THIRD DIVISION

[G.R. No. 207682. December 10, 2014.]

CONRADO B. NICART, JR., as Provincial Governor of LGU-

Eastern Samar, petitioner, vs. MA. JOSEFINA C. TITONG and
JOSELITO M. ABRUGAR, SR., respondents.

DECISION

VELASCO, JR., J : p

The Case

Before Us is a Petition for Review under Rule 45 of the Rules of Court, seeking the: (a)
issuance of a temporary restraining order on the implementation of the writ of mandamus
dated April 16, 2013, issued by the Regional Trial Court, (RTC) Branch 2 of Borongan
City, Eastern Samar in Civil Case No. 4236, entitled Ma. Josefina M. Titong, et al. v.
Hon. Conrado B. Nicart, Jr., et al.; and (b) the annulment and setting aside of the RTC's
Decision dated April 11, 2013 as well as its June 20, 2013 Order, in said case.

The Facts

A few days prior to the end of his term, then Governor of Eastern Samar Ben P. Evardone
(Evardone) issued ninety-three (93) appointments between May 11, 2010 and June 29,
2010, including that of herein respondents Ma. Josefina Titong (Titong) and Joselito
Abrugar, Sr. (Abrugar), which appointments were later confirmed by the Sangguniang
Panlalawigan. Consequently, the appointees immediately assumed their respective
positions.

Upon submission, however, of the appointments to the Civil Service Commission (CSC)
Regional Office (CSCRO) No. VIII, all 93 appointments were disapproved for having
been made in violation of Section 2.1 of CSC Memorandum Circular No. 16, series of
2007. 1

Evardone appealed the disapproval but it was dismissed for non-payment of the requisite
filing fee and the appointments having been issued in violation of said circular.
Respondents, for their part, individually moved for reconsideration of the disapproval of
their respective appointments but later withdrew their motions via an Omnibus Joint
Motion and separately converted the same to an Appeal by means of a petition for review
with the CSC proper.

Meanwhile, on August 10, 2010, Titong and Abrugar requested the assistance of the CSC
with their claim for payment of their first salary which was denied by the Commission on
Audit (COA) Provincial Office and by petitioner, who at that time was already the
incumbent Governor.

Acting on the appeal, the CSC rendered Decision No. 10-0242 2 dated December 13,
2010, granting the petition, modifying the CSCRO's ruling, and declaring the
appointment of Titong and Abrugar valid on the ground that the two are qualified for the
positions to which they were appointed. The fallo of the Decision reads:

WHEREFORE, the Petition for Review of Ma. Josefina C. Titong and Joselito
M. Abrugar, Sr., both Provincial Government Department Heads (Human
Resource [M]anagement Office and [P]rovincial Planning and Development
Office, respectively), Provincial Government of Eastern Samar, is GRANTED.
Accordingly, the Order No. 100360 dated July 26, 2010 of the Civil Service
Commission Regional Office (CSCRO) No. VIII, Palo, Leyte, disapproving the
appointment of [93] employees, including the appointments of petitioners, for
failure to pay the appeal fee, and violation of CSC Memorandum Circular Nos.
3, s. 2011 and 16, s. 2007 is MODIFIED insofar as the appointment of Ma.
Josefina C. Titong and Joselito M. Abrugar, Sr. which are APPROVED. IHCDAS

Petitioner moved for reconsideration of said Decision, but it was denied by the CSC,
through Resolution No. 1100653 3 dated May 27, 2011, the dispositive portion of which
reads:

WHEREFORE, the Motion for Reconsideration of Governor Conrado B.

Nicart, Jr., Provincial Government of Eastern Samar, is DENIED. Accordingly,
CSC Decision No. 10-0242 dated December 13, 2010 which approved the
appointments of Ma. Josefina C. Titong and Joselito M. Abrugar, Sr. as
Provincial Government Department Heads (Human Resource Management
Office and Planning and Development Office, respectively), STANDS. The
Provincial Government of Eastern Samar is directed to pay the salaries and
benefits of Titong and Abrugar from the time that they have assumed their
respective positions.

Undaunted, petitioner filed before the Court of Appeals (CA) a petition for review of the
above CSC Decision and Resolution, docketed as CA-G.R. SP No. 119975, entitled
Conrado B. Nicart, Jr. v. Ma. Josefina C. Titong and Joselito M. Abrugar, Sr., presenting
the sole issue of whether or not the appointments of herein respondents are valid.

There, petitioner, in the main, argues that the appointments were in violation of said
Section 21 of CSC Memorandum Circular No. 16, s. 2007 and that the exemptions laid
down in Nazareno v. City of Dumaguete 4 were not met for the following reasons: (a)
there was no need to fill up the vacancies immediately; and (b) the appointments were
made en masse.

Respondents, for their part, maintain that their appointments were a valid exercise by
Evardone of his power of appointment.

Pending resolution thereof by the CA, the CSC, upon respondents' motion, issued a writ
of execution under CSC Resolution No. 1101319 dated October 6, 2011, ordering
petitioner and the Provincial Government to pay the salaries and other emoluments due to
respondents from the time of their assumption of office on June 21, 2010 up to the
present.

In view of petitioner's continued refusal to pay their salaries, among others, despite the
service of the writ of execution upon him and with CA-G.R. SP No. 119975 still pending
resolution, respondents filed before the RTC a Petition for Mandamus with Unspecified
Damages against herein petitioner, the Vice Governor, and the members of the
Sangguniang Panlalawigan, docketed as in Civil Case No. 4236. 5 In it, they prayed that
therein respondents be directed to: (a) pay Titong and Abrugar their salaries and other
emoluments or benefits due them from their assumption of office on June 21, 2010 up to
the present; (b) incorporate their salaries in the annual budget of the Province; (c) pay
herein respondents damages and attorney's fees; and (d) recognize their appointments as
valid, among others. 6

Respondents, in their Comment, maintain that the petition should be dismissed on any of
the following grounds, viz.: (a) mandamus is not the proper remedy; (b) litis pendentia,
since there is another action pending between the same parties and for the same cause of
action; (c) wilful and deliberate act of forum shopping is punishable by summary
dismissal of the actions filed; and (d) the action is already moot and academic as regards
petitioner's co-respondents thereat since they are being compelled to do an act that has
already been done. 7

CA Ruling in CA-G.R. SP No. 119975

On July 3, 2012, with Civil Case No. 4236 still pending, the CA rendered a Decision 8 in
CA-G.R. SP No. 119975 granting the petition and ruling that respondents' appointments
are not valid for having been issued in violation of CSC Rules and for failure to comply
with the requisites set forth by jurisprudence. 9 Consequently, the CA held, respondents
can no longer claim entitlement to the payment of their salaries from the government and
that it is the appointing authority who shall be personally liable for their salaries, as
directed by Section 4, Rule VI of the Revised Omnibus Rules on Appointments and
Other Personnel Actions which states:
 Sec. 4. The appointing authority shall be personally liable for the salary of the
appointees whose appointments have been disapproved for violation of pertinent
laws such as the publication requirement pursuant to RA 7041.

The fallo of the Decision reads: ICTHDE

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED

and the assailed Resolution No. 1100653 dated May 27, 2011 is set aside.

SO ORDERED.

Aggrieved, respondents sought recourse from this Court via a Rule 45 Petition docketed
as G.R. No. 203835. 10

The Court's Resolution in G.R. No. 203835

Prior to the RTC's resolution of the petition for mandamus, We denied the petition for
review of the CA Decision via Our Resolution of February 27, 2013, ruling that there is
no reversible error in the challenged decision to warrant the exercise of the Court's
discretionary appellate jurisdiction, thereby affirming the CA's finding that respondents'
appointments are invalid. Aggrieved, respondents sought reconsideration thereof.

RTC Decision in Civil Case No. 4236

Pending this Court's action on respondents' motion for reconsideration in G.R. No.
203835, the RTC, on April 11, 2013, rendered the assailed Decision 11 in Civil Case No.
4236 in favor of Titong and Abrugar, disposing of the case in this wise:

WHEREFORE, all the foregoing premises considered, the herein Petition for
Mandamus is hereby GRANTED. The prayer of respondents in their Comment
asking for the dismissal of this petition is hereby DENIED for lack of merit.

Accordingly, judgment is hereby rendered COMMANDING herein

RESPONDENTS and the persons, officials or subordinates under their
respective authorities, TO:

1. PAY IMMEDIATELY the salaries and other emoluments or benefits due to

herein Petitioners MA. JOSEFINA C. TITONG and JOSELITO M.
ABRUGAR, JR., as Human Resource Management Officer (HRMO),
and Provincial Planning and Development Coordinator (PDDC),
respectively, both Provincial Government Department Head (PGDH) of
the Provincial Government of Eastern Samar, from their assumption to
office on June 21, 2010 up to the present as they are both entitled to,
now and in the future;
 2. APPROPRIATE IMMEDIATELY the necessary funds therefore (sic), in case
the appropriated funds therefore (sic) have either been reverted,
realigned or otherwise exhausted or spent;

3. INCORPORATE IMMEDIATELY such funds if none, in the Annual Budget

of the Province for now, and/or in the future as they may be entitled to;

4. GIVE IMMEDIATELY due or rightful recognition to [Titong and Abrugar]

as the duly appointed [HRMO] and [PPDC], respectively, both [PPDH]
and accord them and repose in them their corresponding duties,
responsibilities, rights and privileges as such Department Heads or
Officers per Civil Service Commission proper decision;

5. IMMEDIATELY, for nominal respondents, to allot, allocate, pass in audit or

internal control and disburse the funds above-mentioned;

6. PAY IMMEDIATELY, for respondent [Nicart], in his personal capacity, the

amount of ONE HUNDRED FIFTY (Php150,000.00) PESOS each
petitioner as nominal damages; the amount of FIFTY THOUSAND
(Php50,000.00) as attorneys fees; and the COSTS of suit.

xxx xxx xxx

SO ORDERED. 12

According to the RTC, the non-issuance by the CA of a restraining order or injunction

restraining it from proceeding with Civil Case No. 4236, coupled with respondents' filing
of a Rule 45 petition before this Court (G.R. No. 203835) thereby staying the Decision of
the CA which reversed the ruling of the CSC and declared respondents' appointment as
invalid, results in the continued effectivity of the CSC Decision in respondents' favor. 13
Furthermore, the RTC held that this is consistent with Section 82 of the Uniform Rules
on Administrative Cases in Civil Service (CSC Memorandum Circular No. 19, s. 1999;
CSC Resolution No. 99-1936 dated August 31, 1999), which states that "[t]he filing and
pendency of a petition for review with the [CA] or certiorari with the [SC] shall not stop
the execution of the final decision of the Commission, unless the Court issues a
restraining order or an injunction." 14

Their motion for reconsideration 15 having been denied, 16 petitioner now seeks
recourse from this Court by way of the instant petition presenting the following issues:
HcDATC

I. The Court of Appeals Sixth Division ruled that herein respondents'

appointment are (sic) not valid and they are not entitled to claim salaries
from the government. The Supreme Court affirmed the Court of Appeals
Decision. Did the court a quo gravely err in granting herein respondents'
petition for mandamus?
 II. Having been made aware of the Court of Appeals' Decision reversing the
Civil Service Commission Resolution, did the court a quo gravely err in
enforcing the Decision of the Civil Service Commission?

III. With the recent Resolution of the Supreme Court which affirmed the
Decision of the Court of Appeals, can the petition validly refuse to
comply with the court a quo's writ of mandamus? Will such refusal
constitute contempt? 17

The Court's Resolution in G.R. No. 203835

denying Reconsideration of the February 27, 2013 Resolution

Meanwhile, on February 10, 2014, We issued a Resolution affirming our February 27,
2013 Resolution where We upheld the finding of the CA that the appointments of herein
respondents are invalid, thereby resolving with finality G.R. No. 203835 and writing finis
to the question on the status of their appointment.

The Issue

The core issue for the Court's resolution is whether or not the enforcement of the
Decision of the CSC upholding the legality of respondents' appointment remains to be
proper considering Our affirmation of the invalidity thereof in Our Resolutions of
February 27, 2013 and February 10, 2014.

Our Ruling

The petition is meritorious.

The central foundation for the RTC's continuation of the proceedings in Civil Case No.
4236 and the rendering of the assailed Decision, among others, is Section 82 of CSC
Memorandum Circular No. 19, s. 1999. 18 Said provision states that the filing and
pendency of a petition for review with the [CA] or certiorari with the Supreme Court
shall not stop the execution of the final decision of the Commission unless the Court
issues a restraining order or an injunction. This, coupled with the non-issuance by the CA
of an injunction or restraining order upon CSC Resolution No. 1100653, and its opinion
that the CA's decision in CA-G.R. SP No. 119975 will not constitute res judicata or in
any way affect the petition for mandamus considering that the reliefs sought were
allegedly not founded on the same facts, convinced the trial court that there is sufficient
basis to grant the petition and issue a writ of mandamus compelling petitioner, among
others, to acknowledge respondents' appointment and to pay the salaries and emoluments
due them. CSTDEH

Ordinarily, the non-issuance by the CA of an injunction or restraining order would make

the CSC Resolution executory pending appeal per Section 82 of CSC Memorandum
Circular No. 19, s. 1999, making it a proper subject of a petition for mandamus.
However, what the RTC failed to take into account is the fact that the propriety of the
very directives under the writ of mandamus sought is wholly reliant on the CA's
resolution of CA-G.R. SP No. 119975 and that judicial courtesy dictates that it suspend
its proceedings and await the CA's resolution of the petition for review.

When the RTC rendered the assailed Decision, it was well aware of the pendency of CA-
G.R. SP No. 119975 the subject of which is the reversal and setting aside of the CSC's
affirmation of respondents' appointments, embodied in the very Resolution which
respondents seek to be enforced in the petition for mandamus. Nevertheless, the trial
court, implying that the petition for review pending before the CA will not, in any way,
affect or be affected by the petition for mandamus, held that "such review of the [CA]
deals primarily with the validity or invalidity of the alleged midnight appointments . . .,"
19 as opposed to the petition before it which only seeks the enforcement of the CSC's
Resolution. It then went on to state that "the ground relied upon by [petitioner] is the
mere fact that [respondents'] appointments were allegedly a 'midnight appointments' (sic)
which the [CSC], however, ruled out to be devoid with (sic) merit. The prohibition under
Article VII, Section 15 of the Constitution, it must be noted, applies only to presidential
appointments, but not to local appointments, like in this case. This is true even if the
grounds relied [upon] by [petitioner] are with respect to CSC Circulars and/or
Memorandum, Resolutions, Laws, Rules, and Regulations relative to the civil service."
20

Furthermore, the trial court held that it is an accepted principle that "quasi-judicial bodies
like the Civil Service Commission are better-equipped in handling cases involving the
employment status of employees as those in the Civil Service since it is within the field
of their expertise" 21 and that "the appointments of [respondents] having been accepted
by them and in fact assumed office[,] shall remain in force and in effect until disapproved
by the [CSC], the only office who has the authority to recall such appointments by
[respondents]." 22

To cap it all off, the trial court issued the writ of mandamus and directed petitioner,
among others, to immediately pay respondents' salaries, emoluments, and other benefits
due them by virtue of the positions to which they were appointed to, and to recognize the
validity of their appointments, among others.

In this regard, the Court has, in several cases, held that there are instances where, even if
there is no writ of preliminary injunction or temporary restraining order issued by a
higher court, it would be proper for a lower court or court of origin to suspend its
proceedings on the precept of judicial courtesy. 23 Unfortunately, the RTC did not
find the said principle applicable in Civil Case No. 4236 as it disregarded the fact that
there is an intimate correlation between the two proceedings-though technically no
prejudicial question exists as it properly pertains to civil and criminal cases. 24
To Our mind, considering that the mandamus petition heavily relies on the validity or
invalidity of the appointments which issue is to be resolved by the CA, the court a quo
incorrectly concluded that it may take cognizance of the petition without erroneously
disregarding the principle of judicial courtesy. What is more, the RTC went beyond the
issues of the case when it affirmed the validity of respondents' appointments, considering
that the only issue presented before it is the propriety of executing CSC Resolution No.
1100653 through a writ of mandamus despite the pendency of CA-G.R. SP No. 119975.
25 By making said findings, conclusions, and directives, the RTC, in effect, affirmed the
CSC's finding that the disputed appointments were valid, pre-empted the CA's Resolution
of the appeal, and made its own determination thereon, despite the non-presentation of
said question before it and the pendency thereof before the CA. And all of this was made
under the pretext of enforcing CSC Resolution No. 1100653 via a writ of mandamus. cTADCH

Nevertheless, enforcement of the disputed CSC Resolution is no longer proper and

necessary in light of Our Resolutions dated February 27, 2013 and February 10, 2014,
affirming the CA's ruling that respondents' appointments were not valid, making the issue
on the propriety of enforcing the CSC Resolution pending appeal, moot and academic.

A moot and academic case is one that ceases to present a justiciable controversy by virtue
of supervening events, so that a declaration thereon would be of no practical value. As a
rule, courts decline jurisdiction over such case, or dismiss it on ground of mootness. 26
Whatever judgment is reached, the same can no longer have any practical legal effect or,
in the nature of things, can no longer be enforced. 27

Here, the supervening event contemplated is Our issuance of two minute resolutions-one
denying the petition, and the second denying reconsideration thereof-thereby affirming
CA's finding against the validity of respondents appointments and effectively reversing
the RTC's affirmation of the CSC's findings. It is well to note that although contained in a
minute resolution, Our dismissal of the petition in G.R. No. 203835 was definitely a
disposition of the merits of the case and constituted a bar to a relitigation of the issues
raised there under the doctrine of res judicata. When we dismissed the petition and
denied reconsideration thereof, we effectively affirmed the CA ruling being questioned.
28

Having written finis to the issue of whether respondents' were validly appointed or not,
the mandamus now has no basis upon which its issuance can be anchored under the
principle of res judicata by conclusiveness of judgment. 29

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The

Decision dated April 11, 2013, the Order dated June 20, 2013, and the writ of mandamus
dated April 16, 2013, all issued by the Regional Trial Court, (RTC) Branch 2 of
Borongan City, Eastern Samar in Civil Case No. 4236, entitled Ma. Josefina M. Titong, et
al. v. Hon. Conrado B. Nicart, Jr., et al. are hereby ANNULLED and SET ASIDE. ECaScD
No pronouncement as to costs.

SO ORDERED.

Peralta, Villarama, Jr., Mendoza * and Reyes, JJ., concur.

||| (Nicart v. Titong, G.R. No. 207682, [December 10, 2014])

 EN BANC

[A.M. No. SB-14-21-J. September 23, 2014.]

[Formerly A.M. No. 13-10-06-SB]

RE: ALLEGATIONS MADE UNDER OATH AT THE SENATE

BLUE RIBBON COMMITTEE HEARING HELD ON
SEPTEMBER 26, 2013 AGAINST ASSOCIATE JUSTICE
GREGORY S. ONG, SANDIGANBAYAN

DECISION

PER CURIAM : p

The character of every act depends upon the circumstances in which it is done.

- Justice Oliver Wendell Holmes

This administrative complaint was filed by the Court En Banc after investigation into
certain allegations that surfaced during the Senate Blue Ribbon Committee Hearing
indicated prima facie violations of the Code of Judicial Conduct by an Associate Justice
of the Sandiganbayan. The investigation was conducted motu proprio pursuant to the
Court's power of administrative supervision over members of the Judiciary. 1 SEHACI

Factual Antecedents

In the middle of 2013, the local media ran an exposé involving billions of government
funds channeled through bogus foundations. Dubbed as the "pork barrel scam," as the
money was sourced from the Priority Development Assistance Fund allotted to members
of the House of Representatives and Senate, the controversy spawned massive protest
actions all over the country. In the course of the investigation conducted by the Senate
Committee on Accountability of Public Officers and Investigations (Blue Ribbon
Committee), the names of certain government officials and other individuals were
mentioned by "whistle-blowers" who are former employees of the alleged mastermind,
Janet Lim-Napoles (Mrs. Napoles), wife of an ex-military officer. These personalities
identified by the whistle-blowers allegedly transacted with or attended Mrs. Napoles'
parties and events, among whom is incumbent Sandiganbayan Associate Justice Gregory
S. Ong, herein respondent.
Benhur Luy (Luy), a cousin of Mrs. Napoles who had worked for several years with the
Napoleses, filed illegal detention charges against Mrs. Napoles who accused him of
double-dealing. When Luy went public with his story about Mrs. Napoles' anomalous
transactions and before the warrant of arrest was issued by the court, she reportedly tried
to reach out to the other whistle-blowers for them not to testify against her but instead
point to Luy as the one receiving and distributing the money.

Marina Sula (Sula) executed a Sworn Statement 2 before the National Bureau of
Investigation (NBI) on August 29, 2013, part of which reads:

32. In the sixteen (16) years that I worked with Ms. Napoles, I witnessed
several personalities visit our offices and join us as our special guests during
our parties and other special occasions.AIDTSE

33. These personalities who would either visit our office or join our events
and affairs are: Senator Franklin Drilon, Senator Jinggoy Estrada and family,
Senator Bong Revilla, Lani Mercado-Revilla, Bryan Revilla, Secretary Rene
Villa, Congressman Pichay and Wife, Congressman Plaza, Congressman
Ducut, DAR Director Theresita Panlilio, Catherine Mae Canlas Santos,
Pauline Labayen, Jen Corpuz (Staff of Senator Sotto), Mayor Rene
Maglanque, Atty. Dequina, Justice Gregory Ong, . . . .

34. Before the warrant of arrest was issued against Ms. Napoles, she told us
that that case could take four to five years to clear. She said, "Antayin niyo
munang ma-clear pangalan ko para makakilos ako at matulungan ko kayo".
Sinabi niya na meron na siyang kausap sa Ombudsman at sa
Sandiganbayan.

35. On 28 August 2013 while me and my companions were at the NBI, Janet
Lim Napoles called me. She was crying and ask[i]ng me not to turn my back
on her, that we should stay together. She said "kahit maubos lahat ng pera ko,
susuportahan ko kayo. Hintay[i]n nyo kasi lalabas na ang TRO ko."

xxx xxx xxx

38. Attorney Tan instructed us to implicate Benhur in case we were asked by

the NBI. He said "wala naman ipinakita sa inyong masama si Madam (Janet
Lim Napoles). Siguro wala naman kayong sama ng loob kay madam, kaya
nga idiin ninyo si Benhur na siya ang nag-utos at saka sa kanya ninyo
ibinibigay ang pera." 3 (Emphasis supplied.) IHEAcC

The following day, the social news network Rappler published an article by Aries Rufo
entitled "Exclusive: Napoles Parties with Anti-Graft Court Justice" showing a
photograph of Senator Jinggoy Estrada (Senator Estrada), one of the main public figures
involved in the pork barrel scam, together with Mrs. Napoles and respondent. The
reporter had interviewed respondent who quickly denied knowing Mrs. Napoles and
recalled that the photograph was probably taken in one of the parties frequently hosted by
Senator Estrada who is his longtime friend. Respondent also supposedly admitted that
given the ongoing pork barrel controversy, the picture gains a different context;
nevertheless, he insisted that he has untainted service in the judiciary, and further denied
he was the one advising Mrs. Napoles on legal strategies in connection with the Kevlar
helmet cases where she was acquitted by a Division of the Sandiganbayan of which
respondent is the Chairman and the then Acting Presiding Justice. 4

On September 12, 2013, Sula executed a "Karagdagang Sinumpaang Salaysay" 5

wherein she gave details regarding those persons named in her sworn statement, alleged
to have visited their office or attended their events, thus:

63) T: Ayon sa paragraph Nos. 32 at 33 ng iyong sinumpaang salaysay na may

petsang 29 Agosto 2013, nabanggit mo ang mga personalidad na
nakikita mong bumibisita sa inyong opisina o di kaya naman sa tuwing
may party o special occasions si JANET NAPOLES ay may mga special
guests kayo na kinabibilangan ng mga malalaking pulitiko at ang iba
naman ay may mga katungkulan sa gobyerno. Maari mo bang ilahad ang
mga pangyayari sa mga bawat pagkakataon na nakita mo sila sa iyong
pagkaka-alala? ETIHCa

S: Opo, iisa-isahin ko po ang mga pangyayari sa mga pagkakataon na nakita ko

po ang mga taong nabanggit ko:

xxx xxx xxx

w) Justice GREGORY ONG — Isang beses ko po siyang nakitang nagpunta

sa office sa 2501 Discovery Centre, Ortigas at nakita ko po silang
magkausap ni Madam JANET NAPOLES sa conference room.

xxx xxx xxx 6

In her testimony before the Senate Blue Ribbon Committee on September 26, 2013, Sula
was asked to confirm her statement regarding Justice Ong, thus:

THE CHAIRMAN. Thank you, Senator Grace.

Isang tanong lang kay Ms. Sula.

Sinabi niyo kanina may tinawagan si Ms. Napoles at sinabi niya, "Malapit na
lumabas yung TRO galing sa korte." May kilala pa ba si Janet Lim Napoles sa
huwes sa korte sa Sandiganbayan?

MS. SULA. Hindi ko po alam.

 THE CHAIRMAN. Your attention is called sa page —

MS. SULA. Sandiganbayan po, sorry. Mayroon po siyang binanggit na ano po

— EIDaAH

THE CHAIRMAN. Nandito sa page 20.

MS. SULA. Si Mr. Ong, po, Justice Ong po.

THE CHAIRMAN. Gregory Ong.

MS. SULA. Opo.

THE CHAIRMAN. Sa Sandiganbayan?

MS. SULA. Opo. aAcDSC

xxx xxx xxx 7 (Emphasis supplied.)

In a letter dated September 26, 2013 addressed to Chief Justice Maria Lourdes P.A.
Sereno, respondent meticulously explained the controversial photograph which raised
questions on his integrity as a magistrate, particularly in connection with the decision
rendered by the Sandiganbayan's Fourth Division in the Kevlar helmet cases, which
convicted some of the accused but acquitted Mrs. Napoles.

Respondent surmised that the photograph was taken during the birthday of Senator
Estrada in February, either in the year 2012 or 2013, but definitely not in 2010 or earlier.
He explained that he could vaguely remember the circumstances but it would have been
rude for him to prevent any guest from posing with him and Senator Estrada during the
party. On the nature of his association with Mrs. Napoles, respondent asserted:

(4) I can categorically state, on the other hand, that I have never attended
any party or social event hosted by Mrs. Napoles or her family, either
before she had a case with our court, or while she already had a pending
case with our court, or at any time afterwards. I have never, to use the term
of Mr. Rufo in his article, "partied" with the Napoleses. (Emphasis supplied.)

As to the Kevlar helmet cases, respondent said it was impossible for him to have been
advising Mrs. Napoles, as claimed by Mr. Rufo, as even the article itself noted that Mrs.
Napoles' own brother, Reynald L. Lim, (a.k.a. Reynaldo L. Francisco), a co-accused in
the case, was convicted by the Sandiganbayan. He stressed that these cases were decided
on the merits by the Sandiganbayan, acting as a collegial body and he was not even the
ponente of the decision. STDEcA
Respondent thus submitted himself to the discretion of the Chief Justice such that even
without being required to submit an explanation, he voluntarily did so "to defend [his]
reputation as a judge and protect the Sandiganbayan as an institution from unfair and
malicious innuendos."

On October 7, 2013, Chief Justice Sereno wrote the Members of this Court, citing the
testimonies of Luy and Sula before the Senate Blue Ribbon Committee "[t]hat the
malversation case involving Mrs. Janet Lim-Napoles, Major Jaime G. Napoles, Jenny
Lim Napoles, Reynaldo L. Francisco and other perpetrators was 'fixed' (inayos) through
the intervention of Justice Gregory S. Ong of the Sandiganbayan", to wit:

SEN. ANGARA.

Sa inyo, hindi niyo alam kung inayos iyong kaso na iyon? Kasi napakaraming
koneksiyon, 'di ba?

. . . Sige, huwag kang matakot, Benhur.

MR. LUY.

Alam ko, inayos ni Ms. Napoles iyon dahil may connect nga siya sa
Sandiganbayan

SEN. ANGARA.

Okay. ACcHIa

xxx xxx xxx

THE CHAIRMAN.

. . . Sinabi niyo kanina na may tinawagan si Ms. Napoles at sinabi niya

"Malapit na lumabas yung TRO galing sa korte." May kilala pa ba si
Janet Lim Napoles sa huwes sa korte sa Sandiganbayan?

xxx xxx xxx

MS. SULA.

Si Mr. Ong po, Justice Ong po.

THE CHAIRMAN.

Gregory Ong.
 MS. SULA.

Opo.

THE CHAIRMAN.

Sa Sandiganbayan?

MS. SULA.

Opo.

xxx xxx xxx 8

Chief Justice Sereno then requested the Court En Banc to conduct an investigation motu
proprio under this Court's power of administrative supervision over members of the
judiciary and members of the legal profession (referring to notaries public who were
alleged to have purposely left their specimen signatures, dry seals and notarial books with
Mrs. Napoles to facilitate the incorporation of non-governmental organizations [NGOs]
involved in the scam). 9 aEcADH

Under our Resolution dated October 17, 2013, the Court En Banc required respondent to
submit his comment and directed the NBI to furnish the Court with certified copies of the
affidavit of Luy.DaEcTC

On November 21, 2013, the Court received respondent's Comment. 10 Respondent

categorically denied any irregularity in the Kevlar helmet cases and explained the visit he
had made to Mrs. Napoles as testified by Sula.

On Sula's statement, respondent points out that Sula never really had personal knowledge
whether respondent is indeed the alleged "contact" of Mrs. Napoles at the
Sandiganbayan; what she supposedly "knows" was what Mrs. Napoles merely told her.
Hence, Sula's testimony on the matter is based purely on hearsay. Assuming that Mrs.
Napoles actually made the statement, respondent believes it was given in the context of
massive media coverage of the pork barrel scam exploding at the time. With the
consciousness of a looming criminal prosecution before the Office of the Ombudsman
and later before the Sandiganbayan, it was only natural for Mrs. Napoles to assure Sula
and others involved in their business operation that she would not leave or abandon them
and that she would do all that she can to help them just so they would not turn their backs
on her and become whistle-blowers. Thus, even if Mrs. Napoles made misrepresentations
to Sula regarding respondent as her "connection", she only had to do so in order to
convince Sula and her co-employees that the cases to be filed against them would be
"fixed."
As to Sula's statement that she personally witnessed respondent at one time visiting Mrs.
Napoles at her office and having a meeting with her at the conference room, respondent
said that at the birthday party of Senator Estrada where the controversial photograph was
taken, Mrs. Napoles engaged him in a casual conversation during which the miraculous
healing power of the robe or clothing of the Black Nazarene of Quiapo was mentioned.
When Mrs. Napoles told respondent that she is a close friend of the Quiapo Church's
parish priest, he requested her help to gain access to the Black Nazarene icon. Eventually,
respondent, who is himself a Black Nazarene devotee and was undergoing treatment for
his prostate cancer, was given special permission and was able to drape the Black
Nazarene's robe or clothing for a brief moment over his body and also receive a fragrant
ball of cotton taken or exposed to the holy image, which article he keeps to this day and
uses to wipe any ailing part of his body in order to receive healing. Because of such
favor, respondent out of courtesy went to see Mrs. Napoles and personally thank her.
Respondent stressed that that was the single occasion Sula was talking about in her
supplemental affidavit when she said she saw respondent talking with Mrs. Napoles at the
conference room of their office in Discovery Suites. STaCIA

Respondent maintains that there was nothing improper or irregular for him to have
personally seen Mrs. Napoles at the time in order to thank her, considering that she no
longer had any pending case with his court, and to his knowledge, with any other division
of the Sandiganbayan at the time and even until the date of the preparation of his
Comment. He thus prays that this Court duly note his Comment and accept the same as
sufficient compliance with the Court's Resolution dated October 17, 2013.

This Court upon evaluation of the factual circumstances found possible transgressions of
the New Code of Judicial Conduct committed by respondent. Accordingly, a Resolution
was issued on January 21, 2014 stating that:

WHEREFORE, the Court hereby resolves to have the instant administrative

matter RE-DOCKETED as A.M. No. SB-14-21-J (Re: Allegations Made
Under Oath at the Senate Blue Ribbon Committee Hearing held on
September 26, 2013 against Associate Justice Gregory S. Ong,
Sandiganbayan), and ASSIGNS the same to retired Supreme Court Justice
Angelina Sandoval-Gutierrez for investigation, report and recommendation
within a period of sixty (60) days from notice hereof. AICTcE

The Court further resolves to NOTE the letter dated January 7, 2014 of Atty.
Joffre Gil C. Zapata, Executive Clerk of Court III, Sandiganbayan, Fourth
Division, in compliance with the resolution of the Court En Banc dated
December 3, 2013, transmitting the original records of Criminal Case Nos.
26768 and 26769. Atty. Zapata is INFORMED that there is no more need to
transmit to this Court the post-sentence investigation reports and other reports
on the supervisory history of the accused-probationers in Criminal Case Nos.
26768 and 26769.
 Report and Recommendation of the Investigating Justice

Justice Angelina Sandoval-Gutierrez, a retired Member of this Court, submitted her

report with the following findings and conclusions:

FACTUAL ANTECEDENTS

1. THE KEVLAR CASE

Two criminal cases were filed with the Sandiganbayan sometime in 2001 —
Criminal Case No. 26768 for Falsification of Public Documents and Criminal
Case No. 26769 for Violation of Section 3(e) of the Anti-Graft Law. Charged
were several members of Philippine Marine Corps and civilian employees
including Ms. Janet L. Napoles (Napoles), her mother Magdalena Francisco
(now deceased), her brother Reynaldo Francisco and wife Anna Marie
Dulguime, and her (Napoles') three employees.

These cases are referred to as the Kevlar case because the issue involved is the
same — the questionable purchase of 500 Kevlar helmets by the Philippine
Marine Corps in the amount of P3,865,310.00 from five suppliers or companies
owned by Napoles.

The prosecution alleged inter alia that the accused, acting in conspiracy,
released the payment although there was yet no delivery of the Kevlar helmets;
that the suppliers are mere dummies of Napoles; and that the helmets were made
in Taiwan, not in the U.S.A.

Napoles' husband, Major Jaime Napoles, was dropped from the two
Informations in an Order issued by the Ombudsman on March 18, 2002. EDISaA

Napoles' mother, brother, and sister-in-law were among those convicted for the
lesser crime of Falsification of Public Documents and sentenced to suffer the
penalty of 4 years and 2 months of prision correccional to 8 years and 1 day of
prision mayor and each to pay P5,000.00. They all underwent probation.

Napoles and six members of the Philippine Marine Corps were acquitted in both
cases.

The court ruled that Napoles "was not one of the dealer-payees in the
transaction in question. Even if she owns the bank account where the 14 checks
were later deposited, this does not in itself translate to her conspiracy in the
crimes charged . . . ."

xxx xxx xxx

THE INVESTIGATION
 xxx xxx xxx

I. During the investigation, Benhur testified that he and Napoles are second
cousins. After passing the Medical Technology Licensure Examination in 2002,
he was employed in the JLN (Janet Lim Napoles) Corporation as Napoles'
personal assistant. As such, he was in charge of disbursements of her personal
funds and those of her office. He was also in charge of government transactions
of the corporation and kept records of its daily business activities.

In the course of Benhur's employment at the JLN Corporation, Napoles

mentioned to him the Kevlar case, then pending in the Sandiganbayan, saying
she has a "connect" in that court who would help her.

When asked about his testimony before the Senate Blue Ribbon Committee
concerning the Kevlar case, Benhur declared that Napoles' "connect" with the
Sandiganbayan is respondent, thus:

Q The question was, Mr. Witness, this is coming from Senator Angara,
and I quote, "Kailan ho lumabas yung decision ng Court sa
Kevlar?" And just to refresh your memory, Mr. Witness, then
Ms. Sula answered, "I think 2010. Yun po yung lumabas po."
And then going forward, Senator Angara referred to both of you
this question: "Sa inyo, hindi ninyo alam kung inayos yung kaso
na iyon kasi napakaraming koneksyon, di ba? Baka alam ng
ibang whistleblowers kung nagka-ayusan sa kaso na iyon. Sige,
huwag kang matakot, Benhur." Do you remember that question
being asked from you?

xxx xxx xxx

A Yes po.

Q And now Mr. Witness, about this statement of yours at the Blue
Ribbon Committee that Ms. Napoles has a certain connect sa
Sandiganbayan, who was this connect you were talking about, if
you remember?

Witness Luy

A Si Justice Gregory Ong po.

Q How do you know that Justice Gregory Ong was the connect of Ms.
Napoles at the Sandiganbayan?

A Ang sinabi po. . . Si Ms. Napoles, pinsan ko po kasi we are second

cousins. So kinuwento talaga sa akin ni Madam kung ano ang
 mga developments sa mga cases, kung ano ang mga nangyayari.
Tapos po, sinabi niya sa akin mismo na nakakausap niya si
Justice Gregory Ong at ang nagpakilala raw sa kanya po ay si
Senator Jinggoy Estrada. DCATHS

Benhur further testified that even before the decision in the Kevlar case was
promulgated, Napoles and respondent were already communicating with each
other (nag-uusap na po sila). Therefore, she was sure the decision would be in
her favor:

Q Do you remember the date when the decision (in Kevlar case) was
promulgated?

A Ano po, the year 2010 po ma'am.

Q And you met him (Justice Ong) in 2012?

A 2012 po, pero prior to that decision, madam, naririnig ko na po kay

madam (Ms. Napoles) kasi kinukwento na po ni madam sa akin
na nag-uusap na po sila ni Justice Gregory Ong.

Q That was after the decision was promulgated?

A Bago po nailabas yung decision, ikinwento po ni Ms. Napoles sa akin

na nag-uusap na po sila ni Justice Gregory Ong. Kaya kampante
po si Ms. Napoles. Noong lumabas po yung decision, alam niya
na po. Yun ang sabi sa akin ni Ms. Napoles.

Going back to the hearing before the Blue Ribbon Committee, Benhur told
Senator Angara that Napoles fixed the Kevlar case because she has a "connect"
in the Sandiganbayan:

"Baka alam ng ibang whistle blowers kung nagkaka-ayusan sa

kaso na iyon (Kevlar case). Sige huwag kang matakot Benhur."

Benhur Luy: "Alam ko inayos ni Ms. Napoles iyon dahil may

connect nga siya sa Sandiganbayan."

On how Napoles "inayos" or fixed the Kevlar case, Benhur said that he kept a
ledger of the Sandiganbayan case wherein he listed all her expenses in the sum
of P100 million pesos. He was surprised why she would spend such amount
considering that what was involved in the Kevlar case was only P3.8 million.
She explained that she gave various amounts to different people during the
pendency of the case which lasted up to ten years. And before the decision in
the Kevlar case was released, she also gave money to respondent but she did not
mention the amount. Thus, she knew she would be acquitted. aDcEIH
Q You answered Senator Angara this way which we already quoted a
while ago, "Alam ko inayos ni Ms. Napoles iyon dahil may
connect nga siya sa Sandiganbayan." You stated that the connect
is Justice Ong. Can you explain before us what you mean, "Alam
ko inayos ni Ms. Napoles iyon." What do you mean by that
"inayos"?

A Kasi po ma'am meron kaming ledger ng Sandiganbayan case sa lahat

ng nagastos ni Ms. Janet Napoles, nilista ko po yon lahat. Kasi
naririnig ko po kay Janet Napoles, parang pinsan ko po si Janet
Napoles, "Paano nagkaroon ng kaso ang ate ko? So nadiscover
ko na lang po na yun pala yung Kevlar. So, mahigit one hundred
million na nagastos po ni Ms. Napoles kasi di lang naman po si
sir Justice Gregory Ong. . .

xxx xxx xxx

Q Did you come to know to whom she gave all the money?

A Wala po siyang. . . basta ang sabi niya inayos na niya si . . . binaggit

niya po si . . . kasi si madam hindi kasi nagki-keep kasi ako
pinsan niya po kasi ako, nabanggit niya po si Justice Gregory
Ong. Sinabi niya nagbigay daw po siya ng pera kay Justice Ong
pero she never mentioned kung magkano yung amount.

xxx xxx xxx

Q Nagbigay ng pera kay Justice Gregory Ong?

A Opo, yung ang sabi niya (referring to Ms. Napoles).

Q To you?

A Yes, madam.

Q Do you remember when she made that kind of statement?

A Bago po ano madam, bago po lumabas yung decision kaya kampante

na po si Ms. Napoles bago lumabas yung decision na acquitted
siya. Alam na niya. Sa Kevlar case.

xxx xxx xxx

Justice Gutierrez

Continue counsel. AaSCTD

 Witness Luy

Kasi naikwento po madam ni Ms. Napoles na almost P100 million na

ang nagastos niya. Tapos ang sabi ko nga po sa kanya: "Madam,
P100 million na sa halagang P3.8 lang na PO (purchase order) sa
Kevlar helmet, tapos P100 million na ang nagastos mo?"

Q Did she tell you or explain to you to whom this P100 million was
paid? How was it spent?

A Basta ang natatandaan ko. . . di ko na po matandaan ang mga dates

kasi parang staggered. May P5 million sa ibang tao ang kausap
niya. Tapos ito naman tutulong ng ganito. Iba-iba kasi madam,
eh.

Q But there was no showing the money was given to Justice Ong?

A Wala po pero nabanggit lang po niya (Ms. Napoles) sa akin na

nagbigay po siya kay Justice Ong, but she never mentioned the
amount.

Continuing with his testimony, Benhur declared that in 2012, respondent went
twice to Napoles' office at the Discovery Suites Center, 25 ADB Avenue,
Ortigas, Pasig City. On the first visit, Napoles introduced Justice Ong to Benhur
and her other employees.

Benhur narrated what transpired during that visit. According to him, Napoles
has so much money being placed at the Armed Forces of the Philippines and
Police Savings and Loan Association, Inc. (AFPSLAI) which offered 13%
interest annually. Napoles called Benhur telling him that respondent would like
to avail of such interest for his BDO check of P25.5 million. To arrange this,
Napoles informed Benhur that she would just deposit respondent's P25.5 million
in her personal account with Metrobank. Then she would issue to respondent in
advance eleven (11) checks, each amounting to P282,000.00 as monthly
interest, or a total of P3,102,000.00 equivalent to 13% interest. Upon Justice
Ong's suggestion, the checks should be paid to cash. So, Benhur prepared the
corresponding eleven (11) checks, thus:

Q With respect to the Kevlar case, what participation did you have, if
there was any? TaDAHE

Witness Luy

A Noon 2012 po kasi si Justice Gregory Ong po nasa unit 2501, yung
office (of Ms. Napoles), so kami ni Janet Napoles, nandito sa
2502 kasi yun po talaga ang office namin. Si Ms. Napoles po
 sinabi niya sa akin, Ben, kasi si Ms. Napoles, may pera siyang
madami na pine-place niya po sa AFPSLAI at yung AFPSLAI po
ay nagbibigay po sa kanya o nago-offer ng 13% interest annually
po. So, ang nangyari po doon, sabi ni Janet Napoles, si Justice
Ong ho raw, gustong magkaroon din ng interest parang ganoon.
So tutulungan niya. So ang ginawa po namin . . . .

Q Meaning to say, Justice Ong would like to deposit money?

A Opo.

Q So he could get 13% interest?

A Opo, kasi tapos madam ang nangyari po pumunta na po si Ms.

Napoles sa kanyang opisina. Tinawag po niya ako kasi pinasulat
na niya sa akin ang checke. So, ang ginawa po ni Ms. Napoles,
yung checke ni. . BDO check po kasi yun. Ang sabi sa akin ni
Ms. Napoles, checke daw po yun ni Justice Gregory Ong. Sa,
BDO. So, di ko naman din po nakita Madam yung nakalagay sa.
..

Q So it is the check of Justice Ong, not the check of Ms. Napoles?

A Opo, ang amount po ng check madam ay P25.5 million ang amount

noong BDO check na inissue. . .

Q That belongs to Justice Ong?

A Opo. Tapos madam, so ang ginawa po namin ni Ms. Napoles, dahil po

13% interest ang ino-offer ng AFPSLAI, sabi ni Madam ganito
na lang, Ben, ipasok na lang muna natin yung check niya sa
personal account ko. Ako na lang muna for the meantime, mag-
iissue ng check sa kanya para ma-avail ni Justice Ong yung
interest. So, ang ginawa namin madam, P25.5 million times 13%
interest, tapos divided by 12, lumalabas P282,000.00 or
P283,000.00 or P281,000.00 po madam kasi nag-round off kami
sa P282,000.00. So, ang ginawa ni Madam, baga monthly. So
eleven (11) checks ang prinepare namin. Kung hindi po ako
nagkakamali po, JLN Corporation check ang. . . Ako pa nga po
ang nagsulat at saka bago po namin isinulat yung payee, inalam
pa po namin. . . . So, pumunta na naman si madam sa 2501 kasi
nandoon si Justice Gregory Ong. Noong bumalik siya, pay to
cash na lang daw. So, makikita po sa records namin ni Ms.
Napoles na pumasok ang P25.5 million na amount sa kanyang
account at the same time nag-issue siya ng checke na
P282,000.00 na eleven checks. Nag-start kami madam 2012,
 siguro sometime July or August or mga ganoong buwan po.
Basta 11 checks, hindi nalalayo doon. So, siguro tapos na.

Q But what actually turned out was that the money of Justice Ong was
deposited at the bank but the interest was paid in advance by Ms.
Napoles, and actually the bank will pay Ms. Napoles the
advanced interest she paid to Justice Ong, is that clear? Is that the
arrangement? Do you understand me?

A Kasi ang nangyari po ma'am ganito e: yung P25.5 million ipinasok sa

personal account ni Ms. Napoles dito sa Metrobank. Metrobank
kasi po yun e.

On the second visit of respondent to Napoles' office, they just engaged in

conversation. She ordered Chinese food for him which, according to Benhur, is
his (respondent's) favorite.
aDCIHE

On cross-examination, Benhur claimed that in his affidavits executed in the

NBI, he did not mention respondent's name. However, in his reply-affidavit
filed with the Sandiganbayan, he alleged that Napoles issued P282,000.00 (the
amount stated in each of the 11 checks) but he did not mention the name of the
payee upon instruction of his lawyer, Atty. Baligod. Nonetheless, he knew that
the checks were issued to respondent.

II. Sula, also a whistle blower, testified that she was an employee of JLN
Corporation. Her duties included the formation of corporations by making use
of the forms, applying for business licenses, transfer of properties, purchase of
cars, and others.

Sula corroborated Benhur's testimony that respondent visited the office of

Napoles twice sometime in 2012.

Sula was asked to explain her testimony before the Blue Ribbon Committee
during the hearing on September 26, 2013, quoted as follows:

The Chairman (Senator Teofisto Guingona III)

Sinabi ninyo na may tinawagan si Mrs. Napoles at sinabi niya, Malapit

nang lumabas yung TRO galing sa korte. May kilala pa ba si Janet Lim
Napoles sa huwes sa korte sa Sandiganbayan?

xxx xxx xxx

Ms. Sula

Si Mr. Ong po. Justice Ong po. IcTEAD

 The Chairman

Gregory Ong?

Ms. Sula

Opo.

The Chairman

Sa Sandiganbayan?

Ms. Sula

Opo.

The Chairman

Okay. With that, I will just have a closing statement before we leave the
hearing.

Sula explained that the TRO mentioned by Napoles refers to the TRO to be
issued by the Sandiganbayan in the event the case involving the P10 billion
PDAF scam against her is filed with that court; and that Napoles told Sula and
the other employees not to worry because she has contact with the
Sandiganbayan — respondent Justice Ong, thus:

Q Not the illegal detention case?

Witness Sula aHSCcE

A Hindi po, pag nakasuhan na po kami sa Sandiganbayan.

Q Okay, again?

A Sa pagkakaintindi po namin, ang sabi po ni Madam na it takes 4 to 5

years, so hihintayin niya na ma-acquit, sabi niyang ganoon, ang
pangalan niya para maluwag na tulungan kami. Ito po ang
pagkakaintindi namin na sa Sandiganbayan.

Q Yung PDAF?

A Opo, yung PDAF sa Sandiganbayan.

Q Pagdating ng kaso sa Sandiganbayan?

 A Opo, kasi po ina-ano po niya, siya po tinitira na ni Benhur — si
Madam tungkol sa P10 billion scam. So, pinag-uusapan namin sa
bahay niya sa South Garden Unit na, Madam, paano po yan, pag
lahat ng kaso na iyan dadaan sa lawmakers, dadaan yon sa
Ombudsman at saka sa Sandiganbayan? Sabi niya, "Huwag
kayong mag-alala. Meron naman akong mga contact doon." Sabi
niyang ganoon sa Ombudsman at sa Sandiganbayan.

Q Is that in your affidavit?

A Wala po. Pero sinabi ko po doon sa part na yon (her testimony before
the Senate Blue Ribbon Committee) na meron na siyang kilala sa
Ombudsman, pero hindi niya nabanggit ang pangalan. Pero sa
Sandiganbayan, ang alam namin kilala niya si Justice Ong.

Q Yun ang sagot niya kay Chairman Guingona. Di ba I read it a while

ago?

A Opo, doon sa Sandiganbayan.

Sula also testified that every time Napoles talked to her and the other
employees, she would say that Justice Ong will help her in the Kevlar case.
Sula's testimony is as follows:

Q . . . you told me that somebody will help in the Kevlar case?

A Opo. Sinabi po niya sa amin every time po pag nagkukwento siya,

sinasabi niya na si Justice Ong an[g] tumulong sa kanya para ma-
clear po yung Kevlar case niya.

Sula likewise testified that Napoles told her and the other employees that she
will fix (aayusin) the "PDAF case" in the Sandiganbayan. Then they replied in
jest that her acquaintance in that court is respondent. Napoles retorted, "Ay huag
na iyon kasi masyadong mataas ang talent fee." HTcDEa

xxx xxx xxx

III. Aries Rufo, a Reporter of Rappler, testified that he cannot reveal who gave
him the photograph [of respondent beside Napoles and Senator Jinggoy Estrada]
because he is shielded by law and he has to protect his source.

When asked about his comment upon seeing the picture, Rufo said:

Initially, when I saw the picture, since I knew that Justice Ong was one
of the members of the division that handled the Kevlar case, it aroused
my curiosity why he was in that picture. Second, because in journalism,
 we also get to practice ethical standards, I immediately sensed though
that a Justice or a lawyer, that he should not be seen or be going to a
party or be in an event where respondent (Ms. Napoles) was in a case
under his Division. He should not be in a situation that would
compromise the integrity of his office.

Rufo further testified that on August 27, 2013, he faxed a letter to respondent to
"get his side about the photo." The next day, he went to respondent's office and
showed it to him. Respondent was shocked. He explained that it must have been
taken during one of the parties hosted by his friend Senator Jinggoy Estrada;
that he did not know that the woman in the picture is Napoles because she did
not appear during the hearing of the Kevlar case; and that such picture must
have been taken in one of those instances when a guest would like to pose with
celebrities or public figures.

xxx xxx xxx

Respondent, in his defense, vehemently denied the imputations hurled against

him. SCIAaT

1. He asserted that he could not be the contact or "connect" of Napoles at the

Sandiganbayan for he never met or came to know her during the pendency of
the Kevlar case;

2. Challenging Benhur's testimony that he fixed or "inayos" the Kevlar case,

respondent claimed that it was decided based on the merits by the
Sandiganbayan Fourth Division as a collegial body. The two other members of
the court, Justice Jose R. Hernandez (ponente) and Justice Maria Cristina J.
Cornejo, are independent-minded jurists who could not be pressured or
influenced by anybody, not even by their peers; HDaACI

3. On Benhur's allegation that respondent received an amount of money from

Napoles prior to the promulgation of the decision in the Kevlar case, respondent
deplored the fact that Benhur was attempting to tarnish his reputation without
any proof. And that it is unthinkable for him to have received money from
Napoles considering that her mother, brother, and sister-in-law were convicted;

4. Respondent admitted he went to Napoles' office twice, sometime in March

2012, after the decision in the Kevlar case was promulgated in 2010 and
narrated what prompted him to do so, thus:

At the birthday party of Senator Jinggoy Estrada on February 17, 2012,

Napoles approached him and introduced herself. She engaged him in a
casual conversation and thanked him for her acquittal in the Kevlar case.
Respondent replied she should thank her "evidence" instead, adding that
had the court found enough evidence against her, she would have been
 convicted. She talked about her charity works like supporting Chinese
priests, building churches and chapels in China, and sponsoring Chinese
Catholic priests. He was not interested though in what she was saying
until she mentioned the name of Msgr. Ramirez, former Parish Priest of
Quiapo Church.

Respondent became interested because he has been a devotee of the

Holy Black Nazarene since he was a little boy. Napoles told him that
Msgr. Ramirez has with him the robe of the Holy Black Nazarene which
has a healing power if one wears it. Then respondent asked if he can
have access to the robe so he can be cured of his ailment (prostate
cancer) which he keeps only to himself and to the immediate members
of his family. Napoles made arrangement with Msgr. Ramirez until
respondent was able to drape the robe over his body for about one or two
minutes in Quiapo Church. He also received a fragrant ball of cotton
which he keeps until now to heal any ailing part of his body. That was a
great deal for him. So out of courtesy, he visited Napoles in her office
and thanked her. That was his first visit.HCaDET

Thereafter, Napoles kept on calling respondent, inviting him to her

office, but he kept on declining. Then finally after two weeks, he
acceded for she might think he is "walang kwentang tao." They just
engaged in a small talk for about 30 minutes and had coffee.

5. Concerning Benhur's testimony that Napoles paid respondent an advanced

interest consisting of eleven (11) checks in the amount of P282,000.00 each and
that he issued to her his BDO check of P25.5 million which she deposited in her
account, he claimed that "he never issued that check as he did not intend to
invest in AFPSLAI. In fact, he does not have any money deposited there.
Inasmuch as he did not issue any BDO check, it follows that Napoles could not
have given him those eleven (11) checks representing advanced interest. He
further explained that he found from the internet that in AFPSLAI, an investor
can only make an initial deposit of P30,000.00 every quarter or P120,000.00 per
year. The limit or ceiling is P3 million with an interest of 15% or 16% per
annum.

6. The whistle blower's testimony are conflicting and therefore lack credibility.
While Sula testified that Napoles told her that she did not want to approach
respondent (should a case involving the pork barrel scam be filed with the
Sandiganbayan) because his talent fee is too high, however, both whistle
blowers claimed that he is Napoles' contact in the Sandiganbayan.

With respect to the Rappler Report, according to respondent, Rufo was

insinuating four things:
 1. That there was irregularity in the manner the Kevlar case
was decided;

2. That respondent was close to Napoles even during the

pendency of the Kevlar case;

3. That respondent was attending parties of the Napoleses; and

DSAICa

4. That respondent was advising Napoles about legal strategies

relative to the Kevlar case.

Respondent "dismissed all the above insinuations as false and without factual
basis." As to the last insinuation that he advised Napoles about legal strategies
to be pursued in the Kevlar case, respondent stressed that the case was decided
by a collegial body and that he never interceded on her behalf. SAEHaC

EVALUATION

xxx xxx xxx

It bears stressing that before the Senate Blue Ribbon Committee, Benhur
initially testified that Napoles fixed or "inayos" the Kevlar case because she has
a contact at the Sandiganbayan, referring to respondent. Sula corroborated
Benhur's testimony.

Testifying before the Senate Blue Ribbon Committee is certainly an ordeal. The
witnesses and everything they say are open to the public. They are subjected to
difficult questions propounded by the Senators, supposedly intelligent and
knowledgeable of the subject and issues under inquiry. And they can easily
detect whether a person under investigation is telling the truth or not.
Considering this challenging and difficult setting, it is indubitably improbable
that the two whistle blowers would testify falsely against respondent. AIcaDC

Moreover, during the investigation of this case, Benhur and Sula testified in a
candid, straightforward, and categorical manner. Their testimonies were
instantaneous, clear, unequivocal, and carried with it the ring of truth.

In fact, their answers to the undersigned's probing questions were consistent

with their testimonies before the Senate Blue Ribbon Committee. During cross-
examination, they did not waver or falter. The undersigned found the two
whistle blowers as credible witnesses and their story untainted with bias and
contradiction, reflective of honest and trustworthy witnesses.

The undersigned therefore finds unmeritorious respondent's claim that Benhur

and Sula were lying.
. . . respondent insisted he could not have intervened in the disposition of the
Kevlar case considering that Napoles' mother, brother and sister-in-law were
convicted.

Respondent must have forgotten that Napoles' natural instinct was self-
preservation. Hence, she would avail of every possible means to be exonerated.
Besides, respondent's belief that the two members of his Division are
independent-minded Jurists remains to be a mere allegation.

xxx xxx xxx

With the undersigned's finding that there is credence in the testimonies of

Benhur and Sula, there is no need to stretch one's imagination to arrive at the
inevitable conclusion that in "fixing" Kevlar case, money could be the
consideration. . . Benhur testified he kept a ledger (already shredded) of
expenses amounting to P100 million incurred by Napoles for the Sandiganbayan
during the pendency of the Kevlar case which extended up to ten years; and that
Napoles told him she gave respondent an undetermined sum of money.

Respondent maintains that the testimonies of Benhur and Sula are pure hearsay,
inadmissible in evidence:

Justice Ong ECSHID

Your honor, since these are all accusations against me by Luy and Sula,
and according to Luy and Sula, these were only told to them by
Napoles, always their statements were . . . they do not have
personal knowledge, it was only told to them by Napoles, is it
possible that we subpoena Napoles so that the truth will come
out? If . . .

xxx xxx xxx

Justice Gutierrez

That is your prerogative.

Justice Ong

I am willing to take the risk although I know I am not an acquaintance

of Napoles. Just to clear my name whether I should be hung or I
should not be hung.

xxx xxx xxx

Atty. Geronilla
 I don't think it would be necessary, your honor.

Justice Gutierrez (to Atty. Geronilla) aHIDAE

Discuss this matter with your client, file a motion, then we will see.

However, respondent and his counsel did not take any action on the
undersigned's suggestion. They did not present Napoles to rebut the testimonies
of Benhur and Sula. Significantly, respondent failed to consider that his
testimony is likewise hearsay. He should have presented Msgr. Ramirez and
Napoles as witnesses to support his claim regarding their role which enabled
him to wear the robe of the Holy Black Nazarene.

xxx xxx xxx

Respondent's acts of allowing himself to be Napoles' contact in the

Sandiganbayan, resulting in the fixing of the Kevlar case, and of accepting
money from her, constitute gross misconduct, a violation of the New Code of
Judicial Conduct for the Philippine Judiciary.

xxx xxx xxx

That Benhur personally prepared the eleven (11) checks which Napoles handed
to respondent led the undersigned to conclude without hesitation that this charge
is true. It is highly inconceivable that Benhur could devise or concoct his story.
He gave a detailed and lucid narration of the events, concluding that actually
Napoles gave respondent P3,102,000.00 as advanced interest.

According to respondent, the purpose of his first visit was to thank Napoles for
making it possible for him to wear the Holy Black Nazarene's robe. Even
assuming it is true, nonetheless it is equally true that during that visit,
respondent could have transacted business with Napoles. Why should Napoles
pay respondent an advanced interest of P3,102,000.00 with her own money if it
were not a consideration for a favor?

Respondent's transgression pertains to his personal life and no direct relation to

his judicial function. It is not misconduct but plain dishonesty. His act is
unquestionably disgraceful and renders him morally unfit as a member of the
Judiciary and unworthy of the privileges the law confers on him. Furthermore,
respondent's conduct supports Benhur's assertion that he received money from
Napoles.

Dishonesty likewise violates Canon 2 (1 and 2) on Integrity of the same Code

providing in part that judges must ensure that their conduct is above reproach
and must reaffirm the people's faith in the integrity of the Judiciary.
CITSAc
Indeed, respondent should not stay in his position even for a moment.

xxx xxx xxx

. . . From respondent's end, there was nothing wrong when he visited Napoles
twice in her office considering that the visits took place long after the
promulgation of the decision in the Kevlar case.

Contrary to respondent's submission, such acts also constitute gross misconduct

in violation of Canon 4 on Propriety of the same Code. Section 1 provides that
judges shall avoid impropriety and the appearance of impropriety in all of their
activities.
IHSTDE

. . . respondent's reason for his first visit was to thank Napoles for her help in
making it possible for him to wear the robe of the Holy Black Nazarene. Instead
of visiting her, respondent could have extended his gratitude by simply calling
her by phone. Worse, he visited her again because she may think he is an
unworthy person. This is an extremely frail reason. He was seen by the whistle
blowers and their co-workers who, without doubt, readily confirmed that he was
Napoles' contact at the Sandiganbayan and that he "fixed" the decision in the
Kevlar case. IaSAHC

Respondent cannot be excused for his unconcern for the position he holds.
Being aptly perceived as the visible personification of law and justice, his
personal behavior, not only while in the performance of official duties but also
outside the court, must be beyond reproach. A judicial office circumscribes a
personal conduct and imposes a number of inhibitions, whose faithful
observance is the price one has to pay for holding an exalted position.

xxx xxx xxx

On the photograph showing respondent

with Senator Jinggoy Estrada and Napoles.

xxx xxx xxx

This incident manifests respondent's disregard of the dictum that propriety and
the appearance of propriety are essential to the performance of all the activities
of a judge. This exacting standard of decorum is demanded from judges to
promote public confidence in the integrity of the Judiciary.

In joining Senator Estrada and Napoles in a picture taking, respondent gave a

ground for reproach by reason of impropriety. It bears reiterating Canon 4 (1)
on Propriety of the same Code which provides that judges shall avoid
impropriety and the appearance of impropriety in all of their activities.
Respondent maintained that he did not know Napoles at that time because she
was not present before the Sandiganbayan during the hearing of the Kevlar case
for she must have waived her appearance. Respondent's explanation lacks merit.
That court could not have acquired jurisdiction over her if she did not appear
personally for arraignment.

Of utmost significance is the fact that this is not the first time that respondent
has been charged administratively. In "Assistant Special Prosecutor III
Rohermina J. Jamsani-Rodriguez v. Justices Gregory S. Ong, Jose R.
Hernandez and Rodolfo A. Ponferrada, Sandiganbayan," the Supreme Court
found respondent Justice Ong guilty of violation of PD 1606 and The Revised
Internal Rules of the Sandiganbayan for non-observance of collegiality in
hearing criminal cases in the Hall of Justice, Davao City. Instead of siting as a
collegial body, the members of the Sandiganbayan Fourth Division adopted a
different procedure. The Division was divided into two. As then Chairperson of
the Division, respondent was ordered to pay a fine of P15,000.00 with a stern
warning that a repetition of the same or similar offense shall be dealt with more
severely.TEAaDC

xxx xxx xxx

. . . the undersigned cannot hold back her skepticism regarding the acquittal of
Napoles. The Sandiganbayan Fourth Division, of which respondent was the
Chairman, held that Napoles did not conspire with the suppliers in the
questionable purchase of the Kevlar helmets as she was not one of the "dealer-
payees" in the transaction in question and that there was no proof of an overt act
on her part. How could the Fourth Division arrive at such conclusion? The
Decision itself indicates clearly that (1) Napoles was following up the
processing of the documents; (2) that she was in charge of the delivery of the
helmets; and (3) the checks amounting to P3,864,310.00 as payment for the
helmets were deposited and cleared in only one bank account, Security Bank
Account No. 512-000-2200, in the name of Napoles.

Considering this glaring irregularity, it is safe to conclude that indeed

respondent has a hand in the acquittal of Napoles. All along, the whistle blowers
were telling the truth.

xxx xxx xxx

RECOMMENDATION

IN VIEW OF THE FOREGOING, It is respectfully recommended, for

consideration of the Honorable Court, that respondent Justice Gregory S. Ong
be found GUILTY of gross misconduct, dishonesty, and impropriety, all in
violations of the New Code of Judicial Conduct for the Philippine Judiciary and
be meted the penalty of DISMISSAL from the service WITH FORFEITURE
 of all retirement benefits, excluding accrued leave credits, and WITH
PREJUDICE to reemployment to any government, including government-
owned or controlled corporations. AcSEHT

xxx xxx xxx

The Court's Ruling

This Court adopts the findings, conclusions and recommendations of the Investigating
Justice which are well-supported by the evidence on record.

Based on the testimonies of Luy, Sula and Rufo, the Investigating Justice formulated the
charges against the respondent, as follows:

1. Respondent acted as contact of Napoles in connection with the Kevlar case

while it was pending in the Sandiganbayan Fourth Division wherein he
is the Chairman;

2. Respondent, being Napoles' contact in the Sandiganbayan, fixed the Kevlar

case resulting in her acquittal;

3. Respondent received an undetermined amount of money from Napoles prior

to the promulgation of the decision in the Kevlar case thus, she was sure
("kampante") of her acquittal;

4. Respondent visited Napoles in her office where she handed to him eleven (11)
checks, each amounting to P282,000.00 or a total of P3,102,000.00, as
advanced interest for his P25.5 million BDO check she deposited in her
personal account; and

5. Respondent attended Napoles' parties and was photographed with Senator

Estrada and Napoles. 11

Respondent thus stands accused of gross misconduct, partiality and corruption or bribery
during the pendency of the Kevlar case, and impropriety on account of his dealing and
socializing with Napoles after her acquittal in the said case. Additionally, respondent
failed to disclose in his September 26, 2013 letter to Chief Justice Sereno that he had
actually visited Napoles at her office in 2012, as he vehemently denied having partied
with or attended any social event hosted by her.

Misconduct is a transgression of some established and definite rule of action, a forbidden

act, a dereliction of duty, unlawful behavior, willful in character, improper or wrong
behavior; while "gross" has been defined as "out of all measure beyond allowance;
flagrant; shameful; such conduct as is not to be excused." 12 We agree with Justice
Sandoval-Gutierrez that respondent's association with Napoles during the pendency and
after the promulgation of the decision in the Kevlar case resulting in her acquittal,
constitutes gross misconduct notwithstanding the absence of direct evidence of corruption
or bribery in the rendition of the said judgment.

We cannot overemphasize that in administrative proceedings, only substantial evidence,

i.e., that amount of relevant evidence that a reasonable mind might accept as adequate to
support a conclusion, is required. The standard of substantial evidence is satisfied when
there is reasonable ground to believe that respondent is responsible for the misconduct
complained of, even if such evidence might not be overwhelming or even preponderant.
13 CAIaDT

The testimonies of Luy and Sula established that Napoles had been in contact with
respondent ("nag-uusap sila") during the pendency of the Kevlar case. As Napoles'
trusted staff, they (especially Luy who is a cousin) were privy to her daily business and
personal activities. Napoles constantly updated them of developments regarding the case.
She revealed to them that she has a "connect" or "contact" in the Sandiganbayan who will
help "fix" the case involving her, her mother, brother and some employees. Having
closely observed and heard Napoles being confident that she will be acquitted even prior
to the promulgation of the decision in the Kevlar case, they were convinced she was
indeed in contact with respondent, whose identity was earlier divulged by Napoles to
Luy. Luy categorically testified that Napoles told him she gave money to respondent but
did not disclose the amount. There was no reason for them to doubt Napoles' statement as
they even keep a ledger detailing her expenses for the "Sandiganbayan," which reached
P100 million. Napoles' information about her association with respondent was confirmed
when she was eventually acquitted in 2010 and when they saw respondent visit her office
and given the eleven checks issued by Napoles in 2012.

Respondent maintains that the testimonies of Luy and Sula were hearsay as they have no
personal knowledge of the matters they were testifying, which were merely told to them
by Napoles. Specifically, he points to portions of Sula's testimony indicating that Napoles
had not just one but "contact persons" in Ombudsman and Sandiganbayan; hence, it could
have been other individuals, not him, who could help Napoles "fix" the Kevlar case,
especially since Napoles never really disclosed to Sula who was her (Napoles) contact at
the Sandiganbayan and at one of their conversations Napoles even supposedly said that
respondent's "talent fee" was too high. EAHDac

Bribery is committed when a public officer agrees to perform an act in connection with
the performance of official duties in consideration of any offer, promise, gift or present
received. 14 A judge who extorts money from a party-litigant who has a case before the court
commits a serious misconduct and this Court has condemned such act in the strongest possible
terms. Particularly because it has been committed by one charged with the responsibility of
administering the law and rendering justice, it quickly and surely corrodes respect for law and
the courts. 15
An accusation of bribery is easy to concoct and difficult to disprove. The complainant
must present a panoply of evidence in support of such an accusation. Inasmuch as what is
imputed against the respondent judge connotes a grave misconduct, the Quantum of proof
required should be more than substantial. 16 Concededly, the evidence in this case is
insufficient to sustain the bribery and corruption charges against the respondent. Both
Luy and Sula have not witnessed respondent actually receiving money from Napoles in
exchange for her acquittal in the Kevlar case. Napoles had confided to Luy her alleged
bribe to respondent.

Notwithstanding the absence of direct evidence of any corrupt act by the respondent, we
find credible evidence of his association with Napoles after the promulgation of the
decision in the Kevlar case. The totality of the circumstances of such association strongly
indicates respondent's corrupt inclinations that only heightened the public's perception of
anomaly in the decision-making process. By his act of going to respondent at her office
on two occasions, respondent exposed himself to the suspicion that he was partial to
Napoles. That respondent was not the ponente of the decision which was rendered by a
collegial body did not forestall such suspicion of partiality, as evident from the public
disgust generated by the publication of a photograph of respondent together with Napoles
and Senator Jinggoy Estrada. Indeed, the context of the declarations under oath by Luy
and Sula before the Senate Blue Ribbon Committee, taking place at the height of the
"Pork Barrel" controversy, made all the difference as respondent himself acknowledged.
Thus, even in the present administrative proceeding, their declarations are taken in the
light of the public revelations of what they know of that government corruption
controversy, and how it has tainted the image of the Judiciary. aDHScI

The hearsay testimonies of Luy and Sula generated intense public interest because of
their close relationship to Napoles and their crucial participation in her transactions with
government officials, dubbed by media as the "Pork Barrel Queen." But as aptly observed
by Justice Sandoval-Gutierrez, the "challenging and difficult setting" of the Senate
hearings where they first testified, made it highly improbable that these whistle blowers
would testify against the respondent. During the investigation of this case, Justice
Sandoval-Gutierrez described their manner of testifying as "candid, straightforward and
categorical." She likewise found their testimonies as "instantaneous, clear, unequivocal,
and carried with it the ring of truth," and more important, these are consistent with their
previous testimonies before the Senate; they never wavered or faltered even during cross-
examination.

It is a settled rule that the findings of investigating magistrates are generally given great
weight by the Court by reason of their unmatched opportunity to see the deportment of
the witnesses as they testified. 17 The rule which concedes due respect, and even finality,
to the assessment of credibility of witnesses by trial judges in civil and criminal cases
applies a fortiori to administrative cases. 18 In particular, we concur with Justice
Sandoval-Gutierrez's assessment on the credibility of Luy and Sula, and disagree with
respondent's claim that these witnesses are simply telling lies about his association with
Napoles.

Contrary to respondent's submission, Sula in her testimony said that whenever Napoles
talked about her contacts in the Ombudsman and Sandiganbayan, they knew that insofar
as the Sandiganbayan was concerned, it was understood that she was referring to
respondent even as she may have initially contacted some persons to get to respondent,
and also because they have seen him meeting with Napoles at her office. It appears that
Napoles made statements regarding the Kevlar case not just to Luy but also to the other
employees of JLN Corporation. The following are excerpts from Sula's testimony on
direct examination, where she even hinted at their expected outcome of the Kevlar case:
ITDHcA

Atty. Benipayo

Q So, Ms. Sula, what were the statements being made by Ms. Janet Lim
Napoles regarding her involvement in the Kevlar case, or how she was
trying to address the problem with the Kevlar case pending before the
Sandiganbayan?

Witness Sula

A Ang alam ko po kasi marami po siyang kinaka-usap na mga lawyers na

binabayaran niya para tulungan siya kay Gregory Ong sa Kevlar case.
Tapos, sa kalaunan po, nasabi na niya sa amin na meron na po
siyang nakilala sa Sandiganbayan na nagngangalang Justice
Gregory Ong. Tapos, sabi niya, siya po ang tutulong sa amin para
ma-clear kami. Pero hindi niya sinabi na meron din pong ma . . .
sasagot sa kaso. Hindi po lahat, kasi po dalawa sa mga empleyado niya,
bale apat, dalawang empleyado niya, isang kapatid niya at sister-in-law
ang mag-aano sa kaso pati yung mother niya na namatay na ay sasagot
din sa kaso. Siya lang at saka yung asawa niya ang bale makli-clear sa
kaso.

Q So, she told you that two (2) employees, one (1) sister-in-law and one brother
will answer for the case and Janet Lim Napoles and her husband will be
acquitted, is that right?

A Yun po ang aking pagkaka-alam kasi po, nag-petition po kasi sila eh, yung
mga officemates ko. Nagkaroon ng probation. Noong lumabas ang hatol,
meron silang probation period. cAECST

xxx xxx xxx

Q Which you told me that somebody will help in the Kevlar case?
 A Opo. Sinabi po niya sa amin everytime po pag nagkukwento siya,
sinasabi niya na si Justice Ong ang tutulong sa kanya para ma-clear
po yung Kevlar case niya.

xxx xxx xxx 19 (Emphasis supplied.)

As it turned out, Napoles' husband was dropped from the two informations while her
mother, brother and sister-in-law were convicted in the lesser charge of falsification of
public documents. Apparently, after her acquittal, Napoles helped those convicted secure
a probation. But as stated in our earlier resolution, the Court will no longer delve into the
merits of the Kevlar case as the investigation will focus on respondent's administrative
liability.
SAHIaD

Respondent's act of voluntarily meeting with Napoles at her office on two occasions was
grossly improper and violated Section 1, Canon 4 (Propriety) of the New Code of Judicial
Conduct, which took effect on June 1, 2004.

SECTION 1. Judges shall avoid impropriety and the appearance of impropriety

in all of their activities.

A judge must not only be impartial but must also appear to be impartial and that
fraternizing with litigants tarnishes this appearance. 20 Public confidence in the Judiciary
is eroded by irresponsible or improper conduct of judges. A judge must avoid all
impropriety and the appearance thereof. Being the subject of constant public scrutiny, a
judge should freely and willingly accept restrictions on conduct that might be viewed as
burdensome by the ordinary citizen. 21

In Cañeda v. Alaan, 22 we held that:

Judges are required not only to be impartial but also to appear to be so, for
appearance is an essential manifestation of reality. Canon 2 of the Code of
Judicial Conduct enjoins judges to avoid not just impropriety in their conduct
but even the mere appearance of impropriety.

