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Admin and Election Law First Batch of Cases

December 7, 2017
1) Central Bank vs CA

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-33022 April 22, 1975

CENTRAL BANK OF THE PHILIPPINES, petitioner,


vs.
COURT OF APPEALS and ABLAZA CONSTRUCTION & FINANCE
CORPORATION, respondents.

F.E. Evangelista for petitioner.

Cruz, Villarin & Laureta for private respondent.

BARREDO, J.: ñé+.£ªwph! 1

Petition of the Central Bank of the Philippines for review of the decision of the Court of Appeals in
CA-G.R. No. 43638-R affirming the judgment of the Court of First Instance of Rizal in Civil Case No.
Q-10919 sentenced petitioner to pay respondent Ablaza Construction and Finance Corporation
damages for breach contract in that after having formally and officially awarded, pursuant to the
results of the usual bidding to Ablaza in December 1965 the "contract" for the construction of its San
Fernando, La Union branch building and allowed said contractor to commence the work up to about
May, 1966, albeit without any written formal contract having been executed, the Bank failed and
refused to proceed with the project, unless the plans were revised and a lower price were agreed to
by Ablaza, the Bank claiming that its action was pursuant to the policy of fiscal restraint announced
by the then new President of the Philippines on December 30, 1965 and the Memorandum Circular
No. 1 dated December 31, 1965 of the same President.

The factual background of this case is related in the following portions of the decision of the trial
court, which the Court of Appeals affirmed without modification: têñ.£îhqwâ£

Sometime in 1965, defendant Central Bank of the Philippines issued Invitations to


Bid and Instructions to Bidders for the purpose of receiving sealed proposals for the
general construction of its various proposed regional offices, including the Central
Bank regional office building in San Fernando, La Union.
In response to the aforesaid Invitations to Bid, the plaintiff Ablaza Construction and
Finance Corporation, which was one of the qualified bidders, submitted a bid
proposal for the general construction of defendant's proposed regional office building
in San Fernando, La Union at the public bidding held on November 3, 1965. The said
proposal was, as required by the defendant accompanied by a cash bidder's bond in
the sum of P275,000.00.

On December 7, 1965, the Monetary Board of the defendant Central Bank of the
Philippines, after evaluating all the bid proposals submitted during the above-
mentioned bidding, unanimously voted and approved the award to the plaintiff of the
contract for the general construction of defendant's proposed regional office building
in San Fernando, La Union, for the sum of P3,749,000.00 under plaintiff's Proposal
Item No. 2.

Pursuant thereto, on December 10, 1965, Mr. Rizalino L. Mendoza, Assistant to the
Governor and concurrently the Chairman of the Management Building Committee of
the defendant Central Bank of the Philippines, set a telegram to the plaintiff,
informing the latter that the contract for the general construction of defendant's
proposed regional office building in San Fernando, La Union, had been awarded to
the plaintiff. The said telegram was followed by a formal letter, also dated December
10, 1965, duly signed by said Mr. Rizalino L. Mendoza, confirming the approval of
the award of the above-stated contract under plaintiff's Proposal Item No. 2 in the
amount of P3,749,000.00.

Upon receipt of the aforementioned letter, plaintiff immediately accepted the said
award by means of a letter dated December 15, 1965, whereby plaintiff also
requested permission for its workmen to enter the site of the project, build a
temporary shelter and enclosure, and do some clearing job thereat. Accordingly, said
permission was granted by the defendant as embodied in its letter dated January 4,
1966, addressed to the plaintiff..

Within five (5) days from receipt by the plaintiff of the said notice of award, and
several times thereafter Mr. Nicomedes C. Ablaza, an officer of the plaintiff
corporation, went personally to see Mr. Rizalino L. Mendoza at the latter's Central
Bank office to follow up the signing of the corresponding contract. A performance
bond in the total amount of P962,250.00 (P275,000.00 of which was in cash and
P687,250.00 in the form of a surety bond) was subsequently posted by the plaintiff in
compliance with the above-stated Instructions to Bidders, which bond was duly
accepted by the defendant.

Pursuant to the permission granted by the defendant, as aforesaid, plaintiff


commenced actual construction work on the project about the middle of January,
1966. On February 8, 1966, by means of a formal letter, defendant requested the
plaintiff to submit a schedule of deliveries of materials which, according to plaintiff's
accepted proposal, shall be furnished by the defendant. In compliance therewith, on
February 16, 1966, plaintiff submitted to the defendant the schedule of deliveries
requested for.

During the period when the actual construction work on the project was in progress,
Mr. Nicomedes G. Ablaza had several meetings with Mr. Rizalino L. Mendoza at the
latter's office in the Central Bank. During those meetings, they discussed the
progress of the construction work being then undertaken by the plaintiff of the
projects of the defendant in San Fernando, La Union, including the progress of the
excavation work.

Sometime during the early part of March, 1966, Mr. Rizalino L. Mendoza was at the
construction site of the said project. While he was there, he admitted having seen
pile of soil in the premises. At that time, the excavation work being undertaken by the
plaintiff was about 20% complete. On March 22, 1966, defendant again wrote the
plaintiff, requesting the latter to submit the name of its representative authorized to
sign the building contract with the defendant. In compliance with the said request,
plaintiff submitted to the defendant the name of its duly authorized representative by
means of a letter dated March 24, 1966.

A meeting called by the defendant was held at the conference room of the Central
Bank on May 20, 1966. At the said meeting, the defendant, thru Finance Secretary
Eduardo Romualdez, announced, among other things, the reduction of the
appropriations for the construction of the defendant's various proposed regional
offices, including that of the proposed San Fernando, La Union regional office
building, the construction of which had already been started by the plaintiff. He also
stated that the Central Bank Associated Architects would be asked to prepare new
plans and designs based on such reduced appropriations. The defendant, during that
same meeting, also advised the plaintiff, thru Messrs. Nicomedes G. Ablaza and
Alfredo G. Ablaza (who represented the plaintiff corporation at the said meeting), to
stop its construction work on the Central Bank Regional office building in San
Fernando, La Union. This was immediately complied with by the plaintiff, although its
various construction equipment remained in the jobsite. The defendant likewise
presented certain offer and proposals to the plaintiff, among which were: (a) the
immediate return of plaintiff's cash bidder's bond of P275,000.00; (b) the payment of
interest on said bidder's bond at 12% per annum; (c) the reimbursement to the
plaintiff of the value of all the work accomplished at the site; (d) the entering into a
negotiated contract with the plaintiff on the basis of the reduced appropriation for the
project in question; and (e) the reimbursement of the premium on plaintiff's
performance bond. Not one of these offers and proposals of the defendant, however,
was accepted by the plaintiff during that meeting of May 20, 1966.

On June 3, 1966, plaintiff, thru counsel, wrote the defendant, demanding for the
formal execution of the corresponding contract, without prejudice to its claim for
damages. The defendant, thru its Deputy Governor, Mr. Amado R. Brinas, on June
15, 1966, replied to the said letter of the plaintiff, whereby the defendant claimed that
an agreement was reached between the plaintiff and the defendant during the
meeting held on May 20, 1966. On the following day, however, in its letter dated
June 16, 1966, the plaintiff, thru counsel, vehemently denied that said parties
concluded any agreement during the meeting in question.

