G.R. No. 137718 - Malonzo vs. Zamora

Case Summary (G.R. No. 137718)

Factual Background

Petitioners, as the Mayor and members of the Sangguniang Panlungsod of Caloocan City, enacted Ordinance No. 0254, Series of 1998, titled an ordinance providing payment for approved items in Supplemental Budget No. 1, Calendar Year 1998, which appropriated amounts to be taken from the general fund under a reversion of appropriation captioned “Expropriation of Properties.” The 1998 Annual Budget included an item of P50,000,000 denominated generally as “Expropriation of Properties” and classified under “Current Operating Expenditures.” An earlier ordinance, Ordinance No. 0246, Series of 1997, appropriated P39,352,047.75 for the expropriation of Lot 26 of the Maysilo Estate. The supplemental ordinance actually applied P39,343,028.00, sourced from the P50,000,000, to cover incidental expenses and approved items in the 1998 supplemental budget. The realignment of budgetary items and the exact identity of the funds were the factual nucleus of the administrative charge.

Administrative Determination by the Office of the President

The Office of the President, through Executive Secretary Ronaldo Zamora, found petitioners guilty of misconduct and meted the penalty of suspension from office for a period of three (3) months without pay in its March 15, 1999 decision in O.P. Case No. 98-H-8520. The OP concluded that the amount of P39,352,047.75 appropriated for the expropriation of Lot 26 under Ordinance No. 0246, Series of 1997 was part of the P50,000,000 item in the 1998 budget and that such appropriation constituted a continuing appropriation or capital outlay under Section 322 of the Code, which therefore could not be realigned to other purposes while the expropriation litigation remained pending.

Petition for Certiorari and the Court’s July 27, 1999 Disposition

Petitioners sought relief in the Supreme Court by filing a petition for certiorari under Rule 65, Rules of Court alleging grave abuse of discretion by the OP. On July 27, 1999, the Court granted the petition and annulled and set aside the OP decision for having been rendered with grave abuse of discretion and/or excess of jurisdiction. The Court held that the OP had committed an erroneous appreciation of the facts and had confused the figures and ordinances involved, that the P39,352,047.75 under Ordinance No. 0246, Series of 1997 was distinct from the sums affected by Ordinance No. 0254, Series of 1998, and that the P50,000,000 in the 1998 budget was characterized as “Current Operating Expenditures” and not as a continuing appropriation or capital outlay.

Legal Basis for Finding No Misconduct in the Realignment

The Court analyzed Section 322 of the Code and rejected the OP’s premise that the appropriation realigned by Ordinance No. 0254, Series of 1998 was a continuing appropriation for a capital outlay that could not be reverted or realigned. The Court found that the realignment pertained to the P50,000,000 item classified as current operating expenditures and intended to fund incidental expenses for expropriation and various properties, not the continuing appropriation specifically earmarked for Lot 26 under the 1997 ordinance. Because the P50,000,000 was not a capital outlay or continuing appropriation as defined in Title V, Chapter I, Section 306(e) of the LGC, the Court concluded that the appropriation was lawfully capable of realignment and that petitioners acted within legal bounds.

Consideration of House Rules and Legislative Procedure

The Court addressed respondents’ contention that petitioners failed to comply with Sections 50 and 52 of the Code requiring the adoption or updating of house rules and proper organization of the council during the first regular session. The records showed that the Sangguniang Panlungsod took up the adoption of house rules at its session on July 2, 1998 and created an ad hoc committee to study existing rules prior to enacting Ordinance No. 0254, Series of 1998. The Court held that the law requires only that the matter of adopting or updating internal rules be taken up on the first day of session and does not prohibit the council from transacting other business pending completion of the rules. The Court also found nothing in the law precluding the conduct of three readings of an ordinance in a single session day and declined to infer irregularity or misconduct from the expedited passage when urgency existed.

Motion for Reconsideration and Final Resolution

The Office of the Solicitor General filed a motion for reconsideration on August 12, 1999 contesting the Court’s factual appraisal, asserting lack of available funds at the time of enactment, alleging noncompliance with Section 50 of the Local Government Code, and maintaining that any factual error by the OP did not amount to grave

Case Syllabus (G.R. No. 137718)

Parties and Procedural Posture

REYNALDO O. MALONZO, IN HIS CAPACITY AS CITY MAYOR OF CALOOCAN CITY, Vice-Mayor OSCAR MALAPITAN, and named councilors were petitioners before the Court seeking relief from an administrative decision of the Office of the President.
HON. RONALDO B. ZAMORA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, and HON. RONALDO V. PUNO, IN HIS CAPACITY AS UNDERSECRETARY OF THE DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT, were respondents in relation to the challenged administrative action.
EDUARDO TIBOR was the private complainant whose administrative complaint prompted the OP decision and who remained a respondent in the administrative proceeding.
The Office of the President issued a decision dated March 15, 1999, suspending petitioners for three months without pay for alleged misconduct.
Petitioners filed a petition for certiorari assailing the OP decision on March 22, 1999.
The Supreme Court granted the petition and annulled the OP decision in a judgment dated July 27, 1999, and the Office of the Solicitor General filed a motion for reconsideration on August 12, 1999.
The Supreme Court denied the motion for reconsideration and entered the final resolution on January 28, 2000.

Key Factual Allegations

The OP found that Ordinance No. 0254, Series of 1998 realigned funds and effectively diverted an appropriation previously allocated for expropriation of Lot 26 of the Maysilo Estate.
The OP treated an amount of P39,352,047.75 as having been appropriated under Ordinance No. 0254, Series of 1998 and concluded that such amount represented a continuing appropriation or capital outlay that could not be realigned.
Petitioners contended that the realignment actually involved a separate P50,000,000 appropriation classified as Current Operating Expenditures for general "Expropriation of Properties" and that the P39,352,047.75 figure belonged to a distinct 1997 ordinance.
The record showed two distinct ordinances: Ordinance No. 0246, Series of 1997 appropriating P39,352,047.75 for the Maysilo Lot, and Ordinance No. 0254, Series of 1998 appropriating P39,343,028.00 sourced from the P50,000,000 1998 appropriation.
Petitioners asserted that the P50,000,000 1998 appropriation was generically denominated for expropriation and intended for incidental expenses and not for the purchase of Lot 26 itself.

Administrative Finding and Penalty

The OP adjudged petitioners guilty of misconduct and meted the penalty of three months suspension without pay in O.P. Case No. 98-H-8520 dated March 15, 1999.
The OP based its finding on an interpretation of Section 322 of the Code concerning reversion of unexpended balances and on the view that appropriations for expropriation were continuing appropriations or capital outlays.
The OP also faulted petitioners for alleged noncompliance with provisions on the adoption of house rules and on procedural regularity in passing the supplemental ordinance.

Issues Presented

Whether the OP correctly characterized the appropriations and thus lawfully concluded that petitioners committed misconduct in realigning funds.
Whether the realigned P50,000,000 appropriation classified as Current Operating Expenditures was a permissible subject of realignment.
Whether petitioners violated Section 50 (and Section 52) of the Local Government Code by enacting the supplemental budget absent proper adoption or updating of house rules.
Whether the OP acted with grave abuse of discretion in imposing administrative sanctions such that the Supreme Court could annul the decision via a special civil action for certiorari under Rule 65.

Contentions of the Parties

Petition