They must conduct themselves in such a manner that they give no ground for
reproach. DTIACH

[Respondent's] acts have been less than circumspect. He should have kept
himself free from any appearance of impropriety and endeavored to distance
himself from any act liable to create an impression of indecorum.

xxx xxx xxx

Indeed, respondent must always bear in mind that:

 "A judicial office traces a line around his official as well as personal
conduct, a price one has to pay for occupying an exalted position in
the judiciary, beyond which he may not freely venture. Canon 2 of
the Code of Judicial Conduct enjoins a judge to avoid not just
impropriety in the performance of judicial duties but in all his
activities whether in his public or private life. He must conduct
himself in a manner that gives no ground for reproach." (Emphasis
supplied.)

On this score, our previous pronouncements have enjoined judges to avoid association or
socializing with persons who have pending cases before their court. Respondent cites the
case of Abundo v. Manio, Jr. 23 where this Court did not find fault with a judge who was
charged with fraternizing with his lawyer-friend. In that case, we said:

Respondent admits that he and Atty. Pajarillo became close friends in 1989
when they were both RTC judges stationed in Naga City. Since they both
resided in Camarines Norte, Atty. Pajarillo hitched rides with respondent to
Daet, Camarines Norte in the latter's car.ATcaID

In his Comment, respondent claims that he leaves the door to his chambers open
to lawyers or parties with official court business, whose requests and complaints
regarding their cases he listens to in full view of his staff, who are witnesses to
his transparency and honesty in conducting such dialogues. He also admits that
Atty. Pajarillo has been to his house on several occasions, but only to make
emergency long-distance calls to his children in Metro Manila. He, however,
denies that he and Atty. Pajarillo were frequently seen eating and drinking
together in public places.

We agree with Justice Buzon's finding that the evidence against respondent on
this point was insufficient, viz.:

"On the other hand, the admission of respondent that he attended two
public functions where Atty. Pajarillo was also present; that Atty.
Pajarillo had been in his house twice or thrice and used his telephone;
and that he receives lawyers, including Atty. Pajarillo, and litigants
inside his chambers, the door to which is always open so that [the] staff
could see that no under the table transactions are taking place, is not
proof that he is fraternizing with Atty. Pajarillo. A judge need not ignore
a former colleague and friend whenever they meet each other or when
the latter makes requests which are not in any manner connected with
cases pending in his court. Thus, Canon 30 of the Canons of Judicial
Ethics provides:

'30. Social relations

 It is not necessary to the proper performance of judicial duty that judges
should live in retirement or seclusion; it is desirable that, so far as the
reasonable attention to the completion of their work will permit, they
continue to mingle in social intercourse, and that they should not
discontinue their interests in or appearance at meetings of members at
the bar. A judge should, however, in pending or prospective litigation
before him be scrupulously careful to avoid such action as may
reasonably tend to waken the suspicion that his social or business
relations or friendships constitute an element in determining his judicial
course.'"

The factual setting in Abundo v. Manio, Jr. is not similar to the present case because
Napoles was not a colleague or lawyer-friend but an accused in a former case before the
Sandiganbayan's Fourth Division chaired by respondent and which acquitted her from
malversation charge. What respondent perhaps want to underscore is the caveat for
judges, in pending or prospective litigation before them, to avoid such action as may raise
suspicion on their partiality in resolving or deciding the case. Thus, he emphasized in his
Memorandum that he "never knew Napoles on a personal level while she was still on trial
as an accused in Kevlar helmet case." Respondent even quoted Sula's testimony
expressing her opinion that she finds nothing wrong with respondent going to Napoles'
office because at that time, the Kevlar case had already been terminated. SAHEIc

We do not share the view that the rule on propriety was intended to cover only pending
and prospective litigations.

Judges must, at all times, be beyond reproach and should avoid even the mere suggestion
of partiality and impropriety. 24 Canon 4 of the New Code of Judicial Conduct states that
"[p]ropriety and the appearance of propriety are essential to the performance of all the
activities of a judge." Section 2 further provides:

SEC. 2. As a subject of constant public scrutiny, judges must accept personal

restrictions that might be viewed as burdensome by the ordinary citizen and
should do so freely and willingly. In particular, judges shall conduct themselves
in a way that is consistent with the dignity of the judicial office.

As we held in Sibayan-Joaquin v. Javellana 25

. . . Judges, indeed, should be extra prudent in associating with litigants and

counsel appearing before them so as to avoid even a mere perception of possible
bias or partiality. It is not expected, of course, that judges should live in
retirement or seclusion from any social intercourse. Indeed, it may be desirable,
for instance, that they continue, time and work commitments permitting, to
relate to members of the bar in worthwhile endeavors and in such fields of
interest, in general, as are in keeping with the noble aims and objectives of the
legal profession. In pending or prospective litigations before them, however,
 judges should be scrupulously careful to avoid anything that may tend to
awaken the suspicion that their personal, social or sundry relations could
influence their objectivity, for not only must judges possess proficiency in law
but that also they must act and behave in such manner that would assure, with
great comfort, litigants and their counsel of the judges' competence, integrity
and independence.

In this light, it does not matter that the case is no longer pending when improper acts
were committed by the judge. Because magistrates are under constant public scrutiny, the
termination of a case will not deter public criticisms for acts which may cast suspicion on
its disposition or resolution. As what transpired in this case, respondent's association with
Napoles has unfortunately dragged the Judiciary into the "Pork Barrel" controversy
which initially involved only legislative and executive officials. Worse, Napoles' much-
flaunted "contact" in the judiciary is no less than a Justice of the Sandiganbayan, our
special court tasked with hearing graft cases. We cannot, by any stretch of indulgence and
compassion, consider respondent's transgression as a simple misconduct. TDCcAE

During his testimony, respondent acknowledged his violation of judicial ethics and its
serious repercussions, as shown by his answers to the questions from the Investigation
Justice, viz.:

Justice Gutierrez

What I am thinking Justice, as a Justice holding a very high position, could it

not be possible for you to just go to the Church of Quiapo and ask the
priest there to help you or assist you, no longer through Ms. Napoles?

Justice Ong

You cannot do that, your honor. Ever since when I was a small boy, I never got
near the image of the Mahal na Poon. Nobody can do that, your honor.

Justice Gutierrez

No, no. What I mean is that you can just go to the priest in Quiapo and
make the proper request. Why did you not do that?

Justice Ong

I don't know, your honor.

Justice Gutierrez

Because you have been suffering from that ailment, mass or whatever, and that
you are a devotee of the Black Nazarene. You could have gone to the
 Office of the priest there and had that request for you to wear that robe
of the Black Nazarene? cSIADa

Justice Ong

Hindi ko po alam na may ganyan, your honor. I was only told by Napoles
during that conversation. Had I known that, siguro po pwede ko pong
gawin. Had I known that there is such a robe, maybe I will do that.

Justice Gutierrez

Okay. It happened already. But just to thank Ms. Napoles, I think Justice you
should have been very, very careful about your actuations. You should
not have been seen in public, you know, with a woman like her who was
an accused before. You could have thanked her simply by calling her.
You could have relayed to her your true feelings that you are so grateful
because of her assistance. Were it not for her, you could not have worn
that Holy Robe of the Black Nazarene. You could have simply called her
instead of going to her office; instead of, you know, going to the Church
of Santuario de San Antonio in Forbes Park. And you should have been
more careful not to be seen by the public with her considering that she
was a former accused in that case. HEISca

Justice Ong

I will heed to that advice, your honor.

Justice Gutierrez

Q And you admitted a while ago, during the interview conducted by Mr. Aries
Rufo that "That is a lesson for me; that I should not have associated,
you know, with a former respondent or accused in a case before
me." You admitted that? You said you learned your lesson. Was that the
first time you learned that kind of lesson, Mr. Justice? Or even before
you took your oath as a member of the Judiciary, you already knew that
lesson, isn't it or was that the first time? That is why you associated
yourself with Senator Jinggoy Estrada who was accused before of
plunder? ICHcaD

Justice Ong

Your honor, talking about. . . .

Justice Gutierrez

Q Do you admit you committed a lapse along that line?

 Justice Ong

A Yes, your honor. You have to forgive me for that. 26 (Emphasis supplied.)

In her report, Justice Sandoval-Gutierrez noted that respondent's purported reason for
visiting Napoles in her office remains uncorroborated, as Napoles and the Quiapo parish
priest were not presented as witnesses despite her suggestion to respondent and his
counsel. On the other hand, Luy's testimony on what transpired in one of respondent's
meeting with Napoles at her office appears to be the more plausible and truthful version.
Expectedly, respondent denied having issued a BDO check for P25.5 million as claimed
by Luy, and asserted he (respondent) did not deposit any money to AFPSLAI.
Unfortunately, Luy is unable to present documentary evidence saying that, as previously
testified by him before the Senate, most of the documents in their office were shredded
upon orders of Napoles when the "Pork Barrel Scam" controversy came out. CSTDIE

Justice Sandoval-Gutierrez stated that the eleven checks of P282,000.00 supposed

advance interest for respondent's check deposit to AFPSLAI were given to respondent as
consideration for the favorable ruling in the Kevlar case. Such finding is consistent with
Luy's testimony that Napoles spent a staggering P100 million just to "fix" the said case.
Under the circumstances, it is difficult to believe that respondent went to Napoles office
the second time just to have coffee. Respondent's act of again visiting Napoles at her
office, after he had supposedly merely thanked her during the first visit, tends to support
Luy's claim that respondent had a financial deal with Napoles regarding advance interest
for AFPSLAI deposit. The question inevitably arises as to why would Napoles extend
such an accommodation to respondent if not as consideration for her acquittal in the
Kevlar case? Respondent's controversial photograph alone had raised adverse public
opinion, with the media speculating on pay-offs taking place in the courts.

Regrettably, the conduct of respondent gave cause for the public in general to doubt the
honesty and fairness of his participation in the Kevlar case and the integrity of our courts
of justice. Before this Court, even prior to the commencement of administrative
investigation, respondent was less than candid. In his letter to the Chief Justice where he
vehemently denied having attended parties or social events hosted by Napoles, he failed
to mention that he had in fact visited Napoles at her office. Far from being a plain
omission, we find that respondent deliberately did not disclose his social calls to Napoles.
It was only when Luy and Sula testified before the Senate and named him as the
"contact" of Napoles in the Sandiganbayan, that respondent mentioned of only one
instance he visited Napoles ("This is the single occasion that Sula was talking about in
her supplemental affidavit . . ."). 27

The Court finds that respondent, in not being truthful on crucial matters even before the
administrative complaint was filed against him motu proprio, is guilty of Dishonesty, a
violation of Canon 3 (Integrity) of the New Code of Judicial Conduct. SECAHa
Dishonesty is a "disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of
integrity; lack of honesty, probity or integrity in principle; lack of fairness and
straightforwardness; disposition to defraud, deceive or betray." 28 Dishonesty, being a
grave offense, carries the extreme penalty of dismissal from the service with forfeiture of
retirement benefits except accrued leave credits, and with perpetual disqualification from
re-employment in government service. Indeed, dishonesty is a malevolent act that has no
place in the Judiciary. 29

Under Section 11 (A), Rule 140 of the Rules of Court, a respondent found guilty of a
serious charge may be penalized as follows:

SEC. 11. Sanctions. — A. If the respondent is guilty of a serious charge, any of

the following sanctions may be imposed:

1. Dismissal from the service, forfeiture of all or part of the benefits as the Court
may determine, and disqualification from reinstatement or appointment to any
public office, including government-owned or -controlled corporations.
Provided, however, that the forfeiture of benefits shall in no case include
accrued leave credits;

2. Suspension from office without salary and other benefits for more than three
(3) but not exceeding six (6) months; or

3. A fine of more than P20,000.00 but not exceeding P40,000.00. LexLib

Considering that respondent is not a first time offender and the charges of gross
misconduct and dishonesty are both grave offenses showing his unfitness to remain as a
magistrate of the special graft court, we deem it proper to impose the supreme penalty of
dismissal.

WHEREFORE, the Court finds respondent Sandiganbayan Associate Justice Gregory S.

Ong GUILTY of GROSS MISCONDUCT, DISHONESTY and IMPROPRIETY, all
in violation of the New Code of Judicial Conduct for the Philippine Judiciary, for which
he is hereby DISMISSED from the service, with forfeiture of all retirement benefits,
except accrued leave credits, if any, and with prejudice to reemployment in any branch,
agency or instrumentality of the government including government-owned or -controlled
corporations.ADSIaT

This Decision is IMMEDIATELY EXECUTORY.

SO ORDERED.

Sereno, C.J., Carpio, Del Castillo, Villarama, Jr. and Perlas-Bernabe, JJ., concur.
Velasco, Jr., J., I dissent. I join the opinions of J. Perez and J. Reyes.

Leonardo-de Castro and Peralta, JJ., took no part.

Brion and Leonen, JJ., see separate concurring opinion.

Bersamin, Perez and Reyes, JJ., with concurring and dissenting opinion.

Mendoza, J., I am joining J. Perez and J. Reyes in their dissents.

Jardeleza, J., see concurring opinion.

Separate Opinions
BRION, J., concurring:

I write this Opinion to support Associate Justice Martin S. Villarama, Jr.'s conclusion that
the respondent Justice Gregory Ong (Justice Ong), Chairman of the Fourth Division of
the Sandiganbayan, should be dismissed from the service for gross misconduct,
dishonesty and impropriety. HTCIcE

I likewise submit this Opinion to express my disagreement with the opinions of Associate
Justices Lucas P. Bersamin, Jose P. Perez and Bienvenido L. Reyes that Justice Ong
should only be penalized for simple misconduct and meted the lighter penalty of three to
six months suspension.

I take this opportunity, too, to draw the Court's attention to the administrative offense of
gross misconduct where the underlying act involved is bribery. If the Court is serious
about its anti-corruption intentions, it is high time that it makes itself clear on the needed
quantum of evidence to support a finding of administrative liability, in contrast with the
quantum of evidence needed to find a public officer guilty of bribery in a criminal
proceeding.

An administrative offense, as has been established, should be proven by substantial

evidence as it involves an administrative proceeding; a criminal case, on the other hand,
necessarily requires proof beyond reasonable doubt. Furthermore, we should clarify in
the strongest terms that no need exists to apply in an administrative proceeding an
amorphous quantum of evidence higher than substantial evidence — in the manner a
Member of this Court advocates.

I likewise posit that the present case should serve as a wake-up call for us to re-examine
the use of hearsay evidence in disciplinary proceedings, when the serious charge of
bribery (or gross misconduct based on bribery) is involved. We have disallowed the use
of hearsay evidence in the past. Should we continue with this rule?

Bribery, like rape, is a transgression that is almost never committed in public view. It
thrives and prospers in the dark, in secrecy. But this illegality is not totally unknown to
the Members of this Court; we all know that bribery is happening in our midst. The
media hints at it; law practitioners talk about it and do not even do so in whispers; clients
accept it as a fact of litigation and readily accept their counsels' claim for extra expenses
"para kay justice, para kay judge o para kay fiscal" — a grave injustice to many in the
judiciary and the prosecution service who have strictly trodden the high road of morality
in the public service.SIHCDA

In one recent administrative matter, we even asked a leading and high profile law
practitioner to explain the claim she made in a leading radio station that bribery exists in
the High Court. 1 She blithely escaped sanction by claiming that she only "heard" about
the bribery she spoke about, but at the same time hinted that she could not speak about
this charge because she has cases before this Court.

Thus, as a practical reality, this Court is now in a public denial mode about bribery and
does so by maintaining the rule that disallows hearsay evidence in disciplinary
proceedings, even if the hearsay testimony is already confirmed by the totality of the
evidence on record.

Additionally, we should admit that judges, based on their knowledge, training and
experience, should be adept at recognizing, proving (and consequently evading) the
administrative offense of bribery. This reality should make us aware (if, for some reason,
we have not yet reached this level of cognition) that we would effectively be condoning
the presence of the offenders among us if from the very start we adopt the rule that we
should not consider hearsay evidence at all. In this sense, all of us — the Members of this
Court — may ourselves be worthy of blame for the proliferation of corruption in the
judiciary.TCcIaA

The better approach, I believe, is to allow the investigating judges and justices
sufficient discretion to admit hearsay evidence, subject to guidelines in determining its
probative value. (I dwell at length on this point in the discussions below.)

This approach, in my view, gives the Court flexibility in disciplining its ranks without
sacrificing both the fairness that should be accorded the respondent judges, judicial
officials and employees, and the character of reliability that evidence must carry to
support a finding of administrative liability.

I. Antecedents
The present administrative case against Justice Ong sprang from various testimonies
given by whistleblowers Benhur Luy (Luy) and Marina Sula (Sula) at the height of the
pork barrel scam scandal.

Both Luy and Sula had been employees of Janet Lim-Napoles (Napoles), the main
personality involved in the high profile scandal, more popularly known as the pork barrel
scam. Both claimed to have helped facilitate Napoles' nefarious schemes. In the course of
offering their testimonies against Napoles, they claimed that Justice Ong was Napoles'
"contact man" at the Sandiganbayan — the country's anti-graft court. AcHSEa

In a sworn statement filed before the National Bureau of Investigation (NBI), Sula
narrated that Napoles urged her not to testify against her, and promised that she would
help Sula once she is able to clear her name. Sula also named Justice Ong to be among
those who had visited Napoles' office.

The day following the execution of Sula's sworn statement, Aries Rufo of the news
network Rappler, published the article entitled "Exclusive: Napoles parties with Anti-
graft Court Justice." The article showed the photograph of Senator Jinggoy Estrada
(Senator Estrada, one of the main public figures now criminally charged in the pork
barrel scam scandal) together with Napoles and Justice Ong. The article also noted that
Justice Ong had been a member of the Sandiganbayan's Fourth Division that handled the
Kevlar Helmet case where Napoles stood accused for the ghost purchase of 500 Kevlar
helmets in 1998; the Fourth Division that Justice Ong chairs acquitted Napoles of the
criminal charge.

Thereafter, the Senate Blue Ribbon Committee held committee hearings to investigate the
pork barrel scam. At these hearings, Sula reiterated her statements about Justice Ong.

It was at this time that Justice Ong, unbidden, wrote Chief Justice Maria Lourdes P.A.
Sereno (Chief Justice Sereno) a letter explaining the photo published in Rappler. The
Court responded to the letter, the Rappler article, and Sula's testimony before the Senate
Blue Ribbon Committee, by initiating a motu proprio investigation of Justice Ong.

The Court designated former Justice Angelina Sandoval-Gutierrez, a retired Member of

this Court, as the investigating justice tasked to investigate Justice Ong's involvement
with Napoles.

After hearing the testimonies of Sula, Luy and Justice Ong and considering their
submitted Memoranda, Justice Sandoval-Gutierrez recommended in her Report to the
Court that Justice Ong be found liable for gross misconduct, dishonesty and impropriety.
She recommended that Justice Ong be dismissed from service, with forfeiture of all
retirement benefits and with prejudice to re-employment in any government agency or
instrumentality.
Justice Villarama affirmed Justice Sandoval-Gutierrez's Report, holding that: acAESC

(1) Justice Ong is guilty of gross misconduct and impropriety, for

violating Canon 1 of the New Code of Judicial Conduct, which
requires judges to avoid acts and the appearance of impropriety in
all their activities. The totality of the circumstances shows that
Justice Ong associated with Napoles after the promulgation of the
decision in the Kevlar Helmet case. To Justice Villarama, these
circumstances strongly indicate Justice Ong's corrupt inclinations
and heightened the public's perception of anomaly in the
Judiciary's decision-making process.

Justice Villarama arrived at his conclusion by giving credit to the testimonies of Sula and
Luy who both identified Justice Ong as Napoles' contact man at the Sandiganbayan. This
finding is supported by the photographs showing him with Senator Estrada and Napoles
at a party. Taken together, these pieces of evidence sufficiently proved that he had
exposed himself to suspicion of partiality to Napoles.

Justice Villarama also noted that the financial accommodation that Napoles gave Justice
Ong — which Luy testified to — could be the financial consideration for Justice Ong's
assistance in Napoles' acquittal in the Kevlar Helmet case. The acquittal and Luy's
testimony gave the public cause to doubt the honesty and fairness of Justice Ong's
participation in the Kevlar-Helmet case and the integrity of our justice system.

(2) Justice Ong committed dishonesty and violated Canon 3 of the New
Code of Judicial Conduct on Integrity. In his letter to Chief
Justice Sereno, he denied attending parties hosted by Napoles, and
omitted to inform her that he had visited Napoles' office twice. It
was only when Luy and Sula testified before the Senate and named
him as the "contact man" of Napoles in the Sandiganbayan, that
Justice Ong admitted that he had visited Napoles at her office once.
ACTISD

Justices Bersamin, Perez and Reyes argue on this point that the core of Luy and Sula's
testimonies cannot be used to conclude that Justice Ong committed the offenses charged,
as the testimonies of these witnesses are hearsay. According to them, Luy and Sula do not
have personal knowledge of the alleged financial transaction between Napoles and
Justice Ong. Neither should Justice Ong be held accountable for dishonesty because
Justice Villarama took out of context Justice Ong's statement that he visited Napoles only
once. To the three magistrates, Justice Ong should thus be only found liable for simple
misconduct for mingling with litigants before his court, which offense is punishable by
suspension and a fine.
With due respect to my esteemed Colleagues, I believe that they failed to consider
that Justice Ong's admitted "mingling" with Napoles came while the probation case
of Napoles' co-accused in the Kevlar Helmet case was still pending at the
Sandiganbayan's Fourth Division. These co-accused are all her close relatives — her
mother Magdalena L. Francisco, her brother, Reynaldo L. Francisco and her sister-
in-law Ana Marie Dulguime. My Colleagues apparently failed to consider that these
co-accused/relatives, despite their conviction, never went to jail; when matters had
sufficiently quieted down, Justice Ong granted them probation and even penned the
ruling on reconsideration.

II. The nature of disciplinary proceedings of judges should allow us to

admit hearsay evidence in appropriate cases

A. Disciplinary proceedings for members of the judiciary are sui generis

investigative proceedings requiring substantial evidence to reach a
conclusion

In evaluating the pieces of evidence relating to the charge of bribery against Justice Ong,
Justice Reyes posits that a standard of evidence, higher than substantial evidence, should
be used to arrive at the conclusion that Justice Ong had indeed been bribed by Napoles.
Several Colleagues in the Court additionally argue that hearsay evidence against Justice
Ong should not be admitted nor given probative value, and that, in any case, the
remaining pieces of evidence are insufficient to prove the bribery charge.

Disciplinary proceedings against members of the bench have been characterized as

administrative proceedings, 2 as the end result of these proceedings involves the
determination of whether the respondent judge committed an administrative offense that
carries a disciplinary penalty. The penalties range from the lightest penalty of admonition
with warning, to the ultimate penalty of dismissal from the service. 3 DACcIH

I submit that the characterization of disciplinary proceedings against members and

officials of the judiciary as a mere administrative proceeding whose aim is the imposition
of penalties, is a very simplistic view of what disciplinary proceedings are. Properly and
critically viewed, they are closer to the sui generis nature of disbarment proceedings
against lawyers, where the main objective of inquiry is not the infliction of punishment,
but the investigation of whether the respondent lawyer continues to possess the
qualities required of members of the legal profession. 4

Lawyers assume a unique role in our society because they are officers of the court who
directly participate in the administration of justice; judges' and justices' roles are no less
and in fact are higher than those of lawyers as they directly act as the main principals in
the administration of justice. Judges and justices directly interpret the law and determine
how the scales of justice shall swing through the adjudicatory duties solely reserved for
them by the Constitution.

Under these roles, the all-important question to be answered is whether judges and
justices are worthy of donning the judicial robes and of discharging the
adjudicatory duties of a member of the bench. When they err morally and legally in
discharging their duties, they become pejoratively known as "hoodlums in robes" and
thereby bring disrepute, not only to themselves, but to the institution they represent.

That disbarment of lawyers should be the take-off point in characterizing and calibrating
the role of judges and justices cannot be avoided when it is considered that:

(1) The exercise of the legal professions and the higher calling of acting
as a magistrate are both considered a privilege;

(2) Both professions are under the regulation and supervision of the
Supreme Court;

(3) Both professions have crucial roles in the administration of justice —

the lawyer as an officer of the court, while the judge is the
embodiment of the court that directly acts in dispensing justice;

(4) Both proceedings involve investigating officers appointed by the

Supreme Court to inquire on the accusations against the respondent
lawyer or judge, to be initiated motu proprio or upon the filing of a
complaint; TaCDcE

(5) The ultimate penalty in both disciplinary proceedings involves

divesting the respondent lawyer or judge of the privilege to
practice law or adjudicate as a member of the judiciary,
respectively.

Our focus in disciplinary proceedings for members of the judiciary must necessarily and
unavoidably be the determination of whether the respondent judge is still fit for the
judicial office, with the preservation of the public interest in an independent,
incorruptible judiciary as the ultimate objective.

In this consideration, the Court calls upon the member of the bench charged with
misfeasance or malfeasance, to account for accusations against him or her, with the end
in view of keeping the proper and honest administration of justice untainted and
immaculate in the public's view, by excluding from the judiciary those who, by their
misconduct, have proven themselves unworthy to be entrusted with the duties and
responsibilities of a judge.
DcaSIH
Based on these objectives, the tighter and stricter procedural rules applicable to criminal
proceedings, particularly the requirement for a quantum of evidence higher than
substantial evidence, cannot and should not be used in disciplinary proceedings involving
judges. By their higher evidentiary requirement, proof of wrongdoing becomes more
difficult to achieve, ultimately defeating the objectives of disciplinary proceedings.

As the Court very well knows, our ruling in disciplinary proceedings will not result in the
criminal conviction and the incarceration of the respondent judge or justice; our judgment
is confined to the finding and declaration of the respondent Justice's unworthiness to be a
member of the judiciary. 5 If imprisonment and criminal penalties will result at all from
the judge's or justice's illegal acts, they will not arise from the disciplinary proceedings;
they will arise from separate criminal proceedings that require a whole new and separate
process of charges, trial and conviction upon proof beyond reasonable doubt.

Viewed from the perspectives of proportionality, higher evidentiary standards are

properly required as stakes become higher in the spectrum of individual rights and
liberties; proof beyond reasonable doubt is required in criminal proceedings as the life,
liberty and property of the accused are at stake.

Conversely, as the stakes become lower (as when only the privilege to practice law or to
act as judge or justice is involved) it is but proper that evidentiary standards should
likewise be lower. To lose this proportion is to lay down a policy vastly in favor of the
individual, but at the expense of the societal value of a judiciary whose integrity, fairness
and independence must be at their highest.

In my view, these distinctions ought to be ever present in the Court's mind in order not to
defeat the purpose for which disciplinary proceedings are instituted; forgetting them and
setting impossibly high and impractical standards amount to giving up the first line of
defense in preserving and maintaining the judiciary's independence and integrity. EICSTa

In the context of the present case, I cannot but emphasize that the gauge for determining
whether bribery (or gross misconduct based on bribery) had occurred should be confined
to substantial evidence and not to any higher level of evidence. The bribery accusation
should be adjudged in the same manner that other accusations of gross misconduct,
dishonesty and impropriety should be weighed — through substantial evidence or such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
6

B. The rules on hearsay should be relaxed in disciplinary proceedings against

members of the judiciary

I likewise cannot accept the strict application of the hearsay rules in the present case as
some of my Colleagues advocate. Given the nature of disciplinary proceedings and the
indisputable circumstances present in bribery transactions, the demand for evidence
executed by one who has strict personal knowledge of the illegal transaction is to ask for
a near impossibility in many cases. It is for this reason perhaps that disciplinary findings
of bribery or gross misconduct based on bribery come few and far between.

Indeed, as some of my Colleagues in the Court have pointed out, a bribery charge is easy
to concoct. However, it should likewise not be lost to us that a bribery charge, by its very
nature, is also very difficult to prove even in an administrative proceeding, more so under
the view of some of our Colleagues that a higher burden of proof should be required for a
finding that bribery or acts indicating bribery indeed happened.

Bribery at the consummated stage, by its nature, requires a bribe-giver and a bribe-taker
where both participants are parties to the crime. The public official who accepts money or
other valuable consideration commits bribery, among other things, 7 while the person
who offers and gives the bribe is guilty of corruption of a public official. 8

Necessarily, the persons who have personal knowledge of the transaction would, more
often than not, be limited to the offenders themselves who both risk prosecution for their
misdeeds. Demanding as a matter of law that witnesses speak from their strict personal
knowledge of the actual details of a bribery, would, under these circumstances,
practically amount to the requirement that one of the participants turn on the other.
Obviously, this requirement would make it extremely difficult to successfully prosecute
the crime of bribery. Under these terms, bribery becomes a high percentage crime for the
chances of success it offers.CSTHca

Consider, too, that bribery cases become even more difficult to prove and establish when
one of its participants has extensive knowledge of how bribery is committed and proven
in court. Bribery is a crime that lawyers study from their first year in law school; its
elements as well as the degree of proof required to convict are all drilled into lawyers'
minds from the first course in Criminal Law and later in Remedial Law. This
knowledge is honed as the lawyer takes the bar examination and as he or she goes into
practice.

The specialized knowledge rises to the level of expertise when the lawyer enters the
judiciary where criminal cases — bribery among them — are the daily fare of the cases
he or she handles. This is particularly true for the Sandiganbayan, our anti-graft court,
whose expertise and specialty are crimes committed by public officers in the course of
their duties, bribery among them. HcTEaA

I say all these with no intent to cast any pejorative aspersions on the members of the
Sandiganbayan. I say these merely as a matter of fact — we have before us a respondent
who had been schooled and trained on the elements of bribery, and necessarily, for
those inclined to commit this crime, on the ways and means to avoid even the mere
suspicion of bribery. (Note, for example, Luy's testimony that Justice Ong did not want
checks paid out in his name; he wanted these paid "to cash." Note, too, the claim that he
had merely been engaged in an investment transaction, albeit at very high interest rates.
Without more and standing alone and by themselves, these ready excuses may possibly
pass muster, but not when the other circumstances, discussed below, are considered.)

Given the nature of disciplinary proceedings for judges, as well as the nature of bribery
transactions, I urge my Colleagues in the Court to reconsider and re-examine the need for
applying the rules on hearsay evidence in disciplinary proceedings where a bribery
allegation is involved.

In special situations such as this case, where the illegal transaction is cloaked in
secrecy and the dramatis personae include an expert on the intricacies of bribery
(particularly on how a charge is prosecuted and evaded), do we not owe the institution
we serve and the Filipino people who rely on us for a fair and speedy system of justice,
the duty to exhaust all fair and reasonable means necessary to determine if indeed
there are corrupt officials within our ranks?

I submit that we cannot choose to ignore the special circumstances before us —

particularly the confluence of facts before us that can be likened to a smoking gun staring
us in the face — simply because an unsound evidentiary technicality tells us to do so. The
proper approach, in my view, in order to be sensitive to all the interests involved in an
administration of justice situation, is as I expressed in my Concurring Opinion in AM No.
3-11-09-SC (Re: Interview with Lorna Kapunan on Corruption in the Judiciary): EDHCSI

I believe and propose to the Court that it desist from declaring the matter in
caption closed and terminated simply because the statements Atty. Lorna
Kapunan turned out to be hearsay. Instead, the Court should proactively react to
the smoke that Atty. Kapunan has raised; a fire must exist somewhere behind
her statements. Even smoking embers, if left unattended to, may turn into a
raging conflagration. 9

1) The purpose of hearsay evidence and its decline in administrative

proceedings in other jurisdictions.

Hearsay evidence, or evidence presented by a witness who has no personal knowledge of

the fact being attested to — as a rule — is inadmissible as evidence 10 and, even if
admitted, offers no probative value. 11

The exclusion of hearsay evidence has been traditionally justified by the perceived
unreliability of out-of-court statements. Traditionally, hearsay evidence poses four risks
of unreliability: a narration risk (i.e., the risk that the declarant did not mean what he or
she seemed to say); a sincerity risk (the risk that the declarant intentionally fabricated); a
memory risk (the risk that the declarant misrecalled what happened); and a perception
risk (the risk that the declarant misperceived things to begin with). 12

While the recognition of these risks admittedly has empirical basis, I believe it equally
undeniable that we encounter the same risks whenever we receive testimony from a
person who has personal knowledge of the fact or the event sought to be proved. cSaATC

Indeed, both narrations — one made by a person outside of court (i.e., by a declarant) and
another made by a person testifying before the court (i.e., by a witness) may be
unreliable. The latter, however, is admitted as evidence before the court because the trial
process subjects it to three safeguards that in the end, makes the information the witness
recounted more credible: first, the oath the witness takes to tell the truth, second, the
jury's ability to watch the witness's demeanor, and third, the opportunity for cross-
examination. 13

Consider, however, that we admit other sources of evidence that may be unreliable and
misleading even when subjected to the three safeguards of the trial process, such as the
testimony of cooperating co-defendants. In this situation, we admit the testimony but
evaluate its credibility and probative value vis a vis other pieces of evidence and the
totality of the circumstances that the evidence points us to.

Legal history tells us that the exclusion of hearsay evidence first emerged as a rule after
the introduction of the trial by jury system. Notable scholars observed that judges began
excluding hearsay evidence because untrained and inexperienced jurors tended to
overvalue such evidence, and failed to fully appreciate the potential sources of weakness
in testimonial evidence untested by cross-examination. 14

Aware of this hearsay rule rationale and its history, administrative agencies in the United
States do not exclude hearsay evidence in their quasi-judicial proceedings. 15 They have
recognized that no reason exists to exclude hearsay evidence when hearing officers are
equipped with training and experience to gauge the reliability, value and relevance of
the evidence presented before them. (Interestingly in many cases, the admission of
hearsay evidence is made even if the administrative proceedings do not necessarily
require cross-examination of witnesses.) As in the U.S., and for the same reasons,
England likewise eventually allowed the admission of hearsay evidence in civil actions,
16 after it slowly departed from civil juries beginning in 1854. 17

In the Philippines, we never had the jury system so that the actual and practical reason for
the exclusion of hearsay testimony was, for the most part, lost to us. Our heads, however,
need not forever be buried in the sands of inherited rules as our system of justice has
come of age and has gathered enough experience for a re-examination of the rules that
work or do not work for us. DTESIA
To be sure, I do not recommend an outright abandonment of our rule on hearsay, but I
submit that it is high time that we re-examine its strict application in administrative
proceedings, particularly in disciplinary proceedings of judges and justices where
bribery charges are involved.

Three reasons compel me to make this proposal:

First, disciplinary proceedings of judges, as earlier discussed, involve an administrative

proceeding before an investigating judge or justice who determines, after an
investigation, whether the accusations made against the respondent judge are true, and
thereafter recommends the appropriate remedy or penalty. aSDCIE

In this light, due respect should be given the investigating judge or justice's evaluations of
the credibility of the witnesses, and the reliability of the pieces of information that they
attest to. Unlike lay jurors, the investigating judge or justice has had years of experience
in hearing and evaluating the testimony of witnesses and their demeanor in delivering
their testimonies. The risk of overvaluing the import of hearsay evidence is thus
minimized by the training and expertise of our investigating judges and justices.

Second, the strict application of the hearsay rule, in effect, has shielded erring judges and
justices from facing the consequences of their corrupt acts. As I earlier noted, the nature
of a bribery case necessarily involves secrecy between the corruptor and the corruptee;
thus, bribery rarely, if at all, surfaces when the transaction goes as planned.

Would we have to wait for betrayal, or for ill-relations between the two parties, so that
we can find a witness with personal knowledge of the bribery transaction?

Should this Court simply suffer in silence while practitioners glibly claim that the
judiciary is corrupt and at the same time hide behind the hearsay rule when they are held
to account for their statements?

Third, the unnecessarily strict application of hearsay in administrative proceedings of

judges has crippled this Court's capability to discipline its ranks. An examination of
bribery cases involving judges show our extreme wariness in declaring that a judge had in
fact been bribed, often using the hearsay rule to conclude that insufficiency of evidence
prevents us from finding the judge liable for bribery. We would, however, still penalize
these judges and dismiss them from office because of acts constituting gross misconduct.
ECaSIT

I cannot help but think that we so acted because, at the back of our minds, we might have
believed that the respondent judge had indeed been guilty of bribery, but our over-
attachment to the hearsay rule compelled us to shy away from this reason to support our
conclusion. Hence, we try to find other ways to penalize the erring judge or justice. 18
While this indirect approach may ultimately arrive at the desired goal of penalizing erring
judges and removing the corrupt from our roster, we should realize that this approach
surrenders the strong signal that a finding of guilt for bribery makes.

It must not be lost on us that we send out a message to the public, to the members of the
judiciary, and to the members of the bar, every time we decide a case involving the
discipline of judges: we broadcast, by our actions, that we do not tolerate the acts for
which we found the erring judge guilty. This message is lost when we penalize judges
and justices for gross misconduct other than bribery, when bribery was the real root cause
for the disciplinary action.

I believe that the time has come for this Court to start calling a spade a spade, and make
the conclusion that bribery had taken place if and when the circumstances sufficiently
prove its occurrence. In making this conclusion, we should not be unduly hindered by
technical rules of evidence, including hearsay, as we have the resources and experience to
interpret and evaluate the evidence before us and the information it conveys.

We must not likewise get lost as we wander in our search for the proper degree of
supporting evidence in administrative proceedings. This quantum of evidence should be
substantial evidence because this standard provides the necessary balance and flexibility
in determining the truth behind the accusations against a respondent judge, without
sacrificing the necessary fairness that due process accords him and without sacrificing
what is due to the institution we serve and the Filipino people.

2) The probative value of hearsay evidence in substantial evidence

The admission of hearsay evidence does not necessarily translate into belief in the
information it provides, hook, line and sinker. To satisfy the substantial evidence
requirement for administrative cases, hearsay evidence should necessarily be
supplemented, and corroborated by other evidence that are not hearsay.

We are not completely without experience in admitting and giving due probative value to
hearsay testimony. Note, in this regard, our experience in administrative proceedings on
the writ of amparo, as well as the evaluation of hearsay evidence we do in child abuse
cases.ESDcIA

In both, we give due regard to information otherwise inadmissible because of the hearsay
rule, without giving up the fairness and rule of reason required by the due process clause.
Note too, that in both instances, a compelling need exists to relax the exclusionary rule of
hearsay evidence 19 — a necessity that is also present in disciplinary proceedings against
judges.
In giving due credence to hearsay evidence, we said in the case of Razon, et al. v. Tagitis:
20

The fair and proper rule, to our mind, is to consider all the pieces of evidence
adduced in their totality, and to consider any evidence otherwise inadmissible
under our usual rules to be admissible if it is consistent with the admissible
evidence adduced.In other words, we reduce our rules to the most basic test of
reason — i.e., to the relevance of the evidence to the issue at hand and its
consistency with all other pieces of adduced evidence. Thus, even hearsay
evidence can be admitted if it satisfies this basic minimum test. 21
(Emphasis supplied)

If this approach were to be applied to the disciplinary proceedings of judges, I submit that
all the evidence relating to or tending to support the underlying act of bribery —
regardless of their hearsay nature — can and should be examined. If all the acts alleged
are substantially proven to have been committed, and they collectively point to the
commission of bribery although not to the level of proof beyond reasonable doubt, then
the Court should be well within its rights to find the respondent liable for acts amounting
to gross misconduct based on bribery. EAIcCS

In assessing hearsay evidence, I submit that we consider the following factors:

(1) The credibility of the witness, and possible motives or relationship

with the interested parties that could taint the reliability of his
testimony;

(2) The availability of the declarant to testify in person before the

investigating judge or justice as well as his or her general
character;

(3) The timing of the statement and the relationship between the declarant
and the witness;

(4) Whether the information conveyed by the hearsay evidence had been
substantially corroborated in its material points; and

(5) The circumstances surrounding the statement, particularly those

pointing to the declarant's misrepresentation about the respondent's
involvement.

III. The totality of evidence shows that Justice Ong committed bribery

Based on the above factors, I am convinced and hereby ask the Court to join me in the
conclusion that the hearsay evidence provided by Luy — specifically, that Justice Ong
was Napoles's contactman in the Sandiganbayan, and that the latter paid him a bribe —
should be admitted and given its proper weight when considered alongside other pieces
of evidence. aTICAc

First, the investigating justice found Luy and Sula to be credible and reliable witnesses
whose testimonies even withstood the intense public scrutiny of Senate committee
hearings. No evidence has ever been shown that they fabricated their statements about
Justice Ong, nor that they harbored ulterior or illegal motives in adducing evidence
against Justice Ong.

Second, Napoles, the declarant of the damning statements about Ong, could not
reasonably be made available to testify against Justice Ong, as she would be testifying
against her own interest. As I earlier explained, testifying against Justice Ong would
amount to the admission by Napoles that she had committed the crime of corruption of a
public officer, without any possibility of evading prison sentence by becoming a state
witness.CAcIES

Third, Napoles's statements regarding Justice Ong's assistance in the Kevlar Helmet case,
her payment to Justice Ong, as well as her instructions to give checks to Justice Ong,
were all made in the course of Luy's performance as her employee; they were made in
confidence and in the course of instructing Luy on how to better undertake the tasks she
had asked him to perform.

In particular, Napoles's statement that he paid Justice Ong a certain amount was made in
reference to a ledger she kept of her expenses on the Kevlar Helmet case, information
that she told Luy in the course of the latter's employment.

Fourth, the information derived from the hearsay evidence — that Justice Ong aided
Napoles in the Kevlar Helmet case and that Napoles paid him for this assistance —
constitutes a reasonable explanation for Justice Ong's visits to Napoles's office during
which he was given a financial accommodation by Napoles; Justice Ong's picture with
Napoles during a social function; and the highly questionable grant of probation of
Napoles' relatives by Justice Ong — pieces of evidence that are not based on hearsay.

Further, these pieces of information are corroborated by the testimony of another Napoles
employee, Sula, who received information from Napoles in the course of their employer-
employee relationship. In her testimony, Sula categorically attested that Napoles
identified Justice Ong as her "contactman" in the Sandiganbayan several times; Napoles
did this before Sula and before other Napoles employees.

Fifth, Napoles had no reason to lie or misrepresent that Justice Ong assisted her in the
Kevlar Helmet case at the time she made the disclosure to Luy. At that time, Napoles and
Luy's personal and working relationships were close, as they did not only stand as
employer and employee to one another; they were members of the same family as they
were second cousins. Napoles also disclosed the information to Luy in the course of the
latter's performance of his duties as her employee. There could possibly be no benefit to
Napoles in fabricating the fact of Justice Ong's assistance in the Kevlar Helmet case
where she had been acquitted.

Admitting Luy's hearsay statement regarding Justice Ong's assistance to Napoles in the
Kevlar Helmet case and giving it its proper weight would — when considered with the
rest of the evidence untainted with issues of admissibility — lead to the reasonable
conclusion that Justice Ong had committed gross misconduct through acts amounting to
bribery.AacCIT

As I earlier emphasized, Justice Ong's assistance to Napoles, as well as his receipt of

money from her, reasonably explain Justice Ong's action in the grant of probation to
Napoles's relatives, the ledger of "Sandiganbayan expenses" that Luy encountered in the
course of his employment, as well as Justice Ong's subsequent visits to Napoles's office
where he was given an advantageous financial accommodation. It additionally explains
why Napoles's employees believed that Justice Ong indeed was her contact man at the
Sandiganbayan.

Taken together, these pieces of evidence provide a cohesive narrative revealing that
Napoles gave Justice Ong money in exchange for his assistance in the Kevlar Helmet
case, a case that the Fourth Division of the Sandiganbayan (whose Chairman is Justice
Ong) decided.

The act which the public officer committed in exchange for the gift he received need not
necessarily be a crime — it may consist of committing an unjust act, or refraining from
doing something that is his official duty to do, so long as it is connected with the
performance of his official duties. Assisting a litigant towards a successful avoidance of a
criminal sentence or imprisonment involves such an unjust act. cIETHa

Worthy of note too, that specifying the act which the respondent judge committed to
doing in exchange for the gift he accepted is immaterial for purposes of determining
whether he committed gross misconduct arising from acts amounting to bribery.

Bribery, as defined in the Revised Penal Code, has two forms: first, direct bribery, which
may be committed by accepting a gift in exchange for the public official's (1)
performance of a crime, (2) performance of an unjust act and/or (3) refraining from
performing his duty. 22 These acts must be performed in the course of the public official's
duties in government.

The second form involves indirect bribery — which involves accepting gifts given by
virtue of the public official's position in government, often with the view of exchanging
future favors. 23 Acts which are neither illegal nor unjust, but which are performed in the
course of the public official's duties and in exchange of the gift or favor given to the
public official, falls under indirect bribery. 24
TaHDAS

In these lights, the critical facts necessary to prove bribery, for purposes of determining
gross misconduct, are (1) the respondent judge's act of the receiving a gift or favor, (2)
his knowledge that this gift was given by virtue of his office, and (3) the connection
between the bribe-giver's interest with the bribe-receiver's office.

In other words, what is crucial in gross misconduct where bribery is the underlying act is
the acceptance of a gift or favor, knowing that the gift or favor is given because of one's
position in the judiciary — i.e., that it was given to persuade the respondent judge or
justice to perform an act for the giver. This act may be criminal, unjust, or may even be in
line with the respondent judge or justice's duties.

Notably, the New Code of Judicial Conduct asks members of the judiciary not only to
establish judicial independence and integrity, but to maintain the appearance of these
judicial attributes. Judges and justices are given sufficient leeway and discretion in the
application of the law and evaluation of the pieces of evidence before him or her, and it is
crucial that their exercise of discretion is never compromised. Particularly, their actions
cannot be tainted with ulterior motives that our criminal laws cover, such as payment
from one of the litigants, regardless of whether such litigant's cause was in line with the
law or not.

In these lights, the acceptance of a gift or valuable favor from a litigant in one's court,
especially when such litigant had just been acquitted and still had relatives with pending
cases in the division one presides over or is a member, already constitutes the underlying
act of bribery for purposes of a gross misconduct charge. It involves indirect bribery at
the very least because the gift or favor was accepted knowing full well that it was given
because of one's position in the judiciary, not because of any particular private
relationship that would justify modest gifts. In such case, the gift would necessary be in
exchange for or would be looking up to a favorable act in favor of the giver.

Applying these principles in these lights, I cannot accept Justice Ong's attempt to hide
behind the Sandiganbayan division's collegial decision-making process to exonerate
himself of the charges against him. That he is just one of five (5) justices in his division is
no excuse when it is considered that he speaks for or against the merits of cases pending
with his Division. That Justice Ong himself might not have actually drafted the decision
in the Kevlar Helmet case does not automatically free him from liability for the acts
imputed to and proven against him, as the critical point is his participation in the case. DaTICE

Justice Ong acted, in his official capacity as presiding justice and member of the
Sandiganbayan Fourth Division, on the decision and motion for reconsideration of the
Kevlar Helmet cases. He was identified, by several people who had no cause to implicate
him, as Napoles's contactman in the Sandiganbayan. He even went to Napoles's office
twice before signing probation orders for Napoles's relatives. During one of those visits,
Luy prepared checks to be given to him as an accommodation given to him by Napoles.
At that time, Napoles had just been acquitted before Justice Ong's Division, while the
cases of Napoles' relatives still stood to be acted upon by the Division on the probation
aspects. These acts, to my mind, more than reasonably establish his gross misconduct
based on the underlying acts of bribery (indirect bribery, at the very least).

IV. Assuming arguendo that the hearsay evidence against Justice Ong
could not be admitted as evidence, the totality of admissible
evidence shows that Justice Ong committed gross misconduct by
assisting, claiming to have assisted, or fostering the belief that he
assisted Napoles in the Kevlar case.

A. Assessment of Luy and Sula's testimonies

Even with the use of our traditional approach of excluding hearsay evidence in
administrative proceedings, I submit that the presented evidence that are not hearsay
sufficiently prove that Justice Ong committed acts amounting to gross misconduct. His
acts after the promulgation of the Kevlar Helmet decision show that he had assisted,
claimed to have assisted, or at the very least fostered, the belief that he assisted Napoles
in the Kevlar Helmet case. IEaCDH

A closer examination of Luy and Sula's testimonies show that they are not entirely
without any probative value. A statement made by a witness may, at the same time, be
both hearsay and non-hearsay, depending on what it intends to prove.

If the testimony is used to prove the veracity of a statement that the witness had no
personal knowledge of, then the statement is undoubtedly hearsay with respect to the
subject of the statement. But if the testimony is used to prove matters other than the
veracity of the statement itself 25 and of which the witness has actual knowledge, then
the statement is admissible and may be given probative value. This is the independently
relevant type of evidence.

In these lights, evidence that may be hearsay in proving the fact directly in issue
(bribery), may be used to prove the surrounding facts, related to the fact directly in issue,
that a witness has personal knowledge of, such as the utterance of another person in front
of witnesses, albeit the veracity of the uttered statement itself cannot be considered to be
directly established. 26

Further, it may also be used to show the other person's state of mind, physical and mental
condition, knowledge, belief, intention, and other emotions. 27 The latter, notably,
coincides with Rule 130, Section 48 of the Rules of Court, that allows a witness to
present his opinion on the emotion, behavior, condition, or appearance of a person.

Admittedly, the purpose for which a piece of evidence is offered must be manifested to
the court at the time the evidence is offered and presented. 28 This aspect, however, is
where the leniency of administrative cases on the technical rules of evidence comes in.
Thus, although no distinction had been made as to the purpose of the testimonies,
probative value may be given to and separated from their hearsay aspects, particularly to
the extent that a statement is independently relevant to the issue at hand.

Applied to the present case, we can — without refusing to apply the hearsay rule — give
credence to Luy's statement insofar as it proves that (1) Napoles plainly stated that she
had been talking to Justice Ong while the Kevlar Helmet case was pending in the
Sandiganbayan and that she gave the latter money to assist her, (2) that her demeanor at
the time she uttered this statement was calm and confident, and (3) that during the
conversation when Napoles uttered these statements, she appeared confident that she
would be acquitted in the Kevlar Helmet case.

In other words, while we do not use Luy and Sula's statements to establish that Napoles
had been telling the truth regarding Justice Ong's involvement in acquitting her in the
Kevlar Helmet case, we still can accept that she uttered these statements to Luy, a person
closely related to her and whose work involved confidential matters entrusted only to a
trusted associate or employee.

To reiterate, Luy was not merely an employee of Napoles; he is also her second cousin,
and has assisted her in her operations (now being questioned for its linkages in the illegal
use of the Priority Development Assistance Fund) for a considerable length of time. We
can also accept Luy's impressions of Napoles' state of mind and emotions at the time she
uttered these statements — i.e., a person confident that she would be acquitted.
Significantly, she was in fact acquitted. From the time of this acquittal, the proven acts of
meetings, socials and financial accommodation followed.

With respect to Luy's testimony on the financial accommodation that Napoles gave
Justice Ong, we can derive from his statements the following non-hearsay aspects: SCaTAc

(1) Justice Ong visited Napoles' office twice;

(2) During one of those visits, Napoles received a check worth Php25.5
million;

(3) That in exchange for the Php25.5 million check, Luy was asked to
prepare 11 checks to be issued by Napoles with Justice Ong as the
payee;
 (4) That these checks contain an aggregate amount of Php25.5 million
plus 13% interest; and

(5) That before Luy placed Justice Ong's name in the checks, Napoles
went to the room where Justice Ong had been staying, and
thereafter instructed Luy to make the checks payable to cash.

Luy's statements regarding these events are not hearsay, as he was involved in preparing
these checks. His testimony regarding Justice Ong's presence in Napoles' office at the
time he was preparing these checks also cannot also be considered as hearsay. That these
checks, however, had been issued to facilitate Justice Ong's participation in the AFPSLAI
(that then gave 13% interest to its depositors) cannot be taken as evidence because Luy
had not been personally privy to the transaction facilitated by the checks he prepared.

With respect to Sula's testimony, we can give it credit to the extent that she heard
Napoles say that Justice Ong would help her in the Kevlar Helmet case, not just in front
of Sula, but in front as well of other Napoles employees.

Further, we can also accept Sula's testimony that Justice Ong had visited Napoles' office
twice in 2012. We cannot, however, give credit to Sula's statements regarding Justice
Ong's possible involvement in helping Napoles with the cases filed against her in the
pork barrel scam, as these are speculative and unproven at this point and are not covered
by our present case.

B. The facts established by Luy and Sula's testimonies, when considered with
the totality of the pieces of evidence, sufficiently establish that Justice
Ong assisted or claimed to have assisted Napoles in the Kevlar Helmet
case, or at the very least allowed Napoles to believe in such assistance.

After excluding the aspects of Luy and Sula's testimonies that are hearsay, I believe that
the following facts can be considered sufficiently established:

(1) That Luy and Sula both heard Napoles claim that Justice Ong was
assisting her in the Kevlar Helmet case;

(2) That Sula witnessed Napoles make the same claim before the latter's
other employees;

(3) That Napoles's demeanor in making this claim was of someone who
knew that she would be acquitted prior to the release of decision in
the Kevlar Helmet case;

(4) That indeed Napoles was acquitted in the Kevlar Helmet case;
 (5) That Justice Ong visited Napoles's office twice in 2012;

(6) That during one of those visits, Luy assisted Napoles in preparing 11
checks for Justice Ong, in exchange for the Php25.5 million check
that Napoles allegedly received during Justice Ong's visit.

These factual conclusions from Luy's and Sula's testimonies, when taken together with
other pieces of evidence and circumstances surrounding the case, sufficiently establish,
by substantial evidence, that Justice Ong assisted, claimed to have assisted, or fostered
the belief that he assisted Napoles in the Kevlar Helmet case. They also establish that
Justice Ong afterwards received a favor from Napoles, as he exchanged his Php25.5
million check with 11 checks totaling to Php25.5 million with 13% interest.

Whether Justice Ong's check for Php25.5 million was funded, or had been encashed by
Napoles, unfortunately, are unanswered questions from the evidence of the present case.
If that check had not been funded, then Napoles effectively gave Justice Ong Php25.5
million, plus 13% of this sum, under the guise of the transaction they entered. On the
other hand, if that check had indeed been funded, then a very interesting document to
see would be Justice Ong's Statement of Assets and Liabilities, his SALN.

What, if I may ask, was worth this much to Napoles at that time?

The totality of the pieces of evidence presented before the Court yield the following
factual conclusions:

The two witnesses, both of whom were found credible by the investigating justice,
testified that Napoles had been confident of her acquittal in the Kevlar Helmet case
through Justice Ong's assistance. This confidence, according to Luy, was exhibited by
Napoles even prior to the Sandiganbayan's decision on the Kevlar Helmet case. HCaDIS

Napoles had indeed been acquitted by the Fourth Division that Justice Ong then chaired
(and still chairs). Meanwhile, her relatives, who had been her co-accused, were found
guilty of falsification of public documents but never spent a minute in jail due to Justice
Ong's direct action on this aspect of the Kevlar Helmet case.

We are aware though that the probation order came in the early part of 2013; i.e., after
Justice Ong's established interactions with Napoles in 2012. Napoles and Justice Ong
were photographed together at a social event in 2012. During the same year, Justice
Ong visited Napoles's office twice.

Further, during one of those visits, Napoles allegedly received a check worth Php25.5
million, and initially intended to issue 11 checks reflecting Php25.5 million plus 13%
interest with Justice Ong's name as payee. These checks, however, were ultimately made
payable to cash.

A discordant note in all these is Justice Ong's claim that he visited Napoles to ask for her
assistance in accessing the robe of the Black Nazarene in Quiapo. This claim, however,
does not need to negate the credit of Luy's testimony that he prepared the checks as both
can be accomplished in one visit. (Or, there might have been other visits.) Others also
attested to Justice Ong's visits to Napoles in 2012 and, significantly, other than his lame
reference to the deity and unabashed play for sympathy through religion, Justice Ong
never presented any evidence to disprove these points.

I find it too much of a coincidence that the Sandiganbayan justice that Napoles had been
boasting about as the one who would help her in the Kevlar Helmet case, is the same
justice that she socially mingled with (as shown by their photograph in a party), and the
same justice that had twice personally visited her in her office in 2012. Justice Ong, too,
is apparently one justice who could issue a check for Php25.5 million.

The more logical explanation for all these events, to my mind, is that Justice Ong and
Napoles have been more than passing acquaintances long before 2012. Justice Ong had
been visiting Napoles at her office, and had been present in at least one party where he
was photographed with Napoles and no less than a senator of the realm. These suggest
relationships at both the official and social levels and should be read with the direct
testimony of what Napoles told her employees about her acquittal and the actual fact of
acquittal.

Additionally, Ong had transacted with Napoles to the tune of Php25.5 million, a fact also
directly testified to by Luy.

I submit that the confluence of these facts and events cannot but lead a reasonable mind
to believe that respondent Justice Ong, at the very least, assisted or, to be exact, extended
favors to Napoles and her relatives in the Kevlar Helmet case.

Assisting or claiming to have assisted a litigant in a case pending or decided by the court
he sits in, or allowing the belief that he assisted in the said case violate several canons in
the New Code of Judicial Conduct pertaining to integrity and impartiality. Canon 2,
Section 1, requires judges to "ensure that not only is their conduct above reproach, but
that it is perceived to be so in the view of a reasonable observer."

Further, Canon 3, Section 2 instructs judges to "ensure that his or her conduct, both in
and out of court, maintains and enhances the confidence of the public, the legal
profession and litigants in the impartiality of the judge and of the Judiciary."
Judges must not only perform their duties with impartiality and integrity, but must ensure
that these duties appear to have been executed with impartiality and integrity. Acts of
assisting or making litigants believe that they have been assisted by the judge hearing his
or her case not only reflects on his partiality and questionable integrity, it also reflects
badly for the reputation of the judiciary, as it gives the impression that justice can be
bought. That the Sandiganbayan, the country's anti-graft court, is involved in a
corrupt practice should not be without significance to the Court.

Worse, as the accused in the present case is a member of the judiciary, it sends out the
additional message that the one who dispenses justice can also be the same justice who
sells it. Considering the grave repercussions of Justice Ong's violations, I find it logically
incomprehensible to characterize his acts as less than a serious charge, and I find it
morally reprehensible to impose a penalty less than dismissal with prejudice. The Court
should likewise forward its record of this case to the Ombudsman for whatever action she
may deem proper under the circumstances.

In sum, given the nature of the disciplinary proceedings for judges and the circumstances
proven in the present case, I strongly believe that Justice Ong is no longer worthy of
being identified as one of our colleagues in the judiciary. We should, at the soonest
possible time, act on this already-delayed case with dispatch, dismiss him as
recommended by Justice Villarama, and thereby give the strongest signal to the country
of our intent to purify our ranks.

As one final point, I also invite the Court's attention to the underlying case that
ultimately gave rise to the accusation against Justice Ong. It was a case involving Kevlar
Helmets. aHTcDA

To the uninitiated, these are the helmets that the members of our military use as they
fight battles for us who continue to live in the relative safety and comfort of our
homes. Any irregularity in these purchases means that less than the ideal exchange had
been secured by the purchasing government in the transaction. It is painful to realize that
this irregularity — proven by no less than the conviction of several officers of the
military as well as Napoles' relatives — had been at the possible expense of the members
of the military who risk their lives for the rest of our society. If only for this, the Court
should be aware, sensitive, and critical, in viewing the present case. Even if only to
this extent, let us signal to the military how we feel for and appreciate them.

BERSAMIN, J., concurring and dissenting:

The Majority holds Justice Gregory S. Ong of the Sandiganbayan guilty of gross
misconduct, dishonesty, and impropriety in violation of the New Code of Judicial
Conduct for the Judiciary.
I believe, however, that Justice Ong is administratively liable only for simple misconduct,
because that was the offense competently and properly established against him, and the
offense for which he is to be justly punished. I join the thorough consideration of the
record and recommendation for the suspension of Justice Ong for three months by Justice
Jose Portugal Perez and Justice Bienvenido L. Reyes. I humbly opine that it is unjust to
punish Justice Ong with the extreme penalty of dismissal from the service if the serious
charges of gross misconduct, dishonesty, and impropriety were not clearly and
convincingly proven by competent evidence.

In imposing the ultimate penalty of dismissal, the per curiam decision of the Majority
contained the following observations:

1. Justice Ong's association with Janet Lim Napoles during the pendency of, and after the
promulgation of the decision in the Kevlar case resulting in Napoles's acquittal
constituted gross misconduct notwithstanding the absence of direct evidence of
corruption or bribery in the rendition of the said judgment.

2. The testimonies of Benhur Luy and Marina Sula, the former employees of Napoles,
were considered substantial evidence establishing Napoles's contact with Justice Ong
during the pendency of the Kevlar case. The substance of their testimonies given
credence by the Majority are the following:

(a) Napoles revealed to them that she had a "connect" or "contact" in the
Sandiganbayan who could help "fix" the Kevlar case;

(b) Luy testified that Napoles told him that she gave money to Justice
Ong but did not disclose the amount;

(c) Napoles kept a ledger detailing her expense for the Sandiganbayan,
which reached P100 Million; and

(d) Napoles' information about her association with Justice Ong was
confirmed when she was eventually acquitted in 2010, and when
Luy and Sula saw him visit her office after the promulgation of the
decision in the Kevlar case, and given the eleven checks issued by
Napoles in 2012;

3. The evidence on record was insufficient to sustain the charge of bribery and corruption
against Justice Ong inasmuch as Luy and Sula had not themselves witnessed him actually
receiving money from Napoles. Considering that bribery and corruption connote a grave
misconduct, the quantum of proof should be more than substantial;
4. By his act of going to Napoles's office on two occasions, Justice Ong exposed himself
to the suspicion that he had been partial to Napoles;

5. Investigating Justice Angelina Sandoval-Gutierrez found the testimonies of Luy and

Sula credible;

6. Justice Ong's act of voluntarily meeting with Napoles constituted impropriety, because
he must at all times be beyond reproach and should avoid even the mere suggestion of
partiality and impropriety;

7. According to Justice Sandoval-Gutierrez, the eleven checks supposedly issued as

advance interest for Justice Ong's deposit in AFPSLAI were given to him as
consideration for the favorable ruling in the Kevlar case; and

8. Justice Ong's denial and failure to disclose his attendance in Napoles's gatherings, and
his visits and social calls to Napoles constituted dishonesty.

To the Majority, Justice Ong's guilt for gross misconduct was anchored on the inference
from his association with Napoles having led to her acquittal in the Kevlar case. To
support the inference, the Majority accorded credence to the statements of Luy and Sula
to the effect that: (a) Napoles had told them on different occasions that she had a
"contact" in the Sandiganbayan; (b) Napoles later on disclosed that Justice Ong was her
contact in the Sandiganbayan; and (c) Napoles told Luy that she had paid money to
Justice Ong (whose amounts she did not bother to disclose). CTDAaE

The evidence required in administrative cases is concededly only substantial; 1 that is, the
requirement of substantial evidence is satisfied although the evidence is not
overwhelming, for as long as there is reasonable ground to believe that the person
charged is guilty of the act complained of. 2 However, the substantial evidence rule
should not be invoked to sanction the use in administrative proceedings of clearly
inadmissible evidence. Although strict adherence to technical rules is not required in
administrative proceedings, this lenity should not be considered a license to
disregard fundamental evidentiary rules. 3 The evidence presented must at least
have a modicum of admissibility in order for it to have probative value. Not only
must there be some evidence to support a finding or conclusion, but the evidence
must be substantial. Substantial evidence is more than a mere scintilla; it means
such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. 4 In my opinion, administrative proceedings should not be treated
differently under pain of being perceived as arbitrary in our administrative
adjudications.

The statements of Luy and Sula being relied upon were based not on the declarants'
personal knowledge, but on statements made to them by Napoles. I find it very odd that
the Majority would accord credence to such statements by Luy and Sula if they
themselves did not personally acquire knowledge of such matters. I insist that elementary
evidentiary rules must be observed even in administrative proceedings.

A most basic rule is that a witness can only testify on matters that he or she knows of her
personal knowledge. 5 This rule does not change even if the required standard be
substantial evidence, preponderance of evidence, proof beyond reasonable doubt, or
clear and convincing evidence. The observations that the statements of Luy and Sula
were made amidst the "challenging and difficult setting" 6 of the Senate hearings, and
that the witnesses were "candid, straightforward and categorical" during the
administrative investigation 7 did not excise the defect from them. The concern of the
hearsay rule is not the credibility of the witness presently testifying, but the veracity
and competence of the extrajudicial source of the witness's information.

To be clear, personal knowledge is a substantive prerequisite for accepting testimonial

evidence to establish the truth of a disputed fact. The Court amply explained this in
Patula v. People: 8

To elucidate why . . . hearsay evidence was unreliable and untrustworthy, and

thus devoid of probative value, reference is made to Section 36 of Rule 130,
Rules of Court, a rule that states that a witness can testify only to those facts that
she knows of her personal knowledge; that is, which are derived from her own
perception, except as otherwise provided in the Rules of Court. The personal
knowledge of a witness is a substantive prerequisite for accepting
testimonial evidence that establishes the truth of a disputed fact. A witness
bereft of personal knowledge of the disputed fact cannot be called upon for
that purpose because her testimony derives its value not from the credit
accorded to her as a witness presently testifying but from the veracity and
competency of the extrajudicial source of her information.

In case a witness is permitted to testify based on what she has heard

another person say about the facts in dispute, the person from whom the
witness derived the information on the facts in dispute is not in court and
under oath to be examined and cross-examined. The weight of such
testimony then depends not upon the veracity of the witness but upon the
veracity of the other person giving the information to the witness without
oath. The information cannot be tested because the declarant is not
standing in court as a witness and cannot, therefore, be cross-examined.

It is apparent, too, that a person who relates a hearsay is not obliged to

enter into any particular, to answer any question, to solve any difficulties,
to reconcile any contradictions, to explain any obscurities, to remove any
ambiguities; and that she entrenches herself in the simple assertion that she
was told so, and leaves the burden entirely upon the dead or absent author.
Thus, the rule against hearsay testimony rests mainly on the ground that
there was no opportunity to cross-examine the declarant. The testimony
may have been given under oath and before a court of justice, but if it is
offered against a party who is afforded no opportunity to cross-examine the
witness, it is hearsay just the same.

Moreover, the theory of the hearsay rule is that when a human utterance is
offered as evidence of the truth of the fact asserted, the credit of the
assertor becomes the basis of inference, and, therefore, the assertion can be
received as evidence only when made on the witness stand, subject to the
test of cross-examination. However, if an extrajudicial utterance is offered,
not as an assertion to prove the matter asserted but without reference to
the truth of the matter asserted, the hearsay rule does not apply. For
example, in a slander case, if a prosecution witness testifies that he heard
the accused say that the complainant was a thief, this testimony is
admissible not to prove that the complainant was really a thief, but merely
to show that the accused uttered those words. This kind of utterance is
hearsay in character but is not legal hearsay. The distinction is, therefore,
between (a) the fact that the statement was made, to which the hearsay rule
does not apply, and (b) the truth of the facts asserted in the statement, to
which the hearsay rule applies.

Section 36, Rule 130 of the Rules of Court is understandably not the only
rule that explains why testimony that is hearsay should be excluded from
consideration. Excluding hearsay also aims to preserve the right of the
opposing party to cross-examine the original declarant claiming to have a
direct knowledge of the transaction or occurrence. If hearsay is allowed,
the right stands to be denied because the declarant is not in court. It is then
to be stressed that the right to cross-examine the adverse party's witness,
being the only means of testing the credibility of witnesses and their
testimonies, is essential to the administration of justice. DcCASI

To address the problem of controlling inadmissible hearsay as evidence to

establish the truth in a dispute while also safeguarding a party's right to cross-
examine her adversary's witness, the Rules of Court offers two solutions. The
first solution is to require that all the witnesses in a judicial trial or hearing be
examined only in court under oath or affirmation. Section 1, Rule 132 of the
Rules of Court formalizes this solution, viz.:

Section 1. Examination to be done in open court. — The examination of

witnesses presented in a trial or hearing shall be done in open court, and
under oath or affirmation. Unless the witness is incapacitated to speak,
or the question calls for a different mode of answer, the answers of the
witness shall be given orally. (1a)
 The second solution is to require that all witnesses be subject to the cross-
examination by the adverse party. Section 6, Rule 132 of the Rules of Court
ensures this solution thusly:

Section 6. Cross-examination; its purpose and extent. — Upon the

termination of the direct examination, the witness may be cross-
examined by the adverse party as to any matters stated in the direct
examination, or connected therewith, with sufficient fullness and
freedom to test his accuracy and truthfulness and freedom from interest
or bias, or the reverse, and to elicit all important facts bearing upon the
issue. (8a)

Although the second solution traces its existence to a Constitutional precept

relevant to criminal cases, i.e., Section 14, (2), Article III, of the 1987
Constitution, which guarantees that: "In all criminal prosecutions, the accused
shall . . . enjoy the right . . . to meet the witnesses face to face . . .," the rule
requiring the cross-examination by the adverse party equally applies to non-
criminal proceedings.

We thus stress that the rule excluding hearsay as evidence is based upon
serious concerns about the trustworthiness and reliability of hearsay
evidence due to its not being given under oath or solemn affirmation and
due to its not being subjected to cross-examination by the opposing counsel
to test the perception, memory, veracity and articulateness of the out-of-
court declarant or actor upon whose reliability the worth of the out-of-
court statement depends. 9

In addition, the Majority adverted to the following statements of Luy and Sula, to wit: (a)
Luy and Sula saw Justice Ong visit Napoles in her office; (b) there was a ledger listing
Napoles's alleged "Sandiganbayan" expenses; and (c) Luy personally prepared the 11
checks allegedly issued by Napoles to Justice Ong as advance interest for the latter's
deposit in AFPSLAI as the basis for concluding that Justice Ong's association with
Napoles was more than merely casual; and that such association was instrumental in
Napoles's acquittal in the Kevlar case supposedly orchestrated by Justice Ong in return
for monetary consideration.

I cannot agree with the Majority.

Justice Ong admitted making visits to Napoles, but such visits apparently happened in
2012, or long after the promulgation of the decision in the Kevlar case. He maintained
that he had made his visits only to thank her for accommodating his request for access to
the robe of the Black Nazarene.

The claim about the ledger and checks remained uncorroborated. No ledger or checks or
any other documents indicating the preparation of the ledger or the issuance of the checks
were actually presented. Nor was the connection of such ledger or the checks to the fixing
of the Kevlar case for monetary consideration ever established. In that light, the adverse
statements by Luy and Sula remained to be mere allegations that could not be considered
as evidence by any means. 10

If the Majority concede that there was no sufficient evidence to support the charge of
bribery and corruption against Justice Ong, it became unreasonable for the Majority to
hold that the totality of the circumstances still showed his corrupt inclination. To let
ourselves as judges reach a conclusion of corrupt inclination despite the insufficient basis
to find bribery and corruption is to set at naught all our learning of rendering a judgment
of guilt only upon evidence that is sufficient, credible and reliable.

Having admitted visiting Napoles after the promulgation of the decision in the Kevlar
case, Justice Ong could be considered as fraternizing with a litigant, by which he surely
transgressed his duty as a judge to be beyond reproach and suspicion. 11 He thereby
violated Section 1 of Canon 4 (Propriety) of the New Code of Judicial Conduct.12 Yet,
such association with Napoles was still censurable. Under Rule 140 of the Rules of Court,
fraternizing with lawyers or litigants is classified as a light charge penalized with a fine
of not less than P1,000.00 but not exceeding P10,000.00 and/or censure, reprimand, or
admonition with warning. ASDTEa

The dishonesty of Justice Ong for having initially denied any acquaintance with Napoles
was not of the seriousness or gravity to merit the extreme penalty of dismissal. His denial
neither related to his official duties, nor to his qualifications as a Justice of the
Sandiganbayan. It was not akin to an act of dishonesty committed through the
falsification of one's daily time records, 13 and was not similar to a judge's failure to
disclose in his application for appointment to the Judiciary pending criminal cases filed
against him. 14

It is relevant to note that dishonesty is a serious charge punishable by the following: (a)
dismissal from the service, forfeiture of all or part of the benefits as the Court may
determine, and disqualification from reinstatement or appointment to any public office,
including government-owned or controlled corporations. Provided, however, that the
forfeiture of benefits shall in no case include accrued leave credits; or (b) suspension
from office without salary and other benefits for more than three (3) but not exceeding
six (6) months; or (c) a fine of more than P20,000.00 but not exceeding P40,000.00. 15
Even so, the Court refrained in several instances from imposing these stiff administrative
penalties because of the presence of mitigating circumstances, like the length of service,
acknowledgment of fault, and feeling of remorse and humanitarian considerations. 16

Nonetheless, the Court should appreciate mitigating circumstances in determining the

proper penalty to be imposed upon Justice Ong. At present, he is the longest-sitting
Justice in the Sandiganbayan. Moreover, as mentioned by the Majority, he has admitted
that his having associated himself to a former litigant in his court was an error, and has
asked forgiveness during the proceedings held by Justice Sandoval-Gutierrez.

ACCORDINGLY, I VOTE to hold respondent JUSTICE GREGORY S. ONG guilty

of SIMPLE MISCONDUCT, to be punished with suspension from office for a period of
three months.

PEREZ, J., concurring and dissenting:

I dissent in part with the majority decision.

The Charge

Justice Gregory S. Ong (Justice Ong) of the Sandiganbayan stands administratively

charged with misconduct in relation to two (2) criminal cases decided by the fourth
division of the anti-graft court in 2010 — Criminal Cases No. 26768 and 26769. 1

Criminal Cases No. 26768 and 26769 are referred to as the Kevlar Cases because they
dealt with the prosecution of seventeen (17) persons — ten (10) military officials and
seven (7) private individuals — thought to be involved in what was alleged to be an
anomalous acquisition by the government of five hundred (500) Kevlar helmets in 1998
and 2000. Criminal Case No. 26768 charged all seventeen with malversation of public
funds through falsification of public documents, whereas Criminal Case No. 26769
charged them with violation of Section 3 (e) of Republic Act No. 3019.

The Kevlar Cases were decided on 28 October 2010. The decision was penned by Justice
Jose R. Hernandez and was concurred in by Justice Maria Cristina J. Cornejo and
division chair Justice Ong. It handed out no convictions either for malversation or for
violation of Section 3 (e) of Republic Act No. 3019. The results:

1. In Criminal Case No. 26768, seven (7) of the accused were acquitted
while ten (10) were convicted albeit only for the lesser offense of
falsification of public documents;

2. In Criminal Case No. 26769, all seventeen of the accused were

acquitted.

It is alleged that Justice Ong accepted bribes in exchange for the relatively tempered
decision in the Kevlar Cases. In particular, he is suspected of acting as "contact" and
"fixer" for one of the accused who ended up being acquitted in the two cases. That
accused is Ms. Janet Lim Napoles (Napoles).