On July 5, 1966, defendant again offered to return plaintiff's cash bidder's bond in the
amount of P275,000.00. The plaintiff, thru counsel, on July 6, 1966, agreed to accept
the return of the said cash bond, without prejudice, however, to its claims as
contained in its letters to the defendant dated June 3, June 10, and June 16, 1966,
and with further reservation regarding payment of the corresponding interest thereon.
On July 7, 1966, the said sum of P275,000.00 was returned by the defendant to the
plaintiff.
On January 30, 1967, in accordance with the letter of the plaintiff, thru counsel, dated
January 26, 1967, the construction equipment of the plaintiff were pulled out from the
construction site, for which the plaintiff incurred hauling expenses.

The negotiations of the parties for the settlement of plaintiff's claims out of court
proved to be futile; hence, the present action was instituted by plaintiff against the
defendant." (Pp. 249-256, Rec. on Appeal).

It may be added that the Instructions to Bidders on the basis of which the bid and award in question
were submitted and made contained, among others, the following provisions: têñ.£îhqwâ£

IB 113.4 The acceptance of the Proposal shall be communicated in writing by the


Owner and no other act of the Owner shall constitute the acceptance of the Proposal.
The acceptance of a Proposal shall bind the successful bidder to execute the
Contract and to be responsible for liquidated damages as herein provided. The rights
and obligations provided for in the Contract shall become effective and binding upon
the parties only with its formal execution.

xxx xxx xxx

IB 114.1 The bidder whose proposal is accepted will be required to appear at the
Office of the Owner in person, or, if a firm or corporation, a duly authorized
representative shall so appear, and to execute that contract within five (5) days after
notice that the contract has been awarded to him. Failure or neglect to do so shall
constitute a breach of agreement effected by the acceptance of the Proposal.

xxx xxx xxx

IB 118.1 The Contractor shall commence the work within ten (10) calendar days from
the date he receives a copy of the fully executed Contract, and he shall complete the
work within the time specified." (Pp. 18-19 & 58-59, Petitioner-Appellant's Brief.)

In the light of these facts, petitioner has made the following assignment of errors: têñ.£îhqwâ£

I. THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS A


PERFECTED CONTRACT BETWEEN PETITIONER CENTRAL BANK OF THE
PHILIPPINES AND RESPONDENT ABLAZA CONSTRUCTION & FINANCE
CORPORATION FOR THE GENERAL CONSTRUCTION WORK OF PETITIONER'S
REGIONAL OFFICE BUILDING AT SAN FERNANDO, LA UNION.

II. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER HAS


COMMITTED A BREACH OF CONTRACT.

III. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER HAD


GIVEN ITS APPROVAL TO THE WORK DONE BY RESPONDENT ABLAZA
CONSTRUCTION & FINANCE CORPORATION.

IV. THE COURT OF APPEALS ERRED IN HOLDING THAT THE AWARD OF


ACTUAL AND COMPENSATORY DAMAGES, ATTORNEY'S FEES AND
RETAINING FEE IS FAIR AND REASONABLE, AND IN HOLDING THAT
PETITIONER IS LIABLE FOR COSTS." (Pp. A & B, Petitioner-Appellant's Brief.)
Under the first assigned error, petitioner denotes the major part of its effort to the discussion of its
proposition that there could be no perfected contract in this case, (contrary to the conclusion of the
courts below) because there is no showing of compliance, and in fact, there has been no compliance
with the requirement that there must be a certification of the availability of funds by the Auditor
General pursuant to Section 607 of the Revised Administrative Code which provides thus: têñ.£îhqwâ£

Section 607. Certificate showing appropriation to meet contract. — Except in the


case of a contract for personal service or for supplies to be carried in stock, no
contract involving an expenditure by the National Government of three thousand
pesos or more shall be entered into or authorized until the Auditor General shall have
certified to the officer entering into such obligation that funds have been duly
appropriated for such purpose and that the amount necessary to cover the proposed
contract is available for expenditure on account thereof. When application is made to
the Auditor General for the certificate herein required, a copy of the proposed
contract or agreement shall be submitted to him accompanied by a statement in
writing from the officer making the application showing all obligations not yet
presented for audit which have been incurred against the appropriation to which the
contract in question would be chargeable; and such certificate, when signed by the
Auditor, shall be attached to and become a part of the proposed contract, and the
sum so certified shall not thereafter be available for expenditure for any other
purposes until the Government is discharged from the contract in question.

Except in the case of a contract for supplies to be carried in stock, no contract


involving the expenditure by any province, municipality, chartered city, or municipal
district of two thousand pesos or more shall be entered into or authorized until the
treasurer of the political division concerned shall have certified to the officer entering
into such contract that funds have been duly appropriated for such purpose and that
the amount necessary to cover the proposed contract is available for expenditure on
account thereof. Such certificate, when signed by the said treasurer, shall be
attached to and become part of the proposed contract and the sum so certified shall
not thereafter be available for expenditure for any other purpose until the contract in
question is lawfully abrogated or discharged.

For the purpose of making the certificate hereinabove required ninety per centum of
the estimated revenues and receipts which should accrue during the current fiscal
year but which are yet uncollected, shall be deemed to be in the treasury of the
particular branch of the Government against which the obligation in question would
create a charge." (Pp. 23-25, Petitioner-Appellant's Brief.)

It is contended that in view of such omission and considering the provisions of Section 608 of the
same code to the effect that "a purported contract entered into contrary to the requirements of the
next preceding section hereof shall be wholly void", "no contract between the petitioner and
respondent Ablaza Construction and Finance Corporation for the general construction of the
proposed regional office building of the Central Bank in San Fernando, La Union, was ever perfected
because only the first stage, that is the award of the contract to the lowest responsible bidder,
respondent Ablaza Construction and Finance Corporation, was completed." (p. 29, Petitioner-
Appellant's Brief.) And in support of this pose, petitioner relies heavily on Tan C. Tee & Co. vs.
Wright thus: têñ.£îhqw â£

The aforesaid requirements of the Revised Administrative Code for the perfection of
government contracts have been upheld by this Honorable Court in the case of Tan
C. Tee Co. vs. Wright, 53 Phil. 172, in which case it was held that the award of the
contract to the lowest bidder does not amount to entering into the contract because
of the requirement of Section 607 of the Revised Administrative Code that a copy of
the proposed contract shall be submitted to the Auditor General together with a
request for the availability of funds to cover the proposed contract. Thus, this
Honorable Court held: têñ.£îhqwâ£

'To award the contract to the lowest responsible bidder is not the
equivalent of entering into the contract. Section 607 of the
Administrative Code requires that a copy of the proposed contract
shall be submitted along with the request for the certificate of
availability of funds, but there could be no proposed contract to be
submitted until after the award was made.'

And to guide government authorities in the letting of government contracts, this


Honorable Court, in said case of Tan C. Tee vs. Wright, supra, laid down the
procedure which should be followed, as follows: têñ.£îhqwâ£

`PROCEDURE WHICH SHOULD BE FOLLOWED IN THE LETTING


OF CONTRACTS FOR INSULAR WORKS. — The procedure which
should be followed in the letting of contracts for Insular works is the
following: First, there is an award of the contract by the Director of
Public Works to the lowest responsible bidder. Second, there is a
certificate of availability of funds to be obtained from the Insular
Auditor, and in some cases from the Insular Treasurer, to cover the
proposed contract. And third, there is a contract to be executed on
behalf of the Government by the Director of Public Works with the
approval of the department head.'" (Pp. 27-28, Petitioner-Appellant's
Brief.)

