SYLLABI/SYNOPSIS

EN BANC

[G.R. No. 137718.  July 27, 1999]

REYNALDO O. MALONZO, in his capacity as City Mayor of Caloocan City, OSCAR MALAPITAN, in his capacity as Vice-Mayor of Caloocan City, CHITO ABEL, BENJAMIN MANLAPIG, EDGAR ERICE, DENNIS PADILLA, ZALDY DOLARTE, LUIS TITO VARELA, SUSAN PUNZALAN, HENRY CAMAYO, in their capacities as Members of the Sangguniang Panlungsod of Caloocan City, petitioners, vs. HON. RONALDO B. ZAMORA, in his capacity as Executive Secretary, HON. RONALDO V. PUNO, in his capacity as Under-secretary of the Department of Interior and Local Government, and EDUARDO TIBOR, respondents.

D E C I S I O N

ROMERO, J.:

Consistent with the doctrine that local government does not mean the creation of imperium in imperii or a state within a State, the Constitution has vested the President of the Philippines the power of general supervision over local government units.[1] Such grant of power includes the power of discipline over local officials, keeping them accountable to the public, and seeing to it that their acts are kept within the bounds of law.  Needless to say, this awesome supervisory power, however, must be exercised judiciously and with utmost circumspection so as not to transgress the avowed constitutional policy of local autonomy.  As the facts unfold, the issue that obtrudes in our minds is:  Should the national government be too strong vis-à-vis its local counterpart to the point of subverting the principle of local autonomy enshrined and zealously protected under the Constitution?  It is in this light that the instant case shall now be resolved.

During the incumbency of then Macario A Asistio, Jr., the Sangguniang Panlungsod of Caloocan City passed Ordinance No. 0168, S. 1994,[2] authorizing the City Mayor to initiate proceedings for the expropriation of Lot 26 of the Maysilo Estate registered in the name of CLT Relaty Development Corporation (CLT).  The lot, covering an area of 799,955 square meters, was intended for low-cost housing and the construction of an integrated bus terminal, parks and playgrounds, and related support facilities and utilities.  For this purpose, the said ordinance appropriated the amount of P35,997,975.00,[3] representing 15% of the fair market value of Lot 26 that would be required of the city government as a deposit prior to entry into the premises to be expropriated.

It turned out, however, that the Maysilo Estate straddled the City of Caloocan and the Municipality of Malabon, prompting CLT to file a special civil action[4]  for Interpleader with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction on August 6, 1997, before the Caloocan City Regional Trial Court, branch 124.  The complaint specifically sought to restrain the defendants City of Caloocan and Municipality of Malabon from assessing and collecting real property taxes from CLT and to interplead and litigate among themselves their conflicting rights to claim such taxes.

On December 11, 1997, the Caloocan City Sangguniang Panlungsod, under the stewardship of incumbent Mayor Reynaldo O. Malonzo, enacted Ordinance No. 0246, S.  1997,[5] entitled “AN ORDINANCE AMENDING AND SUPPLEMENTING THE PROVISIONS OF CITY ORDINANCE NO. 0168, SERIES OF 1994 AND FOR OTHER RELATED PURPOSES.”[6] Under this ordinance, certain amendments were introduced, foremost of which was the city council’s decision to increase the appropriated amount of P35,997,975.00 in the previous ordinance to P39,352,047.75, taking into account the subject property’s current fair market value.

After failing to conclude a voluntary sale of Lot 26, the city government commenced on March 23, 1998, a suit for eminent domain[7] against CLT before the Caloocan City Regional Trial Court, Branch 126, to implement the subject property’s expropriation.  Apparently disturbed by this development, the Caloocan City Legal Officer informed the City Mayor through a letter-memorandum[8] dated April 7, 1998, of the pending interpleader case covering Lot 26 and that the same was “a ‘Prejudicial Question’ which must be resolved first by the proper court in order not to put the expropriation proceedings in question.”  He therefore recommended that “pending the final determination and resolution of the court on the issue (territorial jurisdiction) raised in Civil Case No. C-18019 before Branch 124 of the Regional Trial Court of Caloocan City, the expropriation of the subject property be cancelled and/or abandoned.”

In the meantime, after the successful re-election bid of Malonzo, Vice-Mayor Oscar G. Malapitan wrote him a letter[9] dated June 4, 1998, requesting the immediate repair and renovation of the offices of the incoming councilors, as well as the hiring of additional personnel and the retention of those currently employed in the offices of the councilors.