Events Leading to the Instant Administrative Case

The following chain of events precipitated the allegations of bribery against Justice Ong:

A. Pork Barrel Scam

In 2013, Napoles was implicated in a corruption scam that allegedly involved diversion
of billions and billions of pesos worth of pork barrel funds 2 into bogus Non-
Government Organizations (NGOs) and kickbacks for certain legislators. Details of the
scam and Napoles' involvement therein were revealed in sworn statements executed
before the National Bureau of Investigation (NBI) by six (6) "whistleblowers" who were
former employees of Napoles in the JLN Corporation.

The Napoles pork barrel scam was highly publicized in the media. News of the scam was
met with intense outrage by the public and catapulted numerous protest actions all over
the country. Napoles, in her own right, became a well-known public figure in the country
albeit one of disrepute.
STECDc

On 29 August 2013, the Senate Committee on Accountability of Public Officers and

Investigations (Blue Ribbon Committee) began a probe, in aid of legislation, into the
Napoles pork barrel scam.

B. 30 August 2013 Rappler Report and Photograph

On 30 August 2013, the news website Rappler published a report written by one Aries
Rufo (Rufo) entitled "Exclusive: Napoles Parties with Anti-Graft Court Justice" that
featured a photograph of Justice Ong, Napoles and Senator Jinggoy Estrada (Senator
Estrada) posing and standing beside each other at some gathering. 3 The report contains
excerpts of Rufo's interview with Justice Ong regarding, among others, the circumstances
of the featured photograph and the truth behind anonymous "information" that he (Justice
Ong) gave advice to Napoles during the pendency of the Kevlar Cases.

According to the report, Justice Ong acknowledged his presence with Napoles in the
featured photograph but clarified that, at that time the same was taken, he did not know
who Napoles was, much less know that he was with a former litigant of his. 4 The report
also stated that Justice Ong denied being an adviser to Napoles during the pendency of
the Kevlar Cases. 5

After the publication of the Rappler report and photograph, Justice Ong sent to Chief
Justice Maria Lourdes P.A. Sereno a Letter dated 26 September 2013. In the letter,
Justice Ong explained to the Chief Justice that the photograph featured in the Rappler
report could have been taken during the birthday of Senator Estrada either in the year
2012 or 2013, but definitely after the Kevlar Cases have been decided. Justice Ong, in the
same letter, also categorically denied having attended any party or social event hosted by
Napoles before, during or after the decision in the Kevlar Cases.
 C. 26 September 2013 Senate Blue Ribbon Committee Hearing

On the same day Justice Ong wrote his Letter to the Chief Justice, the Senate Blue
Ribbon Committee held one of its hearings on the pork barrel scam. Interrogated in this
hearing were two (2) of the scam's whistleblowers — a certain Benhur Luy (Luy) and one
Marina Sula (Sula).

Among the questions asked of Luy during the Blue Ribbon Committee hearing was the
occurrence, if any, of bribery in the Kevlar Cases. Luy answered that the Kevlar Cases
were fixed because Napoles had a "connect" with the Sandiganbayan:

Senator Angara:

Baka alam ng ibang whistleblowers kung nagkaka-ayusan sa kaso na iyon

[Kevlar Cases]. Sige huwag ka matakot Benhur [Luy].

Luy:

Alam ko inayos ni Ms. Napoles iyon dahil may connect nga siya sa
Sandiganbayan.

On the other hand, Sula was asked during the same hearing whether Napoles knew any of
the justices of the Sandiganbayan. Sula testified that Napoles knew Justice Ong:

Chairman (Senator Guingona III):

Sinabi ninyo na may tinawagan si [Napoles] at sinabi niya, malapit nang

lumabas yung TRO galing sa korte. May kilala pa ba si [Napoles] na
huwes sa korte sa Sandiganbayan?

xxx xxx xxx

Sula:

Si Mr. Ong po. Justice Ong po.

Q: Gregory Ong?

A: Opo.

Q: Sa Sandiganbayan?

A: Opo.

The Administrative Investigation and the Evidence

Amidst the foregoing events, the Chief Justice, on 7 October 2013, requested the Court
En Banc to conduct a motu proprio investigation to shed light on the allegations that
Justice Ong acted as liaison and fixer for Napoles in the Kevlar Cases.

On 17 October 2013, the Court En Banc required Justice Ong to submit his Comment.
Justice Ong submitted his Comment on 21 November 2013.

On 21 January 2014, the Court En Banc then assigned the matter to retired Supreme
Court Justice Angelina Sandoval-Gutierrez (Justice Sandoval-Gutierrez) for
investigation, report and recommendation. SIaHDA

In compliance with the Court's directive for investigation, Justice Sandoval-Gutierrez

conducted hearings on 12 February, 7 March and 21 March 2014.

A. Evidence Against Justice Ong

The evidence against Justice Ong, as culled from the hearings, comprise of the statements
of Luy, Sula and Rufo as well as the 30 August 2013 Rappler report and photograph.

Luy Testimony. 6 Luy is a cousin and former employee of Napoles in the JLN
Corporation. Luy testified that, on numerous occasions, he was told by Napoles that she
has a "connect" in the Sandiganbayan i.e., Justice Ong. Luy recalled that, even during the
pendency of the Kevlar Cases, Napoles confided to him that she was already
communicating with Justice Ong.

Luy also testified that, just before the decision of the Kevlar Cases went out, Napoles told
him that she paid money to Justice Ong; although Napoles did not disclose how much.
Luy said that he used to keep a ledger where he records all payments made by Napoles in
relation to the Kevlar Cases as disclosed to him by the latter.

Luy likewise recounted two (2) instances in 2012, when Justice Ong visited the offices of
Napoles at the Discovery Suites Center in Pasig City:

1. On Justice Ong's first visit, Luy recalled —

a. He saw Justice Ong and Napoles talking in Unit 2501 of the

Discovery Suites. He was then staying at Unit 2502.

b. After a while, Napoles went to him at Unit 2502. Napoles told

him that Justice Ong was interested in depositing a P25
million Banco De Oro (BDO) check with Armed Forces of
the Philippines and Police Savings and Loan Association,
Inc. (AFPSLAI) that offers 13% annual interest.
 c. Napoles, however, told him that instead of depositing the BDO
check with the AFPSLAI she would deposit the same in her
account and would just advance interest payments to Justice
Ong.

d. Napoles then told him to prepare eleven (11) checks for Justice
Ong. So he prepared the eleven checks.

e. After preparing the eleven checks, he handed them to Napoles

who then went back to Unit 2501.

2. On Justice Ong's second visit, Luy said that Justice Ong and Napoles
ate Chinese food at the office.

Sula Testimony. 7 Sula is likewise a former employee of Napoles in the JLN

Corporation. Like Luy, Sula testified that she had been told by Napoles in the past that
Justice Ong fixed the Kevlar Cases for her.

Sula also testified that she once saw Justice Ong visit Napoles' office in 2012.

Rufo Testimony. 8 Rufo was the author of the 30 August 2013 Rappler report that
featured the photograph of Justice Ong, Napoles and Senator Estrada. Rufo testified that
he interviewed Justice Ong prior to the publication of the 30 August 2013 Rappler report.
Rufo said that Justice Ong looked surprised and shocked when presented with the
photograph of him with Napoles and Senator Estrada.

Rufo, however, refused to reveal who gave him the photograph featured in his report
based on his privilege as a journalist to protect the identity of his sources.

B. Evidence for Justice Ong

Justice Ong testified in his defense. 9 At the stand, Justice Ong denied acting as liaison
and fixer for Napoles in the Kevlar Cases. He said that he neither met with Napoles nor
was familiar with the latter during the pendency of the Kevlar Cases. Justice Ong,
however, admitted to associating with Napoles after the Kevlar Cases were decided.

Justice Ong said that his personal encounters with Napoles began only in 2012, during
the birthday party of Senator Estrada. It was there, Justice Ong claimed, that he was first
introduced to Napoles. Justice Ong said that, during the said party, he was able to
converse with Napoles about the Black Nazarene and to exchange cellphone numbers
with the latter. Justice Ong also admitted to eventually asking for Napoles' help in
gaining access to the robe of the Black Nazarene.
Justice Ong further recounted that, sometime after the birthday of Senator Estrada, he
received a call from Napoles asking him to go to the Adoracion Chapel in Makati. Justice
Ong said that when he went to the Adoracion Chapel, he was picked up by a car that
brought him to a house in a posh subdivision. Inside the house, Justice Ong recalled
meeting up with Napoles and one Monsignor Ramirez — the parish priest of Quiapo
Church. There, Justice Ong said, arrangements were made for him to wear the robe of the
Black Nazarene. Weeks after, Justice Ong said he was able to wear the robe of the Black
Nazarene and to receive fragrant cotton balls from the image. ITADaE

Justice Ong also conceded going to Napoles' office twice. Contrary to Luy's account,
however, Justice Ong said he never, in any of his visits, asked Napoles to make a deposit
on his behalf with the AFPSLAI. Justice Ong maintained that, in his first visit to Napoles,
he merely thanked the latter for giving him access to the robe of the Black Nazarene.
Anent visiting Napoles' office for the second time, Justice Ong claimed that he did so
only to accede to Napoles' incessant calls inviting him back to her office. At any rate,
Justice Ong said, he only had coffee with Napoles during his second visit to the latter's
office.

Report and Recommendation

On 15 May 2014, Justice Sandoval-Gutierrez submitted to this Court her Report and
Recommendation.

In her Report and Recommendation, Justice Sandoval-Gutierrez found Luy and Sula to be
credible witnesses; taking note of the candid, straightforward, categorical and consistent
manner by which both Luy and Sula testified during the investigation. 10 Hence, the
investigating justice gave full faith and credence to Luy and Sula's testimonies and held
as an established fact that Justice Ong acted as liaison and fixer for Napoles in the Kevlar
Cases.

Justice Sandoval-Gutierrez moreover noted that despite the fact that Luy and Sula's
statements of bribery against Justice Ong are technically hearsay in nature, they still
qualify as competent evidence since only substantial evidence is required in
administrative proceedings. 11 For the investigating justice, the statements of Luy and
Sula satisfies the standard of substantial evidence because they inspire reasonable
conclusion that Justice Ong accepted bribes in relation to the Kevlar Cases, and both
witnesses were found to be credible. 12

Verily, Justice Sandoval-Gutierrez recommended that Justice Ong be found guilty of

gross misconduct, dishonesty and impropriety and be meted the ultimate penalty of
dismissal from service.

Majority Decision
The majority adopted the recommendation of the investigating justice that Justice Ong be
dismissed from the service. 13

Contrary to the findings of Justice Sandoval-Gutierrez, however, the majority held that
the evidence yielded by the instant administrative investigation was insufficient to
establish that Justice Ong acted as liaison and fixer for Napoles in the Kevlar Cases. 14
For the majority, the evidence on record only establishes that Justice Ong associated with
Napoles two (2) years after the Kevlar Cases were decided. 15

Be that as it may, the majority characterized such association as Grossly Improper, as is

equivalent to Gross Misconduct, on the part of Justice Ong. 16

Moreover, the majority found Justice Ong to be guilty of Dishonesty before this Court. 17

Separate Opinions

The majority decision is supported by the separate opinions of Justice Arturo D. Brion,
Justice Marvic Mario Victor F. Leonen's and Justice Francis H. Jardeleza's. The three
opinions raised different points that tend to justify the dismissal from the service of
Justice Ong.

DISCUSSION

I agree with the majority in finding the evidence yielded by the instant administrative
investigation as insufficient to establish that Justice Ong of the Sandiganbayan acted as
liaison and fixer for Napoles in the Kevlar Cases. I also agree that, at most, the evidence
only shows that Justice Ong associated with Napoles two (2) years after the Kevlar Cases
were decided.

I, however, disagree with the majority in characterizing such association as Gross

Misconduct on the part of Justice Ong. Such association merely constitutes the offense
Simple Misconduct which, under Rule 140 of the Rules of Court, is only a less serious
charge. 18

I also disagree with the finding that Justice Ong was guilty of Dishonesty before this
Court. The basis of this finding was the result of taking statements of Justice Ong out of
context.

Hence, I disagree with the ruling of the majority to dismiss Justice Ong from the service.
I opine that, even with due consideration of the fact that he was already previously
sanctioned by this Court, 19 Justice Ong only ought to be suspended from office for three
(3) months without salary and other benefits.

I
My first objection with the majority decision is that while it found the evidence on record
as insufficient to support the conclusion that Justice Ong accepted bribes in relation to the
Kevlar Cases, it nevertheless imposed a penalty as if such bribery was, in fact,
established. The majority considered the act of Justice Ong in associating with Napoles
two (2) years after the promulgation of the Kevlar Cases as gross misconduct, even
though the evidence does not establish that Justice Ong did so out of any corrupt or
malicious motive. The decision, therefore, sets a very dangerous precedent because it
removes the distinction between what could otherwise constitute as bribery or gross
misconduct on one hand and mere simple misconduct on the other. CaHAcT

The root cause of this discrepancy, it appears to me, is the majority's half-hearted position
as to whether the evidence on record do in fact establish bribery or not.

Thus, in the first part of its discussion, the majority recognized the insufficiency of the
evidence on record to establish bribery on the part of Justice Ong: 20

An accusation of bribery is easy to concoct and difficult to disprove. The

complainant must present a panoply of evidence in support of such an
accusation. Inasmuch as what is imputed against the respondent judge
connotes a grave misconduct, the quantum of proof required should be
more than substantial. Concededly, the evidence in this case is insufficient
to sustain bribery and corruption charges against the [Justice Ong]. Both
Luy and Sula have not witnessed [Justice Ong] actually receiving money
from Napoles in exchange for her acquittal in the Kevlar case. Napoles had
confided to Luy her alleged bribe to respondent. (Emphasis supplied).

However, in a later part of its discussion, the majority insinuated that such bribery was
established by virtue of Justice Ong's "financial deal" with Napoles regarding "advance
interest for AFPSLAI deposit" during one of the former's visit to the latter in 2012: 21

Justice Sandoval-Gutierrez stated that the eleven checks of P282,000

supposed advance interest for respondent's check deposit to AFPSLAI
were given to respondent as consideration for the favorable ruling in the
[Kevlar Cases]. Such finding is consistent with Luy's testimony that Napoles
spent a staggering P100 million just to "fix" the said case. Under the
circumstances, it is difficult to believe that [Justice Ong] went to Napoles' office
the second time just to have coffee. Respondent's act of again visiting
Napoles at her office, after he had supposedly merely thanked her during
the first visit, tends to support Luy's claim that respondent had a financial
deal with Napoles regarding advance interest for AFPSLAI deposit. The
question inevitably arises as to why would Napoles extend such an
accommodation to [Justice Ong] if not as consideration for her acquittal in
the [Kevlar Cases]? [Justice Ong's] controversial photograph alone had raised
adverse public opinion, with the media speculating on pay-offs taking place in
the courts. (Emphasis supplied).
If the real intent of the majority was to say that Justice Ong's "financial deal" with
Napoles was enough to support reasonable conclusion that there was bribery in the
Kevlar Cases, then I must register my dissent to this point as well.

"Financial Deal" Involving

AFPSLAI Deposits was not Proven.

To begin with, the existence of such financial deal was never really established in this
case. Justice Ong's purported financial deal with Napoles rests merely on the hearsay
account of Luy, viz.: 22

Justice Gutierrez

Q: With respect to the Kevlar case, what participation did you have, if there was
any?

Witness Luy:

A: Noong 2012 po kasi, si Justice Gregory Ong po nasa unit . . . office din po
ng JNL Corporation, Unit 2501, yung office; so kami ni Ms. Janet Lim
Napoles nandito sa 2502 kasi yun po ang office talaga namin. Si Ms.
Napoles po sinabi niya sa akin, Ben, kasi si Ms. Napoles, may pera
siyang madami na pine-place niya po sa AFSLAI [sic] at yung AFSLAI
[sic] po ay nagbibigay po sa kanya o nago-offer ng 13% interest
annually po. So, ang nangyari po doon, sabi po ni Janet Napoles, si
Justice Ong ho raw, gustong magkaroon din ng interest parang ganoon.
So tutulungan niya. So, ang ginawa po namin . . .

Justice Gutierrez

Q: Meaning to say, Justice Ong would like to deposit money . . .

A: Opo. TADaCH

Q: So he could get 13% interest?

A: Opo kasi tapos madam ang nangyari po pumunta napo si Ms. Napoles sa
opisina niya. Tinawag niya ako kasi pinapasulat na niya sa akin doon sa
checke. So, ang ginawa po [ni] Ms. Napoles, yung checke ni . . . BDO
check po kasi yun. Ang sabi sa akin ni Ms. Napoles, checke daw po yun
ni Justice Gregory Ong. So, BDO. So, di ko din po naman po nakita
yung nakalagay sa . . .

Q: So, it is the check of Justice Ong not the check of Ms. Napoles?
 A: Opo, Ang amount po ng check madam ay P25.5 million ang amount noong
BDO check na inissue . . .

Q: That belongs to Justice Ong?

A: Opo. Tapos madam, so ang ginawa po naming ni Ms. Napoles, after po noon
madam, dahil 13% interest ang ino-offer ng AFSLAI, [sic] sabi ni
madam, ganito na lang Ben, ipasok na lang muna natin yung checke
niya sa personal account ko. Ako na lang muna for the meantime, mag-
issue ng checke sa kanya para ma-avail ni Justice Ong yung interest. So,
ang ginawa naming madam, P25.5 million times 13% interest, tapos
divided by 12, lumalabas na P282 or 283,000.00 or 281 po madam kasi
nag-round off kami sa P282,000.00. So ginawa ni madam, baga
monthly. So, eleven (11) checks ang prinepare namin. . . . .

The flaws in Luy's account was revealed during his cross-examination: 23

Atty. Geronilla

Q: Where were you at the office at that time?

Witness Luy

A: Yung alin po?

Q: When you saw Justice Ong?

A: Andun lang po ako sa office niya sa cubicle.

Q: Did Ms. Napoles talk to Justice Ong?

A: Yes po.

Q: But you did not know what they talked about.

A: Hindi ko po alam kung ano pinag-uusapan.

Q: Now, when . . . I am interested in this check which as you said P25 million
or so?

A: Opo, P25.5 million po.

Q: Whose check was that?

A: BDO check from Gregory Ong po.

Q: How do you know it was from Gregory Ong?

A: Sinabi po ni Ms. Napoles sa akin.

Q: Ah, it was she who told you?

A: Yes po. TCHcAE

xxx xxx xxx

Justice Gutierrez

Q: By the way Mr. Luy, were you the one who delivered the check to Mr.
Gregory Ong?

Witness Luy:

Q: Hindi na po.

Q: Who delivered the check to him?

A: Si Ms. Napoles na po.

Q: How did you come to know that it was Ms. Napoles? Did you see?

A: Opo, kasi dalawa po kami na nag-prepare. Bago kasi . . . tinanong ko kasi

madam siya kung sino ang payee. Ilalagay ko po ba dito madam
Gregory Ong? Sabi niya, Hindi. Teka lang. Umalis siya. Pumunta sa
kabila, sa 2501. Tapos tumuloy siya at sabi "Pay to cash na lang." So
inilagay naming ni madam na cash. Tapos, pinirmahan niya yung
checke na prinepare ko. So, bitbit na niya yang check. Dinala niya.

Q: Ah, she brought the check to the other room but you did not see the person to
whom it was delivered right?

xxx xxx xxx

A: Ah, you mean na si Ms. Napoles na binigay niya mismo yang checke kay
Gregory Ong? Hindi po.

Q: You did not see?

A: Hindi po. Hindi ko po nakita.

xxx xxx xxx

 Atty. Geronilla

Q: You also said that there were eleven (11) checks issued to somebody whom
you do not know which you gave to Janet Napoles.

Witness Luy

A: Checke po yun ni Ms. Janet Lim Napoles.

Q: Yes. Now, do you have a copy or record of those checks?

A: Wala na po. AcICHD

Q: You know that if you deposit a check, it will return to you, right?

A: Babalik po iyon sa office.

Q: Do you have the return checks? Any return checks?

A: Wala na po.

Q: So you have no personal knowledge as to whom these checks were paid or

who deposited these checks if they deposited it at all?

Justice Gutierrez

Q: Of your own knowledge, where are those checks now?

Witness Luy

A: Hindi ko po alam kung nasaan. Basta ang sabi ni Ms. Napoles sa akin
madam, after na pagkakuha ng checke, noon inihahatid po yung checke,
inihatid lang po yung checke kay Justice Gregory Ong sa kabilang office
sa 2501. Pero hindi ko na po inalam kasi personal checke na po niya yon
e.

Q: I am asking about the return checks?

A: Wala na po, ma'am.

Q: You have no knowledge where they are?

A: Wala po.

What is clear from the statements of Luy regarding the financial deal was that it is only
based on what Napoles actually relayed to him. Luy had no personal knowledge about the
conversation between Napoles and Justice Ong during the latter's visit; about whether
Justice Ong assented to an arrangement with Napoles; and about whether Justice Ong did
issue a BDO check. The only thing Luy was competent to testify about is his preparation
of eleven (11) checks, purportedly for Justice Ong, at the direction of Napoles. But, just
the same, Luy does not have any personal knowledge whether the eleven (11) checks
were indeed given to Justice Ong or whether Justice Ong received and accepted
such checks. IHcTDA

Justice Leonen, in his Reflections, however, opined that we ought to consider as

established Justice Ong's receipt of the eleven (11) checks because "even if Luy was not
in Unit 2501 when Napoles handed the checks to Justice Ong, there could be no other
conclusion to be derived from the facts." 24 I respectfully disagree with Justice Leonen's
analysis.

In my opinion, it is precisely the fact that no one was able to see and observe Justice
Ong receiving the eleven (11) checks that a contrary conclusion i.e., that Justice Ong
never received any checks from Napoles, finds reason. And this conclusion becomes all
the more reasonable if we consider that no one, neither Luy nor Sula, was able to testify
regarding the existence of any returned checks and that no such checks were ever
submitted in evidence.

Hence, I opine that the existence of a so-called "financial deal" between Justice Ong and
Napoles was not established in this case.cHCSDa

Even Assuming the Existence of

the Financial Deal, Evidence Still
Does Not Support Finding of
Bribery in the Kevlar Cases

Moreover, even assuming arguendo that the statements of Luy suffice to establish the
existence of a financial deal between Justice Ong and Napoles, the same cannot still
establish that there had been bribery in the Kevlar Cases. To conclude that the
consideration for the financial deal was Napoles' acquittal in the Kevlar Cases is
equivalent to mere speculation:

First. There is no direct evidence establishing that the financial deal was a bribe. Even
Luy himself does not say so. Hence, any conclusion of bribery can only be inferred from
circumstantial evidence.

Second. There is, however, no circumstantial evidence on record from which the
conclusion of bribery may be inferred. At the very least, there should have been evidence
to show that Justice Ong and Napoles had been communicating during the pendency of
the Kevlar Cases. There is no evidence of such communication in this case — except, the
hearsay testimonies of Luy and Sula.

Third. The conclusion of bribery cannot be inferred from the financial deal itself. The
deal, it must be emphasized, was entered into two (2) years after the decision in the
Kevlar Cases was promulgated. While not impossible, the likelihood that the financial
deal was a bribe becomes remote given the considerable amount of time that passed
between Napoles' acquittal and the purported pay-off.

Fourth. The conclusion of bribery cannot be inferred from the accommodating nature of
the financial deal. Indeed, if Luy's statements as to the existence of the financial deal
were to be believed as the truth, then the deal itself cannot really be considered as an
"accommodation." Justice Ong, as Luy recounted, had to issue a check of his own in
exchange of the eleven (11) checks of Napoles. The implication is that Justice Ong was
not issued the eleven (11) checks out of thin air or as a pay-off; rather, Justice Ong
allowed the use of his own money as consideration for the checks he allegedly received.
Hence, the financial deal can stand as a transaction away from bribery.

Since there is neither direct nor circumstantial evidence to support a finding of bribery,
concluding still that there was such bribery would be mere speculation. It would not be a
"reasonable" conclusion warranted by substantial evidence. From Luy's own story,
bribery is plainly and simply speculative.
cAIDEa

II

My second objection with the majority decision is the characterization of Justice Ong's
association with Napoles as gross misconduct. I opine that the same is merely a simple
misconduct.

Extent of Justice Ong's Association

with Napoles

As established by the evidence, Justice Ong began associating with Napoles two (2) years
after Kevlar Cases were decided. Justice Ong himself admitted the entire breadth of this
"association:" 25

First. At the birthday party of Senator Estrada in 2012, where Justice Ong was first
formally introduced to Napoles. The two talked about the Black Nazarene. They
exchanged cellphone numbers. It was also here that Justice Ong requested the help of
Napoles in gaining access to the robe of the Black Nazarene.

Second. Sometime after the birthday of Senator Estrada, Justice Ong received a call from
Napoles asking him to go the Adoracion Chapel in Makati. Justice Ong went to the
Adoracion Chapel and was picked up by a car that brought him to a house in a posh
subdivision. Inside the house, Justice Ong was able to meet up with Napoles and one
Monsignor Ramirez — the parish priest of Quiapo Church. Here, arrangements were
made for Justice Ong to wear the robe of the Black Nazarene. Weeks after, Justice Ong
was able to wear the robe of the Black Nazarene and he received fragrant cotton balls
from the image.

Third. Sometime after that, Justice Ong went to Napoles' office twice.

The above are the only instances of Justice Ong's association with Napoles that have
been duly supported and established by competent evidence.

Justice Ong's Association with

Napoles is Mere Simple
Misconduct

It is my considered opinion that Justice Ong's association with Napoles only constitutes
simple misconduct. EIcTAD

Unlike the case of fraternization between judges and litigants with still pending cases,
there is no rule of ethics that categorically prohibits and sanctions fraternization between
judges and their former litigants. 26 Be that as it may, cases of fraternization between
judges and their former litigants may still be held unethical if found to be done for a
corrupt purpose or in such manner that violates any of the norms of propriety and
integrity that every member of the bench ought to possess. The ethical implications of
fraternizations between judges and their former litigants, therefore, must be evaluated on
a case-to-case basis.

The case of Justice Ong and his association with Napoles, though done years after the
Kevlar Cases have been decided and not for any proven corrupt purpose, remain
unethical because theirs was not a case of simple fraternization. Aside from socializing
with Napoles, Justice Ong — by his own admission no less — received favors (i.e., the
arrangements made by Napoles providing access to the robe of the Black Nazarene) from
the former that, though innocent, could nonetheless be mistaken by the public as related
to his judgeship. Justice Ong's receipt of such favors from Napoles, therefore, had the
effect of compromising his image of impartiality and integrity as it has indeed given the
story of bribery the appearance of reality. As it has affected the judgeship of Justice Ong,
so has it affected the court to which he belongs.

For such indiscretion, Justice Ong undoubtedly committed violations of Section 1 of

Canon 2 and Section 1 of Canon 4 of the New Code of Judicial Conduct:

CANON 2: INTEGRITY
 SECTION 1. Judges shall ensure that not only is their conduct above reproach,
but that it is perceived to be so in the view of a reasonable observer.

CANON 4: PROPRIETY

SECTION 1. Judges shall avoid impropriety and the appearance of impropriety

in all of their activities.

These violations of Justice Ong, however, cannot be considered as gross misconduct but
mere simple misconduct. Gross misconduct means a transgression of some established
and definite rule of action that is willful, flagrant or animated by corrupt motives. 27
Gross misconduct implies the existence of malice or gross negligence, which reflects the
corrupt character of the actor. Malice or corruption, however, has not been established on
the part of Justice Ong.

Justice Ong, therefore, is only accountable for simple misconduct, i.e., a plain
transgression of established norms but without the elements of willfulness, malice or
corruption.

No Flagrant Disregard of Rules

In his Reflections, however, Justice Leonen opined that Justice Ong's association with
Napoles is still a gross misconduct despite absence of any evidence that taints such
association with corruption. 28 He claims that even sans the element of corruption,
Justice Ong's violations of ethical standards may still be considered gross misconduct
because they constitute "flagrant disregard of rules." 29

I agree that "flagrant disregard of rules" may qualify an otherwise simple misconduct
into a gross one but I discount its existence in this case. In my view, Justice Ong's receipt
of arrangements regarding the robe of the Black Nazarene and his visits to Napoles
thereafter does not show a "propensity to disregard the rules" 30 on his part. IaEScC

Flagrant disregard of rules may indeed exist outside the concept of corruption but it does
require more than the mere act of violating an ethical norm. I submit that in order to
consider a violation of an ethical norm as a "flagrant disregard" we must consider the
circumstances under which such violation was committed. The circumstances must
show precisely a "propensity to disregard the rules" on the part of the actor —
something that is deliberate or malicious and which relates to the very moral fibre
of the actor; not the result of a mere simple indiscretion.

Justice Ong's receipt of arrangements regarding the robe of the Black Nazarene and his
visits to Napoles thereafter undoubtedly resulted in a violation of our ethical norms but it
is not a flagrant violation. We may consider perhaps the following circumstances: the acts
were committed two (2) years after the Kevlar cases were decided; the receipt by Justice
Ong of the arrangements regarding the Black Nazarene were motivated not by anything
illicit but by an all too human religious devotion; such arrangements were of no
significant pecuniary value; the subsequent visits to Napoles' office were not shown to
have been made for any purpose other than to extend thanks to Napoles for the religious
favor. These circumstances, though certainly not justifying, nonetheless speak that
the actuations by Justice Ong was motivated not by any malicious intent to violate
the established rules judicial ethics but more reasonably was the result of a mere
momentary lapse of discretion.

Hence, I discount the existence of a "flagrant disregard of rules" on the part of Justice
Ong.

III

I also object to the majority's finding that Justice Ong had been dishonest with this Court.

Findings of Dishonesty Has No Basis

In finding the existence of dishonesty on the part of Justice Ong, the majority pointed to
the former's somewhat deliberate attempt to conceal his visits to Napoles' office as
inferred from the following circumstances: 31

1. In his Letter dated 26 September 2013 to the Chief Justice, Justice Ong
never mentioned that he visited Napoles' office twice in 2012. AcICTS

2. In his Comment, Justice Ong mentioned of only one instance he visited

Napoles' office, i.e., the single occasion referred to by witness Sula
in her supplemental affidavit.

I respectfully disagree. The instances, from which the inference of concealment was
drawn, were taken out of context.

First. Justice Ong's Letter dated 26 September 2013 came at the heels of the 30 August
2013 Rappler report that depicted him as having "partied" with the Napoleses and which
featured a controversial photograph of him, Napoles and Senator Estrada in some
gathering. Verily, as confirmed by Justice Ong, his main purpose in writing the said letter
was for it to serve as a direct response to the impression created by the said report and
photograph that he had attended a party or social event that was hosted by Napoles. 32

Given the purpose of the Letter, it becomes understandable why Justice Ong's statements
therein were only limited to rebutting the Rappler report and explaining the context and
circumstance of the photograph. Justice Ong could not be expected to mention therein
anything about his subsequent private visits to Napoles' office because those matters were
not, in the first place, brought up by the Rappler report and photograph. Hence, Justice
Ong's silence in the Letter with respect to his visits to Napoles' office cannot be taken
against him.

Second. In his Comment, Justice Ong never stated that he only visited Napoles' office
once. Justice Ong mentioned and described only one occasion of his visit to Napoles'
office because he was, by then, responding to the sole instance in which he was seen by
Sula in Napoles' office. Hence, the use by Justice Ong of the phrase: "This is the single
occasion that Sula was talking about in her supplemental affidavit . . . " 33 Justice Ong
never made any representations that he only visited the office of Napoles once.

At any rate, when asked during the investigation as to how many times he had visited
Napoles' office, Justice Ong candidly admitted doing so twice: 34

Justice Gutierrez

Q: Did you go there?

Justice Ong

A: Yes, your honor.

Q: The second time as claimed by the whistleblowers?

A: Yes, I went there twice, your honor. (Emphasis supplied).

Hence, I find no cause in holding Justice Ong accountable for dishonesty. ADaECI

Findings of Dishonesty By Justice Leonen

In addition to those pointed out by the majority, Justice Leonen further cites the
following instances purportedly indicative of Justice Ong's dishonesty: 35

1. In the Rappler article, Justice Ong was documented as saying that he

did not know who Napoles was or that the latter was a former
litigant of his at the time the photograph featured in the article was
taken. However, Justice Ong contradicted this fact during the
investigation when he revealed that on the occasion when such
photograph was taken, Napoles thanked him for her acquittal in the
Kevlar Cases.

2. Justice Ong, in his Comment, stated that he never attended a social

event hosted by Napoles. However, during the investigation,
 Justice Ong admitted to having attended a Eucharistic mass
arranged by Napoles.

3. Justice Ong had the propensity to conceal his association with Napoles
as much as possible and he only accommodated more details into
his story as he was confronted with more facts about such
association. Thus, when confronted only with a picture of him and
Napoles in some gathering, Justice Ong limited his association
with Napoles to their attendance in Senator Estrada's party. But
later, when confronted with the testimony of Marina Sula who
recounted having seen him visit the office of Napoles once, Justice
Ong explained in his Comment only the circumstances of that one
visit. And still later on, when confronted by Luy's statement during
the investigation to the effect that he visited Napoles' office twice,
Justice Ong's story evolved so as to accommodate that second visit
as well.

Again, I respectfully disagree. The cited instances of dishonesty may be explained

otherwise:

First. The first cited instance of dishonesty is premised on the fact that the photograph
featuring Napoles with Justice Ong was taken after the two were formally introduced to
each other. But such fact had never been established. It could have been otherwise.

Second. The second instance of dishonesty may be explained by the fact that when
Justice Ong mentioned the word "social event" in his Comment he was basically referring
to events such as parties or any social gatherings similar to that of a birthday party. This
is likely so because Justice Ong used the word "social event" primarily as a response to
the impression created by the photograph featured in the Rappler article — which depicts
a party or a similar event. Under those terms, it is understandable that Justice Ong may
not have considered a Eucharistic mass as a "social event." SCIcTD

Third. The third instance of dishonesty just stretches reasonable appreciation of Justice
Ong's statements. Justice Ong, of course, can only be expected to reveal so much as is
required by the subject of inquiry at any given time. When the subject of inquiry,
however, shifted to the entire gamut of his association with Napoles, like what happened
during the investigation stage, Justice Ong was candid enough to reveal them in its
entirety. To assume that the reason why Justice Ong revealed his association with
Napoles piece by piece was because he was trying to avoid disclosure of his entire
association with Napoles is to presume bad faith without any corroboration whatsoever.

Hence, I maintain that there remains no categorical indication that Justice Ong attempted
to be dishonest with this Court.
 IV

Justice Ong then was shown liable only for simple misconduct which, under Section 9 of
Rule 140 of the Rules of Court, is merely a less serious charge. Under Section 11 of the
same rule, the sanction for committing a less serious charge could either be suspension
from office without salary and other benefits for not less than one (1) nor more than three
(3) months or a fine not exceeding P10,000.00 but not exceeding P20,000.00.

It must also be considered, however, that Justice Ong was already previously fined
P15,000.00 by this Court in the administrative case Jamsani-Rodriguez v. Ong. 36

This being his second offense, I deem it proper to sanction Justice Ong with the
maximum period of suspension from office allowable for less serious charges.

IN VIEW WHEREOF, I cast my vote in favor of finding Associate Justice Gregory S.

Ong of the Sandiganbayan guilty of SIMPLE MISCONDUCT, for which he must suffer
SUSPENSION FROM OFFICE, without salary or other benefits, for a period of
THREE (3) MONTHS. Associate Justice Gregory S. Ong is also STERNLY
WARNED that a repetition of the same or similar offenses shall be dealt with more
severely.

SO ORDERED.

REYES, J., concurring and dissenting:

I concur with the ponencia's declaration that the evidence presented against
Sandiganbayan Associate Justice Gregory S. Ong (Justice Ong) are insufficient to sustain
the charge of bribery against him. That there is no direct evidence that would sufficiently
establish that Justice Ong actually received money from Janet Lim-Napoles (Napoles) in
exchange for her acquittal in the Kevlar case. Likewise, I agree with the ponencia's
finding that the association between Justice Ong and Napoles had been sufficiently
proved; that Justice Ong's act of meeting with Napoles at the latter's office on two
occasions, notwithstanding that the decision in the Kevlar case had long been
promulgated, violates the rule of propriety under Canon 4 of the New Code of Judicial
Conduct. SHacCD

I am unable to agree, however, with the ponencia's conclusion that Justice Ong's
association with Napoles "constitutes gross misconduct notwithstanding the absence of
direct evidence of corruption or bribery." Although Justice Ong's dealing with Napoles
gives the appearance of impropriety, there is a paucity of evidence, however, to conclude
that he has a "corrupt inclination" which would merit a finding of gross misconduct on
his part and be meted the penalty of dismissal from the service. Further, I do not agree
with the ponencia that Justice Ong is guilty of dishonesty when he failed to disclose in
his letter to the Chief Justice that he visited Napoles in her office after the promulgation
of the decision in the Kevlar case.

The charge of bribery and/or

corruption against Justice Ong was
not sufficiently proved.

The charge of gross misconduct against Justice Ong stems from the allegation of bribery
against him by "pork barrel scam" whistleblowers Benhur Luy (Luy) and Marina Sula
(Sula). Essentially, Luy and Sula alleged that Napoles solicited the help of Justice Ong in
connection with the Kevlar case, which was then pending before the Sandiganbayan.
They claimed that Napoles was acquitted of the charge against her in the said case
through the intercession of Justice Ong; that Justice Ong obtained monetary consideration
in exchange for Napoles' acquittal. DaHISE

The accusation of bribery is a very serious charge that would entail not only the dismissal
of a judge, in this case an Associate Justice of the Sandiganbayan, but also criminal
prosecution. 1 An accusation of bribery is easy to concoct and difficult to disprove. Thus,
the complainant must present a panoply of evidence in support of such an accusation.
Inasmuch as what is imputed against the respondent connotes a misconduct so grave that,
if proven, would entail dismissal from the bench, the quantum of proof required should
be more than substantial. 2 In such cases, there must be a direct and convincing evidence
to prove the charge of corruption; mere accusations will not suffice. 3

The claims of Luy and Sula that Justice Ong is the "contact" of Napoles in the
Sandiganbayan and that he caused the acquittal of the latter in the Kevlar case in
exchange for monetary consideration are hearsay.

During the investigation conducted by retired Supreme Court Justice Angelina Sandoval-
Gutierrez (Justice Sandoval-Gutierrez) on February 12, 2014, Luy categorically stated in
his direct examination that Justice Ong is the "contact" of Napoles in the Sandiganbayan.
However, when asked how he knew that Justice Ong is the "contact" of Napoles, Luy
replied that Napoles told him so. Thus:

Atty. Garen

Q And now Mr. Witness, about this statement of yours at the Blue Ribbon
Committee that Ms. Napoles has a certain connect sa Sandiganbayan,
who was this connect you were talking about, if you remember?

Witness Luy

A Si Justice Gregory Ong po.

 Q How do you know that Justice Gregory Ong was the connect of Ms. Napoles
at the Sandiganbayan?

A Ang sinabi po . . . Si Ms. Napoles po, pinsan ko po kasi si Ms. Napoles. We

are second cousins. So, kinwento talaga sa akin ni madam kung ano
ang mga development sa mga cases, kung ano ang mga nangyayari.
Tapos po, sinabi niya sa akin mismo na nakakausap niya si Justice
Gregory Ong at ang nagpakilala raw sa kanya po ay si Senator
[J]inggoy Estrada. 4 (Emphasis mine) DTEAHI

Likewise, Luy's allegation that Justice Ong was the one who orchestrated the acquittal of
Napoles in the Kevlar case in exchange for monetary considerations is based only on
what Napoles told him, viz.:

Q You answered Senator Angara this way which we already quoted a while ago:
"Alam ko inayos ni Ms. Napoles iyon dahil may connect nga siya sa
Sandiganbayan." You stated that the "connect" is Justice Ong. Can you
explain before us what you mean "Alam ko inayos ni Ms. Napoles
iyon." What do you mean by that? "inayos"?

Witness Luy

A Kasi po ma'am meron kasi kaming ledger ng Sandigan case so lahat ng

nagastos ni Ms. Janet Napoles, nilista ko po yon lahat. Kasi naririnig ko
po kay Janet Napoles, parang pinsan ko si Ms. Janet Napoles "Paano
nagkaroon ng kaso ang ate ko? So nadiscover ko na lang po na yun pala
yung Kevlar. So, mahigit one hundred na nagastos po ni Ms. Napoles,
kasi di lang naman po si sir Justice Gregory Ong . . .

Justice Gutierrez

Just answer the question directly. Paano inayos . . . Anong ibig mong sabihin na
inayos. Paano inayos?

Witness Luy

A Ano po ma'am nagbigay po siya ng pera pero hindi siya nagbanggit ng

amount. Basta nagpalabas po siya ng pera.

Justice Gutierrez

Q Did you come to know to whom she gave the money? AEDCHc

A Wala po siyang . . . basta ang sabi niya inayos na niya si . . . binanggit po niya
si . . . kasi si madam hindi kasi siya nagki-keep kasi ako pinsan niya po
kasi ako, nabanggit niya po si Justice Gregory Ong. Sinabi niya
 nagbigay daw po siya ng pera kay Justice Ong pero she never
mentioned kung magkano yung amount.

Q Nagbigay ng pera kay Justice Gregory Ong?

A Opo, yun ang sabi niya.

Q That was her statement?

A Yes, madam.

Q To you?

A Yes, madam.

xxx xxx xxx

Witness Luy

Kasi nakwento pa po madam ni Ms. Napoles na almost P100 million na

ang nagastos niya. Tapos ang sabi ko nga po sa kanya: "Madam, P100
million na sa halagang P3.8 lang na PO sa Kevlar helmet, tapos P100
million na ang nagastos mo."

Justice Gutierrez

Q Did she tell you to whom or explain to you where this amount of P100
million was paid? How was it spent?

A Basta ang natatandaan ko . . . di ko na po matandaan ang mga dates kasi

parang staggered. May P5 million sa ibang tao ang kausap niya. Tapos
ito naman tutulong ng ganito. Iba-iba kasi madam eh.

Q But there was no showing the money was given to Justice Ong?

A Wala po pero nabanggit lang po niya sa akin na nagbigay po siya kay

Justice Ong, but she never mentioned the amount. 5 (Emphasis mine)

Even Luy's testimony on the circumstances surrounding Napoles' issuance of eleven (11)
checks, each amounting to P282,000.00, to Justice Ong, supposedly interest payments for
the P25.5 million which the latter wanted to deposit with the Armed Forces of the
Philippines and Police Savings and Loans Association, Inc. (AFPSLAI), are merely based
on what Napoles told him. Luy never saw that the said checks, which he insinuated were
part of the consideration for Napoles' acquittal in the Kevlar case, were indeed given to
Justice Ong.
Q Now, when . . . I am interested in this check which as you said P25 million or
so?

A Opo, P25.5 million po.

Q Whose check was that?

A BDO Check from Gregory Ong po.

Q How do you know that it was from Gregory Ong?

A Sinabi po ni Ms. Napoles sa akin.

Q Ah, it was she who told you?

A Yes po. DTEScI

Q That this is the check of Gregory Ong?

A Yes po. As I testified earlier na hindi ko nakita ang checke kung

nakapangalan kay Ms. Janet Napoles, ang sinabi ni Ms. Napoles sa akin,
ang checke ay BDO na P25.5. Kaya nag-compute kami ng 26.

xxx xxx xxx

Q You never asked or confronted or talked to Justice Ong regarding that matter?
You only relied on the "say-so" of Janet Napoles?

A Sinabi niya, kasi siya ang boss ko, ang instructions niya noon, and at that
time po, Justice Gregory Ong was in the other . . . nasa kabilang office
siya and before na nag-issue kami, na sa 2501 siya.

Q Yes, yes, but I am interested of your personal knowledge in the issuance of

check, if the check came from Justice Ong or not, and you said that it
was only told to you by Janet Napoles?

A Yes po.

Justice Gutierrez

By the way Mr. Luy, were you the one who delivered the check to Mr.
Justice Gregory Ong?

Witness Luy

A Hindi na po.
 Q Who delivered the check to him?

A Si Ms. Napoles na po.

Q How did you come to know that it was Ms. Napoles? Did you see?

A Opo, kasi dalawa po kami na nag-prepare. Bago kasi . . . . Tinanong ko kasi

madam siya kung sino ang payee. Ilalagay ko po ba dito madam Gregory
Ong? Sabi niya, Hindi. Teka lang. Umalis siya. Pumunta sa kabila, sa
2501. Tapos, tumuloy siya at sabi "Pay to cash na lang." So, inilagay
namin madam na cash. Tapos, pinirmahan niya yang checke na
prenepare ko. So, bitbit na niya yang check. Dinala na niya.

Q Ah, she brought the check to the other room but you did not see the person to
whom it was delivered, right?

A Kasi madam, alam ko po na . . .

Atty. Geronilla

No. You just answer the question. TCDHIc

Justice Gutierrez

Just answer the question.

Witness Luy

A Ah, you mean si Ms. Napoles na binigay niya mismo yung checke kay
Gregory Ong? Hindi po.

Justice Gutierrez

Q You did not see?

A Hindi po. Hindi ko po nakita. 6 (Emphases mine)

Similarly, Sula's claim that Justice Ong is the "contact" of Napoles in the Sandiganbayan
is merely based on what Napoles told her. Thus:

Atty. Benipayo

Q So, Ms. Sula, what were the statements being made by Ms. Janet Lim
Napoles regarding her involvement in the Kevlar case, or how she was
trying to address the problem with the Kevlar case pending before the
Sandiganbayan?
 Witness Sula

A Ang alam ko po kasi marami po siyang kinaka-usap na mga lawyers na

binabayaran niya para tulungan siya kay Gregory Ong sa Kevlar case.
Tapos, sa kalaunan po, nasabi na niya sa amin na meron na po
siyang nakilala sa Sandiganbayan na nagngangalang Justice
Gregory Ong. Tapos, sabi niya, siya po ang tutulong sa amin para
ma-clear kami. . . . 7 (Emphasis mine) HCEcaT

Basic is the rule that a witness may only testify to those facts, which he knows of his
personal knowledge. 8 Hearsay evidence is inadmissible, generally, since it is not subject
to the tests that can ordinarily be applied for the ascertainment of the truth of the
testimony, since the declarant is not present and available for cross-examination. 9 By
itself, and as repeatedly conveyed by jurisprudential policy, hearsay evidence is devoid of
intrinsic merit, irrespective of any objection from the adverse party. 10

The veracity of the foregoing allegations against Justice Ong cannot be ascertained since
the declarant thereof, i.e., Napoles, was not presented during the investigation conducted
by Justice Sandoval-Gutierrez. Notwithstanding that the testimonies of Luy and Sula
were admitted in evidence, the same are, insofar as the claims that Justice Ong is the
"contact" of Napoles in the Sandiganbayan and that he caused the acquittal of the latter in
the Kevlar case in exchange for monetary consideration, devoid of any probative value.

While it is true that technical rules of procedure and evidence are not applied strictly in
administrative proceedings, 11 still, hearsay evidence, without more, would not suffice to
establish an allegation therein. 12 In this case, other than the hearsay testimonies of Luy
and Sula, no other evidence was presented to establish that it was indeed Justice Ong who
is the "contact" of Napoles in the Sandiganbayan who helped her secure an acquittal in
the Kevlar case. Thus, the testimonies of Luy and Sula with regard to the foregoing
should not be given any weight in the determination of Justice Ong's administrative
liability.

Justice Ong's act of visiting Napoles'

office twice after the promulgation of
the decision in the Kevlar case gives
the appearance of impropriety.

Although the circumstances surrounding the charge of bribery against Justice Ong were
not established, it does not mean, however, that he cannot be held administratively liable.
Luy testified that he personally saw Justice Ong visit Napoles' office in Discovery Suites
Center on two occasions sometime in 2012, after the promulgation of the decision in the
Kevlar case. Luy's testimony was corroborated by Sula. AcHCED
Justice Ong admitted that he indeed visited Napoles in her office twice sometime in 2012.
However, he clarified that, on his first visit, he just wanted to thank Napoles personally
since the latter made it possible for him to wear the robe of the Black Nazarene, of which
he is a devotee. He explained that he wanted to wear the robe of the Black Nazarene,
which is known for its healing powers, since he is suffering from prostate cancer. On his
second visit to Napoles, he claimed that they just talked for about 30 minutes and had
coffee.

Section 1, Canon 4 of the New Code of Judicial Conduct mandates judges to avoid not
only impropriety but also the appearance of impropriety as well in all of their activities.
As a subject of constant public scrutiny, judges must accept personal restrictions that
might be viewed as burdensome by the ordinary citizen and should do so freely and
willingly. 13 In this regard, judges shall ensure that not only is their conduct above
reproach, but that it is perceived to be so in the view of a reasonable observer. 14 Public
confidence in the judiciary is eroded by irresponsible or improper conduct of judges. Fraternizing
with litigants tarnishes this appearance. 15

Regardless of the reason therefor, it cannot be gainsaid that Justice Ong's act of visiting
Napoles in her office on two occasions gave rise to an appearance of impropriety on his
part. He should have been more circumspect in dealing with Napoles considering that the
latter is a former litigant in a case decided by a division of the Sandiganbayan, of which
he is the chairman. Undoubtedly, from the view of a reasonable observer, such conduct is
highly imprudent and unbefitting of a magistrate of the Sandiganbayan.

The appearance of impropriety on the part of Justice Ong is not negated by the fact that
his visit to the office of Napoles occurred long after the decision in the Kevlar case had
been promulgated. The termination of the Kevlar case will not dissipate public scrutiny
on his conduct as an Associate Justice of the Sandiganbayan, especially considering that
he received a favor from Napoles who was acquitted of the charge against her in the said
case.

The conduct and behavior of everyone connected with an office charged with the
dispensation of justice is circumscribed with the heavy burden of responsibility. His at all
times must be characterized with propriety and must be above suspicion. His must be free
of even a whiff of impropriety, not only with respect to the performance of his judicial
duties, but also his behavior outside the courtroom and as a private individual. 16 ECAaTS

Justice Ong's act of visiting Napoles

only amounts to simple misconduct.

Notwithstanding the finding that there is no direct evidence to prove the charge of bribery
against Justice Ong, the ponencia nevertheless found him guilty of gross misconduct,
imposing upon him the penalty of dismissal from service. The ponencia stressed the
"association" of Justice Ong with Napoles after the promulgation of the decision in the
Kevlar case and pointed out that "[t]he totality of the circumstances of such association
strongly indicates [Justice Ong's] corrupt inclinations."

I do not agree.

Misconduct means intentional wrongdoing or deliberate violation of a rule of law or

standard of behavior in connection with one's performance of official functions and
duties. For grave or gross misconduct to exist, there must be reliable evidence showing
that the judicial acts complained of were corrupt or inspired by the intention to violate the
law, or were in persistent disregard of well-known rules. 17

Contrary to the ponencia's finding, there is no reliable evidence in this case to conclude
that Justice Ong's conduct was corrupt or inspired by the intention to violate the law. The
hearsay testimonies of Luy and Sula, without more, are insufficient to prove the charge of
bribery against Justice Ong. There were no other evidence presented as regards the
alleged bribery of Justice Ong which, when taken together with the hearsay testimonies
of Luy and Sula, would support a finding of gross misconduct on the part of Justice Ong.

The allegation that Justice Ong is the "contact" of Napoles in the Sandiganbayan who
helped her secure an acquittal in the Kevlar case remains to be a mere allegation
unsupported by any reliable evidence. It is derived from the testimonies of Luy and Sula
who testified thereon based not on their personal knowledge but on what Napoles had
told them. To stress, the said testimonies of Luy and Sula have no probative value and
should not have been considered by the ponencia in the determination of the
administrative liability of Justice Ong.

The "totality of circumstances" adverted to by the ponencia, apparently, only refers to the
visit of Justice Ong to the office of Napoles on two occasions after the promulgation of
the decision in the Kevlar case, which fact was admitted by Justice Ong. Indeed, from the
various evidence presented against Justice Ong, only the fact of his visit to Napoles was
sufficiently established. However, as already stated, the fact of Justice Ong's visit to
Napoles only supports a finding of impropriety or giving the appearance of impropriety
on the part of Justice Ong. DTcHaA

Impropriety or giving the appearance of impropriety, by fraternizing with a litigant, in

this case a former litigant, only amounts to simple misconduct. On this point, the Court's
ruling in Atty. Molina v. Judge Paz 18 is instructive, viz.:

In the present administrative case, respondent Judge Paz admitted to facilitating

a meeting between Atty. Molina and Mayor Antiporda with the aim of forging a
settlement between the warring political factions. Respondent Judge Paz saw
himself as a mediator between the contending political factions in the
Municipality of Buguey. However, Atty. Molina was at that time facing a
 multiple murder case in the sala of respondent Judge Paz and the victims of the
multiple murder case were the political followers of Mayor Antiporda. In short,
respondent Judge Paz held a private meeting with Atty. Molina, who was then
accused of multiple murder before respondent Judge. Respondent Judge Paz
knew that Atty. Molina was a private prosecutor in the criminal cases against
the mayor's son pending with another court. The disputes between the political
factions involved grave felonies, which respondent Judge Paz should have
known could not be the subject of compromise.

Canon 2 of the Code of Judicial Conduct provides that a judge should avoid
impropriety and the appearance of impropriety in all his activities. A judge must
not only be impartial, he must also appear to be impartial. Public confidence in
the judiciary is eroded by irresponsible or improper conduct of judges.
Fraternizing with litigants tarnishes this appearance.

Respondent Judge Paz's actuation constitutes simple misconduct, which for

a first offense is punishable with suspension of one month and one day to six
months. However, respondent Judge Paz had retired compulsorily on 21
September 1998. In lieu of suspension, respondent Judge Paz should be fined,
not P1,000 as recommended by the Investigating Justice, but P20,000
considering that simple misconduct is a less serious charge. 19 (Emphasis mine)
ADEHTS

Thus, finding that his conduct violates the rule on propriety under Canon 4 of the New
Code of Judicial Conduct, Justice Ong should be held liable for simple misconduct. The
charge of simple misconduct is classified under Section 9, Rule 140 of the Rules of Court
as a less serious charge. A finding of guilt for a less serious charge carries with it the
penalty of either: (a) suspension from office without salary and other benefits for not less
than one (1) nor more than three (3 ) months; or (b) a fine of more than P20,000.00, but
not exceeding P40,000.00. 20

This is already the second offense of Justice Ong; he had previously been fined and
sternly warned that a repetition of the same or similar offense in the future will be dealt
with more severely. 21 Accordingly, the maximum penalty for less serious charge should be
imposed upon Justice Ong, i.e., suspension from office without salary and other benefits for
three (3) months.

The charge of dishonesty against

Justice Ong is unsubstantiated.

I further disagree with the ponencia's conclusion that Justice Ong is guilty of dishonesty.
The ponencia opined that, in Justice Ong's letter to the Chief Justice prior to the
commencement of the administrative investigation, he vehemently denied having
attended parties or social events hosted by Napoles; that he deliberately failed to disclose
his "social calls" to Napoles. That it was only after Luy and Sula testified that he
mentioned the fact of his visit to Napoles.

Dishonesty is defined as the disposition to lie, cheat, deceive or defraud;

untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack
of fairness and straightforwardness; disposition to defraud, deceive or betray. 22 Contrary
to the ponencia's assessment, the failure of Justice Ong to disclose in his letter to the
Chief Justice the fact of his visit to Napoles cannot be considered dishonesty as would
merit disciplinary action.

The ponencia failed to take into consideration the context of the letter sent by Justice Ong
to the Chief Justice. During the administrative investigation conducted by Justice
Sandoval-Gutierrez, Justice Ong explained that: CIDcHA

Q Why did you write a letter to the Chief Justice?

A I wrote that letter motu proprio although I was not required by the Supreme
Court to write that letter in order to defend a reputation as a magistrate
or as a judge, and also to protect the good name and integrity of the
Sandiganbayan as an institution because I believe that I did not commit
any wrongdoing, sir.

Q What in particular was Mr. Rufo trying to say in this article?

A Mr. Rufo, in his article, he was trying to insinuate that during the pendency of
the Kevlar helmet case against this Janet Napoles, that there is
irregularity in the manner by which the decision was arrived at, and also,
at that time of the pendency of the case, I was [close] to Napoles and he
was also insinuating that I was the . . . I am the legal adviser. I was the
one advising her of the legal strategies as to how to go about the Kevlar
helmet case, and also that I was partying with the Napoleses.

xxx xxx xxx

Q Now in your letter to the Chief Justice, you did not speak about this
circumstance of meeting with Ms. Janet Napoles. So, why did you not
include in your letter your explanation regarding the role of Ms. Napoles
in helping you gain access to the Black Nazarene?

A Because at that time when I wrote the Chief Justice, I was only
addressing the picture wherein myself, Senator Jinggoy and Napoles
were depicted and the article of Mr. Rufo and nowhere in the article
that says that I was seen . . . that I was there in the office of Ms.
Napoles at that time, sir. 23 (Emphases mine)
Verily, Justice Ong wrote the said letter to the Chief Justice to address the insinuations in
the article of Aries Rufo published in the social news-network Rappler, particularly, that
he attended parties and social events hosted by Napoles. This he did by categorically
denying in the said letter that he attended parties or social events hosted by Napoles. He
failed to disclose that he twice visited Napoles in her office since he was addressing the
insinuation against him in the said article. It may have been a lapse of judgment on his
part but it certainly is not dishonesty. In any case, when allegations came out that he
visited the office of Napoles in Discovery Suites Center on two occasions, Justice Ong
readily admitted to such fact. Such admission, indubitably, is incongruent with the idea of
being dishonest.

ACCORDINGLY, I vote to hold Sandiganbayan Associate Justice Gregory S. Ong

guilty of SIMPLE MISCONDUCT. Accordingly, he should suffer the penalty of
SUSPENSION FROM OFFICE for a period of THREE (3) MONTHS, without salary
or other benefits. Further, he is STERNLY WARNED that a repetition of the same or
similar offense in the future shall be dealt with more severely.

LEONEN, J., concurring:

I join the ponencia and the concurring opinions of Justices Arturo Brion and Francis
Jardeleza in this important case that defines our collective commitment to strictly enforce
our own canons of judicial ethics. I add the following views to those they have already
mentioned.

A full understanding of this case requires that we consider the facts in context. EHSADc

Janet "Jenny" Lim Napoles is one of the accused in the Sandiganbayan case, People v. Lt.
Gen. Edgardo Viray Espinosa. 1 The accused were charged with malversation of public
funds, through falsification of public documents, and violation of Section 3 (e) of
Republic Act No. 3019.

The case involved the purchase by the Philippine Marine Corps of 500 US-made Kevlar
helmets worth P3,864,044.99 (hence, this case is referred to as the Kevlar case). Several
vouchers and documents were falsified to certify their delivery by dealers who won the
public biddings. It was alleged that the dealers were merely the dummies of Napoles and
that the helmets were not delivered. It was also alleged that when the helmets were
subsequently delivered, they turned out to be poorly made Kevlar helmets, made
elsewhere and not from the United States as specified in the bid documents.

Benhur Luy, Napoles' cousin and personal assistant, testified at the Senate Blue Ribbon
Committee hearing held on September 26, 2013, that he was aware that Napoles "fixed"
the Kevlar case in the Sandiganbayan. Another witness and former employee of Napoles,
Marina Sula, stated that Napoles knew Justice Gregory S. Ong, the chairperson of the
Sandiganbayan Division that heard the Kevlar case. 2

During this court's investigation following up on statements made during the Senate Blue
Ribbon Committee hearing, Benhur Luy further testified that he kept a ledger where he
listed all the expenses of Napoles in relation to the Kevlar case, which took ten (10) years
to resolve. He found it strange that for a four-million-peso malversation case, Napoles
was spending P100 million. According to Luy, Napoles explained that she had to pay
several individuals in order to fix this case. Luy also stated that one of the beneficiaries to
these pay-offs was Justice Ong, although he did not know how much Justice Ong
received. Before the decision on the Kevlar case was released, Benhur Luy observed that
Napoles was confident that she would be acquitted. 3

On October 28, 2010, the Fourth Division of the Sandiganbayan promulgated the
decision in the Kevlar case. The decision was penned by Associate Justice Jose R.
Hernandez and concurred in by Associate Justices Gregory S. Ong and Cristina J.
Cornejo. As predicted, Napoles was acquitted from the charges against her.

In assessing the guilt of Napoles and her co-accused, the Sandiganbayan relied on the
elements of malversation and falsification of public documents.

The elements of malversation under Article 217 of the Revised Penal Code are as
follows: (1) that the offender is a public officer; (2) that he had the custody or control of
funds or property by reason of the duties of his office; (3) that those funds or property
were public funds or property for which he was accountable; and (4) that he appropriated,
took, misappropriated or consented or, through abandonment or negligence, permitted
another person to take them.

The Sandiganbayan identified Commander Eduardo Resurreccion Loyola as the

accountable officer in the Kevlar case. 4 Commander Loyola had control over the funds
of the Philippine Marine Corps. aDSIHc

The Sandiganbayan also found that the 500 helmets were not yet delivered to the
Philippine Marine Corps even if the inspection report stated otherwise. Without the
delivery of the 500 Kevlar helmets, the Sandiganbayan concluded that there was taking of
government funds. 5

Despite these findings, the Sandiganbayan found that there was no sufficient evidence to
show that Commander Loyola malversed funds because the prosecution did not present
evidence that shows Commander Loyola's participation in the preparation of the
procurement documents that supported the disbursement vouchers. What was only
proven was that Commander Loyola signed those disbursement vouchers and the
fourteen (14) checks that paid for the Kevlar helmets' acquisition. 6
The Sandiganbayan acquitted everyone for the charge of malversation due to the lack of
guilt of the accountable officer. 7

However, the Sandiganbayan ruled that the property inspection and acceptance report that
certified the delivery of the helmets was falsified. The Sandiganbayan found the members
of the Inspection and Acceptance Committee and the private bidders who conspired with
the committee guilty for falsification of a public document.

Napoles was not included among those implicated for the falsification charge. The
Sandiganbayan acquitted Napoles on this basis. Thus, in that decision:

The same finding, however, cannot be attributed to accused Napoles. She was
not one of the dealer-payees in the transaction in question; on this score alone,
her participation as a private individual becomes remote. Even if she owns the
bank account where the 14 checks were later deposited, this does not in itself
translate to her conspiracy in the crime charged in the information absent
evidence of an overt act on her part. 8 (Emphasis supplied)

The Sandiganbayan also pointed out that the prosecution failed to prove that Napoles
used the dealers as dummies since there was "no sufficient evidence that [Napoles]
maintains a controlling interest in these entities." 9

Napoles' co-defendants in the Kevlar case filed a motion for reconsideration on their
conviction for the falsification charge. In the resolution dated September 20, 2011, the
same Sandiganbayan Division lowered the penalty of those who were convicted.

From the records of this case, it appears that Justice Ong met Napoles on February 17,
2012. 10

Justice Ong claims that he did not know Napoles during the pendency of the Kevlar case.
He also claims that he was formally introduced to Napoles during a party hosted by
Senator Jinggoy Estrada sometime in 2012. 11

When Justice Ong met Napoles, she thanked him for her acquittal in the Kevlar case.
Justice Ong told her that she should not thank him, but, rather, she should thank her
evidence. 12

In the course of this meeting, Justice Ong discovered that Napoles engaged in
philanthropic work and worked with different churches. 13 Napoles offered to arrange a
meeting between Justice Ong and the parish priest of Quiapo Church, so Justice Ong
could have an opportunity to wear the robe of the Black Nazarene. 14

Justice Ong emphasized the importance of the opportunity given to him by Napoles. 15
He was a devotee of the Black Nazarene and was suffering from a terminal illness
(prostate cancer). He believed that wearing the robe could catalyze his healing. Justice
Ong exchanged cellphone numbers with Napoles in order to coordinate his meeting with
the parish priest of Quiapo Church. 16

One Sunday, Napoles' driver collected Justice Ong from the adoration chapel of
Santuario de San Antonio Parish in Makati. The driver brought him to a private
residence. He attended a private mass followed by a lunch hosted by Napoles. In that
lunch, he met Monsignor Ramirez of the Quiapo Church. 17

Due to the intercession of Napoles, Justice Ong was able to wear the Black Nazarene's
robe. 18THIECD

Justice Ong testified further that he went to Napoles' office at the Discovery Suites
Center, 25 ADB Avenue, Ortigas, Pasig City, to thank Napoles for giving him the
opportunity to wear the Black Nazarene's robe. 19

After Justice Ong's first visit, Napoles continued calling him and inviting him, and he felt
that he would be a "walang kwentang tao" if he turned her down. 20 He went again for a
second time to Napoles' office for "chit-chat and small talk." 21

Based on Benhur Luy's testimony, during the first time that Justice Ong visited Napoles'
office, Napoles helped Justice Ong invest in the Armed Forces and Police Savings &
Loan Association, Inc. (AFPSLAI). Napoles earns 13% per annum in interest in her
AFPSLAI placements. 22

In that visit, Justice Ong brought a check for P25.5 million to deposit to the AFPSLAI.
Napoles told Luy that the check would be deposited in her Metrobank account. She
further instructed Luy to prepare eleven (11) checks to advance the interest earnings of
Justice Ong. Each check was for approximately P282,000.00, for a total of
P3,102,000.00. 23

After Luy had prepared the eleven (11) checks, he asked Napoles if the payee should be
in the name of Justice Ong. Napoles told Luy that she would ask Justice Ong who was
in the room next to where Luy had prepared the checks. When Napoles returned, she
told Luy that the checks should be paid to cash. Luy followed Napoles' instructions.
Luy handed the checks to Napoles who went to the next room presumably to hand the
checks to Justice Ong. 24

Sometime in July 2013, news broke out that Napoles masterminded a multibillion peso
scam involving the Priority Development Assistance Fund or PDAF. 25 This prompted
media attention to shift to Napoles, her operations, her lifestyle, and her relationships
with powerful individuals.
On August 13, 2013, Aries Rufo's article, entitled Exclusive: Napoles parties with anti-
graft court justice, was published in the news website, Rappler. 26 The article featured a
photograph of Justice Ong with Senator Jinggoy Estrada and Janet Lim Napoles during a
social function. The article published statements made by Justice Ong when the reporter
confronted him with the photo and knowledge of Napoles' acquittal in the Kevlar case.
Excerpts from the article state:

I do not know her. She did not appear in court. I think she had a waiver of
appearance in court," he replied when reminded that Napoles and her brother,
Reynald, Lim aka Reynaldo Francisco, were both respondents in the Kelvar
[sic] helmet case.

xxx xxx xxx

Asked where the photo was taken, Ong vaguely remembers the occasion but
said it could have been one of the parties frequently hosted by Estrada.
"Jinggoy is a friend. I am closer to him than with the father," Ong said,
referring to former President Joseph Estrada. The former president appointed
Ong to the Sandiganbayan in 1998.

xxx xxx xxx

In an interview Wednesday, August 28, Ong sought to downplay the first

impression that he was close to or even a friend of Napoles. He explained, "I
was beside Jinggoy. Jinggoy was the one in the middle. If she was beside me,
that would have been a different story."

He said he "would not be stupid enough" to be posing with Napoles had he

known that she was the respondent in the case previously handled by his
division. The ruling, where a number of Marine officials were found guilty,
was penned by Justice Jose Hernandez. Ong and Justice Maria Cristina
Cornejo concurred.

Told about the propriety of members of the judiciary being seen in social
events that could compromise their integrity, Ong said: "I should have learned
my lesson."

In response to the Rappler article, Justice Ong wrote a letter dated September 26, 2013,
explaining to this court that he did not know Napoles during the pendency of the Kevlar
case.

On September 26, 2013, the Senate Blue Ribbon Committee held an investigation in aid
of legislation in relation to the Priority Development Assistance Fund (PDAF) scandal. In
that hearing, Luy and Sula were presented. Both witnesses mentioned Justice Ong's
connection with Napoles.
The statements made during the Senate Blue Ribbon Committee hearing prompted this
court to investigate the matter surrounding Justice Ong's relationship with Napoles. We
referred the case to former Associate Justice Angelina Sandoval-Gutierrez to conduct an
investigation.

In the report dated May 15, 2014, Justice Sandoval-Gutierrez found Justice Ong guilty of
gross misconduct, dishonesty, and impropriety. She recommended the penalty of
dismissal with forfeiture of all retirement benefits, excluding accrued leave credits, and
with prejudice to re-employment to any government agency, including government-
owned or controlled corporations. 27

The issues in this case are:

(a) Whether Justice Ong committed improprieties amounting to grave misconduct in the
course of his interactions with Janet Lim Napoles;

(b) Whether Justice Ong committed dishonesty; and

(c) Whether dismissal is the appropriate penalty for Justice Ong's actions.

I
Improprieties

Canon 4 of the Code of Judicial Conduct provides for the rules relating to the proprieties
required of judges and justices.

The canon states that "[p]ropriety and the appearance of propriety are essential to the
performance of all the activities of a judge." The rules in the canon regulate the manner
how judges should conduct themselves and how they should relate to lawyers and
litigants. It extensively provides guidelines on judges' receipt of gifts.

Justice Ong improperly received gifts from Napoles. Napoles facilitated his access to
religious garments and allowed him to either illicitly invest in the AFPSLAI or to receive
interest on his alleged investments prior to such interest being earned.

Public officers are prohibited to receive gifts unless it is a) unsolicited; b) of a token

value; and c) customary to an occasion. In addition to these requirements, judges and
justices should ensure that they do not receive any gift which may reasonably be
"perceived as intended to influence the judge in the performance of judicial duties or
otherwise give rise to an appearance of partiality." 28

There was no occasion for Justice Ong to receive a gift from Napoles. His having been
one of the justices that acquitted her from very serious charges in the Sandiganbayan
raises a reasonable belief that such accommodation was the result of Napoles' influence
during his performance of his judicial duties. Justice Ong himself testified that the
accommodations started when he met with Napoles. According to him, Napoles thanked
him while at the same time offered him assistance regarding access to religious garments.

Furthermore, Luy testified that a) he knew that at least P100 million was being spent by
Napoles to ensure her acquittal, and (b) he personally prepared checks that were to be
handed over to Justice Ong.

Finally, the amount of the checks prepared by Luy for Justice Ong was definitely not a
token amount.

Laws and rules regulating gift-

giving to public officers and judges

I disagree with the dissenting opinions that there has to be proof that Justice Ong
committed an act in consideration of these gifts. The mere receipt is in itself illegal and,
thus, grave misconduct was apparent on his part.

Several laws regulate a public officer's receipt of gifts:

The Revised Penal Code in Articles 210, 211, 211-A, and 212 provide:

Art. 210. Direct Bribery. — Any public officer who shall agree to perform an
act constituting a crime, in connection with the performance of his official
duties, in consideration of any offer, promise, gift or present received by such
officer, personally or through the mediation of another, shall suffer the penalty
of prision mayor in its medium and maximum periods and a fine of not less
than three times the value of the gift, in addition to the penalty corresponding
to the crime agreed upon, if the same shall have been committed.

If the gift was accepted by the officer in consideration of the execution of an

act which does not constitute a crime, and the officer executed said act, he
shall suffer the same penalty provided in the preceding paragraph; and if said
act shall not have been accomplished, the officer shall suffer the penalties of
prision correccional in its medium period and a fine of not less than twice the
value of such gift.

If the object for which the gift was received or promised was to make the
public officer refrain from doing something which it was his official duty to
do, he shall suffer the penalties of prision correccional in its maximum period
to prision mayor in its minimum period and a fine of not less than three times
the value of such gift.
 In addition to the penalties provided in the preceding paragraphs, the culprit
shall suffer the penalty of special temporary disqualification.

The provisions contained in the preceding paragraphs shall be made

applicable to assessors, arbitrators, appraisal and claim commissioners,
experts or any other persons performing public duties.

Art. 211. Indirect bribery. — The penalties of prision correccional in its

medium and maximum periods, suspension and public censure shall be
imposed upon any public officer who shall accept gifts offered to him by
reason of his office.

Art. 211-A. Qualified Bribery. — If any public officer is entrusted with law
enforcement and he refrains from arresting or prosecuting an offender who
has committed a crime punishable by reclusion perpetua and/or death in
consideration of any offer, promise, gift or present, he shall suffer the penalty
for the offense which was not prosecuted.

If it is the public officer who asks or demands such gift or present, he shall
suffer the penalty of death.DcCIAa

Art. 212. Corruption of Public Officials. — The same penalties imposed upon
the officer corrupted, except those of disqualification and suspension, shall be
imposed upon any person who shall have made the offers or promises or given
the gifts or presents as described in the preceding articles. (Emphasis
supplied)

Direct bribery requires proof that the public officer agrees to commit or refrain to do an
act "in consideration of any offer, promise, gift or present" which he receives directly or
indirectly. Indirect bribery is committed when the public officer accepts a gift "offered to
him by reason of his office."

Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) added to the acts
proscribed in relation to gift-giving. Thus:

Section 3. Corrupt practices of public officers. — In addition to acts or

omissions of public officers already penalized by existing law, the following
shall constitute corrupt practices of any public officer and are hereby declared
to be unlawful:

xxx xxx xxx

(b) Directly or indirectly requesting or receiving any gift, present, share,

percentage, or benefit, for himself or for any other person, in connection with
any contract or transaction between the Government and any other party,
 wherein the public officer in his official capacity has to intervene under the
law.

(c) Directly or indirectly requesting or receiving any gift, present or other

pecuniary or material benefit, for himself or for another, from any person for
whom the public officer, in any manner or capacity, has secured or obtained,
or will secure or obtain, any Government permit or license, in consideration
for the help given or to be given, without prejudice to Section thirteen of this
Act.

(d) Accepting or having any member of his family accept employment in a

private enterprise which has pending official business with him during the
tendency thereof or within one year after its termination.

The Anti-Graft and Corrupt Practices Act added the prohibition against "directly or
indirectly requesting" gifts, presents, shares, percentages, and other benefits in
connection with the work of a public officer. The scope of work that will be done by the
public officer for the illicit consideration includes "contracts or transactions," granting of
"permits and licenses," or any other governmental act where "the public officer in his
official capacity has to intervene under the law." Republic Act No. 3019 added soliciting
for others, including members of the family of the public officer.

Republic Act No. 6713 or the Code of Conduct and Ethical Standards for Public Officials
and Employees further refined the proscriptions through the following provisions:

Section 3. Definition of Terms. — . . .

(c) "Gift" refers to a thing or a right disposed of gratuitously, or any act or

liberality, in favor of another who accept it, and shall include a simulated
sale or an ostensibly onerous disposition thereof. It shall not include an
unsolicited gift of nominal or insignificant value not given in anticipation
of, or in exchange for, a favor from a public official or employee.