The contention is without merit. To start with, the record reveals that it is more of an afterthought.
Respondent never raised this question whether in its pleadings or at the hearings in the trial court.
We have also read its brief in the appellate court and no mention is made therein of this point. Not
even in its memorandum submitted to that court in lieu of oral argument is there any discussion
thereof, even as it appears that emphasis was given therein to various portions of the Revised
Manual of Instructions to Treasurers regarding the perfection and constitution of public contracts. In
fact, reference was made therein to Administrative Order No. 290 of the President of the Philippines,
dated February 5, 1959, requiring "all contracts of whatever nature involving P10,000 or more to be
entered into by all bureaus and offices, ... including the ... Central Bank ... shall be submitted to the
Auditor General for examination and review before the same are perfected and/or consummated,
etc.", without mentioning, however, that said administrative order was no longer in force, the same
having been revoked on January 17, 1964 by President Macapagal under Administrative Order No.
81, s. 1964.

Hence, if only for the reason that it is a familiar rule in procedure that defenses not pleaded in the
answer may not be raised for the first time on appeal, petitioner's position cannot be sustained.
Indeed, in the Court of Appeals, petitioner could only bring up such questions as are related to the
issues made by the parties in their pleadings, particularly where factual matters may be involved,
because to permit a party to change his theory on appeal "would be unfair to the adverse party." (II,
Moran, Rules of Court, p. 505, 1970 ed.) Furthermore, under Section 7 of Rule 51, the appellate
court cannot consider any error of the lower court "unless stated in the assignment of errors and
properly argued in the brief."
Even prescinding from this consideration of belatedness, however, it is Our considered view that
contracts entered into by petitioner Central Bank are not within the contemplation of Sections 607
and 608 cited by it. Immediately to be noted, Section 607 specifically refers to "expenditure(s) of the
National Government" and that the term "National Government" may not be deemed to include the
Central Bank. Under the Administrative Code itself, the term "National Government" refers only to
the central government, consisting of the legislative, executive and judicial departments of the
government, as distinguished from local governments and other governmental entities and is not
synonymous, therefore, with the terms "The Government of the Republic of the Philippines" or
"Philippine Government", which are the expressions broad enough to include not only the central
government but also the provincial and municipal governments, chartered cities and other
government-controlled corporations or agencies, like the Central Bank. (I, Martin, Administrative
Code, p. 15.)

To be sure the Central Bank is a government instrumentality. But it was created as an autonomous
body corporate to be governed by the provisions of its charter, Republic Act 265, "to administer the
monetary and banking system of the Republic." (Sec. 1) As such, it is authorized "to adopt, alter and
use a corporate seal which shall be judicially noticed; to make contracts; to lease or own real and
personal property, and to sell or otherwise dispose of the same; to sue and be sued; and otherwise
to do and perform any and all things that may be necessary or proper to carry out the purposes of
this Act. The Central Bank may acquire and hold such assets and incur such liabilities as result
directly from operations authorized by the provisions of this Act, or as are essential to the proper
conduct of such operations." (Sec. 4) It has capital of its own and operates under a budget prepared
by its own Monetary Board and otherwise appropriates money for its operations and other
expenditures independently of the national budget. It does not depend on the National Government
for the financing of its operations; it is the National Government that occasionally resorts to it for
needed budgetary accommodations. Under Section 14 of the Bank's charter, the Monetary Board
may authorize such expenditures by the Central Bank as are in the interest of the effective
administration and operation of the Bank." Its prerogative to incur such liabilities and expenditures is
not subject to any prerequisite found in any statute or regulation not expressly applicable to it.
Relevantly to the issues in this case, it is not subject, like the Social Security Commission, to Section
1901 and related provisions of the Revised Administrative Code which require national government
constructions to be done by or under the supervision of the Bureau of Public Works. (Op. of the Sec.
of Justice No. 92, Series of 1960) For these reasons, the provisions of the Revised Administrative
Code invoked by the Bank do not apply to it. To Our knowledge, in no other instance has the Bank
ever considered itself subject thereto.

In Zobel vs. City of Manila, 47 Phil. 169, this Court adopted a restrictive construction of Section 607
of the Administrative Code thus:

The second question to be considered has reference to the applicability of section 607 of the
Administrative Code to contracts made by the City of Manila. In the second paragraph of said
section it is declared that no contract involving the expenditure by any province, municipality,
township, or settlement of two thousand pesos or more shall be entered into or authorized until the
treasurer of the political division concerned shall have certified to the officer entering into such
contract that funds have been duly appropriated for such purpose and that the amount necessary to
cover the proposed contract is available for expenditure on account thereof. It is admitted that no
such certificate was made by the treasurer of Manila at the time the contract now in question was
made. We are of the opinion that the provision cited has no application to contracts of a chartered
city, such as the City of Manila. Upon examining said provision (sec. 607) it will be found that the
term chartered city, or other similar expression, such as would include the City of Manila, is not
used; and it is quite manifest from the careful use of terms in said section that chartered cities were
intended to be excluded. In this connection the definitions of "province," "municipality," and
"chartered city," given in section 2 of the Administrative Code are instructive. The circumstance that
for certain purposes the City of Manila has the status both of a province and a municipality (as is true
in the distribution of revenue) is not inconsistent with this conclusion."1

We perceive no valid reason why the Court should not follow the same view now in respect to the
first paragraph of the section by confirming its application only to the offices comprised within the
term National Government as above defined, particularly insofar as government-owned or created
corporations or entities having powers to make expenditures and to incur liabilities by virtue of their
own corporate authority independently of the national or local legislative bodies, as in the case of the
petitioner herein, are concerned. Whenever necessary, the Monetary Board, like any other corporate
board, makes all required appropriations directly from the funds of the Bank and does not need any
official statement of availability from its treasurer or auditor and without submitting any papers to,
much less securing the approval of the Auditor General or any outside authority before doing so.
Indeed, this is readily to be inferred from the repeal already mentioned earlier of Administrative
Order No. 290, s. 1959, which petitioner tried to invoke, overlooking perhaps such repeal. In other
words, by that repeal, the requirement that the Central Bank should submit to the Auditor General for
examination and review before contracts involving P10,000 or more to be entered into by it "before
the same are perfected and/or consummated" had already been eliminated at the time the
transaction herein involved took place. Consequently, the point of invalidity pressed, belatedly at
that, by petitioner has no leg to stand on.

The other main contention of petitioner is that the purported or alleged contract being relied upon by
respondent never reached the stage of perfection which would make it binding upon the parties and
entitle either of them to sue for specific performance in case of breach thereof. In this connection,
since the transaction herein involved arose from the award of a construction contract2 by a
government corporation and the attempt on its part to discontinue with the construction several
months after such award had been accepted by the contractor and after the latter had already
commenced the work without any objection on the part of the corporation, so much so that entry into
the site for the purpose was upon express permission from it, but before any written contract has
been executed, it is preferable that certain pertinent points be clarified for the proper resolution of the
issue between the parties here and the general guidance of all who might be similarly situated.

