291 as well as relevant jurisprudence on the

matter. No useful purpose will indeed be served if we remand

the matter to the Board, only for its decision to be elevated again

to the Court of Appeals and subsequently to this Court. Hence,

we deem it sound to rule on the merits of the controversy rather

than to remand the case for further proceedings.

The last paragraph of Section 39, RA 8291 specifically provides:

SEC. 39. Exemption from Tax, Legal Process and Lien.-

x x x x x x x x x

The funds and/or the properties referred to herein as well as the

benefits, sums or monies corresponding to the benefits under this

Act shall be exempt from attachment, garnishment, execution,

levy or other processes issued by the courts, quasi-judicial

agencies or administrative bodies incl uding Commission on

Audi t (COA) disallowances and from all financial obligations of

the members, including his pecuniary accountability arising from

or caused or occasioned by his exercise or performance of his

official functions or duties, or incurred relative to or in

connection with his position or work except when his monetary

li abili ty, contractual or otherwi se, is in favor of the GSIS .

It is clear from the above provision that COA disallowances

cannot be deducted from benefits under RA 8291, as the same

are explicitly made exempt by law from such deductions.

Retirement benefits cannot be diminished by COA disallowances

in view of the clear mandate of the foregoing provision. It is a

basic rule in statutory construction that if a statute is clear, plain

and free from ambiguity, it must be given its literal meaning and

applied without interpretation. This is what is known as plain-

meaning rule or verba legis.[20]

Accordingly, the GSIS interpretation of Section 39 that COA

disallowances have become monetary liabilities of respondents

to the GSIS and therefore fall under the exception stated in the

law is wrong. No interpretation of the said provision is necessary

given the clear language of the statute. A meaning that does notappear nor is intended or reflected in the very language of the

statute cannot be placed therein by construction.[21]

Moreover, if we are to accept the GSIS interpretation, then it

would be unnecessary to single out COA disallowances as

among those from which benefits under RA 8291 are exempt. In

such a case, the inclusion of COA disallowances in the

enumeration of exemptions would be a mere surplusage since the

GSIS could simply consider COA disallowances as monetary

liabilities in its favor. Such a construction would empower the

GSIS to withdraw, at its option, an exemption expressly granted

by law. This could not have been the intention of the statute.

That retirement pay accruing to a public officer may not be

withheld and applied to his indebtedness to the government has

been settled in several cases. In Cruz v. Tantuico, Jr.,[22] the

Court, citing Hunt v. Hernandez ,[23] explained the reason for

such policy thus:

x x x we are of the opinion that the exemption should be liberally

construed in favor of the pensioner. Pension in this case is a

bounty flowing from the graciousness of the Government

intended to reward past services and, at the same time, to provide

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the pensioner with the means with which to support himself and

his family. Unless otherwise clearly provided, the pension

should inure wholly to the benefit of the pensioner. It is true that

the withholding and application of the amount involved was had

under section 624 of the Administrative Code and not by any

judicial process, but if the gratuity could not be attached or

levied upon execution in view of the prohibition of section 3 of

Act No. 4051, the appropriation thereof by administrative action,

if allowed, would lead to the same prohibited result and enablethe respondents to do indirectly what they can not do directly

under section 3 of Act No. 4051. Act No. 4051 is a later statute

having been approved on February 21, 1933, whereas the

Administrative Code of 1917 which embodies section 624 relied

upon by the respondents was approved on March 10 of that year.

Considering section 3 of Act No. 4051 as an exception to the

general authority granted in section 624 of the Administrative

Code, antagonism between the two provisions is avoided.

(Underscoring supplied)

The above ruling was reiterated in Tantuico, Jr. v.

Domingo,[24]

where the Court similarly declared that benefitsunder retirement laws cannot be withheld regardless of the

petitioners monetary liability to the government.

The policy of exempting retirement benefits from attachment,

levy and execution, as well as unwarranted deductions, has been

embodied in a long line of retirement statutes. Act No.

4051,[25] which provides for the payment of gratuity to officers

and employees of the Insular Government upon retirement due to

reorganization, expressly provides in its Section 3 that (t)he

gratuity provided for in this Act shall not be attached or levied

upon execution.

The law which established the GSIS, Commonwealth Act No.

186 (CA No. 186),[26] went further by providing as follows:

SEC. 23. Exemptions from legal process and liens. No policy of

life insurance issued under this Act, or the proceeds

thereof, except those corr esponding to the annual

premium thereon in excess of five hundred pesos per annum,

when paid to any member thereunder, shall be liable to

attachment, garnishment, or other process, or to be seized, taken,

appropriated, or applied by any legal or equitable process or

operation of law to pay any debt or liability of such member, or

his beneficiary, or any other person who may have a right

thereunder, either before or after payment; nor shall the proceeds

thereof, when not made payable to a named beneficiary,

constitute a part of the estate of the member for payment of his

debt.