(d) "Receiving any gift" includes the act of accepting, directly or indirectly, a
gift from a person other than a member of his family or relative as defined in
this Act, even on the occasion of a family celebration or national festivity like
Christmas, if the value of the gift is neither nominal nor insignificant, or the
gift is given in anticipation of, or in exchange for, a favor.
DIETcC

xxx xxx xxx

Section 7. Prohibited Acts and Transactions. — In addition to acts and

omissions of public officials and employees now prescribed in the
Constitution and existing laws, the following shall constitute prohibited acts
and transactions of any public official and employee and are hereby declared
to be unlawful:
 xxx xxx xxx

(d) Solicitation or acceptance of gifts. — Public officials and employees

shall not solicit or accept, directly or indirectly, any gift, gratuity, favor,
entertainment, loan or anything of monetary value from any person in the
course of their official duties or in connection with any operation being
regulated by, or any transaction which may be affected by the functions of
their office. (Emphasis supplied)

Republic Act No. 6713 expanded the concept of a "gift" to include "a thing or a right
disposed of gratuitously, or any act or liberality, in favor of another who accepts it, and
shall include a simulated sale or an ostensibly onerous disposition thereof." Access to use
of religious garments is an act of liberality. The receipt of interest before it is earned is a
"gift" not only because it is a "thing or a right disposed of gratuitously" but also because
it is likewise an act of liberality.AaSTIH

Republic Act No. 6713 expressly excluded an "unsolicited gift of nominal or insignificant
value not given in anticipation of, or in exchange for, a favor from a public official or
employee."

Finally, Presidential Decree No. 46, which is still in effect, provides:

WHEREAS, under existing laws and the Civil Service Rules, it is prohibited
to receive, directly or indirectly, any gift, present or any other form of benefit
in the course of official duties;

WHEREAS, it is believed necessary to put more teeth to existing laws and

regulations to wipe out all conceivable forms of graft and corruption in the
public service, the members of which should not only be honest but above
suspicion and reproach; and AHCaED

WHEREAS, the stoppage of the practice of gift-giving to government men is

a concrete step in the administration program of reforms for the development
of new moral values in the social structure of the country, one of the main
objectives of the New Society;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, . . . do hereby make it punishable for any public official or
employee, whether of the national or local governments, to receive, directly or
indirectly, and for private persons to give, or offer to give, any gift, present or
other valuable thing on any occasion, including Christmas, when such gift,
present or other valuable thing is given by reason of his official position,
regardless of whether or not the same is for past favors or the giver hopes or
expects to receive a favor or better treatment in the future from the public
official or employee concerned in the discharge of his official functions.
 Included within the prohibition is the throwing of parties or entertainments in
honor of the official or employee or of his immediate relatives.

For violation of this Decree the penalty of imprisonment for not less than one
(1) year nor more than five (5) years and perpetual disqualification from
public office shall be imposed. The official or employee concerned shall
likewise be subject to administrative disciplinary action and, if found guilty,
shall be meted out the penalty of suspension or removal, depending on the
seriousness of the offense. (Emphasis supplied)

The law prescribes the receipt of gifts before or after the official act or omission. It
punishes the receipt of gifts "regardless of whether or not the same is for past favors or
the giver hopes or expects to receive a favor or better treatment in the future from the
public official or employee concerned in the discharge of his official functions." this law
also expressly proscribes "the throwing of parties or entertainments" by others "in honor
of the official or employee or of his immediate relatives." Even repairing the automobile
of a public officer for free is recognized as another form of gift. 29

In addition to these statutory proscriptions, Canon 4 of the Code of Judicial Conduct

clarifies the rules with respect to judges and justices receiving gifts. Thus:

SECTION 1. Judges shall avoid impropriety and the appearance of

impropriety in all of their activities.

SEC. 2. As a subject of constant public scrutiny, judges must accept personal

restrictions that might be viewed as burdensome by the ordinary citizen and
should do so freely and willingly. In particular, judges shall conduct
themselves in a way that is consistent with the dignity of the judicial office.
TCDcSE

xxx xxx xxx

SEC. 13. Judges and members of their families shall neither ask for, nor
accept, any gift, bequest, loan or favor in relation to anything done or to be
done or omitted to be done by him or her in connection with the performance
of judicial duties.

SEC. 14. Judges shall not knowingly permit court staff or others subject to
their influence, direction or authority, to ask for, or accept, any gift, bequest,
loan or favor in relation to anything done or to be done or omitted to be done
in connection with their duties or functions.

SEC. 15. Subject to law and to any legal requirements of public disclosure,
judges may receive a token gift, award or benefit as appropriate to the
occasion on which it is made provided that such gift, award or benefit might
not reasonably be perceived as intended to influence the judge in the
 performance of judicial duties or otherwise give rise to an appearance of
partiality.

Judicial propriety requires more from judges and justices than with other public officers.
Public confidence in rule of law requires that all basis for doubt with respect to the
independence and integrity of the judicial profession should be avoided. Canon 3, Section
2 of the Code of Judicial Conduct requires judges to "ensure that his or her conduct, both
in and out of court, maintains and enhances the confidence of the public, the legal
profession and litigants in the impartiality of the judge and of the judiciary." Judges and
justices should "ensure that not only is their conduct above reproach, but that it is
perceived to be so in the view of a reasonable observer." 30 As this court previously
required:

. . . a judge's official conduct and his behavior in the performance of judicial

duties should be free from the appearance of impropriety and must be beyond
reproach. One who occupies an exalted position in the administration of justice
must pay a high price for the honor bestowed upon him, for his private as well
as his official conduct must at all times be free from the appearance of
impropriety. Because appearance is as important as reality in the performance of
judicial functions, like Caesar's wife, a judge must not only be pure but also
beyond suspicion. A judge has the duty to not only render a just and impartial
decision, but also render it in such a manner as to be free from any suspicion as
to its fairness and impartiality, and also as to the judge's integrity.
DEcTCa

It is obvious, therefore, that while judges should possess proficiency in law in

order that they can competently construe and enforce the law, it is more
important that they should act and behave in such a manner that the parties
before them should have confidence in their impartiality. 31

In summary: Judges and justices cannot accept gifts, favors, and accommodations.

The only exception under existing law is that a judge or justice may only receive a gift if:

1) it is of nominal value or "a token gift, award or benefit";

2) the gift and its value are "appropriate for the occasion on which it is made"; and

3) the act of giving and accepting the gift, the gift itself, or the value of such gift "might
not reasonably be perceived as intended to influence the judge in the performance of
judicial duties or otherwise give rise to an appearance of partiality." 32

If any of these requirements are not present, the judge or justice commits a serious breach
of both law and the canons. Since it is a violation of law and it affects the public's
perception of the fundamental values of integrity and independence of the judiciary, it
amounts to a grave misconduct punishable by dismissal from the service. aIcHSC
We have penalized several judges who have asked favors from lawyers and litigants who
appeared before them. This court dismissed a judge who solicited "retirement money"
and food for his court staff's Christmas party. 33 That judge solicited from a litigant with
a pending case in his court. This court also reprimanded a judge who solicited and
received court office equipment from a litigant. 34 We also warned and fined a judge for
soliciting and receiving contributions for a religious celebration and barangay fiesta. 35
While this court gave merit to the judge's defense that she was merely "following-up" on
the solicitation letter signed by the parish priest, this court stated that the judge going to
the prosecutor's office to receive the donations from lawyers "does not bode well for the
image of the judiciary." 36 In that case, we stated:

Respondent's act of proceeding to the Prosecutor's Office under the guise of

soliciting for a religious cause betrays not only her lack of maturity as a judge
but also a lack of understanding of her vital role as an impartial dispenser of
justice, held in high esteem and respect by the local community, which must be
preserved at all times. It spawns the impression that she was using her office to
unduly influence or pressure Atty. Yruma, a private lawyer appearing before her
sala, and Prosecutor Diaz into donating money through her charismatic group
for religious purposes.ASHECD

xxx xxx xxx

Respondent's act discloses a deficiency in prudence and discretion that a

member of the judiciary must exercise in the performance of his official
functions and of his activities as a private individual. 37

Justice Ong's receipt of a religious

favor from Napoles is improper

It was improper for Justice Ong to receive a favor from Napoles. Napoles offered it to
him on the same occasion she thanked him for her acquittal. Justice Ong himself
narrated:

Ms. Napoles approached me and introduced herself. She started the

conversation talking to me partly in Chinese because partly, I can speak.
Chinese language, and then, on that occasion, she was thanking me for her
acquittal. Your honor if you may allow me. Alam niyo naman may
kayabangan ako. Sabi ko, you should not thank me. You should thank their
evidence. That is what I do in cases wherein the accused would thank me for
their acquittal and I tell them, do not thank the court for your acquittal. You
should thank your evidence. It is your evidence that sets you free. In fact, I
told her that if only there are enough evidence that would warrant her
conviction, she would be convicted. 38 (Emphasis supplied)
It was after this conversation when Napoles began talking about her work with churches
and offered Justice Ong the opportunity to wear the robe of the Black Nazarene. This
gives us the impression that Justice Ong accepted the favor in return for the acquittal.

The height of impropriety can be seen in the manner Napoles arranged for Justice Ong to
meet Monsignor Ramirez, the parish priest of Quiapo Church. The meeting occurred on a
Sunday. 39 Sunday is sacred for Catholics, a day when all priests are busy. Justice Ong
had the luxury of being picked up by Napoles' driver. There was a private mass officiated
by Monsignor Ramirez and attended by several Chinese individuals. 40 During the lunch
after the mass, Napoles even made sure that Justice Ong was seated next to the
monsignor. 41 This meeting in itself is already a huge favor for Justice Ong.

Justice Ong felt that Napoles "was instrumental in successfully paving the way . . . to be
able to do something that was very important to him." 42 It did not bother him that
Napoles, who provided this favor and accommodation to him, was a winning litigant in a
previous case that his Sandiganbayan Division decided.

Justice Ong's excuse for using Napoles to arrange for the wearing of the robe is that he
did not know that it could be done until he met Napoles. CETIDH

Justice Gutierrez

What I am thinking Justice, as a Justice holding a very high position, could it

not be possible for you to just go to the Church of Quiapo and ask
the priest there to help you or assist you, no longer through Ms.
Napoles?

xxx xxx xxx

Because you have been suffering from that ailment, mass or whatever, and that
you are a devotee of the Black Nazarene. [Y]ou could have gone to the
Office of the priest there and had that request for you to wear that robe
of the [Black] Nazarene?

Justice Ong

Hindi ko po alam na may ganyan, your honor, I was only told by Napoles
during that conversation. Had I known that, siguro po pwede ko pong
gawin. Had I known that there is such a robe, maybe I will do that. 43
(Emphasis supplied)

Justice Ong's reasoning is flimsy to say the least. It is insulting to his colleagues in this
court who are aware of the possibilities of access to such religious garments.
Justice Ong knew about the robe when Napoles told him about it. He should not have
accepted Napoles' offer to arrange the wearing of the robe. As Justice Sandoval-Gutierrez
suggested, he should have gone to the parish priest directly instead of risking the
appearance of impropriety. Even his god would have frowned at the use of religious
symbols for an immoral end.

In Felongco v. Dictado, 44 a judge received free bus tickets from a litigant bus company.
The judge explained that the vice president of the bus company was his cousin and that in
the civil case he was trying, the bus company lost. 45 However, this court still found him
guilty of grave misconduct. Due to this and his other indiscretions, he was dismissed
from service. 46

A religious favor might not be as tangible as bus tickets, but if a judge was dismissed for
accepting bus tickets from a losing litigant, a Sandiganbayan justice who accepted a favor
from a winning litigant deserves a similar penalty.

By accepting the favor, Justice Ong created an impression of partiality, contrary to Canon
4, Section 15 of the Code of Judicial Conduct. If he really wanted to wear the Black
Nazarene robe after Napoles had told him that it was possible, he would have pursued it
himself, and not accept the offer of Napoles to do it for him. It does not appear that there
was no other way for him to touch what he considered as sacred garments except to work
through a person he acquitted.

Justice Ong's continued

fraternization with Napoles
constitutes another impropriety

It was improper for Justice Ong to visit Janet Lim Napoles on two separate occasions just
to thank her for the religious favor he received from her.

It seems contrary to human experience that a Sandiganbayan justice will visit a mere
acquaintance (not a close friend) just to thank the acquaintance for a favor. The second
visit of Justice Ong makes it more suspicious that his visits were not merely for "chit-chat
and small talk." 47

Justice Ong admitted to continuously socializing with a former litigant and even going to
the extent of visiting her in her office. If they are not friends, as he alleged, and he was
merely doing it to not seem as "walang kwentang tao," 48 then he essentially admitted to
socializing with a former litigant.

To be beholden to the impressions of an acquaintance as a result of doing what is right

rather than to be concerned about maintaining the public trust does not speak well of
Justice Ong's character. The Code of Judicial Conduct is not subservient to his
interpretation of social customs. Mas nagiging "walang kwenta" ang isang mahistrado
kapag nalalagay sa alanganin ang buong hudikatura dahil bumibisita siya sa isang
akusado sa isang kasong kanyang hinusgahan. EDcIAC

Besides, the courage required to be able to comply with the required integrity of judges
and justices also means the courage to face a public which may misunderstand his
compliance with the rules. Rather than succumb to this misunderstanding, Justice Ong
should have behaved as a justice should and educated others who would not understand
why the rules are what they are.

Just like when receiving gifts, the Code of Judicial Conduct frowns upon judges
fraternizing with litigants. It is considered an impropriety. This court previously stated,
"[a] judge is not only required to be impartial; he must appear to be impartial.
Fraternizing with litigants tarnishes this appearance." footx 49

The constant association with Napoles creates a perception of past bias and partiality.
Judges in the past always use the excuse that those litigants or counsels that they
fraternized with lost in their cases. Even then, this court proceeded to penalize these
judges. 50

Fraternizing with litigants after the finality of their cases is no different, especially if the
judge is fraternizing with the winning litigant. It appears from a reasonable observer that
the winning litigant only won because of her camaraderie with the judge. It tends to
exhibit the partiality of a judge, which violates Canon 3 of the Code of Judicial Conduct
on impartiality. Section 2 of Canon 3 states that "[j]udges shall ensure that his or her
conduct, both in and out of court, maintains and enhances the confidence of the public,
the legal profession and litigants in the impartiality of the judge and of the judiciary."

Both Luy and Sula witnessed the visits of Justice Ong to Napoles. This affirmed
Napoles' statement to them that her connection in the Sandiganbayan was Justice Ong.
Whether or not Justice Ong brokered the fixing of the Kevlar case may not be relevant.
The visits were not made by Napoles. Justice Ong himself went to the condominium
unit of Napoles who was a former accused. This, in itself, is an impropriety.

Justice Ong's receipt of the eleven

(11) checks from Napoles is another
impropriety

Financial accommodations are considered as "gifts" on the basis of law and the Code of
Judicial Conduct.

The opportunity to invest in a financial instrument with low risks but high returns is a
favor. Advancing interest earnings not yet earned on the investment is another favor.
Being able to invest in a fund without being qualified to do so is yet another favor
received by Justice Ong.

Benhur Luy testified that he prepared the checks to advance the interest earnings of
Justice Ong in his AFPSLAI deposit. The checks amounted to approximately P3
million.

There was substantial evidence to support the conclusion that Justice Ong received these
checks from Napoles. Substantial evidence is "such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion." 51 DAHCaI

Luy attested that he saw Justice Ong visit Napoles. Napoles informed Luy that they
would help Justice Ong invest in AFPSLAI. Napoles entertained Justice Ong in a
different unit of the building (Unit 2501) from where Luy was holding office (Unit 2502).
Napoles then went to Luy and instructed him to issue the checks for Justice Ong. Luy
even remembered asking Napoles if he should put Justice Ong's name as payee. Napoles
had to confirm with Justice Ong before instructing Luy to have the checks paid to cash.

Even if Luy was not at Unit 2501 when Napoles handed the checks to Justice Ong, there
could be no other conclusion to be derived from the facts. It appears that Napoles gave
those eleven (11) checks to Justice Ong in advance of his interest earnings to his
AFPSLAI deposit.

Justice Sandoval-Gutierrez characterized that Luy testified in a "candid, straightforward

and categorical manner." 52 This narration was corroborated by Justice Ong's admission
that he visited Napoles on two occasions. These pieces of evidence, taken together, lead
to no other conclusion but that Justice Ong received eleven (11) checks from Napoles, a
former litigant in his court.

Justice Ong argued that it was impossible for him to invest P25.5 million with the
AFPSLAI. He argued that the AFPSLAI rules only allow for a maximum deposit of
P30,000.00 per quarter and a maximum deposit per member of P3 million.

This argument does not cast serious doubt on Luy's testimony because it is possible that
Napoles and AFPSLAI have a special and illicit arrangement. This provides an
explanation why Napoles told Luy that she would deposit Justice Ong's check in her
personal account. In addition, Justice Ong's argument omitted the fact that those
limitations for the maximum deposit in AFPSLAI only refer to a capital contribution
account. 53 The AFPSLAI also offers a deposit product referred to as a savings deposit
account. The latter account type earns at a lower interest rate per annum, but the product
does not have deposit restrictions.
Currently, AFPSLAI membership is exclusive to current and retired and active uniformed
personnel of the Philippine National Police, the Armed Forces of the Philippines, the
Bureau of Jail Management and Penology, and the Bureau of Fire Protection. 54 By
allowing Napoles to invest on his behalf, Justice Ong indirectly violated the rules of the
AFPSLAI. This is another unacceptable impropriety that Justice Ong committed.

It is difficult to understand why Justice Ong would choose Napoles to broker his
investments. Assuming that he had P25.5 million, legitimate investment bankers and
financial managers will easily find products that are as competitive as the AFPSLAI
capital contribution account for that amount of money. Justice Ong could have invested
that amount of money in the stock market, bonds market, real estate, hedge funds, and
mutual funds under reasonable terms and conditions. HESAIT

Justice Ong should have avoided the impropriety of having a former litigant — one
whom he voted to acquit — manage his money. Risking public condemnation and loss of
public trust simply because he desired an interest rate of 13% and getting the interest
income in advance is inexcusable. Canon 4, Section 1 of the Code of Professional
Responsibility states that "judges must accept personal restrictions that might be viewed
as burdensome by the ordinary citizen. . . ." One of these personal restrictions is choosing
financial intermediaries. Judges and justices should consciously avoid availing financial
accommodations from their former litigants, even if it is not as apparent as receiving
money. Receiving financial accommodations show impropriety and casts doubts on
judges' impartiality.

In Guinto v. Flores,footx 55 this court said:

Respondent judge's conduct of "borrowing" money from litigants in his sala

was highly improper and warrants extreme sanction from this Court. His
insistence that the money he got from Manalastas was merely a "loan" taxes our
credulity. In a recent case, we ruled that receiving money from litigants
unavoidably creates the impression that litigants can facilitate the favorable
resolution of cases pending before the courts.

A judge should impress upon the public that legal issues are resolved based
solely on the facts and the laws applicable. Being at the forefront of the judicial
system, respondent judge should have avoided impropriety and the appearance
of impropriety in his behavior so as not to corrode the people's respect for the
law and judicial institutions. 56IacHAE

I disagree with the dissenting opinions that focus on the alleged lack of evidence
connecting the issuance of the checks to the Kevlar case. This is not relevant to
concluding that Justice Ong committed an unlawful act violative of the Code of
Judicial Conduct.
In Verginesa-Suarez v. Dilag, 57 it was alleged by several anonymous complainants that
Judge Renato Dilag was accepting bribes to render favorable decisions in declaration of
nullity of marriage cases. A judicial audit was conducted, and it was discovered that a
number of the declaration of nullity of marriage cases were decided with irregularities. 58
The Investigating Justice found that the evidence on record was not enough to prove graft
and corruption. The allegations of pay-offs were merely hearsay. However, this court
dismissed Judge Dilag from service for violations of the Code of Judicial Conduct,
specifically for violating the canons on impartiality and impropriety. This court stated:

[W]hile not conclusively and clearly proving the charge of graft and corruption,
the same casts a cloud of suspicion upon the integrity, impartiality and propriety
of which respondent Judge is expected to possess and manifest. These
requirements are concepts of the mind which can only be manifested through
actuations of a magistrate. Thus, as explicitly worded in the New Code of
Judicial Conduct, a judge must not merely possess these requirements but he
must be also be seen and perceived to be such. The judiciary is the bastion of
justice, fairness and equity. Certainly, it cannot afford to have erring magistrates
who will only tarnish its image rather than maintain and preserve the same. 59

This reasoning is applicable to this case.

A cursory review of the Kevlar case, however, reveals some questions that raise
reasonable suspicions that some irregularities have happened.

Pinpointing the irregularities in the Kevlar case is not in exercise of our appellate
jurisdiction. It is similar to the judicial audit conducted in the Verginesa-Suarez. It will
not affect the rights of the parties to a final judgment but should assist this court assess
whether there was abuse of discretion by a trial judge or a justice of the Sandiganbayan.
Abuse of discretion can provide the context for charges of grave misconduct or
improprieties.

The offense charged was a complex crime. The acts consist of falsification of a series of
documents in order to make it appear that the government purchased five hundred (500)
Kevlar helmets for the Marines. However, no helmets were initially delivered. As
charged, falsification was committed as a necessary means to commit the crime of
malversation.

The evidence presented during trial shows that all the requirements of a complex crime
were proven beyond reasonable doubt. To recall:

Under Article 48 of the Revised Penal Code, a complex crime refers to (1) the
commission of at least two grave or less grave felonies that must both (or all) be
the result of a single act, or (2) one offense must be a necessary means for
committing the other (or others). Negatively put, there is no complex crime
 when (1) two or more crimes are committed, but not by a single act; or (2)
committing one crime is not a necessary means for committing the other (or
others). 60

However, the Division of the Sandiganbayan 61 participated in by Justice Ong treated

malversation and falsification of public documents as two separate crimes that must be
pleaded and proved, without taking into account the relation between the two crimes.

This is strange because the same Division of the Sandiganbayan found that the evidence
presented supports the finding that malversation indeed happened. However, the Division
reasoned that since the accountable officer, Commander Loyola, cannot be faulted for
relying on the supporting documents in the disbursement voucher, the acts constituting
the malversation could no longer be attributed to anyone. This is clearly non-sequitur. DaHISE

This is also contrary to our doctrines. In People v. Enfermo, 62 this court ruled:

[O]ur Supreme Court has ruled that to justify conviction for malversation of
public funds, the prosecution has only to prove that the accused received public
funds or property and that he could not account for them or did not have them in
his possession and could not give a reasonable excuse for the disappearance of
the same. An accountable public officer may be convicted of malversation even
if there is no direct evidence of misappropriation and the only evidence is that
there is a shortage in his accounts which he has not been able to explain
satisfactorily. Such conversion of public funds must be affirmatively proved,
whether by direct evidence or by the production of facts from which conversion
necessarily follows. 63

Even assuming that Commander Loyola was unaware that the documents he relied on
were falsified, the Sandiganbayan failed to take into account that malversation may also
be committed through negligence: HETDAC

Malversation may be committed either through a positive act of

misappropriation of public funds or property or passively through negligence by
allowing another to commit such misappropriation. To sustain a charge of
malversation, there must either be criminal intent or criminal negligence and
while the prevailing facts of a case may not show that deceit attended the
commission of the offense, it will not preclude the reception of evidence to
prove the existence of negligence because both are equally punishable in Article
217 of the Revised Penal Code.

More pointedly, the felony involves breach of public trust, and whether it is
committed through deceit or negligence, the law makes it punishable and
prescribes a uniform penalty therefor. Even when the information charges
willful malversation, conviction for malversation through negligence may still
 be adjudged if the evidence ultimately proves that mode of commission of the
offense. 64

Having, thus, disposed of the charge for malversation, the Sandiganbayan focused only
on the lighter offense of falsification.

The Sandiganbayan found that there was falsification of public documents when the
accused public officers certified that Napoles already delivered the Kevlar helmets when,
in truth, she did not. 65 The certification issued by Commander Loyola was made
allegedly to facilitate the encashment of the checks and which were deposited in Napoles'
account. 66

Isolating the malversation charge from the falsification charge paved the way for
Napoles' acquittal. She was a critical link in the charge for malversation because she was
the point-person of the winning bidders and the Philippine Marine Corps. 67 The
Sandiganbayan recognized the reports naming Napoles. 68 Surprisingly, they chose to
disregard these reports since they dismissed the malversation charge for everyone.

The Fourth Division of the Sandiganbayan ruled that the evidence showed that fourteen
(14) government checks were issued and deposited in Napoles' name. Surprisingly, the
same Division of the Sandiganbayan was convinced that this was not enough to show that
she participated in the falsification of the public documents. In spite of the checks, it still
concluded that there was no evidence to support that the winning bidders were merely
dummies of Napoles. In spite of these checks and the finding that these were deposited in
her account, the same Division found that she could not be treated as a conspirator.
Finally, completing its unorthodox conclusions, the Division of Justice Ong concluded
that since Napoles did not sign any of the falsified documents, she was acquitted for the
falsification charge.

The irregularities in the Sandiganbayan decision coupled with the cloud of suspicion cast
by Justice Ong's acquaintance with Napoles erode the integrity and credibility of his
court. Any observer with the required probity can justifiably and reasonably conclude
that the irregularities in the Kevlar case were deliberate. It is not merely an error of
judgment made in good faith if we consider that the justices that participated in the
decision are not only competent but are experts on the rules of evidence, on deriving
inference from the evidence, and on the law from which they are required to render fair
judgments. EAISDH

Even if Justice Jose Hernandez was the ponente of the Kevlar case, Justice Ong still
participated in the case. The case was decided by a collegiate body, hence, we can
presume that any irregularity should be attributed to the members of the collegiate body
and not only to the ponente. It is contrary to public policy for this court to assume that
justices of the Fourth Division of the Sandiganbayan concur with decisions that they have
not read, understood, and studied.

In addition, it was Justice Ong who was seen in the company of Napoles. There are no
reports on the relationship of Napoles to Justice Hernandez. Justice Ong's actions after
his participation in the deliberations of the Kevlar case rouse the suspicion of this court
and transgress the Code of Judicial Conduct.

It has been an accepted doctrine that judges should not be punished for errors in their
judgment, if they were made in good faith. 69 Errors per se should not be subject to
administrative penalties against the deciding judge. However, there will be administrative
sanctions when judicial errors are "tainted with fraud, dishonesty, gross ignorance, bad
faith or deliberate intent to do an injustice." 70

When a Sandiganbayan Division renders a highly irregular decision and one of the
Division's justices continuously associates with the winning litigant, the judicial error
becomes tainted with bad faith. It becomes conduct inconsistent with the ideals of the
office of an Associate Justice of the Sandiganbayan. It deserves administrative
sanction to the highest degree. Otherwise, it will jeopardize the integrity of the courts
as a whole.

Justice Ong acting as the

"connection" of Napoles is
supported by independently
relevant statements

It was improper for Justice Ong to appear to be the "connection" of Napoles to the
Sandiganbayan.

Justices Perez, Bersamin, and Reyes are all of the belief that Luy and Sula were testifying
on matters not of their personal knowledge. Hence, in their view, Luy's and Sula's
testimonies are entirely based on hearsay.

Luy testified on a ledger for the Sandiganbayan during the pendency of the Kevlar case.
Napoles also told him that she paid Justice Ong for the results of that case. However, Luy
was not able to see if any of the items in the ledger were attributed to Justice Ong. 71

Sula knew from Napoles that Justice Ong helped them in their Sandiganbayan case. 72
However, when the PDAF scandal broke out, Napoles told Sula that they would not
approach Justice Ong for help because his "talent fee" was too high. 73

Luy also testified that Napoles instructed him to prepare eleven (11) checks for Justice
Ong, but he was not able to witness Napoles turning over those checks to Justice Ong.
I disagree with the view that the testimonies of Luy and Sula were hearsay. Even if Luy
and Sula testified on matters that Napoles imparted to them in confidence, these
statements do not necessarily constitute hearsay; rather, they are independently relevant
statements. The value of these statements depends on the fact that it was supposed to
prove and should be taken in context.

Independently relevant statements are considered exceptions to the hearsay rule:

Under the doctrine of independently relevant statements, regardless of their

truth or falsity, the fact that such statements have been made is relevant. The
hearsay rule does not apply, and the statements are admissible as evidence.
Evidence as to the making of such statement is not secondary but primary, for
the statement itself may constitute a fact in issue or be circumstantially relevant
as to the existence of such a fact. 74 (Emphasis supplied, citation omitted)

In addition, "[e]vidence as to the making of such statements is not secondary but primary,
for in itself it (a) constitutes a fact in issue or (b) is circumstantially relevant to the
existence of such fact." 75

The testimonies of Luy and Sula pertaining to Napoles' statements on her supposed
connection with Justice Ong constitute independently relevant statements. They are
circumstantially relevant to the administrative charges against him, regardless of the truth
or falsity of Napoles' utterances to them.

While Luy and Sula do not have personal knowledge of Napoles' actual dealings with
Justice Ong, their testimonies prove that Napoles bragged about her connection with
Justice Ong. Evidence tending to prove that Napoles indeed mentioned Justice Ong as a
"connect" should be admissible and credible evidence against Justice Ong in this
administrative case. TESDcA

The following testimonies should be considered by this court in establishing the fact that
Justice Ong was improperly associated and connected with Napoles:

1) Luy's testimony stating his personal knowledge of a) his preparation of the eleven (11)
checks allegedly issued by Napoles to Justice Ong as advance for the latter's deposit in
AFPSLAI, b) the ledger listing Napoles' alleged Sandiganbayan expenses, and c) Justice
Ong's visit to Napoles' office;

2) Sula's testimony stating her personal knowledge of Justice Ong's visit to Napoles'
office; and

3) Justice Ong's own admission that he personally met with Napoles twice.
This court can also take judicial notice of the fact that Napoles has been charged for
numerous cases involving the PDAF together with, among other high-ranking officials,
Senator Estrada. Justice Ong admits to a friendship with Senator Jinggoy Estrada. This
relationship is supported by the picture showing Justice Ong, Senator Estrada, and
Napoles posing together in what appears to be a social gathering. If Justice Ong is to be
believed, he claims that it was Senator Jinggoy Estrada who introduced him — formally
— to Napoles.

These pieces of evidence tend to prove that Napoles herself mentioned to her trusted staff
that she had connections with Justice Ong, particularly for the fixing of the Kevlar case.
These statements are admissible and meet the requirements of credibility for the purpose
of assessing Justice Ong's fitness to continue as a member of the bench.

Justice Ong would rather call attention to minor inconsistencies in the statements of the
witnesses to place them out of their context. He argues that his favorite food is Japanese,
76 and not Chinese, as Luy suggested in his testimony. 77 Just because Luy got his
favorite food wrong does not cast doubt as to the rest of his testimony. Luy never stated
that he knew Justice Ong well. He was merely narrating his recollection of his visits to
Napoles.

Justice Ong also points out that Sula's testimony that Justice Ong is the "connect" of
Napoles in the Sandiganbayan runs contrary to her statement that Napoles told her once
that they would not fix the PDAF cases with Justice Ong because his "talent fee" is too
high. These statements are not mutually exclusive. The statement of Napoles that Justice
Ong's "talent fee" is high already suggests that she had previous dealings with him
directly or indirectly. Any transaction involving a "talent fee" already demeans the
profession of all judges and justices.

The minor inconsistencies that Justice Ong points out do not cast doubt as to the
credibility of the statements made by Luy and Sula. Rather, they show that such
statements were not rehearsed or contrived. For so long as the principal content remains
consistent, minor inconsistencies in the details of the statement which do not cast doubt
on the purpose for which they are presented supports the credibility of such evidence.

Justice Ong's conduct prejudiced

the best interest of the courts

Justice Ong's improprieties do not only constitute grave misconduct, they are also
conduct prejudicial to the best interest of service.

Conduct prejudicial to the best interest of service is subject to disciplinary action under
the Administrative Code. 78
Aries Rufo, a journalist who is a keen observer of the judiciary, mentioned in his
testimony:

Judges and Justices . . . should insulate themselves from situations that

could compromise their integrity. Without Napoles in the picture, I would
have been uncomfortable seeing Justice Ong with Jinggoy considering
that Senator Jinggoy was tried before at the Sandiganbayan for plunder.
He is still an active Justice and an ordinary person might conclude that,
you know, he could favor him in cases if there are.

An ordinary private citizen testified that he perceives Justice Ong as someone who is
partial. Such perception is not unique or isolated. It is enough to prejudice the service that
the judiciary is providing the public.

A reasonable public perception of partiality of one justice with good basis tarnishes the
entire Sandiganbayan and the judiciary in general. It is for this reason that we
promulgated Canon 3, Section 2 of the Code of Judicial Conduct, to wit:

SEC. 2. Judges shall ensure that his or her conduct, both in and out of court,
maintains and enhances the confidence of the public, the legal profession and
litigants in the impartiality of the judge and of the judiciary. (Emphasis
supplied)

In Tan v. Pacuribot: 79

We have repeatedly reminded members of the Judiciary to so conduct

themselves as to be beyond reproach and suspicion, and to be free from any
appearance of impropriety in their personal behavior, not only in the discharge
of their official duties but also in their everyday lives. For no position exacts a
greater demand on the moral righteousness and uprightness of an individual
than a seat in the Judiciary. Judges are mandated to maintain good moral
character and are at all times expected to observe irreproachable behavior so as
not to outrage public decency. 80

II
Dishonesty

Dishonesty is "the concealment of truth in a matter of fact relevant to one's office or

connected with the performance of his duties. It is an absence of integrity, a disposition to
betray, cheat, deceive or defraud, bad faith." 81 Dishonesty is also the "disposition to lie,
cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or
integrity in principle; lack of fairness and straightforwardness; disposition to defraud,
deceive or betray." 82
Dishonesty need not be an outright lie. It can consist of the concealment of the truth. The
truth can be concealed not only by negating the truth. Under certain circumstances, facts
can be concealed by one who does not say anything. The truth can be denied by uttering
statement that make a contrary reality seem like the truth.

Truth can also be denied by slanting the facts, i.e., refocusing events on a detail that is
irrelevant or stating only a partial truth. Dishonesty may be the conclusion from an
examination of a series of actions. Sometimes, individuals can utter independently true
statements, but when taken together, would create a context that is contrary to the truth.

Justice Ong committed dishonest acts in concealing his association with Napoles.

Justice Ong misrepresented his affiliation with Napoles when Aries Rufo confronted him
with the photograph of him with Senator Estrada and Napoles. Before the Investigating
Justice, Rufo testified:

Q Did you ask why Janet Napoles was there?

A Yes, I asked him and he said he doesn't recognize her because it appears that
she did not appear in the Kevlar case. He said that . . .

Q You mean, he did not recognize who this lady is?

A Yes, Justice.

xxx xxx xxx

Q When you reminded him, did he finally recognize her as Janet Napoles?

A There was no categorical statement that he knew that it was Janet Napoles. I
got the sense that he knew her because of the stories and the photos that .
...

xxx xxx xxx

I asked him what brought about the photograph. He said it must have been in
one of those instances where a guest would like to have his or her photo
taken with celebrities or with other public figures and he also stated it
must have been when I asked him whether they are close or not, he
qualified the situation . . . the photo, by saying that it would have been
different if he was close to Napoles in that photo that would indicate that
they were closed [sic] but the fact that they were separated by Senator
Jinggoy Estrada, it must have been the case where a person like Janet
Lim Napoles would want her photo taken with public figures. 83
As a result of this conversation, Aries Rufo quoted Justice Ong in his article. "I do not
know her. She did not appear in court. I think she had a waiver of appearance in court."
84

The ponencia also points out that Justice Ong's dishonest act was contained in his letter to
the Chief Justice dated September 26, 2013. In that letter, he did not disclose that he
visited Napoles' office sometime in 2012.

In addition to the letter, Justice Ong's denial that he did not attend any party hosted by
Napoles was reiterated in his comment:

Justice Ong categorically states that he has never attended any party or social
event or affair hosted by Mrs. Napoles or her family, either before she had a
case with his court, or while she already had a pending case with his court, or at
any time afterwards. This fact has now been confirmed by Sula who never
claimed that Justice Ong was a presence or a fixture in any of the parties or
social events or affairs that were hosted by Mrs. Napoles. 85

Justice Ong's representations constitute dishonesty that renders him administratively

liable.

Justices Perez and Reyes are of the belief that Justice Ong's acts do not constitute
dishonesty. They opine that Justice Ong's statements were taken out of context.
According to them, in his letter dated September 26, 2013, Justice Ong was only
defending himself from the impression created by the Rappler article that makes it seem
that he was part of Napoles' social circle. At that time, he was not obligated to disclose
anything about the favor regarding the Black Nazarene's robes or that he visited Napoles'
office.

Justice Reyes also points out that during the investigation, Justice Ong readily admitted to
having associated with Napoles, which negates the finding that he intended to be
dishonest in the letter to the Chief Justice.

I disagree.

I believe that Justice Ong's actions show a disposition to deceive. His words lacked the
integrity and honesty we require from a Sandiganbayan justice. This is obvious if we take
all his statements in the proper context.

Before the investigation on these issues went full-scale, Justice Ong deliberately wanted
to create an impression that he was not associated with Napoles. This could be concluded
from Aries Rufo's narration of the interview that preceded the Rappler article. Napoles
already had a notorious reputation at that time, and an ordinary citizen would impulsively
dissociate himself in order to avoid being implicated by Napoles' notoriety.
However, Justice Ong is not an ordinary citizen. He is required by the Rules of Court and
the Code of Judicial Conduct to be honest in all his dealings. 86 If he has stayed true to
this Code, he would not have had anything to conceal from the public. He would be able
to face reporters and confidently say that he had nothing to do with Napoles.

A specifically dishonest statement Justice Ong made during the Rappler interview was
when "[h]e said he 'would not be stupid enough' to be posing with Napoles had he known
that she was the respondent in the case previously handled by his division."

However, during his testimony last March 21, 2014, he revealed that during the first time
he was introduced to Napoles, Napoles thanked him for the Kevlar case acquittal. It is
reasonable to presume that the introduction occurred, as narrated by Justice Ong, prior to
the picture-taking. Thus, the statement made by Justice Ong to Rufo was an outright lie.

Another specifically dishonest statement of Justice Ong was made in his comment. He
stated that he never attended a social event or affair hosted by the Napoleses. It was to
negate the statement made in the Rappler article that "Napoles parties with anti-graft
court justice." At that time, Justice Ong just needed to address the fact that he was seen at
the party of Senator Estrada, which was also attended by Napoles. Hence, there is no
inconsistency with the truth (he and Napoles were guests at Senator Estrada's party) and
his statement in the comment (he was not a guest at Napoles' party).

However, during the course of the investigation, Justice Ong admitted to attending an
affair where he was invited by Napoles. He attended a Eucharistic mass at a private
residence. It is difficult to deny that it was Napoles who hosted that affair. This
conclusion is based on Justice Ong's own narration. Napoles' driver picked him up. She
seated him next to the Monsignor of Quiapo Church. His admissions are inconsistent with
his previous statements.

Even if we assume that Justice Ong was not dishonest solely on the basis of his letter to
the Chief Justice, he did commit dishonesty elsewhere. He committed dishonesty when
he interacted with the reporter. He continued his dishonesty when he was asked to
comment on the statements made during the Senate Blue Ribbon Committee
investigation.

I disagree with some of my colleagues that his dishonesty was cured because he readily
admitted his association with Napoles during the investigation. It is easy to admit matters
when already confronted with so many pieces of evidence that cannot be denied. It does
not wipe out his past acts of dishonesty.

Justice Ong had the disposition to deceive the public by limiting his association with
Napoles as much as possible. His story accommodated more details as more facts
emerged about his association with Napoles.
When Aries Rufo only had a photo to confront Justice Ong, Justice Ong limited his
association with Napoles to the fact that they were both attendees of Senator Estrada's
party.

His narrative evolved after the picture had been published. He stated in the letter to the
Chief Justice that he did not know Napoles during the pendency of the Kevlar case.

On Marina Sula's testimony that she saw Justice Ong once in their office, he explained in
his comment dated November 21, 2013 the reason why Sula saw him there. He narrated
the religious favor Napoles gave him and the need for him to personally thank Napoles in
her office.

During the hearing on February 12, 2014, Benhur Luy stated that he saw Justice Ong
twice in Napoles' office. On March 21, 2014, when it was Justice Ong's turn to testify, his
story evolved once more to accommodate the second instance that Luy referred to by
stating that he visited Napoles' office twice to thank her for the religious favor.

Justice Ong's dishonest acts might not be as apparent as irregularly punching on the
bundy clock, 87 or misrepresenting facts in the personal data sheet for civil service
qualifications. 88 However, his acts are still dishonest and show his disposition to betray,
cheat, deceive, and defraud.

This court must be wary of non-traditional concealments of truth. It shows that a person
not only made a dishonest act but that the person has a propensity to conceal the truth.
This runs against the very principles of truth and justice that the judiciary tries to uphold.
It is reprehensible if it is a judge or justice — expected by the public trust to be honest —
who perpetrates this act. As we have time and again declared: "[D]ishonesty is a
malevolent act that has no place in the Judiciary." 89

Justice Ong should be dismissed for

his dishonesty

Rule 140, Section 8 of the Rules of Court classifies dishonesty as a serious charge. Rule
140, Section 11 (A) provides for a range of penalties:

1. Dismissal from service, forfeiture of all or part of the benefits as the

Court may determine, and disqualification from reinstatement or
appointment to any public office, including government-owned or
controlled corporations. Provided, however, That the forfeiture of
benefits shall in no case include accrued leave credits;

2. Suspension from office without salary and other benefits for more than
three (3) but not exceeding six (6) months; or
 3. A fine of more than P20,000.00 but not exceeding P40,000.00.

Justice Bersamin opines that Justice Ong's dishonesty "did not meet the required
seriousness or gravity that would merit the extreme penalty of dismissal." Justice
Bersamin applied the standard that for there to be dishonesty that is subject to the penalty
of dismissal, the act of dishonesty should relate to Justice Ong's official duties or
qualifications as a justice of the Sandiganbayan.

I cannot agree with Justice Bersamin's assessment. Justice Ong's dishonesty was related
to his qualifications as a justice of the Sandiganbayan. He might not have placed a false
entry in his personal data sheet for the Judicial Bar Council to assess, 90 but he concealed
truth that affects his fitness to be a member of the judiciary. The Code of Judicial
Conduct requires propriety from its members. This qualification of a justice should be
constant and should be met by a justice at all times. When Justice Ong committed
dishonest acts to conceal his impropriety, his dishonesty related to his qualifications as a
Sandiganbayan justice.

The dishonesty of Justice Ong did not only pertain to a single act. Taken together, this set
of acts reveals a propensity of Justice Ong to be dishonest. For dishonesty alone, he
should be meted the penalty of dismissal.

III
Grave misconduct

Time and again, this court has clarified what can be considered as misconduct. Thus:

Misconduct has been defined as improper or wrongful conduct. It is the

transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment. 91 (Underscoring supplied)

To be considered grave misconduct, "the elements of corruption, clear intent to violate

the law or flagrant disregard of established rule" 92 must be present.

Justices Perez, Bersamin, and Reyes concur that the improprieties of Justice Ong were
tantamount to misconduct. However, due to the absence of the element of corruption, the
misconduct cannot be considered grave, hence, they merely penalized him for simple
misconduct.

However, grave misconduct is not only qualified by corruption, it could also be

qualified by violation of law or "flagrant disregard of established rule."
Justice Ong violated the law by improperly receiving gifts from Napoles. In addition, he
flagrantly disregarded established rules.

In Imperial, Jr. v. Government Service Insurance System, 93 this court described the
instances when there is flagrant disregard of an established rule:

Flagrant disregard of rules is a ground that jurisprudence has already touched

upon. It has been demonstrated, among others, in the instances when there had
been open defiance of a customary rule; in the repeated voluntary disregard of
established rules in the procurement of supplies; in the practice of illegally
collecting fees more than what is prescribed for delayed registration of
marriages; when several violations or disregard of regulations governing the
collection of government funds were committed; and when the employee
arrogated unto herself responsibilities that were clearly beyond her given duties.
The common denominator in these cases was the employee's propensity to
ignore the rules as clearly manifested by his or her actions. 94 (Emphasis in
the original, citations omitted)

Justice Ong repeatedly ignored the Code of Judicial Conduct. His many years in the
judiciary should have instilled in him the discipline to be cautious in his social life.
Otherwise, he compromises his independence and impartiality.

Yet, Justice Ong repeatedly met and accepted favors from a former litigant. He offers no
other explanation to characterize his relationship with Napoles. Certainly, his many acts
of impropriety constitute grave misconduct.

Grave misconduct or gross misconduct constituting violations of the Code of Judicial

Conduct under the Rules of Court, Rule 140, Section 8, is another serious charge. Again,
the range of penalties for serious charges include dismissal, three- to six-month
suspension, or a fine ranging from P20,000.00 to P40,000.00.

For Justice Ong's series of improprieties, he deserves the penalty of DISMISSAL.

We meted the penalty of dismissal to a Regional Trial Court judge, Judge Marino Rubia,
for similar improprieties. In Sison-Barias v. Rubia, 95 Judge Rubia and one of his court
staff met with a litigant in a restaurant in the Bonifacio Global City. At that time, the
litigant had three pending cases in Judge Rubia's sala. During the meeting, Judge Rubia
asked inappropriate questions relating to the personal circumstances of the litigant. The
litigant was disturbed because Judge Rubia revealed that he was close to the opposing
counsel, and he seemed to be using information about that litigant that he derived from
the opposing counsel. The litigant felt that Judge Rubia was severely biased toward the
opposing party. Judge Rubia convinced her to meet with opposing counsel to arrange her
cases extra-judicially. For that meeting, Judge Rubia did not ask or receive favors from
the litigant in exchange for a favorable decision, but the litigant paid the bill for the meals
at the restaurant. After this incident, the litigant felt the bias against her in every order
that Judge Rubia issued regarding her cases.

In Rubia, this court strictly enforced Canons 2, 3, and 4 of the Code of Judicial Conduct.
To our mind, due to "[Judge Rubia's] actions, complainant and all who will be made
aware of the events of this case will harbor distrust toward the judiciary and its
processes."

Justice Ong should not be given a lighter penalty simply because he fraternized with a
previous litigant, not a current litigant. The effect on his integrity, impartiality, and
propriety is the same. He was a Sandiganbayan associate justice who was willing to
compromise the integrity of the judiciary for favors. In that sense, Justice Ong's
transgressions are even graver than Judge Rubia's.

IV
Proper penalty

The charge of grave misconduct constituting Justice Ong's improprieties and his
dishonesty is enough to justify the penalty of DISMISSAL.

In addition, Justice Ong already had a prior administrative sanction that aggravates his
current standing in this administrative case.

In Jamsani-Rodriguez v. Ong, 96 this court already penalized Justice Ong for his
misconduct. While the nature of Justice Ong's offense was different, the finding of his
administrative liability came with a warning that a repetition of the same or similar act
shall be dealt with more severely. The fact that this court subsequently granted him
judicial clemency 97 does not cure this warning. This warning persists.

The acts committed by Justice Ong in this case are more severe than in Jamsani-
Rodriguez v. Ong. In Jamsani-Rodriguez, Justice Ong was found guilty of irregularly
holding proceedings in court, violative of the collegial nature of the Sandiganbayan. In
this case, his acts lacked integrity, were improper, and dishonest.

FINAL NOTE

The Code of Judicial Conduct requires "[j]udges [to] ensure that not only is their conduct
above reproach, but that it is perceived to be so in the view of a reasonable observer." 98
A judge should ensure that his conduct, even out of court, maintains and enhances the
confidence of the public in the impartiality of the judiciary. 99

The expectations of propriety are higher for Sandiganbayan justices like Justice Ong. It is
the Sandiganbayan that has the primary exclusive jurisdiction to hear and decide the most
difficult cases involving graft and corruption. It is the Sandiganbayan that sits in
judgement of public officers who violate the provisions of the Revised Penal Code,
Republic Act No. 3019, Republic Act No. 6713, and Presidential Decree No. 46 on the
receiving of gifts. It is the justices of the Sandiganbayan that struggle day in and day out
against political pressure and personal risk to live by the public's faith that they will
themselves follow the law.

Many times during the deliberations of this case, colleagues have pointed to the need for
compassion for the case of Justice Ong. We are told that he has served long years as a
judge and as a justice. We were even told that he attempted to informally circulate a
letter through other colleagues in this court that he was willing to take optional
retirement should he be meted with any kind of suspension.

That he had the audacity to try to influence the members of this court by offering to
resign through an informal letter circulated through some colleagues is in my view
could have been another basis for his dismissal. It shows that he has at least made
attempts to communicate ex parte with members of this court outside the formal
processes allowed by our rules.

Ex parte communication sub rosa by one being investigated with any member of this
court while we sit in deliberation of his case is wrong. Influence peddling is wrong.

We should, as the court with the constitutional duty to discipline judges and justices of
the lower courts, properly call out an attempt to illicitly influence this court when it
happens.

If there is any group deserving of compassion, it should be the judges and justices who
toil with meager salaries and highly taxed benefits and who struggle daily to keep their
integrity and independence intact. Our compassion should be reserved to judges and
justices who do not succumb to temptation or pressure to cater to the rich and powerful
accused at the expense of the Filipino people. Our compassion should be for them who
we will disappoint should we mistake a failure of our ability to do justice for mercy.

Every decision will cause us discomfort. I do not take personal pleasure in voting for his
dismissal. But it is what is called for by law and my conscience.

We fail ourselves, our institution, and the values and principles we swore to uphold when
we lose the courage to do what is right and just.

ACCORDINGLY, I vote that Justice Ong be found GUILTY of GRAVE

MISCONDUCT, IMPROPRIETY, ACTS PREJUDICIAL TO THE BEST INTEREST
OF SERVICE, and DISHONESTY. I vote that he be DISMISSED from the service, with
forfeiture of all retirement benefits, except accrued leave credits, if any, and with
prejudice to re-employment in any branch, agency, or instrumentality of the government
including government-owned or controlled corporations.

JARDELEZA, J., separate concurring:

Respondent Ong stands administratively charged for violations of the New Code of
Judicial Conduct, specifically that:

(1) Respondent acted as contact of Napoles in connection with the Kevlar

case while it was pending in the Sandiganbayan Fourth Division
wherein he is the Chairman;

(2) Respondent, being Napoles' contact in the Sandiganbayan, fixed the

Kevlar case resulting in her acquittal;

(3) Respondent received an undetermined amount of money from Napoles

prior to the promulgation of the decision in the Kevlar case thus,
she was sure (kampante) of her acquittal;

(4) Respondent visited Napoles in her office where she handed to him
eleven (11) checks, each amounting to P282,000.00, or a total of
P3,102,000.00, as advanced interest for his P25.5 million BDO
check she deposited in her personal account; and

(5) Respondent attended Napoles' parties and was photographed with

Senator Estrada and Napoles. 1

After much consideration, the majority found Respondent guilty of gross misconduct,
dishonesty and impropriety, for which he is meted the penalty of "dismissal from the
service, with forfeiture of all retirement benefits, except accrued leave credits, if any, and
with prejudice to reemployment in any branch, agency or instrumentality of the
government including government-owned or controlled corporations."

I concur with the majority. I submit this Separate Opinion, however, to emphasize that
the commission of acts of Indirect Bribery under Article 211 of the Revised Penal Code
(RPC)and Acceptance of Gift under Presidential Decree No. 46 (PD 46) 2 are also
punishable administratively. If proven on the facts by substantial evidence, they give rise
to the sanctions of dismissal from the service and forfeiture of benefits as provided under
Rule 140 of the Revised Rules of Court. 3

Laws governing practice of gift-giving

A public officer should not accept any gift offered to him because such gift is offered in
anticipation of future favor from him. Such gift received will in the future corrupt him or
make him omit the performance of his official duty. 4 As part of the government's efforts
to wipe out all conceivable forms of graft and corruption in the public service, there are
several laws in place that regulate the practice of gift-giving to public officials. For
purposes of this case, PD 46 and Article 211 of the Revised Penal Code find relevance.

Thus, Presidential Decree No. 46 makes it "punishable for any public official or
employee, whether of the national or local governments, to receive, directly or indirectly,
and for private persons to give, or offer to give, any gift, present or other valuable thing
on any occasion, including Christmas, when such gift, present or other valuable thing is
given by reason of his official position, regardless of whether or not the same is for past
favor or favors or the giver hopes or expects to receive a favor or better treatment in the
future from the public official or employee concerned in the discharge of his official
functions."

Violation of PD 46 shall be penalized by imprisonment of not less than one (1) year nor
more than five (5) years and perpetual disqualification from office. The official or
employee concerned shall likewise be subject to administrative disciplinary action and,
"if found guilty, shall be meted out the penalty of suspension or removal, depending on
the seriousness of the offense."

While PD 46 is not part of the enumeration in Section 8, Rule 140 of the Revised Rules
of Court the commission of which gives rise to the sanction of dismissal from the service
and forfeiture of benefits, PD 46 should be deemed included among these "serious
charges." An examination of said Section would show that the enumeration is qualified
by the word "include" — which implies that the enumeration is not exclusive but would
also cover acts analogous to those enumerated. 5 The acts of gift-giving and gift-
receiving prohibited in PD 46 are analogous 6 to those same practices similarly
prohibited under Article 211 of the RPC (Indirect Bribery) and Republic Act No. 3019,
otherwise known as the Anti-Graft and Corrupt Practices Act. The common element
under PD 46 and Article 211 of the RPC is that both laws consider a public official's act
of receiving a gift, given by reason of his official position, as corrupt.

PD 46 was issued by former President Ferdinand E. Marcos in 1972. To date, it has not
been repealed nor its constitutionality duly questioned; it thus continues to be good law.
In fact, PD 46 is included in the Revised Edition of the Compilation of Laws on Graft and
Corruption issued by the Office of the Ombudsman in 2004. In his Commentary on Legal
and Judicial Ethics, Agpalo identifies violation of PD 46 as among the other crimes
committed by public officers and included in the liability of judges. 7

Similarly, Article 211 of the RPC (Indirect Bribery) provides for a penalty to be imposed
upon any public official who shall accept gifts offered to him by reason of his office. This
Article was amended in 1985 to increase the penalty for the offense from arresto mayor
to prision correcional.
Significantly, under both PD 46 and Article 211 of the RPC, a public officer becomes
liable upon mere acceptance of a gift. It is not necessary that the official should do any
particular act or promise to do an act, as it is enough that he accepts gifts offered to him
by reason of his office. 8 Neither is it required that the giver hopes or expects to receive a
favor or better treatment in the future. 9 That PD 46 and Article 211 is a variant of the
other appears to be confirmed by Luis B. Reyes who, in his commentary on the Revised
Penal Code, included PD 46 in his discussion of Article 211. 10

Republic Act No. 6713 (RA 6713), or the Code of Conduct and Ethical Standards for
Public Officials and Employees, defines a gift as "a thing or a right to dispose of
gratuitously, or any act or liberality, in favor of another who accepts it . . ." 11 RA 6713
further defines the act of "receiving any gift" to include "the act of accepting directly or
indirectly, a gift from a person other than a member of his family or relative . . . even on
the occasion of a family celebration or national festivity like Christmas, if the value of the
gift is neither nominal nor insignificant, or the gift is given in anticipation of, or in
exchange for, a favor." 12

Notably, the proscription against the solicitation and/or acceptance of gifts has been
adopted by a number of government agencies as part of their official policy. The
Governance Commission for Government-Owned and Controlled Corporations (GCG),
under Section 29 of the Code of Corporate Governance for the GOCC Sector, required all
covered Governing Boards to formally adopt a "No Gift Policy" and ensure its full
advertisement to the community and its strict implementation by particular set of rules.
13 Thus, government-owned and controlled corporations (GOCCs) such as the Land
Bank of the Philippines, PD 46

In this case, the evidence on record substantially establish that Respondent accepted gifts,
extended to him by reason of his office, from Mrs. Napoles.

Evidence on record

During the course of the investigation, it was alleged that Respondent met with Mrs.
Napoles twice in her office in 2012. Respondent did not deny these meetings but
explained that these were mere gestures of appreciation on his part for Mrs. Napoles'
invaluable assistance in securing him access to the robe of the Black Nazarene:

xxx xxx xxx

A: . . . And one thing that caught my attention was that she told me that
Monsignor Ramirez is not only a Parish Priest of Quiapo Church but that
he has with him the robe of the Mahal na Poon which is miraculous and
has a healing power if you wear it.

Atty. Geronilla
Q: What was your reaction when Mrs. Napoles told you about this?

Justice Ong

A: I have a medical issue, but I did not tell her that. I have a medical issue and
how I wished that I will get relief because of my faith and devotion to
the Mahal na Poon called the Black Nazarene. So, obviously, I was
very interested and I asked that if I can have access to the robe of
the Mahal na Poon.

xxx xxx xxx

Q: Now what happened after this when you confirmed with Mrs. Napoles that
there was such a robe of the Black Nazarene and you wanted to be
draped or clothed or whatever? What happened next? What did you tell
to Ms. Napoles?

A: I want to have access to that robe so that I can wear it and then put it on
my body, sir.

Q: What happened next? What was the reaction of Mrs. Napoles when you
told her about your wish?

A: Mrs. Napoles readily acceded and she told me that she will arrange an
audience with Monsignor Ramirez for me.

Q: And what happened next?

A: About the call of Mrs. Napoles on the cell, she told me if I know Sanctuario
de San Antonio Church . . .

Q: How did she know your cell number Justice Ong?

A: Did I not tell you that we exchanged cell numbers when I got interested
when she mentioned about Monsignor Ramirez . . .

Atty. Geronilla

I think your mind came ahead. You have not stated that. I am sorry.

Justice Ong

. . . the Parish Priest of Quiapo, that is why I got interested and we exchanged
cell numbers.

Q: You were saying that Janet Napoles called you up?

A: Yes, sir.

Q: In your cellphone?

A: Yes, sir. She told me Monsignor Ramirez agreed, but do you know the
Sanctuario de San Antonio Church in Makati?

Q: What was your answer?

A: I said I know the Santuario in Makati but definitely sabi ko I know the
Adoracion Chapel at the back of the church. I don't go to Santuario. I
went there only twice or thrice.

Q: So, what happened next after you told her that you know the Adoracion
Chapel at the back of the Santuario de San Antonio Church?

A: She told me that I just park my car there and somebody will pick me up. That
was a Sunday. When she arranged for a meeting, that was a Sunday, sir.

Q: After that, did you actually go to the Adoracion Chapel?

A: Yes, sir. I went there and I was picked up by the driver and he brought me to
. . . inside a subdivision. I really don't know if it is Forbes or
Dasmarinas.

Q: What happened next?

A: I went inside the house, and it is a modest house, and at that time, a mass was
about to take place.

Q: Who were in the house where the mass was about to take place, Justice?

A: Monsignor Ramirez and a number of Chinese priests and many Chinese

guests inside the house.

Q: What happened next? What did you do there?

A: I attended the mass and then after the mass, nahihiya po ako e. I wanted to
go home already but Janet Napoles said "No, I will introduce you." Kasi
ho there were many Chinese and I did not want to be identified with
them. So, I wanted to go home already because ever since if I may be
allowed, your Honor, if I have a problem, the Chinese Federation, they
cannot approach me. When I was in the RTC, there was someone who . .
. I wanted to leave the premises but Janet Napoles said I have to
introduce you to Monsignor Ramirez. So, I was introduced to Monsignor
 Ramirez and I was also introduced to the husband of Napoles. The
husband was a good singer. He was playing the guitar during the mass.

Q: What is the name of the husband?

A: Jaime Napoles, sir.

Q: Do you know where that house is?

A: I do not know, sir, but that is the place where Monsignor Ramirez and the
other priests were staying.

Q: Okay, according to Mrs. Janet Napoles, she wanted to introduce you to

Monsignor Ramirez. Did she actually introduce you to him?

A: Yes, sir. I was introduced to Monsignor Ramirez and that was already about
lunch time and after the mass, Monsignor Ramirez told me to stay for
lunch.

Q: And who were with you in the lunch?

A: The husband and wife together with a number of Chinese guests seated in a
long table.

Q: Do you remember where you were seated?

A: Yes, sir. Monsignor Ramirez is a very big guy, almost 400 lbs. I suppose. He
is a very big guy so he was seated in the kabisera and I was seated to his
right, and Mrs. Napoles was facing me. I supposed Monsignor
Ramirez already knew at that time that I wanted access to the robe.
When I kissed his hand, he told me "Hijo, bakit gusto mong masuot
ang robe ng Mahal na Poon?" Since he is a priest, I confided "kasi
ho may prostate cancer po ako e." and he said you just talk to Mrs.
Napoles and arrange it and I will have you wear it. You just make
arrangement with Ms. Napoles and you will know when and how
you can wear that robe.

Q: So did this actually happen, Justice Ong?

A: Yes, sir.

Q: Will you tell this Court the circumstances of this happening?

A: After a week or more than that, a week or two, Mrs. Napoles told me to
go to Quiapo Church early in the afternoon. I am very sure it was
not a Friday kasi ho walang masyadong tao. When I went inside, it is
 a small office, a man was already waiting for me and he was holding
I think the robe. So, I addressed him Manong and he said "Sige,
isuot mo na. Yan ang sabi ni Monsignor." So I wore the robe. I put
on the robe.

Justice Gutierrez

Q: For how long was the robe on your body? How many minutes?

Justice Ong

A: One or two minutes only, your honor. I was so happy. I cannot explain
my happiness. I was spiritually refreshed because of my devotion,
my faith in the Mahal na Poon.

Atty. Geronilla

Q: After you have already worn on your body the robe of the Black Nazarene,
what happened?

Justice Ong

A: I said, thank you Manong. I said, Manong, maraming salamat po. When I
was about to leave, manong said: Sandali lang, may ipinabibigay sa iyo.

Q: What was that?

A: He gave me fragrant cotton balls and he told me that "kung saan may
karamdaman ka or kung saan may sakit, pwede mong ipahid."
Tutulungan ka ni Mahal na Poon." As a matter of fact, I have it
here, your Honor. I want to show it to you, your Honor, but I cannot
leave this. This is the one taken from the body of the Mahal na Poon.

Justice Gutierrez

Witness showing to the Investigating Justice fragrant cotton balls.

Justice Ong

Date ho, your honor, it was bilog na bilog. Since it has been with me for a long
time, napisa na.

Justice Gutierrez

Which witness claims it has some miraculous healing power. Continue.

Atty. Geronilla

Q: After this man gave you that piece of cotton or cotton balls, what
happened next? What did you do, if any?

A: After that, I decided to see Ms. Napoles, sir. I called her up. I decided to
see her because this is a big thing for me. I should not only thank
her over the phone but I want to thank her personally.

xxx xxx xxx

Q: Now when did you see Ms. Napoles?

A: It was already . . . I think it was . . . probably sometime in March, sir.

Justice Gutierrez

Q: What was the year?

A: 2013, your honor. No, 2012, your honor.

Q: Now, you were explaining earlier that your letter to the Chief Justice
concentrated only on the photograph and article of Mr. Rufo and that at
that time, there was no allegation regarding the fact that you visited or
was seen in the office of Janet Napoles. Now, will you please tell us
where this allegation was first made regarding your visit to Ms.
Napoles?

A: When I was directed by the Honorable Supreme Court to file my comment,

sir.

Justice Gutierrez

Let us be consistent. The last question was he saw Janet Napoles in March
2012. So, where did you meet Janet Napoles?

A: In her office, your honor, the first time because I was told to go to the
Discovery Suites. That was the first time I went there.

Justice Gutierrez

Q: Discovery Suites at 2502?

A: I don't know. It's on the 25th floor.

Q: What happened when you met her on the 25th floor? Was she there?
A: Yes, your honor. I was alone with her. And afterwards, I left. I went
there only to thank her because it is a big deal for me.

Q: That is all the conversation you had with her, just to thank her?

A: Yes, your honor.

Q: So, afterwards, you left?

A: Yes, your honor.

Justice Gutierrez

Continue, counsel.

Atty. Geronilla

Q: Early statement of yours when I was asking why you did not state the
circumstances regarding . . .

Justice Gutierrez

Next question before that.

Q: Did you go there?

Justice Ong

Yes, your honor.

Q: The second time as claimed by the whistleblowers?

A: Yes, I went there twice your honor.

Q: When was the second time after you thanked her? You went there for that
second time?

A: Yes, your honor.

Q: When was that? Do you remember?

A: After a week or two, I went there again, your honor.

Q: So, what was your purpose in going back to her place for the second
time?
 A: Your honor, after I thanked her for the first time, she kept on calling me
up. She wanted to invite me. I turned her down. Ang daming
imbitasyon. I turned her down, and then finally, I acceded because I
felt that she was not happy for me na parang walang kwentang tao, I
will always turn her down. So, I just went to see her again.

Q: So, what was the purpose of your going there for the second time?

A: Only for chitchat and small talk only, your honor. 21

xxx xxx xxx

(Emphasis and underscoring supplied.)

A professed Black Nazarene devotee, Respondent, by his own admission, "asked" Mrs.
Napoles to arrange for him "access" to the robe of the Black Nazarene. 22 Respondent
also received, as a result of this same access provided by Mrs. Napoles, fragrant cotton
balls which he wipes on any ailing part of his body. 23 In my view, these special favors
constitute gifts which, under both PD 46 and Article 211 of the RPC, Respondent is
prohibited from receiving.

First. A gift need not be restricted to a physical thing or object. In fact, as provided under
RA 6713, it can come in the form of a favor, an act or liberality extended in favor of
another. Thus, in Capuno vs. Jaramillo, 24 a judge was found guilty of gross misconduct
and dismissed from the service for having accepted the free use, for one year, of a car and
availment of free battery recharging services from a litigant who has a pending case
before him. In Agpalasin vs. Agcaoili, 25 a judge was dismissed for allowing a litigant in
his sala to pay for the freight of his personal acquisitions.

Second. The gift given to Respondent can hardly be considered of nominal or

insignificant value. Respondent referred to the robe of the "Mahal na Poon" as
"miraculous and has a healing power if you wear it." 26 By Respondent's own estimation
of his devotion, this gift is of immeasurable value to him as it is a gift of healing, more so
in light of his medical condition. As Respondent testified, after he wore the robe, he was
"so happy" and "spiritually refreshed because of his devotion." 27

This Court may take judicial notice of the fact that ardent devotees of the Black Nazarene
risk injury to life and limb for even just a simple touch of the icon's robe when it is
paraded during the Black Nazarene's feast day in January. Needless to say, this gift of the
ability to wear (and not merely to touch) the Black Nazarene's robe partakes of special
treatment not made available to the rest of the faithful. It was, however, made especially
available to Respondent. The same can be said of the gift of the fragrant cotton balls.
In addition, Respondent admitted that, after having worn the Black Nazarene's robe and
received the fragrant cotton balls, he went to Mrs. Napoles' office on his own volition to
thank her personally. Even after that, he was unable to decline Mrs. Napoles' invitations
for him to visit her at her office. These only prove that Respondent deemed the gifts of
such inestimable value that he needed to see Mrs. Napoles twice to personally thank her.
Otherwise, as the Honorable Investigating Justice Angelina Sandoval-Gutierrez said,
Respondent could very well just have thanked Mrs. Napoles over the phone, as would be
the polite way to do when one receives tokens of nominal value. 28

Finally, the gift was extended to Respondent by reason of his office. Respondent is not a
relative or family friend of Mrs. Napoles. Neither are they colleagues or employees of the
same office. In fact, according to Respondent, they met only during the party of Senator
Estrada. The only conceivable and rational reason Mrs. Napoles would give Respondent
the favors she gave him is because he is a member of the Sandiganbayan.

In view of the foregoing, and for the reasons stated in the Majority Opinion, I vote with
the Majority in finding Respondent GUILTY of GROSS MISCONDUCT,
DISHONESTY AND IMPROPRIETY.

||| (In re Ong, A.M. No. SB-14-21-J, [September 23, 2014])

 FIRST DIVISION

[G.R. No. 199032. November 19, 2014.]

RETIRED SPO4 BIENVENIDO LAUD, petitioner, vs. PEOPLE OF

THE PHILIPPINES, respondent.

DECISION

PER CURIAM : p

Assailed in this petition for review on certiorari 1 are the Decision 2 dated April 25, 2011
and the Resolution 3 dated October 17, 2011 of the Court of Appeals (CA) in CA-G.R.
SP. No. 113017 upholding the validity of Search Warrant No. 09-14407. 4

The Facts

On July 10, 2009, the Philippine National Police (PNP), through Police Senior
Superintendent Roberto B. Fajardo, applied with the Regional Trial Court (RTC) of
Manila, Branch 50 (Manila-RTC) for a warrant to search three (3) caves located inside
the Laud Compound in Purok 3, Barangay Ma-a, Davao City, where the alleged remains
of the victims summarily executed by the so-called "Davao Death Squad" may be found.
5 In support of the application, a certain Ernesto Avasola (Avasola) was presented to the
RTC and there testified that he personally witnessed the killing of six (6) persons in
December 2005, and was, in fact, part of the group that buried the victims. 6 DSAacC

Judge William Simon P. Peralta (Judge Peralta), acting as Vice Executive Judge of the
Manila-RTC, found probable cause for the issuance of a search warrant, and thus, issued
Search Warrant No. 09-14407 7 which was later enforced by the elements of the PNP-
Criminal Investigation and Detection Group, in coordination with the members of the
Scene of the Crime Operatives on July 15, 2009. The search of the Laud Compound
caves yielded positive results for the presence of human remains. 8

On July 20, 2009, herein petitioner, retired SPO4 Bienvenido Laud (Laud), filed an
Urgent Motion to Quash and to Suppress Illegally Seized Evidence 9 premised on the
following grounds: (a) Judge Peralta had no authority to act on the application for a
search warrant since he had been automatically divested of his position as Vice Executive
Judge when several administrative penalties were imposed against him by the Court; 10
(b) the Manila-RTC had no jurisdiction to issue Search Warrant No. 09-14407 which was
to be enforced in Davao City; 11 (c) the human remains sought to be seized are not a
proper subject of a search warrant; 12 (d) the police officers are mandated to follow the
prescribed procedure for exhumation of human remains; 13 (e) the search warrant was
issued despite lack of probable cause; 14 (f) the rule against forum shopping was violated;
15 and (g) there was a violation of the rule requiring one specific offense and the proper
specification of the place to be searched and the articles to be seized. 16

The Manila-RTC Ruling

In an Order 17 dated July 23, 2009, the Manila-RTC granted the motion of Laud "after a
careful consideration [of] the grounds alleged [therein]." Aside from this general
statement, the said Order contained no discussion on the particular reasons from which
the Manila-RTC derived its conclusion.

Respondent, the People of the Philippines (the People), filed a Motion for
Reconsideration 18 which was, however, denied in an Order 19 dated December 8, 2009,
wherein the Manila-RTC, this time, articulated its reasons for the warrant's quashal,
namely: (a) the People failed to show any compelling reason to justify the issuance of a
search warrant by the Manila-RTC which was to be implemented in Davao City where
the offense was allegedly committed, in violation of Section 2, Rule 126 of the Rules of
Court; 20 (b) the fact that the alleged offense happened almost four (4) years before the
search warrant application was filed rendered doubtful the existence of probable cause;
21 and (c) the applicant, i.e., the PNP, violated the rule against forum shopping as the
subject matter of the present search warrant application is exactly the same as the one
contained in a previous application 22 before the RTC of Davao City, Branch 15 (Davao-
RTC) which had been denied. 23 DISaEA

Unconvinced, the People filed a petition for certiorari before the CA, docketed as CA-
G.R. SP. No. 113017.

The CA Ruling

In a Decision 24 dated April 25, 2011, the CA granted the People's petition and thereby
annulled and set aside the Orders of the Manila-RTC for having been tainted with grave
abuse of discretion.

It held that the requirements for the issuance of a search warrant were satisfied, pointing
out that an application therefor involving a heinous crime, such as Murder, is an
exception to the compelling reasons requirement under Section 2, Rule 126 of the Rules
of Court as explicitly recognized in A.M. No. 99-20-09-SC 25 and reiterated in A.M. No.
03-8-02-SC, 26 provided that the application is filed by the PNP, the National Bureau of
Investigation (NBI), the Presidential Anti-Organized Crime Task Force (PAOC-TF) or
the Reaction Against Crime Task Force (REACT-TF), 27 with the endorsement of its
head, before the RTC of Manila or Quezon City, and the warrant be consequently issued
by the Executive Judge or Vice-Executive Judge of either of the said courts, as in this
case. 28

Also, the CA found that probable cause was established since, among others, witness
Avasola deposed and testified that he personally witnessed the murder of six (6) persons
in December 2005 and was actually part of the group that buried the victims — two
bodies in each of the three (3) caves. 29 Further, it observed that the Manila-RTC failed
to consider the fear of reprisal and natural reluctance of a witness to get involved in a
criminal case, stating that these are sufficient reasons to justify the delay attending the
application of a search warrant. 30 Accordingly, it deemed that the physical evidence of a
protruding human bone in plain view in one of the caves, and Avasola's first-hand eye
witness account both concur and point to the only reasonable conclusion that the crime of
Murder had been committed and that the human remains of the victims were located in
the Laud Compound. 31

Finally, the CA debunked the claim of forum shopping, finding that the prior application
for a search warrant filed before the Davao-RTC was based on facts and circumstances
different from those in the application filed before the Manila-RTC. 32 aEcDTC

Dissatisfied, Laud moved for reconsideration which was, however, denied in a Resolution
33 dated October 17, 2011, hence, this petition.

The Issues Before the Court

The issues for the Court's resolution are as follows: (a) whether the administrative
penalties imposed on Judge Peralta invalidated Search Warrant No. 09-14407; (b)
whether the Manila-RTC had jurisdiction to issue the said warrant despite non-
compliance with the compelling reasons requirement under Section 2, Rule 126 of the
Rules of Court; (c) whether the requirements of probable cause and particular description
were complied with and the one-specific-offense rule under Section 4, Rule 126 of the
Rules of Court was violated; and (d) whether the applicant for the search warrant, i.e., the
PNP, violated the rule against forum shopping.

The Court's Ruling

The petition has no merit.