Malonzo acted on said letter and endorsed the same to the Office of the City Treasurer.  The latter in turn manifested through a memorandum[10]dated June 26, 1998, that “since the expropriation of CLT Property is discontinued, the appropriation for expropriation of FIFTY MILLION PESOS (P50M)[11] can be reverted for use in a supplemental budget” stating further that he certifies “(F)or its reversion since it is not yet obligated, and for its availability for re-appropriation in a supplemental budget.”

Pursuant to the treasurer’s certification on the availability of funds to accommodate Vice-Mayor Malapitan’s request, Malonzo subsequently endorsed to the Sangguniang Panlungsod  Supplemental Budget No. 01, Series of 1998, appropriating the amount of P39,343,028.00.  The city council acted favorably on Malonzo’s endorsement and, thus, passed Ordinance No. 0254, S. 1998[12] entitled “AN ORDINANCE PROVIDING PAYMENTS FOR APPROVED ITEMS IN THE SUPPLEMENTAL BUDGET NO. 1 CALENDAR YEAR 1998 AND APPROPRIATING CORRESPONDING AMOUNT WHICH SHALL BE TAKEN FROM THE GENERAL FUND (REVERSION OF APPROPRIATION-EXPROPRIATION OF PROPERTIES).”

Alleging, however, that petitioners conspired and confederated in willfully violating certain provisions of the Local Government Code of 1991 (hereinafter the "Code") through the passage of Ordinance No. 0254, S. 1998, a certain Eduardo Tibor, by himself and as a taxpayer, filed on July 15, 1998, an administrative complaint for Dishonesty, Misconduct in Office, and Abuse of Authority against petitioners before the Office of the President (OP).[13]

After the complaint was given due course, petitioners filed on October 15, 1998 their Consolidated Answer,[14] pointing out, among other things, that said complaint constituted collateral attack of a validly enacted ordinance whose validity should only be determined in a judicial forum.  They also claimed that the assailed ordinance was enacted strictly in accordance with Article 417 of the Rules and Regulations Implementing the Local Government Code of 1991 (hereinafter, the “Rules”), as amended by Administrative Order No. 47 dated April 12, 1993.

After several exchanges of pleadings,[15] petitioners, citing Section 326 of the Code and Article 422, Rule XXXIV of the Rules, filed on February 7, 1999, a Motion to Refer the Case to the Department of Budget and Management (DBM) on the ground that the DBM has been granted power under the Code to review ordinances authorizing the annual or supplemental appropriations of, among other things, highly urbanized cities such as Caloocan City.  This motion, however, remained unresolved.

Two days later, after learning that a certain Teotimo de Guzman Gajudo had filed an action for the Decalaration of Nullity of Ordinance No. 0254, Series of 1998, before the Caloocan City Regional Trial Court,[16] petitioners filed with the OP a Manifestation and Very Urgent Motion to Suspend Proceedings on the ground that the determination of the validity of said ordinance was a prejudicial question.  Likewise, this motion was not acted upon by the OP.

Thus, without resolving the foregoing motions of petitioners, the OP rendered its assailed judgment[17] on March 15, 1999, the decretal portion of which reads:

“WHEREFORE, herein respondents Mayor Reynaldo Malonzo, Vice-mayor Oscar G. Malapitan and Councilors Chito Abel, Benjamin Manlapig, Edgar Erice, Dennis Padilla, Zaldy Dolatre, Susana Punzalan, Henry Camayo, and Luis Tito Varela, all of Caloocan City, are hereby adjudged guilty of misconduct and each is meted the penalty of SUSPENSION[18] from office for a period of three (3) months without pay to commence upon receipt of this Decision.  This Decision is immediately executory.

SO ORDERED.”

On even date, the Department of Interior and Local Government (DILG) administered Macario E. Asistio III’s oath of office as Acting Mayor of Caloocan City.

Without moving for reconsideration of the OP’s decision, petitioners filed before this Court on March 22, 1999, the instant Petition for Certiorari and Prohibition With Application for Preliminary Injunction and Prayer for Restraining Order, With alternative Prayer for Preliminary Mandatory Injunction.[19]

In a resolution of this Court dated April 5, 1999, we resolved to set the case for oral argument[20] on April 20, 1999 while at the same time directed the parties to maintain the status quo before March 15, 1999.

To support their petition, petitioners contend that on account of the filing of an action for interpleader by CLT, the expropriation proceedings had to be suspended pending final resolution of the boundary dispute between Malabon and Caloocan City.  Due to his dispute, the P50 million appropriation for the expropriation of properties under current operating expenses had not been obligated and no security deposit was forthcoming.  It was not at the time a continuing appropriation.  This unavoidable discontinuance of the purpose for which the appropriation was made effectively converted the earlier expropriation of P39,352,047.75 into savings as defined by law.

