ENBANC

[G.R.Nos.11758992.May22,1996]

ROMEO R. SALALIMA, DANILO S. AZAA, JUAN VICTORIA, LORENZO REYEG, ARTURO

OSIA, CLENIO CABREDO, VICENTE GO, SR., RAMON FERNANDEZ, JR., MASIKAP
FONTANILLA, WILBOR RONTAS and NEMESIO BACLAO, petitioners, vs. HON.
TEOFISTOT.GUINGONA,JR.,inhiscapacityastheExecutiveSecretary,VICTORR.
SUMULONG, RENATO C. CORONA and ANGEL V. SALDIVAR, in their capacity as
MembersoftheAdHocCommittee,MAYORNAOMIC.CORRAL,KGD.FRANCISCO
ALARTE, MAYOR ANTONIO DEMETRIOU and DOMINADOR LIM, JESUS JAMES
CALISIN, EVELYN SILVERIO, SILVERIO COPE, TOBIAS BETITO, MANUEL LANUZA,
JAMES ENRICO SALAZAR, RODOLFO ANTE, JUAN RIVERA, MARCIAL TUANQUI,
DR. SALVADOR SAMBITAN, ATTY. EUTIQUIO NEPOMUCENO, in their capacity as
ACTING GOVERNOR, ACTING VICEGOVERNOR, and ACTING MEMBERS OF THE
SANGGUNIANGPANLALAWIGANOFALBAY,respectively,respondents.
DECISION
DAVIDE,JR.,J.:

Petitioners seek to annul and set aside Administrative Order No. 153, signed on 7 October 1994 by the
PresidentandbypublicrespondentExecutiveSecretaryTeofistoT.Guingona,Jr.,approvingthefindingsoffact
and recommendations of the Ad Hoc Committee and holding the petitioners administratively liable for the
followingactsoromissions:(a)wantondisregardoflawamountingtoabuseofauthorityinO.P.CaseNo.5470
(b)graveabuseofauthorityunderSection60(e)oftheLocalGovernmentCodeof1991(R.A.No.7160)inO.P.
CaseNo.5469(c)oppressionandabuseofauthorityunderSection60(c)and(e)ofR.A.No.7160inO.P.Case
No.5471and(d)abuseofauthorityandnegligenceinO.P.CaseNo.5450.Thesaidordermetedoutoneachof
the petitioners penalties of suspension of different durations, to be served successively but not to go beyond
theirrespectiveunexpiredtermsinaccordancewithSection66(b)ofR.A.No.7160.
Prefacingthepetitionwithaclaimthatthechallengedadministrativeorderisanoppressiveandcapricious
exerciseofexecutivepower,thepetitionerssubmitthat:
I.

THEPUBLICRESPONDENTHONORABLEEXECUTIVESECRETARYTEOFISTOT.GUINGONA,JR.
ACTEDWITHGRAVEABUSEOFDISCRETIONAMOUNTINGTOLACKOREXCESSOFJURISDICTION
INSUSPENDINGTHEPETITIONERSFORPERIODSRANGINGFROMTWELVEMONTHSTOTWENTY
MONTHSINVIOLATIONOFTHECONSTITUTIONALMANDATESONLOCALAUTONOMYAND
SECURITYOFTENUREANDAPPOINTINGUNQUALIFIEDPERSONSTONONVACANTPOSITIONSAS
THEIRSUCCESSORSINOFFICE.
II.

THEPUBLICRESPONDENTHONORABLEEXECUTIVESECRETARYTEOFISTOT.GUINGONA,JR.
ACTEDWITHGRAVEABUSEOFDISCRETIONAMOUNTINGTOLACKOREXCESSOFJURISDICTION
INHOLDINGTHEPETITIONERSGUILTYOFABUSEOFAUTHORITYFORFAILURETOSHAREWITH
THEMUNICIPALITYOFTIWITHEAMOUNTOFP40,724,471.74PAIDBYNAPOCORTOTHEPROVINCE
OFALBAY,PURSUANTTOTHEMEMORANDUMOFAGREEMENTDATEDJULY29,1992.

III.

THEPUBLICRESPONDENTTEOFISTOT.GUINGONA,JR.ACTEDWITHABUSEOFDISCRETIONIN
SUSPENDINGTHEPETITIONERSBASEDUPONTHEPROVISIONSOFTHELOCALGOVERNMENT
CODE:
A.WHATWERENOTCOMPLAINEDOF
B.UPONACTSCOMMITTEDPRIORTOITSEFFECTIVITYAND
C.WHERETHEADMINISTRATIVECASESWHENFILEDWEREALREADYCOVEREDBYPRESCRIPTION.
IV.

THEPUBLICRESPONDENTEXCEEDEDITSJURISDICTIONWHENITPREMATURELYDECIDEDTHESE
CASESONTHEBASISOFTHESAOREPORTNO.9311WHICHISPENDINGAPPEALTOTHE
COMMISSIONONAUDITSITTINGENBANC.
We resolved to give due course to this petition and to decide it on the basis of the pleadings thus far
submitted, after due consideration of the satisfactory explanation of the petitioners that his case has not been
mootedbytheexpirationoftheirtermofofficeon30June1995andthecommentoftheOfficeoftheSolicitor
Generalthatthiscaseberesolvedonthemerits.Inseekingaresolutionofthiscaseonthemerits,Officeofthe
SolicitorGeneralinvitestheattentionoftheCourttothefollowing:
(a)Whiletheperiodsofsuspensionhavebeenservedbypetitionersandthatsomeofthemhaveevenbeenelectedto
othergovernmentpositions,thereistheprimaryissueofwhetherthesuspensionswerevalidandgroundedon
sufficientcause.
(b) If the suspensions are found to be valid, petitioners are not entitled to reimbursement of salaries during their
suspensionperiods.
(c) If upheld, Administrative Order No. 15 would be used as a strong ground in filing cases against petitioners for
violationsoftheAntiGraftandCorruptPracticesAct.
(d)Corollary[sic]totheseissuesistheissueoftheinterpretationandapplicationofthe[R]ealPropertyTaxCodeand
theLocalGovernmentCodeunderthecircumstancesofthiscase.
(e)Theresolutionoftheseissueswouldfinallyputtorestwhetherrespondentsactedwithgraveabuseofdiscretion
amounting to lack of jurisdiction for having suspended petitioners on the basis of their findings in the four (4)
administrativecasesfiledagainstthepetitioners.

Thefactualantecedentsarenotcomplicated.
Sometime in 1993, several administrative complaints against the petitioners, who were elective officials of
theProvinceofAlbay,werefiledwiththeOfficeofthePresidentandlaterdocketedasO.P.CasesNos.5450,
5469, 5470, and 5471. Acting thereon, the President issued Administrative Order No. 94 creating an Ad Hoc
Committeetoinvestigatethechargesandtothereaftersubmititsfindingsandrecommendations.
The Ad Hoc Committee was composed of Undersecretary Victor R. Sumulong of the Department of the
Interior and Local Government (DILG), Assistant Executive Secretary Renato C. Corona, and Presidential
AssistantAngelV.Saldivar.
On26August1994,afterconductinghearings,theAdHocCommitteesubmitteditsreporttotheOfficeof
thePresident.
On 7 October 1994, the President promulgated Administrative Order No. 153 quoting with approval the
followingpertinentfindingsandrecommendationsoftheCommitteethus:
ThefindingoftheAdHocCommitteeinO.P.CaseNos.5470,5469,5471and5450areasfollows:
I.O.P.CaseNo.5470
ThisreferstotheadministrativecomplaintfiledbyTiwiMayorNaomiCorralagainstAlbayGovernorRomeo
Salalima,ViceGovernorDaniloAzaa,andAlbaySangguniangPanlalawiganMembersJuanVictoria,Lorenzo

Reyeg, Arturo Osia, Clenio Cabredo, Vicente Go, [S]r., Jesus Marcellana, Ramon Fernandez, Jr., Masikap
Fontanilla,andWilborRontas.
DocketedasO.P.CaseNo.5470,thecomplaintchargestherespondentsformalversationandconsistent&
habitualviolationofpars.(c)and(d)ofSection60ofRepublicAct(RA)No.7160,otherwiseknownastheLocal
GovernmentCode.
Theantecedentfactsareasfollows:
On4June1990,theSupremeCourtinthecaseentitledNationalPowerCorporation(NPC)v.TheProvince
ofAlbay,etal.,G.R.No.87479renderedjudgment(Exhs.DtoD14)declaring,interalia,NPCliableforunpaid
realestatetaxesonitspropertiesinAlbaycoveringtheperiod11June1984to10March1987.
Citingthefactthatitstaxexemptionprivilegeshadbeenrevoked,theSupremeCourtheldthatNPCsreal
properties,consistingmainlyofgeothermalplantsinTiwiandsubstationfacilitiesinDaraga,aresubjecttoreal
estate tax in accordance with Presidential Decree (PD) No. 464, as amended, otherwise known as the Real
PropertyTaxDecree.
Earlier, said properties were sold at an auction sale conducted by the Province of Albay (the Province) to
satisfy NPCs tax liabilities. Being the sole bidder at the auction, the Province acquired ownership over said
properties.
On29July1992,theNPCthroughthenPresidentPabloMalixiandtheProvincerepresentedbyrespondent
Salalima,enteredintoaMemorandumofAgreement(MOA)[Exhs.7to7A]wherebytheformeragreedtosettle
itstaxliabilities,thenestimatedatP214,845,104.76.
UndertheMOA,thepartiesagreedthat:
theactualamountcollectiblefromNPCwillhavetoberecomputed/revalidated
NPCshallmakeaninitialpaymentofP17,763,000.00uponsigningoftheagreement
thebalanceoftherecomputed/revalidatedamount(lesstheaforesaidinitialpayment),shallbepaidintwentyfour
(24)equalmonthlyinstallmentstocommenceinSeptember1992and
ownershipovertheauctionedpropertiesshallreverttoNPCuponsatisfactionofthetaxliabilities.

On3August1992,MayorCorralformallyrequestedtheProvincethroughrespondentSalalima,toremitthe
rightful tax shares of Tiwi and certain barangays of Tiwi where NPCs properties are located (concerned
barangays)relativetothepaymentsmadebyNPC(Exh.B).
Onthesameday,3August1992,theTiwiSangguniangBayanpassedResolutionNo.1292(Exhs.GtoG
1)requestingtheAlbaySangguniangPanlalawigantoholdajointsessionwiththeformertogetherwithMayor
Corral and the Sangguniang Pambarangays of the concerned barangays, for the purpose of discussing the
distributionorapplicationoftheNPCpayments.
On10August1992,respondentSalalimarepliedthattherequestcannotbegrantedastheinitialpayment
amountingtoP17,763,000.00wasonlyanearnestmoneyandthatthetotalamounttobecollectedfromNPC
wasstillbeingvalidated(Exh.I).
Not satisfied with respondent Salalimas response, Mayor Corral complained to NPC about the Provinces
failuretoremitTiwisandtheconcernedbarangayssharesinthepaymentsmadebyNPC(Exh.50C).
On 14 August 1992, President Malixi informed respondent Salalima that the representatives of both NPC
andtheProvincehavereconciledtheiraccountsanddeterminedthattheamountduefromNPCwasdownto
P207,375,774.52(Exh.20).
DuetothebrewingmisunderstandingbetweenTiwiandtheconcernedbarangaysontheonehand,andthe
Provinceontheother,andsoasnottobecaughtinthemiddleofthecontroversy,NPCrequestedaclarification
fromtheOfficeofthePresidentastothescopeandextentofthesharesoflocalgovernmentunitsinrealestate
taxcollections(Exh.6to6A).
Meantime,theAlbaySangguniangPanlalawiganpassedResolutionNo.17892dated8October1992(Exh.
R) and Resolution No. 20492 dated 5 November 1992 (Exh. S) appropriating P9,778,932.57 and P17,663,43
1.58oratotalofP27,442,364.15fromthegeneralfundtosatisfyprioryearsobligationsandtoimplementcertain
projectsoftheProvince.TheseresolutionswereapprovedbyrespondentSalalimaon22October1992and6
November1992,respectively.

On3December1992,theOfficeofthePresidentthroughChiefPresidentialLegalCounselAntonioCarpio
opined that the MOA entered into by NPC and the Province merely recognized and established NPCs tax
liability. He further clarified that the sharing scheme and those entitled to the payments to be made by NPC
undertheMOAshouldbethatprovidedunderthelaw,andsinceTiwiisentitledtoshareinsaidtaxliabilities,
NPC may remit such share directly to Tiwi. The pertinent portion of Chief Presidential Legal Counsel Carpios
letterdated3December1992(Exhs.HtoH1)addressedtoPresidentMalixireads:
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TheMemorandumofAgreemententeredintobytheProvinceofAlbayandNPCmerelyenunciatesthetaxliability
ofNPC.TheMemorandumofAgreementdoesnotprovideforthemannerofpaymentofNPCsliability.Thus,the
mannerofpaymentasprovidedforbylawshallgovern.Inanyevent,theMemorandumofAgreementcannotamend
thelawallowingthepaymentofsaidtaxestotheMunicipalityofTiwi.
ThedecisioninthecaseofNPCv.ProvinceofAlbay(186SCRA198),likewise,onlyestablishedtheliabilityof
NPCforrealpropertytaxesbutdoesnotspecificallyprovidethatsaidbacktaxesbepaidexclusivelytoAlbay
province.
Therefore,itisouropinionthattheNPCmaypaydirectlytothemunicipalityofTiwitherealpropertytaxes
accruingtothesame.
Pleasebeguidedaccordingly.
Verytrulyyours,
(Sgd.)ANTONIOT.CARPIO
ChiefPresidentialLegalCounsel
Becauseofthisopinion,PresidentMalixi,throughaletterdated9December1992(Exhs.ItoI1),informed
MayorCorralandrespondentSalalimathatstartingwiththeJanuary1993installment,NPCwilldirectlypayTiwi
itsshareinthepaymentsundertheMOA.Healsoinvitedthepartiestoaclarificatorymeetingon17December
1992athisQuezonCityofficetodiscussthematterindetail.
Only Mayor Corral attended the 17 December 1992 meeting with President Malixi as respondent Salalima
wasindisposed.President Malixi then provided Mayor Corral with schedules (Exhs. J to J2) of the payments
alreadymadebyNPCundertheMOAandthecomputationandthedistributionofshares.
Asof9December1992,paymentsmadebyNPCtotheProvincereachedP40,724,471.74,brokendownas
follows:

PaymentDatesAmount
July29,1992P17,763,000.00
Sept.3,19924,660,255.80
Oct.5,19926,820,480.12
Nov.5,19925,740,367.96
Dec.9,19925,740,367.66
TotalP40,724,471.74
On 19 December 1992, in an apparent reaction to NPCs decision to directly remit to Tiwi its share in the
payments made and still to be made pursuant to the MOA, the Albay Sangguniang Panlalawigan passed
OrdinanceNo.0992(Exhs.KtoK1),which,amongothers:
authorized the Provincial Treasurer upon the direction of the Provincial Governor to sell the real properties
(acquiredbytheProvinceattheauctionsale)atapublicauction,andtocausetheimmediatetransferthereofto
thewinningbidderand
declaredasforfeitedinfavoroftheProvince,allthepaymentsalreadymadebyNPCundertheMOA.