Presidential Decree No. 1146,[27] which amended CA No. 186,

likewise contained a provision exempting benefits from

attachment, garnishment, levy or other processes. However, the

exemption was expressly made inapplicable to obligations of the

member to the System, or to the employer, or when the benefits

granted are assigned by the member with the authority of the

System.[28]

The latest GSIS enactment, RA 8291,[29] provides for a more

detailed and wider range of exemptions under Section 39. Aside

from exempting benefits from judicial processes, it likewise

unconditionally exempts benefits from quasi-judicial and

administrative processes, including COA disallowances, as well

as all financial obligations of the member. The latter includes

any pecuniary accountability of the member which arose out ofthe exercise or performance of his official functions or duties or

incurred relative to his position or work. The only exception to

such pecuniary accountability is when the same is in favor of the

GSIS.

Thus, monetary liability in favor of GSIS refers to indebtedness

of the member to the System other than those which fall under

the categories of pecuniary accountabilities exempted under the

law. Such liability may include unpaid social insurance

premiums and balances on loans obtained by the retiree from the

System, which do not arise in the performance of his duties and

are not incurred relative to his work. The general policy, asreflected in our retirement laws and jurisprudence, is to exempt

benefits from all legal processes or liens, but not from

outstanding obligations of the member to the System. This is to

ensure maintenance of the GSIS fund reserves in order to

guarantee fulfillment of all its obligations under RA 8291.

Notwithstanding the foregoing, however, we find it necessary to

nonetheless differentiate between those benefits which were

properly disallowed by the COA and those which were not.

Anent the benefits which were improperly disallowed, the same

rightfully belong to respondents without qualification. As for

benefits which were justifiably disallowed by the COA, the same

were erroneously granted to and received by respondents who

now have the obligation to return the same to the System.

It cannot be denied that respondents were recipients of benefits

that were properly disallowed by the COA. These COA

disallowances would otherwise have been deducted from their

salaries, were it not for the fact that respondents retired before

such deductions could be effected. The GSIS can no longer

recover these amounts by any administrative means due to the

specific exemption of retirement benefits from COA

disallowances. Respondents resultantly retained benefits to

which they were not legally entitled which, in turn, gave rise to

an obligation on their part to return the amounts under the

principle of solutio indebiti.

Under Article 2154 of the Civil Code,[30] if something is received

and unduly delivered through mistake when there is no right to

demand it, the obligation to return the thing arises. Payment byreason of mistake in the construction or application of a doubtful

or difficult question of law also comes within the scope

of solutio indebiti.[31]

In the instant case, the confusion about the increase and payment

of benefits to GSIS employees and executives, as well as its

subsequent disallowance by the COA, arose on account of the

application of RA 6758 or the Salary Standardization Law and

its implementing rules, CCC No. 10. The complexity in the

application of these laws is manifested by the several cases that

have reached the Court since its passage in 1989.[32] The

application of RA 6758 was made even more difficult when itsimplementing rules were nullified for non-

publication.[33] Consequently, the delivery of benefits to

respondents under an erroneous interpretation of RA 6758 gave

rise to an actionable obligation for them to return the same.

While the GSIS cannot directly proceed against respondents

retirement benefits, it can nonetheless seek restoration of the

amounts by means of a proper court action for its

recovery. Respondents themselves submit that this should be the

case,[34] although any judgment rendered therein cannot be

enforced against retirement benefits due to the exemption

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provided in Section 39 of RA 8291. However, there is no

prohibition against enforcing a final monetary judgment against

respondents other assets and properties.This is only fair and

consistent with basic principles of due process.

As such, a proper accounting of the amounts due and refundable

is in order. In rendering such accounting, the parties must

observe the following guidelines:

(1) All deductions from respondents retirement benefits should

be refunded except those amounts which may properly be

defined as monetary liability to the GSIS;

(2) Any other amount to be deducted from retirement benefits

must be agreed upon by and between the parties; and

(3) Refusal on the part of respondents to return disallowed

benefits shall give rise to a right of action in favor of GSIS

before the courts of law.

Conformably, any fees due to Atty. Sundiam for his professional

services may be charged against respondents retirement benefits.

The arrangement, however, must be covered by a proper

agreement between him and his clients under (2) above.

As to whether respondents are entitled to dividends on the

provident fund contributions, the same is not within the issues

raised before the Court. The second petition refers only to the

legality of the deductions made by GSIS from respondents

retirement benefits. There are factual matters that need to be

threshed out in determining respondents right to the payment of

dividends, in view of the GSIS assertion that the management

contributions were not actually remitted to the fund. Thus, the

payment of dividends should be the subject of a separate claim

where the parties can present evidence to prove their respective

assertions. The Court is in no position to resolve the matter since

the material facts that would prove or disprove the claim are not

on record.