A. Effect of Judge Peralta's Administrative Penalties.

Citing Section 5, Chapter III of A.M. No. 03-8-02-SC which provides that "[t]he
imposition upon an Executive Judge or Vice-Executive Judge of an administrative
penalty of at least a reprimand shall automatically operate to divest him of his position as
such," Laud claims that Judge Peralta had no authority to act as Vice-Executive Judge
and accordingly issue Search Warrant No. 09-14407 in view of the Court's Resolution in
Dee C. Chuan & Sons, Inc. v. Judge Peralta 34 wherein he was administratively
penalized with fines of PhP15,000.00 and PhP5,000.00. 35 cHESAD

While the Court does agree that the imposition of said administrative penalties did
operate to divest Judge Peralta's authority to act as Vice-Executive Judge, it must be
qualified that the abstraction of such authority would not, by and of itself, result in the
invalidity of Search Warrant No. 09-14407 considering that Judge Peralta may be
considered to have made the issuance as a de facto officer whose acts would, nonetheless,
remain valid.

Funa v. Agra 36 defines who a de facto officer is and explains that his acts are just as
valid for all purposes as those of a de jure officer, in so far as the public or third persons
who are interested therein are concerned, viz.:

A de facto officer is one who derives his appointment from one having
colorable authority to appoint, if the office is an appointive office, and whose
appointment is valid on its face. He may also be one who is in possession of an
office, and is discharging [his] duties under color of authority, by which is
meant authority derived from an appointment, however irregular or informal, so
that the incumbent is not a mere volunteer. Consequently, the acts of the de
facto officer are just as valid for all purposes as those of a de jure officer, in so
far as the public or third persons who are interested therein are concerned. 37

The treatment of a de facto officer's acts is premised on the reality that third persons
cannot always investigate the right of one assuming to hold an important office and, as
such, have a right to assume that officials apparently qualified and in office are legally
such. 38 Public interest demands that acts of persons holding, under color of title, an
office created by a valid statute be, likewise, deemed valid insofar as the public — as
distinguished from the officer in question — is concerned. 39 Indeed, it is far more
cogently acknowledged that the de facto doctrine has been formulated, not for the
protection of the de facto officer principally, but rather for the protection of the public
and individuals who get involved in the official acts of persons discharging the duties of
an office without being lawful officers. 40

In order for the de facto doctrine to apply, all of the following elements must concur: (a)
there must be a de jure office; (b) there must be color of right or general acquiescence by
the public; and (c) there must be actual physical possession of the office in good faith. 41
EHcaDT

The existence of the foregoing elements is rather clear in this case. Undoubtedly, there is
a de jure office of a 2nd Vice-Executive Judge. Judge Peralta also had a colorable right to
the said office as he was duly appointed to such position and was only divested of the
same by virtue of a supervening legal technicality — that is, the operation of Section 5,
Chapter III of A.M. No. 03-8-02-SC as above-explained; also, it may be said that there
was general acquiescence by the public since the search warrant application was regularly
endorsed to the sala of Judge Peralta by the Office of the Clerk of Court of the Manila-
RTC under his apparent authority as 2nd Vice Executive Judge. 42 Finally, Judge
Peralta's actual physical possession of the said office is presumed to be in good faith, as
the contrary was not established. 43 Accordingly, Judge Peralta can be considered to have
acted as a de facto officer when he issued Search Warrant No. 09-14407, hence, treated
as valid as if it was issued by a de jure officer suffering no administrative impediment.

B. Jurisdiction of the Manila-RTC to Issue Search Warrant No. 09-14407;

Exception to the Compelling Reasons Requirement under Section 2, Rule
126 of the Rules of Court.

Section 12, Chapter V of A.M. No. 03-8-02-SC states the requirements for the issuance
of search warrants in special criminal cases by the RTCs of Manila and Quezon City.
These special criminal cases pertain to those "involving heinous crimes, illegal
gambling, illegal possession of firearms and ammunitions, as well as violations of the
Comprehensive Dangerous Drugs Act of 2002, the Intellectual Property Code, the Anti-
Money Laundering Act of 2001, the Tariff and Customs Code, as amended, and other
relevant laws that may hereafter be enacted by Congress, and included herein by the
Supreme Court." Search warrant applications for such cases may be filed by "the
National Bureau of Investigation (NBI), the Philippine National Police (PNP) and the
Anti-Crime Task Force (ACTAF)," and "personally endorsed by the heads of such
agencies." As in ordinary search warrant applications, they "shall particularly describe
therein the places to be searched and/or the property or things to be seized as prescribed
in the Rules of Court." "The Executive Judges [of these RTCs] and, whenever they are on
official leave of absence or are not physically present in the station, the Vice-Executive
Judges" are authorized to act on such applications and "shall issue the warrants, if
justified, which may be served in places outside the territorial jurisdiction of the said
courts." IcEaST

The Court observes that all the above-stated requirements were complied with in this
case.

As the records would show, the search warrant application was filed before the Manila-
RTC by the PNP and was endorsed by its head, PNP Chief Jesus Ame Versosa, 44
particularly describing the place to be searched and the things to be seized (as will be
elaborated later on) in connection with the heinous crime of Murder. 45 Finding probable
cause therefor, Judge Peralta, in his capacity as 2nd Vice-Executive Judge, issued Search
Warrant No. 09-14407 which, as the rules state, may be served in places outside the
territorial jurisdiction of the said RTC.
Notably, the fact that a search warrant application involves a "special criminal case"
excludes it from the compelling reason requirement under Section 2, Rule 126 of the
Rules of Court which provides:

SEC. 2. Court where application for search warrant shall be filed. — An

application for search warrant shall be filed with the following:

a) Any court within whose territorial jurisdiction a crime was committed.

b) For compelling reasons stated in the application, any court within the
judicial region where the crime was committed if the place of the
commission of the crime is known, or any court within the judicial region
where the warrant shall be enforced.

However, if the criminal action has already been filed, the application shall only
be made in the court where the criminal action is pending. (Emphasis supplied)
EDaHAT

As explicitly mentioned in Section 12, Chapter V of A.M. No. 03-8-02-SC, the rule on
search warrant applications before the Manila and Quezon City RTCs for the above-
mentioned special criminal cases "shall be an exception to Section 2 of Rule 126 of the
Rules of Court." Perceptibly, the fact that a search warrant is being applied for in
connection with a special criminal case as above-classified already presumes the
existence of a compelling reason; hence, any statement to this effect would be
superfluous and therefore should be dispensed with. By all indications, Section 12,
Chapter V of A.M. No. 03-8-02-SC allows the Manila and Quezon City RTCs to issue
warrants to be served in places outside their territorial jurisdiction for as long as the
parameters under the said section have been complied with, as in this case. Thus, on these
grounds, the Court finds nothing defective in the preliminary issuance of Search Warrant
No. 09-14407. Perforce, the RTC-Manila should not have overturned it.

C. Compliance with the Constitutional Requirements for the Issuance of Search

Warrant No. 09-14407 and the One-Specific-Offense Rule under Section 4,
Rule 126 of the Rules of Court.

In order to protect the people's right against unreasonable searches and seizures, Section
2, Article III of the 1987 Philippine Constitution (Constitution) provides that no search
warrant shall issue except upon probable cause to be determined personally by the
judge after examination under oath or affirmation of the complainant and the witnesses
he may produce, and particularly describing the place to be searched and the persons
or things to be seized: STDEcA

SEC. 2. The right of the people to be secure in their persons, houses, papers, and
effects against unreasonable searches and seizures of whatever nature and for
any purpose shall be inviolable, and no search warrant or warrant of arrest shall
 issue except upon probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he
may produce, and particularly describing the place to be searched and the
persons or things to be seized.

Complementarily, Section 4, Rule 126 of the Rules of Court states that a search warrant
shall not be issued except upon probable cause in connection with one specific offense:

SEC. 4. Requisites for issuing search warrant. — A search warrant shall not
issue except upon probable cause in connection with one specific offense to
be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the things to be seized
which may be anywhere in the Philippines. (Emphasis supplied)

In this case, the existence of probable cause for the issuance of Search Warrant No. 09-
14407 is evident from the first-hand account of Avasola who, in his deposition, stated
that he personally witnessed the commission of the afore-stated crime and was, in fact,
part of the group that buried the victims:

Q9 - Who are these six (6) male victims who were killed and buried in the caves
in December 2005 at around 9:00 p.m.? TcEDHa

A9 - I heard Tatay Laud calling the names of the two victims when they were
still alive as Pedro and Mario. I don't know the names of the other four
victims.

Q10 - What happened after Pedro, Mario and the other four victims were killed?

A10 - Tatay Laud ordered me and the six (6) killers to bring and bury equally
the bodies in the three caves. We buried Pedro and Mario altogether in
the first cave, located more or less 13 meters from the makeshift house
of Tatay Laud, the other two victims in the second cave and the
remaining two in the third cave.

Q11 - How did you get there at Laud Compound in the evening of December
2005?

A11 - I was ordered by Tatay Laud to go [to] the place. I ran errands [for] him.
46

Avasola's statements in his deposition were confirmed during the hearing on July 10,
2009, where Judge Peralta conducted the following examination:

Court:
 . . . Anong panandaan mo? Nandoon ka ba noong naghukay, nakatago o
kasama ka?

Mr. Avasola:

Kasama po ako sa pagbuhat ng mga tao, sir. ScEaAD

Court:

Mga ilang katao?

Mr. Avasola:

Anim (6) po.

Court:

May mass grave ba na nahukay?

Mr. Avasola:

May tatlong kweba po na maliliit yung isa malaki. . . . . 47

Verily, the facts and circumstances established from the testimony of Avasola, who was
personally examined by Judge Peralta, sufficiently show that more likely than not the
crime of Murder of six (6) persons had been perpetrated and that the human remains in
connection with the same are in the place sought to be searched. In Santos v. Pryce
Gases, Inc., 48 the Court explained the quantum of evidence necessary to establish
probable cause for a search warrant, as follows:

Probable cause for a search warrant is defined as such facts and circumstances
which would lead a reasonably discrete and prudent man to believe that an
offense has been committed and that the objects sought in connection with the
offense are in the place sought to be searched. A finding of probable cause
needs only to rest on evidence showing that, more likely than not, a crime has
been committed and that it was committed by the accused. Probable cause
demands more than bare suspicion; it requires less than evidence which would
justify conviction. The existence depends to a large degree upon the finding or
opinion of the judge conducting the examination. However, the findings of the
judge should not disregard the facts before him nor run counter to the clear
dictates of reason. 49DAHEaT

In light of the foregoing, the Court finds that the quantum of proof to establish the
existence of probable cause had been met. That a "considerable length of time" attended
the search warrant's application from the crime's commission does not, by and of itself,
negate the veracity of the applicant's claims or the testimony of the witness presented. As
the CA correctly observed, the delay may be accounted for by a witness's fear of reprisal
and natural reluctance to get involved in a criminal case. 50 Ultimately, in determining
the existence of probable cause, the facts and circumstances must be personally examined
by the judge in their totality, together with a judicious recognition of the variable
complications and sensibilities attending a criminal case. To the Court's mind, the
supposed delay in the search warrant's application does not dilute the probable cause
finding made herein. In fine, the probable cause requirement has been sufficiently met.

The Court similarly concludes that there was compliance with the constitutional
requirement that there be a particular description of "the place to be searched and the
persons or things to be seized."

"[A] description of a place to be searched is sufficient if the officer with the warrant can,
with reasonable effort, ascertain and identify the place intended and distinguish it from
other places in the community. Any designation or description known to the locality that
points out the place to the exclusion of all others, and on inquiry leads the officers
unerringly to it, satisfies the constitutional requirement." 51

Search Warrant No. 09-14407 evidently complies with the foregoing standard since it
particularly describes the place to be searched, namely, the three (3) caves located inside
the Laud Compound in Purok 3, Barangay Ma-a, Davao City: ESTCDA

You are hereby commanded to make an immediate search at any time [of] the
day of the premises above describe[d] particularly the three (3) caves (as
sketched) inside the said Laud Compound, Purok 3, Brgy. Ma-a, Davao
City and forthwith seize and take possession of the remains of six (6) victims
who were killed and buried in the just said premises.

xxx xxx xxx 52 (Emphases supplied)

For further guidance in its enforcement, the search warrant even made explicit reference
to the sketch 53 contained in the application. These, in the Court's view, are sufficient
enough for the officers to, with reasonable effort, ascertain and identify the place to be
searched, which they in fact did.

The things to be seized were also particularly described, namely, the remains of six (6)
victims who were killed and buried in the aforesaid premises. Laud's posturing that
human remains are not "personal property" and, hence, could not be the subject of a
search warrant deserves scant consideration. Section 3, Rule 126 of the Rules of Court
states:

SEC. 3. Personal property to be seized. — A search warrant may be issued for

the search and seizure of personal property:
 (a) Subject of the offense;

(b) Stolen or embezzled and other proceeds, or fruits of the offense; or cHAaCE

(c) Used or intended to be used as the means of committing an offense.

(Emphases supplied)

"Personal property" in the foregoing context actually refers to the thing's mobility, and
not to its capacity to be owned or alienated by a particular person. Article 416 of the Civil
Code, 54 which Laud himself cites, 55 states that in general, all things which can be
transported from place to place are deemed to be personal property. Considering that
human remains can generally be transported from place to place, and considering further
that they qualify under the phrase "subject of the offense" given that they prove the
crime's corpus delicti, 56 it follows that they may be valid subjects of a search warrant
under the above-cited criminal procedure provision.

Neither does the Court agree with Laud's contention that the term "human remains" is too
all-embracing so as to subvert the particular description requirement. As the Court sees it,
the description points to no other than the things that bear a direct relation to the offense
committed, i.e., of Murder. It is also perceived that the description is already specific as
the circumstances would ordinarily allow given that the buried bodies would have
naturally decomposed over time. These observations on the description's sufficient
particularity square with the Court's pronouncement in Bache and Co., (Phil.), Inc. v.
Judge Ruiz, 57 wherein it was held:

A search warrant may be said to particularly describe the things to be

seized when the description therein is as specific as the circumstances will
ordinarily allow (People v. Rubio, 57 Phil. 384 [1932]); or when the
description expresses a conclusion of fact — not of law by which the warrant
officer may be guided in making the search and seizure (idem., dissent of Abad
Santos, J.); or when the things described are limited to those which bear
direct relation to the offense for which the warrant is being issued (Sec. 2,
Rule 126, Revised Rules of Court) . . . If the articles desired to be seized have
any direct relation to an offense committed, the applicant must necessarily have
some evidence, other than those articles, to prove the said offense; and the
articles subject of search and seizure should come in handy merely to strengthen
such evidence. (Emphases supplied) 58

Consequently, the Court finds that the particular description requirement — both as to the
place to be searched and the things to be seized — had been complied with. DTEIaC

Finally, the Court finds no violation of the one-specific-offense rule under Section 4,
Rule 126 of the Rules of Court as above-cited which, to note, was intended to prevent the
issuance of scattershot warrants, or those which are issued for more than one specific
offense. The defective nature of scatter-shot warrants was discussed in the case of People
v. CA 59 as follows:

There is no question that the search warrant did not relate to a specific offense,
in violation of the doctrine announced in Stonehill v. Diokno and of Section 3
[now, Section 4] of Rule 126 providing as follows:

SEC. 3. Requisites for issuing search warrant. — A search warrant shall

not issue but upon probable cause in connection with one specific offense
to be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the things to be
seized.

Significantly, the petitioner has not denied this defect in the search warrant and
has merely said that there was probable cause, omitting to continue that it was in
connection with one specific offense. He could not, of course, for the warrant
was a scatter-shot warrant that could refer, in Judge Dayrit's own words, "to
robbery, theft, qualified theft or estafa." On this score alone, the search warrant
was totally null and void and was correctly declared to be so by the very judge
who had issued it. 60 ACETID

In Columbia Pictures, Inc. v. CA, 61 the Court, however, settled that a search warrant that
covers several counts of a certain specific offense does not violate the one-specific-
offense rule, viz.:

That there were several counts of the offense of copyright infringement and the
search warrant uncovered several contraband items in the form of pirated video
tapes is not to be confused with the number of offenses charged. The search
warrant herein issued does not violate the one-specific-offense rule. (Emphasis
supplied) 62

Hence, given that Search Warrant No. 09-14407 was issued only for one specific offense
— that is, of Murder, albeit for six (6) counts — it cannot be said that Section 4, Rule 126
of the Rules of Court had been violated.

That being said, the Court now resolves the last issue on forum shopping.

D. Forum Shopping.

There is forum shopping when a litigant repetitively avails of several judicial remedies in
different courts, simultaneously or successively, all substantially founded on the same
transactions and the same essential facts and circumstances, and all raising substantially
the same issues either pending in or already resolved adversely by some other court to
increase his chances of obtaining a favorable decision if not in one court, then in another.
63

Forum shopping cannot be said to have been committed in this case considering the
various points of divergence attending the search warrant application before the Manila-
RTC and that before the Davao-RTC. For one, the witnesses presented in each
application were different. Likewise, the application filed in Manila was in connection
with Murder, while the one in Davao did not specify any crime. Finally, and more
importantly, the places to be searched were different — that in Manila sought the search
of the Laud Compound caves, while that in Davao was for a particular area in the Laud
Gold Cup Firing Range. There being no identity of facts and circumstances between the
two applications, the rule against forum shopping was therefore not violated. cTEICD

Thus, for all the above-discussed reasons, the Court affirms the CA Ruling which upheld
the validity of Search Warrant No. 09-14407.

WHEREFORE, the petition is DENIED. The Decision dated April 25, 2011 and the
Resolution dated October 17, 2011 of the Court of Appeals in CA-G.R. SP. No. 113017
are hereby AFFIRMED.

SO ORDERED.

Sereno, C.J., Velasco, Jr., * Leonardo-de Castro, Perez and Perlas-Bernabe, JJ., concur.

||| (Laud v. People, G.R. No. 199032, [November 19, 2014])

 THIRD DIVISION

[A.M. No. P-12-3069. January 20, 2014.]

ATTY. VIRGILIO P. ALCONERA, complainant, vs. ALFREDO T.

PALLANAN, respondent.

DECISION

VELASCO, JR., J : p

Before Us is an administrative complaint for Grave Misconduct and Making Untruthful

Statements filed by Atty. Virgilio P. Alconera against Alfredo Pallanan, Sheriff IV,
assigned at the Regional Trial Court (RTC), Branch 36 in General Santos City.

The antecedent facts are as follows:

Complainant was the counsel for Morito Rafols, the defendant in Civil Case No. 5967-2,
an unlawful detainer case entitled Cua Beng a.k.a. Manuel Sy and Ka Kieng v. Morito
Rafols, et al., filed before the Municipal Trial Court in Cities (MTCC), Branch 2 in
General Santos City, South Cotabato. After trial, the MTCC ruled against Rafols and his
co-defendants in a Judgment 1 dated March 12, 2009, disposing as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and

against the defendant MORITO RAFOLS, his privies, assigns, heirs, transferee,
sublessee, co-lessee or agents if any to vacate from the subject lots and deliver
possession thereof to the plaintiffs and for defendant to pay back rentals of
P5,000.00 per month from June 2008 and every succeeding months thereafter
until he vacate the premises and to jointly and severally, together with all other
defendants, pay attorney's fees in the amount of P20,000.00 with the other
defendants and costs of litigation.

SO ORDERED. SITCEA

Therefrom, Rafols, through complainant Alconera, appealed the case to the RTC, Branch
36, docketed as Civil Case No. 675. Pending appeal, the court issued an Order dated
February 18, 2011 granting Cua Beng's motion for execution she filed in Civil Case No.
5967-2, the unlawful detainer case. Alconera sought reconsideration but the motion was
denied through another Order 2 dated March 14, 2011.
On March 17, 2011, a troubled Evelyn Rafols, Rafols' daughter-in-law, called up
Alconera, who at that time was in Manila, to report that the sheriff, respondent Pallanan,
was about to implement the adverted writ of execution. Evelyn Rafols informed Alconera
that respondent sheriff arrived along with the lawyer of the opposing party and 30 other
men to enforce the writ. Respondent sheriff then allegedly demanded payment of
PhP720,000 to settle Rafols' obligation to which the latter protested on the ground that
the amount is too exorbitant when they have been religiously depositing monthly rentals
in court to satisfy the judgment.

After explaining the matter to Alconera, Evelyn Rafols passed her phone to respondent
sheriff. Over the phone, a verbal disagreement between the two ensued. Alconera claims
that he has a pending motion for reconsideration on the issuance of the writ of execution,
but the respondent said that the motion has already been denied. And since no Temporary
Restraining Order (TRO) has been issued enjoining the implementation, respondent
claimed that he is legally mandated to perform his ministerial duty of enforcing the writ.
Complainant countered that he has not yet received a copy of the denial of the motion,
rendering the execution premature and, at the same time, preventing him from securing a
TRO from the higher courts. Nevertheless, respondent still pushed through with the
execution of the judgment.

On March 18, 2011, complainant returned to General Santos City and, at his law office,
found a copy of the Order denying his Motion for Reconsideration, which was only
served that very same day. The RTC ruled that there was no pending Motion to Approve
Supersedeas Bond filed with it. Instead, what was filed not with the RTC but with the
MTCC was a "NOTICE OF APPEAL — and — MOTION TO APPROVE PROPERTY
SUPERSEDEAS BOND," which was not granted. CcAITa

That afternoon, Alconera went to RTC Br. 36 with his daughter to confront respondent
sheriff. The face-off escalated into a heated argument caught on video. It was
complainant's daughter, Shyla Mae Zapanta, who is coincidentally his office clerk, who
filmed the incident and transcribed the dialogue during the altercation. As hereunder
translated in English, the exchanges went:

ATTY. ALCONERA:

Pag hatod nimo didto sa demolition order, kabalo ka na wala pa ko kadawat ug

denial? (When you served the demolition order, you know that I did not
yet receive a copy of the denial order?)

SHERIFF PALLANAN:

Denial sa unsa, motion? (Denial of what, motion?)

ATTY. ALCONERA:
Oo. (Yes.)

SHERIFF PALLANAN:

Attorney, ang motion inyoha nang kuan diri sa korte, and akoa sa writ ko. As
long as the sheriff did not receive a TRO or any order from the court
restraining him to implement the writ, I have to go. So in case, just in
case, na may resolution si judge na ireconsider and iyang order after
they declare, ideliver na sa area kung asa gi-execute so the sheriff will
move out. (Attorney, the motion, that is your. . . what do you call this,
here in court. Mine is the writ. As long as the sheriff did not receive a
TRO or any order from the court restraining him to implement the writ, I
have to go. So in case, just in case, the judge reconsiders his order, they
will declare, deliver it to the area where the writ if executed so the
sheriff will move out.)

ATTY. ALCONERA:

Mo execute diay ka? Dili diay ka mangutana kung duna pa bay motion for
recon ani? (So you will execute? You will not inquire whether a motion
for reconsideration has been filed?)

SHERIFF PALLANAN:

Bisag may motion for recon na, Attorney, I have to go gyud. (Even if there is a
motion for reconsideration, I really have to go.)

ATTY. ALCONERA:

Uy, di man na ingon ana, uy! Ana imong natun-an as sheriff ?

SHERIFF PALLANAN:

Oo mao na sya. Mao na sya — sa akoa ha, mao na sya. (Yes, that is it. That is it
— to me ha, that is it.)

ATTY. ALCONERA:

Kita ra ta sa Supreme Court ani. (Let us see each other in the Supreme Court.)

SHERIFF PALLANAN:

. . . (unintelligible) Ang imoha ana. . . imong motion ana. . . and imong motion
ana, delaying tactic. (Your motion is a delaying tactic.)

ATTY. ALCONERA:
Ah, sige lang, atubang lang ta sa Supreme Court. (Ok, let's just see each other
in the Supreme Court.) aEcDTC

SHERIFF PALLANAN:

Oo, atubangon nako ko na siya, pero mag-review pud ka.

ATTY. ALCONERA:

Unsay mag-review? (What review?)

SHERIFF PALLANAN:

Motion nang imoha, Dong. (Yours is motion, Dong.) ("Dong" is equivalent to

the Filipino term "Totoy"; if used by one to address someone older than
him, it is an insult.)

ATTY. ALCONERA:

Naunsa man ka, Dong. (What happened to you, Dong?)

SHERIFF PALLANAN:

Motion na imoha. . . Dapat diri ka mag file, dili ka didto mag-file. Ayaw ko
awaya. (Yours is motion. You should file it here, you do not file it there.
Don't quarrel with me.)

ATTY. ALCONERA:

Lahi imong tono sa akoa sa telepono Dong ba. (You were rude in the telephone,
Dong.)

SHERIFF PALLANAN:

Oo, kay lain man pud ka mag sulti. Ang imong venue kay diri, dili sa area. (Yes,
because you also talked bad, your venue is here in court, not in the area.)

ATTY. ALCONERA:

Ingon nako sa imo nakadawat ka ba . . . nakadawat ba ug. . . (I was just asking

you whether you received. . .)

SHERIFF PALLANAN:

Dili nako na concern. (That is not my concern.)

ATTY. ALCONERA:

O, ngano nag ingon man ka nga "Ayaw ko diktahe, Attorney?" (Why did you
say, "Don't dictate on me, Attorney?")

SHERIFF PALLANAN:

Yes, do not dictate me. Kay abogado ka, sheriff ko. Lahi tag venue. Trabaho
akoa, magtrabaho pud ka. (Yes, do not dictate me. Because you are a
lawyer, and I am a sheriff. I do my job, you do yours.)

ATTY. ALCONERA:

Bastos kaayo ka manulti ba. (You are very rude!) aSTECA

SHERIFF PALLANAN:

Ikaw ang bastos! (You are the one who is rude!)

ATTY. ALCONERA:

Magkita ta sa Supreme Court. (I will see you in the Supreme Court.)

SHERIFF PALLANAN:

Magkita ta, eh! Ikaw lang akong hadlukan nga wala man ka sa area. (As you
wish, I am not afraid of you, you were not in the area.)

ATTY. ALCONERA:

Unsa nang inyong style diri, Kempeta? (What is your style here, Kempetai?)

SHERIFF PALLANAN:

Dili man! Na may order. Why can't your accept? (No! There is an order. Why
can't you accept?)

ATTY. ALCONERA:

Naay proseso, Dong. Mao ning proseso: ang MR, proseso ang MR. (There is a
process, Dong. This is the process: MR.)

SHERIFF PALLANAN:

Oo, proseso pud na ang akong pagimplement. Naa'y writ. (Yes, my

implementing the writ is also a process. There is a writ.)
ATTY. ALCONERA:

Nabuang, ka Dong? (What is going on with you, Dong?)

SHERIFF PALLANAN:

Ka dugay na nimo nga abogado, wala ka kabalo! (You have been a lawyer for a
long time now, yet you do not know!)

ATTY. ALCONERA:

Dugay na bitaw. Ikaw bago ka long na sheriff. (Yes, I have been a lawyer for a
long time now, you, you are new in your job as sheriff).

SHERIFF PALLANAN:

Pero kabalo ko. (But I know.)

ATTY. ALCONERA:

Susmaryosep!

SHERIFF PALLANAN:

O, di ba? Wala sa padugayay. Naa sa kahibalo. (Isn't that true? It is not the
length of time one has spent on his job. It is the knowledge that one
possesses.)

ATTY. ALCONERA:

Tanawa imong pagka sheriff, Dong. (Know your job as a sheriff, Dong.)

SHERIFF PALLANAN:

Tanawa pud imong pagka abogado kung sakto. Pilde! Sige mo pangulekta didto
ibayad sa imo! (Know your job also as a lawyer, see if you are correct.
Loser! You [and the Rafols] are always collecting [from the other
defendants] so your fees can be paid!)

ATTY. ALCONERA:

Ngano wala man lagi nimo kuhaa ang mga butang didto, Dong? (Why did you
not bring with you the things that you had gathered, Dong.)

SHERIFF PALLANAN:
 Oo, kay hulaton ta ka pag demotion. (Yes, because I will wait for you on
demotion day.)

ATTY. ALCONERA:

Nahadlok ka, Dong. (You were afraid, Dong.) DCcIaE

SHERIFF PALLANAN:

Wala ko nahadlok, Doy. Sa demotion adto didto, Attorney. Sulayi ko! Sulayan
nato imong pagkaabogado! (I'm not afraid of you, Doy. On demotion
day, you go there, Attorney. You try me! Let us see how good a lawyer
you are.) ("Doy" is the same as "Dong.")

ATTY. ALCONERA:

March 22 pa ang hearing sa imong abogado, Dong. (The hearing of the motion
of your lawyer, is on March 22 yet, Dong.)

SHERIFF PALLANAN:

Asus, Pinobre na imong style, Attorney. Bulok! (Your style is that of an

impoverished lawyer, Attorney. Dullard!)

It is against the foregoing backdrop of events that Alconera filed a Complaint-Affidavit 3

against the respondent sheriff for grave misconduct before this Court on April 6, 2011.
The case was referred to the Office of the Court Administrator (OCA) and was docketed
as A.M. No. 11-3634-P. As directed by the OCA, respondent filed his comment. 4 In it,
he averred that the duty of a court sheriff in enforcing a writ of execution is ministerial,
and without a TRO enjoining it, a sheriff is duty bound to implement it.

On July 14, 2011, respondent filed his own Affidavit of Complaint 5 against herein
complainant for Grave Misconduct and for violating the Code of Ethics. Respondent
alleged that during the enforcement of the writ, a second phone conversation took place.
Complainant allegedly called up Evelyn Rafols who put him on loudspeaker for the
respondent to hear his words. Alconera then allegedly made a threat that there will be
bloodshed if respondent's party pushes through with the implementation of the writ.
Respondent likewise claimed that complainant berated him at his office on March 18,
2011 and that the incident was orchestrated by the complainant. His (respondent sheriff's)
complaint affidavit avers:

6.GRAVE MISCONDUCT OF ATTY. VIRGILIO ALCONERA — The

planned attack happened in our office on March 18, 2011 in the afternoon, after
lunch, in the presence of his lady companion (believed to [be] his daughter),
who is so delighted in taking videos. He is so angry and at rage as if he is the
 boss in our office, yelling and nagging at me with NO RESPECT as a nomad.
THE ONLY PERSON AROUND WAS ME, THE GIRL HE BROUGHT
THERE (who is taking videos), AND THE NAGGING ATTY. VIRGILIO
ALCONERA (JUST THREE OF US), while pointing his finger into his
MOTION for Reconsideration that he is holding [sic] almost an inch to my
face. Saying "KITA NIMO NI, KITA NIMO NI?" NA INSULTO KO NIMO
NGANO WALA KA NI PATOO NAKO PAYLAN TAKA UG KASO
HULATA SA SUPREME COURT! (DO YOU SEE THIS? DO YOU SEE
THIS? YOU INSULTED ME WHY DID YOU NOT FOLLOW MY ORDER I
WILL FILE CHARGES AGAINST YOU WAIT FOR IT IN THE SUPREME
COURT!) HE wants me to shiver in scare and expect me to beg. No, GO I said.
I ALWAYS REPEATED THE WORDS "WHERE IS YOUR T.R.O. Just
present it." Because he is too loud, Mrs. Nenita Paredes, our stenographer,
ARRIVED and middle on us our arguments. On the mid part of the arguments,
he recorded the events; he and his companion, cohort in designing the plan of
the attack, orchestrated it. IT'S AN ASSAULT TO THE OFFICER OF THE
LAW. He told me — SHERIFF KA LANG WALA KAY NABAL AN.
NGANON NADAWAT MAN KA DIRI BOGO KA. (YOU ARE JUST A
SHERIFF. WHAT DO YOU KNOW? WHY ARE YOU ADMITTED HERE
YOU DUMB, WHO TAUGHT YOU THAT?) Ana mo diri IPINATAY!
KINSA NAG TUDLO SA IMOHA ANA. While he almost struck his motion
papers into my face, I was caught unaware.

In view of respondent's counter-charge, Alconera supplemented his affidavit-complaint 6

to include a charge against the former for False Testimony. Complainant belied the
claims of respondent sheriff, and showed that the respondent's allegations can nowhere be
seen in the transcript of the altercation.
aEcTDI

On March 2, 2012, this Court, upon the OCA's recommendation, resolved to re-docket
Alconera's complaint as a regular administrative case with docket No. A.M. No. P-12-
3069 and referred the same to the Executive Judge of the Regional Trial Court, General
Santos City, South Cotabato, for investigation, report, and recommendation.

After due proceedings, the investigating judge submitted a report, styled as Order 7 dated
August 6, 2013, with the following recommendation:

Based on the findings and evaluation, the herein Executive Judge hereby
recommends the respondent Sheriff be ADMONISHED. The respondent must
be reminded that as a Court Employee, he must exercise utmost patience and
humility in the performance of his duties amidst all the pressures and personal
attacks against his person because he carried with him the image of the entire
judiciary.

SO ORDERED.
The Executive Judge adopted the transcript of the altercation as appearing in the affidavit
of Shyla Mae Zapanta and based his recommendation mainly thereon.

The Issues

The main issue in this case is whether or not respondent can be held administratively
liable for grave misconduct and false testimony. In fine, the controversy stems from the
propriety of the implementation of the writ of execution, and the altercation between
complainant and respondent. While the investigating judge made a recommendation
based on how respondent conducted himself as an officer of the court in the afternoon of
March 18, 2013, there was no discussion regarding the propriety of the implementation of
the writ, which is the main issue in the case for grave misconduct. It then behooves this
Court to sift through the arguments and records to rule on this point.ETDaIC

The Court's Ruling

Grave Misconduct

Misconduct has been defined as "a transgression of some established and definite rule of
action, more particularly, unlawful behavior or gross negligence by a public officer." The
misconduct is grave if it involves any of the additional elements of corruption, willful
intent to violate the law, or to disregard established rules, all of which must be
established by substantial evidence, and must necessarily be manifest in a charge of grave
misconduct. 8 In this case, complainant imputes grave misconduct on the respondent for
the following acts:

1.For enforcing the writ despite the fact that complainant has yet to
receive the copy of the order denying his motion for
reconsideration on the issuance of the writ of execution;

2.For allegedly leaking to the opposing counsel the issuance of the order
denying the motion for reconsideration;

3.For allegedly demanding P720,000 from Rafols for a P165,000.00

obligation; and

4.For allegedly being arrogant and disrespectful.

Complainant admits that there is no TRO enjoining the enforcement of the writ, nor
allegation in his pleadings that a motion to quash the writ of execution was ever filed.
However, complainant asserts that respondent committed grave misconduct when the
latter implemented the writ prior to serving the complainant a copy of the order denying
the motion for reconsideration. According to complainant, said motion stayed the
execution, and the writ could not have been validly executed without first informing the
parties concerned of the motion's denial.

We rule against complainant on this point.

It must be borne in mind that the case at bar traces its roots to an unlawful detainer case
wherein the MTCC ruled against Rafols, complainant's client. In ejectment cases, the
rulings of the courts are immediately executory and can only be stayed via compliance
with Section 19, Rule 70 of the Rules of Court,to wit:

Section 19.Immediate execution of judgment; how to stay same. — If judgment

is rendered against the defendant, execution shall issue immediately upon
motion, unless an appeal has been perfected and the defendant to stay execution
files a sufficient supersedeas bond, approved by the Municipal Trial Court and
executed in favor of the plaintiff to pay the rents, damages, and costs accruing
down to the time of the judgment appealed from, and unless, during the
pendency of the appeal, he deposits with the appellate court the amount of rent
due from time to time under the contract, if any, as determined by the judgment
of the Municipal Trial Court. In the absence of a contract, he shall deposit with
the Regional Trial Court the reasonable value of the use and occupation of the
premises for the preceding month or period at the rate determined by the
judgment of the lower court on or before the tenth day of each succeeding
month or period. The supersedeas bond shall be transmitted by the Municipal
Trial Court, with the other papers, to the clerk of the Regional Trial Court to
which the action is appealed.

Clearly then under said Sec. 19, Rule 70, a judgment on a forcible entry and detainer
action is made immediately executory to avoid further injustice to a lawful possessor. The
defendant in such a case may have such judgment stayed only by (a) perfecting an
appeal; (b) filing a supersedeas bond; and (c) making a periodic deposit of the rental or
reasonable compensation for the use and occupancy of the property during the pendency
of the appeal. 9 The failure of the defendant to comply with any of these conditions is a
ground for the outright execution of the judgment, the duty of the court in this respect
being ministerial and imperative. Hence, if the defendant-appellant has perfected the
appeal but failed to file a supersedeas bond, the immediate execution of the judgment
would automatically follow. Conversely, the filing of a supersedeas bond will not stay the
execution of the judgment if the appeal is not perfected. Necessarily then, the supersedeas
bond should be filed within the period for the perfection of the appeal. 10

In the case at bar, complainant lost his client's case and appealed to the RTC. His client
has also been periodically depositing rental with the court for the use of the property
pending appeal. However, as ruled by the RTC, the bond filed did not meet the legal
requirements because first and foremost, the bond posted was a property bond, not cash
nor surety. Furthermore, Rafols did not own the property he posted as bond and besides,
it was also not issued in favour of the plaintiff in the ejectment case. Because of the non-
compliance with the requirements under the above-quoted rule, the execution of the
judgment was not effectively stayed. The only exceptions to non-compliance are the
existence of fraud, accident, mistake or excusable negligence which prevented the
defendant from posting the supersedeas bond or making the monthly deposit, or the
occurrence of supervening events which brought about a material change in the situation
of the parties and which would make the execution inequitable. 11 But whether or not
these obtain in the case at bar is an issue best left to the court that issued the writ of
execution.

Given the above circumstances, there was no legal impediment preventing respondent
sheriff from performing his responsibility of enforcing the writ of execution. Since Rafols
failed to comply with the requirements under the Rules, Cua Beng who prevailed in the
unlawful detainer case is entitled as a matter of right to the immediate execution of the
court's judgment both as to the restoration of possession and the payment of the accrued
rentals or compensation for the use and occupation of the premises. 12

Well-settled is that the sheriff's duty in the execution of a writ is purely ministerial; he is
to execute the order of the court strictly to the letter. He has no discretion whether to
execute the judgment or not. When the writ is placed in his hands, it is his duty, in the
absence of any instructions to the contrary, to proceed with reasonable celerity and
promptness to implement it in accordance with its mandate. It is only by doing so could
he ensure that the order is executed without undue delay. 13 This holds especially true
herein where the nature of the case requires immediate execution. Absent a TRO, an
order of quashal, or compliance with Sec. 19, Rule 70 of the Rules of Court,respondent
sheriff has no alternative but to enforce the writ.

Immediacy of the execution, however, does not mean instant execution. The sheriff must
comply with the Rules of Court in executing a writ. Any act deviating from the procedure
laid down in the Rules of Court is a misconduct and warrants disciplinary action. In this
case, Sec. 10 (c), Rule 39 of the Rules prescribes the procedure in the implementation of
the writ. It provides:

Section 10.Execution of judgments for specific act. —

xxx xxx xxx

(c)Delivery or restitution of real property. — The officer shall demand of the

person against whom the judgment for the delivery or restitution of real
property is rendered and all persons claiming rights under him to peaceably
vacate the property within three (3) working days, and restore possession
thereof to the judgment obligee, otherwise, the officer shall oust all such
persons therefrom with the assistance, if necessary, of appropriate peace
officers, and employing such means as may be reasonably necessary to retake
 possession, and place the judgment obligee in possession of such property. Any
costs, damages, rents or profits awarded by the judgment shall be satisfied in the
same manner as a judgment for money. aCHcIE

Based on this provision, enforcement in ejectment cases requires the sheriff to give notice
of such writ and to demand from defendant to vacate the property within three days. Only
after such period can the sheriff enforce the writ by the bodily removal of the defendant
in the ejectment case and his personal belongings. 14 Even in cases wherein decisions are
immediately executory, the required three-day notice cannot be dispensed with. A sheriff
who enforces the writ without the required notice or before the expiry of the three-day
period is running afoul with the Rules. 15

In the present controversy, the Order denying the motion for reconsideration was
allegedly served, according to the respondent, on the same day the writ was executed on
March 17, 2011. Complainant, however, avers that his office was only able to receive the
denial the day after the execution or on March 18, 2011. At first blush, one might hastily
conclude that the three-day notice rule was apparently not observed. This Court,
however, is not prepared to make such a finding. We are mindful of the possibility that a
demand to vacate has already been given when complainant and Rafols were first served
the Order granting the issuance of a writ of execution, before the motion for
reconsideration was filed. More importantly, complainant failed to allege con-compliance
with Sec. 10 (c) of Rule 39.

Thus far, no deviation from the Rules has been properly ascribed to respondent. As an
officer of the court, he is accorded the presumption of regularity in the performance of his
duties. The burden was on complainant to adduce evidence that would prove the
respondent's culpability, if any. Without evidence of any departure from well established
rules, any unlawful behaviour, or any gross negligence on his part, the presumption
remains applicable and respondent cannot be held administratively liable for the offense
of grave misconduct.

Discourtesy in the Performance of Official Duties

The foregoing notwithstanding, the Court adopts in part the recommendation of the
investigating judge that respondent should nonetheless be penalized for discourtesy in the
performance of his official duties.

As a public officer and a trustee for the public, it is the ever existing responsibility of
respondent to demonstrate courtesy and civility in his official actuations with the public.
16 In Court Personnel of the Office of the Clerk of Court of the Regional Trial Court —
San Carlos City v. Llamas, 17 this Court has held that:

Public service requires integrity and discipline. For this reason, public servants
must exhibit at all times the highest sense of honesty and dedication to duty. By
 the very nature of their duties and responsibilities, they must faithfully adhere
to, hold sacred and render inviolate the constitutional principle that a public
office is a public trust; that all public officers and employees must at all times
be accountable to the people, serve them with utmost responsibility, integrity,
loyalty and efficiency. IDSaEA

xxx xxx xxx

At all times, employees of the judiciary are expected to accord respect to the
person and the rights of another, even a co-employee. Their every act and word
should be characterized by prudence, restraint, courtesy and dignity.
Government service is people-oriented; high-strung and belligerent behavior has
no place therein.

Rude and hostile behavior often translates a personal conflict into a potent
pollutant of an otherwise peaceful work environment; ultimately, it affects the
quality of service that the office renders to the public. Letting personal hatred
affect public performance is a violation of the principle enshrined in the Code of
Conduct and Ethical Standards for Public Officials and Employees, a principle
that demands that public interest be upheld over personal ones.

Improper behavior especially during office hours exhibits not only a paucity of
professionalism at the workplace, but also great disrespect for the court itself.
Such demeanor is a failure of circumspection demanded of every public official
and employee. Thus, the Court looks "with great disfavor upon any display of
animosity by any court employee" and exhorts every court personnel to act with
strict propriety and proper decorum to earn public trust for the judiciary.
Colleagues in the judiciary, including those occupying the lowliest position, are
entitled to basic courtesy and respect.

In discharging its constitutional duty of supervising lower courts and their

personnel, this Court cannot ignore the fact that the judiciary is composed
essentially of human beings who have differing personalities, outlooks and
attitudes; and who are naturally vulnerable to human weaknesses. Nevertheless,
the Code of Judicial Ethics mandates that court personnel must not only be, but
also be perceived to be, free from any impropriety — with respect not only to
their duties in the judicial branch, but also to their behavior anywhere else.

Based on the transcript of the altercation, it is readily apparent that respondent has indeed
been remiss in this duty of observing courtesy in serving the public. He should have
exercised restraint in dealing with the complainant instead of allowing the quarrel to
escalate into a hostile encounter. The balm of a clean conscience should have been
sufficient to relieve any hurt or harm respondent felt from complainant's criticisms in the
performance of his duties. On the contrary, respondent's demeanour tarnished the image
not only of his office but that of the judiciary as a whole, exposing him to disciplinary
measure.
 Making Untruthful Statements

Lastly, the charge of making untruthful statements must also fail. While the statements
mentioned in respondent's complaint-affidavit were not reflected in the transcript
submitted by the complainant, this actuality is not conclusive evidence that such event
did not take place. As claimed by respondent, complainant's clerk was only able to record
a part of the argument. We cannot then discount the probability that there is more to the
argument than what was caught on video and there remains the possibility that what
respondent narrated and what complainant recorded both actually transpired.

WHEREFORE, respondent Alfredo T. Pallanan is ADMONISHED and WARNED to

be always courteous in dealing with the public in the performance of official duties. A
repetition of the same or similar acts will be dealt with more severely.

SO ORDERED.

Peralta, Abad, Mendoza and Leonen, JJ., concur.

||| (Alconera v. Pallanan, A.M. No. P-12-3069, [January 20, 2014])

 THIRD DIVISION

[G.R. No. 197307. February 26, 2014.]

FLOR GUPILAN-AGUILAR and HONORE R. HERNANDEZ,

petitioners, vs. OFFICE OF THE OMBUDSMAN, represented by
HON. SIMEON V. MARCELO; and PNP-CIDG, represented by
DIR. EDUARDO MATILLANO, respondents.

DECISION

VELASCO, JR., J : p

The Case

This Petition for Review on Certiorari under Rule 45 seeks to reverse and set aside the
July 22, 2009 1 Decision of the Court of Appeals and its June 13, 2011 Resolution in CA-
G.R. SP No. 88954, affirming the decision of the Ombudsman in OMB-C-A-03-0327-I
that found petitioners guilty of grave misconduct and dishonesty and dismissed them
from the service.

The Facts

In June 2003, the Philippine National Police Criminal Investigation and Detection Group
(PNP-CIDG) conducted an investigation on the lavish lifestyle and alleged nefarious
activities of certain personnel of the Bureau of Customs, among them petitioners Flor
Gupilan-Aguilar (Aguilar), then Chief of the Miscellaneous Division, and Honore
Hernandez (Hernandez), Customs Officer III. Aguilar was then receiving a basic annual
salary of PhP249,876. Her year-to-year assets, liabilities and net worth for CYs 1999 to
2002, taken from her Statement of Assets, Liabilities and Net Worth (SALNs) for the
corresponding years, are shown below:

Real 1999 3 2000 4 2001 5 2002 6

Properties 2

House and P880,000.00 P980,000.00 P1,030,000.00 P1,030,000.00

Lot in
Quezon City
Apartment in P500,000.00 P550,000.00 P550,000.00 P550,000.00
Caloocan
City
Personal
Properties 7
Car P450,000.00 P450,000.00 P450,000.00 P900,000.00
Jewelry P500,000.00 P600,000.00 P650,000.00 P750,000.00
Appliances P100,000.00 P120,000.00 P125,000.00 P135,000.00
Furniture and P100,000.00 P120,000.00 P125,000.00 P150,000.00
Fixture
———————— ———————— ———————— ————————
———— ——— ——— ————
Total Assets P2,530,000.00 P2,820,000.00 P2,930,000.00 P3,515,000.00
Liabilities
GSIS - P450,000.00 P400,000.00 P300,000.00
Car Loan - - - P500,000.00
———————— ———————— ———————— ————————
———— ——— ——— ————
Total - P450,000.00 P400,000.00 P800,000.00
Liabilities
———————— ———————— ———————— ————————
———— ——— ——— ————
Net Worth P2,530,000.00 P2,370,000.00 P2,530,000.00 P2,715,000.00
=========== =========== =========== ===========
Her SALNs for the years aforementioned do not reflect any income source other than
her employment. The spaces for her spouse's name and business interest were left in
blank.

Following weeks of surveillance and lifestyle probe, the PNP-CIDG investigating team,
headed by Atty. Virgilio Pablico, executed on July 28, 2003 a Joint-Affidavit, depicting
Aguilar, who, in her Personal Data Sheet, indicated "Blk 21 Lot 8 Percentage St. BIR
Vill, Fairview, QC" as her home address, as owning properties not declared or properly
identified in her SALNs, specifically the following:

Real Properties

1. Lot 6, Blk 21, BIR Village, Fairview, Quezon City worth

approximately Php1,000,000.00;

2. A 4-bedroom Unit 1007-A Antel Seaview Towers, 2626 Roxas Blvd.,

Pasay City worth Php12,000,000.00, with rights to 4 parking slots;
and

3. Residential lot in Naga City worth Php148,200.00

Personal Properties
 Make/Model Plate No. Registered Owner

Honda CRV BIM-888 Flor G. Aguilar

Isuzu Trooper HRH-659 Honore R. Hernandez
BMW (red) XCR-500 Asia Int'l Auctioneer, Inc.
BMW (silver) XFD-441 Southwing Heavy Industries, Inc. 8

It was also unearthed that, during a four-year stretch, from July 1999 to June 2003,
Aguilar, per the Bureau of Immigration (BI) records, took 13 unofficial trips abroad,
eight to Los Angeles, California, accompanied most of the time by daughter Josephine.
During the same period, her two other daughters also collectively made nine travels
abroad. Per the PNP-CIDG's estimate, Aguilar would have spent around PhP3,400,000
for her and her daughters' foreign travels.
HaIESC

In view of what it deemed to be a wide variance between Aguilar's acquired assets and
what she spent for her four-year overseas travels, on one hand, and her income, on the
other, the PNP-CIDG, through P/Director Eduardo Matillano — in a letter-complaint of
July 28, 2003, with enclosures, on a finding that she has violated Republic Act No. (RA)
1379 9 in relation to RA 3019 10 and 6713 11 — charged her with grave misconduct and
dishonesty. Hernandez was charged too with the same offenses. Upon evaluation of the
complaint and of the evidence presented, which included the aforementioned joint-
affidavit, the Ombudsman created an investigating panel which then conducted
administrative proceedings on the complaint, docketed as OMB-C-A-03-0327-I.

By Order of September 3, 2003, then Overall Deputy Ombudsman Margarito Gervacio,

Jr. placed Aguilar under preventive suspension for six (6) months without pay. Another
Order, 12 however, was issued, effectively lifting the order of preventive suspension on
the stated ground that Aguilar's untraversed controverting evidence "considerably
demonstrated the weakness of the evidence in support of the complaint."

In the meantime, Aguilar filed her Counter Affidavit, 13 primarily addressing the
allegations in the aforementioned joint-affidavit. In it, she belied allegations about not
declaring Lot 6, Blk 21, BIR Village, Fairview. As explained, what she considers her
dwelling in that area consists of a duplex-type structure that sits on the Lot 8 she
originally owned and the contiguous Lot 6, which she subsequently acquired from one
Norma Jurado.

Anent Unit 1007-A of Antel Seaview Towers, Aguilar pointed to her US-based brother
Carlo as owner of this condo unit, the latter having purchased it from Mina Gabor on July
14, 2003. Carlo, as she averred, has allowed her to stay in the unit. Appended to Aguilar's
counter-affidavit is a Deed of Sale 14 purportedly executed in Los Angeles in favor of
Carlo.
Aguilar also denied owning the so-called third real property, the Panicuason, Naga City
lot, since she had already sold it in 1992.

As to allegations that she owns but failed to declare the four above-listed vehicles,
Aguilar admitted to owning only the subject Honda CRV van, but denied the charge of
failing to declare it in her SALN. She ascribed ownership of the Isuzu Trooper to
Hernandez. As for the red and silver BMW cars registered in the name of the entities
mentioned in the complaint, Aguilar alleged that they were merely lent to her by her
brother's friend.

Not being the owner of the properties aforementioned, Aguilar wondered how she can be
expected to include them in her SALN.

Finally, she claimed having seven brothers and two sisters in the US who had sponsored
her US trips and who at times even sent airline tickets for her and her daughters' use.

Hernandez, for his defense, alleged that the complaint adverted only to his being the
registered owner of an Isuzu Trooper. There is no specification, he added, as to his
acquisition of, and not declaring, unexplained wealth. 15

Ruling of the Ombudsman

Based on the evidence on record and the parties' position papers, the investigating panel
issued for approval a draft Decision 16 dated June 3, 2004, which found Aguilar guilty of
the offenses charged. And while Hernandez was also charged and investigated, the fallo
and even the body of the proposed decision was silent as to him, save for the following
line:

. . . the fact that the motor vehicle, Isuzu Trooper with Plate No. HRH 659 is
registered in his [Hernandez's] name, does not make him administratively liable.
17

Evidently not totally satisfied with the panel's recommended action, the Ombudsman
directed that a joint clarificatory hearing be conducted, and one was held on September
23, 2004. The proceedings resulted in the issuance of what the investigating panel styled
as Supplemental Decision 18 dated January 6, 2005 further detailing the bases for the
earlier finding on Aguilar's liability. Like the earlier draft, no reference was made in the
fallo of the Supplemental Decision to Hernandez's guilt or innocence.

Following a review of the two issuances thus submitted, then Ombudsman

Simeon Marcelo issued on January 18, 2005 a decision denominated Supplement, 19
approving, with modification, the adverted Decision and Supplemental Decision. The
modification relates to the liability of Hernandez whom the Ombudsman found to be
 Aguilar's dummy and equally guilty of grave misconduct and dishonesty deserving
too of the penalty of dismissal from the service. Dispositively, the Supplement reads:

WHEREFORE, the Decision dated 03 June 2004 and Supplemental Decision

dated 06 January 2005 are approved insofar as it finds respondent Flor Aguilar
guilty of the administrative offenses of Grave Misconduct and Dishonesty and is
hereby meted the penalty of DISMISSAL from the service, with the accessory
penalty of cancellation of eligibility, forfeiture of retirement benefits and
perpetual disqualification for re-employment in the government service.

Further, the undersigned hereby disapproves the ruling contained in the

Decision dated 03 June 2004 with regard to Honore Hernandez, the latter being
likewise found guilty of the administrative offenses of Grave Misconduct and
Dishonesty and is hereby meted the penalty of Dismissal from the service, with
the accessory penalty of cancellation of eligibility, forfeiture of retirement
benefits and perpetual disqualification for re-employment in the government
service.

SO ORDERED.

Aguilar and Hernandez moved for but were denied reconsideration 20 via an Order 21 of
February 28, 2005. The two then went to the Court of Appeals (CA) on a petition for
review under Rule 43, docketed as CA-G.R. SP No. 88954. Even as they decried what
they tag as a case disposition in installments, petitioners asserted the absence of
substantial evidence to support the allegations in the complaint, and that the judgment of
dismissal is recommendatory and not immediately executory. SDTcAH

Ruling of the Court of Appeals

The CA, in its assailed Decision of July 22, 2009, affirmed that of the Ombudsman,
disposing as follows:

WHEREFORE, the instant petition is DENIED and the assailed Decision of the
Ombudsman finding petitioners guilty of Grave Misconduct and Dishonesty,
and meted them the penalty of DISMISSAL from the government service, with
the accessory penalty of cancellation of elibility, forfeiture of retirement
benefits and perpetual disqualification for reemployment in the government
service in OMB-C-A-03-0327-I is AFFIRMED.

SO ORDERED. 22

Even as it junked petitioners' contention on the sufficiency of the complainant's

inculpating evidence and on the nature of the Ombudsman's judgment, the CA declared
that petitioners' remedy under the premises is an appeal to this Court by force of Section
14 in relation to Sec. 27 of RA 6770 or the Ombudsman Act of 1989. Sec. 14 provides
that "[n]o court shall hear any appeal or application for remedy against the
decisions or findings of the Ombudsman, except the Supreme Court on pure
questions of law," while Sec. 27 states that "[f]indings of fact by the [OMB] when
supported by substantial evidence are conclusive."

On June 13, 2011, the CA denied petitioners' motion for reconsideration.

Hence, the present petition raising the following issues:

1. Whether or not a Rule 43 petition to assail the findings or decisions of

the Ombudsman in an administrative case is proper;

2. Whether or not the acts complained of constitute grave misconduct,

dishonesty or both;

3. Whether or not there is substantial evidence to support the assailed

findings of the Ombudsman and the CA; and

4. Whether or not the decision of the Ombudsman is but

recommendatory or immediately executory.

Petitioners also invite attention to the June 4, 2012 decision of the Regional Trial Court
(RTC) of Manila in Criminal Case No. 08-263022, acquitting Aguilar for falsification
allegedly involving the same disputed transactions in OMB-C-A-03-0327-I.

The Court's Ruling

The petition, on its procedural and substantial aspects, is partly meritorious. The Court
shall first address procedural issues and concerns raised in this recourse.

Petitioners properly appealed to the CA

Petitioners first contend that the CA erred in its holding that, in line with Sec. 14 23 and
Sec. 27 of RA 6770, they should have appealed the Ombudsman's Decision to this Court
on questions of law instead of filing a Rule 43 petition before the CA.

Petitioners stand on solid ground on this issue.

The Ombudsman has defined prosecutorial powers and possesses adjudicative

competence over administrative disciplinary cases filed against public officers. What
presently concerns the Court relates to the grievance mechanism available to challenge
the OMB's decisions in the exercise of that disciplinary jurisdiction.
The nature of the case before the Office of the Ombudsman (OMB) determines the proper
remedy available to the aggrieved party and with which court it should be filed. In
administrative disciplinary cases, an appeal from the OMB's decision should be taken to
the CA under Rule 43, unless the decision is not appealable owing to the penalty
imposed.

In the case at bar, the Ombudsman, in the exercise of his administrative disciplinary
jurisdiction had, after due investigation, adjudged petitioners guilty of grave misconduct
and dishonesty and meted the corresponding penalty. Recourse to the CA via a Rule 43
petition is the proper mode of appeal. Rule 43 governs appeals to the CA from decisions
or final orders of quasi-judicial agencies. 24

Reliance by the CA on Sec. 14 in relation to Sec. 27 of RA 6770 to support its position as

to which court a party may repair to to assail the OMB's decision in disciplinary cases is
misinformed. As has been held, those portions of said Sec. 27 and any other provisions
implementing RA 6770, insofar as they expanded the appellate jurisdiction of this Court
without its concurrence, violate Article VI, Sec. 30 of the 1987 Constitution. 25 We said
so in the landmark Fabian v. Desierto: 26 ADcEST

WHEREFORE, Section 27 of [RA] 6770 (Ombudsman Act of 1989), together

with Section 7, Rule III of [A.O.]. 07 (Rules of Procedure of the [OMB]), and
any other provision of law or issuance implementing the aforesaid Act and
insofar as they provide for appeals in administrative disciplinary cases
from the Office of the Ombudsman to the Supreme Court, are hereby
declared INVALID and of no further force and effect. (Emphasis added.)

As a consequence and in line with the regulatory philosophy adopted in appeals from
quasi-judicial agencies in the 1997 Revised Rules of Civil Procedure, appeals from
decisions of the Ombudsman in administrative disciplinary cases should be taken to the
CA under the provisions of Rule 43. 27 Barata v. Abalos, Jr., 28 Coronel v. Desierto, 29
and recently Dimagiba v. Espartero 30 have reiterated the pertinent holding in Fabian.

The Decision of the Ombudsman is

mandatory and immediately executory

This brings us to the issue on the nature of the Ombudsman's decisions in administrative
disciplinary suits, it being petitioners' posture that such decisions, as here, are only
recommendatory and, at any event, not immediately executory for the reason that the
PNP-CIDG filed the basic complaint on August 20, 2003 31 when the ruling in Tapiador
v. Office of the Ombudsman 32 had still controlling sway. To petitioners, Tapiador
enunciated the dictum that the Ombudsman's disciplinary power is only to recommend,
the power to suspend and dismiss erring personnel being vested in the head of the office
concerned. As a corollary point, petitioners also advance the argument that the legal
situation changed only when Office of the Ombudsman v. Court of Appeals 33 and
Ombudsman v. Samaniego 34 were decided in June 2006 and September 2008,
respectively.

We are not impressed.

Petitioners' wilting or unwitting invocation of Tapiador is specious. Administrative

disciplinary authority of the OMB does not end with a recommendation to punish. The
statement in Tapiador that the Ombudsman is without authority to directly dismiss an
erring public official as its mandate is only to recommend was mere obiter dictum, and
cannot, in the words of Ledesma v. Court of Appeals, 35 "be cited as a doctrinal
declaration of the Supreme Court." In fact, the pronouncement in Tapiador on the
Ombudsman's disciplinary authority was only limited to two sentences, to wit:

. . . Besides, assuming arguendo, that petitioner were administratively liable, the

Ombudsman has no authority to directly dismiss the petitioner from the
government service . . . . Under Section 13, subparagraph (3), of Article XI of
the 1987 Constitution, the Ombudsman can only "recommend" the removal of
the public official or employee found to be at fault, to the public official
concerned. 36

The terse obiter in Tapiador should be compared with the holding in Ombudsman v. De
Leon 37 which even chronicled the pertinent internal rules of procedure in the Office of
the Ombudsman (OMB) and illustrated that, as early as 2000, rules were already enforced
by the OMB that provide for the immediate execution of judgments pending appeal. As
pointed out in De Leon, Sec. 27 of the Ombudsman Act of 1989 prescribes the rules on
the effectivity and finality of the OMB's decisions:

SEC. 27. Effectivity and Finality of Decisions. — (1) All provisionary orders at
the Office of the Ombudsman are immediately effective and executory.

xxx xxx xxx

In all administrative disciplinary cases, orders, directives, or decisions of

the Office of the Ombudsman may be appealed to the Supreme Court by
filing a petition for certiorari within ten (10) days from receipt of the
written notice of the order, directive or decision or denial of the motion for
reconsideration in accordance with Rule 45 of the Rules of Court.

The above rules may be amended or modified by the Office of the

Ombudsman . . . . (Emphasis supplied.)

The then Sec. 7, Rule III of Administrative Order No. 07 (AO 07) or the Rules of
Procedure of the OMB, in turn, stated:
 Sec. 7. Finality of decision. — Where the respondent is absolved of the charge,
and in case of conviction where the penalty imposed is public censure or
reprimand, suspension of not more than one month, or a fine equivalent to one
month salary, the decision shall be final and unappealable. In all other cases, the
decision shall become final after the expiration of ten (10) days from receipt
thereof by the respondent, unless a motion for reconsideration or petition for
certiorari, shall have been filed by him as prescribed in Section 27 of RA
6770. (Emphasis supplied.)

The Court, in Lapid v. Court of Appeals, 38 has interpreted the above-quoted provision to
mean that the sanctions imposed by the Ombudsman other than public censure,
reprimand, suspension of not more than one month or a fine equivalent to one month
salary are not immediately executory and can be stayed by an appeal timely filed. The
pertinent ruling in Lapid has, however, been superseded. 39 On August 17, 2000, AO 14-
A was issued amending Sec. 7, Rule III of the Rules of Procedure of the OMB. The rule,
as thus amended, pertinently reads:

Section 7. Finality and execution of decision. — Where . . . the penalty

imposed is public censure or reprimand, suspension of not more than one
month, or a fine equivalent to one month salary, the decision shall be final and
unappealable. In all other cases, the decision may be appealed . . . .

An appeal shall not stop the decision from being executory. In case the
penalty is suspension or removal and the respondent wins such appeal, he shall
be considered as having been under preventive suspension and shall be paid the
salary and such other emoluments that he did not receive by reason of the
suspension or removal. (Emphasis supplied.)

Then came AO 17 dated September 15, 2003 further amending Sec. 7 of Rule III. Thus,
the section now provides:

Section 7. Finality and execution of decision. — Where the respondent is

absolved of the charge, and in case of conviction where the penalty imposed is
public censure or reprimand, suspension of not more than one month, or a fine
equivalent to one month salary, the decision shall be final, executory, and
unappealable. In all other cases, the decision may be appealed to the Court of
Appeals . . . .

An appeal shall not stop the decision from being executory. In case the
penalty is suspension or removal and the respondent wins such appeal, he
shall be considered as having been under preventive suspension and shall
be paid the salary and such other emoluments that he did not receive by
reason of the suspension or removal. (Emphasis supplied.)
Clearly then, as early as August 17, 2000, when AO 14-A was issued, the OMB-imposed
penalties in administrative disciplinary cases were already immediately executory
notwithstanding an appeal timely filed. In this case, it must be noted that the complaint
dated July 28, 2003 was filed on August 20, 2003 or after the AO 14-A has come into
effect. Thus, no error can be attributed to the CA when it ruled that the penalties imposed
by the Ombudsman against petitioners are immediately executory. Immediate execution
argues against the outlandish notion that the Ombudsman can only recommend
disciplinary sanctions.

The acts complained of constitute

Dishonesty but not Grave Misconduct

a. Grave Misconduct

The charges against petitioners for grave misconduct and dishonesty basically stemmed
from their alleged act of amassing unexplained wealth or acquiring properties
disproportionate to their income, petitioner Aguilar's alleged failure to declare them in
her SALNs, and for petitioner Hernandez's alleged acquiescence to be her dummy. To
our the mind, however, we find that even if petitioners, for argument, failed to include
several properties in their SALNs, the omission, by itself, does not amount to grave
misconduct.

Largo v. Court of Appeals 40 is instructional as to the nature of the offense. To constitute

misconduct, the complained act/s or omission must have a direct relation and be linked to
the performance of official duties. The Court wrote in Amosco v. Magro:

x x x By uniform legal definition, it is a misconduct such as affects his

performance of his duties as an officer and not such only as affects his
character as a private individual. In such cases, it has been said at all times, it
is necessary to separate the character of the man from the character of the
officer . . . . It is settled that misconduct, misfeasance, or malfeasance
warranting removal from office of an officer must have direct relation to and be
connected with the performance of official duties amounting either to
maladministration or willful, intentional neglect and failure to discharge the
duties of the office . . . . 41

Owning properties disproportionate to one's salary and not declaring them in the
corresponding SALNs cannot, without more, be classified as grave misconduct. Even if
these allegations were true, we cannot see our way clear how the fact of non-declarations
would have a bearing on the performance of functions by petitioner Aguilar, as Customs
Chief of the Miscellaneous Division, and by petitioner Hernandez, as Customs
Operations Officer. It is non-sequitur to assume that the omission to declare has served,
in some way, to hinder the rendition of sound public service for there is no direct relation
or connection between the two. Without a nexus between the act complained of and the
discharge of duty, the charge of grave misconduct shall necessarily fail.

b. Dishonesty

Dishonesty, as juridically understood, implies the disposition to lie, cheat, deceive, or

defraud; untrustworthiness; lack of integrity; lack of honesty or probity in principle; lack
of fairness and straightforwardness; disposition to defraud, deceive or betray. 42 It is a
malevolent act that puts serious doubt upon one's ability to perform duties with the
integrity and uprightness demanded of a public officer or employee. 43

The inculpatory allegations in the controversy, if proved, qualify as acts of dishonesty

that would merit dismissal from service. The requirement of filing a SALN is enshrined,
as it were, in the Constitution 44 to promote transparency in the civil service and operates
as a deterrent against government officials bent on enriching themselves through
unlawful means. By mandate of law, it behooves every government official or employee
to make a complete disclosure of his or her assets, liabilities and net worth in order to
suppress any questionable accumulation of wealth because the latter usually results from
non-disclosure of such matters. 45

The significance of requiring the filing of a complete, truthful, and sworn SALN as a
measure to curb corruption in the bureaucracy cannot be gainsaid. Secs. 7 and 8 of the
Anti-Graft and Corrupt Practices Act (RA 3019) are emphatic on this point:

Sec. 7. Statement of Assets and Liabilities. — Every public officer, within

thirty days after assuming office, and thereafter, on or before the fifteenth day of
April following the close of every calendar year, . . . shall prepare and file . . . a
true, detailed and sworn statement of the amounts and sources of his income, the
amounts of his personal and family expenses and the amount of income taxes
paid for the next preceding calendar year . . . .

Sec. 8. Prima Facie Evidence of and Dismissal Due to Unexplained Wealth. —

If in accordance with the provisions of [RA 1379], a public official has been
found to have acquired during his incumbency, whether in his name or in the
name of other persons, an amount of property and/or money manifestly out of
proportion to his salary and to his other lawful income, that fact shall be ground
for dismissal or removal. Properties in the name of the spouse and dependents
of such public official may be taken into consideration, when their acquisition
through legitimate means cannot be satisfactorily shown. . . . [M]anifestly
excessive expenditures incurred by the public official, his spouse or any of their
dependents including . . . frequent travel abroad of a non-official character by
any public official when such activities entail expenses evidently out of
proportion to legitimate income, shall likewise be taken into consideration in the
enforcement of this Section . . . . The circumstances hereinabove mentioned
shall constitute valid ground for the administrative suspension of the public
 official concerned for an indefinite period until the investigation of the
unexplained wealth is completed.

The aforequoted Section 8 speaks of unlawful acquisition of wealth and excessive

expenditure, the evil sought to be suppressed and avoided, and Section 7, which directs
full disclosure of wealth in the SALN, is a means of preventing said evil and is aimed
particularly at minimizing if not altogether curtailing the opportunities for official
corruption and maintaining a standard of honesty in the public service. By the SALN, the
public is able to monitor movement in the fortune of a public official; it serves as a valid
check and balance mechanism to verify undisclosed properties and wealth. 46 HTDCAS

The failure to file a truthful SALN puts in doubts the integrity of the officer and would
normally amount to dishonesty. It should be emphasized, however, that mere
misdeclaration in the SALN does not automatically amount to such an offense.
Dishonesty requires malicious intent to conceal the truth or to make false statements;
otherwise, the government employee may only liable for negligence, not for dishonesty.
47 In addition, only when the accumulated wealth becomes manifestly disproportionate
to the income of the public officer/employee and income from other sources, and the
public officer/employee fails to properly account or explain these sources of income and
acquisitions, does he or she become susceptible to dishonesty. 48

Substantial evidence

The core of the controversy in this case lies in whether or not the complainant's pieces of
evidence extant in and deducible from the records meet the quantum of evidence required
to justify the dismissal action taken against petitioners. Petitioner Aguilar argues that the
initial evidentiary assessment by the OMB when it lifted the order of preventive
suspension was correct. To recall, the OMB declared at that time that the evidence PNP-
CIDG presented was not strong enough to support the basic complaint.

In essence, petitioners, Aguilar in particular, urge us to gauge whether or not the

complainant has hurdled the quantum of evidence requirement in administrative cases so
as to shift the burden of evidence on them. Respondents, on the other hand, are correct in
pointing out that a review of the evidence would necessarily entail a corresponding
evaluation of facts ascertained by the Ombudsman and the CA, and that as a general rule,
the Court should refrain from delving into factual questions. However, we have already
held in a catena of cases that the general rule admits of exceptions, including when the
judgment is based on misappreciation of facts or when the findings of facts are
conflicting. 49 In light of the series of seemingly confusing orders and rulings
promulgated by the Ombudsman, it is beyond cavil that a review of the facts in this case
is warranted.

a. Evidence against petitioner Aguilar

 i. Lot 6, Block 21, BIR Village, Fairview, Quezon City

Petitioner Aguilar admits owning this parcel of land, but insists at every turn that she had
consistently declared it in her SALNs. A perusal of her SALNs from 1999-2002 would
indeed show that she had declared ownership of the Fairview property, entering it merely
as "House & Lot, Q.C." This is as opposed to the allegations of the PNP-CIDG that what
she has been declaring is Lot 8 of Block 21, and not Lot 6.

We sustain the findings of the Ombudsman contained in the Supplemental Decision as to

the validity of petitioner Aguilar's account on this point. As observed by the Ombudsman,
the house and lot she declared as residence is actually a duplex-type structure, with a
party wall in the middle, erected on two lots, Lots 6 and 8. When petitioner Aguilar
purchased Lot 8 from one Norma Jurado, she dismantled the dividing wall to make a
solitary unit.

This explanation finds support from a perusal of her travel documents wherein she
interchanges her address between said Lot 6 and Lot 8.

ii. Antel Towers

Petitioner Aguilar argues next that the four-bedroom condominium apartment with two
parking slots along Pasay City is actually owned by her US-based brother Carlo who
allegedly purchased it from Mina Gabor, as evidenced by the Deed of Sale dated July 14,
2003.

The Court, as were the CA and the OMB, is unconvinced. A cursory reading of the deed
shows July 14, 2003, or a month after the PNP-CIDG initiated an investigation over
Aguilar's lifestyle, as its date of execution. On the other hand, petitioner Aguilar admitted
during the clarificatory hearing conducted on September 23, 2004 that, as early as 2000,
she and her daughter have already been occupying the apartment, thus:

Q: You said in your direct clarificatory questioning that you don't know when
Carlo Gupilan bought this property?

A: Yes, sir.

Q: But when did you reside in that property for the first time?

A: Mga 2000 pa yun.

Q: When for the first time did you know that Carlo Gupilan acquired that
Antel Towers property?
 A: Noon pong sinabi niya: "Ate, napakalayo sa opisina mo ang bahay mo.
Gusto mo gamitin mo yung bahay ko sa Pasay?"

Q: Mga kailan yun?

A: Mga 2000. 50

Evidently, a serious disparity exists between the document presented and the statements
petitioner Aguilar herself made. As the CA observed, citing the Ombudsman's findings,
petitioner insists that the property is owned by her brother Carlo who invited her to stay
in his condo unit in 2000. However, per the document she presented, the alleged Deed of
Sale between him and Gabor, was only executed on July 14, 2003.

On what authority then she has been staying on the apartment unit before the alleged
Carlo-Gabor sales transaction was executed remained unexplained. This aberration
coupled by her beneficial ownership of the property, as demonstrated by her possession
and occupancy of the unit, casts serious doubts as to her brother's alleged ownership of
the unit since 2000 and renders dubious the alleged deed of sale. To recall, graft
investigators will not only look into properties in a public servant's name, but also those
claimed by their relatives or dummies. The SALN requirement will be a useless ritual if
public officers can easily evade the obligation to disclose if they register the asset under
someone else's name.

iii. Naga City property

As petitioner Aguilar alleged, she purchased the property from her parents who, in June
1990, executed the corresponding deed of sale in her favor. This sale may be
documented, but her claim that she subsequently sold the Naga property to one Rosendo
Gonzales sometime in 1992 is not supported by evidence. She has not adduced any
document or deed proving that she no longer owns the property. On the other hand, the
PNP-CIDG was able to secure from the City Assessor's office a copy of the tax
declaration of the property in 2002 which, on its face, clearly yields this fact: the property
is still registered under Aguilar's name; the alleged sale between her and Rosendo
Gonzales was not annotated.

iv. Vehicles

There is no quibbling as to the ownership of the Honda CRV and the Isuzu Trooper. The
question pivots only as to the two (2) BMWs that petitioner Aguilar had acknowledged
using.