RealizingfromtheactuationsoftherespondentsthatTiwisshareintheP40,724,471.74paymentsalready
madebyNPCwillnotbeforthcoming,MayorCorralfiledthepresentcomplaintwiththeOfficeofthePresident
on25January1993.
In determining whether the respondents are guilty of the charges against them, the threshold issue of
whetherthepaymentstobemadebyNPCundertheMOAshouldaccruesolelyandexclusivelyinfavorofthe
Province,mustfirstberesolved.
Sections 38, 39, 41, 86 and 87 of P.D. No. 464, as amended, prescribe the authority of local government
unitstolevyrealpropertytaxaswellasthesharingschemeamonglocalgovernmentunitsincludingthenational
governmentwithrespectthereto.Saidprovisionsread:

SEC.38.IncidenceofRealPropertyTax.Thereshallbelevied,assessed,andcollectedinallprovinces,citiesand
municipalitiesanannualadvaloremtaxorrealproperty,suchasland,buildings,machineryandother
improvementsaffixedorattachedtorealpropertynothereinafterspecificallyexempted.
SEC.39.RatesofLevy.Theprovincial,cityormunicipalboardorcouncilshallfixauniformrateofrealproperty
taxapplicabletotheirrespectivelocalitiesasfollows:
(1)Inthecaseofaprovince,thetaxshallbefixedbyordinanceoftheprovincialboardattherateofnotlessthan
onefourthofonepercentbutnotmorethanonehalfofonepercentoftheassessedvalueofrealproperty
(2)Inthecaseofacity,thetaxshallbefixedbyordinanceofthemunicipalboardorcitycouncilattherateofnotless
thanonehalfofonepercentbutnotmorethantwopercentoftheassessedvalueofrealpropertyand
(3)Inthecaseofamunicipality,thetaxshallbefixedbyordinanceofthemunicipalcouncilsubjecttotheapprovalof
the provincial board at the rate of not less than onefourth of one percent but not more than onehalf of one
percentoftheassessedvalueofrealproperty.

SEC.41.AnadditionalonepercenttaxonrealpropertyfortheSpecialEducationFund.Thereisherebyimposed
anannualtaxofonepercentonrealpropertytoaccruetotheSpecialEducationFundcreatedunderRepublicAct
No.5447,whichshallbeinadditiontothebasicrealpropertytaxwhichlocalgovernmentsareauthorizedtolevy,
assessandcollectunderthisCodeProvided,ThatrealpropertygrantedexemptionunderSection40ofthiscode
shallalsobeexemptfromtheimpositionaccruingtotheSpecialEducationFund.(asamendedbyP.D.No.1913)
SEC.86.Distributionofproceeds.(a)Theproceedsoftherealpropertytax,exceptasotherwiseprovidedinthis
Code,shallaccruetotheprovince,cityormunicipalitywherethepropertysubjecttothetaxissituatedandshallbe
appliedbytherespectivelocalgovernmentunitforitsownuseandbenefit.
(b)Barriosharesonrealpropertytaxcollections.Theannualsharesofthebarriosinrealpropertytaxcollections
shallbeasfollows:
(1)Fivepercentoftherealpropertytaxcollectionsoftheprovinceandanotherfivepercentofthecollectionsofthe
municipalityshallaccrueinthebarriowherethepropertysubjecttothetaxissituated.
(2) In the case of the city, ten percent of the collections of the tax shall likewise accrue to the barrio where the
propertyissituated.

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SEC.87.Applicationofproceeds.(a)Theproceedsoftherealpropertytaxpertainingtothecityandtothe
municipalityshallaccrueentirelytotheirrespectivegeneralfunds.Inthecaseoftheprovince,onefourththereof
shallaccruetoitsroadandbridgefundandremainingthreefourthsofitsgeneralfund.
(b)TheentireproceedsoftheadditionalonepercentrealpropertytaxleviedfortheSpecialEducationFundcreated
underRA.No.5447collectedintheprovinceorcityonrealpropertysituatedintheirrespectiveterritorial
jurisdictionsshallbedistributedasfollows:
(1)Collectionsintheprovinces:Fiftyfivepercentshallaccruetothemunicipalitywherethepropertysubjecttothe
tax is situated twentyfive percent shall accrue to the province and twenty percent shall be remitted to the
TreasurerofthePhilippines.(asamendedbyPD.No.1969)

xxxxxxxxx

(c)Theproceedsofalldelinquenttaxesandpenalties,aswellastheincomerealizedfromtheuse,leaseorother
dispositionofrealpropertyacquiredbytheprovinceorcityatapublicauctioninaccordancewiththeprovisionsof
thisCode,andtheproceedsofthesaleofthedelinquentrealpropertyoroftheredemptionthereof,shallaccrueto
theprovince,cityormunicipalityinthesamemannerandproportionasifthetaxortaxeshadbeenpaidinregular
course.
xxxxxxxxx(Italicssupplied)
The foregoing provisions clearly show that local government units may levy and collect real property tax
rangingfromalowofonefourthofonepercent(0.25%)toahighoftwopercent(2.0%)oftheassessedvalueof
real property depending on the local government unit levying the same. It is likewise clear that a province, a
municipality and a city may each separately levy said tax on real property located within their respective
jurisdictionsbutnotexceedingtheratesprescribedunderSec.39ofP.D.No.464.
Andapartfromsaidbasictax,thelawauthorizesthecollectionofanadditionaltaxequivalenttoonepercent
(1.0%)oftheassessedvalueoftherealpropertytoaccruetotheSpecialEducationFund(SEF).
In accordance with the authority conferred upon them by P.D. No. 464, the following tax resolutions or
ordinanceswerepassed:

BytheProvince
ResolutionNo.30,seriesof1978,oftheProvincialBoardofAlbay,enactingProvincialTaxOrdinanceNo.4
whoseSection1,provides:
Thereshallbelevied,assessedandcollectedanannualadvaloremtaxonrealpropertiesincludingimprovements
thereonequivalenttoonehalfofonepercentoftheassessedvalueofrealproperty.
BytheMunicipalityofTiwi
OrdinanceNo.25.seriesof1974,oftheSangguniangBayanofTiwi,Albay,whoseSection2provides:
Thatthetaxrateofrealpropertyshallbeonehalfofonepercentoftheassessedvalueofrealproperty.
BytheMunicipalityofDaraga
OrdinanceNo.27,seriesof1980,oftheSangguniangBayanofDaraga,Albay,whoseSection3provides:
RatesofLevyThetaxhereinleviedisherebyfixedatonehalfofonepercent(1/2of1%)oftheassessedvalueof
realproperty.(seeExhs.50GItalicssupplied)
Applyingsaidratesoflevy,therealpropertytaxescollectiblefromtheNPCare:
1.Abasictaxof1%,leviedbytheProvince(0.5%)andTiwi(0.5%)ontheonehandandtheProvince(0.5%)and
Daraga(0.5%)ontheotherand
2.Theadditional1%taxpertainingtotheSEF.

oratotalof2.0%ontheassessedvalueofNPCsrealproperties.
Ontheotherhand,sharingonsaidtaxes,shallbeasfollows:

1.Onthebasictax:
Province47.5%
Municipality47.5%
Barangay5.0%

Total100.0%
2.OntheadditionaltaxpertainingtotheSEF:
Province25.0%
Municipality55.0%
NationalGovernment20.0
Total100.0%
Inrealterms,theP40,724,471.74inpaymentsearliermadebyNPCshouldbesharedbytheProvince,Tiwi
andDaraga,theconcernedbarangaysandthenationalgovernment,asfollows:

ProvinceMunicipalitiesBarangayNatl.Govt.
BasicTax
P9,672,062.049,672,062.041,018,111.79none
SEF
4,072,447.1810,181,117.93none6,108,670.76
Total
P13,744,509.2219,853,179.971,018,111.796,108,670.76
ThisshowsthattheProvinceisentitledonlytoP13,744,509.21oftheP40,724,471.74aggregatepayments
byNPC.Ontheotherhand,thebalanceofP26,979,962.52representsthecollectivesharesofTiwi,Daraga,the
concernedbarangaysandthenationalgovernment.
The Province maintains, however, that considering that it acquired ownership over the properties of NPC
subjectmatteroftheauction,allthepaymentstobemadebyNPCundertheMOAshouldaccrueexclusivelyto
theProvince.
Thisisuntenable.Thelawclearlyprovidesthattheproceedsofallthedelinquenttaxesandpenaltiesaswell
as the income realized from the x x x disposition of real property acquired by the province or city at a public
auctionxxx,andthesaleofdelinquentpropertyortheredemptionthereofshallaccruetotheprovince,cityor
municipalityinthesamemannerandproportionasifthetaxortaxeshavebeenpaidintheregularcourse(Sec.
87(c)supra).
ItisimmaterialthattheProvincewasthehighestbidderandeventuallybecametheowneroftheproperties
soldattheauctionsale.Whatisessentialisthattheproceedsoftheresaleofsaidpropertiesacquiredbythe
Province,bedistributedinthesamemannerandproportionamongtherightfulbeneficiariesthereofasprovided
bylaw.
ThiswastheimportandessenceofChiefPresidentialLegalCounselCarpiosopinionwhenhestatedthat
the sharing scheme provided by law cannot be amended by a mere agreement between the taxpayer, in this
caseNPC,andthecollectingauthority,inthisinstancetheProvinceofAlbay.
Likewise, it is axiomatic that while contracting parties may establish stipulations, clauses, terms and
conditionsastheymaydeemconvenient,theymaynotdosoifthesearecontrarytolaw,morals,goodcustoms,
publicorderorpublicpolicy(Art.1306,NewCivilCode).
AlsorelevanttothediscussionarethefollowingprovisionsoftheLocalGovernmentCodeof1991:

Sec.307.RemittanceofGovernmentMoniestotheLocalTreasury.OfficersofLocalgovernmentauthorizedto
receiveandcollectmoniesarisingfromtaxes,revenues,orreceiptsofanykindshallremitthefullamountreceived
andcollectedtothetreasuryofsuchlocalgovernmentunitwhichshallbecreditedtotheparticularaccountor
accountstowhichthemoniesinquestionproperlybelong.

SEC.308.LocalFunds.EverylocalgovernmentunitshallmaintainaGeneralFundwhichshallbeusedtoaccount
forsuchmoniesandresourcesasmaybereceivedbyanddisbursedfromthelocaltreasury.TheGeneralFundshall
consistofmoniesandresourcesofthelocalgovernmentwhichareavailableforthepaymentofexpenditures,
obligationsorpurposesnotspecificallydeclaredbylawasaccruingandchargeableto,orpayablefromanyother
fund.
SEC.309.SpecialFunds.Thereshallbemaintainedineveryprovincial,city,ormunicipaltreasurythefollowing
specialfunds:
(a) Special Education Fund (SEF) shall consist of the respective shares of provinces, cities, municipalities and
barangaysintheproceedsoftheadditionaltaxonrealpropertytobeappropriatedforpurposesprescribedin
Section272ofthisCodeand
(b)TrustFundsshallconsistofprivateandpublicmonieswhichhaveofficiallycomeintothepossessionofthelocal
governmentorofalocalgovernmentofficialastrustee,agentoradministrator,orwhichhavebeenreceivedas
a guaranty for the fulfillment of some obligation. A trust fund shall only be used for the specific purpose for
whichitwascreatedorforwhichitcameintothepossessionofthelocalgovernmentunit.(Italicssupplied)

TheseprovisionsarerestatementsofSec.3(4)and(5)ofP.D.No.1445andbothSec.43,BookVandSec.
2(4)ofBookV(B)ofExecutiveOrderNo.292,otherwiseknownastheAdministrativeCodeof1987.
It isunmistakable from the foregoing provisions that the shares of Tiwi,Daraga,theconcernedbarangays
andthenationalgovernmentinthepaymentsmadebyNPCundertheMOA,shouldbe,astheyareinfact,trust
funds. As such, the Province should have, upon receipt of said payments, segregated and lodged in special
accounts, the respective shares of Tiwi, Daraga, the concerned barangays and the national government for
eventual remittance to said beneficiaries. Said shares cannot be lodged in, nor remain part of, the Provinces
generalfund.Moreover,theProvincecannotutilizesaidamountsforitsownbenefitoraccount(seealsoSec.
86,PD.No.464,asamended).
Therefore, the balance of P26,979,962.52 representing the collective shares of Tiwi and Daraga, the
concerned barangays and the national government, cannot be appropriated nor disbursed by the Province for
thepaymentofitsownexpendituresorcontractualobligations.
However,intotaldisregardofthelaw,theProvincetreatedtheP40,724,471.74NPCpaymentsassurplus
adjustment(Account792419)andlodgedthesameinitsgeneralfund.Notrustliabilityaccountswerecreated
infavoroftherightfulbeneficiariesthereofasrequiredbylaw.
Report No. 9311 (Exh. N), prepared and made by the Special Audit Office (SAO) of the Commission on
Audit(COA)furthersupportourfindings,thus
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PartII.FindingsandObservations
Theauditfindings,whicharediscussedindetailintheattachedreport,aresummarizedbelow:
1.TheremittancesoftheNPCoftheP40,724,471.74fromJulytoDecember1992representingpartialpaymentsof
real tax delinquencies from June 22, 1984 to March 10, 1989, were not shared with the Municipalities of Tiwi,
Daraga,andtheconcernedbarangaysandtheNationalGovernmentinviolationofP.D.464.TheMemorandum
ofAgreemententeredintobetweentheProvinceofAlbayandNapocorcannotamendtheprovisionsofP.D.No.
464whichspecifiesthesharingschemeoftherealpropertytaxamongtheprovince,cityormunicipalitywhere
thepropertysubjecttotaxissituatedandtheNationalGovernment.