In the interest of clarity, we reiterate herein our ruling that there

is no identity of subject matter between the COA proceedings,

from which the first petition stemmed, and respondents claim of

refund before the Board. While the first petition referred to the

propriety of the COA disallowances per se, respondents claim

before the Board pertained to the legality of deducting the COA

disallowances from retirement benefits under Section 39 of RA

8291.

Finally, on respondents claim that the GSIS acted in bad faith

when it deducted the COA disallowances from their retirement

benefits, except for bare allegations, there is no proof or

evidence of the alleged bad faith and partiality of the

GSIS. Moreover, the latter cannot be faulted for taking measures

to ensure recovery of the COA disallowances since respondents

have already retired and would be beyond its administrative

reach. The GSIS merely acted upon its best judgment and chose

to err in the side of prudence rather than suffer the consequence

of not being able to account for the COA disallowances. It

concededly erred in taking this recourse but it can hardly be

accused of malice or bad faith in doing so.

WHEREFORE, in view of the foregoing, the April 16,2002 Decision in G.R. Nos. 138381 and 141625 is

AMENDED. In addition to the refund of amounts corresponding

to benefits allowed in G.R. No. 138381, the GSIS is ordered to

REFUND all deductions from retirement benefits EXCEPTamounts representing monetary liability of the respondents to the

GSIS as well as all other amounts mutually agreed upon by the

parties.

SO ORDERED.

G.R. No. 180388 January 18, 2011

GREGORIO R. VIGILAR, SECRETARY OF THEDEPARTMENT OF PUBLIC WORKS AND HIGHWAYS(DPWH), DPWH UNDERSECRETARIES TEODORO E.ENCARNACION AND EDMUNDO E. ENCARNACIONAND EDMUNDO V. MIR, DPWH ASSISTANTSECRETARY JOEL L. ALTEA, DPWH REGIONALDIRECTOR VICENTE B. LOPEZ, DPWH DISTRICTENGINEER ANGELITO M. TWAÑO, FELIX A.DESIERTO OF THE TECHNICAL WORKING GROUPVALIDATION AND AUDITING TEAM, ANDLEONARDO ALVARO, ROMEO N. SUPAN, VICTORINOC. SANTOS OF THE DPWH PAMPANGA 2NDENGINEERING DISTRICT, Petitioners,vs.

ARNULFO D. AQUINO, Respondent.

D E C I S I O N

SERENO, J.:

Before the Court is a Petition for Review on Certiorar i1 under

Rule 45 of the Rules of Court, assailing the Decision2 of the

Court of Appeals in C.A.-G.R. CV No. 82268, dated 25

September 2006.

The antecedent facts are as follows:

On 19 June 1992, petitioner Angelito M. Twaño, then Officer-in-

Charge (OIC)-District Engineer of the Department of Public

Works and Highways (DPWH) 2nd Engineering District of

Pampanga sent an Invitation to Bid to respondent Arnulfo D.

Aquino, the owner of A.D. Aquino Construction and Supplies.

The bidding was for the construction of a dike by bulldozing a

part of the Porac River at Barangay Ascomo-Pulungmasle,

Guagua, Pampanga.

Subsequently, on 7 July 1992, the project was awarded to

respondent, and a "Contract of Agreement" was thereafter

executed between him and concerned petitioners for the amount

of PhP1,873,790.69, to cover the project cost.

By 9 July 1992, the project was duly completed by respondent,

who was then issued a Certificate of Project Completion dated

16 July 1992. The certificate was signed by Romeo M. Yumul,

the Project Engineer; as well as petitioner Romeo N. Supan,

Chief of the Construction Section, and by petitioner Twaño.

Respondent Aquino, however, claimed that PhP1,262,696.20

was still due him, but petitioners refused to pay the amount. He

thus filed a Complaint3 for the collection of sum of money with

damages before the Regional Trial Court of Guagua, Pampanga.

The complaint was docketed as Civil Case No. 3137.

Petitioners, for their part, set up the defense4 that the Complaint

was a suit against the state; that respondent failed to exhaust

administrative remedies; and that the "Contract of Agreement"

covering the project was void for violating Presidential Decree

No. 1445, absent the proper appropriation and the Certificate of

Availability of Funds.5

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On 28 November 2003, the lower court ruled in favor of

respondent, to wit:

WHEREFORE, premises considered, defendant Department ofPublic Works and Highways is hereby ordered to pay the

plaintiff Arnulfo D. Aquino the following:

1. PhP1,873,790.69, Philippine Currency, representing actual

amount for the completion of the project done by the plaintiff;

2. PhP50,000.00 as attorney’s fee and

3. Cost of this suit.

SO ORDERED. 6

It is to be noted

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