Per petitioner Aguilar's account, a friend of another brother, Salvador, has allowed her
the use of the BMWs. As claimed, US-based Salvador is in the business of exporting
used cars from the US to the Philippines and has local contacts which include the two
corporations under whose names the BMWs are registered. The PNP-CIDG, on the other
hand, submitted pictures 51 taken during its surveillance of Aguilar showing the red and
silver BMWs leaving the parking space of Antel Towers, if not parked at slots reserved
for the use of the unit Aguilar has been occupying. DAHaTc

We rule, as the CA and the Ombudsman earlier did, against petitioner Aguilar on this
point. As found by the Ombudsman and confirmed by the CA, petitioner Aguilar had
control and possession — both attributes of ownership — of the two BMW vehicles.
While she alleged having only borrowed them, her statement during the clarificatory
hearings that she does not know who the real owners are over stretches credulity. Her
allegation was that the vehicles were only lent her by her brother's friend. But when
pressed on how she came into contact with the friend, who was unnamed, since her
brother is in the US, she was unable to give a direct answer. 52

In another perspective, it bears to stress that petitioner Aguilar, a ranking customs

official, had veritably admitted to receiving benefits from the above named corporations
which had been facilitating her brother's used car export business. As correctly observed
by the Ombudsman, Sec. 7 of RA 6713 or the Code of Ethical Standards 53 prohibits
public officials and employees from directly or indirectly soliciting or accepting gifts,
favor or things of monetary value from anyone in connection with any operation being
regulated by, or any transaction which may be affected by the functions of their office.
The Anti-Graft and Corrupt Practices Act declares and penalizes similar acts. 54

The act complained of as regards the BMW cars for sure is indicative of corruption,
tending to suggest that petitioner Aguilar had used her position in the customs bureau to
advance her brother's business interests as well as that of the two corporations which
facilitate the vehicle exportation and importation business. Thus, even in the absence of
compelling evidence to prove that petitioner Aguilar is the actual owner of the subject
high-priced BMW vehicles, she can still be held amenable under the premises for conduct
prejudicial to the best interest of the service.

v. Foreign Travels

Petitioner Aguilar's exculpating allegations, as earlier narrated, as to her foreign travels

during the period material fail to convince.

While indeed some of her siblings executed affidavits tending to prove they have
sufficient income to shoulder her travels, they stopped short of saying that they did in fact
contribute or entirely pay, as Aguilar urges the Court to believe, for her and her
daughters' trip to Los Angeles. Nowhere in the documents was it mentioned that they
defrayed petitioner Aguilar's expenses for her visits. The general affidavits merely
indicated their jobs and how much salary they receive monthly. As held in Office of the
Ombudsman v. Racho, 55 an unexplained wealth case, the documents that Racho
presented, purportedly showing his brothers' financial capability to send or contribute
large sum of money for their business, do not prove that they did, in fact, contribute or
remit money for their supposed joint business venture.

As a final note on the matter, petitioner Aguilar had submitted affidavits 56 wherein she
averred that all expenses for her and her daughter's travel shall be borne or defrayed by
her alone. 57 So what happens to her claim that her siblings shouldered most of her travel
expenses?

vi. Summary

Administrative proceedings are governed by the "substantial evidence rule," meaning a

finding of guilt in an administrative case may and would issue if supported by substantial
evidence that the respondent has committed the acts stated in the complaint. Substantial
evidence is more than a mere scintilla. It means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion, even if other minds equally
reasonable might conceivably opine otherwise. 58 Its absence is not shown by stressing
that there is contrary evidence, direct or circumstantial, on record. 59

In the case at bar, the required evidence sufficient to justify holding petitioner Aguilar
administratively liable has been, to us, as to the CA, satisfied. Not only did she fail to
declare in her SALN the residential lot located at Panicuason, Naga City, she likewise
failed to satisfactorily explain her beneficial ownership of the Antel Seaview Towers
four-bedroom condominium unit and her use of the two BMWs registered in the name of
different corporations, which, as the records show, are both based in Olongapo City.

Relevant to this determination is Sec. 2 of RA 1379, 60 in relation to Sec. 8 of RA 3019,

which states that whenever any public officer or employee has acquired during his
incumbency an amount of property which is manifestly out of proportion to his salary as
such officer or employee and to his other lawful income and the income from legitimately
acquired property, said property shall be presumed prima facie to have been unlawfully
acquired. When the presumption holds, the burden of evidence then shifts to the
respondent, in this instance petitioner Aguilar, to show that the financial resources used
to acquire the undeclared assets and her expenditures came from lawful income. To be
sure, petitioner Aguilar has failed to discharge this burden, as the CA, and the OMB
before it, have determined. The explanation she offered when confronted with her
undeclared acquisitions and travel splurge is too flimsy compared to her own admissions
as to her beneficial ownership over the properties. Her SALNs during the years in
question clearly indicated she was a pure compensation income earner. With an annual
salary of PhP249,876, it is incomprehensible how she could have acquired her undeclared
assets on top of paying for her annual travels and living expenses. The discrepancy in the
total valuation of her declared and undeclared assets is also too glaring for petitioner
Aguilar's omission to be written off as mere negligence or carelessness. As a result, no
error can be attributed to the CA and the Ombudsman adjudging her guilty of dishonesty.

Petitioner Aguilar's acquittal in Crim. Case No. 08-263022 of the Manila RTC on the
ground of insufficiency of evidence would not carry the day for her. The dismissal of the
criminal aspect of the complaint filed against Aguilar has hardly any bearing on the
administrative case mainly because the quantum of evidence required to support a finding
of guilt in a criminal case is proof beyond reasonable doubt. Administrative cases are, as
a rule, separate and independent from criminal suits and are governed by differing
evidentiary criteria. The acquittal of an accused who is also a respondent in an
administrative case does not conclude the administrative proceedings, nor carry with it
relief from administrative liability. This is because unlike in criminal cases where the
threshold quantum of evidence required is proof beyond reasonable doubt, only
substantial evidence is necessary in administrative cases. 61

b. Evidence against petitioner Hernandez

Unlike in the case of his co-petitioner, this Court is unable to make out a case of
dishonesty, let alone grave misconduct against petitioner Hernandez. To be sure, the
OMB investigating panel, in the Decision dated June 3, 2004, recommended petitioner
Hernandez's exoneration. However, in a bizarre twist, the Ombudsman, in its Supplement
dated January 18, 2005, disapproved the panel's own assessment of the sufficiency of
evidence as regards petitioner Hernandez and ruled that, while the Isuzu Trooper with
Plate No. HRH-659 was registered under his name, it is actually owned by Aguilar.
Accordingly, the Ombudsman decreed Hernandez's dismissal for supposedly consenting
to act as Aguilar's dummy. The Ombudsman, in net effect, used petitioner Hernandez's
own admission of vehicle ownership against him and ruled that he could not afford to
acquire the car on his salary of PhP14,098 a month.

In ruling for petitioner Hernandez, we do so taking stock of the pronouncement in the

first-issued Decision of the Ombudsman. There was indeed no specific allegation in the
complaint against him other than his owning an Isuzu Trooper vehicle, which he declared
in his SALN. But mere ownership is not an actionable administrative offense. The PNP-
CIDG also did not present any additional evidence as against petitioner Hernandez. We
are, thus, at a loss to understand how the Ombudsman, after saying in not so many words
that Hernandez was not guilty, would completely reverse itself in the Supplement. Having
already disposed of the issue as regards petitioner Hernandez in the Decision, it was then
quite improper for the Ombudsman to reverse its findings six months after, albeit no
evidence had been adduced in the interim to support the new finding.

While the Ombudsman's reasoning — as adopted by the CA, regarding petitioner

Hernandez's purchasing capability, or lack of it — may be plausible at first blush, the
latter was able to justify his ownership of the Isuzu Trooper. Evidence on record would
show that aside from his employment, he and his wife have other sources of income. As
he alleged in his pleadings, his wife, Ruth, is a practicing physician who, besides
maintaining a clinic in both the Seamen's Hospital in Manila and at the Medical Center
Muntinlupa, engages in OB-GYN consultancy. And as seen in his SALN for 2002, the
couple run Sarah Katrina's Drugstore in Las Piñas City and even own shares of stocks in
Medical Center Muntinlupa. A car loan worth PhP1,600,000 was also reported in his
2002 SALN. 62 In fine, there is valid reason to conclude that the Hernandez couple, with
their combined income, could very well afford a medium-priced motor van.

Given these circumstances, the innocence claim of petitioner Hernandez becomes all the
more credible and the justifications offered sufficient to absolve him of administrative
liability. It should be understood that the laws on SALN aim to curtail the acquisition of
unexplained wealth. Where the source of the undisclosed wealth can be properly
accounted for, as in the case of petitioner Hernandez, then it is "explained wealth" which
the law does not penalize. 63

Under OMB AO 17, if the respondent, meted by OMB the penalty of suspension or
removal, is exonerated on appeal, he shall be considered as having been under preventive
suspension and shall be paid the salary and such other emoluments that he failed to
receive by reason of that suspension or removal. So it must be in the case of petitioner
Hernandez.

WHEREFORE, the petition is PARTIALLY GRANTED. The appealed July 22, 2009
Decision and June 13, 2011 Resolution in CA-G.R. SP No. 88954 are MODIFIED. The
charge for Grave Misconduct against Flor Gupilan-Aguilar is DISMISSED, while the
appellate court's finding of her liability for Dishonesty and the corresponding penalty
imposed are AFFIRMED.

The CA Decision, however, insofar as it finds Honore Hernandez guilty of the offenses
charged against him, is hereby REVERSED and SET ASIDE. The complaint against
him for Grave Misconduct and Dishonesty is accordingly DISMISSED. He is
accordingly ordered REINSTATED immediately to his former or equivalent position in
the Bureau of Customs without loss or diminution in his salaries and benefits. In addition,
he shall be paid his salary and such other emoluments corresponding to the period he was
out of the service by reason of the judgment of dismissal decreed by the Office of the
Ombudsman, as affirmed by the Court of Appeals.

SO ORDERED.

Peralta, Bersamin, * Mendoza and Leonen, JJ., concur.

||| (Gupilan-Aguilar v. Office of the Ombudsman, G.R. No. 197307, [February 26, 2014])
 THIRD DIVISION

[G.R. No. 208232. March 10, 2014.]

SURVIVING HEIRS OF ALFREDO R. BAUTISTA, namely:

EPIFANIA G. BAUTISTA and ZOEY G. BAUTISTA, petitioners, vs.
FRANCISCO LINDO and WELHILMINA LINDO; and HEIRS OF
FILIPINA DAQUIGAN, namely: MA. LOURDES DAQUIGAN,
IMELDA CATHERINE DAQUIGAN, IMELDA DAQUIGAN and
CORSINO DAQUIGAN, REBECCA QUIAMCO and ANDRES
QUIAMCO, ROMULO LORICA and DELIA LORICA, GEORGE
CAJES and LAURA CAJES, MELIDA BAÑEZ and FRANCISCO
BAÑEZ, MELANIE GOFREDO, GERVACIO CAJES and ISABEL
CAJES, EGMEDIO SEGOVIA and VERGINIA SEGOVIA, ELSA
N. SAM, PEDRO M. SAM and LINA SAM, SANTIAGO MENDEZ
and MINA MENDEZ, HELEN M. BURTON and LEONARDO
BURTON, JOSE JACINTO and BIENVENIDA JACINTO,
IMELDA DAQUIGAN, LEO MATIGA and ALICIA MATIGA,
FLORENCIO ACEDO JR., and LYLA VALERIO, respondents.

DECISION

VELASCO, JR., J : p

The Case

This is a Petition for Review on Certiorari under Rule 45 assailing the April 25, 2013
Order of the Regional Trial Court (RTC) in Civil Case No. (1798)-021 as well as its
Order of July 3, 2013 denying reconsideration.

The Facts

Alfredo R. Bautista (Bautista), petitioner's predecessor, inherited in 1983 a free-patent

land located in Poblacion, Lupon, Davao Oriental and covered by Original Certificate of
Title (OCT) No. (1572) P-6144. A few years later, he subdivided the property and sold it
to several vendees, herein respondents, via a notarized deed of absolute sale dated May
30, 1991. Two months later, OCT No. (1572) P-6144 was canceled and Transfer
Certificates of Title (TCTs) were issued in favor of the vendees. 1

Three years after the sale, or on August 5, 1994, Bautista filed a complaint for repurchase
against respondents before the RTC, Branch 32, Lupon, Davao Oriental, docketed as
Civil Case No. 1798, 2 anchoring his cause of action on Section 119 of Commonwealth
Act No. (CA) 141, otherwise known as the "Public Land Act," which reads: EAcCHI

SECTION 119. Every conveyance of land acquired under the free patent or
homestead provisions, when proper, shall be subject to repurchase by the
applicant, his widow, or legal heirs, within a period of five years from the date
of the conveyance.

Respondents, in their Answer, raised lack of cause of action, estoppel, prescription, and
laches, as defenses.

Meanwhile, during the pendency of the case, Bautista died and was substituted by
petitioner Epifania G. Bautista (Epifania).

Respondents Francisco and Welhilmina Lindo later entered into a compromise agreement
with petitioners, whereby they agreed to cede to Epifania a three thousand two hundred
and thirty square meter (3,230 sq.m.)-portion of the property as well as to waive,
abandon, surrender, and withdraw all claims and counterclaims against each other. The
compromise was approved by the RTC in its Decision dated January 27, 2011, the fallo
of which reads:

WHEREFORE, a DECISION is hereby rendered based on the above-quoted

Compromise Agreement and the parties are enjoined to strictly comply with the
terms and conditions of the same.

SO ORDERED. 3

Other respondents, however, filed a Motion to Dismiss 4 dated February 4, 2013, alleging
that the complaint failed to state the value of the property sought to be recovered.
Moreover, they asserted that the total selling price of all the properties is only sixteen
thousand five hundred pesos (PhP16,500), and the selling price or market value of a
property is always higher than its assessed value. Since Batas Pambansa Blg. (BP) 129,
as amended, grants jurisdiction to the RTCs over civil actions involving title to or
possession of real property or interest therein where the assessed value is more than
PhP20,000, then the RTC has no jurisdiction over the complaint in question since the
property which Bautista seeks to repurchase is below the PhP20,000 jurisdictional
ceiling.

RTC Ruling 5

Acting on the motion, the RTC issued the assailed order dismissing the complaint for
lack of jurisdiction. The trial court found that Bautista failed to allege in his complaint
that the value of the subject property exceeds 20 thousand pesos. Furthermore, what was
only stated therein was that the total and full refund of the purchase price of the property
is PhP16,500. This omission was considered by the RTC as fatal to the case considering
that in real actions, jurisdictional amount is determinative of whether it is the municipal
trial court or the RTC that has jurisdiction over the case.

With respect to the belated filing of the motion, the RTC, citing Cosco Philippines
Shipping, Inc. v. Kemper Insurance Company, 6 held that a motion to dismiss for lack of
jurisdiction may be filed at any stage of the proceedings, even on appeal, and is not lost
by waiver or by estoppel. The dispositive portion of the assailed Order reads: ScaCEH

WHEREFORE, the complaint for Repurchase, Consignation, with Preliminary

Injunction and Damages is hereby dismissed for lack of jurisdiction.

SO ORDERED. 7

Assignment of Errors

Their motion for reconsideration having been denied, petitioners now seek recourse
before this Court with the following assigned errors:

THE PUBLIC RESPONDENT RTC ERRED IN ADMITTING THE MOTION

TO DISMISS DATED FEBRUARY 4, 2013, BELATEDLY FILED BY THE
PRIVATE RESPONDENTS IN THE CASE.

II

THE PUBLIC RESPONDENT RTC ERRED IN HOLDING THAT THE

INSTANT CASE FOR REPURCHASE IS A REAL ACTION. 8

The Issue

Stated differently, the issue for the Court's resolution is: whether or not the RTC erred in
granting the motion for the dismissal of the case on the ground of lack of jurisdiction over
the subject matter.

Arguments

Petitioners argue that respondents belatedly filed their Motion to Dismiss and are now
estopped from seeking the dismissal of the case, it having been filed nine (9) years after
the filing of the complaint and after they have actively participated in the proceedings.
Additionally, they allege that an action for repurchase is not a real action, but one
incapable of pecuniary estimation, it being founded on privity of contract between the
parties. According to petitioners, what they seek is the enforcement of their right to
repurchase the subject property under Section 119 of CA 141.

Respondents, for their part, maintain that since the land is no longer devoted to
agriculture, the right of repurchase under said law can no longer be availed of, citing
Santana v. Mariñas. 9 Furthermore, they suggest that petitioners intend to resell the
property for a higher profit, thus, the attempt to repurchase. This, according to
respondents, goes against the policy and is not in keeping with the spirit of CA 141 which
is the preservation of the land gratuitously given to patentees by the State as a reward for
their labor in cultivating the property. Also, the Deed of Absolute Sale presented in
evidence by Bautista was unilaterally executed by him and was not signed by
respondents. Lastly, respondents argue that repurchase is a real action capable of
pecuniary estimation.

Our Ruling

The petition is meritorious.

Jurisdiction of courts is granted by the Constitution and pertinent laws.

Jurisdiction of RTCs, as may be relevant to the instant petition, is provided in Sec. 19 of

BP 129, which reads:

Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise
exclusive original jurisdiction:

1) In all civil actions in which the subject of the litigation is incapable of

pecuniary estimation;

2) In all civil actions which involve the title to, or possession of, real
property, or any interest therein, where the assessed value of the property
involved exceeds Twenty thousand pesos (P20,000.00) or, for civil actions in
Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00)
except actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon the Metropolitan
Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.

On the other hand, jurisdiction of first level courts is prescribed in Sec. 33 of BP 129,
which provides:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts

and Municipal Circuit Trial Courts in civil cases. — Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

xxx xxx xxx

 3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value of
the property or interest therein does not exceed Twenty thousand pesos
(P20,000.00) or, in civil actions in Metro Manila, where such assessed value
does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses and costs:
Provided, That in cases of land not declared for taxation purposes, the value of
such property shall be determined by the assessed value of the adjacent lots.

The core issue is whether the action filed by petitioners is one involving title to or
possession of real property or any interest therein or one incapable of pecuniary
estimation.

The course of action embodied in the complaint by the present petitioners' predecessor,
Alfredo R. Bautista, is to enforce his right to repurchase the lots he formerly owned
pursuant to the right of a free-patent holder under Sec. 119 of CA 141 or the Public Land
Act.IATHaS

The Court rules that the complaint to redeem a land subject of a free patent is a civil
action incapable of pecuniary estimation.

It is a well-settled rule that jurisdiction of the court is determined by the allegations in the
complaint and the character of the relief sought. 10 In this regard, the Court, in Russell
v. Vestil, 11 wrote that "in determining whether an action is one the subject matter of
which is not capable of pecuniary estimation this Court has adopted the criterion of first
ascertaining the nature of the principal action or remedy sought. If it is primarily for
the recovery of a sum of money, the claim is considered capable of pecuniary estimation,
and whether jurisdiction is in the municipal courts or in the RTCs would depend on the
amount of the claim." But where the basic issue is something other than the right to
recover a sum of money, where the money claim is purely incidental to, or a consequence
of, the principal relief sought, this Court has considered such actions as cases where the
subject of the litigation may not be estimated in terms of money, and, hence, are
incapable of pecuniary estimation. These cases are cognizable exclusively by RTCs. 12

Settled jurisprudence considers some civil actions as incapable of pecuniary estimation,

viz.:

1. Actions for specific performance;

2. Actions for support which will require the determination of the civil
status;

3. The right to support of the plaintiff;

 4. Those for the annulment of decisions of lower courts;

5. Those for the rescission or reformation of contracts; 13

6. Interpretation of a contractual stipulation. 14

The Court finds that the instant cause of action to redeem the land is one for specific
performance.

The facts are clear that Bautista sold to respondents his lots which were covered by a free
patent. While the deeds of sale do not explicitly contain the stipulation that the sale is
subject to repurchase by the applicant within a period of five (5) years from the date of
conveyance pursuant to Sec. 119 of CA 141, still, such legal provision is deemed
integrated and made part of the deed of sale as prescribed by law. It is basic that the law
is deemed written into every contract. 15 Although a contract is the law between the
parties, the provisions of positive law which regulate contracts are deemed written therein
and shall limit and govern the relations between the parties. 16 Thus, it is a binding
prestation in favor of Bautista which he may seek to enforce. That is precisely what he
did. He filed a complaint to enforce his right granted by law to recover the lot subject of
free patent. Ergo, it is clear that his action is for specific performance, or if not strictly
such action, then it is akin or analogous to one of specific performance. Such being the
case, his action for specific performance is incapable of pecuniary estimation and
cognizable by the RTC.

Respondents argue that Bautista's action is one involving title to or possession of real
property or any interests therein and since the selling price is less than PhP20,000, then
jurisdiction is lodged with the MTC. They rely on Sec. 33 of BP 129.

Republic Act No. 7691 17 amended Sec. 33 of BP 129 and gave Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts exclusive original
jurisdiction in all civil actions which involve title to, or possession of, real property, or
any interest therein where the assessed value of the property or interest therein does not
exceed twenty thousand pesos (PhP20,000) or, in civil actions in Metro Manila, where
such assessed value does not exceed fifty thousand pesos (PhP50,000) exclusive of
interest, damages of whatever kind, attorney's fees, litigation expenses and costs. aScITE

At first blush, it appears that the action filed by Bautista involves title to or possession of
the lots he sold to respondents. Since the total selling price is less than PhP20,000, then
the MTC, not the RTC, has jurisdiction over the case. This proposition is incorrect for the
re-acquisition of the lots by Bautista or herein successors-in-interests, the present
petitioners, is but incidental to and an offshoot of the exercise of the right by the latter to
redeem said lots pursuant to Sec. 119 of CA 141. The reconveyance of the title to
petitioners is solely dependent on the exercise of such right to repurchase the lots in
question and is not the principal or main relief or remedy sought. Thus, the action of
petitioners is, in reality, incapable of pecuniary estimation, and the reconveyance of the
lot is merely the outcome of the performance of the obligation to return the property
conformably to the express provision of CA 141.

Even if we treat the present action as one involving title to real property or an interest
therein which falls under the jurisdiction of the first level court under Sec. 33 of BP 129,
as the total selling price is only PhP16,000 way below the PhP20,000 ceiling, still, the
postulation of respondents that MTC has jurisdiction will not hold water. This is because
respondents have actually participated in the proceedings before the RTC and
aggressively defended their position, and by virtue of which they are already barred to
question the jurisdiction of the RTC following the principle of jurisdiction by estoppel.

In Heirs of Jose Fernando v. De Belen, it was held that the party raising defenses to the
complaint, actively participating in the proceedings by filing pleadings, presenting his
evidence, and invoking its authority by asking for an affirmative relief is deemed
estopped from questioning the jurisdiction of the court. 18

Here, we note that aside from the belated filing of the motion to dismiss — it having been
filed nine (9) years from the filing of the complaint — respondents actively participated
in the proceedings through the following acts:

1. By filing their Answer and Opposition to the Prayer for Injunction

19 dated September 29, 1994 whereby they even interposed
counterclaims, specifically: PhP501,000 for unpaid survey
accounts, PhP100,000 each as litigation expenses, PhP200,000 and
PhP3,000 per daily appearance by way of attorney's fees,
PhP500,000 as moral damages, PhP100,000 by way of exemplary
damages, and costs of suit;

2. By participating in Pre-trial;

3. By moving for the postponement of their presentation of evidence;

20

4. By presenting their witness; 21 and

5. By submitting the compromise agreement for approval. 22

Having fully participated in all stages of the case, and even invoking the RTC's authority
by asking for affirmative reliefs, respondents can no longer assail the jurisdiction of the
said trial court. Simply put, considering the extent of their participation in the case, they
are, as they should be, considered estopped from raising lack of jurisdiction as a ground
for the dismissal of the action.

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The

April 25, 2013 and July 3, 2013 Orders of the Regional Trial Court in Civil Case No.
(1798)-021 are hereby REVERSED and SET ASIDE.

The Regional Trial Court, Branch 32 in Lupon, Davao Oriental is ORDERED to proceed
with dispatch in resolving Civil Case No. (1798)-021.

No pronouncement as to costs.

SO ORDERED.

Peralta, Abad, Mendoza and Leonen, JJ., concur.

||| (Heirs of Bautista v. Lindo, G.R. No. 208232, [March 10, 2014])
 THIRD DIVISION

[G.R. No. 195580. April 21, 2014.]

NARRA NICKEL MINING AND DEVELOPMENT CORP.,

TESORO MINING AND DEVELOPMENT, INC., and
MCARTHUR MINING, INC., petitioners, vs. REDMONT
CONSOLIDATED MINES CORP., respondent.

DECISION

VELASCO, JR., J : p

Before this Court is a Petition for Review on Certiorari under Rule 45 filed by Narra
Nickel and Mining Development Corp. (Narra), Tesoro Mining and Development, Inc.
(Tesoro), and McArthur Mining, Inc. (McArthur), which seeks to reverse the October 1,
2010 Decision 1 and the February 15, 2011 Resolution of the Court of Appeals (CA).

The Facts

Sometime in December 2006, respondent Redmont Consolidated Mines Corp.

(Redmont), a domestic corporation organized and existing under Philippine laws, took
interest in mining and exploring certain areas of the province of Palawan. After inquiring
with the Department of Environment and Natural Resources (DENR), it learned that the
areas where it wanted to undertake exploration and mining activities where already
covered by Mineral Production Sharing Agreement (MPSA) applications of petitioners
Narra, Tesoro and McArthur.

Petitioner McArthur, through its predecessor-in-interest Sara Marie Mining, Inc.

(SMMI), filed an application for an MPSA and Exploration Permit (EP) with the Mines
and Geo-Sciences Bureau (MGB), Region IV-B, Office of the Department of
Environment and Natural Resources (DENR). Subsequently, SMMI was issued MPSA-
AMA-IVB-153 covering an area of over 1,782 hectares in Barangay Sumbiling,
Municipality of Bataraza, Province of Palawan and EPA-IVB-44 which includes an area
of 3,720 hectares in Barangay Malatagao, Bataraza, Palawan. The MPSA and EP were
then transferred to Madridejos Mining Corporation (MMC) and, on November 6, 2006,
assigned to petitioner McArthur. 2

Petitioner Narra acquired its MPSA from Alpha Resources and Development Corporation
and Patricia Louise Mining & Development Corporation (PLMDC) which previously
filed an application for an MPSA with the MGB, Region IV-B, DENR on January 6,
1992. Through the said application, the DENR issued MPSA-IV-1-12 covering an area of
3.277 hectares in barangays Calategas and San Isidro, Municipality of Narra, Palawan.
Subsequently, PLMDC conveyed, transferred and/or assigned its rights and interests over
the MPSA application in favor of Narra.

Another MPSA application of SMMI was filed with the DENR Region IV-B, labeled as
MPSA-AMA-IVB-154 (formerly EPA-IVB-47) over 3,402 hectares in Barangays
Malinao and Princesa Urduja, Municipality of Narra, Province of Palawan. SMMI
subsequently conveyed, transferred and assigned its rights and interest over the said
MPSA application to Tesoro.

On January 2, 2007, Redmont filed before the Panel of Arbitrators (POA) of the DENR
three (3) separate petitions for the denial of petitioners' applications for MPSA designated
as AMA-IVB-153, AMA-IVB-154 and MPSA IV-1-12. CSHEAI

In the petitions, Redmont alleged that at least 60% of the capital stock of McArthur,
Tesoro and Narra are owned and controlled by MBMI Resources, Inc. (MBMI), a 100%
Canadian corporation. Redmont reasoned that since MBMI is a considerable stockholder
of petitioners, it was the driving force behind petitioners' filing of the MPSAs over the
areas covered by applications since it knows that it can only participate in mining
activities through corporations which are deemed Filipino citizens. Redmont argued that
given that petitioners' capital stocks were mostly owned by MBMI, they were likewise
disqualified from engaging in mining activities through MPSAs, which are reserved only
for Filipino citizens.

In their Answers, petitioners averred that they were qualified persons under Section 3
(aq) of Republic Act No. (RA) 7942 or the Philippine Mining Act of 1995 which
provided:

Sec. 3 Definition of Terms. — As used in and for purposes of this Act, the
following terms, whether in singular or plural, shall mean:

xxx xxx xxx

(aq) "Qualified person" means any citizen of the Philippines with capacity to
contract, or a corporation, partnership, association, or cooperative organized
or authorized for the purpose of engaging in mining, with technical and
financial capability to undertake mineral resources development and duly
registered in accordance with law at least sixty per cent (60%) of the capital of
which is owned by citizens of the Philippines: Provided, That a legally
organized foreign-owned corporation shall be deemed a qualified person for
purposes of granting an exploration permit, financial or technical assistance
agreement or mineral processing permit.
Additionally, they stated that their nationality as applicants is immaterial because they
also applied for Financial or Technical Assistance Agreements (FTAA) denominated as
AFTA-IVB-09 for McArthur, AFTA-IVB-08 for Tesoro and AFTA-IVB-07 for Narra,
which are granted to foreign-owned corporations. Nevertheless, they claimed that the
issue on nationality should not be raised since McArthur, Tesoro and Narra are in
fact Philippine Nationals as 60% of their capital is owned by citizens of the
Philippines. They asserted that though MBMI owns 40% of the shares of PLMC (which
owns 5,997 shares of Narra), 3 40% of the shares of MMC (which owns 5,997 shares of
McArthur) 4 and 40% of the shares of SLMC (which, in turn, owns 5,997 shares of
Tesoro), 5 the shares of MBMI will not make it the owner of at least 60% of the capital
stock of each of petitioners. They added that the best tool used in determining the
nationality of a corporation is the "control test," embodied in Sec. 3 of RA 7042 or
the Foreign Investments Act of 1991. They also claimed that the POA of DENR did not
have jurisdiction over the issues in Redmont's petition since they are not enumerated in
Sec. 77 of RA 7942. Finally, they stressed that Redmont has no personality to sue them
because it has no pending claim or application over the areas applied for by petitioners.

On December 14, 2007, the POA issued a Resolution disqualifying petitioners from
gaining MPSAs. It held:

[I]t is clearly established that respondents are not qualified applicants to engage
in mining activities. On the other hand, [Redmont] having filed its own
applications for an EPA over the areas earlier covered by the MPSA application
of respondents may be considered if and when they are qualified under the law.
The violation of the requirements for the issuance and/or grant of permits over
mining areas is clearly established thus, there is reason to believe that the
cancellation and/or revocation of permits already issued under the premises is in
order and open the areas covered to other qualified applicants.

xxx xxx xxx

WHEREFORE, the Panel of Arbitrators finds the Respondents, McArthur

Mining, Inc., Tesoro Mining and Development, Inc., and Narra Nickel Mining
and Development Corp. as, DISQUALIFIED for being considered as Foreign
Corporations. Their Mineral Production Sharing Agreement (MPSA) are hereby
. . . DECLARED NULL AND VOID. 6

The POA considered petitioners as foreign corporations being "effectively controlled" by

MBMI, a 100% Canadian company and declared their MPSAs null and void. In the same
Resolution, it gave due course to Redmont's EPAs. Thereafter, on February 7, 2008, the
POA issued an Order 7 denying the Motion for Reconsideration filed by petitioners.

Aggrieved by the Resolution and Order of the POA, McArthur and Tesoro filed a joint
Notice of Appeal 8 and Memorandum of Appeal 9 with the Mines Adjudication Board
(MAB) while Narra separately filed its Notice of Appeal 10 and Memorandum of Appeal.
11

In their respective memorandum, petitioners emphasized that they are qualified persons
under the law. Also, through a letter, they informed the MAB that they had their
individual MPSA applications converted to FTAAs. McArthur's FTAA was denominated
as AFTA-IVB-09 12 on May 2007, while Tesoro's MPSA application was converted to
AFTA-IVB-08 13 on May 28, 2007, and Narra's FTAA was converted to AFTA-IVB-07
14 on March 30, 2006. DHESca

Pending the resolution of the appeal filed by petitioners with the MAB, Redmont filed a
Complaint 15 with the Securities and Exchange Commission (SEC), seeking the
revocation of the certificates for registration of petitioners on the ground that they are
foreign-owned or controlled corporations engaged in mining in violation of Philippine
laws. Thereafter, Redmont filed on September 1, 2008 a Manifestation and Motion to
Suspend Proceeding before the MAB praying for the suspension of the proceedings on
the appeals filed by McArthur, Tesoro and Narra.

Subsequently, on September 8, 2008, Redmont filed before the Regional Trial Court of
Quezon City, Branch 92 (RTC) a Complaint 16 for injunction with application for
issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction,
docketed as Civil Case No. 08-63379. Redmont prayed for the deferral of the MAB
proceedings pending the resolution of the Complaint before the SEC.

But before the RTC can resolve Redmont's Complaint and applications for injunctive
reliefs, the MAB issued an Order on September 10, 2008, finding the appeal meritorious.
It held:

WHEREFORE, in view of the foregoing, the Mines Adjudication Board hereby

REVERSES and SETS ASIDE the Resolution dated 14 December 2007 of the
Panel of Arbitrators of Region IV-B (MIMAROPA) in POA-DENR Case Nos.
2001-01, 2007-02 and 2007-03, and its Order dated 07 February 2008 denying
the Motions for Reconsideration of the Appellants. The Petition filed by
Redmont Consolidated Mines Corporation on 02 January 2007 is hereby
ordered DISMISSED. 17

Belatedly, on September 16, 2008, the RTC issued an Order 18 granting Redmont's
application for a TRO and setting the case for hearing the prayer for the issuance of a writ
of preliminary injunction on September 19, 2008.

Meanwhile, on September 22, 2008, Redmont filed a Motion for Reconsideration 19 of

the September 10, 2008 Order of the MAB. Subsequently, it filed a Supplemental Motion
for Reconsideration 20 on September 29, 2008.
Before the MAB could resolve Redmont's Motion for Reconsideration and Supplemental
Motion for Reconsideration, Redmont filed before the RTC a Supplemental Complaint 21
in Civil Case No. 08-63379.

On October 6, 2008, the RTC issued an Order 22 granting the issuance of a writ of
preliminary injunction enjoining the MAB from finally disposing of the appeals of
petitioners and from resolving Redmont's Motion for Reconsideration and Supplement
Motion for Reconsideration of the MAB's September 10, 2008 Resolution.

On July 1, 2009, however, the MAB issued a second Order denying Redmont's Motion
for Reconsideration and Supplemental Motion for Reconsideration and resolving the
appeals filed by petitioners.

Hence, the petition for review filed by Redmont before the CA, assailing the Orders
issued by the MAB. On October 1, 2010, the CA rendered a Decision, the dispositive of
which reads:

WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed Orders,

dated September 10, 2008 and July 1, 2009 of the Mining Adjudication Board
are reversed and set aside. The findings of the Panel of Arbitrators of the
Department of Environment and Natural Resources that respondents McArthur,
Tesoro and Narra are foreign corporations is upheld and, therefore, the rejection
of their applications for Mineral Product Sharing Agreement should be
recommended to the Secretary of the DENR.

With respect to the applications of respondents McArthur, Tesoro and Narra for
Financial or Technical Assistance Agreement (FTAA) or conversion of their
MPSA applications to FTAA, the matter for its rejection or approval is left for
determination by the Secretary of the DENR and the President of the Republic
of the Philippines.

SO ORDERED. 23

In a Resolution dated February 15, 2011, the CA denied the Motion for Reconsideration
filed by petitioners.

After a careful review of the records, the CA found that there was doubt as to the
nationality of petitioners when it realized that petitioners had a common major investor,
MBMI, a corporation composed of 100% Canadians. Pursuant to the first sentence of
paragraph 7 of Department of Justice (DOJ) Opinion No. 020, Series of 2005, adopting
the 1967 SEC Rules which implemented the requirement of the Constitution and other
laws pertaining to the exploitation of natural resources, the CA used the "grandfather
rule" to determine the nationality of petitioners. It provided:
 Shares belonging to corporations or partnerships at least 60% of the capital of
which is owned by Filipino citizens shall be considered as of Philippine
nationality, but if the percentage of Filipino ownership in the corporation or
partnership is less than 60%, only the number of shares corresponding to
such percentage shall be counted as of Philippine nationality. Thus, if
100,000 shares are registered in the name of a corporation or partnership at least
60% of the capital stock or capital, respectively, of which belong to Filipino
citizens, all of the shares shall be recorded as owned by Filipinos. But if less
than 60%, or say, 50% of the capital stock or capital of the corporation or
partnership, respectively, belongs to Filipino citizens, only 50,000 shares shall
be recorded as belonging to aliens. 24 (emphasis supplied)

In determining the nationality of petitioners, the CA looked into their corporate structures
and their corresponding common shareholders. Using the grandfather rule, the CA
discovered that MBMI in effect owned majority of the common stocks of the petitioners
as well as at least 60% equity interest of other majority shareholders of petitioners
through joint venture agreements. The CA found that through a "web of corporate
layering, it is clear that one common controlling investor in all mining corporations
involved . . . is MBMI." 25 Thus, it concluded that petitioners McArthur, Tesoro and
Narra are also in partnership with, or privies-in-interest of, MBMI.

Furthermore, the CA viewed the conversion of the MPSA applications of petitioners into
FTAA applications suspicious in nature and, as a consequence, it recommended the
rejection of petitioners' MPSA applications by the Secretary of the DENR.

With regard to the settlement of disputes over rights to mining areas, the CA pointed out
that the POA has jurisdiction over them and that it also has the power to determine the of
nationality of petitioners as a prerequisite of the Constitution prior the conferring of
rights to "co-production, joint venture or production-sharing agreements" of the state to
mining rights. However, it also stated that the POA's jurisdiction is limited only to the
resolution of the dispute and not on the approval or rejection of the MPSAs. It stipulated
that only the Secretary of the DENR is vested with the power to approve or reject
applications for MPSA.

Finally, the CA upheld the findings of the POA in its December 14, 2007 Resolution
which considered petitioners McArthur, Tesoro and Narra as foreign corporations.
Nevertheless, the CA determined that the POA's declaration that the MPSAs of
McArthur, Tesoro and Narra are void is highly improper. cCaEDA

While the petition was pending with the CA, Redmont filed with the Office of the
President (OP) a petition dated May 7, 2010 seeking the cancellation of petitioners'
FTAAs. The OP rendered a Decision 26 on April 6, 2011, wherein it canceled and
revoked petitioners' FTAAs for violating and circumventing the "Constitution . . .[,] the
Small Scale Mining Law and Environmental Compliance Certificate as well as Sections 3
and 8 of the Foreign Investment Act and E.O. 584." 27 The OP, in affirming the
cancellation of the issued FTAAs, agreed with Redmont stating that petitioners
committed violations against the abovementioned laws and failed to submit evidence to
negate them. The Decision further quoted the December 14, 2007 Order of the POA
focusing on the alleged misrepresentation and claims made by petitioners of being
domestic or Filipino corporations and the admitted continued mining operation of PMDC
using their locally secured Small Scale Mining Permit inside the area earlier applied for
an MPSA application which was eventually transferred to Narra. It also agreed with the
POA's estimation that the filing of the FTAA applications by petitioners is a clear
admission that they are "not capable of conducting a large scale mining operation and
that they need the financial and technical assistance of a foreign entity in their operation,
that is why they sought the participation of MBMI Resources, Inc." 28 The Decision
further quoted:

The filing of the FTAA application on June 15, 2007, during the pendency of
the case only demonstrate the violations and lack of qualification of the
respondent corporations to engage in mining. The filing of the FTAA
application conversion which is allowed foreign corporation of the earlier
MPSA is an admission that indeed the respondent is not Filipino but rather of
foreign nationality who is disqualified under the laws. Corporate documents of
MBMI Resources, Inc. furnished its stockholders in their head office in Canada
suggest that they are conducting operation only through their local counterparts.
29

The Motion for Reconsideration of the Decision was further denied by the OP in a
Resolution 30 dated July 6, 2011. Petitioners then filed a Petition for Review on
Certiorari of the OP's Decision and Resolution with the CA, docketed as CA-G.R. SP
No. 120409. In the CA Decision dated February 29, 2012, the CA affirmed the Decision
and Resolution of the OP. Thereafter, petitioners appealed the same CA decision to this
Court which is now pending with a different division.

Thus, the instant petition for review against the October 1, 2010 Decision of the CA.
Petitioners put forth the following errors of the CA:

I.

The Court of Appeals erred when it did not dismiss the case for mootness
despite the fact that the subject matter of the controversy, the MPSA
Applications, have already been converted into FTAA applications and that
the same have already been granted.

II.
 The Court of Appeals erred when it did not dismiss the case for lack of
jurisdiction considering that the Panel of Arbitrators has no jurisdiction to
determine the nationality of Narra, Tesoro and McArthur.

III.

The Court of Appeals erred when it did not dismiss the case on account of
Redmont's willful forum shopping.

IV.

The Court of Appeals' ruling that Narra, Tesoro and McArthur are foreign
corporations based on the "Grandfather Rule" is contrary to law, particularly
the express mandate of the Foreign Investments Act of 1991, as amended, and
the FIA Rules.

V.

The Court of Appeals erred when it applied the exceptions to the res inter
alios acta rule.

VI.

The Court of Appeals erred when it concluded that the conversion of the
MPSA Applications into FTAA Applications were of "suspicious nature" as
the same is based on mere conjectures and surmises without any shred of
evidence to show the same. 31

We find the petition to be without merit.

This case not moot and academic

The claim of petitioners that the CA erred in not rendering the instant case as moot is
without merit.

Basically, a case is said to be moot and/or academic when it "ceases to present a

justiciable controversy by virtue of supervening events, so that a declaration thereon
would be of no practical use or value." 32 Thus, the courts "generally decline jurisdiction
over the case or dismiss it on the ground of mootness." 33

The "mootness" principle, however, does accept certain exceptions and the mere raising
of an issue of "mootness" will not deter the courts from trying a case when there is a valid
reason to do so. In David v. Macapagal-Arroyo (David), the Court provided four
instances where courts can decide an otherwise moot case, thus:
 1.) There is a grave violation of the Constitution;

2.) The exceptional character of the situation and paramount public interest is
involved;

3.) When constitutional issue raised requires formulation of controlling

principles to guide the bench, the bar, and the public; andcaTIDE

4.) The case is capable of repetition yet evading review. 34

All of the exceptions stated above are present in the instant case. We of this Court note
that a grave violation of the Constitution, specifically Section 2 of Article XII, is being
committed by a foreign corporation right under our country's nose through a myriad of
corporate layering under different, allegedly, Filipino corporations. The intricate
corporate layering utilized by the Canadian company, MBMI, is of exceptional character
and involves paramount public interest since it undeniably affects the exploitation of our
Country's natural resources. The corresponding actions of petitioners during the lifetime
and existence of the instant case raise questions as what principle is to be applied to cases
with similar issues. No definite ruling on such principle has been pronounced by the
Court; hence, the disposition of the issues or errors in the instant case will serve as a
guide "to the bench, the bar and the public." 35 Finally, the instant case is capable of
repetition yet evading review, since the Canadian company, MBMI, can keep on utilizing
dummy Filipino corporations through various schemes of corporate layering and
conversion of applications to skirt the constitutional prohibition against foreign mining in
Philippine soil.

Conversion of MPSA applications to FTAA applications

We shall discuss the first error in conjunction with the sixth error presented by petitioners
since both involve the conversion of MPSA applications to FTAA applications.
Petitioners propound that the CA erred in ruling against them since the questioned MPSA
applications were already converted into FTAA applications; thus, the issue on the
prohibition relating to MPSA applications of foreign mining corporations is academic.
Also, petitioners would want us to correct the CA's finding which deemed the
aforementioned conversions of applications as suspicious in nature, since it is based on
mere conjectures and surmises and not supported with evidence.

We disagree.

The CA's analysis of the actions of petitioners after the case was filed against them by
respondent is on point. The changing of applications by petitioners from one type to
another just because a case was filed against them, in truth, would raise not a few
sceptics' eyebrows. What is the reason for such conversion? Did the said conversion not
stem from the case challenging their citizenship and to have the case dismissed against
them for being "moot"? It is quite obvious that it is petitioners' strategy to have the case
dismissed against them for being "moot."

Consider the history of this case and how petitioners responded to every action done by
the court or appropriate government agency: on January 2, 2007, Redmont filed three
separate petitions for denial of the MPSA applications of petitioners before the POA. On
June 15, 2007, petitioners filed a conversion of their MPSA applications to FTAAs. The
POA, in its December 14, 2007 Resolution, observed this suspect change of applications
while the case was pending before it and held:

The filing of the Financial or Technical Assistance Agreement application is a

clear admission that the respondents are not capable of conducting a large scale
mining operation and that they need the financial and technical assistance of a
foreign entity in their operation that is why they sought the participation of
MBMI Resources, Inc. The participation of MBMI in the corporation only
proves the fact that it is the Canadian company that will provide the finances
and the resources to operate the mining areas for the greater benefit and interest
of the same and not the Filipino stockholders who only have a less substantial
financial stake in the corporation.

xxx xxx xxx

. . . The filing of the FTAA application on June 15, 2007, during the pendency
of the case only demonstrate the violations and lack of qualification of the
respondent corporations to engage in mining. The filing of the FTAA
application conversion which is allowed foreign corporation of the earlier
MPSA is an admission that indeed the respondent is not Filipino but rather
of foreign nationality who is disqualified under the laws. Corporate
documents of MBMI Resources, Inc. furnished its stockholders in their head
office in Canada suggest that they are conducting operation only through their
local counterparts. 36

On October 1, 2010, the CA rendered a Decision which partially granted the petition,
reversing and setting aside the September 10, 2008 and July 1, 2009 Orders of the MAB.
In the said Decision, the CA upheld the findings of the POA of the DENR that the herein
petitioners are in fact foreign corporations thus a recommendation of the rejection of their
MPSA applications were recommended to the Secretary of the DENR. With respect to
the FTAA applications or conversion of the MPSA applications to FTAAs, the CA
deferred the matter for the determination of the Secretary of the DENR and the President
of the Republic of the Philippines. 37

In their Motion for Reconsideration dated October 26, 2010, petitioners prayed for the
dismissal of the petition asserting that on April 5, 2010, then President Gloria
Macapagal-Arroyo signed and issued in their favor FTAA No. 05-2010-IVB, which
rendered the petition moot and academic. However, the CA, in a Resolution dated
February 15, 2011 denied their motion for being a mere "rehash of their claims and
defenses." 38 Standing firm on its Decision, the CA affirmed the ruling that petitioners
are, in fact, foreign corporations. On April 5, 2011, petitioners elevated the case to us via
a Petition for Review on Certiorari under Rule 45, questioning the Decision of the CA.
Interestingly, the OP rendered a Decision dated April 6, 2011, a day after this petition for
review was filed, cancelling and revoking the FTAAs, quoting the Order of the POA and
stating that petitioners are foreign corporations since they needed the financial strength of
MBMI, Inc. in order to conduct large scale mining operations. The OP Decision also
based the cancellation on the misrepresentation of facts and the violation of the "Small
Scale Mining Law and Environmental Compliance Certificate as well as Sections 3 and 8
of the Foreign Investment Act and E.O. 584." 39 On July 6, 2011, the OP issued a
Resolution, denying the Motion for Reconsideration filed by the petitioners.

Respondent Redmont, in its Comment dated October 10, 2011, made known to the Court
the fact of the OP's Decision and Resolution. In their Reply, petitioners chose to ignore
the OP Decision and continued to reuse their old arguments claiming that they were
granted FTAAs and, thus, the case was moot. Petitioners filed a Manifestation and
Submission dated October 19, 2012, 40 wherein they asserted that the present petition is
moot since, in a remarkable turn of events, MBMI was able to sell/assign all its
shares/interest in the "holding companies" to DMCI Mining Corporation (DMCI), a
Filipino corporation and, in effect, making their respective corporations fully-Filipino
owned.

Again, it is quite evident that petitioners have been trying to have this case dismissed for
being "moot." Their final act, wherein MBMI was able to allegedly sell/assign all its
shares and interest in the petitioner "holding companies" to DMCI, only proves that they
were in fact not Filipino corporations from the start. The recent divesting of interest by
MBMI will not change the stand of this Court with respect to the nationality of
petitioners prior the suspicious change in their corporate structures. The new documents
filed by petitioners are factual evidence that this Court has no power to verify.

The only thing clear and proved in this Court is the fact that the OP declared that
petitioner corporations have violated several mining laws and made misrepresentations
and falsehood in their applications for FTAA which lead to the revocation of the said
FTAAs, demonstrating that petitioners are not beyond going against or around the law
using shifty actions and strategies. Thus, in this instance, we can say that their claim of
mootness is moot in itself because their defense of conversion of MPSAs to FTAAs has
been discredited by the OP Decision.

Grandfather test

The main issue in this case is centered on the issue of petitioners' nationality, whether
Filipino or foreign. In their previous petitions, they had been adamant in insisting that
they were Filipino corporations, until they submitted their Manifestation and Submission
dated October 19, 2012 where they stated the alleged change of corporate ownership to
reflect their Filipino ownership. Thus, there is a need to determine the nationality of
petitioner corporations.

Basically, there are two acknowledged tests in determining the nationality of a

corporation: the control test and the grandfather rule. Paragraph 7 of DOJ Opinion No.
020, Series of 2005, adopting the 1967 SEC Rules which implemented the requirement of
the Constitution and other laws pertaining to the controlling interests in enterprises
engaged in the exploitation of natural resources owned by Filipino citizens, provides:

Shares belonging to corporations or partnerships at least 60% of the capital of

which is owned by Filipino citizens shall be considered as of Philippine
nationality, but if the percentage of Filipino ownership in the corporation or
partnership is less than 60%, only the number of shares corresponding to such
percentage shall be counted as of Philippine nationality. Thus, if 100,000 shares
are registered in the name of a corporation or partnership at least 60% of the
capital stock or capital, respectively, of which belong to Filipino citizens, all of
the shares shall be recorded as owned by Filipinos. But if less than 60%, or say,
50% of the capital stock or capital of the corporation or partnership,
respectively, belongs to Filipino citizens, only 50,000 shares shall be counted as
owned by Filipinos and the other 50,000 shall be recorded as belonging to
aliens.

The first part of paragraph 7, DOJ Opinion No. 020, stating "shares belonging to
corporations or partnerships at least 60% of the capital of which is owned by Filipino
citizens shall be considered as of Philippine nationality," pertains to the control test or the
liberal rule. On the other hand, the second part of the DOJ Opinion which provides, "if
the percentage of the Filipino ownership in the corporation or partnership is less than
60%, only the number of shares corresponding to such percentage shall be counted as
Philippine nationality," pertains to the stricter, more stringent grandfather rule. TaEIcS

Prior to this recent change of events, petitioners were constant in advocating the
application of the "control test" under RA 7042, as amended by RA 8179, otherwise
known as the Foreign Investments Act (FIA), rather than using the stricter grandfather
rule. The pertinent provision under Sec. 3 of the FIA provides:

SECTION 3. Definitions. — As used in this Act:

a.) The term Philippine national shall mean a citizen of the Philippines; or a
domestic partnership or association wholly owned by the citizens of the
Philippines; a corporation organized under the laws of the Philippines of which
at least sixty percent (60%) of the capital stock outstanding and entitled to vote
is wholly owned by Filipinos or a trustee of funds for pension or other employee
retirement or separation benefits, where the trustee is a Philippine national and
 at least sixty percent (60%) of the fund will accrue to the benefit of Philippine
nationals: Provided, That were a corporation and its non-Filipino
stockholders own stocks in a Securities and Exchange Commission (SEC)
registered enterprise, at least sixty percent (60%) of the capital stock
outstanding and entitled to vote of each of both corporations must be
owned and held by citizens of the Philippines and at least sixty percent
(60%) of the members of the Board of Directors, in order that the
corporation shall be considered a Philippine national. (emphasis supplied)

The grandfather rule, petitioners reasoned, has no leg to stand on in the instant case since
the definition of a "Philippine National" under Sec. 3 of the FIA does not provide for it.
They further claim that the grandfather rule "has been abandoned and is no longer the
applicable rule." 41 They also opined that the last portion of Sec. 3 of the FIA admits the
application of a "corporate layering" scheme of corporations. Petitioners claim that the
clear and unambiguous wordings of the statute preclude the court from construing it and
prevent the court's use of discretion in applying the law. They said that the plain, literal
meaning of the statute meant the application of the control test is obligatory.

We disagree. "Corporate layering" is admittedly allowed by the FIA; but if it is used to

circumvent the Constitution and pertinent laws, then it becomes illegal. Further, the
pronouncement of petitioners that the grandfather rule has already been abandoned must
be discredited for lack of basis.

Art. XII, Sec. 2 of the Constitution provides:

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum and
other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State.
With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources
shall be under the full control and supervision of the State. The State may
directly undertake such activities, or it may enter into co-production, joint
venture or production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is
owned by such citizens. Such agreements may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under
such terms and conditions as may be provided by law.

xxx xxx xxx

The President may enter into agreements with Foreign-owned corporations

involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In
 such agreements, the State shall promote the development and use of local
scientific and technical resources. (emphasis supplied)

The emphasized portion of Sec. 2 which focuses on the State entering into different types
of agreements for the exploration, development, and utilization of natural resources with
entities who are deemed Filipino due to 60 percent ownership of capital is pertinent to
this case, since the issues are centered on the utilization of our country's natural resources
or specifically, mining. Thus, there is a need to ascertain the nationality of petitioners
since, as the Constitution so provides, such agreements are only allowed corporations or
associations "at least 60 percent of such capital is owned by such citizens." The
deliberations in the Records of the 1986 Constitutional Commission shed light on how a
citizenship of a corporation will be determined:

Mr. BENNAGEN:

Did I hear right that the Chairman's interpretation of an independent national

economy is freedom from undue foreign control? What is the meaning
of undue foreign control?

MR. VILLEGAS:

Undue foreign control is foreign control which sacrifices national sovereignty

and the welfare of the Filipino in the economic sphere.

MR. BENNAGEN:

Why does it have to be qualified still with the word "undue"? Why not simply
freedom from foreign control? I think that is the meaning of
independence, because as phrased, it still allows for foreign control.

MR. VILLEGAS:

It will now depend on the interpretation because if, for example, we retain the
60/40 possibility in the cultivation of natural resources, 40 percent
involves some control; not total control, but some control.

MR. BENNAGEN:

In any case, I think in due time we will propose some amendments.

MR. VILLEGAS:

Yes. But we will be open to improvement of the phraseology.

Mr. BENNAGEN:
Yes.

Thank you, Mr. Vice-President.

xxx xxx xxx

MR. NOLLEDO:

In Sections 3, 9 and 15, the Committee stated local or Filipino equity and
foreign equity; namely, 60-40 in Section 3, 60-40 in Section 9, and 2/3-
1/3 in Section 15.

MR. VILLEGAS:

That is right.

MR. NOLLEDO:

In teaching law, we are always faced with the question: 'Where do we base the
equity requirement, is it on the authorized capital stock, on the
subscribed capital stock, or on the paid-up capital stock of a
corporation'? Will the Committee please enlighten me on this?

MR. VILLEGAS:

We have just had a long discussion with the members of the team from the UP
Law Center who provided us with a draft. The phrase that is contained
here which we adopted from the UP draft is '60 percent of the voting
stock.'

MR. NOLLEDO:

That must be based on the subscribed capital stock, because unless declared
delinquent, unpaid capital stock shall be entitled to vote.

MR. VILLEGAS:

That is right.

MR. NOLLEDO:

Thank you.

With respect to an investment by one corporation in another corporation,

say, a corporation with 60-40 percent equity invests in another
 corporation which is permitted by the Corporation Code, does the
Committee adopt the grandfather rule?

MR. VILLEGAS:

Yes, that is the understanding of the Committee.

MR. NOLLEDO:

Therefore, we need additional Filipino capital?

MR. VILLEGAS:

Yes. 42 (emphasis supplied)

It is apparent that it is the intention of the framers of the Constitution to apply the
grandfather rule in cases where corporate layering is present. Elementary in statutory
construction is when there is conflict between the Constitution and a statute, the
Constitution will prevail. In this instance, specifically pertaining to the provisions under
Art. XII of the Constitution on National Economy and Patrimony, Sec. 3 of the FIA will
have no place of application. As decreed by the honorable framers of our Constitution,the
grandfather rule prevails and must be applied.

Likewise, paragraph 7, DOJ Opinion No. 020, Series of 2005 provides:

The above-quoted SEC Rules provide for the manner of calculating the Filipino
interest in a corporation for purposes, among others, of determining compliance
with nationality requirements (the 'Investee Corporation'). Such manner of
computation is necessary since the shares in the Investee Corporation may be
owned both by individual stockholders ('Investing Individuals') and by
corporations and partnerships ('Investing Corporation'). The said rules thus
provide for the determination of nationality depending on the ownership of the
Investee Corporation and, in certain instances, the Investing Corporation.

Under the above-quoted SEC Rules, there are two cases in determining the
nationality of the Investee Corporation. The first case is the 'liberal rule', later
coined by the SEC as the Control Test in its 30 May 1990 Opinion, and pertains
to the portion in said Paragraph 7 of the 1967 SEC Rules which states, '(s)hares
belonging to corporations or partnerships at least 60% of the capital of which is
owned by Filipino citizens shall be considered as of Philippine nationality.'
Under the liberal Control Test, there is no need to further trace the ownership of
the 60% (or more) Filipino stockholdings of the Investing Corporation since a
corporation which is at least 60% Filipino-owned is considered as Filipino.

The second case is the Strict Rule or the Grandfather Rule Proper and pertains
to the portion in said Paragraph 7 of the 1967 SEC Rules which states, "but if
 the percentage of Filipino ownership in the corporation or partnership is less
than 60%, only the number of shares corresponding to such percentage shall be
counted as of Philippine nationality." Under the Strict Rule or Grandfather Rule
Proper, the combined totals in the Investing Corporation and the Investee
Corporation must be traced (i.e., "grandfathered") to determine the total
percentage of Filipino ownership.

Moreover, the ultimate Filipino ownership of the shares must first be traced to
the level of the Investing Corporation and added to the shares directly owned in
the Investee Corporation . . . .

xxx xxx xxx

In other words, based on the said SEC Rule and DOJ Opinion, the Grandfather
Rule or the second part of the SEC Rule applies only when the 60-40
Filipino-foreign equity ownership is in doubt (i.e., in cases where the joint
venture corporation with Filipino and foreign stockholders with less than 60%
Filipino stockholdings [or 59%] invests in other joint venture corporation which
is either 60-40% Filipino-alien or the 59% less Filipino). Stated differently,
where the 60-40 Filipino-foreign equity ownership is not in doubt, the
Grandfather Rule will not apply. (emphasis supplied) CTacSE

After a scrutiny of the evidence extant on record, the Court finds that this case calls for
the application of the grandfather rule since, as ruled by the POA and affirmed by the OP,
doubt prevails and persists in the corporate ownership of petitioners. Also, as found by
the CA, doubt is present in the 60-40 Filipino equity ownership of petitioners Narra,
McArthur and Tesoro, since their common investor, the 100% Canadian corporation —
MBMI, funded them. However, petitioners also claim that there is "doubt" only when the
stockholdings of Filipinos are less than 60%. 43

The assertion of petitioners that "doubt" only exists when the stockholdings are less than
60% fails to convince this Court. DOJ Opinion No. 20, which petitioners quoted in their
petition, only made an example of an instance where "doubt" as to the ownership of the
corporation exists. It would be ludicrous to limit the application of the said word only to
the instances where the stockholdings of non-Filipino stockholders are more than 40% of
the total stockholdings in a corporation. The corporations interested in circumventing our
laws would clearly strive to have "60% Filipino Ownership" at face value. It would be
senseless for these applying corporations to state in their respective articles of
incorporation that they have less than 60% Filipino stockholders since the applications
will be denied instantly. Thus, various corporate schemes and layerings are utilized to
circumvent the application of the Constitution.

Obviously, the instant case presents a situation which exhibits a scheme employed by
stockholders to circumvent the law, creating a cloud of doubt in the Court's mind. To
 determine, therefore, the actual participation, direct or indirect, of MBMI, the grandfather
rule must be used.

McArthur Mining, Inc.

To establish the actual ownership, interest or participation of MBMI in each of

petitioners' corporate structure, they have to be "grandfathered."

As previously discussed, McArthur acquired its MPSA application from MMC, which
acquired its application from SMMI. McArthur has a capital stock of ten million pesos
(PhP10,000,000) divided into 10,000 common shares at one thousand pesos (PhP1,000)
per share, subscribed to by the following: 44

Name Nationality Number of Amount Amount Paid

Shares Subscribed

Madridejos Mining Filipino 5,997 PhP5,997,000.00 PhP825,000.00

Corporation
MBMI Resources, Canadian 3,998 PhP3,998,000.00 PhP1,878,174.60
Inc.
Lauro L. Salazar Filipino 1 PhP1,000.00 PhP1,000.00
Fernando B. Filipino 1 PhP1,000.00 PhP1,000.00
Esguerra
Manuel A. Agcaoili Filipino 1 PhP1,000.00 PhP1,000.00
Michael T. Mason American 1 PhP1,000.00 PhP1,000.00
Kenneth Cawkell Canadian 1 PhP1,000.00 PhP1,000.00
––––––– ––––––––––––– ––––––––––––––
Total 10,000 PhP10,000,000.00 PhP2,708,174.60
====== ============ ============
(emphasis supplied)

Interestingly, looking at the corporate structure of MMC, we take note that it

has a similar structure and composition as McArthur. In fact, it would seem that
MBMI is also a major investor and "controls" 45 MBMI and also, similar nominal
shareholders were present, i.e., Fernando B. Esguerra (Esguerra), Lauro L. Salazar
(Salazar), Michael T. Mason (Mason) and Kenneth Cawkell (Cawkell):
Madridejos Mining Corporation
Name Nationality Number of Amount Amount Paid
Shares Subscribed

Olympic Mines & Filipino 6,663 PhP6,663,000.00 PhP0

Development Corp.
MBMI Resources, Canadian 3,331 PhP3,331,000.00 PhP2,803,900.00
Inc.
Amanti Limson Filipino 1 PhP1,000.00 PhP1,000.00
Fernando B. Filipino 1 PhP1,000.00 PhP1,000.00
Esguerra
Lauro Salazar Filipino 1 PhP1,000.00 PhP1,000.00
Emmanuel G. Filipino 1 PhP1,000.00 PhP1,000.00
Hernando
Michael T. Mason American 1 PhP1,000.00 PhP1,000.00
Kenneth Cawkell Canadian 1 PhP1,000.00 PhP1,000.00
––––––– –––––––––––––––– ––––––––––––––––
Total 10,000 PhP10,000,000.00 PhP2,809,900.00
====== ============== ==============
(emphasis supplied)

Noticeably, Olympic Mines & Development Corporation (Olympic) did not pay any
amount with respect to the number of shares they subscribed to in the corporation, which
is quite absurd since Olympic is the major stockholder in MMC. MBMI's 2006 Annual
Report sheds light on why Olympic failed to pay any amount with respect to the number
of shares it subscribed to. It states that Olympic entered into joint venture agreements
with several Philippine companies, wherein it holds directly and indirectly a 60%
effective equity interest in the Olympic Properties. 46 Quoting the said Annual report:

On September 9, 2004, the Company and Olympic Mines & Development

Corporation ("Olympic") entered into a series of agreements including a
Property Purchase and Development Agreement (the Transaction Documents)
with respect to three nickel laterite properties in Palawan, Philippines (the
"Olympic Properties"). The Transaction Documents effectively establish a
joint venture between the Company and Olympic for purposes of
developing the Olympic Properties. The Company holds directly and
indirectly an initial 60% interest in the joint venture. Under certain
circumstances and upon achieving certain milestones, the Company may
earn up to a 100% interest, subject to a 2.5% net revenue royalty. 47
(emphasis supplied)

Thus, as demonstrated in this first corporation, McArthur, when it is "grandfathered,"

company layering was utilized by MBMI to gain control over McArthur. It is apparent
that MBMI has more than 60% or more equity interest in McArthur, making the latter a
foreign corporation.

Tesoro Mining and Development, Inc.

Tesoro, which acquired its MPSA application from SMMI, has a capital stock of ten
million pesos (PhP10,000,000) divided into ten thousand (10,000) common shares at
PhP1,000 per share, as demonstrated below:
 Name Nationality Number of Amount Amount Paid
Shares Subscribed

Sara Marie Filipino 5,997 PhP5,997,000.00 PhP825,000.00

Mining, Inc.
MBMI Canadian 3,998 PhP3,998,000.00 PhP1,878,174.60
Resources, Inc.
Lauro L. Salazar Filipino 1 PhP1,000.00 PhP1,000.00
Fernando B. Filipino 1 PhP1,000.00 PhP1,000.00
Esguerra
Manuel A. Filipino 1 PhP1,000.00 PhP1,000.00
Agcaoili
Michael T. Mason American 1 PhP1,000.00 PhP1,000.00
Kenneth Cawkell Canadian 1 PhP1,000.00 PhP1,000.00
–––––– –––––––––––––––– –––––––––––––––
Total 10,000 PhP10,000,000.00 PhP2,708,174.60
===== ============== =============
(emphasis supplied)

Except for the name "Sara Marie Mining, Inc.," the table above shows exactly the same
figures as the corporate structure of petitioner McArthur, down to the last centavo. All the
other shareholders are the same: MBMI, Salazar, Esguerra, Agcaoili, Mason and
Cawkell. The figures under "Nationality," "Number of Shares," "Amount Subscribed,"
and "Amount Paid" are exactly the same. Delving deeper, we scrutinize SMMI's
corporate structure:

Name Nationality Number of Amount Amount Paid

Shares Subscribed

Olympic Mines & Filipino 6,663 PhP6,663,000.00 PhP0

Development Corp.
MBMI Resources, Canadian 3,331 PhP3,331,000.00 PhP2,794,000.00
Inc.
Amanti Limson Filipino 1 PhP1,000.00 PhP1,000.00
Fernando B. Filipino 1 PhP1,000.00 PhP1,000.00
Esguerra
Lauro Salazar Filipino 1 PhP1,000.00 PhP1,000.00
Emmanuel G. Filipino 1 PhP1,000.00 PhP1,000.00
Hernando
Michael T. Mason American 1 PhP1,000.00 PhP1,000.00
Kenneth Cawkell Canadian 1 PhP1,000.00 PhP1,000.00
–––––– ––––––––––––– ––––––––––––––
Total 10,000 PhP10,000,000.00 PhP2,809,900.00
====== ============= ============
 (emphasis supplied)

After subsequently studying SMMI's corporate structure, it is not farfetched for us to spot
the glaring similarity between SMMI and MMC's corporate structure. Again, the
presence of identical stockholders, namely: Olympic, MBMI, Amanti Limson (Limson),
Esguerra, Salazar, Hernando, Mason and Cawkell. The figures under the headings
"Nationality," "Number of Shares," "Amount Subscribed," and "Amount Paid" are
exactly the same except for the amount paid by MBMI which now reflects the amount of
two million seven hundred ninety four thousand pesos (PhP2,794,000). Oddly, the total
value of the amount paid is two million eight hundred nine thousand nine hundred pesos
(PhP2,809,900).

Accordingly, after "grandfathering" petitioner Tesoro and factoring in Olympic's

participation in SMMI's corporate structure, it is clear that MBMI is in control of Tesoro
and owns 60% or more equity interest in Tesoro. This makes petitioner Tesoro a non-
Filipino corporation and, thus, disqualifies it to participate in the exploitation, utilization
and development of our natural resources.

Narra Nickel Mining and Development Corporation

Moving on to the last petitioner, Narra, which is the transferee and assignee of PLMDC's
MPSA application, whose corporate structure's arrangement is similar to that of the first
two petitioners discussed. The capital stock of Narra is ten million pesos
(PhP10,000,000), which is divided into ten thousand common shares (10,000) at one
thousand pesos (PhP1,000) per share, shown as follows: ACHEaI

Name Nationality Number of Amount Amount Paid

Shares Subscribed

Patricia Louise Filipino 5,997 PhP5,997,000.00 PhP1,677,000.00

Mining &
Development
Corp.
MBMI Canadian 3,998 PhP3,996,000.00 PhP1,116,000.00
Resources, Inc.
Higinio C. Filipino 1 PhP1,000.00 PhP1,000.00
Mendoza, Jr.
Henry E. Filipino 1 PhP1,000.00 PhP1,000.00
Fernandez
Manuel A. Filipino 1 PhP1,000.00 PhP1,000.00
Agcaoili
Ma. Elena A. Filipino 1 PhP1,000.00 PhP1,000.00
Bocalan
Bayani H. Agabin Filipino 1 PhP1,000.00 PhP1,000.00
Robert L. American 1 PhP1,000.00 PhP1,000.00
McCurdy
Kenneth Cawkell Canadian 1 PhP1,000.00 PhP1,000.00
––––––– ––––––––––––– ––––––––––––––
Total 10,000 PhP10,000,000.00 PhP2,800,000.00
====== ============= =============

Again, MBMI, along with other nominal stockholders, i.e., Mason, Agcaoili and
Esguerra, is present in this corporate structure.

Patricia Louise Mining & Development Corporation

Using the grandfather method, we further look and examine PLMDC's corporate
structure:

Name Nationality Number of Amount Amount Paid

Shares Subscribed

Palawan Alpha Filipino 6,596 PhP6,596,000.00 PhP0

South Resources
Development
Corporation
MBMI Resources, Canadian 3,396 PhP3,396,000.00 PhP2,796,000.00
Inc.
Higinio C. Filipino 1 PhP1,000.00 PhP1,000.00
Mendoza, Jr.
Fernando B. Filipino 1 PhP1,000.00 PhP1,000.00
Esguerra
Henry E. Filipino 1 PhP1,000.00 PhP1,000.00
Fernandez
Lauro L. Salazar Filipino 1 PhP1,000.00 PhP1,000.00
Manuel A. Agcaoili Filipino 1 PhP1,000.00 PhP1,000.00
Bayani H. Agabin Filipino 1 PhP1,000.00 PhP1,000.00
Michael T. Mason American 1 PhP1,000.00 PhP1,000.00
Kenneth Cawkell Canadian 1 PhP1,000.00 PhP1,000.00
––––––– ––––––––––––– ––––––––––––––
Total 10,000 PhP10,000,000.00 PhP2,708,174.60
====== ============= ============
(emphasis supplied)
Yet again, the usual players in petitioners' corporate structures are present. Similarly, the
amount of money paid by the 2nd tier majority stock holder, in this case, Palawan Alpha
South Resources and Development Corp. (PASRDC), is zero.

Studying MBMI's Summary of Significant Accounting Policies dated October 31, 2005
explains the reason behind the intricate corporate layering that MBMI immersed itself in:

JOINT VENTURES The Company's ownership interests in various

mining ventures engaged in the acquisition,
exploration and development of mineral properties
in the Philippines is described as follows:

(a) Olympic Group

The Philippine companies holding the Olympic Property, and the ownership
and interests therein, are as follows:

Olympic-Philippines (the "Olympic Group"

Sara Marie Mining Properties Ltd. ("Sara Marie") — 33.3%
Tesoro Mining & Development, Inc. (Tesoro) — 60.0%

Pursuant to the Olympic joint venture agreement the Company holds

directly and indirectly an effective equity interest in the Olympic
Property of 60.0%. Pursuant to a shareholders' agreement, the Company
exercises joint control over the companies in the Olympic Group.

(b) Alpha Group

The Philippine companies holding the Alpha Property, and the ownership
interests therein, are as follows:

Alpha-Philippines (the "Alpha Group")

Patricia Louise Mining Development Inc. ("Patricia") — 34.0%
Narra Nickel Mining & Development Corporation (Narra) — 60.4%

Under a joint venture agreement the Company holds directly and indirectly
an effective equity interest in the Alpha Property of 60.4%. Pursuant to a
shareholders' agreement, the Company exercises joint control over the
companies in the Alpha Group. 48 (emphasis supplied)

Concluding from the above-stated facts, it is quite safe to say that petitioners McArthur,
Tesoro and Narra are not Filipino since MBMI, a 100% Canadian corporation, owns 60%
or more of their equity interests. Such conclusion is derived from grandfathering
petitioners' corporate owners, namely: MMI, SMMI and PLMDC. Going further and
adding to the picture, MBMI's Summary of Significant Accounting Policies statement —
regarding the "joint venture" agreements that it entered into with the "Olympic" and
"Alpha" groups — involves SMMI, Tesoro, PLMDC and Narra. Noticeably, the
ownership of the "layered" corporations boils down to MBMI, Olympic or corporations
under the "Alpha" group wherein MBMI has joint venture agreements with, practically
exercising majority control over the corporations mentioned. In effect, whether looking at
the capital structure or the underlying relationships between and among the corporations,
petitioners are NOT Filipino nationals and must be considered foreign since 60% or more
of their capital stocks or equity interests are owned by MBMI.

Application of the res inter alios acta rule

Petitioners question the CA's use of the exception of the res inter alios acta or the
"admission by co-partner or agent" rule and "admission by privies" under the Rules of
Court in the instant case, by pointing out that statements made by MBMI should not be
admitted in this case since it is not a party to the case and that it is not a "partner" of
petitioners.

Secs. 29 and 31, Rule 130 of the Revised Rules of Court provide:

Sec. 29. Admission by co-partner or agent. — The act or declaration of a

partner or agent of the party within the scope of his authority and during the
existence of the partnership or agency, may be given in evidence against such
party after the partnership or agency is shown by evidence other than such act or
declaration itself. The same rule applies to the act or declaration of a joint
owner, joint debtor, or other person jointly interested with the party.

Sec. 31. Admission by privies. — Where one derives title to property from
another, the act, declaration, or omission of the latter, while holding the title, in
relation to the property, is evidence against the former.

Petitioners claim that before the above-mentioned Rule can be applied to a case, "the
partnership relation must be shown, and that proof of the fact must be made by evidence
other than the admission itself." 49 Thus, petitioners assert that the CA erred in finding
that a partnership relationship exists between them and MBMI because, in fact, no such
partnership exists.

Partnerships vs. joint venture agreements

Petitioners claim that the CA erred in applying Sec. 29, Rule 130 of the Rules by stating
that "by entering into a joint venture, MBMI have a joint interest" with Narra, Tesoro and
McArthur. They challenged the conclusion of the CA which pertains to the close
characteristics of "partnerships" and "joint venture agreements." Further, they asserted
that before this particular partnership can be formed, it should have been formally
reduced into writing since the capital involved is more than three thousand pesos
(PhP3,000). Being that there is no evidence of written agreement to form a partnership
between petitioners and MBMI, no partnership was created.

We disagree.

A partnership is defined as two or more persons who bind themselves to contribute

money, property, or industry to a common fund with the intention of dividing the profits
among themselves. 50 On the other hand, joint ventures have been deemed to be "akin"
to partnerships since it is difficult to distinguish between joint ventures and partnerships.
Thus: IEDHAT

[T]he relations of the parties to a joint venture and the nature of their association
are so similar and closely akin to a partnership that it is ordinarily held that their
rights, duties, and liabilities are to be tested by rules which are closely
analogous to and substantially the same, if not exactly the same, as those which
govern partnership. In fact, it has been said that the trend in the law has been to
blur the distinctions between a partnership and a joint venture, very little law
being found applicable to one that does not apply to the other. 51

Though some claim that partnerships and joint ventures are totally different animals,
there are very few rules that differentiate one from the other; thus, joint ventures are
deemed "akin" or similar to a partnership. In fact, in joint venture agreements, rules and
legal incidents governing partnerships are applied. 52

Accordingly, culled from the incidents and records of this case, it can be assumed that the
relationships entered between and among petitioners and MBMI are no simple "joint
venture agreements." As a rule, corporations are prohibited from entering into partnership
agreements; consequently, corporations enter into joint venture agreements with other
corporations or partnerships for certain transactions in order to form "pseudo
partnerships." Obviously, as the intricate web of "ventures" entered into by and among
petitioners and MBMI was executed to circumvent the legal prohibition against
corporations entering into partnerships, then the relationship created should be deemed as
"partnerships," and the laws on partnership should be applied. Thus, a joint venture
agreement between and among corporations may be seen as similar to partnerships since
the elements of partnership are present.