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2.ThecollectionofP40,724,471.74wasfullytreatedassurplusadjustment(Account792419)beingprioryears
income,withoutcreatingatrustliabilityforthemunicipalityandbarangaysconcernedandnationalgovernment,
As of December 31, 1992, the balance of the account was only P25,668,653. 12 thus, stressing that
P15,255,818.62 was spent. x x x Under the General Fund, cash available was only P4,92 1,353.44 leaving
practicallynocashtoanswerforthesharesoftheMunicipalitiesofTiwiandDaragaandtheirbarangayswhere
thepropertiesarelocated.(pp.4and16(Italicssupplied)

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Aspointedoutearlier,theProvincewasentitledonlytoP13,744,509.21oftheP40,724,471.74inpayments
madebyNPC.Thus,itmayonlyappropriateanddisburseP13,744,509.21.Any disbursements exceeding this
amountwouldthereforebeillegal.
ThisCommitteeparticularlynotesthefactualfindingofCOAthatasof31December1992,theactualcash
balanceoftheProvincesgeneralfundwasonlyP4,921,353.44.ThismeansthatoftheP40,724,471.74actually
paid by the NPC and lodged in the Provinces general fund, P35,803,118.30 was disbursed or spent by the
Province.ThisexceedstheP13,744,509.21shareoftheProvincebyP22,058,609.09.
Theforegoingmaybeillustratedasfollows:

NPCPaymentsreceivedby
theProvinceP40,724,471.74
LessActualCashBalance
(generalfund)
asof1231924,921,353.44
P35,803,118.30
LessShareoftheProvince13,744,509.21
AmountIllegallyDisbursed
bytheProvinceP22,058,609.09
We have already shown that Ordinance No. 0992 (Exhs. K to K1) declaring as forfeited in favor of the
ProvincetheentireamountofP40,724,471.74paidbyNPCtobepatentlyillegalasitunlawfullydeprivesTiwi
and Daraga, the barangays concerned, and the national government of their rightful shares in said payments.
Beingillegal,saidordinancemaynotbeusedorrelieduponbytherespondentstojustifythedisbursementsof
fundsinexcessoftheirshare.
NeithermayResolutionNos.17892and20492beusedtojustifythedisbursementsconsideringthatthe
appropriations made thereunder totalling P27,442,364.51 are to be funded by the P40,724,471.74 surplus
adjustmentthatincludesthetrustfundsnotbelongingtotheProvince.EvenassumingthatResolutionNo.178
92 authorizing the expenditure of P9,778,932.57 were to be taken from the Provinces share amounting to
P13,744,509.21, the rest of the disbursements still have no legal basis. Clearly, this is violative of the
fundamentalrulethat(n)omoneyshallbepaidoutofthelocaltreasuryexceptinpursuanceofanappropriation
ordinanceorlaw(par.[a],Sec.305,RepublicActNo.7160).
Respondents raise the common defense that the findings contained in SAO Report No. 9311 are not yet
finalastheyhavefiledanappealtherefrom.
It is important to stress that the exceptions (Exhs. 50B, 50I, & 50J) raised by the respondents to COA
merelyinvolvequestionsoflaw,i.e.,astowhethertheProvincealoneshouldbeentitledtothepaymentsmade
byNPCundertheMOA,andwhetherthesharesofTiwiandDaraga,theconcernedbarangays,andthenational
government,shouldbeheldintrustforsaidbeneficiaries.
ConsideringthatthefactualfindingsunderSAOReport9311arenotdisputed,thisCommitteehastreated
saidfactualfindingsasfinalor,attheveryleast,ascorroborativeevidence.
Respondents contention that COAs factual findings, contained in SAO Report No. 9311 cannot be
considered in this investigation is untenable. For no administrative or criminal investigation can proceed, if a
respondentisallowedtoarguethataparticularCOAfindingisstillthesubjectofanappealandmovethatthe
resolution of such administrative or criminal case be held in abeyance.This will inevitably cause unnecessary
delays in the investigation of administrative and criminal cases since an appeal from a COA finding may be
broughtallthewayuptotheSupremeCourt.
Besides, the matters raised by the respondents on appeal involve only conclusions/interpretation of law.
Surely,investigativebodies,suchasCOA,theOmbudsmanandeventhisCommittee,areempoweredtomake
theirownconclusionsoflawbasedonagivensetoffacts.
Finally,sufficientevidencehasbeenadducedinthiscaseapartfromthefactualfindingscontainedinSAO
Report9311toenablethisCommitteetoevaluatethemeritsoftheinstantcomplaint.

WealsorejectrespondentAzaasdefensethatsincehedidnotparticipateinthedeliberationandpassageof
ResolutionNo.0992,merelysigningthesameaspresidingofficeroftheSangguniangPanlalawigan,andonly
certifyingthatthesamehadbeenpassed,hedidnotincuranyadministrativeliability.
The fact remains that as presiding officer of the Sangguniang Panlalawigan and being the second highest
officialoftheProvince,respondentAzaaisjointlyresponsiblewithotherprovincialofficialsintheadministration
of fiscal and financial transactions of the Province. As presiding officer of the Sangguniang Panlalawigan,
respondentAzaahasadutytoseetoitthatresolutionsorordinancespassedarewithintheboundsofthelaw.
He cannot merely preside over the sessions of the Sangguniang Panlalawigan unmindful of the legality and
proprietyofresolutionsorordinancesbeingproposedordeliberateduponbyhiscolleagues.
ThiscollectiveresponsibilityisprovidedunderSecs.304and305ofRepublicAct.No.7160,thus

SEC.304.Scope.ThisTitleshallgoverntheconductandmanagementoffinancialaffairs,transactionsand
operationsofprovinces,cities,municipalities,andbarangays.
SEC.305.FundamentalPrinciples.Thefinancialaffairs,transactions,andoperationsoflocalgovernmentunits
shallbegovernedbythefollowingfundamentalprinciples:
xxxxxxxxx
(1)Fiscalresponsibilityshallbesharedbyallthoseexercisingauthorityoverthefinancialaffairs,transactions,and
operationsoflocalgovernmentunitsand
xxxxxxxxx(Italicssupplied.)

It cannot be denied that the Sangguniang Panlalawigan has control over the Provinces purse as it may
approve or not resolutions or ordinances generating revenue or imposing taxes as well as appropriating and
authorizingthedisbursementoffundstomeetoperationalrequirementsorfortheprosecutionofprojects.
Being entrusted with such responsibility, the provincial governor, vicegovernor and the members of the
Sangguniang Panlalawigan, must always be guided by the socalled fundamental principles enunciated under
the Local Government Code, i.e., No money shall be paid out of the local treasury except in pursuance of an
appropriations ordinance or law local revenue is generated only from sources authorized by law or ordinance
and collection thereof shall at all times be acknowledged properly all monies officially received by a local
governmentofficerinanycapacityoronanyoccasionshallbeaccountedforaslocalfunds,unlessotherwise
providedbylawandtrustfundsinthelocaltreasuryshallnotbepaidoutexceptinfulfillmentofthepurposesfor
whichthetrustwascreatedorthefundsreceived(Sec.305,R.A.7160).
AlltherespondentscouldnotclaimignoranceofthelawespeciallywithrespecttotheprovisionsofP.D.No.
464thatlaydownthesharingschemeamonglocalgovernmentunitsconcernedandthenationalgovernment,
for both the basic real property tax and additional tax pertaining to the Special Education Fund. Nor can they
claimthattheProvincecouldvalidlyforfeittheP40,724,471.74paidbyNPCconsideringthattheProvinceisonly
entitledtoaportionthereofandthatthebalancewasmerelybeingheldintrustfortheotherbeneficiaries.
Asapublicofficer,respondentAzaa(andtheotherrespondentsaswell)hasadutytoprotecttheinterests
not only of the Province but also of the municipalities of Tiwi and Daraga and even the national government.
When the passage of an illegal or unlawful ordinance by the Sangguniang Panlalawigan is imminent, the
presiding officer has a duty to act accordingly, but actively opposing the same by temporarily relinquishing his
chair and participating in the deliberations. If his colleagues insist on its passage, he should make known his
opposition thereto by placing the same on record. No evidence of any sort was shown in this regard by
respondentAzaa.
Clearly,alltherespondentshave,whetherbyactoromission,deniedtheotherbeneficiariesoftheirrightful
shares in the tax delinquency payments made by the NPC and caused the illegal forfeiture, appropriation and
disbursementoffundsnotbelongingtotheProvince,throughthepassageandapprovalofOrdinanceNo.0992
andResolutionNos.17892and20492.
Theforegoingfactualsettingshowsawantondisregardoflawonthepartoftherespondentstantamountto
abuseofauthority.Moreover,theillegaldisbursementsmadecanqualifyastechnicalmalversation.
This Committee, thus, finds all the respondents guilty of abuse of authority, and accordingly, recommends
theimpositionofthefollowingpenaltiesofsuspensionwithoutpay:

a.RespondentSalalimafive(5)monthsand
b.Alltheotherfour(4)monthseach.
respondents
II.OPCaseNo.5469
This refers to the administrative complaint filed against Albay Governor Romeo Salalima, ViceGovernor
Danilo Azafla, Albay Sangguniang Panlalawigan Members Juan Victoria, Lorenzo Reyeg, Jesus Marcellana,
ArturoOsia,ClenioCabredo,RamonFernandez,Jr.,MasikapFontanilla,VicenteGo,Sr.,andNemesioBaclao
relativetotheretainercontractforlegalservicesenteredintobetweentheProvinceofAlbay,ontheonehand,
andAtty.JesusR.CornagoandtheCortes&ReynaLawFirm,ontheother,andthedisbursementofpublicfund
inpaymentthereof.ThecomplaintwasdocketedasOPCaseNo.5469.
Theantecedentfactsareasfollows.
BecauseoftherefusalbytheNationalPowerCorporation(NPC)topayrealpropertytaxesassessedbythe
ProvinceofAlbay(theProvince)coveringtheperiodfrom11June1984upto10March1987amountingtoP2
14,845,184.76,theProvincesoldatpublicauctionthepropertiesofNPCconsistingofgeothermalpowerplants,
buildings,machineryandotherimprovementslocatedatTiwiandDaraga,Albay.TheProvincewasthesoleand
winningbidderattheauctionsale.
AsNPCfailedtoredeemitspropertiessoldattheauction,theProvincepetitionedtheRegionalTrialCourtin
Tabaco,Albaytoissueawritofpossessionoverthesame.
Sometime in 1989, NPC filed a petition with the Supreme Court, which was docketed as G.R. No. 87479,
questioningthevalidityoftheauctionsaleconductedbytheProvince.NPCclaims,interalia,thatitsproperties
arenotsubjecttorealpropertytax.
On 17 May 1989, the Province, through Atty. Romulo Ricafort, the legal officer of the Province, filed its
commentontheNPCpetitionwiththeSupremeCourt.
On 2 June 1989, the Albay Sangguniang Panlalawigan adopted Resolution No. 12989 (Exhs. B to BI)
authorizingrespondentGovernortoengagetheservicesofaManilabasedlawfirmtohandlethecaseagainst
NPC.
On 25 August 1989, Atty. Jesus R. Cornago entered his appearance with the Supreme Court as
collaborating counsel for the Province in G.R. No. 87479. The entry of appearance of Atty. Cornago bore the
conformityofrespondentGovernor.
On 14 November 1989, Atty. Antonio Jose F. Cortes of the Cortes & Reyna Law Firm sent respondent
Governor a letter (Exhs. D to D1) informing him that Atty. Jesus R. Cornago, as collaborating counsel for the
Province, has filed a memorandum with the Supreme Court, suggesting that a retainer agreement be signed
betweentheProvince,ontheonehand,andAtty.CornagoandCortes&ReynaLawFirm,ontheotherhand,
andsettingforththeconditionsoftheretaineragreement,thus:

Ascollaboratingcounselsfortherespondentsintheaforementionedcase,ourlawfirmandthatofAtty.JesusR.
CornagorequestthatyoupayusanAcceptanceFeeofFIFTYTHOUSAND(P50,000.00)PESOS,whilethe
aforementionedcaseispendingintheSupremeCourt.Thereafter,wewillchargeyouacontingentfeeequivalentto
eighteenpercent(18%)ofthevalueofthepropertysubjectmatterofthecasewhichisP214Million,payabletousin
theeventthatweobtainafavorablejudgmentforyoufromtheSupremeCourtinthecase.Xeroxexpensesfor
copiesofmotions,memorandumandothermatterstobefiledwiththeSupremeCourtinthecase,togetherwith
xeroxcopiesofdocumentaryevidence,aswellasmailingexpenses,willbeforyouraccountalso.
On8January1990,theAlbaySangguniangPanlalawiganpassedResolutionNo.0190(Exhs.CtoC1)
authorizingrespondentGovernortosignandconfirmtheretainercontractwiththeCortes&ReynaLawFirm.
RespondentSalalimasignedtheretaineragreement.

On 4 June 1990, the Supreme Court issued a decision dismissing the NPC petition and upholding the
validityoftheauctionsaleconductedbytheProvincetoanswerforNPCstaxliabilities.
Subsequently, the following payments amounting to P7,380,410.31 (Exhs. E to Nl) were made by the
ProvincetoAtty.AntonioJoseCortesandAtty.JesusR.Cornago:

ParticularsClaimant/PayeeAmount
DisbursementCortes&ReynaP50,508.75
Voucher(DV)
No.4,Jan.
8,1990
CheckNo.
931019
DVNo.1889Atty.AntonioJoseCortesP1,421,040.00
Aug.13,1992.
CheckNo.
236063S
DVNo.1890Atty.JesusR.CornagoP1,786,300.00
Aug.13,1992
CheckNo.
236064S
DVNo.2151Atty.AntonioJoseCortesP838,851.44
Sept.28,
1992,Check
No.238174S
DVNo.2226Atty.AntonioJoseCortesP886,662.40
Oct.8,.1992
CheckNo.
239528S
DVNo.2227Atty.JesusR.CornagoP341,024.00
Oct.8,1992
CheckNo.
239529S
DVNo.2474Atty.JesusR.CornagoP287,018.40
Nov.6,1992
CheckNo.
250933
DVNo.2475Atty.AntonioJoseCortesP746,247.83
Dec.9,1992
CheckNo.
253163
DVNo.2751Atty.AntonioJoseCortesP747,247.84
Dec.9,1992
CheckNo.
253163

DVNo.2752Atty.JesusR.CornagoP287,018.40
Dec.9,1992
CheckNo.
253164____________
TOTALP7,380,410.31
DisbursementVoucherNos.2474and2475wereapprovedbyrespondentAzaa.Therestwereapprovedby
respondentGovernor.
Inaletterdated31May1993(Exh.O)andcertificateofsettlementandbalancesdated17May1993(Exh.
P), the Provincial Auditor of Albay informed respondent Governor that payments made by the Province as
attorneysfeesamountingtoP7,380,410.31havebeendisallowedbytheCommissiononAudit(COA,withthe
followingnotation:

ThedisbursementvouchersdetailedhereunderrepresentpaymentsforattorneysfeesofCortes&ReynaLawOffice
forlegalservicesrenderedre:G.R.No.87479NAPOCOR,Petitionervs.TheProvinceofAlbay,etal.,Respondent,
SupremeCourt,enbanc.TotalpaymentsofP7,380,410.31aredisallowedforlackoftherequisitepriorwritten
conformityandacquiescenceoftheSolicitorGeneralxxxaswellasthewrittenconcurrenceofthecommissionon
AuditasprovidedforandrequiredunderCOACircularNo.86255datedApril2,1986,re:Inhibitionagainst
employmentbygovernment:agenciesandinstrumentalitiesxxxofprivatelawyerstohandletheirlegalcases,viz.
ThecomplaintallegesthatbyenteringintotheretaineragreementwithprivatelawyersandpayingP7,380,
410.31tothesaidprivatelawyers,respondentsviolatedseveralprovisionsoflawwhichwarrantstheimposition
ofadministrativepenaltiesagainstthem.ItistobenotedthatrespondentsVictoria,Reyeg,Cabredo,Marcellana
and Osia were not yet members of the Sangguniang Panlalawigan when Resolution No. 129 was passed.
However,thecomplaintallegesthattheserespondentswerenamedinthecomplaintbecausetheyapprovedthe
supplementalbudget/appropriationordinancesprovidingforthepaymentoftheattorneysfees.
Thesoleissueinthiscaseiswhetherornotrespondentshaveincurredadministrativeliabilityinenteringinto
theretaineragreementwithAtty.CornagoandtheCortes&ReynaLawFirmandinmakingpaymentspursuant
tosaidagreementforpurposesofthecasefiledbyNPCwiththeSupremeCourtagainsttheProvince.
Wefindmeritinthecomplaintandholdthatunderthecircumstancessurroundingthetransactioninquestion
therespondentsabusedtheirauthority.
Sec.481oftheLocalGovernmentCode(R.A.No.7160)requirestheappointmentofalegalofficerforthe
provincewhosefunctionsincludethefollowing:

Representthelocalgovernmentunitinallcivilactionsandspecialproceedingswhereinthelocalgovernmentunitor
anyofficialthereof,inhisofficialcapacityisapartyProvided,That,inactionsorproceedingwhereacomponent
cityormunicipalityisapartyadversetotheprovincialgovernmentortoanothercomponentcityormunicipality,a
speciallegalofficermaybeemployedtorepresenttheadverseparty.
The Supreme Court has ruled in Municipality of Bocaue, et al. v. Manotok, 93 Phil. 173 (1953), that local
governments[sic]unitscannotberepresentedbyprivatelawyersanditissolelytheProvincialFiscalwhocan
rightfullyrepresentthem,thus:

Underthelaw,theProvincialFiscalofBulacan,andhisassistantsarechargedwiththedutytorepresenttheprovince
andanymunicipalitythereofinallcivilactionsxxx
ItwouldseemclearthattheProvincialFiscalistheonlycounselwhocanrightfullyrepresenttheplaintiffsand
therefore,Attys.AlvirandMacapagal[theprivatelawyershiredbytheProvinceofBulacan]havenostandinginthe
case.Theappealhereininterposedinbehalfoftheplaintiffscannotthereforebemaintained.
ThisrulingappliessquarelytothecaseathandbecauseSec.481oftheLocalGovernmentCodeisbased
onSec.1681oftheRevisedAdministrativeCodewhichwasthesubjectofinterpretationintheabovecitedcase
ofMunicipalityofBocaue,etal.v.Manotok.