Petitioner buttresses its position in regard to this issue on the provisions earlier quoted in this opinion
of the Instruction to Bidders:têñ.£îhqwâ£

IB 113.4 The acceptance of the Proposal shall be communicated in writing by the


Owner and no other act of the Owner shall constitute the acceptance of the Proposal.
The acceptance of a Proposal shall bind the successful bidder to execute the
Contract and to be responsible for liquidated damages as herein provided. The rights
and obligations provided for in the Contract shall become effective and binding upon
the parties only with its formal execution.

xxx xxx xxx

IB 118.1 The Contractor shall commence the work within ten (10) calendar days from
the date he receives a copy of the fully executed Contract, and he shall complete the
work within the time specified." (Pp. 18-19, Petitioner-Appellant's Brief.)

Petitioner insists that under these provisions, the rights and obligations of the Bank and Ablaza could
become effective and binding only upon the execution of the formal contract, and since admittedly
no formal contract has yet been signed by the parties herein, there is yet no perfected contract to
speak of and respondent has, therefore, no cause of action against the Bank. And in refutation of
respondent's argument that it had already started the work with some clearing job and foundation
excavations, which has never been stopped by petitioner who had previously given express
permission to respondent to enter the jobsite, build a temporary shelter and enclosures thereon,
petitioner counters that under the above instructions, respondent is supposed to commence the work
"within ten (10) calendar days from the date he receives a copy of the fully executed Contract," and
for said respondent to have started actual construction work before any contract has been signed
was unauthorized and was consequently undertaken at his own risk, all the above circumstances
indicative of estoppel notwithstanding.

We are not persuaded that petitioner's posture conforms with law and equity. According to
Paragraph IB 114.1 of the Instructions to Bidders, Ablaza was "required to appear in the office of the
Owner (the Bank) in person, or, if a firm or corporation, a duly authorized representative (thereof),
and to execute the contract within five (5) days after notice that the contract has been awarded to
him. Failure or neglect to do so shall constitute a breach of agreement effected by the acceptance of
the Proposal." There can be no other meaning of this provision than that the Bank's acceptance of
the bid of respondent Ablaza effected an actionable agreement between them. We cannot read it in
the unilateral sense suggested by petitioner that it bound only the contractor, without any
corresponding responsibility or obligation at all on the part of the Bank. An agreement presupposes
a meeting of minds and when that point is reached in the negotiations between two parties intending
to enter into a contract, the purported contract is deemed perfected and none of them may thereafter
disengage himself therefrom without being liable to the other in an action for specific performance.

The rather ambiguous terms of Paragraph IB 113.4 of the Instructions to Bidders relied upon by
petitioner have to be reconciled with the other paragraphs thereof to avoid lack of mutuality in the
relation between the parties. This invoked paragraph stipulates that "the acceptance of
(respondent's) Proposal shall bind said respondent to execute the Contract and to be responsible for
liquidated damages as herein provided." And yet, even if the contractor is ready and willing to
execute the formal contract within the five (5) day period given to him, petitioner now claims that
under the invoked provision, it could refuse to execute such contract and still be absolutely free from
any liability to the contractor who, in the meantime, has to make necessary arrangements and incur
expenditures in order to be able to commence work "within ten (10) days from the date he receives a
copy of the fully executed Contract," or be responsible for damages for delay. The unfairness of such
a view is too evident to be justified by the invocation of the principle that every party to a contract
who is sui juris and who has entered into it voluntarily and with full knowledge of its unfavorable
provisions may not subsequently complain about them when they are being enforced, if only
because there are other portions of the Instruction to Bidders which indicate the contrary. Certainly,
We cannot sanction that in the absence of unavoidable just reasons, the Bank could simply refuse to
execute the contract and thereby avoid it entirely. Even a government owned corporation may not
under the guise of protecting the public interest unceremoniously disregard contractual commitments
to the prejudice of the other party. Otherwise, the door would be wide open to abuses and anomalies
more detrimental to public interest. If there could be instances wherein a government corporation
may justifiably withdraw from a commitment as a consequence of more paramount considerations,
the case at bar is not, for the reasons already given, one of them.

As We see it then, contrary to the contention of the Bank, the provision it is citing may not be
considered as determinative of the perfection of the contract here in question. Said provision only
means that as regards the violation of any particular term or condition to be contained in the formal
contract, the corresponding action therefor cannot arise until after the writing has been fully
executed. Thus, after the Proposal of respondent was accepted by the Bank thru its telegram and
letter both dated December 10, 1965 and respondent in turn accepted the award by its letter of
December 15, 1965, both parties became bound to proceed with the subsequent steps needed to
formalize and consummate their agreement. Failure on the part of either of them to do so, entities
the other to compensation for the resulting damages. To such effect was the ruling of this Court in
Valencia vs. RFC 103 Phil. 444. We held therein that the award of a contract to a bidder constitutes
an acceptance of said bidder's proposal and that "the effect of said acceptance was to perfect a
contract, upon notice of the award to (the bidder)". (at p. 450) We further held therein that the
bidder's "failure to (sign the corresponding contract) do not relieve him of the obligation arising from
the unqualified acceptance of his offer. Much less did it affect the existence of a contract between
him and respondent". (at p. 452)

It is neither just nor equitable that Valencia should be construed to have sanctioned a one-sided
view of the perfection of contracts in the sense that the acceptance of a bid by a duly authorized
official of a government-owned corporation, financially and otherwise autonomous both from the
National Government and the Bureau of Public Works, insofar as its construction contracts are
concerned, binds only the bidder and not the corporation until the formal execution of the
corresponding written contract.

Such unfairness and inequity would even be more evident in the case at bar, if We were to uphold
petitioner's pose. Pertinently to the point under consideration, the trial court found as follows:

To determine the amount of damages recoverable from the defendant, plaintiff's claim for actual
damages in the sum of P298,433.35, as hereinabove stated, and the recommendation of Messrs.
Ambrosio R. Flores and Ricardo Y. Mayuga, as contained in their separate reports (Exhs. "13" and
"15"), in the amounts of P154,075.00 and P147,500.00, respectively, should be taken into account.

There is evidence on record showing that plaintiff incurred the sum of P48,770.30 for the preparation
of the jobsite, construction of bodegas, fences field offices, working sheds, and workmen's quarters;
that the value of the excavation work accomplished by the plaintiff at the site was P113,800.00; that
the rental of the various construction equipment of the plaintiff from the stoppage of work until the
removal thereof from the jobsite would amount to P78,540.00 (Exhs. "K" - "K-l"); that the interest on
the cash bond of P275,000.00 from November 3, 1965 to July 7, 1966 at 12% per annum would be
P22,000.00; that for removing said construction equipment from the jobsite to Manila, plaintiff paid a
hauling fee of P700.00 (Exhs. "L" - "L-1" ); that for the performance bond that the plaintiff posted as
required under its contract with the defendant, the former was obliged to pay a premium of
P2,216.55; and that the plaintiff was likewise made to incur the sum of P32,406.50, representing the
3% contractor's tax (Exhs. "AA" - "A-l"). The itemized list of all these expenditures, totalling
P298,433.35 is attached to the records of this case (Annex "B", Complaint) and forms part of the
evidence of the plaintiff. Mr. Nicomedes G. Ablaza, the witness for the plaintiff, properly identified
said document and affirmed the contents thereof when he testified during the hearing. The same
witness likewise explained in detail the various figures contained therein, and identified the
corresponding supporting papers.