Considering that the relationships found between petitioners and MBMI are considered to
be partnerships, then the CA is justified in applying Sec. 29, Rule 130 of the Rules by
stating that "by entering into a joint venture, MBMI have a joint interest" with Narra,
Tesoro and McArthur.

Panel of Arbitrators' jurisdiction

We affirm the ruling of the CA in declaring that the POA has jurisdiction over the instant
case. The POA has jurisdiction to settle disputes over rights to mining areas which
definitely involve the petitions filed by Redmont against petitioners Narra, McArthur and
Tesoro. Redmont, by filing its petition against petitioners, is asserting the right of
Filipinos over mining areas in the Philippines against alleged foreign-owned mining
corporations. Such claim constitutes a "dispute" found in Sec. 77 of RA 7942:

Within thirty (30) days, after the submission of the case by the parties for the
decision, the panel shall have exclusive and original jurisdiction to hear and
decide the following:

(a) Disputes involving rights to mining areas

(b) Disputes involving mineral agreements or permits

We held in Celestial Nickel Mining Exploration Corporation v. Macroasia Corp.: 53

The phrase "disputes involving rights to mining areas" refers to any adverse
claim, protest, or opposition to an application for mineral agreement. The POA
therefore has the jurisdiction to resolve any adverse claim, protest, or opposition
to a pending application for a mineral agreement filed with the concerned
Regional Office of the MGB. This is clear from Secs. 38 and 41 of the DENR
AO 96-40, which provide:

Sec. 38.

xxx xxx xxx

Within thirty (30) calendar days from the last date of

publication/posting/radio announcements, the authorized officer(s) of the
concerned office(s) shall issue a certification(s) that the
publication/posting/radio announcement have been complied with. Any
adverse claim, protest, opposition shall be filed directly, within
thirty (30) calendar days from the last date of
publication/posting/radio announcement, with the concerned
Regional Office or through any concerned PENRO or CENRO for
filing in the concerned Regional Office for purposes of its resolution
by the Panel of Arbitrators pursuant to the provisions of this Act
and these implementing rules and regulations. Upon final resolution
of any adverse claim, protest or opposition, the Panel of Arbitrators
shall likewise issue a certification to that effect within five (5)
working days from the date of finality of resolution thereof. Where
there is no adverse claim, protest or opposition, the Panel of
Arbitrators shall likewise issue a Certification to that effect within
five working days therefrom.
 xxx xxx xxx

No Mineral Agreement shall be approved unless the requirements

under this Section are fully complied with and any adverse
claim/protest/opposition is finally resolved by the Panel of
Arbitrators.

Sec. 41.

xxx xxx xxx

Within fifteen (15) working days from the receipt of the

Certification issued by the Panel of Arbitrators as provided in
Section 38 hereof, the concerned Regional Director shall initially
evaluate the Mineral Agreement applications in areas outside
Mineral reservations. He/She shall thereafter endorse his/her
findings to the Bureau for further evaluation by the Director within
fifteen (15) working days from receipt of forwarded documents.
Thereafter, the Director shall endorse the same to the secretary for
consideration/approval within fifteen working days from receipt of
such endorsement.

In case of Mineral Agreement applications in areas with Mineral

Reservations, within fifteen (15) working days from receipt of the
Certification issued by the Panel of Arbitrators as provided for in
Section 38 hereof, the same shall be evaluated and endorsed by the
Director to the Secretary for consideration/approval within fifteen days
from receipt of such endorsement. (emphasis supplied) ACcDEa

It has been made clear from the aforecited provisions that the "disputes
involving rights to mining areas" under Sec. 77(a) specifically refer only to
those disputes relative to the applications for a mineral agreement or
conferment of mining rights.

The jurisdiction of the POA over adverse claims, protest, or oppositions to a

mining right application is further elucidated by Secs. 219 and 43 of DENR AO
95-936, which read:

Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions. —

Notwithstanding the provisions of Sections 28, 43 and 57 above, any
adverse claim, protest or opposition specified in said sections may
also be filed directly with the Panel of Arbitrators within the
concerned periods for filing such claim, protest or opposition as
specified in said Sections.

Sec. 43. Publication/Posting of Mineral Agreement. —

 xxx xxx xxx

The Regional Director or concerned Regional Director shall also cause

the posting of the application on the bulletin boards of the Bureau,
concerned Regional office(s) and in the concerned province(s) and
municipality(ies), copy furnished the barangays where the proposed
contract area is located once a week for two (2) consecutive weeks in a
language generally understood in the locality. After forty-five (45) days
from the last date of publication/posting has been made and no adverse
claim, protest or opposition was filed within the said forty-five (45)
days, the concerned offices shall issue a certification that
publication/posting has been made and that no adverse claim, protest or
opposition of whatever nature has been filed. On the other hand, if
there be any adverse claim, protest or opposition, the same shall be
filed within forty-five (45) days from the last date of
publication/posting, with the Regional Offices concerned, or
through the Department's Community Environment and Natural
Resources Officers (CENRO) or Provincial Environment and
Natural Resources Officers (PENRO), to be filed at the Regional
Office for resolution of the Panel of Arbitrators. However previously
published valid and subsisting mining claims are exempted from
posted/posting required under this Section.

No mineral agreement shall be approved unless the requirements

under this section are fully complied with and any
opposition/adverse claim is dealt with in writing by the Director and
resolved by the Panel of Arbitrators. (Emphasis supplied.)

It has been made clear from the aforecited provisions that the "disputes
involving rights to mining areas" under Sec. 77(a) specifically refer only to
those disputes relative to the applications for a mineral agreement or
conferment of mining rights.

The jurisdiction of the POA over adverse claims, protest, or oppositions to a

mining right application is further elucidated by Secs. 219 and 43 of DENRO
AO 95-936, which reads:

Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions. —

Notwithstanding the provisions of Sections 28, 43 and 57 above, any
adverse claim, protest or opposition specified in said sections may also
be filed directly with the Panel of Arbitrators within the concerned
periods for filing such claim, protest or opposition as specified in said
Sections.

Sec. 43. Publication/Posting of Mineral Agreement Application. —

 xxx xxx xxx

The Regional Director or concerned Regional Director shall also cause

the posting of the application on the bulletin boards of the Bureau,
concerned Regional office(s) and in the concerned province(s) and
municipality(ies), copy furnished the barangays where the proposed
contract area is located once a week for two (2) consecutive weeks in a
language generally understood in the locality. After forty-five (45) days
from the last date of publication/posting has been made and no adverse
claim, protest or opposition was filed within the said forty-five (45)
days, the concerned offices shall issue a certification that
publication/posting has been made and that no adverse claim, protest or
opposition of whatever nature has been filed. On the other hand, if
there be any adverse claim, protest or opposition, the same shall be
filed within forty-five (45) days from the last date of
publication/posting, with the Regional offices concerned, or through
the Department's Community Environment and Natural Resources
Officers (CENRO) or Provincial Environment and Natural
Resources Officers (PENRO), to be filed at the Regional Office for
resolution of the Panel of Arbitrators. However, previously published
valid and subsisting mining claims are exempted from posted/posting
required under this Section.

No mineral agreement shall be approved unless the requirements

under this section are fully complied with and any
opposition/adverse claim is dealt with in writing by the Director and
resolved by the Panel of Arbitrators. (Emphasis supplied.)

These provisions lead us to conclude that the power of the POA to resolve any
adverse claim, opposition, or protest relative to mining rights under Sec. 77(a)
of RA 7942 is confined only to adverse claims, conflicts and oppositions
relating to applications for the grant of mineral rights. POA's jurisdiction is
confined only to resolutions of such adverse claims, conflicts and
oppositions and it has no authority to approve or reject said applications.
Such power is vested in the DENR Secretary upon recommendation of the
MGB Director. Clearly, POA's jurisdiction over "disputes involving rights
to mining areas" has nothing to do with the cancellation of existing mineral
agreements. (emphasis ours)

Accordingly, as we enunciated in Celestial, the POA unquestionably has jurisdiction to

resolve disputes over MPSA applications subject of Redmont's petitions. However, said
jurisdiction does not include either the approval or rejection of the MPSA applications,
which is vested only upon the Secretary of the DENR. Thus, the finding of the POA, with
respect to the rejection of petitioners' MPSA applications being that they are foreign
corporation, is valid.
Justice Marvic Mario Victor F. Leonen, in his Dissent, asserts that it is the regular courts,
not the POA, that has jurisdiction over the MPSA applications of petitioners.

This postulation is incorrect.

It is basic that the jurisdiction of the court is determined by the statute in force at the time
of the commencement of the action. 54

Sec. 19, Batas Pambansa Blg. 129 or "The Judiciary Reorganization Act of 1980" reads:

Sec. 19. Jurisdiction in Civil Cases. — Regional Trial Courts shall exercise
exclusive original jurisdiction:

1. In all civil actions in which the subject of the litigation is incapable of

pecuniary estimation.

On the other hand, the jurisdiction of POA is unequivocal from Sec. 77 of RA 7942:

Section 77. Panel of Arbitrators. —

. . . Within thirty (30) days, after the submission of the case by the parties for
the decision, the panel shall have exclusive and original jurisdiction to hear and
decide the following:

(c) Disputes involving rights to mining areas SEIcHa

(d) Disputes involving mineral agreements or permits

It is clear that POA has exclusive and original jurisdiction over any and all disputes
involving rights to mining areas. One such dispute is an MPSA application to which an
adverse claim, protest or opposition is filed by another interested applicant. In the case at
bar, the dispute arose or originated from MPSA applications where petitioners are
asserting their rights to mining areas subject of their respective MPSA applications. Since
respondent filed 3 separate petitions for the denial of said applications, then a controversy
has developed between the parties and it is POA's jurisdiction to resolve said disputes.

Moreover, the jurisdiction of the RTC involves civil actions while what petitioners filed
with the DENR Regional Office or any concerned DENRE or CENRO are MPSA
applications. Thus POA has jurisdiction.

Furthermore, the POA has jurisdiction over the MPSA applications under the doctrine of
primary jurisdiction. Euro-med Laboratories v. Province of Batangas 55 elucidates:

The doctrine of primary jurisdiction holds that 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 courts is had even if the matter may well be
within their proper jurisdiction.

Whatever may be the decision of the POA will eventually reach the court system via a
resort to the CA and to this Court as a last recourse.

Selling of MBMI's shares to DMCI

As stated before, petitioners' Manifestation and Submission dated October 19, 2012
would want us to declare the instant petition moot and academic due to the transfer and
conveyance of all the shareholdings and interests of MBMI to DMCI, a corporation duly
organized and existing under Philippine laws and is at least 60% Philippine-owned. 56
Petitioners reasoned that they now cannot be considered as foreign-owned; the transfer of
their shares supposedly cured the "defect" of their previous nationality. They claimed that
their current FTAA contract with the State should stand since "even wholly-owned
foreign corporations can enter into an FTAA with the State." 57 Petitioners stress that
there should no longer be any issue left as regards their qualification to enter into FTAA
contracts since they are qualified to engage in mining activities in the Philippines. Thus,
whether the "grandfather rule" or the "control test" is used, the nationalities of petitioners
cannot be doubted since it would pass both tests.

The sale of the MBMI shareholdings to DMCI does not have any bearing in the instant
case and said fact should be disregarded. The manifestation can no longer be considered
by us since it is being tackled in G.R. No. 202877 pending before this Court. Thus, the
question of whether petitioners, allegedly a Philippine-owned corporation due to the sale
of MBMI's shareholdings to DMCI, are allowed to enter into FTAAs with the State is a
non-issue in this case.

In ending, the "control test" is still the prevailing mode of determining whether or not a
corporation is a Filipino corporation, within the ambit of Sec. 2, Art. II of the 1987
Constitution, entitled to undertake the exploration, development and utilization of the
natural resources of the Philippines. When in the mind of the Court there is doubt, based
on the attendant facts and circumstances of the case, in the 60-40 Filipino-equity
ownership in the corporation, then it may apply the "grandfather rule."

WHEREFORE, premises considered, the instant petition is DENIED. The assailed

Court of Appeals Decision dated October 1, 2010 and Resolution dated February 15,
2011 are hereby AFFIRMED.

SO ORDERED.

Peralta, Abad and Mendoza, JJ., concur.

Leonen, J., I dissent. See separate opinion.

Separate Opinions
LEONEN, J., dissenting:

Investments into our economy are deterred by interpretations of law that are
not based on solid ground and sound rationale. Predictability in policy is a very strong
factor in determining investor confidence.
The so-called "Grandfather Rule" has no statutory basis. It is the Control Test
that governs in determining Filipino equity in corporations. It is this test that is
provided in statute and by our most recent jurisprudence.
Furthermore, the Panel of Arbitrators created by the Philippine Mining Act is
not a court of law. It cannot decide judicial questions with finality. This includes the
determination of whether the capital of a corporation is owned or controlled by
Filipino citizens. The Panel of Arbitrators renders arbitral awards. There is no dispute
and, therefore, no competence for arbitration, if one of the parties does not have a
mining claim but simply wishes to ask for a declaration that a corporation is not
qualified to hold a mining agreement. Respondent here did not claim a better right to a
mining agreement. By forum shopping through multiple actions, it sought to
disqualify petitioners. The decision of the majority rewards such actions.
In this case, the majority's holding glosses over statutory provisions 1 and
settled jurisprudence. 2
Thus, I disagree with the ponencia in relying on the Grandfather Rule. I
disagree with the finding that petitioners Narra Nickel Mining and Development
Corp. (Narra), Tesoro Mining and Development, Inc. (Tesoro), and McArthur Mining,
Inc. (McArthur) are not Filipino corporations. Whether they should be qualified to
hold Mineral Production Sharing Agreements (MPSA) should be the subject of proper
proceedings in accordance with this opinion. I disagree that the Panel of Arbitrators
(POA) of the Department of Environment and Natural Resources (DENR) has
jurisdiction to disqualify an applicant for mining activities on the ground that it does
not have the requisite Filipino ownership.
Furthermore, respondent Redmont Consolidated Mines Corp. (Redmont) has
engaged in blatant forum shopping. The Court of Appeals 3 is in error for sustaining
the POA. Thus, its findings that Narra, Tesoro, and McArthur are not qualified
corporations must be rejected.
To recapitulate, Redmont took interest in undertaking mining activities in the
Province of Palawan. Upon inquiry with the Department of Environment and Natural
Resources, it discovered that Narra, Tesoro, and McArthur had standing MPSA
applications for its interested areas. 4
Narra, Tesoro, and McArthur are successors-in-interest of other corporations
that have earlier pursued MPSA applications:
1. Narra intended to succeed Alpha Resources and Development Corporation
and Patricia Louise Mining and Development Corporation (PLMDC),
which held the application MPSA-IV-1-12 covering an area of 3,277
hectares in Barangay Calategas and Barangay San Isidro, Narra,
Palawan; 5
2. Tesoro intended to succeed Sara Marie Mining, Inc. (SMMI), which held the
application MPSA-AMA-IVB-154 covering an area of 3,402 hectares in
Barangay Malinao and Barangay Princess Urduja, Narra, Palawan; 6
3. McArthur intended to succeed Madridejos Mining Corporation (MMC),
which held the application MPSA-AMA-IVB-153 covering an area of
more than 1,782 hectares in Barangay Sumbiling, Bataraza, Palawan
and EPA-IVB-44 which includes a 3,720-hectare area in Barangay
Malatagao, Bataraza, Palawan from SMMI. 7
Contending that Narra, Tesoro, and McArthur are corporations whose foreign
equity disqualifies them from entering into MPSAs, Redmont filed with the DENR
Panel of Arbitrators (POA) for Region IV-B three (3) separate petitions for the denial
of the MPSA applications of Narra, Tesoro, and McArthur. In these petitions,
Redmont asserted that at least sixty percent (60%) of the capital stock of Narra,
Tesoro, and McArthur are owned and controlled by MBMI Resources, Inc. (MBMI),
a corporation wholly owned by Canadians. 8
Narra, Tesoro, and McArthur countered that the POA did not have jurisdiction
to rule on Redmont's petitions per Section 77 of Republic Act No. 7942, otherwise
known as the Philippine Mining Act of 1995 (Mining Act). They also argued that
Redmont did not have personality to sue as it had no pending application of its own
over the areas in which they had pending applications. They contended that whether
they were Filipino corporations has become immaterial as they were already pursuing
applications for Financial or Technical Assistance Agreements (FTAA), which, unlike
MPSAs, may be entered into by foreign corporations. They added that, in any case,
they were qualified to enter into MPSAs as 60% of their capital is owned by Filipinos.
9

In a December 14, 2007 resolution, 10 the POA held that Narra, Tesoro, and
McArthur are foreign corporations disqualified from entering into MPSAs. The
dispositive portion of this resolution reads:
WHEREFORE, the Panel of Arbitrators finds the Respondents
McArthur Mining, Inc., Tesoro Mining and Development, Inc., and Narra
Nickel Mining and Development Corp. as, DISQUALIFIED for being
 considered as Foreign Corporations. Their Mineral Production Sharing
Agreement (MPSA) are hereby as [sic], they are DECLARED NULL AND
VOID.
Accordingly, the Exploration Permit Applications of Petitioner
Redmont Consolidated Mines Corporation shall be GIVEN DUE COURSE,
subject to compliance with the provisions of the Mining Law and its
implementing rules and regulations. 11
Narra, Tesoro, and McArthur then filed appeals before the Mines Adjudication
Board (MAB). In a September 10, 2008 order, 12 the MAB pointed out that "no MPSA
has so far been issued in favor of any of the parties"; 13 thus, it faulted the POA for
still ruling that "[t]heir Mineral Production Sharing Agreement (MPSA) are hereby as
[sic], they are DECLARED NULL AND VOID." 14
The MAB sustained the contention of Narra, Tesoro, and McArthur that "the
Panel does not have jurisdiction over the instant case, and that it should have
dismissed the Petition fortwith [sic]." 15 It emphasized that:
[W]hether or not an applicant for an MPSA meets the qualifications imposed
by law, more particularly the nationality requirement, is a matter that is
addressed to the sound discretion of the competent body or agency, in this
case the [Securities and Exchange Commission]. In the interest of orderly
procedure and administrative efficiency, it is imperative that the DENR,
including the Panel, accord full faith and confidence to the contents of
Appellants' Articles of Incorporation, which have undergone thorough
evaluation and scrutiny by the SEC. Unless the SEC or the courts promulgate
a ruling to the effect that the Appellant corporations are not Filipino
corporations, the Board cannot conclude otherwise. This proposition is borne
out by the legal presumptions that official duty has been regularly performed,
and that the law has been obeyed in the preparation and approval of said
documents. 16
Redmont then filed with the Court of Appeals a petition for review under Rule
43 of the 1997 Rules on Civil Procedure. This petition was docketed as CA-G.R. SP
No. 109703.
In a decision dated October 1, 2010, 17 the Court of Appeals, through its
Seventh Division, reversed the MAB and sustained the findings of the POA. 18
The Court of Appeals noted that the "pivotal issue before the Court is whether
or not respondents McArthur, Tesoro and Narra are Philippine nationals under
Philippine laws, rules and regulations." 19 Noting that doubt existed as to their foreign
equity ownerships, the Court of Appeals, Seventh Division, asserted that such equity
ownerships must be reckoned via the Grandfather Rule. 20 Ultimately, it ruled that
Narra, Tesoro, and McArthur "are not Philippine nationals, hence, their MPSA
applications should be recommended for rejection by the Secretary of the DENR." 21
 On the matter of the Panel of Arbitrators' jurisdiction, the Court of Appeals,
Seventh Division, referred to this court's declarations in Celestial Nickel Mining
Exploration Corp. v. Macroasia Corp. 22 and considered these pronouncements as
"clearly support[ing the conclusion] that the POA has jurisdiction to resolve the
Petitions filed by . . . Redmont." 23
The motion for reconsideration of Narra, Tesoro, and McArthur was denied by
the Court of Appeals through a resolution dated February 15, 2011. 24
Hence, this present petition was filed and docketed as G.R. No. 195580.
Apart from these proceedings before the POA, the MAB and the Court of
Appeals, Redmont also filed three (3) separate actions before the Securities and
Exchange Commission, the Regional Trial Court of Quezon City, and the Office of
the President:
First action: On August 14, 2008, Redmont filed a complaint for
revocation of the certificates of registration of Narra, Tesoro, and McArthur
with the Securities and Exchange Commission (SEC). 25 This complaint
became the subject of another case (G.R. No. 205513), which was
consolidated but later de-consolidated with the present petition, G.R. No.
195580.
In view of this complaint, Redmont filed on September 1, 2008 a
manifestation and motion to suspend proceeding[s] before the MAB. 26
In a letter-resolution dated September 3, 2009, the SEC's Compliance
and Enforcement Department (CED) ruled in favor of Narra, Tesoro, and
McArthur. It applied the Control Test per Section 3 of Republic Act No. 7042,
as amended by Republic Act No. 8179, the Foreign Investments Act (FIA),
and held that Narra, Tesoro, and McArthur as well as their co-respondents in
that case satisfied the requisite Filipino equity ownership. 27 Redmont then
filed an appeal with the SEC En Banc.
In a decision dated March 25, 2010, 28 the SEC En Banc set aside the
SEC-CED's letter-resolution with respect to Narra, Tesoro, and McArthur as
the appeal from the MAB's September 10, 2008 order was then pending with
the Court of Appeals, Seventh Division. 29 The SEC En Banc considered the
assertion that Redmont has been engaging in forum shopping:
It is evident from the foregoing that aside from identity
of the parties . . ., the issue(s) raised in the CA Case and the
factual foundations thereof . . . are substantially the same as
those obtaining the case at bar. Yet, Redmont did not include
this CA Case in the Certification against Forum Shopping
attached to the instant Appeal. 30
However, with respect to the other respondent-appellees in that case
(Sara Marie Mining, Inc., Patricia Louise Mining and Development Corp.,
Madridejos Mining Corp., Bethlehem Nickel Corp., San Juanico Nickel Corp.,
and MBMI Resources, Inc.), the complaint was remanded to the SEC-CED for
further proceedings with the reminder for it to "consider every piece already
on record and, if necessary, to conduct further investigation in order to
ascertain, consistent with the Grandfather Rule, the true, actual Filipino and
foreign participation in each of these five (5) corporations." 31
Asserting that the SEC En Banc had already made a definite finding
that Redmont has been engaging in forum shopping, Sara Marie Mining, Inc.,
Patricia Louise Mining and Development Corp., and Madridejos Mining Corp.
filed with the Court of Appeals a petition for review under Rule 43 of the
1997 Rules of Civil Procedure. This petition was docketed as CA-G.R. SP No.
113523.
In a decision dated May 23, 2012, the Court of Appeals, Former Tenth
Division, found that "there was a deliberate attempt not to disclose the
pendency of CA-GR SP No. 109703." 32 It concluded that "the partial
dismissal of the case before the SEC is unwarranted. It should have been
dismissed in its entirety and with prejudice to the complainant." 33 The
dispositive portion of the decision reads:
WHEREFORE, the Petition is GRANTED. The
Decision dated March 25, 2010 of the Securities and Exchange
Commission En Banc is REVERSED and SET ASIDE.
Accordingly, the complaint for revocation filed by Redmont
Consolidated Mines is DISMISSED with prejudice. 34
(Emphasis supplied)
On January 22, 2013, the Court of Appeals, Former Tenth Division,
issued a resolution 35 denying Redmont's motion for reconsideration.
Aggrieved, Redmont filed the petition for review on certiorari which
became the subject of G.R. No. 205513, initially lodged with this court's First
Division. Through a November 27, 2013 resolution, G.R. No. 205513 was
consolidated with G.R. No. 195580. Subsequently however, this court's Third
Division de-consolidated the two (2) cases.
Second Action: On September 8, 2008, Redmont filed a complaint for
injunction (of the MAB proceedings pending the resolution of the complaint
before the SEC) with application for issuance of a temporary restraining order
(TRO) and/or writ of preliminary injunction with the Regional Trial Court,
Branch 92, Quezon City. 36 The Regional Trial Court issued a TRO on
September 16, 2008. By then, however, the MAB had already ruled in favor
of Narra, Tesoro, and McArthur. 37
Third Action: On May 7, 2010, Redmont filed with the Office of the
President a petition seeking the cancellation of the financial or technical
assistance agreement (FTAA) applications of Narra, Tesoro, and McArthur. In
a decision dated April 6, 2011, 38 the Office of the President ruled in favor of
Redmont. In a resolution dated July 6, 2011, 39 the Office of the President
denied the motion for reconsideration of Narra, Tesoro, and McArthur. As
noted by the ponencia, Narra, Tesoro, and McArthur then filed an appeal with
 the Court of Appeals. As this appeal has been denied, they filed another
appeal with this court, which appeal is pending in another division. 40
The petition for review on certiorari subject of G.R. No. 195580 is an appeal
from the Court of Appeals' October 1, 2010 decision in CA-G.R. SP No. 109703
reversing the MAB and sustaining the POA's findings that Narra, Tesoro, and
McArthur are foreign corporations disqualified from entering into MPSAs. The
petition also questions the February 15, 2011 resolution of the Court of Appeals
denying the motion for reconsideration of Narra, Tesoro, and McArthur.
To reiterate, G.R. No. 195580 was consolidated with another petition — G.R.
No. 205513 — through a resolution of this court dated November 27, 2013. G.R. No.
205513 is an appeal from the Court of Appeals, Former Tenth Division's May 23,
2012 decision and January 22, 2013 resolution in CA-G.R. SP No. 113523.
Subsequently however, G.R. No. 195580 and G.R. No. 205513 were de-consolidated.
Apart from G.R. Nos. 195580 and 205513, a third petition has been filed with
this court. This third petition is an offshoot of the petitions filed by Redmont with the
Office of the President seeking the cancellation of the FTAA applications of Narra,
Tesoro, and McArthur.
The main issue in this case relates to the ownership of capital in Narra, Tesoro,
and McArthur, i.e., whether they have satisfied the required Filipino equity ownership
so as to be qualified to enter into MPSAs.
In addition to this, Narra, Tesoro, and McArthur raise procedural issues: (1) the
POA's jurisdiction over the subject matter of Redmont's petitions; (2) the supposed
mootness of Redmont's petitions before the POA considering that Narra, Tesoro, and
McArthur have pursued applications for FTAAs; and (3) Redmont's supposed
engagement in forum shopping. 41
Governing laws
Mining is an environmentally sensitive activity that entails the exploration,
development, and utilization of inalienable natural resources. It falls within the broad
ambit of Article XII, Section 2 as well as other sections of the 1987 Constitution
which refers to ancestral domains 42 and the environment. 43
More specifically, Republic Act No. 7942 or the Philippine Mining Act, its
implementing rules and regulations, other administrative issuances as well as
jurisprudence govern the application for mining rights among others. Small-scale
mining 44 is governed by Republic Act No. 7076, the People's Small-scale Mining Act
of 1991. Apart from these, other statutes such as Republic Act No. 8371, the
Indigenous Peoples Rights Act of 1997 (IPRA), and Republic Act No. 7160, the Local
Government Code (LGC)contain provisions which delimit the conduct of mining
activities.
 Republic Act No. 7042, as amended by Republic Act No. 8179, the Foreign
Investments Act (FIA)is significant with respect to the participation of foreign
investors in nationalized economic activities such as mining. In the 2012 resolution
ruling on the motion for reconsideration in Gamboa v. Teves, 45 this court stated that
"The FIA is the basic law governing foreign investments in the Philippines,
irrespective of the nature of business and area of investment." 46
Commonwealth Act No. 108, as amended, otherwise known as the Anti-
Dummy Law, penalizes those who "allow [their] name or citizenship to be used for
the purpose of evading" 47 "constitutional or legal provisions requir[ing] Philippine or
any other specific citizenship as a requisite for the exercise or enjoyment of a right,
franchise or privilege". 48
Batas Pambansa Blg. 68, the Corporation Code, is the general law that
"provide[s] for the formation, organization, [and] regulation of private corporations."
49 The conduct of activities relating to securities, such as shares of stock, is regulated
by Republic Act No. 8799, the Securities Regulation Code (SRC).
DENR's Panel of Arbitrators
has no competence over the
petitions filed by Redmont
The DENR Panel of Arbitrators does not have the competence to rule on the
issue of whether the ownership of the capital of the corporations Narra, Tesoro, and
McArthur meet the constitutional and statutory requirements. This alone is ample
basis for granting the petition.
Section 77 of the Mining Act provides for the matters falling under the
exclusive original jurisdiction of the DENR Panel of Arbitrators, as follows:
Section 77. Panel of Arbitrators. — . . . Within thirty (30) working
days, after the submission of the case by the parties for decision, the panel
shall have exclusive and original jurisdiction to hear and decide on the
following:
(a) Disputes involving rights to mining areas;
(b) Disputes involving mineral agreements or permit;
(c) Disputes involving surface owners, occupants and
claimholders/concessionaires; and
(d) Disputes pending before the Bureau and the Department at the date of the
effectivity of this Act.
In 2007, this court's decision in Celestial Nickel Mining Exploration
Corporation v. Macroasia Corp. 50 construed the phrase "disputes involving rights to
mining areas" as referring "to any adverse claim, protest, or opposition to an
application for mineral agreement." 51
Proceeding from this court's statements in Celestial, the ponencia states:
 Accordingly, as We enunciated in Celestial, the POA unquestionably
has jurisdiction to resolve disputes over MPSA applications subject of
Redmont's petitions. However, said jurisdiction does not include either the
approval or rejection of the MPSA applications which is vested only upon the
Secretary of the DENR. Thus, the finding of the POA, with respect to the
rejection of the petitioners' MPSA applications being that they are foreign
corporation [sic], is valid. 52
An earlier decision of this court, Gonzales v. Climax Mining Ltd., 53 ruled on
the jurisdiction of the Panel of Arbitrators as follows:
We now come to the meat of the case which revolves mainly around
the question of jurisdiction by the Panel of Arbitrators: Does the Panel of
Arbitrators have jurisdiction over the complaint for declaration of nullity
and/or termination of the subject contracts on the ground of fraud, oppression
and violation of the Constitution? This issue may be distilled into the more
basic question of whether the Complaint raises a mining dispute or a judicial
question.
A judicial question is a question that is proper for determination
by the courts, as opposed to a moot question or one properly decided by
the executive or legislative branch. A judicial question is raised when the
determination of the question involves the exercise of a judicial function; that
is, the question involves the determination of what the law is and what the
legal rights of the parties are with respect to the matter in controversy.
On the other hand, a mining dispute is a dispute involving (a) rights to
mining areas, (b) mineral agreements, FTAAs, or permits, and (c) surface
owners, occupants and claimholders/concessionaires. Under Republic Act No.
7942 (otherwise known as the Philippine Mining Act of 1995), the Panel of
Arbitrators has exclusive and original jurisdiction to hear and decide these
mining disputes. The Court of Appeals, in its questioned decision, correctly
stated that the Panel's jurisdiction is limited only to those mining disputes
which raise questions of fact or matters requiring the application of
technological knowledge and experience. 54 (Emphasis supplied)
Moreover, this court's decision in Philex Mining Corp. v. Zaldivia, 55 which
was also referred to in Gonzales, explained what "questions of fact" are appropriate
for resolution in a mining dispute:
We see nothing in sections 61 and 73 of the Mining Law that indicates
a legislative intent to confer real judicial power upon the Director of Mines.
The very terms of section 73 of the Mining Law, as amended by Republic Act
No. 4388, in requiring that the adverse claim must "state in full detail the
nature, boundaries and extent of the adverse claim" show that the conflicts to
be decided by reason of such adverse claim refer primarily to questions of
fact. This is made even clearer by the explanatory note to House Bill No.
2522, later to become Republic Act 4388, that "sections 61 and 73 that refer to
the overlapping of claims are amended to expedite resolutions of mining
 conflicts * * *." The controversies to be submitted and resolved by the
Director of Mines under the sections refer therfore [sic] only to the
overlapping of claims and administrative matters incidental thereto. 56
(Emphasis supplied)
The pronouncements in Celestial cited by the ponencia were made to address
the assertions of Celestial Nickel and Mining Corporation (Celestial Nickel) and Blue
Ridge Mineral Corporation (Blue Ridge) that the Panel of Arbitrators had the power
to cancel existing mineral agreements pursuant to Section 77 of the Mining Act. 57
Thus:
Clearly, POA's jurisdiction over "disputes involving rights to mining
areas" has nothing to do with the cancellation of existing mineral agreements.
58

These pronouncements did not undo or abandon the distinction, clarified in

Gonzales, between judicial questions and mining disputes. The former are cognizable
by regular courts of justice, while the latter are cognizable by the DENR Panel of
Arbitrators.
As has been repeatedly acknowledged by the ponencia, 59 the Court of Appeals,
60 and the Mines Adjudication Board, 61 the present case, and the petitions filed by
Redmont before the DENR Panel of Arbitrators boil down to the "pivotal issue . . .
[of] whether or not [Narra, Tesoro, and McArthur] are Philippine nationals."
This is a matter that entails a consideration of the law. It is a question that
relates to the status of Narra, Tesoro, and McArthur and the legal rights (or
inhibitions) accruing to them on account of their status. This does not entail a
consideration of the specifications of mining arrangements and operations. Thus, the
petitions filed by Redmont before the DENR Panel of Arbitrators relate to judicial
questions and not to mining disputes. They relate to matters which are beyond the
jurisdiction of the Panel of Arbitrators.
Furthermore nowhere in Section 77 of the Republic Act No. 7942 is there a
grant of jurisdiction to the Panel of Arbitrators over the determination of the
qualification of applicants. The Philippine Mining Act clearly requires the existence
of a "dispute" over a mining area, 62 a mining agreement, 63 with a surface owner, 64 or
those pending with the Bureau or the Department 65 upon the law's promulgation. The
existence of a "dispute" presupposes that the party bringing the suit has a colorable or
putative claim more superior than that of the respondent in the arbitration
proceedings. After all, the Panel of Arbitrators is supposed to provide binding
arbitration which should result in a binding award either in favor of the petitioner or
the respondent. Thus, the Panel of Arbitrators is a qualified quasi-judicial agency. It
does not perform all judicial functions in lieu of courts of law.
The petition brought by respondent before the Panel of Arbitrators a quo could
not have resulted in any kind of award in its favor. It was asking for a judicial
declaration at first instance of the qualification of the petitioners to hold mining
agreements in accordance with the law. This clearly was beyond the jurisdiction of the
Panel of Arbitrators and eventually also of the Mines Adjudication Board (MAB).
The remedy of Redmont should have been either to cause the cancellation of
the registration of any of the petitioners with the Securities and Exchange
Commission or to request for a determination of their qualifications with the Secretary
of the Department of Environment and Natural Resources. Should either the
Securities and Exchange Commission (SEC) or the Secretary of Environment and
Natural Resources rule against its request, Redmont could have gone by certiorari to
a Regional Trial Court.
Having brought their petitions to an entity without jurisdiction, the petition in
this case should be granted.
Mining as a nationalized
economic activity
The determination of who may engage in mining activities is grounded in the
1987 Constitution and the Mining Act.
Article XII, Section 2 of the 1987 Constitution reads:
Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development, and utilization
of natural resources shall be under the full control and supervision of the
State. The State may directly undertake such activities, or it may enter
into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least 60 per centum of
whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-
five years, and under such terms and conditions as may be provided by law. In
cases of water rights for irrigation, water supply, fisheries, or industrial uses
other than the development of waterpower, beneficial use may be the measure
and limit of the grant.
The State shall protect the nation's marine wealth in its archipelagic
waters, territorial sea, and exclusive economic zone, and reserve its use and
enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural
resources by Filipino citizens, as well as cooperative fish farming, with
priority to subsistence fishermen and fish workers in rivers, lakes, bays, and
lagoons.
The President may enter into agreements with foreign-owned
corporations involving either technical or financial assistance for large-scale
exploration, development, and utilization of minerals, petroleum, and other
 mineral oils according to the general terms and conditions provided by law,
based on real contributions to the economic growth and general welfare of the
country. In such agreements, the State shall promote the development and use
of local scientific and technical resources.
The President shall notify the Congress of every contract entered into
in accordance with this provision, within thirty days from its execution.
(Emphasis supplied)
The requirement for nationalization should always be read in relation to Article
II, Section 19 of the Constitution which reads:
Section 19. The State shall develop a self-reliant and independent
national economy effectively controlled by Filipinos. (Emphasis supplied)
Congress takes part in giving substantive meaning to the phrases "Filipino . . .
corporations or associations at least 60 per centum of whose capital is owned by such
citizens" 66 as well as the phrase "effectively controlled by Filipinos". 67 Like all
constitutional text, the meanings of these phrases become more salient in context.
Thus, Section 3 (aq) of the Mining Act defines a "qualified person" as follows:
Section 3. Definition of Terms. — As used in and for purposes of this
Act, the following terms, whether in singular or plural, shall mean:
xxx xxx xxx
(aq) "Qualified person" means any citizen of the Philippines with
capacity to contract, or a corporation, partnership, association, or cooperative
organized or authorized for the purpose of engaging in mining, with technical
and financial capability to undertake mineral resources development and
duly registered in accordance with law at least sixty per centum (60%) of
the capital of which is owned by citizens of the Philippines: Provided, That
a legally organized foreign-owned corporation shall be deemed a qualified
person for purposes of granting an exploration permit, financial or technical
assistance agreement or mineral processing permit. (Emphasis supplied)
In addition, Section 3 (t) defines a "foreign-owned corporation" as follows:
(t) "Foreign-owned corporation" means any corporation, partnerships,
association, or cooperative duly registered in accordance with law in
which less than fifty per centum (50%) of the capital is owned by
Filipino citizens.
Under the Mining Act, nationality requirements are relevant for the following
categories of mining contracts and permits: first, exploration permits (EP); second,
mineral agreements (MA); third, financial or technical assistance agreements (FTAA);
and fourth, mineral processing permits (MPP).
In Section 20 of the Mining Act, "[a]n exploration permit grants the right to
conduct exploration for all minerals in specified areas." Section 3 (q) defines
exploration as the "searching or prospecting for mineral resources by geological,
geochemical or geophysical surveys, remote sensing, test pitting, trenching, drilling,
shaft sinking, tunneling or any other means for the purpose of determining the
existence, extent, quantity and quality thereof and the feasibility of mining them for
profit." DENR Administrative Order No. 2005-15 characterizes an exploration permit
as the "initial mode of entry in mineral exploration." 68
In Section 26 of the Mining Act, "[a] mineral agreement shall grant to the
contractor the exclusive right to conduct mining operations and to extract all mineral
resources found in the contract area."
There are three (3) forms of mineral agreements:
1. Mineral production sharing agreement (MPSA) "where the Government
grants to the contractor the exclusive right to conduct mining operations
within a contract area and shares in the gross output [with the]
contractor . . . provid[ing] the financing, technology, management and
personnel necessary for the implementation of [the MPSA]". 69
2. Co-production agreement (CA) "wherein the Government shall provide
inputs to the mining operations other than the mineral resource"; 70 and
3. Joint-venture agreement (JVA) "where a joint-venture company is organized
by the Government and the contractor with both parties having equity
shares. Aside from earnings in equity, the Government shall be entitled
to a share in the gross output". 71
The second paragraph of Section 26 of the Mining Act allows a contractor "to
convert his agreement into any of the modes of mineral agreements or financial or
technical assistance agreement . . . ."
Section 33 of the Mining Act allows "[a]ny qualified person with technical and
financial capability to undertake large-scale exploration, development, and utilization
of mineral resources in the Philippines" through a financial or technical assistance
agreement.
In addition to Exploration Permits, Mineral Agreements, and FTAAs, the
Mining Act allows for the grant of mineral processing permits (MPP) in order to
"engage in the processing of minerals." 72 Section 3 (y) of the Mining Act defines
mineral processing as "milling, beneficiation or upgrading of ores or minerals and
rocks or by similar means to convert the same into marketable products."
Applying the definition of a "qualified person" in Section 3 (aq) of the Mining
Act, a corporation which intends to enter into a Mining Agreement must have (1)
"technical and financial capability to undertake mineral resources development" and
(2) "duly registered in accordance with law at least sixty per centum (60%) of the
capital of which is owned by citizens of the Philippines". 73 Clearly, the Department
of Environment and Natural Resources, as an administrative body, determines
technical and financial capability. The DENR, not the Panel of Arbitrators, is also
mandated to determine whether the corporation is (a) duly registered in accordance
with law and (b) at least "sixty percent of the capital" is "owned by citizens of the
Philippines."
Limitations on foreign participation in certain economic activities are not new.
Similar, though not identical, limitations are contained in the 1935 and 1973
Constitutions with respect to the exploration, development, and utilization of natural
resources.
Article XII, Section 1 of the 1935 Constitution provides:
Section 1. All agricultural, timber, and mineral lands of the public
domain, waters, minerals, coal, petroleum, and other mineral oils, all forces or
potential energy, and other natural resources of the Philippines belong to the
State, and their disposition, exploitation, development, or utilization shall be
limited to citizens of the Philippines, or to corporations or associations at
least sixty per centum of the capital of which is owned by such citizens,
subject to any existing right, grant, lease, or concession at the time of the
inauguration of the Government established under this Constitution. Natural
resources, with the exception of public agricultural land, shall not be
alienated, and no license, concession, or lease for the exploitation,
development, or utilization of any of the natural resources shall be granted for
a period exceeding twenty-five years, except as to water rights for irrigation,
water supply, fisheries, or industrial uses other than the development of water
power, in which cases beneficial use may be the measure and the limit of the
grant. (Emphasis supplied)
Likewise, Article XIV, Section 9 of the 1973 Constitution states:
Section 9. The disposition, exploration, development, of exploitation,
or utilization of any of the natural resources of the Philippines shall be limited
to citizens of the Philippines, or to corporations or association at least sixty
per centum of the capital of which is owned by such citizens. The Batasang
Pambansa, in the national interest, may allow such citizens, corporations, or
associations to enter into service contracts for financial, technical,
management, or other forms of assistance with any foreign person or entity for
the exploitation, development, exploitation, or utilization of any of the natural
resources. Existing valid and binding service contracts for financial, the
technical, management, or other forms of assistance are hereby recognized as
such. (Emphasis supplied)
The rationale for nationalizing the exploration, development, and utilization of
natural resources was explained by this court in Register of Deeds of Rizal v. Ung Siu
Si Temple 74 as follows:
The purpose of the sixty per centum requirement is obviously to
ensure that corporations or associations allowed to acquire agricultural land
or to exploit natural resources shall be controlled by Filipinos; and the
spirit of the Constitution demands that in the absence of capital stock, the
 controlling membership should be composed of Filipino citizens. 75 (Emphasis
supplied)
On point are Dean Vicente Sinco's words, cited with approval by this court in
Republic v. Quasha: 76
It should be emphatically stated that the provisions of our Constitution
which limit to Filipinos the rights to develop the natural resources and to
operate the public utilities of the Philippines is one of the bulwarks of our
national integrity. The Filipino people decided to include it in our Constitution
in order that it may have the stability and permanency that its importance
requires. It is written in our Constitution so that it may neither be the subject
of barter nor be impaired in the give and take of politics. With our natural
resources, our sources of power and energy, our public lands, and our
public utilities, the material basis of the nation's existence, in the hands of
aliens over whom the Philippine Government does not have complete
control, the Filipinos may soon find themselves deprived of their
patrimony and living as it were, in a house that no longer belongs to
them. 77 (Emphasis supplied)
Article XII, Section 2 of the 1987 Constitution ensures the effectivity of the
broad economic policy, spelled out in Article II, Section 19 of the 1987 Constitution,
of "a self-reliant and independent national economy effectively controlled by
Filipinos" and the collective aspiration articulated in the 1987 Constitution's Preamble
of "conserv[ing] and develop[ing] our patrimony."
In this case, Narra, Tesoro, and McArthur are corporations of which a portion
of their equity is owned by corporations and individuals acknowledged to be foreign
nationals. Moreover, they have each sought to enter into a Mineral Production Sharing
Agreement (MPSA). This arrangement requires that foreigners own, at most, only
40% of the capital.
Notwithstanding that they have moved to obtain FTAAs — which are
permitted for wholly owned foreign corporations — Redmont still asserts that Narra,
Tesoro, and McArthur are in violation of the nationality requirements of the 1987
Constitution and of the Mining Act. 78
Narra, Tesoro, and McArthur argue that the Grandfather Rule should not be
applied as there is no legal basis for it. They assert that Section 3 (a) of the Foreign
Investments Act (FIA)provides exclusively for the Control Test as the means for
reckoning foreign equity in a corporation and, ultimately, the nationality of a
corporation engaged in or seeking to engage in an activity with nationality
restrictions. They fault the Court of Appeals for relying on DOJ Opinion No. 20,
series of 2005, a mere administrative issuance, as opposed to the Foreign Investments
Act,a statute, for applying the Grandfather Rule. 79
Standards for reckoning
foreign equity participation in
nationalized economic
activities
The broad and long-standing nationalization of certain sectors and industries
notwithstanding, an apparent confusion has persisted as to how foreign equity
holdings in a corporation engaged in a nationalized economic activity shall be
reckoned. As have been proffered by the myriad cast of parties and adjudicative
bodies involved in this case, there have been two means: the Control Test and the
Grandfather Rule.
Paragraph 7 of the 1967 Rules of the Securities and Exchange Commission,
dated February 28, 1967, states:
Shares belonging to corporations or partnerships at least 60% of the
capital of which is owned by Filipino citizens shall be considered as of
Philippine nationality, but if the percentage of Filipino ownership in the
corporation or partnership is less than 60%, only the number of shares
corresponding to such percentage shall be counted as of Philippine nationality.
Thus, if 100,000 shares are registered in the name of a corporation or
partnership at least 60% of the capital stock or capital respectively, of which
belong to a Filipino citizens, all of the said shares shall be recorded as owned
by Filipinos. But if less than 60%, or, say, only 50% of the capital stock or
capital of the corporation or partnership, respectively belongs to Filipino
citizens, only 50,000 shares shall be counted as owned by Filipinos and the
other 50,000 shares shall be recorded as belonging to aliens. 80
Department of Justice (DOJ) Opinion No. 20, series of 2005, explains that the
1967 SEC Rules provide for the Control Test and the Grandfather Rule as the means
for reckoning foreign and Filipino equity ownership in an "investee" corporation:
The above-quoted SEC Rules provide for the manner of calculating the
Filipino interest in a corporation for purposes, among others of determining
compliance with nationality requirements (the "Investee Corporation"). Such
manner of computation is necessary since the shares of the Investee
Corporation may be owned both by individual stockholders ("Investing
Individuals") and by corporations and partnerships ("Investing Corporation").
The determination of nationality depending on the ownership of the Investee
Corporation and in certain instances, the Investing Corporation.
Under the above-quoted SEC Rules, there are two cases in determining
the nationality of the Investee Corporation. The first case is the 'liberal rule',
later coined by the SEC as the Control Test in its 30 May 1990 Opinion, and
pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which
states, '(s)hares belonging to corporations or partnerships at least 60% of the
capital of which is owned by Filipino citizens shall be considered as of
Philippine nationality.' Under the liberal Control Test, there is no need to
further trace the ownership of the 60% (or more) Filipino stockholdings of the
Investing Corporation since a corporation which is at least 60% Filipino-
owned is considered as Filipino.
 The second case is the Strict Rule or the Grandfather Rule Proper and
pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which
states, 'but if the percentage of Filipino ownership in the corporation or
partnership is less than 60%, only the number of shares corresponding to such
percentage shall be counted as of Philippine nationality.' Under the Strict Rule
or Grandfather Rule Proper, the combined totals in the Investing Corporation
and the Investee Corporation must be traced (i.e., 'grandfathered') to determine
the total percentage of Filipino ownership. 81
DOJ Opinion No. 20, series of 2005, then concluded as follows:
[T]he Grandfather Rule or the second part of the SEC Rule
applies only when the 60-40 Filipino-foreign equity ownership is in doubt
(i.e., in cases where the joint venture corporation with Filipino and foreign
stockholders with less than 60% Filipino stockholdings [or 59%] invests in
another joint venture corporation which is either 60-40% Filipino-alien or
59% less Filipino. Stated differently, where the 60-40 Filipino-foreign equity
ownership is not in doubt, the Grandfather Rule will not apply. 82 (Emphasis
supplied)
The conclusion that the Grandfather Rule "applies only when the 60-40
Filipino-foreign equity ownership is in doubt" 83 is borne by that opinion's
consideration of an earlier DOJ opinion (i.e., DOJ Opinion No. 18, series of 1989).
DOJ Opinion No. 20, series of 2005's quotation of DOJ Opinion No. 18, series of
1989, reads:
. . . . It is quite clear . . . that the "Grandfather Rule", which was
evolved and applied by the SEC in several cases, will not apply in cases where
the 60-40 Filipino-alien equity ownership in a particular natural resource
corporation is not in doubt. 84
A full quotation of the same portion of DOJ Opinion No. 18, series of 1989,
reveals that the statement quoted above was made in a very specific context (i.e., a
prior DOJ opinion) that necessitated a clarification:
Opinion No. 84, s. 1988 cited in your query is not meant to overrule
the aforesaid SEC rule. 85 There is nothing in said Opinion that precludes the
application of the said SEC rule in appropriate cases. It is quite clear from said
SEC rule that the 'Grandfather Rule', which was evolved and applied by the
SEC in several cases, will not apply in cases where the 60-40 Filipino-alien
equity ownership in a particular natural resource corporation is not in doubt. 86
DOJ Opinion No. 18, series of 1989, addressed the query made by the
Chairman of the Securities and Exchange Commission (SEC) "on whether or not it
may give due course to the application for incorporation of Far Southeast Gold
Resources, Inc., (FSEGRI) to engage in mining activities in the Philippines in the
light of [DOJ] Opinion No. 84, s. 1988 applying the so-called 'Grandfather Rule' . . .
." 87
 DOJ Opinion No. 84, series of 1988, applied the Grandfather Rule. In doing so,
it noted that the DOJ has been "informed that in the registration of corporations with
the [SEC], compliance with the sixty per centum requirement is being monitored with
the 'Grandfather Rule'" 88 and added that the Grandfather Rule is "applied specifically
in cases where the corporation has corporate stockholders with alien stockholdings."
89

Prior to applying the Grandfather Rule to the specific facts subject of the
inquiry it addressed, DOJ Opinion No. 84, series of 1988, first cited the SEC's
application of the Grandfather Rule in a May 30, 1987 opinion rendered by its Chair,
Julio A. Sulit, Jr. 90
This SEC opinion resolved the nationality of the investee corporation, Silahis
International Hotel (Silahis). 31% of Silahis' capital stock was owned by Filipino
stockholders, while 69% was owned by Hotel Properties, Inc. (HPI). HPI, in turn, was
47% Filipino-owned and 53% alien-owned. Per the Grandfather Rule, the 47%
indirect Filipino stockholding in Silahis through HPI combined with the 31% direct
Filipino stockholding in Silahis translated to an aggregate 63.43% Filipino
stockholding in Silahis, in excess of the requisite 60% Filipino stockholding required
so as to be able to engage in a partly nationalized business. 91
In noting that compliance with the 60% requirement has (thus far) been
monitored by SEC through the Grandfather Rule and that the Grandfather Rule has
been applied whenever a "corporation has corporate stockholders with alien
stockholdings," 92 DOJ Opinion No. 84, series of 1988, gave the impression that the
Grandfather Rule is all-encompassing. Hence, the clarification in DOJ Opinion No.
18, series of 1989, that the Grandfather Rule "will not apply in cases where the 60-40
Filipino-alien equity ownership . . . is not in doubt." 93 This clarification was affirmed
in DOJ Opinion No. 20, series of 2005, albeit rephrased positively as against DOJ
Opinion No. 19, series of 1989's negative syntax (i.e., "not in doubt"). Thus, DOJ
Opinion No. 20, series of 2005, declared, that the Grandfather Rule "applies only
when the 60-40 Filipino-foreign equity ownership is in doubt." 94
Following DOJ Opinion No. 18, series of 1989, the SEC in its May 30, 1990
opinion addressed to Mr. Johnny M. Araneta stated:
[T]he Commission En Banc, on the basis of the Opinion of the
Department of Justice No. 18, S. 1989 dated January 19, 1989 voted and
decided to do away with the strict application/computation of the so-called
"Grandfather Rule" Re: Far Southeast Gold Resources, Inc. (FSEGRI), and
instead applied the so-called "Control Test" method of determining
corporate nationality. 95 (Emphasis supplied)
The SEC's May 30, 1990 opinion related to the ownership of shares in Jericho
Mining Corporation (Jericho) which was then wholly owned by Filipinos. Two (2)
corporations wanted to purchase a total of 60% of Jericho's authorized capital stock:
40% was to be purchased by Gold Field Asia Limited (GFAL), an Australian
corporation, while 20% was to be purchased by Gold Field Philippines Corporation
(GFPC). GFPC was itself partly foreign-owned. It was 60% Filipino-owned, while
40% of its equity was owned by Circular Quay Holdings, an Australian corporation. 96
Applying the Control Test, the SEC's May 30, 1990 opinion concluded that:
GFPC, which is 60% Filipino owned, is considered a Filipino
company. Consequently, its investment in Jericho is considered that of a
Filipino. The 60% Filipino equity requirement therefore would still be met by
Jericho.
Considering that under the proposed set-up Jericho's capital stock will
be owned by 60% Filipino, it is still qualified to hold mining claims or rights
or enter into mineral production sharing agreements with the Government. 97
Some two years after DOJ Opinion No. 18, series of 2009, Republic Act No.
7042, otherwise known as the Foreign Investments Act (FIA), was enacted. Section 3
(a) of the Foreign Investments Act defines a "Philippine National" as follows:
SEC. 3. Definitions. — As used in this Act:
a) the term "Philippine National" shall mean a citizen of the Philippines or a
domestic partnership or association wholly owned by citizens of the
Philippines; or a corporation organized under the laws of the
Philippines of which at least sixty percent (60%) of the capital stock
outstanding and entitled to vote is owned and held by citizens of the
Philippines or a corporation organized abroad and registered as doing
business in the Philippine under the Corporation Code of which one
hundred percent (100%) of the capital stock outstanding and entitled to
vote is wholly owned by Filipinos or a trustee of funds for pension or
other employee retirement or separation benefits, where the trustee is a
Philippine national and at least sixty percent (60%) of the fund will
accrue to the benefit of Philippine nationals: Provided, That where a
corporation and its non-Filipino stockholders own stocks in a
Securities and Exchange Commission (SEC) registered enterprise,
at least sixty percent (60%) of the capital stock outstanding and
entitled to vote of each of both corporations must be owned and held
by citizens of the Philippines and at least sixty percent (60%) of the
members of the Board of Directors of each of both corporations
must be citizens of the Philippines, in order that the corporation
shall be considered a Philippine national; (as amended by R.A. 8179).
(Emphasis supplied)
Thus, under the Foreign Investments Act,a "Philippine national" is any of the
following:
1. a citizen of the Philippines;
2. a domestic partnership or association wholly owned by citizens of the
Philippines;
 3. a corporation organized under the laws of the Philippines, of which at least
60% of the capital stock outstanding and entitled to vote is owned and
held by citizens of the Philippines;
4. a corporation organized abroad and registered as doing business in the
Philippines under the Corporation Code, of which 100% of the capital
stock outstanding and entitled to vote is wholly owned by Filipinos; or
5. a trustee of funds for pension or other employee retirement or separation
benefits, where the trustee is a Philippine national and at least 60% of
the fund will accrue to the benefit of Philippine nationals.
The National Economic and Development Authority (NEDA) formulated the
implementing rules and regulations (IRR) of the Foreign Investments Act. Rule I,
Section 1 (b) of these IRR reads:
RULE I
DEFINITIONS
SECTION 1. DEFINITION OF TERMS. — For the purposes of these Rules
and Regulations:
xxx xxx xxx
b. Philippine national shall mean a citizen of the Philippines or a
domestic partnership or association wholly owned by the citizens
of the Philippines; or a corporation organized under the laws
of the Philippines of which at least sixty percent (60%) of the
capital stock outstanding and entitled to vote is owned and
held by citizens of the Philippines; or a corporation organized
abroad and registered as doing business in the Philippines under
the Corporation Code of which 100% of the capital stock
outstanding and entitled to vote is wholly owned by Filipinos; or
a trustee of funds for pension or other employee retirement or
separation benefits, where the trustee is a Philippine national and
at least sixty percent (60%) of the fund will accrue to the benefits
of the Philippine nationals; Provided, that where a corporation
and its non-Filipino stockholders own stocks in Securities and
Exchange Commission (SEC) registered enterprise, at least sixty
percent (60%) of the capital stock outstanding and entitled to
vote of each of both corporations must be owned and held by
citizens of the Philippines and at least sixty percent (60%) of the
members of the Board of Directors of each of both corporation
must be citizens of the Philippines, in order that the corporation
shall be considered a Philippine national. The Control Test
shall be applied for this purpose.
Compliance with the required Filipino
ownership of a corporation shall be determined on the
basis of outstanding capital stock whether fully paid or
 not, but only such stocks which are generally entitled to
vote are considered.
For stocks to be deemed owned and held by
Philippine citizens or Philippine nationals, mere legal
title is not enough to meet the required Filipino equity.
Full beneficial ownership of the stocks, coupled with
appropriate voting rights is essential. Thus, stocks, the
voting rights of which have been assigned or transferred
to aliens cannot be considered held by Philippine
citizens or Philippine nationals.
Individuals or juridical entities not meeting the
aforementioned qualifications are considered as non-
Philippine nationals. (Emphasis supplied)
The Foreign Investments Act's implementing rules and regulations are clear
and unequivocal in declaring that the Control Test shall be applied to determine the
nationality of a corporation in which another corporation owns stocks.
From around the time of the issuance of the SEC's May 30, 1990 opinion
addressed to Mr. Johnny M. Araneta where the SEC stated that it "decided to do away
with the strict application/computation of the so-called 'Grandfather Rule' . . ., and
instead appl[y] the so-called 'Control Test'", 98 the SEC "has consistently applied the
control test". 99 This is a matter expressly acknowledged by Justice Presbitero J.
Velasco in his dissent in Gamboa v. Teves: 100
It is settled that when the activity or business of a corporation falls
within any of the partly nationalized provisions of the Constitution or a
special law, the "control test" must also be applied to determine the
nationality of a corporation on the basis of the nationality of the stockholders
who control its equity.
The control test was laid down by the Department of Justice (DOJ) in
its Opinion No. 18 dated January 19, 1989. It determines the nationality of a
corporation with alien equity based on the percentage of capital owned by
Filipino citizens. It reads:
Shares belonging to corporations or partnerships at least
60% of the capital of which is owned by Filipino citizens shall
be considered as Philippine nationality, but if the percentage of
Filipino ownership in the corporation or partnership is less than
60% only the number of shares corresponding to such
percentage shall be counted as of Philippine nationality.
In a catena of opinions, the SEC, "the government agency tasked with
the statutory duty to enforce the nationality requirement prescribed in Section
11, Article XII of the Constitution on the ownership of public utilities," has
consistently applied the control test.
 The FIA likewise adheres to the control test. This intent is evident
in the May 21, 1991 deliberations of the Bicameral Conference Committee
(Committees on Economic Affairs of the Senate and House of
Representatives), to wit:
CHAIRMAN TEVES. . . . . On definition of terms,
Ronnie, would you like anything to say here on the definition
of terms of Philippine national?
HON. RONALDO B. ZAMORA. I think we've — we
have already agreed that we are adopting here the control test.
Wasn't that the result of the —
CHAIRMAN PATERNO. No. I thought that at the last
meeting, I have made it clear that the Senate was not able to
make a decision for or against the grandfather rule and the
control test, because we had gone into caucus and we had voted
but later on the agreement was rebutted and so we had to go
back to adopting the wording in the present law which is not
clearly, by its language, a control test formulation.
HON. ANGARA. Well, I don't know. Maybe I was
absent, Ting, when that happened but my recollection is that
we went into caucus, we debated [the] pros and cons of the
control versus the grandfather rule and by actual vote the
control test bloc won. I don't know when subsequent rejection
took place, but anyway even if the — we are adopting the
present language of the law I think by interpretation,
administrative interpretation, while there may be some
differences at the beginning, the current interpretation of this is
the control test. It amounts to the control test.
CHAIRMAN TEVES. That's what I understood, that
we could manifest our decision on the control test formula even
if we adopt the wordings here by the Senate version.
xxx xxx xxx
CHAIRMAN PATERNO. The most we can do is to say
that we have explained — is to say that although the House
Panel wanted to adopt language which would make clear that
the control test is the guiding philosophy in the definition of [a]
Philippine national, we explained to them the situation in the
Senate and said that we would be — was asked them to adopt
the present wording of the law cognizant of the fact that the
present administrative interpretation is the control test
interpretation. But, you know, we cannot go beyond that.
MR. AZCUNA. May I be clarified as to that portion
that was accepted by the Committee. [sic]
 MR. VILLEGAS. The portion accepted by the
Committee is the deletion of the phrase "voting stock or
controlling interest."
This intent is even more apparent in the Implementing Rules and
Regulations (IRR) of the FIA. In defining a "Philippine national," Section
1(b) of the IRR of the FIA categorically states that for the purposes of
determining the nationality of a corporation the control test should be
applied.
The cardinal rule in the interpretation of laws is to ascertain and give
effect to the intention of the legislator. Therefore, the legislative intent to
apply the control test in the determination of nationality must be given
effect. 101 (Emphasis supplied)
The Foreign Investments Act and its implementing rules notwithstanding, the
Department of Justice, in DOJ Opinion No. 20, series of 2005, still posited that the
Grandfather Rule is still applicable, albeit "only when the 60-40 Filipino-foreign
equity ownership is in doubt." 102
Anchoring itself on DOJ Opinion No. 20, series of 2005, the SEC En Banc
found the Grandfather Rule applicable in its March 25, 2010 decision in Redmont
Consolidated Mines Corp. v. McArthur Mining Corp. (subject of the petition in G.R.
No. 205513). 103 It asserted that there was "doubt" in the compliance with the requisite
60-40 Filipino-foreign equity ownership:
Such doubt, we believe, exists in the instant case because the foreign
investor, MBMI, provided practically all the funds of the remaining appellee-
corporations. 104
On December 9, 2010, the SEC Office of the General Counsel (OGC) rendered
an opinion (SEC-OGC Opinion No. 10-31) effectively abandoning the Control Test in
favor of the Grandfather Rule:
We are aware of the Commission's prevailing policy of applying the
so-called "Control Test" in determining the extent of foreign equity in a
corporation. Since the 1990s, the Commission En Banc, on the basis of DOJ
Opinion No. 18, series of 1989 dated January 19, 1989, voted and decided to
do away with the strict application/computation of the "Grandfather Rule,"
and instead applied the "Control Test" method of determining corporate
nationality. . . . 105
However, we now opine that the Control Test must not be applied in
determining if a corporation satisfies the Constitution's citizenship
requirements in certain areas of activities. . . . . 106
Central to the SEC-OGC's reasoning is a supposed distinction between
Philippine "citizens" and Philippine "nationals". It emphasized that Article XII,
Section 2 of the 1987 Constitution used the term "citizen" (i.e., "corporations or
associations at least 60 per centum of whose capital is owned by such citizens") and
that this terminology was reiterated in Section 3 (aq) of the Mining Act (i.e., "at least
sixty per centum (60%) of the capital of which is owned by citizens of the
Philippines"). 107
It added that the enumeration of who the citizens of the Philippines are in
Article III, Section 1 of the 1987 Constitution is exclusive and that "only natural
persons are susceptible of citizenship". 108
Finding support in this court's ruling in the 1966 case of Palting v. San Jose
Petroleum, 109 the SEC-OGC asserted that it was necessary to look into the
"citizenship of the individual stockholders, i.e., natural persons of [an] investor-
corporation in order to determine if the [c]onstitutional and statutory restrictions are
complied with." 110 Thus, "if there are layers of intervening corporations . . . we must
delve into the citizenship of the individual stockholders of each corporation." 111 As
the SEC-OGC emphasized, "[t]his is the strict application of the Grandfather Rule."
112

Between the Grandfather Rule and the Control Test, the SEC-OGC opined that
the framers of the 1987 Constitution intended to apply the Grandfather Rule and that
the Control Test ran counter to their intentions:
Indeed, the framers of the Constitution intended for the "Grandfather
Rule" to apply in case a 60%-40% Filipino-Foreign equity corporation invests
in another corporation engaging in an activity where the Constitution restricts
foreign participation. 113
xxx xxx xxx
The Control Test creates a legal fiction where if 60% of the shares of
an investing corporation are owned by Philippine citizens then all of the
shares or 100% of that corporation's shares are considered Filipino owned for
purposes of determining the extent of foreign equity in an investee corporation
engaging in an activity restricted to Philippine citizens. 114
The SEC-OGC reasoned that the invalidity of the Control Test rested on the
matter of citizenship:
In other words, Philippine citizenship is being unduly attributed to
foreign individuals who own the rest of the shares in a 60% Filipino equity
corporation investing in another corporation. Thus, applying the Control Test
effectively circumvents the Constitutional mandate that corporations engaging
in certain activities must be 60% owned by Filipino citizens. The words of the
Constitution clearly provide that we must look at the citizenship of the
individual/natural person who ultimately owns and controls the shares of
stocks of the corporation engaging in the nationalized/partly-nationalized
activity. This is what the framers of the constitution intended. In fact, the
Mining Act strictly adheres to the text of the Constitution and does not
provide for the application of the Control Test. Indeed, the application of the
Control Test has no constitutional or statutory basis. Its application is only by
mere administrative fiat. 115 (Emphasis supplied)
 This court must now put to rest the seeming tension between the Control Test
and the Grandfather Rule.
This court's 1952 ruling in Davis Winship v. Philippine Trust Co. 116 cited its
1951 ruling in Filipinas Compania de Seguros v. Christern, Huenefeld and Co., Inc.
117 and stated that "the nationality of a private corporation is determined by the
character or citizenship of its controlling stockholders." 118
Filipinas Compania de Seguros, for its part, specifically used the term "Control
Test" (citing a United States Supreme Court decision) 119 in ruling that the respondent
in that case, Christern, Huenefeld and Co., Inc. — the majority of the stockholders of
which were German subjects — "became an enemy corporation upon the outbreak of
the war." 120
Their pronouncements and clear reference to the Control Test notwithstanding,
Davis Winship and Filipinas Compania de Seguros do not pertain to nationalized
economic activities but rather to corporations deemed to be of a belligerent nationality
during a time of war.
In and of itself, this court's 1966 decision in Palting had nothing to do with the
Control Test and the Grandfather Rule. Palting, which was relied upon by SEC-OGC
in Opinion No. 10-31, was promulgated in 1966, months before the 1967 SEC Rules
and its bifurcated paragraph 7 were adopted.
Likewise, Palting was promulgated before Republic Act No. 5186, the
Investments Incentive Act, was adopted in 1967. The Investments Incentive Act was
adopted with the declared policy of "accelerat[ing] the sound development of the
national economy in consonance with the principles and objectives of economic
nationalism," 121 thereby effecting the (1935) Constitution's nationalization objectives.
It was through the Investments Incentive Act that a definition of a "Philippine
national" was established. 122 This definition has been practically reiterated in
Presidential Decree No. 1789, the Omnibus Investments Code of 1981; 123 Executive
Order No. 226, the Omnibus Investments Code of 1987; 124 and the present Foreign
Investments Act. 125
This court's 2009 decision in Unchuan v. Lozada 126 referred to Section 3 (a) of
the Foreign Investments Act defining "Philippine national". In so doing, this court
may be characterized to have applied the Control Test:
In this case, we find nothing to show that the sale between the sisters
Lozada and their nephew Antonio violated the public policy prohibiting aliens
from owning lands in the Philippines. Even as Dr. Lozada advanced the
money for the payment of Antonio's share, at no point were the lots registered
in Dr. Lozada's name. Nor was it contemplated that the lots be under his
control for they are actually to be included as capital of Damasa Corporation.
According to their agreement, Antonio and Dr. Lozada are to hold 60% and
40% of the shares in said corporation, respectively. Under Republic Act No.
 7042, particularly Section 3, a corporation organized under the laws of
the Philippines of which at least 60% of the capital stock outstanding and
entitled to vote is owned and held by citizens of the Philippines, is
considered a Philippine National. As such, the corporation may acquire
disposable lands in the Philippines. Neither did petitioner present proof to
belie Antonio's capacity to pay for the lots subjects of this case. 127 (Emphasis
supplied)
This court's 2011 decision in Gamboa v. Teves 128 also pertained to the
reckoning of foreign equity ownership in a nationalized economic activity (i.e., public
utilities). However, it centered on the definition of the term "capital" 129 which was
deemed as referring "only to shares of stock entitled to vote in the election of
directors." 130
This court's 2012 resolution ruling on the motion for reconsideration in
Gamboa 131 referred to the SEC En Banc's March 25, 2010 decision in Redmont
Consolidated Mines Corp. v. McArthur Mining Corp. (subject of G.R. No. 205513),
which applied the Grandfather Rule:
This SEC en banc ruling conforms to our 28 June 2011 Decision that
the 60-40 ownership requirement in favor of Filipino citizens in the
Constitution to engage in certain economic activities applies not only to
voting control of the corporation, but also to the beneficial ownership of the
corporation. 132
However, a reading of the original 2011 decision will reveal that the matter of
beneficial ownership was considered after quoting the implementing rules and
regulations of the Foreign Investments Act. The third paragraph of Rule I, Section 1
(b) of these rules states that "[f]ull beneficial ownership of the stocks, coupled with
appropriate voting rights is essential." It is this same provision of the implementing
rules which, in the first paragraph, declares that "the Control Test shall be applied . . .
."
In any case, the 2012 resolution's reference to the SEC En Banc's March 25,
2010 decision in Redmont can hardly be considered as authoritative. It is, at most,
obiter dictum. In the first place, Redmont was evidently not the subject of Gamboa. It
is the subject of G.R. No. 205513, which was consolidated, then de-consolidated, with
the present petition. Likewise, the crux of Gamboa was the consideration of the kind/s
of shares to which the term "capital" referred, not the applicability of the Control Test
and/or the Grandfather Rule. Moreover, the 2012 resolution acknowledges that:
[T]he opinions of the SEC en banc, as well as of the DOJ, interpreting
the law are neither conclusive nor controlling and thus, do not bind the Court.
It is hornbook doctrine that any interpretation of the law that administrative or
quasi-judicial agencies make is only preliminary, never conclusive on the
Court. The power to make a final interpretation of the law, in this case the
term "capital" in Section 11, Article XII of the 1987 Constitution, lies with
this Court, not with any other government entity. 133
The Grandfather Rule is not
enshrined in the Constitution
In ruling that the Grandfather Rule must apply, the ponencia relies on the
deliberations of the 1986 Constitutional Commission. The ponencia states that these
discussions "shed light on how a citizenship of a corporation will be determined." 134
The ponencia cites an exchange between Commissioners Bernardo F. Villegas
and Jose N. Nolledo: 135
MR. NOLLEDO:
In Sections 3, 9 and 15, the Committee stated local or Filipino equity and
foreign equity; namely, 60-40 in Section 3, 60-40 in Section 9, and 2/3-
1/3 in Section 15.
MR. VILLEGAS:
That is right.
MR. NOLLEDO:
In teaching law, we are always faced with this question: "Where do we base the
equity requirement, is it on the authorized capital stock, on the
subscribed capital stock, or on the paid-up capital stock of a
corporation"? Will the Committee please enlighten me on this?
MR. VILLEGAS:
We have just had a long discussion with the members of the team from the UP
Law Center who provided us a draft. The phrase that is contained here
which we adopted from the UP draft is "60 percent of voting stock."
MR. NOLLEDO:
That must be based on the subscribed capital stock, because unless declared
delinquent, unpaid capital stock shall be entitled to vote.
MR. VILLEGAS:
That is right.
MR. NOLLEDO:
Thank you.
With respect to an investment by one corporation in another corporation, say, a
corporation with 60-40 percent equity invests in another corporation
which is permitted by the Corporation Code, does the Committee adopt
the Grandfather Rule?
MR. VILLEGAS:
Yes, that is the understanding of the Committee.
MR. NOLLEDO:
Therefore, we need additional Filipino capital?
 MR. VILLEGAS:
Yes. 136 (Emphasis supplied)
This court has long settled the interpretative value of the deliberations of the
Constitutional Commission. In Civil Liberties Union v. Executive Secretary, 137 this
court noted:
A foolproof yardstick in constitutional construction is the intention
underlying the provision under consideration. Thus, it has been held that the
Court in construing a Constitution should bear in mind the object sought to be
accomplished by its adoption, and the evils, if any, sought to be prevented or
remedied. A doubtful provision will be examined in the light of the history of
the times, and the condition and circumstances under which the Constitution
was framed. The object is to ascertain the reason which induced the framers of
the Constitution to enact the particular provision and the purpose sought to be
accomplished thereby, in order to construe the whole as to make the words
consonant to that reason and calculated to effect that purpose. 138
However, in the same case, this court also said: 139
While it is permissible in this jurisdiction to consult the debates and
proceedings of the constitutional convention in order to arrive at the reason
and purpose of the resulting Constitution,resort thereto may be had only when
other guides fail as said proceedings are powerless to vary the terms of the
Constitution when the meaning is clear. Debates in the constitutional
convention "are of value as showing the views of the individual members,
and as indicating the reasons for their votes, but they give us no light as
to the views of the large majority who did not talk, much less of the mass
of our fellow citizens whose votes at the polls gave that instrument the
force of fundamental law. We think it safer to construe the constitution
from what appears upon its face." The proper interpretation therefore
depends more on how it was understood by the people adopting it than in
the framers's understanding thereof. 140 (Emphasis supplied)
As has been stated:
The meaning of constitutional provisions should be determined from a
contemporary reading of the text in relation to the other provisions of the
entire document. We must assume that the authors intended the words to be
read by generations who will have to live with the consequences of the
provisions. The authors were not only the members of the Constitutional
Commission but all those who participated in its ratification. Definitely, the
ideas and opinions exchanged by a few of its commissioners should not be
presumed to be the opinions of all of them. The result of the deliberations of
the Commission resulted in a specific text, and it is that specific text — and
only that text — which we must read and construe.
The preamble establishes that the "sovereign Filipino people" continue
to "ordain and promulgate" the Constitution. The principle that "sovereignty
resides in the people and all government authority emanates from them" is not
 hollow. Sovereign authority cannot be undermined by the ideas of a few
Constitutional Commissioners participating in a forum in 1986 as against the
realities that our people have to face in the present.
There is another, more fundamental, reason why reliance on the
discussion of the Constitutional Commissioners should not be accepted as
basis for determining the spirit behind constitutional provisions. The
Constitutional Commissioners were not infallible. Their statements of fact or
status or their inferences from such beliefs may be wrong . . . . . 141
It is true that the records of the Constitutional Commission indicate an
affirmative reference to the Grandfather Rule. However, the quoted exchange fails to
indicate a consensus or the general sentiment of the forty-nine (49) members 142 of the
Constitutional Commission. What it indicates is, at most, an understanding between
Commissioners Nolledo and Villegas, albeit with the latter claiming that the same
understanding is shared by the Constitutional Commission's Committee on National
Economy and Patrimony. (Though even then, it is not established if this
understanding is shared by the committee members unanimously, or by a majority of
them, or is advanced by its leadership under the assumption that it may speak for the
Committee.)
The 1987 Constitution is silent on the precise means through which foreign
equity in a corporation shall be determined for the purpose of complying with
nationalization requirements in each industry. If at all, it militates against the
supposed preference for the Grandfather Rule that, its mention in the Constitutional
Commission's deliberations notwithstanding, the 1987 Constitution was, ultimately,
inarticulate on adopting a specific test or means.
The 1987 Constitution is categorical in its omission. Its meaning is clear. That
is to say, by its silence, it chose to not manifest a preference. Had there been any such
preference, the Constitution could very well have said it.
In 1986, when the Constitution was being drafted, the Grandfather Rule and
the Control Test were not novel concepts. Both tests have been articulated since as far
back as 1967. The Foreign Investments Act,while adopted in 1991, has "predecessor
statute[s]" 143 dating to before 1986. As earlier mentioned, these predecessors also
define the term "Philippine national" and in substantially the same manner that
Section 3 (a) of the Foreign Investments Act does. 144 It is the same definition: This is
the same basis for applying the Control Test.
It is elementary that the Constitution is not primarily a lawyer's document. 145
As the convoluted history of the Control Test and Grandfather Rule shows, even those
learned in the law have been in conflict, if not in outright confusion, as to their
application. It is not proper to insist upon the Grandfather Rule as enshrined in the
Constitution — and as manifesting the sovereign people's will — when the
Constitution makes absolutely no mention of it.
 In the final analysis, the records of the Constitutional Commission do not bind
this court. As Charles P. Curtis, Jr. said on the role of history in constitutional
exegesis: 146
The intention of the framers of the Constitution, even assuming we
could discover what it was, when it is not adequately expressed in the
Constitution, that is to say, what they meant when they did not say it, surely
that has no binding force upon us. If we look behind or beyond what they
set down in the document, prying into what else they wrote and what they
said, anything we may find is only advisory. They may sit in at our
councils. There is no reason why we should eavesdrop on theirs. 147 (Emphasis
provided)
The Control Test is
established by congressional
dictum
The Foreign Investments Act addresses the gap. As this court has
acknowledged, "[t]he FIA is the basic law governing foreign investments in the
Philippines, irrespective of the nature of business and area of investment." 148
The Foreign Investments Act applies to nationalized economic activities under
the Constitution. Section 8 of the Foreign Investments Act 149 provides that there shall
be two (2) component lists, A and B, with List A pertaining to "the areas of activities
reserved to Philippine nationals by mandate of the Constitution and specific laws."
To reiterate, Section 3 (a) of the Foreign Investments Act defines a "Philippine
national" as including "a corporation organized under the laws of the Philippines of
which at least sixty per cent (60%) of the capital stock outstanding and entitled to vote
is owned and held by citizens of the Philippines." This is a definition that is consistent
with the first part of paragraph 7 of the 1967 SEC Rules, which, as proffered by DOJ
Opinion No. 20, series of 2005, articulates the Control Test: "[s]hares belonging to
corporations or partnerships at least 60 per cent of the capital of which is owned by
Filipino citizens shall be considered as of Philippine nationality."
Moreover, the Foreign Investments Act admits of situations where a
corporation invests in another corporation by owning shares of the latter. Thus, the
proviso in Section 3 (a) of the Foreign Investments Act reads:
Provided, That where a corporation and its non-Filipino stockholders
own stocks in a Securities and Exchange Commission (SEC) registered
enterprise, at least sixty percent (60%) of the capital stock outstanding and
entitled to vote of each of both corporations must be owned and held by
citizens of the Philippines and at least sixty percent (60%) of the members of
the Board of Directors of each of both corporations must be citizens of the
Philippines, in order that the corporation shall be considered a Philippine
national[.]
 Supplementing this is the last sentence of the first paragraph of Rule I, Section
1 (b) of the implementing rules and regulations of the Foreign Investments Act: "The
Control Test shall be applied for this purpose."
As such, by congressional dictum, which is properly interpreted by
administrative rule making, the Control Test must govern in reckoning foreign equity
ownership in corporations engaged in nationalized economic activities. It is through
the Control Test that these corporations' minimum qualification to engage in
nationalized economic activities adjudged.
DOJ Opinion No. 20, series of
2005, provides a qualifier, not
a mere example
The ponencia states that "this case calls for the application of the grandfather
rule since, . . ., doubt prevails and persists in the corporate ownership of herein
petitioners." 150 This position is borne by the ponencia's consideration of DOJ Opinion
No. 20, series of 2005, which states:
[T]he Grandfather Rule or the second part of the SEC Rule applies
only when the 60-40 Filipino-foreign equity ownership is in doubt (i.e., in
cases where the joint venture corporation with Filipino and foreign
stockholders with less than 60% Filipino stockholdings [or 59%] invests
in another joint venture corporation which is either 60-40% Filipino-
alien or 59% less Filipino. Stated differently, where the 60-40 Filipino-
foreign equity ownership is not in doubt, the Grandfather Rule will not apply.
151 (Emphasis supplied)