In hiring private lawyers to represent the Province of Albay, respondents exceeded their authority and
violated the abovequoted section of the Local Government Code and the doctrine laid down by the Supreme
Court.
Moreover, the entire transaction was attended by irregularities. First, the disbursements to the lawyers
amounting to P7,380,410.31 were disallowed by the Provincial Auditor on the ground that these were made
without the prior written conformity of the Solicitor General and the written concurrence of the Commission on
Audit(COA)asrequiredbyCOACircularNo.86255dated2April1986.
TherespondentsattemptedtodisputethisfindingbypresentingtheSolicitorGeneralsconformitydated15
July1993.Thisconformitywas,howeverobtainedafterthedisbursementswerealreadymadein1990and1992.
What is required by COA Circular No. 86255 is a prior written conformity and acquiescence of the Solicitor
General.
Anotherirregularityinthetransactionconcernsthelawyers.ResolutionNo.0190authorizedtherespondent
GovernortosignandconfirmaretainercontractforlegalserviceswiththeCortes&ReynaLawFirmat202E.
RodriguezSr.Blvd.,QuezonCity.TheretainercontractsignedbyrespondentGovernorwas,however,notonly
withtheCortes&ReynaLawFirmbutalsowithAtty.JesusR.CornagoofJameccaBuilding,280TomasMorato
Avenue,QuezonCity.ThatAtty.JesusR.CornagoandtheCortes&ReynaLawFirmaretwoseparateentitiesis
evidentfromtheretainedcontractitself:

Ascollaboratingcounselsfortherespondentsintheaforementionedcase,ourlawfirmandthatofAtty.JesusR.
CornagorequestthatyoupayusanAcceptanceFeeofFIFTYTHOUSAND(P50,000.00)PESOS,whilethe
aforementionedcaseispendingintheSupremeCourt.Thereafter,wewillchargeyouacontingentfeeequivalentto
eighteenpercent(18%)ofthevalueofthepropertysubjectmatterofthecasewhichisP214million,payabletousin
theeventweobtainafavorablejudgmentforyoufromtheSupremeCourtinthecase.Xeroxexpensesforcopiesof
motions,memorandumandothermatterstobefiledwiththeSupremeCourtinthecase,togetherwithxeroxcopies
ofdocumentaryevidence,aswellasmailingexpenses,willbeforyouraccountalso.
xxxxxxxxx

Verytrulyyours,
CORTES&REYNA
LAWFIRM
and
Atty.JESUSR.CORNAGO
JarneccaBuilding
280TomasMoratoAvenue
by:
(Sgd.)ANTONIOJOSEF.CORTES
Withmyconformity:
(Sgd.)GOV.ROMEOR.SALALIMA
ProvinceofAlbay
(Italicssupplied.)
InenteringintoaretaineragreementnotonlywiththeCortes&ReynaLawFirmbutalsowithAtty.JoseR.
Cornago,respondentGovernorexceededhisauthorityunderResolutionNo.0190.
Complicating further the web of deception surrounding the transaction is the fact that it was only Atty.
CornagowhoappearedascollaboratingcounselofrecordoftheProvinceintheSupremeCourtcase(G.R.No.
87479).WequotetheentryofappearanceofAny.Cornagoinfullinsaidcase:

APPEARANCE
COMESNOW,theundersignedcounsel,andtothisHonorableSupremeCourt,respectfullyentershisappearanceas
counselfortherespondentsintheaboveentitledcase,incollaborationwithAtty.RomuloL.Ricafort,counselof
recordfortherespondents.ThisappearancebearstheconformityoftherespondentGov.RomeoR.Salalima,as
shownbyhissignatureappearingatthespaceindicatedbelow.Inthisconnection,itisrespectfullyrequestedthat,
henceforth,theundersignedcounselbefurnishedwithacopyofallnotices,orders,resolutionsandothermattersthat
maybeissuedinthiscaseatitsofficeaddressindicatedbelow.
QuezonCity,forManila,August24,1989.
(Sgd.)JESUSR.CORNAGO
CounselforRespondents
280TomasMoratoAvenue
QuezonCity
PTRNo.56100589Mandaluyong
IBPNo.27935189Pasig,MM
Withmyconformity:
(Sgd.)ROMEOR.SALALIMA
Respondent
OfficeoftheGovernorofAlbay
LegaspiCity
EventheSolicitorGeneral,inhislettertorespondentGovernordated15July1993,notedthattheProvince
is represented in the Supreme Court by Attys. Ricafort Cornago and Glenn Manahan but not by the Cortes &
ReynaLawFirm,thus:

Incidentally,acheckwithourofficerecordsofthecaseG.R.No.87479revealsthattheProvinceofAlbayandits
officialsnamedrespondentsthereinwererepresentedintheSupremeCourtbyAtty.RomuloRicaforttheProvinces
LegalOfficerII,andAttys.JesusR.CornagoandGlennManahanofJAMECCABuilding,280TomasMorato
Avenue,QuezonCitynoappearancewasenteredthereinbytheCortes&ReynaLawFirm.(Italicssupplied)
Furthermore,thememorandumwiththeSupremeCourtfiledfortheProvincewassignedbyAtty.Cornago
and not by the Cortes & Reyna Law Firm. Consequently, the Cortes & Reyna Law Firm was not counsel of
recordoftheProvinceinG.R.No.87479.Andyet,sixofthetencheckspaidbytheProvinceandamountingto
morethanP3.6millionwereissuedinfavoroftheCortes&ReynaLawFirmthroughAtty.AntonioJoseCortes.
Inotherwords,respondentsdisbursedmoneytotheCortes&ReynaLawFirmalthoughthelatterdidnotappear
ascounselfortheProvinceintheSupremeCourtinG.R.No.87479.
Finally,theattorneysfeesagreeduponbyrespondentSalalimaandconfirmedbytheotherrespondentsare
not only unreasonable but also unconscionable. The contingent fee of 18% of the P2l4 million claim of the
ProvinceagainstNPCamountstoP38.5million.Thewordunconscionable,asappliedtoattorneysfee,means
nothingmorethanthatthefeecontractedfor,standingaloneandunexplainedwouldbesufficienttoshowthatan
unfairadvantagehadbeentakenoftheclient,orthatalegalfraudhadbeentakenoftheclient,orthatalegal
fraudhadbeenperpetratedonhim.(Moran,CommentsontheRulesofCourt,Vol.6,p.236.)
TheProvincehasalegalofficer,Atty.Ricafort,whohadalreadyfiledacommentonNPCspetitionagainst
theProvince.The comment filed by Atty. Ricafort already covers the basic issues raised in the petition. When
Atty.CornagofiledanappearanceandsubsequentlyamemorandumfortheProvince,thepetitionwasalready
beengivenduecoursebytheSupremeCourtandtheonlypleadingtobefiledbythepartiesbeforetheCourt
wouldissueitsdecisionwasamemorandum.Surely,onememorandumcouldnotbeworthP38.5million.
Furthermore,theprofessionalcharacterandsocialstandingofAtty.Cornagoarenotsuchaswouldmerita
P38.5 million fee for the legal services rendered for the Province. During the hearing, respondent Governor
admittedthathehadhiredAtty.CornagobecausetheywereschoolmatesatSanBedaCollege,thus:

SECRETARYCORONA:

MayIaskaquestionGovernor,whatwasyourbasisforchoosingthisparticularLawoffice?WhynotACCRA,why
notSycipSalazar,whynotCarpioVillaraza,whythisparticularLawoffice?Frankly,Ineverheardofthislawoffice.
Whorecommendedit?
GOVERNORSALALIMA:
Atty.CornagowasthenagraduateofSanBedaandIamagraduateofSanBeda.
SECRETARYCORONA:
Wereyouclassmates?
GOVERNORSALALIMA:
No.
SECRETARYCORONA:
Howmanyyearsapartwereyou?
GOVERNORSALALIMA:
Two(2)years.
SECRETARYCORONA:
So,youkneweachotherfromthelawschool?
GOVERNORSALALIMA:
Yes.
SECRETARYCORONA:
WereyoumembersofthesamefraternityinSanBeda?
GOVERNORSALALIMA:
Yes.
(TSN,12July1992,pp.2729.)

ItisevidentthatrespondentGovernorhiredAtty.Cornagonotonthebasisofhiscompetencyandstanding
inthelegalcommunitybutpurelyforpersonalreasons.Likewise,thestandingoftheCortes&ReynaLawFirmis
notsuchaswouldmeritP38.5millionforonememorandum,which,inthiscase,ithadnotevenfiledbecauseit
wasnotthecounselofrecord.Hence,consideringthelaborandtimeinvolved,theskillandexperiencecalledfor
in the performance of the services and the professional character and social standing of the lawyers, the
attorneysfeeofP38.5millionisunconscionable.Byallowingsuchscandalouslyexorbitantattorneysfeeswhich
is patently disadvantageous to the government, respondents betrayed a personal bias to the lawyers involved
andcommittedabuseofauthority.
Parenthetically,theretainercontractcontainingsuchexorbitantattorneysfeesmayalsobeviolativeofthe
following: (a) COA Circular No. 8555A (8 September 1985) prohibiting irregular, unnecessary, excessive or
extravagantexpendituresorusesoffundsand(b)Sec.3(e)and(g)ofR.A.No.3019,otherwiseknownasthe
AntiGraftandCorruptPracticesAct.
Finally, the Committee again applies in this case, as was applied in OP Case No. 5470, the rule of joint
responsibilityasenunciatedunderSec.305(1)oftheLocalGovernmentCode.
In view of the foregoing, the Committee holds that respondents committed abuse of authority under Sec.
60(e)oftheLocalGovernmentCodeforthefollowing:
1.Hiringprivatelawyers,inviolationofSec.481oftheLocalGovernmentCode,tohandlethecaseoftheProvince
ofAlbaybeforetheSupremeCourtinG.R.No.87479
2.DisbursingpublicmoneyinviolationofCOArulesandregulations
3.PayingtheCortes&ReynaLawFirmpublicmoneyalthoughitwasonlyAtty.Cornagowhowasthecounselof
recordoftheProvinceofAlbayintheSupremeCourtcase
4.AuthorizinganunconscionableandgrosslydisadvantageousattorneysfeesofP38.5millionand

5.Additionally,astorespondentGovernor,enteringintoaretaineragreementnotonlywiththeCortes&ReynaLaw
Firm but also with Atty. Cornago, thus exceeding his authority under Resolution No. 0 190 passed by the
SangguniangPanlalawigan.

Aftertakingalltheattendantcircumstancesintoconsideration,theCommitteerecommendsthatthefollowing
penaltiesofsuspensionswithoutpaybemetedout:
a.RespondentsSalalimasix(6)months
andAzaaeachand
b.Alltheother
respondentsfour(4)months
each.

III.OPCaseNo.5471
This refers to the administrative complaint filed by the Tiwi Mayor Naomi Corral against Albay Governor
RomeoSalalima,AlbaySangguniangPanlalawiganMembersJuanVictoria,LorenzoReyeg,ArturoOsia,Jesus
Marcellana, Nemesio Baclao, Ramon Fernandez, Jr., Masikap Fontanilla, Vicente Go, Sr., Wilbor Rontas and
ClenioCabredo,andTiwiViceMayorRodolfoBenibeforabuseofauthorityandoppressionunderSec.60(c)
and(e)ofR.A.No.7160.
Theantecedentfactsareasfollows:

On20October1992,MayorCorralandseven(7)KagawadsoftheTiwiSangguniangBayanchargedherein
respondentGovernorSalalimaandViceGovernorAzanaforabuseofauthority,misconductinofficeandoppression.
Thisadministrativecomplaint,initiallydocketedasOPCaseNo.4982(DILGAdm.CaseNo.P893),arosefrom
therefusalofsaidrespondentstoremitTiwisshareintheP40,724,471.74taxdelinquencypaymentsmadebyNPC.
ThiscasewassubsequentlysubstitutedbyOPCaseNo.54790filedon25January1993whichnowincludedas
respondentsAlbaySangguniangPanlalawiganMembersVictoria,Reyeg,Osia,Cabredo,Go,Marcellana,Fernandez,
Fontanilla,andRontas.
Subsequently,MayorCorralbecamethesubjectofseveraladministrativeandcriminalcomplaintsfiledbycertain
individualswiththefollowingoffices:
a.AchillesBercesv.MayorNaomiCorral
(1)AlbaySangguniangPanlalawigan,Adm.CaseNo.0292
(2)AlbaySangguniangPanlalawigan,Adm.CaseNo.0592
(3)OfficeoftheOmbudsman,OMBAdm.CaseNo.1930163
(4)OfficeoftheOmbudsman,OMBCaseNo.0930682
(5)OfficeoftheOmbudsman,OMB0923008
b.MurielCortezanov.MayorNaomiCorral
(6)AlbaySangguniangPanlalawigan,Adm.CaseNo.1093
(7)OfficeoftheOmbudsman,OMB0923000
c.AmeliaCatorcev.MayorNaomiCorral
(8)AlbaySangguniangPanlalawigan,Adm.CaseNo.0993
d.AidaMarfilv.MayorNaomiCorral
(9)AlbaySangguniangPanlalawigan,Adm.CaseNo.0793
(10)OfficeoftheOmbudsman,0MBCaseNo.5930110

e.RodolfoBelbisv.MayorNaomiCorral
(11)AlbaySangguniangPanlalawigan,Adm.CaseNo.0693
(12)OfficeoftheOmbudsman,0MBCaseNo.0930098
f.Kin.JuanVictoria,etal.v.MayorNaomiCorral
(13)OfficeoftheProsecutor,I.S.No.93046(forLibel).LegaspiCity
g.GovernorRomeoSalalima,etal.v.MayorNaomiCorral
(14)OfficeoftheProsecutor,I.S.No.93044(forLibelandPerjury),LegaspiCity
(15)OfficeofthePrbsecutor,I.S.No.93045(forLibelandPerjury),LegaspiCity
oratotaloffifteen(15)cases.
On 7 January 1993, the respondentmembers of the Sangguniang Panlalawigan passed Omnibus
Resolution No. 2 recommending that Mayor Corral be placed under preventive suspension for sixty (60) days
pendingtheresolutionofAdm.CaseNo.0592(Exh.18).
On11January1993,respondentSalalimaapprovedsaidresolutionand,onthesamedate,officiallydirected
hereinrespondentTiwiViceMayorBenibetoassumetheofficeanddischargethefunctionsofTiwiMayor(Exh.
18).
On21January1993,DepartmentoftheInteriorandLocalGovernment(DILG)SecretaryRafaelAlunanIII
directedtheliftingofthe11January1993suspensionorderissuedbyrespondentSalalima.InhislettertoMayor
Corral(Exh.C),hestated,thus:

ConsideringthatthepreventivesuspensionimposeduponyoubyGovernorRomeoR.Salalimaofthatprovince,was
issuedafterthelattersrefusaltoacceptyouranswer,therefore,theissuanceofsubjectorderofpreventivesuspension
ispremature,theissueshavingnotbeenjoined.
Inviewthereof,theOrderofPreventiveSuspensiondated11January1993,issuedbyGovernorSalalima,ishereby
lifted.
On 26 January 1993, the Office of the President (OP), acting in OP Case No. 4982, after finding that the
evidenceofguiltisstrong,andgiventhegravityoftheoffenseandthegreatprobabilitythatthecontinuancein
officeofrespondentGovernorRomeoR.Salalimacouldinfluencethewitnessesorposeathreattothesafety
and integrity of the records and other evidence, placed respondent Salalima under preventive suspension for
sixty(60)days(Exhs.DtoD2).
Respondent Salalima subsequently sought the reversal of the OP Order dated 26 January 1993 but the
samewasdismissedbytheSupremeCourton26May1993inthecaseentitledSalalimav.theHon.Executive
Secretary,G.R.No.108585(Exh.E).
On2February1993,MayorCorralfiledamotiontoinhibittherespondentsfromhearingthesixcasesfiled
against her with the Sangguniang Panlalawigan (Adm. Case Nos. 0292, 0592,0693,0793,0993 and 1093)
asserting her constitutional right to due process of law. This motion was however denied with the respondent
membersoftheSangguniangPanlalawiganassumingjurisdictionoverthecases.
After conducting marathon hearings, respondentmembers of the Sangguniang Panlalawigan rendered
judgmentsagainstMayorCorralandimposing,amongothers,thefollowingpenaltiesofsuspension:
1.InAdm.CaseNo.0292suspensionfortwo(2)months(seeDecisiondated1July1993,[Exhs.FtoF2])
2.InAdm.CaseNo.0592suspensionforthree(3)months(seeResolutiondated5July1993,[Exhs.0toG2])
3.InAdm.CaseNo.0693and0793suspensionforone(1)month(seeResolutiondated8July1993,(Exhs.H
toH3])and
4.InAdm.CaseNo.1093suspensionfortheperiodofunexpiredterm(seeResolutiondated9July1993,(Exhs.I
to12]).

On22July1993,respondentSalalimaissuedadirectiveaddressedtotheProvincialTreasurer,Provincial
Auditor,PNPProvincialDirector,ProvincialAssessor,ProvincialAccountant,ProvincialBudgetOfficer,Provincial
DILG Officer, the Sangguniang Panlalawigan and Provincial Prosecutor enjoining them to assist in the
implementationofthedecisionssuspending
MayorCorralbydecreeingdirectivestoyoursubordinateofficialsinTiwi,Albaytostrictlyadheresthereto.
Subsequently, Mayor Corral interposed appeals from the decisions of respondentmembers of the
SangguniangPanlalawigansuspendingherfromofficetotheOP(docketedasOPCaseNos.5337and5345)
withaprayerthattheimplementationofsaiddecisionsbestayed.
On28July1993,theOPorderedthesuspension/stayofexecutionofthedecisionsinAdm.CaseNos.0292
and0592(Exhs.JtoJ2).
Similarly,on3August1993,theOPorderedthesuspension/stayofexecutionofthedecisionsinAdm.Case
Nos.0693,0793and1093(Exhs.KtoKi).
Also,withrespecttoAdm.CaseNos.693and793,theCivilServiceCommission(CSC)issuedResolution
Nos. 93 005 (dated 5 January 1993) and 92 817 (dated 4 March 1993), which provided the bases and
justificationsfortheactsofMayorCorralcomplainedofinthesetwo(2)cases.TheSupremeCourtsubsequently
affirmedsaidCSCresolutions(Exhs.LtoL2).
InthemultiplechargesforlibelandperjuryagainstMayorCorral,arisingfromhercomplaintinOPCaseNo.
5470,filedwiththeRegionalTrialCourtofLegaspiCity,theSupremeCourtorderedthelowercourttoceaseand
desistfromproceedingwiththecaseinaresolutiondated16September1993(Exhs.QtoQ2).
Indeterminingwhetherrespondentsareguiltyofthechargeslevelledagainstthem,thefollowingissuehas
to be resolved, i.e., whether the conduct of the proceedings in the administrative cases filed and the series of
suspension orders imposed by the respondent members of the Sangguniang Panlalawigan on Mayor Corral
constituteoppressionandabuseofauthority?

Oppressionhasbeendefinedasanactofcruelty,severity,unlawfulexaction,dominationorexcessiveuseof
authority.(Ochatev.TyDeling,L13298,March30,1959,105Phil.384,390.)
Abusemeanstomakeexcessiveorimproperuseofathing,ortoemployitinamannercontrarytothenaturalor
legalrulesforitsuse.Tomakeanextravagantorexcessiveuse,astoabuseonesauthority(BlacksLawDictionary
<5thEd.>,II).Itincludesmisuse(CityofBaltimoret.Cornellsville&S.P.Ry,Co.,6Phils.190,191,3Pitt20,23).
Moreover,Section63(d)ofR.A.No.7160expresslystatesthat,[a]nyabuseoftheexerciseofthepowersof
preventivesuspensionshallbepenalizedasabuseofauthority.
Now, does the above narration of facts show commission by respondents of the administrative offenses
complainedof?
Areviewoftheproceedingsrevealthatthesameweremarkedbyhasteandarbitrariness.Thiswasevident
fromthestartwhenMayorCorralwaspreventivelysuspended(inAdm.CaseNo.0592)evenbeforeshecould
fileheranswer.Intheothercases,respondentmembersofSangguniangPanlalawiganruledthatMayorCorral
hadwaivedherrighttoadduceevidenceinherdefense.
Consequently,respondentsdidnotalsofullyevaluatetheevidencespresentedtosupportthechargesmade.
Assuch,allthedecisionsofrespondentssuspendingMayorCorralwereorderedliftedsuspendedbytheDILG
andOP.Thus,eventhecasesfiledwiththeOfficeoftheOmbudsman,whichwerebasedonthesameincidents
complainedofinthesaidadministrativecases,weresubsequentlydismissed.
Respondentsshouldhaveinhibitedthemselvesfromassumingjurisdictionoversaidcases(Adm.CaseNos.
0292,0592,0693,0793,0993,and1093)astimelymovedbyMayorCorralconsideringthattheywerethe
respondentsinvariousadministrativecomplaintssheearlierfiledwiththeOPandwiththeDILGstartingwithOP
CaseNo.4892.However,despitetheviolationofdueprocessresultingfromtheircollectiveacts,respondents,in
their determination and eagerness to suspend and harass Mayor Corral, proceeded to hear and decide said
cases.
The OP has no jurisdiction over administrative complaints filed against elective municipal officials. Under
Sec.61(b)ofR.A.No.7160,[a]complaintagainstanyelectiveofficialofamunicipalityshallbefiledbeforethe

SangguniangPanlalawiganwhosedecisionmaybeappealedtotheOfficeofthePresident.
WHEREFORE, thecharges against Vice Mayor Benibe are dismissed. However, all the other respondents
herein are found guilty of oppression and abuse of authority under Section 60(c) and (e) of R.A. No. 7160.
Accordingly,itisrecommendedthateachofthembemetedthepenaltyoffour(4)monthssuspensionwithout
pay.
IV.OPCaseNo.5450
ThisreferstotheadministrativechargesfiledbyTabacoMayorAntonioDemetriouagainstGovernorRomeo
Salalima for violation of Section 60, pars. (c) and (d) of the Local Government Code, Section 3, par. (g) of
RepublicActNo.3019,andtheprovisionsofPDNo.1594,asamended.
ThiscasewasfiledwiththeOfficeofthePresident(OP)on18October1993anddocketedasOPCaseNo.
5450.
ThefactsasfoundbythisCommitteeareasfollows:
On27September1989theTabacoPublicMarketwasdestroyedbyfire(Exh.A,par.1).
On26September1990,theOPadvisedMayorDemetriouandrespondentSalalimathattheP12.0Millionin
BudgetaryAssistancetoLocalGovernmentUnits(BALGU)fundsearlierremittedbythenationalgovernmentto
theProvince,shouldbeusedfortherehabilitationoftheTabacoPublicMarket,andthattheprojectshouldbe
implementedbytheProvincialGovernorinconsultationwiththeMayorofTabaco(Exh.37).
On 8 May 1991, a public bidding was conducted by the Albay Provincial Government for the repair and
rehabilitationoftheTabacoPublicMarket(Exh.A,par.1).
On 29 May 1991, the Province represented by respondent Salalima and RYU Construction entered into a
contractforP6,783,737.59forsaidrepairandrehabilitation(Exh.H).Amongothers,thecontractstipulatedthat
thecontractedworkshouldbecompletedin150days.
Thecontractorstartedtheprojecton1July1991andcompletedthesameon2June1992(Exh.41).
On6March1992,theProvincerepresentedbyrespondentSalalimaenteredintoanothercontract(Exh.1)
for P4,304,474.00 with RYU Construction for additional repair and rehabilitation works for the Tabaco Public
Market.Thetermsandconditionsofthiscontractarethesameasthosestipulatedinthe29May1991contract
exceptfortheconstructionperiodwhichisonlyfor90days.
Constructionofthesecondprojectcommencedon27March1992andwascompletedon2June1992(Exh.
42).
In his complaint, Mayor Demetriou alleged that despite the delay in the completion of work under the first
contract, liquidated damages were not imposed on, nor collected from, RYU Construction by the Province.
Moreover, he claims that the second contract with RYU Construction was entered into in violation of P.D. No.
1594asRYUincurreddelaywithrespecttothefirstcontract.
Wefindmeritinthecomplaint:
Pars.1and2ofitemCI8,par.1ofitemCI11,andpar.10.4.2ofitemlBoftheimplementingRulesand
Regulations(IRR)ofPDNo.1594,asamended,read:
CI8LIQUIDATEDDAMAGES
1.Wherethecontractorrefusesorfailstosatisfactorilycompletetheworkwithinthespecifiedcontracttime,plusany
timeextensiondulygrantedandisherebyindefaultunderthecontract,thecontractorshallpaytheGovernment
forliquidateddamages,andnotbywayofpenalty,anamounttobedeterminedinaccordancewiththefollowing
formula for each calendar day of delay, until the work is completed and accepted or taken over by the
Government:

xxxxxxxxx
2.To be entitled to such liquidated damages, the Government does not have to prove that it has incurred actual
damages.Suchamountshallbedeductedfroman)moneydueorwhichmaybecomeduethecontractorunder

thecontractand/orcollectsuchliquidateddamagesfromtheretentionmoneyorothersecuritiespostedbythe
contractorwhicheverisconvenienttotheGovernment.

CI1ExtensionofContracttime
1. Should the amount of additional work of any kind or other special circumstances of any kind whatsoever occur
such as to fairly entitle the contractor to an extension of contract time, the Government shall determine the
amount of such extension provided that the Government is not bound to take into account any claim for an
extension of time unless the contractor has prior to the expiration of the contract time and within thirty (30)
calendar days after such work has been commenced or after the circumstances leading to such claim have
arisen,deliveredtotheGovernmentnoticesinorderthatitcouldhaveinvestigatedthematthattime.Failureto
provide such notice shall constitute a waiver by the contractor of any claim. Upon receipt of full and detailed
particulars,theGovernmentshallexaminethefactsandextentofthedelayandshallextendthecontracttimefor
completingthecontractworkwhen,intheGovernmentsopinion,thefindingoffactsjustifyanextension.

xxxxxxxxx
IB10.4.2ByNegotiatedContract
1.Negotiatedcontractmaybeenteredintoonlywhereanyofthefollowingconditionsexistsandtheimplementing
office/agency/corporationisnotcapableofundertakingtheprojectbyadministration:

xxxxxxxxx
c.Wherethesubjectprojectisadjacentorcontiguoustoanongoingprojectanditcouldbeeconomicallyprosecuted
bythesamecontractor,inwhichcase,directnegotiationmaybeundertakenwiththesaidcontractoratthesame
unit prices adjusted to price levels prevailing at the time of negotiation using parametric formulae herein
prescribed without the 5% deduction and contract conditions, less mobilization cost, provided that he has no
negativeslippageandhasdemonstratedasatisfactoryperformance.(Italicssupplied)

A reading of items CI 8 and CI 11 above shows that the collection of liquidated damages is mandatory in
casesofdelayunlesstherearevalidordersofextensionofcontractworkgivenbytheGovernment.
Underthe29May1991contract,therepairworksshouldhavebeencompletedon26December1991since
theprojectwasstartedon1July.Butthentheprojectwasfinishedonlyon2June1992.
ThisisconfirmedbytheCOAthroughSAOReportNo.9311(Exh.N),thus
xxxxxxxxx

xxxTheprojectwascompletedonlyonJune2,1992oradelayof132workingdays,asshowninthefollowing
tabulation
BillingAsofDaysLapsed%Accomplishment
FirstDec.2,199113026.48
SecondJan.8,199218753.19
ThirdFeb.10,199210075.23
FinalJune2,1992202100.00
InviewofthedelaysinprojectcompletiontheTeamrequestedfromtheProvincialEngineeranycopyoftheorder
suspendingandresumingthework(suspensionandresumeorder)sincethesamewasnotattachedtotheclaimsof
thecontractororpaidvouchers.Unfortunately,theProvincialEngineercouldnotprovidesaiddocumentasthe
EngineeringOfficehadnotissuedany.Ineffect,therewasnobasisfortheextensionofcontracttimeandthe
contractorshouldhavebeenconsideredasbehindscheduleintheperformanceofthecontract.Despiteits
deficiency,noliquidateddamageswaseverimposedagainstthecontractor.(pp.2526)[Italicssupplied]
RespondentSalalimafailedtosubmitanyevidenceconcerninganyorderissuedbytheProvincialGovernment
extendingRYUConstructionscontract.