It is noteworthy, in this connection, that there is nothing in the records that would show that the
defendant assailed the accuracy and/or reasonableness of the figures presented by the plaintiff;
neither does it appear that the defendant offered any evidence to refute said figures.

While it is claimed by the defendant that the plaintiff incurred a total expense of only P154,075.00
according to the report of Mr. Ambrosio R. Flores, or P147,500.00, according to the report of Mr.
Ricardo Y. Mayuga, the Court finds said estimates to be inaccurate. To cite only an instance, in
estimating, the value of the excavation work, the defendant merely measured the depth, length and
width of the excavated, area which was submerged in water, without ascertaining the volume of rock
and the volume of earth actually excavated as was done by the plaintiff who prepared a detailed plan
showing the profile of the excavation work performed in the site (Exh. "B"). Likewise, the unit
measure adopted by the defendant was in cubic meter while it should be in cubic yard. Also the unit
price used by the defendant was only P8.75 for rock excavation while it should be P10.00 per cubic
yard; and only P4.95 for earth excavation while it should be P5.50 per cubic yard as clearly indicated
in plaintiff's proposal (Annex "A", Complaint; same as Annex "1", Answer). The Court, therefore, can
not give credence to defendant's, aforementioned estimates in view of their evident inaccuracies.

The Court finds from the evidence adduced that Plaintiff claim for actual damages in the sum of
P298,433.35 is meritorious.

The Bulk of plaintiffs claims consists of expected profit which it failed to realize due to the breach of
the contract in question by the defendant. As previously stated, the plaintiff seeks to recover the
amount of P814,190.00 by way of unrealized expected profit. This figure represents 18% of
P4,523,275.00 which is the estimated direct cost of the subject project.

As it has been established by the evidence that the defendant in fact was guilty of breach of contract
and, therefore, liable for damages (Art. 1170, New Civil Code), the Court finds that the plaintiff is
entitled to recover from the defendant unrealized expected profit as part of the actual or
compensatory damages. Indemnification for damages shall comprehend not only the value of the
loss suffered, but also that of the profits which the obligee failed to obtain (Art. 2200, New Civil
Code).

Where a party is guilty of breach of contract, the other party is entitled to recover the profit which the
latter would have been able to make had the contract been performed (Paz P. Arrieta, et al.,
plaintiffs-appellees, vs. National Rice Corporation defendant-appellant, G.R. No. L-15645,
promulgated on January 31, 1964; Vivencio Cerrano, plaintiff-appellee, vs. Tan Chuco, defendant-
appellant, 38 Phil. 392).

Regarding the expected profit, a number of questions will have to be answered: Is the 18%
unrealized expected profit being claimed by the plaintiff reasonable? Would the plaintiff be entitled to
the whole amount of said expected profit although there was only partial performance of the
contract? Would the 18% expected profit be based on the estimated direct cost of the subject in the
amount of P4,523,275.00, or on plaintiff's bid proposal of P3,749,000.00?

On the question of reasonableness of the 18% expected profit, the Court noted that according to
defendant's own expert witness, Mr. Ambrosio R. Flores, 25% contractor's profit for a project similar
in magnitude as the one involved in the present case would be ample and reasonable. Plaintiff's
witness, Mr. Nicomedes G. Ablaza, an experienced civil engineer who has been actively engaged in
the construction business, testified that 15% to 20% contractor's profit would be in accordance with
the standard engineering practice. Considering the type of the project involved in this case, he
stated, the contractor's profit was placed at 18%. Taking into consideration the fact that this
percentage of profit is even lower than what defendant's witness considered to be ample and
reasonable, the Court believes that the reasonable percentage should be 18% inasmuch as the
actual work was not done completely and the plaintiff has not invested the whole amount of money
called for by the project." (Pp. 263-268, Record on Appeal.)

These findings have not been shown to Us to be erroneous. And additional and clarificatory details,
which We find to be adequately supported by the record, are stated in Respondents' brief thus: têñ.£îhqw â£

23. In a letter dated January 4, 1966, petitioner Central Bank, through the same Mr.
Mendoza, to this request of respondent Ablaza. (Annex "D-1" to the Partial
Stipulation of Facts, R.A., p. 146).

24. Acting upon this written permission, respondent Ablaza immediately brought its
men and equipment from Manila to the construction site in San Fernando, La Union,
and promptly commenced construction work thereat. This work, consisted of the
setting up of an enclosure around the site, the building of temporary shelter for its
workmen, and the making of the necessary excavation works. (Commissioner's
Report, R.A., p. 181).

25. Following the commencement of such construction work, petitioner Central Bank,
through a letter dated February 8, 1966, formally requested respondent Ablaza to
submit to petitioner the following:
têñ.£îhqw â£

(a) A schedule of deliveries of material which, under the terms of


respondent Ablaza's approved proposal, were to be furnished by
petitioner.

(b) A time-table for the accomplishment of the construction work.

In short, as early as February 8, 1966, or more than three months


prior to petitioner's repudiation of the contract in question the latter
(petitioner) already took the above positive steps it compliance with
its own obligations under the contract.

26. Acting upon petitioner's above letter of February 8, 1966, on February 16, 1966,
respondent Ablaza submitted the schedule of deliveries requested by petitioner.
(Commissioner's Report, R.A., p. 182; Decision id., 252; also Exhs. "D" to "D-7",
inclusive.)

27. During the period of actual construction, respondent Ablaza, on several


occasions, actually discussed the progress of the work with Mr. Mendoza. In
addition, in March 1966, the latter (Mr. Mendoza) personally visited the construction
site. There he saw the work which respondent had by that time already accomplished
which consisted of the completion of approximately 20% of the necessary excavation
works. (Commissioner's Report, R.A., p. 182; Decision, id., p. 252).

28. Following Mr. Mendoza's visit at the construction site, or more specifically on
March 22, 1966, the latter (Mendoza) wrote to respondent Ablaza, instructing the
latter to formally designate the person to represent the corporation at the signing of
the formal construction contract. (Exh. "H"; also t.s.n., pp. 119-121, December 18,
1967).

29. By a letter dated March 24, 1966, respondent Ablaza promptly complied with the
above request. (Exh. "I"; also t.s.n., pp 121-123, December 18, 1967).

30. Subsequently, respondent Ablaza posted the required performance guaranty


bond in the total amount of P962,250.00, consisting of (a) a cash bond in the amount
of P275,000.00, and (b) a surety bond, PSIC Bond No. B-252-ML, dated May 19,
1966, in the amount of P687,250.00. In this connection, it is important to note that the
specific purpose of this bond was to guarantee "the faithful Performance of the
Contract" by respondent Ablaza. (Partial Stipulation of Facts, par. 6, R.A., p.
141). This performance guaranty bond was duly accepted by petitioner.(Id.)

31. However, on May 20, 1966, petitioner Central Bank called for a meeting with
representatives of respondent Ablaza and another contractor. This meeting was held
at the Conference Room of the Central Bank Building. At this meeting, then Finance
Secretary Eduardo Romualdez, who acted as the representative of petitioner,
announced that the Monetary Board had decided to reduce the appropriations for the
various proposed Central Bank regional office buildings, including the one for San
Fernando, La Union.