As is clear from the quoted portion of DOJ Opinion No. 20, series of 2005, the
phrase "in doubt" is followed by a qualifying clause: "i.e., in cases where the joint
venture corporation with Filipino and foreign stockholders with less than 60%
Filipino stockholdings [or 59%] invests in another joint venture corporation which is
either 60-40% Filipino-alien or 59% less Filipino."
The ponencia states that this clause "only made an example of an instance
where 'doubt' as to the ownership of a corporation exists" 152 and is, thus, not
controlling.
This construction is erroneous. The abbreviation "i.e." is an acronym for the
Latin "id est", which translates to "that is". 153 It is used not to cite an example but "to
add explanatory information or to state something in different words." 154 Whatever
follows "i.e." is a paraphrasing or an alternative way of stating the word/s that
preceded it. The words succeeding "i.e.", therefore, refer to the very conception of the
words preceding "i.e.".
Had DOJ Opinion No. 20, series of 2005, intended to cite an example or to
make an illustration, it should have instead used "e.g." This stands for the Latin
"exempli gratia", which translates to "for example." 155
 Thus, all that DOJ Opinion No. 20, series of 2005, meant was that "doubt" as
to Filipino-foreign equity ownership exists when Filipino stockholdings is less than
sixty percent (60%). Indeed, there is no doubt where Filipino stockholdings amount to
at least sixty percent (60%). Pursuant to Section 3 (a) of the Foreign Investments
Act,a corporation is then already deemed to be of Philippine nationality.
The Control Test serves the
rationale for nationalizing the
exploration, development,
and utilization of natural
resources
The application of the Control Test is by no means antithetical to the avowed
policy of a "national economy effectively controlled by Filipinos." 156 The Control
Test promotes this policy.
It is a matter of transitivity 157 that if Filipino stockholders control a corporation
which, in turn, controls another corporation, then the Filipino stockholders control the
latter corporation, albeit indirectly or through the former corporation.
An illustration is apt.
Suppose that a corporation, "C", is engaged in a nationalized activity requiring
that 60% of its capital be owned by Filipinos and that this 60% is owned by another
corporation, "B", while the remaining 40% is owned by stockholders, collectively
referred to as "Y". Y is composed entirely of foreign nationals. As for B, 60% of its
capital is owned by stockholders collectively referred to as "A", while the remaining
40% is owned by stockholders collectively referred to as "X". The collective A, is
composed entirely of Philippine nationals, while the collective X is composed entirely
of foreign nationals. (N.b., in this illustration, capital is understood to mean "shares of
stock entitled to vote in the election of directors," per the definition in Gamboa). 158
Thus:
 By owning 60% of B's capital, A controls B. Likewise, by owning 60% of C's
capital, B controls C. From this, it follows, as a matter of transitivity, that A controls
C; albeit indirectly, that is, through B.
This "control" holds true regardless of the aggregate foreign capital in B and C.
As explained in Gamboa, control by stockholders is a matter resting on the ability to
vote in the election of directors:
Indisputably, one of the rights of a stockholder is the right to
participate in the control or management of the corporation. This is exercised
through his vote in the election of directors because it is the board of directors
that controls or manages the corporation. 159
B will not be outvoted by Y in matters relating to C, while A will not be
outvoted by X in matters relating to B. Since all actions taken by B must necessarily
be in conformity with the will of A, anything that B does in relation to C is, in effect,
in conformity with the will of A. No amount of aggregating the foreign capital in B
and C will enable X to outvote A, nor Y to outvote B.
In effect, A controls C, through B. Stated otherwise, the collective Filipinos in
A, effectively control C, through their control of B.
To reiterate, "[t]he purpose of the sixty per centum requirement is . . . to ensure
that corporations . . . allowed to . . . exploit natural resources shall be controlled by
Filipinos." 160 The decisive consideration is therefore control rather than plain
ownership of capital.
The Grandfather Rule does
not guarantee control and can
undermine the rationale for
nationalization
As against each other, it is the Control Test, rather than the Grandfather Rule,
which better serves to ensure that Philippine nationals control a corporation.
As is illustrated by the SEC's September 21, 1990 opinion addressed to Carag,
Caballes, Jamora, Rodriguez and Somera Law Offices, the application of the
Grandfather Rule does not guarantee control by Filipino stockholders. In certain
instances, the application of the Grandfather Rule actually undermines the rationale
(i.e., control) for the nationalization of certain economic activities.
The SEC's September 21, 1990 opinion related to the nationality of a proposed
corporation. Another corporation, Indo Phil Textile Mills, Inc. (Indo Phil), intended to
subscribe to 70% of the proposed corporation's capital stock upon incorporation. The
remainder (i.e., 30%) of the proposed corporation's capital stock would have been
subscribed to by Filipinos. For its part, Indo Phil was owned by foreign stockholders
to the extent of 56%. Thus, it was only 44% Filipino-owned.
 Applying the Grandfather Rule, the aggregate Filipino stockholdings in the
proposed corporation was computed to amount to 60.8%. As such, the proposed
corporation was deemed to be of Filipino nationality.
A consideration of the same case, with emphasis on the matter of "control"
(and therefore in a manner more in keeping with the rationale for nationalization),
should yield a different conclusion.
Considering that there is no indication in the SEC opinion that any of the
shares in Indo Phil do not have voting rights, it must be assumed that all such shares
have voting rights. As the foreign stockholdings in Indo Phil amount to 56%, control
of Indo Phil is held by foreign nationals; that is, this 56% can outvote the 44%
stockholding of Indo Phil's Filipino stockholders. Since control of the proposed
corporation will rest on Indo Phil (which is to hold 70% of its capital), this control
would ultimately rest on those who control Indo Phil; that is, its 56% foreign
stockholding.
Had the Control Test been applied, Indo Phil would have, at the onset, been
deemed to have failed to satisfy the requisite Filipino equity ownership, and its 70%
stockholding in the proposed corporation would have been deemed not held by
Philippine nationals. The Control Test would thus have averted an aberrant result
where a corporation ultimately controlled by foreign nationals was deemed to have
satisfied the requisite Filipino equity ownership.
The Control Test satisfies the
beneficial ownership
requirement
Apart from control (through voting rights), also significant is "beneficial
ownership". In the 2011 decision in Gamboa, 161 this court stated:
Mere legal title is insufficient to meet the 60 percent Filipino-owned
"capital" required in the Constitution. Full beneficial ownership of 60 percent
of the outstanding capital stock, coupled with 60 percent of the voting rights,
is required. The legal and beneficial ownership of 60 percent of the
outstanding capital stock must rest in the hands of Filipino nationals in
accordance with the constitutional mandate. Otherwise, the corporation is
"considered as non-Philippine national[s]." 162
The concept of "beneficial ownership" is not novel. The implementing rules
and regulations (amended 2004) of Republic Act No. 8799, the Securities Regulation
Code (SRC), defines "beneficial owner or beneficial ownership" as follows:
SRC Rule 3 — Definition of Terms Used in the Rules and Regulations
1. As used in the rules and regulations adopted by the Commission under
the Code, unless the context otherwise requires:
A. Beneficial owner or beneficial ownership means any person who,
directly or indirectly, through any contract, arrangement,
 understanding, relationship or otherwise, has or shares voting
power, which includes the power to vote, or to direct the voting
of such security; and/or investment returns or power, which
includes the power to dispose of, or to direct the disposition of
such security; provided, however, that a person shall be
deemed to have an indirect beneficial ownership interest in
any security which is:
i. held by members of his immediate family sharing the same household;
ii. held by a partnership in which he is a general partner;
iii. held by a corporation of which he is a controlling shareholder; or
iv. subject to any contract, arrangement or understanding which gives
him voting power or investment power with respect to such
securities; provided however, that the following persons or
institutions shall not be deemed to be beneficial owners of
securities held by them for the benefit of third parties or in
customer or fiduciary accounts in the ordinary course of
business, so long as such shares were acquired by such persons
or institutions without the purpose or effect of changing or
influencing control of the issuer:
a. a broker dealer;
b. an investment house registered under the Investment Houses
Law;
c. a bank authorized to operate as such by the Bangko Sentral ng
Pilipinas;
d. an insurance company subject to the supervision of the Office
of the Insurance Commission;
e. an investment company registered under the Investment
Company Act;
f. a pension plan subject to regulation and supervision by the
Bureau of Internal Revenue and/or the Office of the
Insurance Commission or relevant authority; and
g. a group in which all of the members are persons specified
above.
All securities of the same class beneficially owned by a person,
regardless of the form such beneficial ownership takes, shall be
aggregated in calculating the number of shares beneficially
owned by such person.
A person shall be deemed to be the beneficial owner of a security if that
person has the right to acquire beneficial ownership, within thirty
(30) days, including, but not limited to, any right to acquire,
through the exercise of any option, warrant or right; through the
conversion of any security; pursuant to the power to revoke a
 trust, discretionary account or similar arrangement; or pursuant
to automatic termination of a trust, discretionary account or
similar arrangement. (Emphasis supplied)
Thus, there are two (2) ways through which one may be a beneficial owner of
securities, such as shares of stock: first, by having or sharing voting power; and
second, by having or sharing investment returns or power. By the implementing rules'
use of "and/or", either of the two suffices. They are alternative means which may or
may not concur.
Voting power, as discussed previously, ultimately rests on the controlling
stockholders of the controlling investor corporation. To go back to the previous
illustration, voting power ultimately rests on A, it having the voting power in B
which, in turn, has the voting power in C.
As to investment returns or power, it is ultimately A which enjoys investment
power. It controls B's investment decisions — including the disposition of securities
held by B — and (again, through B) controls C's investment decisions.
Similarly, it is ultimately A which benefits from investment returns generated
through C. Any income generated by C redounds to B's benefit, that is, through
income obtained from C, B gains funds or assets which it can use either to finance
itself in respect of capital and/or operations. This is a direct benefit to B, itself a
Philippine national. This is also an indirect benefit to A, a collectivity of Philippine
nationals, as then, its business — B — not only becomes more viable as a going
concern but also becomes equipped to funnel income to A.
Moreover, beneficial ownership need not be direct. A controlling shareholder
is deemed the indirect beneficial owner of securities (e.g., shares) held by a
corporation of which he or she is a controlling shareholder. Thus, in the previous
illustration, A, the controlling shareholder of B, is the indirect beneficial owner of the
shares in C to the extent that they are held by B.
Practical difficulties with the
Grandfather Rule
Per SEC-OGC Opinion No. 10-31, the Grandfather Rule calls for the
aggregation of stockholdings on the basis of the individual stockholders (i.e., natural
persons) of every investor corporation. This construction presents practical problems
which, in many circumstances, render the reckoning of foreign equity a futile
exercise.
It is a given that a corporation may hold shares in another corporation. Having
to reckon equity to that point when natural persons hold rights to stocks makes it
conceivable that stockholdings will have to be traced ad infinitum. The Grandfather
Rule, as conceived in SEC-OGC Opinion No. 10-31, will never be satisfied for as
long as there is a corporation holding the shares of another corporation.
 This proposition is rendered even more difficult (and absurd) by how certain
corporations are listed and traded in stock exchanges. In these cases, the ownership of
stocks and the fractional composition of a corporation can change on a daily basis.
Even Palting, which SEC-OGC Opinion No. 10-31 relied upon to justify resort
to the Grandfather Rule, acknowledged these impracticalities and absurdities:
[T]o what extent must the word "indirectly" be carried? Must we trace the
ownership or control of these various corporations ad infinitum for the
purpose of determining whether the American ownership-control-requirement
is satisfied? Add to this the admitted fact that the shares of stock of the
PANTEPEC and PANCOASTAL which are allegedly owned or controlled
directly by citizens of the United States, are traded in the stock exchange in
New York, and you have a situation where it becomes a practical
impossibility to determine at any given time, the citizenship of the controlling
stock required by the law. 163
The Control Test is sustained
by the Mining Act
The Foreign Investments Act's reckoning of a Philippine national on the basis
of control and the requisite application of the Control Test are reinforced by the
Mining Act.
Section 3 (aq) of the Mining Act deems as a qualified person (for purposes of a
mineral agreement) a "corporation, . . . at least sixty per centum (60%) of the capital
of which is owned by citizens of the Philippines." Insofar as the controlling equity
requirement is concerned, this is practically a restatement of Section 3 (a) of the
Foreign Investments Act. 164
Moreover, Section 3 (t), by defining a "foreign-owned corporation" as
a "corporation, . . . in which less than fifty per centum (50%) of the capital is
owned by Filipino citizens" is merely stating Section 3 (aq)'s inverse. Section
3 (t) remains consistent with the Control Test, for after all, a corporation in
which less than half of the capital is owned by Filipino could not possibly be
controlled by Filipinos.
Sixty percent Filipino equity
ownership is indispensable to
be deemed a Philippine
national
But what of corporations in which Filipino equity is greater than 50% but less
than 60%?
The Foreign Investments Act is clear. The threshold to qualify as a Philippine
national, whether as a stand-alone corporation or one involving investments from or
by other corporation/s, is 60% Filipino equity ownership. Failing this, a corporation
must be deemed to be of foreign nationality.
 The necessary implication of Section 3 (a) of the FIA is that anything that fails
to breach this 60% threshold is not a Philippine national. There is no "doubt", as DOJ
Opinion No. 20, series of 2005, posits. Any declaration, in the Mining Act or
elsewhere, that a corporation in which Filipino equity ownership is less than 50% is
deemed foreign-owned is merely to articulate — so as to eliminate uncertainty — the
natural consequence of Filipinos' minority shareholding in a corporation. Ultimately,
the positive determination of what makes a Philippine national, per Section 3 (a) of
the Foreign Investments Act,is that which controls.
The Grandfather Rule may
be applied as a supplement to
the Control Test
This standard under the Foreign Investments Act is the Control Test. Its
application can be nuanced if there is a clear showing that the context of a case
requires it. The Foreign Investments Act's standard should be applied with the end of
achieving the rationale for nationalization. Thus, sixty percent equity ownership is but
a minimum.
This court's conception of what constitutes control — as articulated in Gamboa
— must be deemed integrated into the Foreign Investment Act's standard. Bare
ownership of 60% of a corporation's shares would not suffice. What is necessary is
such ownership as will ensure control of a corporation.
In Gamboa, "[f]ull beneficial ownership of 60 percent of the outstanding
capital stock, coupled with 60 percent of the voting rights, is required." 165 With this
in mind, the Grandfather Rule may be used as a supplement to the Control Test,
that is, as a further check to ensure that control and beneficial ownership of a
corporation is in fact lodged in Filipinos.
For instance, Department of Justice Opinion No. 165, series of 1984, identified
the following "significant indicators" or badges of "dummy status":
1. That the foreign investor provides practically all the funds for the joint
investment undertaken by Filipino businessmen and their foreign
partner.
2. That the foreign investors undertake to provide practically all the
technological support for the joint venture.
3. That the foreign investors, while being minority stockholders, manage the
company and prepare all economic viability studies. 166
In instances where methods are employed to disable Filipinos from exercising
control and reaping the economic benefits of an enterprise, the ostensible control
vested by ownership of 60% of a corporation's capital may be pierced. Then, the
Grandfather Rule allows for a further, more exacting examination of who actually
controls and benefits from holding such capital.
 Narra, Tesoro, and McArthur
ostensibly satisfy the
minimum requirement of
60% Filipino equity holding
Turning now to Narra, Tesoro, and McArthur, a determination of their
qualification to enter into MPSAs requires an examination of the structures of their
respective stockholdings and controlling interests. This examination must remain
consistent with the previously discussed requirements of effective control and
beneficial ownership.
Consistent with Gamboa, 167 this examination of equity structures must
likewise focus on "capital" understood as "shares of stock entitled to vote in the
election of directors." 168
Proceeding from the findings of the Court of Appeals in its October 1, 2010
decision in CA-G.R. SP No. 109703, 169 it appears that at least 60% of equities in
Narra, Tesoro, and McArthur is owned by Philippine nationals. Per this initial
analysis, Narra, Tesoro, and McArthur ostensibly satisfy the requirements of the
Control Test in order that they may be deemed Filipino corporations.
Attention must be drawn to how these findings fail to indicate which
(fractional) portion of these equities consist of "shares of stock entitled to vote in the
election of directors" or, if there is even any such portion of shares which are not
entitled to vote. These findings fail to indicate any distinction between common
shares and preferred shares (not entitled to vote). Absent a basis for reckoning non-
voting shares, there is, thus, no basis for diminishing the 60% Filipino equity holding
in Narra, Tesoro, and McArthur and undermining their having ostensibly satisfied the
requirements of the Control Test in order to be deemed Filipino corporations qualified
to enter into MPSAs.
1. Narra Nickel Mining and Development Corporation
Petitioner Narra Nickel Mining and Development Corporation has P10 Million
in capital stock, divided into 10,000 shares at P1,000.00 per share, subscribed to as
follows: 170

Name Nationality Number of Amount Amount Paid

Shares Subscribed

Patricia Louise Filipino 5,997 P5,997,000.00 P1,667,000.00

Mining and
Development Corp.

MBMI Resources, Inc. Canadian 3,996 P3,996,000.00 P1,116,000.00

Higinio C. Mendoza, Jr. Filipino 1 P1,000.00 P1,000.00
Henry E. Fernandez Filipino 1 P1,000.00 P1,000.00
Ma. Elena A. Bocalan Filipino 1 P1,000.00 P1,000.00
Michael T. Mason American 1 P1,000.00 P1,000.00
Robert L. McCurdy Canadian 1 P1,000.00 P1,000.00
Manuel A. Agcaoili Filipino 1 P1,000.00 P1,000.00
Bayani H. Agabin Filipino 1 P1,000.00 P1,000.00
–––––– ––––––––––––– –––––––––––––
Total 10,000 P10,000,000.00 P2,800,000.00
====== ============ ============

Patricia Louise Mining and Development Corporation (PLMDC) also has P10
Million in capital stock, divided into 10,000 shares at P1,000.00 per share, subscribed
to as follows: 171
Name Nationality Number of Amount Amount Paid
Shares Subscribed

Palawan Alpha South Filipino 6,596 P6,596,000.00 P0

Resource
Development Corp.
MBMI Resources, Inc. Canadian 3,396 P3,396,000.00 P2,796,000.00
Higinio C. Mendoza, Jr. Filipino 1 P1,000.00 P1,000.00
Fernando B. Esguerra Filipino 1 P1,000.00 P1,000.00
Henry E. Fernandez Filipino 1 P1,000.00 P1,000.00
Lauro L. Salazar Filipino 1 P1,000.00 P1,000.00
Michael T. Mason American 1 P1,000.00 P1,000.00
Kenneth Cawkel Canadian 1 P1,000.00 P1,000.00
Manuel A. Agcaoili Filipino 1 P1,000.00 P1,000.00
Bayani H. Agabin Filipino 1 P1,000.00 P1,000.00
––––––– –––––––––––––– –––––––––––––
Total 10,000 P10,000,000.00 P2,804,000.00
====== ============= ============

Palawan Alpha South Resource and Development Corporation, a Filipino

corporation, along with Higinio C. Mendoza, Jr., Fernando B. Esguerra, Henry E.
Fernandez, Lauro L. Salazar, Manuel A. Agcaoili, and Bayani H. Agabin, who are all
Filipinos, collectively own 6,002 shares in or 60.02% of the capital stock of PLMDC.
PLMDC is thus ostensibly a Filipino corporation (i.e., it is controlled by Philippine
nationals who own more than 60% of its capital as required by Section 3 (a) of the
Foreign Investments Act).
PLMDC, along with Higinio C. Mendoza, Jr., Henry E. Fernandez, Ma. Elena
A. Bocalan, Manuel A. Agcaoili and Bayani H. Agabin, who are all Filipinos,
collectively own 6,002 shares in or 60.02% of the capital stock of Narra. As Narra has
 satisfied the minimum Filipino equity ownership (i.e., 60%) required by Section 3 (a)
of the Foreign Investments Act,it is ostensibly a Filipino corporation. Moreover, as it
has satisfied the minimum Filipino equity ownership (i.e., 60%) required by Section 3
(aq) of the Mining Act to be deemed a qualified person for purposes of mineral
agreements, Narra is ostensibly qualified to enter into an MPSA.
2. Tesoro Mining and Development, Inc.
Petitioner Tesoro Mining and Development, Inc. has P10 Million in capital
stock, divided into 10,000 shares at P1,000.00 per share, subscribed to as follows: 172
Name Nationality Number of Amount Amount Paid
Shares Subscribed

Sara Marie Mining, Inc. Filipino 5,997 P5,997,000.00 P825,000.00

MBMI Resources, Inc. Canadian 3,998 P3,998,000.00 P1,878,174.60
Lauro L. Salazar Filipino 1 P1,000.00 P1,000.00
Fernando B. Esguerra Filipino 1 P1,000.00 P1,000.00
Manuel A. Agcaoili Filipino 1 P1,000.00 P1,000.00
Michael T. Mason American 1 P1,000.00 P1,000.00
Kenneth Cawkel Canadian 1 P1,000.00 P1,000.00
–––––– –––––––––––––– –––––––––––––
Total 10,000 P10,000,000.00 P2,708,174.60
====== ============= ============

Sara Marie Mining, Inc. (SMMI) also has P10 Million in capital stock, divided
into 10,000 shares at P1,000.00 per share, subscribed to as follows: 173
Name Nationality Number of Amount Amount Paid
Shares Subscribed

Olympic Mines and Filipino 6,663 P6,663,000.00 P0

Development Corp.
MBMI Resources, Inc. Canadian 3,331 P3,331,000.00 P2,794,000.00
Amanti Limson Filipino 1 P1,000.00 P1,000.00
Fernando B. Esguerra Filipino 1 P1,000.00 P1,000.00
Lauro Salazar Filipino 1 P1,000.00 P1,000.00
Emmanuel G. Filipino 1 P1,000.00 P1,000.00
Hernando
Michael T. Mason American 1 P1,000.00 P1,000.00
Kenneth Cawkel Canadian 1 P1,000.00 P1,000.00
––––––– –––––––––––––– –––––––––––––
Total 10,000 P10,000,000.00 P2,809,900.00
====== ============= ============
 Olympic Mines and Development Corporation (OMDC), a Filipino
corporation, along with Amanti Limson, Fernando B. Esguerra, Lauro Salazar, and
Emmanuel G. Hernando, who are all Filipinos, collectively own 6,667 shares in or
66.67% of the capital stock of SMMI. SMMI is thus ostensibly a Filipino corporation
(i.e., it is controlled by Philippine nationals who own more than 60% of its capital as
required by Section 3 (a) of the Foreign Investments Act).
SMMI, along with Lauro L. Salazar, Fernando B. Esguerra, and Manuel A.
Agcaoili, who are all Filipinos, collectively own 6,000 shares in or 60% of the capital
stock of Tesoro. As Tesoro has satisfied the minimum Filipino equity ownership (i.e.,
60%) required by Section 3 (a) of the Foreign Investments Act,it is ostensibly a
Filipino corporation. Moreover, as it has satisfied the minimum Filipino equity
ownership (i.e., 60%)required by Section 3 (aq) of the Mining Act to be deemed a
qualified person for purposes of mineral agreements, Tesoro is ostensibly qualified to
enter into an MPSA.
3. McArthur Mining Corporation
Petitioner McArthur Mining Corporation has P10 Million in capital stock,
divided into 10,000 shares at P1,000.00 per share, subscribed to as follows: 174
Name Nationality Number of Amount Amount Paid
Shares Subscribed

Madridejos Mining Filipino 5,997 P5,997,000.00 P825,000.00

Corp.
MBMI Resources, Inc. Canadian 3,998 P3,998,000.00 P1,878,174.60
Lauro L. Salazar Filipino 1 P1,000.00 P1,000.00
Fernando B. Esguerra Filipino 1 P1,000.00 P1,000.00
Manuel A. Agcaoili Filipino 1 P1,000.00 P1,000.00
Michael T. Mason American 1 P1,000.00 P1,000.00
Kenneth Cawkel Canadian 1 P1,000.00 P1,000.00
–––––– –––––––––––––– –––––––––––––
Total 10,000 P10,000,000.00 P2,708,174.60
====== ============= ============

Madridejos Mining Corporation (Madridejos) also has P10 Million in capital

stock, divided into 10,000 shares at P1,000.00 per shares, subscribed to as follows: 175
Name Nationality Number of Amount Amount Paid
Shares Subscribed

Olympic Mines and Filipino 6,663 P6,663,000.00 P0

Development Corp.
MBMI Resources, Inc. Canadian 3,331 P3,331,000.00 P2,803,900.00
Amanti Limson Filipino 1 P1,000.00 P1,000.00
Fernando B. Esguerra Filipino 1 P1,000.00 P1,000.00
Lauro Salazar Filipino 1 P1,000.00 P1,000.00
Emmanuel G. Filipino 1 P1,000.00 P1,000.00
Hernando
Michael T. Mason American 1 P1,000.00 P1,000.00
Kenneth Cawkel Canadian 1 P1,000.00 P1,000.00
–––––– ––––––––––––– –––––––––––––
Total 10,000 P10,000,000.00 P2,809,900.00
====== ============ ============

OMDC, a Filipino corporation, combined with Amanti Limson, Fernando B.

Esguerra, Lauro Salazar, and Emmanuel G. Hernando, who are all Filipino,
collectively own 6,667 shares in or 66.67% of the capital stock of Madridejos.
Madridejos is thus ostensibly a Filipino corporation (i.e., it is controlled by Philippine
nationals who own more than 60% of its capital as required by Section 3 (a) of the
Foreign Investments Act).
Madridejos combined with Lauro L. Salazar, Fernando B. Esguerra, and
Manuel A. Agcaoili, who are all Filipinos, collectively own 6,000 shares in or 60% of
the capital stock of McArthur. As McArthur has satisfied the minimum Filipino
equity ownership (i.e., 60%) required by Section 3 (a) of the Foreign Investments
Act,it is ostensibly a Filipino corporation. Moreover, as it has satisfied the minimum
Filipino equity ownership (i.e., 60%) required by Section 3 (aq) of the Mining Act to
be deemed a qualified person for purposes of mineral agreements, McArthur is
ostensibly qualified to enter into an MPSA.
In its October 1, 2010 decision, the Court of Appeals, Seventh Division, made
much of a joint venture entered into by the Canadian Corporation, MBMI Resources,
Inc. with OMDC. 176 This joint venture was denominated "Olympic Properties". Per
MBMI's 2006 Annual report, MBMI was noted to hold "directly and indirectly an
initial 60% interest in [Olympic Properties]." 177 This joint venture, however, does not
factor into the respective stockholders' genealogies of Tesoro and McArthur. It is an
independent venture entered into by OMDC with MBMI. It is OMDC, and not
Olympic Properties, which owns shares in Tesoro and McArthur. It is, therefore, of no
consequence that MBMI holds a 60% interest in Olympic Properties.
Having made these observations, it should not be discounted that a more
thorough consideration — as has been intimated in the earlier disquisition regarding
how 60% Filipino equity ownership is but a minimum and how the Grandfather Rule
may be applied to further examine actual Filipino ownership — could yield an
entirely different conclusion. In fact, Redmont has asserted that such a situation
avails.
However, the contingencies of this case must restrain the court's
consideration of Redmont's claims. Redmont sought relief from a body without
jurisdiction — the Panel of Arbitrators — and has engaged in blatant forum
shopping. It has taken liberties with and ran amok of rules that define fair play. It
is, therefore, bound by its lapses and indiscretions and must bear the consequences
of its imprudence.
Redmont has been engaged in
blatant forum shopping
The concept of and rationale against forum shopping was explained by this
court in Top Rate Construction and General Services, Inc. v. Paxton Development
Corporation: 178
Forum shopping is committed by a party who institutes two or more
suits in different courts, either simultaneously or successively, in order to ask
the courts to rule on the same or related causes or to grant the same or
substantially the same reliefs, on the supposition that one or the other court
would make a favorable disposition or increase a party's chances of obtaining
a favorable decision or action. It is an act of malpractice for it trifles with the
courts, abuses their processes, degrades the administration of justice and adds
to the already congested court dockets. What is critical is the vexation
brought upon the courts and the litigants by a party who asks different
courts to rule on the same or related causes and grant the same or
substantially the same reliefs and in the process creates the possibility of
conflicting decisions being rendered by the different for a upon the same
issues, regardless of whether the court in which one of the suits was brought
has no jurisdiction over the action. 179 (Emphasis supplied)
Equally settled is the test for determining forum shopping. As this court
explained in Yap v. Court of Appeals: 180
To determine whether a party violated the rule against forum
shopping, the most important factor to ask is whether the elements of litis
pendentia are present, or whether a final judgment in one case will amount to
res judicata in another; otherwise stated, the test for determining forum
shopping is whether in the two (or more) cases pending, there is identity of
parties, rights or causes of action, and reliefs sought. 181
Litis pendentia "refers to that situation wherein another action is pending
between the same parties for the same cause of action, such that the second action
becomes unnecessary and vexatious." 182 It requires the concurrence of three (3)
requisites: (1) the identity of parties, or at least such as representing the same interests
in both actions; (2) the identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and (3) the identity of the two cases such that judgment in
one, regardless of which party is successful, would amount to res judicata in the
other. 183
In turn, prior judgment or res judicata bars a subsequent case when the
following requisites concur: (1) the former judgment is final; (2) it is rendered by a
court having jurisdiction over the subject matter and the parties; (3) it is a judgment or
an order on the merits; (4) there is — between the first and the second actions —
identity of parties, of subject matter, and of causes of action. 184
Redmont has taken at least four (4) distinct routes all seeking substantially the
same remedy. Stripped of their verbosity and legalese, Redmont's petitions before the
DENR Panel of Arbitrators, complaint before the Regional Trial Court, complaint
before the Securities and Exchange Commission, and petition before the Office of the
President all seek to prevent Narra, Tesoro, and McArthur as well as their co-
respondents and/or co-defendants from engaging in mining operations. Moreover,
these are all grounded on the same cause (i.e., that they are disqualified from doing so
because they fail to satisfy the requisite Filipino equity ownership) and premised on
the same facts or circumstances.
Redmont has created a situation where multiple tribunals must rule on the
extent to which the parties adverse to Redmont have met the requisite Filipino equity
ownership. It is certainly possible that conflicting decisions will be issued by the
various tribunals over which Redmont's various applications for relief have been
lodged. It is, thus, glaring that the very evil sought to be prevented by the rule against
forum shopping is being foisted by Redmont.
The consequences of willful forum shopping are clear. Rule 7, Section 5 of the
1997 Rules of Civil Procedure provides:
Section 5. Certification against forum shopping. — The plaintiff or
principal party shall certify under oath in the complaint or other initiatory
pleading asserting a claim for relief, or in a sworn certification annexed
thereto and simultaneously filed therewith: (a) that he has not theretofore
commenced any action or filed any claim involving the same issues in any
court, tribunal or quasi-judicial agency and, to the best of his knowledge, no
such other action or claim is pending therein; (b) if there is such other pending
action or claim, a complete statement of the present status thereof; and (c) if
he should thereafter learn that the same or similar action or claim has been
filed or is pending, he shall report that fact within five (5) days therefrom to
the court wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable
by mere amendment of the complaint or other initiatory pleading but shall be
cause for the dismissal of the case without prejudice, unless otherwise
provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall
constitute indirect contempt of court, without prejudice to the corresponding
administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct
contempt, as well as a cause for administrative sanctions. (n)
It strains credulity to accept that Redmont's actions have not been willful. By
filing petitions with the DENR Panel of Arbitrators, Redmont started the entire series
 of events that have culminated in: first, the present petition; second, the de-
consolidated G.R. No. 205513; and third, at least one (1) more petition filed with this
court. 186
Following the adverse decision of the Panel of Arbitrators, Narra, Tesoro, and
McArthur pursued appeals before the Mines Adjudication Board. This is all but a
logical consequence of the POA's adverse decision. While the appeal before the MAB
was pending, Redmont filed a complaint with the SEC and then filed a complaint with
the Regional Trial Court to enjoin the MAB from proceeding. Redmont seems to have
conveniently forgotten that it was its own actions that gave rise to the proceedings
before the MAB in the first place. Moreover, even as all these were pending and in
various stages of appeal and/or review, Redmont still filed a petition before the Office
of the President.
Consistent with Rule 7, Section 5 of the 1997 Rules of Civil Procedure, the
actions subject of these consolidated petitions must be dismissed with prejudice.
It should also not escape this court's attention that the vexatious actions of
Redmont would not have been possible were it not for the permissiveness of
Redmont's counsels. To reiterate, willful forum shopping leads not only to an action's
dismissal with prejudice but "shall [also] constitute direct contempt, [and is] a cause
for administrative sanctions." 187 Redmont's counsels should be reminded that the
parameters established by judicial (and even administrative) proceedings, such as the
rule against forum shopping, are not to be trifled with.
ACCORDINGLY, I vote to GRANT the petition for review on certiorari
subject of G.R. No. 195580. The assailed decision dated October 1, 2010 and the
assailed resolution dated February 15, 2011 of the Court of Appeals, Seventh
Division, in CA-G.R. SP No. 109703, which reversed and set aside the September 10,
2008 and July 1, 2009 orders of the Mines Adjudication Board (MAB) should be SET
ASIDE AND DECLARED NULL AND VOID. The September 10, 2008 order of
the Mines Adjudication Board dismissing the petitions filed by Redmont Consolidated
Mines with the DENR Panel of Arbitrators must be REINSTATED.
(Narra Nickel Mining & Development Corp. v. Redmont Consolidated Mines Corp.,
|||

G.R. No. 195580, [April 21, 2014])

 THIRD DIVISION

[G.R. No. 204029. June 4, 2014.]

AVELINA ABARIENTOS REBUSQUILLO [substituted by her

heirs, except Emelinda R. Gualvez] and SALVADOR A. OROSCO,
petitioners, vs. SPS. DOMINGO and EMELINDA REBUSQUILLO
GUALVEZ and the CITY ASSESSOR OF LEGAZPI CITY,
respondents.

DECISION

VELASCO, JR., J : p

Before Us is a Petition for Review on Certiorari under Rule 45 assailing the

Decision 1 and Resolution 2 dated March 30, 2012 and September 25, 2012,
respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 93035, which
reversed and set aside the Decision dated January 20, 2009 of the Regional Trial
Court (RTC), Branch 4 in Legazpi City, in Civil Case No. 10407.
The antecedent facts may be summarized as follows:
On October 26, 2004, petitioners Avelina Abarientos Rebusquillo (Avelina)
and Salvador Orosco (Salvador) filed a Complaint for annulment and revocation of an
Affidavit of Self-Adjudication dated December 4, 2001 and a Deed of Absolute Sale
dated February 6, 2002 before the court a quo. In it, petitioners alleged that Avelina
was one of the children of Eulalio Abarientos (Eulalio) and Victoria Villareal
(Victoria). Eulalio died intestate on July 3, 1964, survived by his wife Victoria, six
legitimate children, and one illegitimate child, namely: (1) Avelina Abarientos-
Rebusquillo, petitioner in this case; (2) Fortunata Abarientos-Orosco, the mother of
petitioner Salvador; (3) Rosalino Abarientos; (4) Juan Abarientos; (5) Feliciano
Abarientos; (6) Abraham Abarientos; and (7) Carlos Abarientos. His wife Victoria
eventually died intestate on June 30, 1983. TCAHES

On his death, Eulalio left behind an untitled parcel of land in Legazpi City
consisting of two thousand eight hundred sixty-nine (2,869) square meters, more or
less, which was covered by Tax Declaration ARP No. (TD) 0141.
In 2001, Avelina was supposedly made to sign two (2) documents by her
daughter Emelinda Rebusquillo-Gualvez (Emelinda) and her son-in-law Domingo
Gualvez (Domingo), respondents in this case, on the pretext that the documents were
needed to facilitate the titling of the lot. It was only in 2003, so petitioners claim, that
Avelina realized that what she signed was an Affidavit of Self-Adjudication and a
Deed of Absolute Sale in favor of respondents.
As respondents purportedly ignored her when she tried to talk to them, Avelina
sought the intervention of the RTC to declare null and void the two (2) documents in
order to reinstate TD 0141 and so correct the injustice done to the other heirs of
Eulalio.
In their answer, respondents admitted that the execution of the Affidavit of
Self-Adjudication and the Deed of Sale was intended to facilitate the titling of the
subject property. Paragraph 9 of their Answer reads:
Sometime in the year 2001, [petitioner] Avelina together with the
other heirs of Eulalio Abarientos brought out the idea to [respondent]
Emelinda Rebusquillo-Gualvez to have the property described in paragraph 8
of the complaint registered under the Torrens System of Registration. To
facilitate the titling of the property, so that the same could be attractive to
prospective buyers, it was agreed that the property's tax declaration
could be transferred to [respondents] Spouses [Emelinda] R. Gualvez and
Domingo Gualvez who will spend all the cost of titling subject to
reimbursement by all other heirs in case the property is sold; That it was
agreed that all the heirs will be given their corresponding shares on the
property; That pursuant to said purpose Avelina Abarientos-Rebusquillo with
the knowledge and consent of the other heirs signed and executed an Affidavit
of Self-Adjudication and a Deed of Absolute Sale in favor of [respondents]
Gualvez. In fact, [petitioner] Avelina Rebusquillo was given an advance sum
of FIFTY THOUSAND PESOS (P50,000.00) by [respondent] spouses and all
the delinquent taxes paid by [respondents]. 3HDCAaS

After trial, the RTC rendered its Decision dated January 20, 2009 annulling the
Affidavit of Self-Adjudication and the Deed of Absolute Sale executed by Avelina on
the grounds that (1) with regard to the Affidavit of Self-Adjudication, she was not the
sole heir of her parents and was not therefore solely entitled to their estate; and (2) in
the case of the Deed of Absolute Sale, Avelina did not really intend to sell her share in
the property as it was only executed to facilitate the titling of such property. The
dispositive portion of the RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered, as
follows:

1. The subject Affidavit of Self-Adjudication of the Estate of the

Deceased Spouses Eulalio Abarientos and Victoria Villareal,
dated December 4, 2001 as well as the subject Deed of Absolute
Sale, notarized on February 6, 2002, covering the property
described in par. 8 of the Amended Complaint are hereby
ordered ANNULLED;
 2. That defendant City Assessor's Officer of Legazpi City is hereby
ordered to CANCEL the Tax Declaration in the name of private
[respondents] spouses Gualvez under ARP No. 4143 and to
REINSTATE the Tax Declaration under ARP No. 0141 in the
name of Eulalio Abarientos;

3. By way of restitution, [petitioner] Avelina Abarientos Rebusquillo is

hereby ordered to return or refund to [respondents] spouses
Domingo Gualvez and Emelinda Gualvez, the PhP50,000.00
given by the latter spouses to the former. 4
TIDaCE

Assailing the trial court's decision, respondents interposed an appeal with the
CA arguing that the Deed of Sale cannot be annulled being a public document that has
for its object the creation and transmission of real rights over the immovable subject
property. The fact that Avelina's testimony was not offered in evidence, so
respondents argued, the signature on the adverted deed remains as concrete proof of
her agreement to its terms. Lastly, respondents contended that the Complaint filed by
petitioners Avelina and Salvador before the RTC is not the proper remedy provided
by law for those compulsory heirs unlawfully deprived of their inheritance.
Pending the resolution of respondents' appeal, Avelina died intestate on
September 1, 2009 leaving behind several living heirs 5 including respondent
Emelinda.
In its Decision dated March 30, 2012, the appellate court granted the appeal
and reversed and set aside the Decision of the RTC. The CA held that the RTC erred
in annulling the Affidavit of Self-Adjudication simply on petitioners' allegation of the
existence of the heirs of Eulalio, considering that issues on heirship must be made in
administration or intestate proceedings, not in an ordinary civil action. Further, the
appellate court observed that the Deed of Absolute Sale cannot be nullified as it is a
notarized document that has in its favor the presumption of regularity and is entitled
to full faith and credit upon its face.
Aggrieved by the CA's Decision, petitioner Avelina, as substituted by her heirs
except respondent Emelinda, and petitioner Salvador are now before this Court
ascribing reversible error on the part of the appellate court.
We find merit in the instant petition.
It has indeed been ruled that the declaration of heirship must be made in a
special proceeding, not in an independent civil action. However, this Court had
likewise held that recourse to administration proceedings to determine who heirs are
is sanctioned only if there is a good and compelling reason for such recourse. 6
Hence, the Court had allowed exceptions to the rule requiring administration
proceedings as when the parties in the civil case already presented their evidence
regarding the issue of heirship, and the RTC had consequently rendered judgment
upon the issues it defined during the pre-trial. 7 In Portugal v. Portugal-Beltran, 8
this Court held: CSDTac

In the case at bar, respondent, believing rightly or wrongly that she

was the sole heir to Portugal's estate, executed on February 15, 1988 the
questioned Affidavit of Adjudication under the second sentence of Rule 74,
Section 1 of the Revised Rules of Court. Said rule is an exception to the
general rule that when a person dies leaving a property, it should be judicially
administered and the competent court should appoint a qualified
administrator, in the order established in Sec. 6, Rule 78 in case the deceased
left no will, or in case he did, he failed to name an executor therein.
Petitioners claim, however, to be the exclusive heirs of Portugal A
probate or intestate court, no doubt, has jurisdiction to declare who are the
heirs of a deceased.
It appearing, however, that in the present case the only property
of the intestate estate of Portugal is the Caloocan parcel of land to still
subject it, under the circumstances of the case, to a special proceeding
which could be long, hence, not expeditious, just to establish the status of
petitioners as heirs is not only impractical; it is burdensome to the estate with
the costs and expenses of an administration proceeding. And it is superfluous
in light of the fact that the parties to the civil case — subject of the
present case, could and had already in fact presented evidence before the
trial court which assumed jurisdiction over the case upon the issues it
defined during pre-trial.
In fine, under the circumstances of the present case, there being no
compelling reason to still subject Portugal's estate to administration
proceedings since a determination of petitioners' status as heirs could be
achieved in the civil case filed by petitioners, the trial court should proceed to
evaluate the evidence presented by the parties during the trial and render a
decision thereon upon the issues it defined during pre-trial . . . . (emphasis
supplied)
Similar to Portugal, in the present case, there appears to be only one parcel of
land being claimed by the contending parties as the inheritance from Eulalio. It would
be more practical, as Portugal teaches, to dispense with a separate special proceeding
for the determination of the status of petitioner Avelina as sole heir of Eulalio,
especially in light of the fact that respondents spouses Gualvez admitted in court
that they knew for a fact that petitioner Avelina was not the sole heir of Eulalio
and that petitioner Salvador was one of the other living heirs with rights over the
subject land. As confirmed by the RTC in its Decision, respondents have stipulated
and have thereby admitted the veracity of the following facts during the pre-trial: ScAaHE

IV — UNCONTROVERTED FACTS: (Based on the stipulation of facts in

the Pre-Trial Order)

A. . . .
 B. [Petitioners] and private [respondents] spouses Gualvez admitted the
following facts:

1. Identity of the parties;

2. Capacity of the [petitioners] and private [respondents] to sue and be

sued;

3. [Petitioner] Avelina Abarientos-Rebusquilllo is not the only

surviving heir of deceased spouses Eulalio and Victoria
Abarientos;

4. Petitioner Salvador Orosco is a co-owner/possessor of a portion of

the subject property;

5. Fortunata Abarientos-Orosco is the sister of Avelina Abarientos;

6. [Respondent] Emelinda Rebusquillo-Gualves is a daughter of

[petitioner] Avelina A. Rebusquillo;

7. [Petitioner] Avelina Rebusquillo was born on Nov. 10, 1923;

8. The existence of Affidavit of Self-Adjudication of Estate of the

Deceased and Deed of Absolute Sale executed by [petitioner]
Avelina A. Rebusquillo on the subject property. 9 (emphasis
supplied) SaITHC

In light of the admission of respondents spouses Gualvez, it is with more

reason that a resort to special proceeding will be but an unnecessary superfluity.
Accordingly, the court a quo had properly rendered judgment on the validity of the
Affidavit of Self-Adjudication executed by Avelina. As pointed out by the trial court,
an Affidavit of Self-Adjudication is only proper when the affiant is the sole heir
of the decedent. The second sentence of Section 1, Rule 74 of the Rules of Court is
patently clear that self-adjudication is only warranted when there is only one heir:
Section 1. Extrajudicial settlement by agreement between heirs. — . . .
If there is only one heir, he may adjudicate to himself the entire estate by
means of an affidavit filed in the office of the register of deeds. . . . (emphasis
supplied)
As admitted by respondents, Avelina was not the sole heir of Eulalio. In fact,
as admitted by respondents, petitioner Salvador is one of the co-heirs by right of
representation of his mother. Without a doubt, Avelina had perjured herself when she
declared in the affidavit that she is "the only daughter and sole heir of spouses
EULALIO ABARIENTOS AND VICTORIA VILLAREAL." 10 The falsity of this
claim renders her act of adjudicating to herself the inheritance left by her father
invalid. The RTC did not, therefore, err in granting Avelina's prayer to declare the
affidavit null and void and so correct the wrong she has committed.
In like manner, the Deed of Absolute Sale executed by Avelina in favor of
respondents was correctly nullified and voided by the RTC. Avelina was not in the
right position to sell and transfer the absolute ownership of the subject property to
respondents. As she was not the sole heir of Eulalio and her Affidavit of Self-
Adjudication is void, the subject property is still subject to partition. Avelina, in fine,
did not have the absolute ownership of the subject property but only an aliquot
portion. What she could have transferred to respondents was only the ownership of
such aliquot portion. It is apparent from the admissions of respondents and the records
of this case that Avelina had no intention to transfer the ownership, of whatever
extent, over the property to respondents. Hence, the Deed of Absolute Sale is nothing
more than a simulated contract.
The Civil Code provides: aDcTHE

Art. 1345. Simulation of a contract may be absolute or relative. —

The former takes place when the parties do not intend to be bound at all;
the latter, when the parties conceal their true agreement. (emphasis supplied)
Art. 1346. An absolutely simulated or fictitious contract is void. — A
relative simulation, when it does not prejudice a third person and is not
intended for any purpose contrary to law, morals, good customs, public order
or public policy binds the parties to their real agreement.
In Heirs of Policronio Ureta Sr. v. Heirs of Liberato Ureta, 11 this Court
explained the concept of the simulation of contracts:
In absolute simulation, there is a colorable contract but it has no
substance as the parties have no intention to be bound by it. The main
characteristic of an absolute simulation is that the apparent contract is
not really desired or intended to produce legal effect or in any way alter
the juridical situation of the parties. As a result, an absolutely simulated
or fictitious contract is void, and the parties may recover from each other
what they may have given under the contract. However, if the parties state
a false cause in the contract to conceal their real agreement, the contract is
relatively simulated and the parties are still bound by their real agreement.
Hence, where the essential requisites of a contract are present and the
simulation refers only to the content or terms of the contract, the agreement is
absolutely binding and enforceable between the parties and their successors in
interest. (emphasis supplied) acHTIC

In the present case, the true intention of the parties in the execution of the Deed
of Absolute Sale is immediately apparent from respondents' very own Answer to
petitioners' Complaint. As respondents themselves acknowledge, the purpose of the
Deed of Absolute Sale was simply to "facilitate the titling of the [subject] property,"
not to transfer the ownership of the lot to them. Furthermore, respondents concede
that petitioner Salvador remains in possession of the property and that there is no
indication that respondents ever took possession of the subject property after its
supposed purchase. Such failure to take exclusive possession of the subject property
or, in the alternative, to collect rentals from its possessor, is contrary to the principle
of ownership and is a clear badge of simulation that renders the whole transaction
void. 12
Contrary to the appellate court's opinion, the fact that the questioned Deed of
Absolute Sale was reduced to writing and notarized does not accord it the quality of
incontrovertibility otherwise provided by the parole evidence rule. The form of a
contract does not make an otherwise simulated and invalid act valid. The rule on
parole evidence is not, as it were, ironclad. Sec. 9, Rule 130 of the Rules of Court
provides the exceptions: DEcTCa

Section 9. Evidence of written agreements. — . . .

However, a party may present evidence to modify, explain or add to
the terms of written agreement if he puts in issue in his pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the written
agreement;
(b) The failure of the written agreement to express the true intent
and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their
successors in interest after the execution of the written agreement.
The term "agreement" includes wills. (emphasis supplied)
The failure of the Deed of Absolute Sale to express the true intent and
agreement of the contracting parties was clearly put in issue in the present case.
Again, respondents themselves admit in their Answer that the Affidavit of Self-
Adjudication and the Deed of Absolute Sale were only executed to facilitate the titling
of the property. The RTC is, therefore, justified to apply the exceptions provided in
the second paragraph of Sec. 9, Rule 130 to ascertain the true intent of the parties,
which shall prevail over the letter of the document. That said, considering that the
Deed of Absolute Sale has been shown to be void for being absolutely simulated,
petitioners are not precluded from presenting evidence to modify, explain or add to
the terms of the written agreement. 13
WHEREFORE, the instant petition is GRANTED. The Decision dated
March 30, 2012 and the Resolution dated September 25, 2012 of the Court of Appeals
in CA-G.R. CV No. 93035 are hereby REVERSED and SET ASIDE. The Decision
dated January 20, 2009 in Civil Case No. 10407 of the Regional Trial Court (RTC),
Branch 4 in Legazpi City is REINSTATED.
SO ORDERED. CSDTac

Peralta, Villarama, Jr., * Mendoza and Leonen, JJ., concur.

||| (Rebusquillo v. Spouses Gualvez, G.R. No. 204029, [June 4, 2014])
 THIRD DIVISION

[G.R. No. 209785. June 4, 2014.]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. MARLON

ABETONG y ENDRADO, accused-appellant.

DECISION

VELASCO, JR., J : p

The Case

This treats of accused-appellant Marlon Abetong's appeal from the June 28, 2013
Decision 1 of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 01357 affirming his
conviction beyond reasonable doubt of violating Section 5, Article II of Republic Act No.
(RA) 9165 or the Comprehensive Dangerous Drugs Act of 2002.

The Facts

Accused-appellant was charged in an Information 2 that reads:

That on or about the 22nd day of August 2003, in the City of Bacolod,
Philippines, and within the jurisdiction of this Honorable Court, the herein
accused, not being authorized by law to sell, trade, dispense, deliver, give away
to another, distribute, dispatch in transit or transport any dangerous drugs, did,
then and there wilfully, unlawfully and feloniously sell, deliver, give away to a
police poseur buyer in a buy-bust operation one (1) heat-sealed transparent
plastic packet containing methylamphetamine hydrochloride or shabu weighing
0.02 gram(s) more or less, in exchange for a price of P100.00 in mark money,
consisting of two (2) P50.00 bill with Serial Nos. BZ323461 and CN467805, in
violation of the aforementioned law.

Act contrary to law. EaICAD

During trial, prosecution witness Police Officer 3 Wilfredo Perez (PO3 Perez) of the
Police Station 1, Bacolod City Police Office, testified that, in the morning of August 22,
2003, their office received information that a certain alias "Cano," later identified as
accused-appellant, was selling drugs in his house at Purok Sigay, Barangay 2, Bacolod
City. Police Senior Inspector Jonathan Lorilla (Inspector Lorilla) then called for a
briefing for the conduct of a buy-bust operation against "Cano" and designated PO3
Perez as the poseur-buyer. In preparation for the operation, PO3 Perez initialled two (2)
PhP50 bills bearing Serial Nos. CN467805 and BZ323461, which were going to be used
as marked money. After recording the details of the preparation in the police blotter, PO3
Perez and the informant proceeded to the address while Inspector Lorilla and some of his
personnel tailed in a car.

Upon arrival at the target area, PO3 Perez and the asset knocked on the door and were
greeted by accused-appellant, who asked the purpose of the visit. PO3 Perez answered
that he wanted to buy PhP100 worth of shabu. The two were ushered in by accused-
appellant and once inside, PO3 Perez saw three persons sitting around a table, passing to
one another a tooter and allegedly engaged in a pot session. The three were identified as
Ricky Bayotas, Reynaldo Relos and Archie Berturan. PO3 Perez then drew two PhP50
bills marked "WCP" and handed them over to accused-appellant who in turn gave him a
plastic sachet containing white crystalline substance from his right pocket.

After receiving the plastic sachet, PO3 Perez introduced himself as a police officer and
signalled his back-up to effect the arrest of the four individuals. The suspects attempted
to flee but their plans were foiled by the timely arrival of the other policemen. They were
then brought to the police station where their arrest and the list of the items confiscated
from them were entered in the police blotter. From their arrest until the items seized were
transmitted to the Philippine National Police (PNP) Crime Laboratory, the pieces of
evidence were allegedly under PO3 Perez's custody. In his testimony, PO3 Perez stated
that he kept the items inside the evidence locker in the Drug Enforcement Unit Office, to
which only Inspector Lorilla has a key.

On August 25, 2013, PO3 Perez brought the sachet containing crystalline substance and
the tooter to the PNP Crime Laboratory for testing. The items were received by Inspector
Augustina Ompoy (Inspector Ompoy), the Forensic Chemical Officer of the Regional
PNP Crime Laboratory 6, Camp Delgado, Iloilo City, who then performed the necessary
examinations on the items recovered.

Inspector Ompoy testified for the prosecution on the receipt in the PNP Crime Laboratory
of the letter-request for laboratory examination of the specimens. According to her, she
conducted quantitative and qualitative tests and found that the white crystalline substance
in the plastic sachet tested positive for methamphetamine hydrochloride, a dangerous
drug, weighing 0.04 gram while the tooter tested negative for any prohibited drug.

Accused-appellant, for his part, raised that he was illegally arrested, a defense
corroborated by Crispin Mejorada, Jr., a friend and neighbor of the former. As succinctly
put by the trial court: 3

Testifying in his defense, accused Marlon Abetong declared being at home in

Purok Sigay, Brgy. 2, Bacolod City at 11:50 AM of August 22, 2003, sweeping
the floor, alone. Suddenly, a male person entered the open door and held him by
his pants. When Marlon asked what his fault was, the man answered to just go
 with him. The person was in civvies, fair-skinned and tall; he did not introduce
himself. Marlon was handcuffed while they were at the foot-walk heading to
26th Aguinaldo Street, and searched, but nothing was recovered from him
except his money — P9.00. Accused was made to board a vehicle at Aguinaldo;
three handcuffed persons were inside. All four were brought to BAC-Up 2 and
placed in a cell. Abetong was not informed of the cause of his arrest; no drugs
were presented to him. He knew of the charge — Violation of Section 5, R.A.
9165 — only during arraignment in court.

The Ruling of the RTC

On May 25, 2011, the Regional Trial Court (RTC), Branch 47 in Bacolod City did not
give credence to accused-appellant's defense and rendered a Decision 4 convicting him of
the crime charged. To wit:

WHEREFORE, finding accused Marlon Abetong y Endrado guilty beyond

reasonable doubt of Violation of Section 5, Article II of R.A. 9165 (Sale,
Delivery, etc. of Dangerous Drugs), as charged, judgment is hereby rendered
sentencing him to suffer Life Imprisonment and to pay a fine of P500,000.00.
He is also to bear the accessory penalty prescribed by law. Costs against
accused. ATCEIc

The subject one (1) sachet of methamphetamine hydrochloride/shabu (Exh. "B-

3-A") recovered/bought from him being a dangerous drug, the same is hereby
ordered confiscated and/or forfeited in favor of the government, and to be
forthwith delivered/turned over to the Philippine Drug Enforcement Agency
(PDEA) provincial office for immediate destruction or disposition in accordance
with law.

The immediate commitment of accused to the national penitentiary for service

of sentence is likewise further ordered.

SO ORDERED.

Aggrieved, accused-appellant appealed to the CA, raising the sole issue that his guilt was
not proved beyond reasonable doubt. He maintained that, assuming without conceding
the validity of the buy-bust operation, the prosecution failed to sufficiently prove that the
integrity of the evidence was preserved. Raising non-compliance with Sec. 21 of RA
9165, he argued, among others: (1) that the markings on the items seized do not bear the
date and time of the confiscation, as required; (2) that about three days have passed since
the items were confiscated before they were brought to the crime laboratory; and (3) that
there was neither an inventory nor a photograph of the recovered plastic sachet. Accused-
appellant likewise hinged his appeal on the fact that Inspector Lorilla, who had the only
key to the evidence locker, did not testify during trial.
 The Ruling of the CA

On June 28, 2013, the court a quo promulgated the assailed Decision denying the appeal.
The fallo reads:STIHaE

WHEREFORE, premises considered, the appeal is DENIED. The decision

dated May 25, 2011 of the Regional Trial Court Branch 47 in Bacolod City,
convicting the accused-appellant of the offense charged and sentencing him to
life imprisonment and to pay a fine of P500,000.00, is AFFIRMED.

SO ORDERED.

In upholding the RTC conviction, the CA ratiocinated that the prosecution's evidence was
sufficient to afford the court a reliable assurance that the evidence presented is one and
the same as those confiscated from accused-appellant. Hence, this appeal.

The Court's Ruling

We find for accused-appellant.

Sec. 21 of RA 9165 or the Comprehensive Dangerous Drugs Act of 2002, in part,

requires:

Section 21. Custody and Disposition of Confiscated, Seized, and/or

Surrendered Dangerous Drugs, Plant Sources of Dangerous Drugs, Controlled
Precursors and Essential Chemicals, Instruments/Paraphernalia and/or
Laboratory Equipment. — The PDEA shall take charge and have custody of all
dangerous drugs, plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or laboratory
equipment so confiscated, seized and/or surrendered, for proper disposition in
the following manner:

(1) The apprehending team having initial custody and control of the drugs
shall, immediately after seizure and confiscation, physically inventory and
photograph the same in the presence of the accused or the persons from whom
such items were confiscated and/or seized, or his/her representative or counsel,
a representative from the media and the Department of Justice (DOJ), and any
elected public official who shall be required to sign the copies of the inventory
and be given a copy thereof;

(2) Within twenty-four (24) hours upon confiscation/seizure of dangerous

drugs, plant sources of dangerous drugs, controlled precursors and essential
chemicals, as well as instruments/paraphernalia and/or laboratory equipment,
the same shall be submitted to the PDEA Forensic Laboratory for a qualitative
and quantitative examination.
The case People v. Musa 5 was instrumental for the CA in justifying leniency in the
compliance with Sec. 21 of RA 9165. Relying on the case, the CA dispensed with several
procedural requirements resulting in accused-appellant's conviction. As cited:

Since the "perfect chain" is almost always impossible to obtain, non-compliance

with Sec. 21 of RA 9165, as stated in the Implementing Rules and Regulations,
does not, without more, automatically render the seizure of the dangerous drug
void, and evidence is admissible as long as the integrity and evidentiary value of
the seized items are properly preserved by the apprehending officer/team.

In the present case, accused-appellants insist on the police officer's non-

compliance with the chain of custody rule since there was "no physical
inventory and photograph of the seized items were taken in their presence or in
the presence of their counsel, a representative from the media and the
Department of Justice and an elective official."

We, however, find these observations insignificant since a review of the

evidence on record shows that the chain of custody rule has been sufficiently
observed by the apprehending officers. HTSaEC

Jurisprudence indeed instructs that failure to observe strictly the above-quoted provision
can be excused as long as (1) the integrity and evidentiary value of the seized items are
properly preserved by the apprehending officers and (2) non-compliance was attended by
justifiable grounds. 6 However, the prosecution in this case was unsuccessful in showing
that there was no opportunity for tampering, contamination, substitution, nor alteration of
the specimens submitted. On the contrary, there is a dearth of evidence to show that the
evidence presented was well-preserved. The prosecution likewise failed to offer any
justification on why the afore-quoted provision was not complied with.

The prosecution failed to establish an unbroken

chain of custody over the drug evidence

A unique characteristic of narcotic substances is that they are not readily identifiable as in
fact they are subject to scientific analysis to determine their composition and nature. And
the risk of tampering, loss or mistake with respect to an exhibit of this nature is greatest
when the exhibit is small and is one that has physical characteristics fungible in nature
and similar in form to substances familiar to people in their daily lives. As a reasonable
measure, in authenticating narcotic specimens, a standard more stringent than that applied
to cases involving objects which are readily identifiable must be applied — a more
exacting standard that entails a chain of custody of the item with sufficient completeness
if only to render it improbable that the original item has either been exchanged with
another or been contaminated or tampered with. 7
The chain of custody rule requires that the admission of an exhibit be preceded by
evidence sufficient to support a finding that the matter in question is what the proponent
claims it to be. It would include testimony about every link in the chain, from the moment
the item was picked up to the time it is offered into evidence, in such a way that every
person who touched the exhibit would describe how and from whom it was received,
where it was and what happened to it while in the witness' possession, the condition in
which it was received and the condition in which it was delivered to the next link in the
chain. These witnesses would then describe the precautions taken to ensure that there had
been no change in the condition of the item and no opportunity for someone not in the
chain to have possession of it. 8

In the case at bar, the failure of Inspector Lorilla to testify is fatal to the prosecution's
case. To recall, only PO3 Perez and Inspector Ompoy testified against accused-appellant.
During his testimony, PO3 Perez admitted that he put the confiscated item in the
evidence locker on August 22, 2003 for safekeeping and subsequently brought them to
Inspector Ompoy at the crime laboratory on August 25, 2003. 9 During this three-day
interval, the items were allegedly kept inside the evidence locker to which only Inspector
Lorilla has the key. As per the records: 10

Q: From the time that the items were confiscated on August 22, 2003 at around
11:50 in the morning up to the time it was delivered to the PNP Crime
Laboratory on August 25, 2003 at 10:40 in the morning, where were the
items kept?

A: It was placed in the evidence locker of the Drug Enforcement Unit together
with other exhibits.

Q: Who placed the confiscated items inside the locker in the office of the Drug
Enforcement Unit?

A: Myself.

Q: Who keeps the key to that locker?

A: Police Inspector Jonathan Lorilla.

Q: Aside from Police Inspector Jonathan Lorilla, is there any other person who
has access to that locker?

A: No more.

It is evident from this sequence of events that during the interim, Inspector Lorilla
constructively acquired custody over the seized items. As the lone key holder and
consequentially a link in the chain, Inspector Lorilla's testimony became indispensable in
proving the guilt of accused-appellant beyond reasonable doubt. Only he could have
testified that from August 22 to 25, 2003 no one else obtained the key from him for
purposes of removing the items from their receptacle. Only he could have enlightened the
courts on what safety mechanisms have been installed in order to preserve the integrity of
the evidence acquired while inside the locker. Absent his testimony, therefore, it cannot
be plausibly claimed that the chain of custody has sufficiently been established. To be
sure, PO3 Perez did not even testify that he was assigned to safeguard the evidence locker
for the said duration; only that he was the one who put it in and three days later took them
out of the locker room before bringing them to the crime laboratory.

Requiring the key holder's testimony is especially significant in this case in view of the
law enforcers' failure to deliver the confiscated items to the crime laboratory within 24
hours, as required under Sec. 21 of RA 9165. While the delay in itself is not fatal to the
prosecution's case as it may be excused based on a justifiable ground, it exposes the items
seized to a higher probability of being handled by even more personnel and,
consequently, to a higher risk of tampering or alteration. Thus, the testimony of the key
holder becomes necessary to attest to the fact that the integrity and evidentiary value of
the confiscated evidence have been preserved. AIHDcC

The CA erred in applying the doctrine that the testimony of a lone prosecution witness, as
long as it is credible and positive, can prove the guilt of the accused beyond reasonable
doubt. 11 Such doctrine is unavailing in drugs cases wherein all who acquired custody
over the confiscated items would necessarily have to testify in order to establish an
unbroken chain. Additionally, worth noting is that PO3 Perez's testimony is not
"virtually free from any form of inconsistency and contradictions as to besmirch it
with doubt and question" contrary to the CA's findings. 12 In fact, it can be gleaned
from the records that one of his key statements has been refuted by forensic chemist
Ompoy herself.

Based on the affidavit 13 executed by PO3 Perez on August 25, 2003, three persons were
engaged in a pot session in the house of accused-appellant. However, when the tooter
allegedly confiscated from the three was tested for dangerous drugs, the test yielded a
negative result. 14 While the guilt of the three others is not an issue in this case, this is
illustrative of a disparity in the prosecution's version of facts and militates against PO3
Perez's credibility.

The presumption of regularity has been overturned

The prosecution cannot skirt the issue of the broken chain of custody by relying on the
presumption of regularity. This presumption, it must be stressed, is not conclusive. Any
taint of irregularity affects the whole performance and should make the presumption
unavailable. 15 The presumption, in other words, obtains only when nothing in the
records suggests that the law enforcers involved deviated from the standard conduct of
official duty as provided for in the law. But where the official act in question is irregular
on its face, as in this case, an adverse presumption arises as a matter of course. 16

A perusal of the Information filed against accused-appellant and Inspector Ompoy's

chemistry report reveals a glaring inconsistency in this case. As can be recalled, the
Information charges accused-appellant of selling 0.02 gram of methamphetamine
hydrochloride. Relative to the crime charged, Inspector Ompoy, on the other hand,
testified 17 in the following wise:

Q: Tell us what kind of tests did you conduct on the specimen?

A: This consists of the physical, chemical and confirmatory tests. In the

physical this includes the weighing of the specimen out of its container.
Specimen "A" weighs 0.04 gram of white crystalline substance. Then I
proceeded to my chemical test in which Marqui and Simons tests were
employed. In the Marqui test, a drop of Marqui reagent was added to the
representative sample and it [yielded] orange-to-brown color which is
indicative of the presence of methamphetamine hydrochloride. In the
Simons test, Simons reagents 1, 2 and 3 were added to another
representative sample and it produced a deep-blue color reaction, also
indicative of the presence of methamphetamine hydrochloride.

xxx xxx xxx

Q: For the record, please read the description of Specimen "A"

A: One heat-sealed transparent plastic packet with markings containing 0.04

gram of white crystalline substance, placed inside a staple-sealed
transparent plastic bag with markings.

From the foregoing transcript, the incongruence between the weight of the drug accused-
appellant is being charged of selling and the weight of the drug tested by the forensic
chemist becomes patent. For sure, this discrepancy in the weight of the substance is fatal
to the case of the prosecution. 18 It automatically casts doubt as to the identity of the item
seized and of the one tested as it erases any assurance that the evidence being offered is
indeed the same as the one recovered during the buy-bust operation.

Well-settled is that "the dangerous drug itself, the shabu in this case, constitutes the very
corpus delicti of the offense, and in sustaining a conviction under RA 9165, the identity
and integrity of the corpus delicti must definitely be shown to have been preserved. . . .
Thus, to remove any doubt or uncertainty on the identity and integrity of the seized drug,
evidence must definitely show that the illegal drug presented in court is the very same
illegal drug actually recovered from the accused; otherwise, the prosecution for
possession under RA 9165 fails." 19 Applying this precept in the case at bar, any
guarantee of the drug item's preservation was effectively removed by the failure of the
prosecution to describe consistently the very corpus delicti of the criminal offense.

The arresting officers unduly deviated from legal procedure

It is beyond dispute that the date and time of confiscation do not appear on the markings
of the seized items. It cannot also be denied that no photograph was taken of the
recovered items for documentation purposes. It is admitted that no representative from
the media, from the Department of Justice, or any elective official was present to serve as
witness in recording the arrest. The prosecution's testimonial evidence is likewise bereft
of any allegation of efforts undertaken by the law enforcers to contact these
representatives. Nevertheless, an accused can still be convicted in spite of these
circumstances provided that a justifiable ground for excusing non-compliance with the
requirements under Sec. 21 of RA 9165 has satisfactorily been established by the
prosecution as required by jurisprudence and the law's implementing rules.

Such justifiable ground is wanting in this case. No explanation whatsoever was offered
by PO3 Perez in his testimony justifying non-compliance. Without this justification, it
was improper for the court a quo to affirm accused-appellant's conviction. To sustain the
RTC and the CA's findings would render the legal requirements under Sec. 21 of RA
9165 inutile and would effectively diminish the safeguards offered by the law in favor of
the accused. EHCDSI

WHEREFORE, the appeal is GRANTED. The June 28, 2013 Decision of the Court of
Appeals is hereby REVERSED and SET ASIDE. Accused-appellant Marlon Abetong y
Endrado is hereby ACQUITTED based on reasonable doubt.

The Director of the Bureau of Prisons is ordered to immediately RELEASE accused-

appellant from custody, unless he is being held for some other lawful cause, and to
INFORM this Court, within five (5) days from receipt of this Decision, of the date
accused-appellant was actually released from confinement.

SO ORDERED.

Peralta, Villarama, Jr., * Mendoza and Leonen, JJ., concur

||| (People v. Abetong y Endrado, G.R. No. 209785, [June 4, 2014])