Thelawrequiresthatrequestsforcontractextensionaswellastheordersgrantingthesamemustbemadeandgiven
priortotheexpirationofthecontract.Therationaleforthisrequirementisobviouslytopreventacontractorfrom
justifyinganydelayafterthecontractexpires.
Beforesigningthe6March1992contract,whichwasenteredintoonanegotiatedbasisandnotthroughbidding,
respondentSalalimashouldhaveinquiredwhetherornotRYUConstructionincurrednegativeslippage.Hadhedone
so,thematterofimposingandcollectingliquidateddamageswouldhavebeengivenappropriateattention.Thisis
aggravatedbythefactthatrespondentknewthatRYUConstructionwasthecontractorfortheoriginalrehabilitation
andrepairworkfortheTabacoPublicmarketbeingthesignatorytothefirstcontract.
Clearly,therefore,therewasafailureonthepartoftheProvincetoimposeandcollectliquidateddamagesfromthe
erringcontractor,RYUConstruction.
Goingtothesecondcharge,wefindthatrespondentSalalimaunmistakablyviolatedtheprovisionsofP.D.No.1594,
asamended.
Fundamentalistherulethatgovernmentcontractsespeciallyinfrastructurecontractsareawardedonlythrough
bidding.AsexplicitlyordainedbySec.4ofP.D.No.1594,constructionprojectsshallgenerallybeundertakenby
contractaftercompetitivebidding.Byitsverynatureandcharacteristic,acompetitivepublicbiddingaimstoprotect
thepublicinterestbygivingthepublicthebestpossibleadvantagesthroughopencompetition.Atthesametime,
biddingseekstopreventorcurtailfavoritism,fraudandcorruptionintheawardofthecontractwhichotherwise
mightprevailwerethegovernmentofficialconcernedisvestedwiththefullorabsoluteauthoritytoselectthe
prospectivecontractor(Fernandez,TreatiseonGovernmentContractsUnderPhilippineLaw,1991Ed.citingCaltex
Phil.Inc.v.DelgadoBros.,96Phil.368SanDiegov.MunicipalityofNaujan,107Phil.118andMatutev.
Hernandez,66Phil.68).
Thisispreciselythereasonwhynegotiatedcontractscanberesortedtoonlyinafewinstancessuchasthatprovided
underpar.1(c)ofitemIB10.4.2oftheIRRofPDNo.1594,supra.However,saidprovisorequiresthatthe
contractorhadnotincurrednegativeslippageandhasdemonstratedasatisfactoryperformance.
AndsinceRYUConstructionincurrednegativeslippagewithrespecttotherepairworksunderthe29May1991
contractasfoundbyCOA,itwasanomalousfortheProvincethroughrespondentSalalimatoenterintoanegotiated
contractwithsaidcontractorforadditionalrepairandrehabilitationworksfortheTabacoPublicmarket.Failingto
complywiththerequirementsoflaw,the6March1992contractisclearlyirregular,ifnotillegal.
Finally,saidcontractmayalsobeviolativeofthefollowing:(a)COACircularNo.8555A.(dated8September
1985)prohibitingirregularexpendituresorusesoffundsand(b)Sec.3(e)and(g)ofR.A.No.3019,otherwise
knownastheAntiGraftandCorruptPracticesAct.
Premisesconsidered,thisCommitteefindstherespondentguiltyofabuseofauthorityandgrossnegligence.
Accordingly,itisrecommendedthatthepenaltyofsuspensionwithoutpaybemetedoutonrespondentSalalimafor
five(5)months.(pp.235)
ThePresidentthenconcludedanddisposedasfollows:

Afteracarefulreviewofthecases,1agreewithandadoptthefindingsandrecommendationsoftheAdHoc
Committee,supportedastheyarebytheevidenceonrecord.
WHEREFORE,thefollowingpenaltiesaremetedoutoneachoftherespondents,towit:
InOPCaseNo.5470
a.GovernorRomeoSalalimasuspensionwithoutpayforfive(5)months:

b. ViceGovernor DaniloAzaa, Albay Sangguniang Panlalawigan Members Juan Victoria, Lorenzo Reyeg,Arturo
Osia,ClenioCabredo,VicenteGo,Sr.,JesusMarcellana,RamonFernandez,Jr.,MasikapFontanilla,andWilbor
Rontassuspensionwithoutpayforfour(4)months.

InOPCaseNo.5469
a.GovernorRomeoSalalimaandViceGovernorDaniloAzaasuspensionwithoutpayforsix(6)monthsand
b. Albay Sangguniang Members Juan Victoria, Lorenzo Reyeg, Jesus Marcellana, Arturo Osia, Clenio Cabredo,
RamonFernandez,Jr.,MasikapFontilla,VicenteGo,Sr.,andNemesioBaclaosuspensionwithoutpayforfour
(4)months

InOPCaseNo.5471
a.GovernorRomeoSalalimaandAlbaySangguniangMembersJuanVictoria,LorenzoReyeg,JesusMarcellana,
Arturo Osia, Wilbor Rontas, Clenio Cabredo, Ramon Fernandez, Jr., Masikap Fontilla, Vicente Go, Sr., and
NemesioBaclaosuspensionwithoutpayforfour(4)months

InOPCaseNo.5450
a.GovernorRomeoSalalimasuspensionwithoutpayforfive(5)months.

Thesuspensionimposedonrespondentsshallbeservedsuccessivelybutshallnotexceedtheirrespectiveunexpired
terms,inaccordancewiththelimitationimposedunderSection66(b)oftheLocalGovernmentCode.
ItmustatoncebepointedoutthatinsofarasO.P.CaseNo.5471isconcerned,nothingofitssubstantive
aspect is challenged in this petition. The petitioners mentioned it only in their claim of prematurity of
Administrative Order No. 153 in view of their appeal from Special Audit Office (SAO) Report No. 9311 to the
COA en banc. O.P. Case No. 5471 is the administrative complaint filed by Tiwi Mayor Corral against the
petitioners for abuse of authority and oppression in connection with their conduct in the several administrative
casesfiledbycertainindividualsagainstMayorCorral.Ithasnologicalnexustotheappeal.Thedecisionthenin
O.P.CaseNo.5471standsunchallengedinthispetition.
AstoO.P.CasesNos.5450,5469,and5470,theissuespresentedbythepetitionersmaybereformulatedin
thiswise:
I.Did the Office of the President act with grave abuse of discretion amounting to lack or excess of jurisdiction in
suspendingthepetitionersforperiodsrangingfromtwelvetotwentymonths?
II.Did the Office of the President commit grave abuse of discretion in deciding O.P. Cases Nos. 5450,5469, and
5470despitethependencyofthepetitionersappealtotheCOAenbanefromSpecialAuditOffice(SAO)Report
No.9311andtheCertificateofSettlementandBalances(CSB)?
III. Did the Office of the President commit grave abuse of discretion in holding the petitioners guilty of abuse of
authorityindenyingtheMunicipalityofTiwiofitsrightfulshareintheP40,724,471.74whichtheProvinceofAlbay
hadreceivedfromtheNPCundertheMemorandumofAgreement?
IV.Did the Office of the President commit grave abuse of discretion in suspending in O.P. Cases Nos. 5469 and
5450petitioner Salalima, who was reelected on 11 May 1992, for an alleged administrative offense committed
duringhisfirsttermandinsuspendinginO.P.CaseNo.5469theotherpetitioners,someofwhomwereelected
andothersreelectedon11May1992,foranallegedadministrativeoffensecommittedin1989?
V.DidtheOfficeofthePresidentcommitgraveabuseofdiscretioninholdingthepetitionersinO.P.CaseNo.5469
guiltyofgraveabuseofauthorityunderSection60(e)oftheLocalGovernmentCodeof1991althoughtheywere
chargedunderSection3(g)ofR.A.No.3019,asamended,andSection60(d)oftheLocalGovernmentCodeof
1991,therebydeprivingthemofdueprocessoflaw?

Weshalltakeuptheseissuesintheordertheyarepresented.
I

Anentthefirstissue,thepetitionerscontendthatthechallengedadministrativeorderdeprivedthemoftheir
respective offices without procedural and substantive due process. Their suspensions ranging from twelve
monthstotwentymonthsorfortheentiredurationoftheirunexpiredterm,whichwasthenonlysevenmonths,
constituted permanent disenfranchisement or removal from office in clear violation of Section 60 of R.A. No.
7160whichmandatesthatanelectivelocalofficialmayberemovedfromofficebyorderofthecourt.

TheCommentoftheSolicitorGeneralissilentonthisissue.However,respondentsMayorCorralandnewly
appointedprovincialofficialsmaintainthatthesuspensionimposeduponthepetitionersineachofthefourcases
waswithinthelimitsprovidedforinSection66(b)ofR.A.No.7160andthattheaggregatethereofrangingfrom
twelvemonthstotwentymonths,butnottoexceedtheunexpiredportionofthepetitionerstermofoffice,didnot
changeitsnatureastoamounttoremoval.
Section66(b)ofR.A.No.7160expresslyprovides:

SEC.66.FormandNoticeofDecision.xxx
(b)Thepenaltyofsuspensionshallnotexceedtheunexpiredtermoftherespondentoraperiodofsix(6)monthsfor
everyadministrativeoffense,norshallsaidpenaltybeabartothecandidacyoftherespondentsosuspended
aslongashemeetsthequalificationsfortheoffice.

Thisprovisionsetsthelimitstothepenaltyofsuspension,viz.,itshouldnotexceedsixmonthsortheunexpired
portionofthetermofofficeoftherespondentforeveryadministrativeoffense.[1]Anadministrativeoffensemeans
everyactorconductoromissionwhichamountsto,orconstitutes,anyofthegroundsfordisciplinaryaction.The
offensesforwhichsuspensionmaybeimposedareenumeratedinSection60oftheCode,whichreads:

SEC.60.GroundsforDisciplinaryAction.Anelectivelocalofficialmaybedisciplined,suspended,orremoved
fromofficeonanyofthefollowinggrounds:
(a)DisloyaltytotheRepublicofthePhilippines
(b)CulpableviolationoftheConstitution
(c)Dishonesty,oppression,misconductinoffice,grossnegligence,orderelictionofduty
(d)Commissionofanyoffenseinvolvingmoralturpitudeoranoffensepunishablebyatleastprisionmayor
(e)Abuseofauthority
(f) Unauthorized absence for fifteen (15) consecutive working days, except in the case of members of the
sangguniangpanialawigan,sangguniangpanlungsod,sangguniangbayan,andsangguniangbarangay
(g) Acquisition for, or acquisition of, foreign citizenship or residence or the status of an immigrant of another
countryand
(h)SuchothergroundsasmaybeprovidedinthisCodeandotherlaws.

An elective local official may be removed from office on the grounds enumerated above by order of the
propercourt.
Assuming then that the findings and conclusions of the Office of the President in each of the subject four
administrative cases arc correct, it committed no grave abuse of discretion in imposing the penalty of
suspension, although the aggregate thereof exceeded six months and the unexpired portion of the petitioners
termofoffice.Thefactremainsthatthesuspensionimposedforeachadministrativeoffensedidnotexceedsix
monthsandtherewasanexpressprovisionthatthesuccessiveserviceofthesuspensionshouldnotexceedthe
unexpiredportionofthetermofofficeofthepetitioners.Theirtermofofficeexpiredatnoonof30June1995.[2]
AndthisCourtisnotpreparedtorulethatthesuspensionamountedtothepetitionersremovalfromoffice.[3]
II

Petitioners contend that the decisions in OP. Cases Nos. 5450, 5470, and 5471 are predicated on SAO
ReportNo.9311oftheCOAAuditTeam,whilethatinO.P.CaseNo.5469isbasedontheCSBissuedbythe
Provincial Auditor of Albay. Since the Report and the CSB are on appeal with, and pending resolution by, the
CommissiononAuditEnBanc,theyarenotyetfinal,conclusive,andexecutoryasadmittedbytheteamleader
oftheCOAAuditTeamthatsubmittedtheSAOReportandbytheProvincialAuditorwhoissuedtheCSB.The
petitionersalsopointoutthattheCOAChairmanhadalreadyreversedtherecommendationintheSAOReport
No.9311thattheProvincialGovernmentofAlbayshouldsharewiththeMunicipalityofTiwitheP40,724,471.74
representingpaymentsoftheNPCasofDecember1992.TheythensubmitthatAdministrativeOrderNo.153
suspendingallthepetitionersisprematureinviewofthependencyoftheappealtotheCOAenbancfromSAO
ReportNo.9311andtheCSB.
ThisissueofprematuritywasraisedbeforetheAdHocCommittee.Inrejectingit,theCommitteeexplained
asfollows:

It is important to stress that the exceptions (Exhs. 50B, 50I, & 50J) raised by the respondents to COA
nierelyinvolvequestionsoflaw,i.e.,astowhethertheProvincealoneshouldbeentitledtothepaymentsmade
byNPCundertheMOA,andwhetherthesharesofTiwiandDaraga,theconcernedbarangays,andthenational
government,shouldbeheldintrustforsaidbeneficiaries.
ConsideringthatthefactualfindingsunderSAOReport9311arenotdisputed,thisCommitteehastreated
saidfactualfindingsasfinalor,attheveryleast,ascorroborativeevidence.
Respondents contention that COAs factual findings, as contained in SAO Report No. 9311 cannot be
consideredinthis investigation is untenable.For no administrative and criminal investigation can proceed, if a
respondentisallowedtoarguethataparticularCOAfindingisstillthesubjectofanappealandmovethatthe
resolution of such administrative or criminal case be held in abeyance. This will inevitably cause unnecessary
delays in the investigation of administrative and criminal cases since an appeal from a COA finding may be
broughtallthewayuptotheSupremeCourt.
Besides, the matters raised by the respondents on appeal involve only conclusions/interpretation of law.
Surely,investigativebodies,suchasCOA,theOmbudsmanandeventhisCommittee,areempoweredtomake
theirownconclusionsoflawbasedonagivensetoffacts.
Finally,sufficientevidencehasbeenadducedinthiscaseapartfromthefactualfindingscontainedinSAO
ReportNo.9311toenablethisCommitteetoevaluatethemeritsoftheinstantcomplaint.
TheallegedappealfromtheCSBisunclearfromtherecords,andinlightoftheforegoingstatementofthe
AdHocCommitteeitisobviousthatsuchappealwasnotraised.
WeagreewiththeAdHocCommitteethatthependencyoftheappealwasnoobstacletotheinvestigation
andresolutionoftheadministrativecases.
Itmaybefurtherstressedthataspecialaudithasadifferentpurposeinlinewiththeconstitutionalpower,
authority,anddutyoftheCOAunderSection2,SubdivisionD,ArticleIXoftheConstitutiontoexamine,audit,
andsettleallaccountspertainingtotherevenueandreceiptsof,andexpendituresorusesoffundsandproperty,
owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or
instrumentalities,includinggovernmentownedorcontrolledcorporationswithoriginalchartersanditsexclusive
authority .. . to define the scope of its audit and examination, establish the techniques and methods required
therefor,andpromulgateaccountingandauditingrulesandregulations,includingthoseforthepreventionand
disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of
governmentfundsandproperties.[4]
III