32. In view of this decision, Secretary Romualdez informed respondent Ablaza that
new plans and designs for the proposed regional office building in San Fernando
would have to be drawn up to take account of the reduction in appropriation.
Secretary Romualdez then advised respondent to suspendwork at the construction
site in San Fernando in the meanwhile. (Decision, R.A., pp. 253-254).

33. After making the above announcements, Secretary Romualdez proposed that all
existing contracts previously entered into between petitioner Central Bank and the
several winning contractors (among them being respondent Ablaza) be considered
set aside.

34. Obviously to induce acceptance of the above proposal, Secretary Romualdez


offered the following concessions to respondent Ablaza: têñ.£îhqwâ£

(a) That its cash bond in the amount of P275,000.00 be released


immediately, and that interest be paid thereon at the rate of 12% per
annum.

(b) That respondent Ablaza be reimbursed for expenses incurred for


the premiums on the performance bond which it posted, and which
petitioner had already accepted. (Decision, R.A., pp. 253-254).

35. In addition, Secretary Romualdez also proposed the conclusion of a new contract
with respondent Ablaza for the construction of a more modest regional office building
at San Fernando, La Union, on a negotiated basis. However, the sincerity and
feasibility of this proposal was rendered dubious by a caveat attached to it, as
follows:têñ.£îhqw â£

'4. Where auditing regulations would permit, the Central Bank would
enter into a negotiated contract with the said corporation (Ablaza) for
the construction work on the building on the basis of the revised
estimates.' (Annex "8" to Answer, R.A., p. 95).

36. The revised cost fixed for this proposed alternative regional office building was
fixed at a maximum of P3,000,000.00 (compared to P3,749,000.00 under the
contract originally awarded to respondent). (Annex "6-A" to Answer, R.A., p. 87).

37. Needless perhaps to state, respondent Ablaza rejected the above proposals
(pars. 34 and 35, supra.), and on June 3, 1966, through counsel, wrote to petitioner
demanding the formal execution of the contract previously awarded to it, or in the
alternative, to pay "all damages and expenses suffered by (it) in the total amount of
P1,181,950.00 ... "(Annex "7" to Answer, R.A., pp. 89-91; Decision, id., p. 254).

38. In a letter dated June 15, 1966, petitioner Central Bank, through Deputy
Governor Amado R. Brinas, replied to respondent Ablaza's demand denying any
liability on the basis of the following claim: têñ.£îhqw â£
`(That, allegedly) in line with the agreement ... reached between the
Central Bank and Ablaza Construction and Finance Corporation at a
meeting held ... on May 20, 1966,' "whatever agreements might have
been previously agreed upon between (petitioner and respondent)
would be considered set aside." (Decision, R.A., p. 255; Annex "8" to
Answer, id., pp. 93-96.)

39. The above claim was, however, promptly and peremptorily denied by respondent
Ablaza, through counsel, in a letter dated June 16, 1966. (Partial Stipulation of Facts,
par. 9, R.A., p. 142, also Annex "G" thereof; Commissioner's Report, R.A., p.
185; Decision, id., p. 255.)" (Appellee's Brief, pars. 23 to 39, pp. 14-19.)

None of these facts is seriously or in any event sufficiently denied in petitioner's reply brief.

Considering all these facts, it is quite obvious that the Bank's insistence now regarding the need for
the execution of the formal contract comes a little too late to be believable. Even
assuming arguendo that the Revised Manual of Instructions to Treasurers were applicable to the
Central Bank, which is doubtful, considering that under the provisions of its charter already referred
to earlier, disbursements and expenditures of the Bank are supposed to be governed by rules and
regulations promulgated by the Monetary Board, in this particular case, the attitude and actuations
then of the Bank in relation to the work being done by Ablaza prior to May 20, 1966 clearly indicate
that both parties assumed that the actual execution of the written contract is a mere formality which
could not materially affect their respective contractual rights and obligations. In legal effect,
therefore, the Bank must be considered as having waived such requirement.

To be more concrete, from December 15, 1965, when Ablaza accepted the award of the contract in
question, both parties were supposed to have seen to it that the formal contract were duly signed.
Under the Instructions to Bidders, Ablaza was under obligation to sign the same within five (5) days
from notice of the award, and so, he called on the Bank at various times for that purpose. The Bank
never indicated until May, 1966 that it would not comply. On the contrary, on February 8, 1966,
Ablaza was requested to submit a "schedule of deliveries of materials" which under the terms of the
bid were to be furnished by the Bank. On March 22, 1966, Ablaza received a letter from the Bank
inquiring as to who would be Ablaza's representative to sign the formal contract. In the meanwhile,
no less than Mr. Rizalino Mendoza, the Chairman of the Management Building Committee of the
Central Bank who had been signing for the Bank all the communications regarding the project at
issue, had visited the construction site in March, 1966, just before he wrote the request
abovementioned of the 22nd of that month for the nomination of the representative to sign the formal
contract, and actually saw the progress of the work and that it was being continued, but he never
protested or had it stopped. All these despite the fact that the Memorandum Circular being invoked
by the Bank was issued way back on December 31, 1965 yet. And when finally on May 20, 1966 the
Bank met with the representatives of Ablaza regarding the idea of changing the plans to more
economical ones, there was no mention of the non-execution of the contract as entitling the Bank to
back out of it unconditionally. Rather, the talk, according to the findings of the lower courts, was
about the possibility of setting aside whatever agreement there was already. Under these
circumstances, it appears that respondent has been made to believe up to the time the Bank
decided definitely not to honor any agreement at all that its execution was not indispensable to a
contract to be considered as already operating and respondent could therefore proceed with the
work, while the contract could be formalized later.

Petitioner contends next that its withdrawal from the contract is justified by the policy of economic
restraint ordained by Memorandum Circular No. 1. We do not see it that way. Inasmuch as the
contract here in question was perfected before the issuance of said Memorandum Circular, it is
elementary that the same may not be enforced in such a manner as to result in the impairment of the
obligations of the contract, for that is not constitutionally permissible. Not even by means of a
statute, which is much more weighty than a mere declaration of policy, may the government issue
any regulation relieving itself or any person from the binding effects of a contract. (Section 1 (10),
Article III, Philippine Constitution of 1953 and Section 11, Article IV, 1973 Constitution of the
Philippines.) Specially in the case of the Central Bank, perhaps, it might not have been really
imperative that it should have revised its plans, considering that it has its own resources
independent of those of the national government and that the funds of the Central Bank are derived
from its own operations, not from taxes. In any event, if the memorandum circular had to be
implemented, the corresponding action in that direction should have been taken without loss of time
and before the contract in question had taken deeper roots. It is thus clear that in unjustifiably failing
to honor its contract with respondent, petitioner has to suffer the consequences of its action.

The last issue submitted for Our resolution refers to the amount of damages awarded to Ablaza by
the trial court and found by the Court of Appeals to be "fair and reasonable." Again, after a review of
the record, We do not find sufficient ground to disturb the appealed judgment even in this respect,
except as to attorney's fees.