They argue further that there is no truth in the allegation that Ordinance No. 0254, S. 1998 was passed without complying with Sections 50 and 52 of the Local Government Code requiring that on the first regular session following the election of its members and within 90 days thereafter, the Sanggunian concerned shall adopt or update its existing rules of procedure.  According to them, the minutes of the session held on July 2, 1998 would reveal that the matter of adoption or updating of the house rules was taken up and that the council arrived at a decision to create an ad hoc committee to study the rules.[21] Moreover, even if the Sanggunian failed to approve the new rules of procedure for the ensuing year, the rules which were applied in the previous year shall be deemed in force and effect until a new ones are adopted.

With respect to the OP’s assumption of jurisdiction, petitioners maintained that the OP effectively arrogated unto itself judicial power when it entertained a collateral attack on the validity of Ordinance No. 0254, S. 1998.  Furthermore, primary jurisdiction over the administrative complaint of Tibor should have pertained to the Office of the Ombudsman, as prescribed by Article XI, Sections 13 and 15 of the Constitution.  They also asserted that the declaration in the OP’s decision to the effect that Ordinance No. 0254, S. 1998 was irregularly passed constituted a usurpation of the DBM’s power of review over ordinances authorizing annual or supplemental appropriations of, among others, highly-urbanized cities like Caloocan City as provided under Section 326 of the Local Government Code of 1991.  In  light of said statutory provision, petitioners opined that respondents should have deferred passing upon the validity of the subject ordinance until after the DBM shall have made are view thereof.

Finally, petitioners complained that respondents violated the right to equal protection of the laws when Vice-Mayor Oscar Malapitan was placed in the same class as the rest of the councilors when in truth and in fact, as Presiding Officer of the council, he did not even vote nor participate in the deliberations.  The violation of such right, according to petitioners, made the OP’s decision a nullity.  They concluded that the administrative complaint was anathema to the State’s avowed policy of local autonomy as the threat of harassment suits could become a sword of Damocles hanging over the heads of local officials.

Contending that the OP decison judiciously applied existing laws and jurisprudence under the facts obtaining in this case, the Office of the Solicitor General (OSG)[22] disputed petitioners’ claims contending that the appropriation of P39,352,047.75 contained in an earlier ordinance (Ord. NO. 0246 S. 1997) for the expropriation of Lot 26 of the Maysilo Estate was a capital outlay as defined under Article 306 (d) of the Code and not current operating expenditures.  Since it was a capital outlay, the same shall continue and remain valid until fully spent or the project is completed, as provided under Section 322 of the Code.

The OSG asserted further that the filing on August 6, 1997 of an interpleader case by CLT which owns Lot 26 should not be considered as an unavoidable discontinuance that automatically converted the appropriated amount into savings which could be used for supplemental budget.  Since the said amount was not transformed into savings and, hence, no funds were actually available, then the passage of Ordinance No. 0254, S. 1998 which realigned the said amount on a supplemental budget violated Section 321 of the Code requiring an ordinance providing for a supplemental budget to be supported by funds actually available as certified by the local treasurer or by new revenue sources.

Petitioners were likewise faulted for violating Sections 50 and 52 of the Code requiring the Sangguniang Panlungsod to adopt or update its existing rules of procedure within the first 90 days following the election of its members.  The Sanggunian allegedly conducted three readings of Ordinance No. 0254, S. 1998 in one day and on the first day of its session (July 2, 1998) without the Sanggunian having first organized itself and adopted its rules of procedure.  It was only on July 23, 1998 that the Sanggunian adopted its internal rules of procedure.

As regard petitioners’ contention that the administrative complaint of Tibor should have been filed with the Office of the Ombudsman instead of the OP, the OSG pointed out that under Section 60 and 61 of the Code, the OP is vested with jurisdiction to discipline, remove or suspend a local elective official for, among other things, misconduct in office.  The Ombudsman has never been vested with original and exclusive jurisdiction regarding administrative complaints involving government officials.

Finally, the OSG sought to dismiss the petition on the grounds of non-exhaustion of administrative remedies before the OP and for failure to follow Section 4, Rule 65 of the 1997 Rules of Civil Procedure which prescribes that “if it [the subject of the petition] involves the acts or omissions of a quasi-judicial agency, and unless provided by law or these Rules, the petition shall be filed in and cognizable only by the Court of Appeals.”