Astothethirdissue,thepetitionersaverthattheP40,724,471.74receivedbytheProvinceofAlbayfromthe
NPC represents part of the price paid for properties owned by the province in a corporate capacity and
repurchasedbytheformerowner.Itconstitutespaymentofadebtandnotofatax,whichdebtarosefromand
was a consequence of, the Memorandum of Agreement dated July 29, 1992. They further contend that the
MemorandumofAgreement(MOA)partakesofadeedofsale.AndnowhereintheRealPropertyTaxCode(P.D.
No.464)[5] is there any provision requiring provinces to share with the municipalities the proceeds of a private
sale.WhatarerequiredtobesharedareonlythecollectionsofrealpropertytaxesandSpecialEducationFund
(SEF)proceedsofdelinquenttaxesandpenalties,orofthesaleofdelinquentrealproperty,oroftheredemption
thereofandincomerealizedfromtheuse,lease,ordispositionofrealpropertyseizedbytheprovince.
ItmustberecalledthatinAugust1992,GovernorSalalimaandNPCPresident,PabloMalixi,werealready
agreedthatthebasictaxduefromtheNPCwasP207,375,77472.[6]Butlater,Malixiinformedtheformerthat
uponrecomputationoftherealpropertytaxpayabletotheProvinceofAlbayattheminimumofonefourthofone
percentpursuanttoSection39(1)oftheRealPropertyTaxCode,theNPCcameupwithanadjustedfigureofP
129,609,859.20.[7] Governor Salalima then explained that one percent was applied in the computation for the
reconciledfigureofP207,375,774.72becausetheonehalfpercentimposedbytherespectiveordinancesofthe
municipalitieswherethedelinquentpropertiesarelocatedwasaddedtotheonehalfpercentimposedbythetax
ordinanceoftheProvince.Hisreplyreadsasfollows:

September9,1992
Hon.PabloV.Malixi

President,NationalPower
Corporation
Diliman,QuezonCity
DearPresidentMalixi:
AssuggestedinyourletterofAugust31,1992,weareverypleasedtofurnishyouherewiththecertifiedtruecopies
ofthelocaltaxordinanceswhichservedasourbasisinimposingtherateof1%ofthereconciledfigureof
P207,375,774.72,towit:
(a)ResolutionNo.30,seriesof1974oftheProvincialBoardofAlbay,enactingProvincialTaxOrdinanceNo.4,
whoseSectionI,provides:
Thereshallbelevied,assessedandcollectedasannualadvaloremtaxonrealpropertiesincludingimprovements
thereonequivalenttoonehalfofonepercentoftheassessedvalueofrealproperty.
(b)OrdinanceNo.25,seriesof1974,oftheSangguniangBayanofTiwi,Albay,whoseSection2provides:
Thatthetaxrateofrealpropertyshallbeonehalfofonepercentoftheassessedvalueofrealproperty.
(c)OrdinanceNo.27,seriesof1980,oftheSangguniangBayanofDaraga.Albay,whoseSection3provides:
RatesofLevyThetaxhereinleviedisherebyfixedatonehalfofonepercent(1/2of1%)oftheassessedvalueof
therealproperty.
ThesetaxordinanceswereinpursuancetoSec.39(1)(3)ofP.D.464,theapplicablelawduringtheperiod
1984to1987.ByaddingtheonehalfpercentimposedinthetaxOrdinanceofTiwitotheonehaIfpercentalso
imposedintheProvincialTaxOrdinance,wehaveatotalofonepercentwhichweusedastherateoflevyin
computingthebasictaxdueontherealpropertiesinTiwi.
OntherealpropertiesinDaraga,wealsoaddedtheonehalfpercentimposedbytheDaragaTaxOrdinance
totheonehalfpercentoftheProvincialTaxOrdinance.
TheadditionaltaxofonepercentfortheSpecialEducationalFund(SEF)wasimposedpursuanttoSection
41ofP.D.464,whichprovidesasfollows:

ThereisherebyimposedannualtaxofonepercentonrealpropertytoaccruetotheSpecialEducationalFundcreated
underRepublicActNo.5447,whichshallbeinadditiontothebasicrealpropertytaxwhichlocalgovernmentsare
authorizedtolevy,assessandcollectunderthisCodexxx
Wehopethattheforegoingclarificationwillsettlewhateverdoubtthereisonwhyweapplied1%forbasic
taxandanother1%forSEPinarrivingatP207,375,774.72.[8](Italicssupplied).
The petitioners even emphasized in the instant petition that Governor Salalima specifically included the
amountsduetotheMunicipalitiesofTiwiandDaragainaskingNapocortosettleitsobligations.Inotherwords,
the original claim of P214,845,184.76 or the reconciled figure of P207,375,774.72 representing real property
taxesfrom11June1984to10March1987alreadycoveredtherealpropertytaxespayabletothemunicipalities
concerned.
Hence,whentheProvincesoldatpublicauctionthedelinquentpropertiesconsistingofbuildings,machines,
and similar improvements, it was acting not only in its own behalf but also in behalf of the municipalities
concerned.Andrightlyso,becauseunderSection60ofP.D.No.477,theProvince,thrutheProvincialTreasurer,
isdutyboundtocollecttaxesthroughouttheprovince,includingthenational,provincial,andmunicipaltaxesand
otherrevenuesauthorizedbylaw.Moreover,underSection73oftheRealPropertyTaxCode,theprovincialor
citytreasureristheoneauthorizedtoadvertisethesaleatpublicauctionoftheentiredelinquentrealproperty,
except real property mentioned in Subsection (a) of Section 40, to satisfy all the taxes and penalties due and
costsofsale.Heisalsoauthorizedtobuythedelinquentrealpropertyinthenameoftheprovinceifthereisno
bidderorifthehighestbidisforanamountnotsufficienttopaythetaxes,penalties,andcostsofsale.[9]

Since in this case, there was no bidder, the provincial treasurer could buy, as he did, the delinquent
properties in the name of the province for the amount of taxes, penalties due thereon, and the costs of sale,
whichincludedtheamountsoftaxesduethemunicipalitiesconcerned.Itisthereforewrongforthepetitionersto
say that the subject NPC properties are exclusively owned by the Province. The Municipalities of Tiwi and
Daragamaybeconsideredcoownersthereoftotheextentoftheirrespectivesharesintherealpropertytaxes
andthepenaltiesthereon.
It must further be noted that it is the provincial treasurer who has charge of the delinquent real property
acquiredbytheprovince.[10]Heistheonewhomthedelinquenttaxpayeroranypersonholdingalienorclaimto
thepropertydealwithincasethelatterwishestoredeemtheproperty.[11]Heisalsotheoneauthorizedtoeffect
theresaleatpublicauctionofthedelinquentproperty.[12]Thus,themunicipalitiesconcernedhadtodependon
himfortheeffectivecollectionofrealpropertytaxespayabletothem.Accordingly,whentheProvinceentered
intotheMemorandumofAgreementwiththeNPC,itwasalsoactinginbehalfofthemunicipalitiesconcerned.
Andwhateverbenefitsthatmightspringfromthatagreementshouldalsobesharedwiththelatter.
TheMOA,contrarytothepositionofthepetitioners,isnotanordinarycontractofsale.Hereinbelowisthe
pertinentportionofthatagreement:

WHEREAS,theSupremeCourtruledintheNATIONALPOWERCORPORATIONVS.THEPROVINCEOF
ALBAY,etal.,G.R.No.87479thatNAPOCORisliabletopayRealtyTaxforitspropertiesinthemunicipalitiesof
TiwiandDaraga,AlbayfortheperiodJune11,1984toMarch10,1987
WHEREAS,NAPOCORiswillingtosettleitsrealtytaxliabilityinfavorofthePROVINCEOFALBAY
WHEREAS,thereisaneedtofurthervalidate/reconcilethecomputationoftherealtytaxinthetotalamountofP2
14,845,184.76
NOW,THEREFORE,inviewoftheforegoingpremisesandforandinconsiderationofthemutualcovenantand
stipulationshereinafterprovided,thepartiesheretohaveagreedasfollows:
1.NAPOCORwillmakeaninitialpaymentofP17,783,000.00receiptofwhichisherebyacknowledged.
2. The balance of the validated/reconciled amount of the real estate taxes will be paid in 24 equal monthly
installments, payable within the first five (5) working days of the month. The first monthly installment will
commenceinSeptember1992.
3. Should NAPOCOR default in any monthly installment, the balance will immediately become due and
demandable.
4. NAPOCOR will pay such other taxes and charges, such as the franchise tax as provided for in the Local
GovernmentCodeof1991.
5.InconsiderationofsettlementofNAPOCORstaxliability,thePROVINCEOFALBAYherebywaivesitsclaim
ofownershipoverNAPOCORpropertiessubjectinG.R.No.87479uponfullpaymentofthebalancedueto
thePROVINCEOFALBAY.[13](Italicssupplied).

Thetenoroftheabovequotedagreementshowsthattheintentionofthepartieswasfortheredemptionof
the subject properties in that the Province would waive ownership over the properties in consideration of
settlementofNapocorstaxliability.
UnderSection78oftheRealPropertyTaxCode,thedelinquentrealpropertysoldatpublicauctionmaybe
redeemedbypayingthetotalamountoftaxesandpenaltiesdueuptothedateofredemption,costsofsale,and
theinterestat20%ofthepurchaseprice.
The petitioners are estopped from claiming that the amounts received by the Province from the NPC
constitutepaymentsofadebtundertheMOAorofcontractpriceinaprivatesale.Theyconstituteredemption
priceorpaymentsofNPCstaxliabilities.ThisisevidentfromtheMOAaswellastheentryinthereceiptissued
bytheProvince,thrutheProvincialTreasurer,whichreads:

Date:July29,1992
ReceivedfromNationalPowerCorp.
Manila

IntheamountofSeventeenMillionSevenHundredSixtyThreeThousandPesosPhilippineCurrency
P17,763,000.00.
Inpaymentofthefollowing:
ForPartialPayment=P17,763,000.00
ofRealtyTaxDelinquencyofCaseNo.87479,NPC
vs.ProvinceofAlbay
TotalP17,763,000.00
(Sgd.)AbundioM.Nuez
ProvincialTreasurer[14]
Also worth noting is Provincial Ordinance No. 0992 adopted by the petitioners which provides: That the
installments paid by said corporation for the months of September to December 1992, representing partial
paymentsoftheprincipaltaxduearedeclaredforfeitedinfavoroftheProvincialGovernmentofAlbay.
Moreover, in Resolution No. 19792, the petitioners referred as tax benefits the shares of certain
municipalitiesandbarangaysfromtheamountpaidbytheNPCundertheMOA.Theresolutionreadsinpartas
follows:

WHEREAS,byvirtueoftheMemorandumAgreement,signedbythepetitioner,ProvinceofAlbayandrespondent
oppositor,NationalPowerCorporation(NPC),thelatterhaveagreedandpaidaninitialpaymenttotheProvinceof
Albay
WHEREAS,thesharingbasedontheLocalGovernmentCodeof1991,themunicipalitiesofMalinaoandLigaoare
entitledtotheirsharesofP1,435.00andP4,416.82respectivelyandthebarangaysBayinLingao(sic)toP319.00
andTagoytoyinMalinaotoP981.00
WHEREAS,thesetaxbenefitsduethemarenotenoughtopursueaworthwhileprojectinsaidmunicipalitiesand
barangaysconsideringthepresenteconomicsituation.[15](Italicssupplied)
Aspointedoutbytherespondents,iftheMOAwasmerelyfortherepurchasebyNPCofitspropertiesfrom
Albay,whatcouldhavebeenexecutedwasasimpledeedofabsolutesaleinfavorofNPCatanagreedprice
notnecessarilyP214millionwhichwasthetotalamountoftherealtytaxinarrearsAdditionally,therewouldhave
beennoneedforthepartiestofurthervalidate/reconcilethetaxcomputationoftherealtytaxinthetotalamount
ofP214,845,18476
Clearly, the P40,724,471 74 paid by the NPC to the Province pursuant to the MOA was part of the
redemptionpriceoroftherealtytaxesinarrears.
It is conceded that under Section 78 of the Real Property Tax Code, redemption of delinquency property
mustbemadewithinoneyearfromthedateofregistrationofsaleofthepropertyTheauctionsaleoftheNPC
propertieswasheldon30March1989anddeclaredvalidbythisCourtinits4June1990decision.Itwasonly
on29July1992thattheNPCofferedtorepurchaseitsformerpropertiesbypayingitstaxliabilities.When the
Provinceacceptedtheoffer,itvirtuallywaivedtheoneyearredemptionperiod.AndhavingthusallowedtheNPC
to redeem the subject properties and having received part of the redemption price, the Province should have
sharedwiththemunicipalitiesconcernedthoseamountspaidbytheNPCinthesamemannerandproportionas
ifthetaxeshadbeenpaidinregularcourseconformablywithSection87(c)oftheRealPropertyTaxCode,which
provides:
(c)theproceedsofalldelinquenttaxesandpenalties,aswellastheincomerealizedfromtheuse,leaseorother
dispositionofrealpropertyacquiredbytheprovinceorcityatapublicauctioninaccordancewiththeprovisions
of this Code, and the proceeds of the sale of the delinquent real property or of the redemption thereof shall
accruetotheprovince,cityormunicipalityinthesameproportionasifthetaxortaxeshadbeenpaidinregular
course.