There are three principal items of damages awarded by the courts below, namely: (1) compensation
for actual work done in the amount of P298,433.35, (2) unrealized profits equivalent to 18% of the
contract price of P3,749,000 or P674,820.00 and (3) 15% of the total recovery as attorney's fees in
addition to the P5,000 already paid as retaining fee. All of these items were the subject of evidence
presented by the parties. According to the Court of Appeals: têñ.£îhqw â£

As regard the accuracy and reasonableness of the award for damages, both actual
and compensatory, it is to be noted that the trial court subjected the Commissioner's
report and the evidence adduced therein to a careful scrutiny. Thus, when the
appellant called the trial court's attention to the fact that the P814,190.00 unrealized
expected profit being claimed by appellee represented 18% of P4,523,275.00 which
was the estimated cost of the project, while the contract awarded to appellee was
only in the amount of P3,749,000.00 as per its bid proposal, the Court made the
necessary modification. It is further to be noted that the amount of 18% of the
estimated cost considered in the said award is much less than that given by
appellant's own expert witness, Ambrosio R. Flores. He testified that 25% as
contractor's profit "would be fair, ample and reasonable." (T.s.n, p. 557, Batalla.)" (p.
17 A, Appellant's brief.)

Basically, these are factual conclusions which We are not generally at liberty to disregard. And We
have not been shown that they are devoid of reasonable basis.

There can be no dispute as to the legal obligation of petitioner to pay respondent the actual
expenses it has incurred in performing its part of the contract.

Upon the other hand, the legal question of whether or not the Bank is liable for unrealized profits
presents no difficulty. In Arrieta vs. Naric G.R. No. L-15645, Jan. 31, 1964, 10 SCRA 79, this Court
sustained as a matter of law the award of damages n the amount of U.S. $286,000, payable in
Philippine Currency, measured in the rate of exchange prevailing at the time the obligation was
incurred (August, 1952), comprising of unrealized profits of the plaintiff, Mrs. Paz Arrieta, in a case
where a government-owned corporation, the Naric failed to proceed with the purchase of imported
rice after having accepted and approved the bid of Arrieta and after she had already closed her
contract with her foreign sellers.
Actually, the law on the matter is unequivocally expressed in Articles 2200 and 2201 of the Civil
Code thus: têñ.£îhqwâ£

ART. 2200. Identification for damages shall comprehend not only the value of the
loss suffered, but also that of the profits, which the obligee failed to obtain..

ART. 2201. In contracts and quasi-contracts, the damages for which the obligor who
acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have forseen or
could have reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
for all damages which may be reasonably attributed to the non- performance of the
obligation.

Construing these provisions, the following is what this Court held in Cerrano vs. Tan Chuco, 38 Phil.
392: têñ.£îhqwâ£

.... Article 1106 (now 2200) of the Civil Code establishes the rule that prospective
profits may be recovered as damages, while article 1107 (now 2201) of the same
Code provides that the damages recoverable for the breach of obligations not
originating in fraud (dolo) are those which were or might have been foreseen at the
time the contract was entered into. Applying these principles to the facts in this case,
we think that it is unquestionable that defendant must be deemed to have foreseen at
the time he made the contract that in the event of his failure to perform it, the plaintiff
would be damaged by the loss of the profit he might reasonably have expected to
derive from its use.

When the existence of a loss is established, absolute certainty as to its amount is not
required. The benefit to be derived from a contract which one of the parties has
absolutely failed to perform is of necessity to some extent, a matter of speculation,
but the injured party is not to be denied all remedy for that reason alone. He must
produce the best evidence of which his case is susceptible and if that evidence
warrants the inference that he has been damaged by the loss of profits which he
might with reasonable certainty have anticipated but for the defendant's wrongful act,
he is entitled to recover. As stated in Sedgwick on Damages (Ninth Ed., par. 177):

The general rule is, then, that a plaintiff may recover compensation for any gain
which he can make it appear with reasonable certainty the defendant's wrongful act
prevented him from acquiring, ...'. (See also Algarra vs. Sandejas, 27 Phil. Rep., 284,
289; Hicks vs. Manila Hotel Co., 28 Phil. Rep., 325.) (At pp. 398-399.)

Later, in General Enterprises, Inc. vs. Lianga Bay Logging Co. Inc., 11 SCRA 733, Article 2200 of
the Civil Code was again applied as follows: têñ.£îhqwâ£

Regarding the actual damages awarded to appellee, appellant contends that they are
unwarranted inasmuch as appellee has failed to adduce any evidence to substantiate
them even assuming arguendo that appellant has failed to supply the additional
monthly 2,000,000 board feet for the remainder of the period agreed upon in the
contract Exhibit A. Appellant maintains that for appellee to be entitled to demand
payment of sales that were not effected it should have proved (1) that there are
actual sales made of appellee's logs which were not fulfilled, (2) that it had obtained
the best price for such sales, (3) that there are buyers ready to buy at such price
stating the volume they are ready to buy, and (4) appellee could not cover the sales
from the logs of other suppliers. Since these facts were not proven, appellee's right to
unearned commissions must fail.

This argument must be overruled in the light of the law and evidence on the matter.
Under Article 2200 of the Civil Code, indemnification for damages comprehends not
only the value of the loss suffered but also that of the profits which the creditor fails to
obtain. In other words, lucrum cessans is also a basis for indemnification. The
question then that arises is: Has appellee failed to make profits because of
appellant's breach of contract, and in the affirmative, is there here basis for
determining with reasonable certainty such unearned profits?

Appellant's memorandum (p. 9) shows that appellee has sold to Korea under the
contract in question the following board feet of logs, Breareton Scale: têñ.£îhqw â£

Months Board Feet

From June to August 1959 3,007,435


September, 1959 none
October, 1959 2,299,805
November, 1959 801,021
December, 1959 1,297,510

Total 7,405,861

The above figures tally with those of Exhibit N. In its brief (p. 141) appellant claims
that in less than six months' time appellee received by way of commission the
amount of P117,859.54, while in its memorandum, appellant makes the following
statement:

`11. The invoice F.O.B. price of the sale through plaintiff General is P767,798.82 but
the agreed F.O.B. price was P799,319.00, the commission at 13% (F.O.B.) is
P117,859.54. But, as there were always two prices — Invoice F.O.B price and F.O.B.
price as per contract, because of the sales difference amounting to P31,920.18, and
the same was deducted from the commission, actually paid to plaintiff General is only
P79,580.82.' " It appears, therefore, that during the period of June to December,
1959, in spite of the short delivery incurred by appellant, appellee had been earning
its commission whenever logs were delivered to it. But from January, 1960, appellee
had ceased to earn any commission because appellant failed to deliver any log in
violation of their agreement. Had appellant continued to deliver the logs as it was
bound to pursuant to the agreement it is reasonable to expect that it would have
continued earning its commission in much the same manner as it used to in
connection with the previous shipments of logs, which clearly indicates that it failed to
earn the commissions it should earn during this period of time. And this commission
is not difficult to estimate. Thus, during the seventeen remaining months of the
contract, at the rate of at least 2,000,000 board feet, appellant should have delivered
thirty-four million board feet. If we take the number of board feet delivered during the
months prior to the interruption, namely, 7,405,861 board feet, and the commission
received by appellee thereon, which amounts to P79,580.82, we would have that
appellee received a commission of P.0107456 per board feet. Multiplying 34 million
board feet by P.0107456, the product is P365,350.40, which represents the lucrum
cessans that should accrue to appellee. The award therefore, made by the court a
quo of the amount of P400,000.00 as compensatory damages is not speculative, but
based on reasonable estimate.