The petition is impressed with merit.

Preliminarily, we find a need to resolve a couple of procedural issues which have a bearing on the propriety of this Court’s action on the petition, to wit: (1) whether the Supreme Court is the proper forum which can take cognizance of this instant petition assailing the decision of the OP, and (2) whether the Supreme Court may entertain the instant petition despite the absence of a prior motion for reconsideration filed by petitioners with the OP.

After a very careful and meticulous review of the parties’ respective positions on these matters, we find that this Court possesses the requisite power to assume jurisdiction and rule on the petition.

It is not the first time that similar procedural challenges have been brought before this Court.  Just recently, in the case of Fortich, et al. v. Corona, et al.,[23] we again had an occasion to clarify our position on these questions.  By way of backgrounder, said case involved the so-called “Win-Win Resolution” of the OP which modified tha approval of the conversion to agro-industrial area of a 144-hectare land located in San Vicente, Sumilao, Bukidnon.  As in this case, the OSG opposed said petition on the ground that the same should have been filed with the Court of Appeals since what was sought to be reviewed was the OP’s decision.  Facing said issues squarely, we explained that we did not find any reason why such petition should not have been filed in this Court, holding that:

“But the Supreme Court has the full discretionary power to take cognizance of the petition filed directly to it if compelling reasons, or the nature and importance of the issues raised, warrant.  This has been the judicial policy to be observed and which has been reiterated in subsequent cases, namely: Uy vs. Contreras, et al., Torres vs. Arranz, Bercero vs. De Guzman, and Advincula vs. Legaspi, et al.  As we have further stated in Cuaresma:

‘x x x.  A direct invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefore, clearly and specifically set out in the petition.  This is established policy.  It is a policy that is necessary to prevent inordinate demands upon the Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction, and  to prevent further over-crowding of the Court’s docket.’

Pursuant to said judicial policy, we resolve to take primary jurisdiction over the present petition in the interest of speedy justice and to avoid future litigations (sic) so as to promptly put an end to the present controversy which, as correctly observed by petitioners, has sparked national interest because of the magnitude of the problem created by the issuance of the assailed resolution.  Moreover, as will be discussed later, we find the assailed resolution wholly void and requiring the petitioners to file their petition first with the Court of Appeals would only result in a waste of time and money.

That the Court has the power to set aside its own rules in the higher interests of justice is well-entrenched in our jurisprudence.  We reiterate what we said in Piczon v. Court of Appeals:

‘Be it remembered that rules of procedure are but mere tools designed to facilitate the attainment of justice.  Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided.  Time and again, this Court has suspended its own rules and excepted a particular case from their operation whenever the higher interests of justice so require.  In the instant petition, we forego a lengthy disquisition of the proper procedure that should have been taken by the parties involved and proceed directly to the merits of the case.”’ [Underscoring supplied, citations omitted].

In like manner, it is our considered view now that the instant petition has been properly brought before us in light of the importance of the subject matter and the transcendental nature of the issues raised.  Realignment, as explained in the pleadings, is a common practice borne out of necessity and sanctioned by law.  Just how such a common practice may be carried out within the bounds of law, considering the fact that public funds are at stake, is, we believe, an issue that is not only one of the first impression, but likewise of considerable significance as a guide to local governance.  Furthermore, as will be discussed later, the assailed decision of the OP has been tainted with grave abuse of discretion, thus, requiring the immediate exercise of this Court’s corrective power lest public welfare, more particularly that of the Caloocan City constituents, be jeopardized by a more circumlocutory procedure which respondents are now insisting upon.

With respect to the alleged non-exhaustion of administrative remedies, we do not see the same as a fatal procedural lapse that would prevent us from entertaining the more pressing questions raised in this case.  In any event, jurisprudence is replete with instances instructing us that a motion for reconsideration is neither always a prerequisite nor a hard-and-fast rule to be followed where there are particularly exceptional attendant circumstances such as, in the instant case, patent nullity of the questioned act and the necessity of resolving the issues without further delay.[24]

Having therefore disposed of the procedural questions, we now turn our attention to the more crucial substantive issues, namely:

1.  Whether the Office of the President gravely abused its discretion when it found petitioners guilty of misconduct for the reason that Ordinance No. 0254, Series of 1998, was allegedly tainted with irregularity;

2.  Whether Ordinance No. 0254, Series of 1998, violated Section 326 of the Local Government Code of 1991 on reversion of unexpended balances of appropriations;

3.  Whether Ordinance No. 0254, Series of 1998, complied with Section 321 of the Local Government Code of 1991 requiring that changes in the annual budget should be supported by funds actually available; and

4.  Whether Ordinance No. 0254, Series of 1998, was valid considering that prior to its passage there was as yet no formal adoption of rules of procedure by the Caloocan City Sangguniang Panlungsod.