As early as 3 August 1992, respondent Mayor Corral had already made a written demand for payment or
remittanceofthesharesaccruingtotheMunicipalityofTiwi.PetitionerGovernorSalalimarefusedsayingthatthe

initialcheckofP17,763,000.00wasmerelyanearnestmoney.Yet,on22October1992,thepetitionerspassed
the aforequoted Resolution No. 19792 giving some local government units, where smaller portions of the
delinquentpropertiesaresituated,sharesfromthepaymentsmadebytheNPCundertheMOA.
The petitioners cannot claim to have acted in good faith in refusing to give the municipalities of Tiwi and
Daragatheirshare.AspointedoutbytheOfficeoftheSolicitorGeneral,thepetitionerswereawareofthelocal
taxordinancespassedbytherespectiveSanggunianBayanofTiwiandDaragarelativetotherealtytaxtobe
imposed on properties located in their respective localities. Petitioner Salalima had even quoted the said
ordinancesinhislettertoMr.PabloMalixiandattachedcopiesthereoftothatletter.Significantly,thepetitioners
averredintheinstantpetitionthatGovernorSalalimaspecificallyincludedtheamountsduetothemunicipalities
ofTiwiandDaragainaskingNPCtosettleitsobligations.
Whendoubtaroseastowhetherthemunicipalitiesconcernedareentitledtoshareintheamountspaidby
theNPC,theprovincefiledon20November1992apetitionfordeclaratoryrelief,whichtheRegionalTrialCourt
of Albay decided only on 12 May 1994. Yet, as of 31 December 1992, the province had already disbursed or
spentalargepartoftheNPCpayments.AsfoundbyCOA,oftheP40,724,471.74actuallypaidbytheNPCand
lodgedintheprovincesgeneralfund,P35,803,118.30wasdisbursedorspentbytheProvince.
If petitioners were really in good faith, they should have held the shares of Tiwi and Daraga in trust[16]
pursuanttoSection309(b)oftheLocalGovernmentCodeof1991,whichprovides:

Trustfundsshallconsistofprivateandpublicmonieswhichhaveofficiallycomeintothepossessionofthelocal
governmentorofalocalgovernmentofficialastrustee,agentoradministrator...Atrustfundshallonlybeusedfor
thespecificpurposeforwhichitcameintothepossessionofthelocalgovernmentunit.
AspointedoutbytheAdHocCommitteeinitsreport,whichwasadoptedbytheOfficeofthePresident:

ItisunmistakablefromtheforegoingprovisionsthatthesharesofTiwi,Daraga,theconcernedbarangaysandthe
nationalgovernmentinthepaymentsmadebyNPCundertheMOA,shouldbe,astheyareinfact,trustfunds.As
such,theProvinceshouldhave,uponreceiptofsaidpayments,segregatedandlodgedinspecialaccounts,the
respectivesharesofTiwi,Daraga,theconcernedbarangaysandthenationalgovernmentforeventualremittanceto
saidbeneficiaries.Saidsharescannotbelodgedin,norremainpartof,theProvincesgeneralfund.Moreover,the
Provincecannotutilizesaidamountsforitsownbenefitoraccount(seealsoSec.86,P.D.No.464,asamended).
Therefore,thebalanceofP26,979,962.52representingthecollectivesharesofTiwiandDaraga,theconcerned
barangaysandthenationalgovernment,cannotbeappropriatednordisbursedbytheProvinceforthepaymentofits
ownexpendituresorcontractualobligations.
However,intotaldisregardofthelaw,theProvincetreatedtheP40,724,471.74NPCpaymentsassurplusadjustment
(Account792419)andlodgedthesameinitsgeneralfund.Notrustliabilityaccountswerecreatedinfavorofthe
rightfulbeneficiariesthereofasrequiredbylaw.
We cannot therefore fault the public respondents with grave abuse of discretion in holding the petitioners
guilty of abuse of authority for failure to share with the municipalities of Tiwi and Daiaga the amount of
P40,724,471.74paidbytheNPC.
IV

WeagreewiththepetitionersthatGovernorSalalimacouldnolongerbeheldadministrativelyliableinO.P.
CaseNo.5450inconnectionwiththenegotiatedcontractenteredintoon6March1992withRYUConstruction
foradditionalrehabilitationworkattheTabacoPublicMarket.Norcouldthepetitionersbeheldadministratively
liable in O.P. Case No. 5469 for the execution in November 1989 of the retainer contract with Atty. Jesus
Cornago and the Cortes and Reyna Law Firm. This is so because public officials cannot be subject to
disciplinaryactionforadministrativemisconductcommittedduringapriorterm,asheldinPascualvs.Provincial
BoardofNuevaEcija[17]andAguinaldovs.Santos.[18]InPascual,thisCourtruled:
Wenowcometoonemainissueofthecontroversythelegalityofdisciplininganelectivemunicipalofficial
forawrongfulactcommittedbyhimduringhisimmediatelyprecedingtermofoffice.

Intheabsenceofanyprecedentinthisjurisdiction,wehaveresortedtoAmericanauthorities.Wefoundthat
casesonthematterareconflictingdueinpart,probably,todifferencesinstatutesandconstitutionalprovisions,
and also, in part, to a divergence of views with respect to the question of whether the subsequent election or
appointment condones the prior misconduct. The weight of authority, however, seems to incline to the rule
denying the right to remove one from office because of misconduct during a prior term, to which we fully
subscribe.

Offensescommitted,oractsdone,duringprevioustermaregenerallyheldnottofurnishcauseforremovalandthis
isespeciallytruewheretheconstitutionprovidesthatthepenaltyinproceedingsforremovalshallnotextendbeyond
theremovalfromoffice,anddisqualificationfromholdingofficeforthetermforwhichtheofficerwaselectedor
appointed.(67C.J.S.p.248,citingRicevs.State,161S.W.2d.401Montgomeryvs.Nowell,40S.W.2d418
Peopleexrel.Bagshawvs.Thompson,130P.2d237BoardofComrs.ofKingfisherCountyvs.Shutler,281P.222
Statevs.Blake,280P.388InreFudula,147A.67Statevs.Ward,43S.W.2d.217).
Theunderlyingtheoryisthateachtermisseparatefromotherterms,andthatthereelectiontoofficeoperatesas
acondonationoftheofficerspreviousmisconducttotheextentofcuttingofftherighttoremovehimtherefor(43
Am.Jur.P.45,citingAtty.Gen.vs.Hasty,184Ala.121,63So.559,50L.R.A.(NS)553.AsheldonConantvs.
Brogan(1887)6N.Y.S.R.332,citedin17A.I.R.281,63So.559,50LRA(NS)553

TheCourtshouldneverremoveapublicofficerforactsdonepriortohispresenttermofoffice.Todootherwise
wouldbetodeprivethepeopleoftheirrighttoelecttheirofficers.Whenthepeoplehaveelectedamantooffice,it
mustbeassumedthattheydidthiswithknowledgeofhislifeandcharacter,andthattheydisregardorforgavehis
faultsormisconduct,ifhehadbeenguiltyofany.Itisnotforthecourt,byreasonofsuchfaultsormisconductto
practicallyoverrulethewillofthepeople.
ThisCourtreiteratedthisruleinAguinaldoandexplicitlystatedtherein:

Clearlythen,theruleisthatapublicofficialcannotberemovedforadministrativemisconductcommittedduringa
priorterm,sincehisreelectiontoofficeoperatesacondonationoftheofficerspreviousmisconducttotheextentof
cuttingofftherighttoremovehimtherefor.Theforegoingrule,however,findsnoapplicationtocriminalcases
pendingagainstpetitionerforactshemayhavecommittedduringthefailedcoup.
However, the Office of the Solicitor General maintains that Aguinaldo does not apply because the case
againsttheofficialthereinwasalreadypendingwhenhefiledhiscertificateofcandidacyforhisreelectionbid.It
isoftheviewthatanofficialsreelectionrendersmootandacademicanadministrativecomplaintagainsthimfor
actsdoneduringhisprevioustermonlyifthecomplaintwasfiledbeforehisreelection.Thefinedistinctiondoes
not impress us. The rule makes no distinction. As a matter of fact, in Pascual the administrative complaint
againstPascualforactscommittedduringhisfirsttermasMayorofSanJose,NuevaEcija,wasfiledonlyayear
afterhewasreelected.
The rule adopted inPascual,qualifiedinAguinaldoinsofar as criminal cases are concerned, is still a good
law.Sucharuleisnotonlyfoundedonthetheorythatanofficialsreelectionexpressesthesovereignwillofthe
electoratetoforgiveorcondoneanyactoromissionconstitutingagroundforadministrativedisciplinewhichwas
committed during his previous term.We may add that sound public policy dictates it. To rule otherwise would
open the floodgates to exacerbating endless partisan contests between the reelected official and his political
enemies,whomaynotstoptohoundtheformerduringhisnewtermwithadministrativecasesforacts,alleged
tohavebeencommittedduringhispreviousterm.Hissecondtermmaythusbedevotedtodefendinghimselfin
thesaidcasestothedetrimentofpublicservice.Thisdoctrineofforgivenessorcondonationcannot,however,
applytocriminalactswhichthereelectedofficialmayhavecommittedduringhispreviousterm.
WethusrulethatanyadministrativeliabilitywhichpetitionerSalalimamighthaveincurredintheexecutionof
theretainercontractinO.P.CaseNo.5469andtheincidentsrelatedtherewithandintheexecutionon6March
1992ofacontractforadditionalrepairandrehabilitationworksfortheTabacoPublicMarketinO.P.CaseNo.
5450aredeemedextinguishedbyhisreelectioninthe11May1992synchronizedelections.Soaretheliabilities,
if any, of petitioner members of the Sangguniang Panlalawigan ng Albay, who signed Resolution No. 129
authorizingpetitionerSalalimatoenterintotheretainercontractinquestionandwhowerereelectedinthe1992
elections.Thisis,however,withoutprejudicetotheinstitutionofappropriatecivilandcriminalcasesasmaybe
warrantedbytheattendantcircumstances.AstopetitionersVictoria,Marcellana,Reyeg,Osia,andCabredowho

became members of the Sangguniang Panlalawigan only after their election in 1992, they could not be held
administratively liable in O.P. Case No. 5469, for they had nothing to do with the said resolution which was
adoptedinApril1989yet.
HavingthusheldthatthepetitionerscouldnolongerbeadministrativelyliableinO.P.CaseNo.5469,wefind
itunnecessarytodelveinto,andpassupon,thefifthissue.
WHEREFORE, the instant special action for certiorari is hereby partly GRANTED. That part of the
challenged Administrative Order No. 153 imposing the penalty of suspension on petitioner Governor Romeo
Salalima in O.P. Cases Nos. 5450 and 5469 and on petitioners Vice Governor Danilo Azaa and Sangguniang
Panlalawigan Members Juan Victoria, Lorenzo Reyeg, Arturo Osia, Wilbor Rontas, Clenio Cabredo, Ramon
Fernandez, Jr., Masikap Fontanilla, Vicente Go, Sr., and Nemesio Baclao in O.P. Case No. 5469 are hereby
ANNULLEDandSETASIDE,withoutprejudicetothefilingofappropriatecivilorcriminalactionsagainstthemif
warrantedbytheattendantcircumstances.
Nopronouncementastocosts.
SOORDERED.
Narvasa,C.J.,Padilla,Romero,Bellosillo,Melo,Puno,Vitug,Kapunan,Mendoza,Francisco,Hermosisima,
Jr.,Panganiban,andTorres,Jr.,JJ.,concur.
Regalado,J.,tooknopart.RelatedtoonecounselinG.R.No.87479whichisinvolvedinthiscase.
[1]SeealsoArticle131,RulesandRegulationsImplementingtheLocalGovernmentCodeof1991.
[2]Section2,ArticleXVIII,1987ConstitutionSection43,LocalGovernmentCodeof1991.
[3] The Office of the President is without any power to remove elected officials, since such power is exclusively vested in the proper

courts as expressly provided for in the last paragraph of the aforequoted Section 60. Parenthetically, it may be observed that
Article125,RuleXIXoftheRulesandRegulationsImplementingtheLocalGovernmentCodeof1991grantstothedisciplining
authoritythepowertoremoveanelectivelocalofficial.Paragraph(b)ofthesaidArticleprovidesasfollows:
(b) An elective local official may he removed from office on the grounds enumerated in paragraph (a) of this Article [The grounds
enumerated in Section 60, The Local Government Code of 1991] by order of the proper court or the disciplining authority
whicheverfirstacquiresjurisdictiontotheexclusionoftheother.(Italicssupplied)
This grant to the disciplining authority of the power to remove elective local officials is clearly beyond the authority of the Oversight
Committee that prepared the Rules and Regulations. It is settled that no rule or regulation may alter, amend, or contravene a
provision of law, like the Local Government Code. Implementing rules should conform, not clash, with the law that they
implement,foraregulationwhichoperatestocreatearuleoutofharmonywiththestatuteisanullity.(Regidorvs.Chiongbian,
173 SCRA 507 [1989]. See also Teoxol vs.Members of the Board ofAdministrators, PVA, 33 SCRA 585 [1970] Manuel vs.
General Auditing Office, 42 SCRA 660 [1971]). No less than then principal author of the Local Government Code of 1991,
Senator Aquilino Q. Pimentel, Jr., expresses doubts on the validity of this power of removal on the part of the disciplining
authority which the Oversight Committee inserted in the Rules and Regulations. (AQUILINO Q. PIMENTEL, JR., The Local
GovernmentCodeof1991,TheKeytoNationalDevelopment171[1993ed.]).
The law on suspension or removal of elective public officials must be strictly construed and applied, and the authority in whom such
power of suspension or removal is vested must exercise it with utmost good faith, fOr involved is not just an ordinary public
official but one chosen by the people through the exercise of their constitutional right of suffrage.Their will must not be put to
naught by the caprice or partisanship of the disciplining authority. Where the disciplining authority is given only the power to
suspend and not the power to remove, it should not he permitted to manipulate the law by usurping the power to remove by
arbitrarilyexercisingthepowertosuspendinamannerthatresultsintheremovalofanelectedofficialfromoffice.Asweaptly
statedinLacsonvs.Roque(92Phil.456,464[1953]):
[T]heabridgmentofthepowertoremoveorsuspendanelectivemayorisnotwithoutitsownjustification,andwas,wethink,deliberately
intendedbythelawmakers.Theevilsresultingfromarestrictedauthoritytosuspendorremovemusthavebeenweighedagainst
the injustices and harms to the public interests which would be likely to emerge from an unrestrained discretionary power to
suspendandremove.
The rationale against indefinite preventive suspension decreed in Layno vs. Sandiganbayan (136 SCRA 536 [1985]) and in Ganzon vs.
Court of Appeals (200 SCRA 271 [1991]) may equally apply to the imposition of suspension us a penalty and must guide the
actionofdiscipliningauthoritiesinimposingthepenaltyofsuspensiononelectivelocalofficials.
[4]SeeCaltexvs.CommissiononAudit,208SCRA726[1992]
[5]70O.G.No.26[1July1974],52725313.
[6]AnnexesNandOofPetitionRollo,147148.

[7]AnnexP,id.id.,149.
[8]AnnexQofPetitionRollo,151152.
[9]Section75,RealPropertyTaxCode.
[10]Section81,Id.
[11]Section78,Id.
[12]Section81,RealPropertyTaxCode.
[13]AnnexKofPetitionRollo,143144.
[14]Annex5ofRespondentsCommentRollo,325.
[15]Annex10ofRespondentsComment,Rollo,328.
[16] Fortunately, the Municipalities of Tiwi and Daraga and the National Government eventually received their respective shares, which

were paid directly to them by the NPC pursuant to the directive of the Office of the President issued after the NPC requested
clarification regarding the right of the municipalities concerned to share in the realty tax delinquencies. But this fact does not
detractfromtheadministrativeliabilityofthepetitioners.Notably,whentheNPCadvisedtheProvinceofAlbayon9December
1992 that starting with the January 1993 installment it would pay directly to the Municipality of Tiwi by applying the sharing
schemeprovidedbylaw,thepetitionerspassedon19December1992anordinancedeclaringasforfeitedinfavoroftheProvince
all the payments made by the NPC under the MOA and authorizing the sale of the NPC properties at public auction. This
actuationofthepetitionersrevealsallthemoretheirintentiontodeprivethemunicipalitiesconcernedoftheirsharesintheNPC
payments.
[17]106Phil.466[1959].
[18]212SCRA768[1992].