As stated earlier, the OP found petitioners guilty of misconduct on the ground that they failed to strictly comply with certain provisions of the Code relating to the passage of the ordinance in question.  It  justified its position, thus:

“By respondents (sic) very own admission --- and these facts are a matter of record --- the P39,352,047.75 appropriated in Ordinance 0254 to fund the approved items listed therein was merely a portion of the P50 Million included and appropriated in the 1998 Annual Budget for expropriation purpose and that the judicial action for expropriation --- earlier filed by the city and for which an allocation of P39,352,047.75 out of the P50 Million appropriation for expropriation of properties --- is still pending with the court.  This being so, the amount allocated for the expropriation cannot be reverted or be deemed as savings to serve as funds actually available for the supplemental budget.

It cannot be argued that “the unexpected turn of events” mentioned by the respondents --- referring to the filing by CLT Realty on August 6, 1997 of a complaint against the Municipality of Malabon and the City of Caloocan for interpleader amounts to an unavoidable discontinuance of the expropriation project, and thus effectively converted the earlier expropriation (sic) of P39,352,047.75 into “SAVINGS”.  For one, it was only on March 23, 1998, that the City of Caloocan filed an expropriation case against CLT Realty (docketed as Special Case No. 548 Regional Trial Court, Caloocan City).  If, as respondents argue, the August 6, 1997 interpleader suit amounted to the unavoidable discontinuance of the expropriation project, thus effectively turning the earlier appropriation of P39,352,047.75 into savings, then how explain the March 23, 1998 expropriation case?  For another, the records do not indicate --- not even an allegation to this effect--- that the City of Caloocan has withdrawn the expropriation case aforementioned which is, ordinarily, the legal route taken in the event of abandonment of discontinuance of the expropriation project.  On the contrary, the city government, as indicated in its judicial pleadings that now form part of the records, even sought the issuance of a writ of possession.

In this light, it is all too clear that Ordinance No. 0254 was enacted without funds actually available as required by Section 321 of the Local Government Code of 1991, which pertinently reads ---

x x x                                    x x x                             x x x

The words “actually available” are so clear and certain that interpretation is neither required nor permitted.  The application of this legal standard to the facts of this case compels the conclusion that, there being no reversion, as above-explained, the supplemental budget was not supported by funds actually available, by funds really in the custody or possession of the treasurer.

Stated differently, it may be that the City Treasurer of Caloocan, vis-a-vis Ordinance No. 0254, issued a certificate of availability of funds (Annex “9”, answer).  The issuance, however cannot alter the reality that the funds referred to therein are not funds actually available because they are sourced or are to be sourced from an appropriation for a capital outlay which cannot be validly reverted or “converted into savings,” as respondents put it, on ground of “unavoidable discontinuance of the expropriation project.”

Adding significance to the conclusion reached herein is the fact that the enactment by the respondents of the supplemental budget was clearly tainted with undue haste.  The sangguniang panlungsod conducted the three (3) readings (the 1st the 2nd and 3rd) on the same day, July 2, 1998, its first day of session, adopted it on July 7, 1998, and approved by respondent mayor on the following day, July 8, 1998, without first having itself organized and its rules of procedure adopted and without first electing its officers and chairmen and the members of the different committees in accordance with [the] provisions of the LGC (see Secs. 50 & 52, RA 7162).  This undue haste implies willful failure to respond to or comply with what the law requires which is the essence of bad faith.

x x x                                    x x x                             x x x

We are thus one with the DILG in finding respondents guilty of violating Section 321 in relation to Section 332 of the Local Government Code of 1991.  This violation constitutes misconduct, an offense implying a wrongful intent, an unlawful behavior in relation to the office, one that usually involves a transgression of some established and definite rule of action, more particularly unlawful behavior by the public officer.  [Citations omitted].[25]

We cannot, however, agree with the above disquisition.

The OP’s premise, in our opinion, rests upon an erroneous appreciation of the facts on record.  The OP seems to have been confused as to the figures and amounts actually involved.  A meticulous analysis of the records would show that there is really no basis to support the OP’s contention that the amount of P39,352,047.75 was appropriated under Ordinance No. 0254, S. 1998, since in truth and in fact, what was appropriated in said ordinance was the amount of P39,343,028.00.  The allocation of P39,352,047.75 is to be found in the earlier Ordinance No. 0246, S. 1997 which is a separate and distinct ordinance.  This point of clarification is indeed very critical and must be emphasized at this juncture because any further discussion would have to depend upon the accuracy of the figures and amounts being discussed.  As will be explained below, this faulty appreciation of the facts by the OP caused it to arrive at the wrong conclusion even if it would have correctly interpreted and applied the pertinent statutory provisions.

Section 322 of the Code upon which the OP anchored its opinion that petitioners breached a statutory mandate provides:

SEC 322. Reversion of Unexpended Balances of Appropriations, Continuing Appropriations.– Unexepended balances of appropriations authorized in the annual appropriations ordinance shall revert to the unappropriated surplus of the general funds at the end of the fiscal year and shall not thereafter be available for expenditure except by subsequent enactment.  However, appropriations for capital outlays shall continue and remain valid until fully spent, reverted or the project is completed.  Reversions of continuing appropriations shall not be allowed unless obligations therefor have been fully paid or otherwise settled.

Based on the above provision, the OP reached the determination that Ordinance No. 0254, S. 1998 could not have lawfully realigned the amount of P39,352,047.75 which was previously appropriated for the expropriation of Lot 26 of the Maysilo Estate since such appropriation was in the nature of a capital outlay until fully spent, reverted; or the project for which it is earmarked is completed.

The question, however, is not whether the appropriation of P39,352,047.75 could fall under the definitions of continuing appropriation[26] and capital outlays,[27] considering that such amount was not the subject of the realignment made by Ordinance No. 0254, Series of 1998.  Rather, the issue is whether petitioners are liable for their actions in regard to said ordinance which actually realigned a position of the P50 million which was simply denominated in a general manner as “Expropriation of Properties” and classified under “Current Operating Expenditures in the 1998 Annual Budget of Caloocan City.  Clearly, these are two distinct amounts separate from each other.  That this is the case has likewise been clarified in the pleadings and during the oral argument where petitioners adequately explained that the P50 million was NOT appropriated for the purpose of purchasing Lot 26 of the Maysilo Estate but rather for expenses incidental to expropriation such as relocation of squatters, appraissal fee, expenses for publication, mobilization fees, and expenses for preliminary studies.[28] This position appears to us more convincing than that of the interpretation of respondents.  The appropriation of P39,352,047.75 under Ordinance No. 0246, S. 1997 is, we believe, still a subsisting appropriation that has never been lumped together with other funds to arrive at the sum of P50 million allocated in the 1998 budget.  To be sure, denomination of the P50 million amount as “Expropriation of Properties” left much to be desired and would have been confused with the appropriation for expropriation under Ordinance No. 0246, S, 1997, but had respondents probed deeper into the actual intention for which said amount was allocated, then they would have reached an accurate characterization of the P50 million.

Bearing in mind, therefore, the fact that it is the P50 million which is now being realigned, the next logical question to ask is whether such amount is capable of being lawfully realigned.  To this, we answer in the affirmative.

No less than respondents themselves argued, citing Sections 321 and 322 in relation to Section 306 (d) and (e) of the Code, that realignment shall not be allowed when what is involved are continuing appropriations or capital outlays.  But this argument becomes clearly inapplicable in view of our disquisition above that the realignment being complained of had nothing to do with the P39,352,047.75 appropriation for the purchase of Lot 26 of the Maysilo Estate which is clearly the one that is classifiable as a capital outlay or a continuing appropriation.  The realignment, as we have earlier discussed, pertained to the P50 million which was classified as “Current Operating Expenditures.”  Having been determined as such by the local council upon which legislative discretion is granted, then the statutory proscription does not, therefore, apply and respondents cannot insist that it should.

Moreover, in view of the fact that what is being realigned is the P50 million appropriation which is classified, neither as a capital outlay nor a continuing appropriation, then respondents’ position that Ordinance No. 0254, S. 1998 was enacted without funds actually available and in violation of Section 321 of the Code likewise falls flat on its face.  This is notwithstanding respondents’ assertion that the “unaviodable discontinuance” of the expropriation proceedings for Lot 26 could not have automatically converted the appropriated amount therefor into “savings.”  For one thing, the Code appears silent and respondents themselves have not shown how unexpected balances of appropriations revert to the general fund.  Likewise, it would be pointless to belabor this matter because it has been brought out precisely on the assumption that the amount of P39,352,047.75, has no more leg to stand on, as explained earlier.

As to the alleged violation of Sections 50 and 52 of the Code requiring the adoption of house rules and the organization of the council, we believe that the same hardly merits even cursory consideration.  We cannot infer the mandate of the Code that no other business may be transacted on the first regular session except to take up the matter of adopting or updating rules.  All that the law requires is that “on the first regular session … the sanggunian concerned shall adopt or update its existing rules or procedure.” There is nothing in the language thereof that restricts the matters to be taken up during the first regular session merely to the adoption or updating of the house rules.  If it were the intent of Congress to limit the business of the local council to such matters, then it would have done so in clear and unequivocal terms.  But as it is, there is no such intent.

Moreover, adoption or updating of house rules would necessarily entail work beyond the day of the first regular session.  In fact, it took the members of the Sangguniang Panlungsod of Caloocan City until July 23, 1998 to complete the task of adopting their house rules.  Does this mean that prior thereto, the local council’s hands were tied and could not act on any other matter?  That would certainly be absurd for it would result in a hiatus and a paralysis in the local legislature’s work  which could not have been intended by the law.  Interpretatio talis in ambiguis semper frienda est, ut evitatur inconveniens et absurdum.  Where there is ambiguity, such interpretation as will avoid inconvenience and absurdity is to be adopted.[29] We believe that there has been sufficient compliance with the Code when on the first regular session, the Sanggunian took up the matter of adopting a set of house rules as duly evidenced by the “KATITIKAN NG KARANIWANG PULONG NG SANGGUNIANG PANLUNGSOD NA GINANAP NOONG IKA-2 NG HULYO, 1998 SA BAGONG GUSALI NG PAMAHALAANG LUNGSOD NG CALOOCAN”[30] where Item No. 3 thereof specifically mentioned the request for creation of an ad hoc committee to study the existing house rules.

The foregoing explanation leads us to the ineluctable conclusion that, indeed, respondents committed grave abuse of discretion.[31] Not only are their reasoning flawed but are likewise lacking in factual and legal support.  Misconduct, being a grave administrative offense for which petitioners stood charged, cannot be treated cavalierly.  There must be clear and convincing proof on record that petitioners were motivated by wrongful intent,[32] committed unlawful behavior in relation to their respective offices,[33] or transgressed some established and definite rules of action.[34] But as we have stressed above, petitioners were acting within legal bounds.  Respondents seem to have turned a blind eye or simply refused to consider facts that would have enlightened them and exculpated herein petitioners to such an extent that they arrived at their erroneous conclusion.  In view hereof, this Court is justified in striking down the impugned act of the Office of the President.

Two motions filed in accordance with procedural rules were ignored by the Office of the President and left unresolved:  first, the February 7, 1999 Motion to Refer the Case to the DBM and second, the Manifestation and Very Urgent Motion to Suspend Proceedings on the ground that the determination of the validity of said ordinance was a prejudicial question.  Motions need not necessarily grant what movant is asking for, but they must be acknowledged and resolved.  The Office of the President, being the powerful office that law and tradition have endowed it, needs no mighty blows on the anvil of authority to ensure obedience to its pronouncements.  It would be more in keeping with its exalted stature if its actions could safeguard the very freedoms so sedulously nurtured by the people.  Even what it may deem minor lapses, emanating as it does from such an exalted office, should not be allowed to go unchecked lest our democratic institutions be gradually eroded.

WHEREFORE, the instant petition is hereby GRANTED.  The assailed decision of the Office of the President in O.P. Case No. 98-H-8520 dated March 15, 1999 is ANNULLED and SET ASIDE for having been rendered with grave abuse of discretion amounting to lack and/or excess of jurisdiction.  Consequently, respondents, their subordinates, agents, representatives, and successors-in-interest are permanently enjoined from enforcing or causing the execution in any manner of the aforesaid decision against herein petitioners.

No pronouncement as to costs.

SO ORDERED.

Bellosillo, Melo, Puno, Vitug, Mendoza, Panganiban, Purisima, Buena, and Gonzaga-Reyes, JJ., concur.

Quisumbing, J., in the result.

Kapunan, J., see dissenting opinion.

Pardo, and Ynares-Santiago, JJ., join the dissent of J. Kapunan.

Davide, Jr., C.J., on leave.



[1] Const. Art. X, Section 4.

[2] Entitled “AN ORDINANCE EXPROPRIATING, WITH AUTHORITY TO THE HONORABLE CITY MAYOR TO INITIATE EXPROPRIATION PROCEEDINGS, FOR PUBLIC USE, WELFARE AND BENEFIT, LOT 26 OF THE MAYSILO ESTATE IN THE CITY OF KALOOKAN, REGISTERED IN THE NAME OF CLT REALTY DEVELOPMENT CORPORATION UNDER TCT NO. T-77013, COVERING AN AREA OF SEVEN HUNDRED NINETY NINE THOUSAND NINE HUNDRED FIFTY FIVE (799,955) SQUARE METERS, FOR LOW-COST HOUSING, AN INTEGRATED BUS TERMINAL, PARKS AND PLAYGROUNDS AND RELATED SUPPORT FACILITIES AND UTILITIES, AND APPROPRIATING FUNDS THEREFOR.”  This was enacted by the Sangguniang Panlungsod on March 24, 1994 and approved by the city Mayor on April 18, 1994.

[3] Rollo, p. 156.

[4] Docketed as Civil Case No. C-18019.  During the Oral Hearing of this case on April 20, 1999, the Court was informed that this case is still pending in the trial court.

[5] Rollo, pp. 158-161.

[6] This was eventually approved by the City Mayor on January 7, 1998.

[7] Docketed as Special Civil Case No. C-548.

[8] Rollo, pp. 179-180.

[9] Ibid., p. 181.

[10] Ibid., p. 182 The City Budget Department likewise concurred with the city Treasurer’s recommendation in this wise:  “I suggested that a supplemental budget be introduced for the purpose of the next council’s session.  The funding source may be the reversion of existing and unobligated P50 million appropriations for the expropriation of properties, the discontinuance of which was approved by your Office as per recommendation of the City Legal Officer in his letter to you dated April 7, 1998.”  Cf. Rollo, p. 183.

[11] This amount corresponded to the item “Expropriation of properties” listed on page 235 of the local Budget Preparation Form No. 152 and under the sub-heading “Current Operating Expenditures.”

[12] Approved by the Office of the Mayor on July 8, 1998.

[13] Docketed as O. P. Case No. 98-H-8520.

[14] Rollo, pp. 75-100

[15] Significantly, complainant Tibor expressly admitted in his Reply (Rollo, pp. 104-115) to petitioners’ Consolidated Answer that he “does not question the wisdom nor legality and validity of the questioned Supplemental Budget Ordinance.  What is being questioned is the precipitate, haste, and the violation of the laws committed by respondents herein before referred to in the enactment of the said Ordinance which amounts to Dishonesty, Misconduct in Office and Abuse of Authority, the jurisdiction of which appropriately pertains to this Honorable Office.”

[16] Docketed as Civil Case No. C-18683.

[17] Rollo, pp. 56-62.

[18] The administrative penalty was imposed upon petitioners pursuant to Sections 60 and 61 of the Local Government Code of 1991.  Section 60 specifies the grounds for disciplinary actions against an elective local officials such as dishonesty, misconduct in office and abuse of authority while Section 61 empowers the OP to act upon administrative complaints against an erring local elective official.

[19] Ibid., pp. 3-50.

[20] The Oral Argument took place on April 20, 1999 in Baguio City.

[21] A resolution was eventually passed on July 23, 1998 adopting an internal rules of procedure.

[22] Comment, Rollo, pp. 215-241.

[23] G.R. No. 131457, April 24, 1998.

[24] Cf. Paat v. Court of Appeals, 266 SCRA 167 (1997); Carale v. Abarintos, 269 SCRA 132 (1997).

[25] Rollo, pp. 60-62.

[26] SEC. 306. Definition of terms. xxx

(e) “Continuing appropriation” refers to an appropriation available to support obligations for a specified purpose or project, such as those for the construction of physical structures or for the acquisition of real property or equipment, even when these obligations are incurred beyond the budget year.

[27] SEC. 306 Definition of terms. xxx

(d) “Capital Outlays” refers to appropriations for the purchase of goods and services, the benefits of which extend beyond the fiscal year and which add to the assets of the local government unit concerned, including investments in public utilities such as public markets and slaughterhouses.

[28] Reply to OSG’s Comment, Rollo, pp. 267-268.

[29] Agpalo, STATUTORY CONSTRUCTION 108 (1990)

[30] Memorandum for Petitioners, pp. 22-23.

[31] See Kanlaon Construction Enterprises Co., Inc. v. National Labor Relations Commission, 279 SCRA 337 (1997); Esguerra v. Court of Appeals, 267 SCRA 380 (1997); Tañada v. Angara, 272 SCRA 18 (1997).

[32] Suroza v. Honorado, 110 SCRA 396.

[33] Guillen v. Constantino, 282 SCRA 583.

[34] Oyao v. Pabatao, 78 SCRA 90.