In the light of these considerations, We cannot say that the Court of Appeals erred in making the
aforementioned award of damages for unrealized profits to respondent Ablaza.

With respect to the award for attorney's fees, We believe that in line with the amount fixed in Lianga,
supra., an award of ten per centum (10%) of the amount of the total recovery should be enough.

PREMISES CONSIDERED, the decision of the Court of Appeals in this case is affirmed, with the
modification that the award for attorney's fees made therein is hereby reduced to ten per centum
(10%) of the total recovery of respondent Ablaza.

Costs against petitioner.

Fernando (Chairman), Antonio, Aquino and Concepcion, JJ., concur. 1äwphï1.ñët

Footnotes têñ.£îhqwâ£

1 This was before Section 607 was amended by Act 3441 by including chartered
cities in the provision.

2 According to the stipulation of facts of the parties, "the contract for the general
construction work for the Central Bank Regional Office Building in San Fernando, La
Union was awarded to plaintiff." (Par. 4 thereof.)

2) BOC vs Dela Rosa

G.R. Nos. 95122-23 May 31, 1991

BOARD OF COMMISSIONERS (COMMISSION ON IMMIGRATION AND DEPORTATION),


BOARD OF SPECIAL INQUIRY, COMMISSIONER ANDREA D. DOMINGO, ASSOCIATE
COMMISSIONER JORGE V. SARMIENTO, ACTING ASSOCIATE COMMISSIONER REGINO R.
SANTIAGO, MEMBERS OF THE BOARD OF SPECIAL INQUIRY, ESTANISLAO CANTA, LEO
MAGAHOM and BENJAMIN KALAW, petitioners,
vs.
HON. JOSELITO DELA ROSA, Presiding Judge, RTC Manila, Branch 29, WILLIAM T.
GATCHALIAN,respondents.

BOARD OF COMMISSIONERS (COMMISSION ON IMMIGRATION AND DEPORTATION),


BOARD OF SPECIAL INQUIRY, COMMISSIONER ANDREA D. DOMINGO, ASSOCIATE
COMMISSIONER JORGE V. SARMIENTO, ACTING ASSOCIATE COMMISSIONER REGINO R.
SANTIAGO, MEMBERS OF THE BOARD OF SPECIAL INQUIRY, ESTANISLAO CANTA, LEO
MAGAHOM and BENJAMIN KALAW, petitioners,
vs.
HON. TERESITA DIZON CAPULONG, Presiding Judge, RTC Branch 172, Valenzuela, Metro
Manila, DEE HUA T. GATCHALIAN, SHERWING T. GATCHALIAN, KENNETH T. GATCHALIAN,
REXLON T. GATCHALIAN, and WESLIE T. GATCHALIAN, respondents.

G.R. Nos. 95612-13 May 31, 1991

WILLIAM T. GATCHALIAN, petitioner,


vs.
BOARD OF COMMISSIONERS (COMMISSION ON IMMIGRATION AND DEPORTATION), et
al., respondents.

The Solicitor General for petitioners.


edesma, Saludo & Associates for respondent William Gatchalian.
Cervo and Tanay Law Office for respondent T.D. Capulong, D.H.T. Gatchalian, et al.

BIDIN, J.:

This is a petition for certiorari and prohibition filed by the Solicitor General seeking 1) to set aside the
Resolution/Temporary Restraining Order dated September 7, 1990, issued by respondent Judge de
la Rosa in Civil Case No. 90-54214 which denied petitioners' motion to dismiss and restrained
petitioners from commencing or continuing with any of the proceedings which would lead to the
deportation of respondent William Gatchalian, docketed as D.C. No. 90-523, as well as the Order of
respondent Judge Capulong dated September 6, 1990 in Civil Case No. 3431-V-90 which likewise
enjoined petitioners from proceeding with the deportation charges against respondent Gatchalian,
and 2) to prohibit respondent judges from further acting in the aforesaid civil cases.

On October 23, 1990, respondent Gatchalian filed his Comment with Counter-Petition, docketed as
G.R. Nos. 96512-13, alleging lack of jurisdiction on the part of respondent Board of Commissioners,
et al., over his person with prayer that he be declared a Filipino citizen, or in the alternative, to
remand the case to the trial court for further proceedings.

On December 13, 1990, petitioners filed their comment to respondent Gatchalian's counter-petition.
The Court considers the comment filed by respondent Gatchalian as answer to the petition and
petitioners' comment as answer to the counter-petition and gives due course to the petitions.

There is no dispute as to the following facts:

On July 12, 1960, Santiago Gatchalian, grandfather of William Gatchalian, was recognized by the
Bureau of Immigration as a native born Filipino citizen following the citizenship of his natural mother,
Marciana Gatchalian (Annex "1", counter-petition). Before the Citizenship Evaluation Board,
Santiago Gatchalian testified that he has five (5) children with his wife Chu Gim Tee, namely: Jose
Gatchalian, Gloria Gatchalian, Francisco Gatchalian, Elena Gatchalian and Benjamin Gatchalian
(Annex "2", counter-petition).

On June 27, 1961, William Gatchalian, then a twelve-year old minor, arrived in Manila from
Hongkong together with Gloria, Francisco, and Johnson, all surnamed Gatchalian. They had with
them Certificates of Registration and Identity issued by the Philippine Consulate in Hongkong based
on a cablegram bearing the signature of the then Secretary of Foreign Affairs, Felixberto Serrano,
and sought admission as Filipino citizens. Gloria and Francisco are the daughter and son,
respectively, of Santiago Gatchalian; while William and Johnson are the sons of Francisco.

After investigation, the Board of Special Inquiry No. 1 rendered a decision dated July 6, 1961,
admitting William Gatchalian and his companions as Filipino citizens (Annex "C", petition). As a
consequence thereof, William Gatchalian was issued Identification Certificate No. 16135 by the
immigration authorities on August 16, 1961 (Annex "D", petition).

On January 24, 1962, the then Secretary of Justice issued Memorandum No. 9 setting aside all
decisions purporting to have been rendered by the Board of Commissioners on appeal or on
review motu proprio of decisions of the Board of Special Inquiry. The same memorandum directed
the Board of Commissioners to review all cases where entry was allowed on the ground that the
entrant was a Philippine citizen. Among those cases was that of William and others.

On July 6, 1962, the new Board of Commissioners, after a review motu proprio of the proceedings
had in the Board of Special Inquiry, reversed the decision of the latter and ordered the exclusion of,
among others, respondent Gatchalian (Annex "E", petition). A warrant of exclusion also dated July 6,
1962 was issued alleging that "the decision of the Board of Commissioners dated July 6, 1962 . . .
has now become final and executory (Annex "F", petition).

The actual date of rendition of said decision by the Board of Commissioners (whether on July 6,
1962 or July 20, 1962) became the subject of controversy in the 1967 case of Arocha vs. Vivo (21
SCRA 532) wherein this Court sustained the validity of the decision of the new Board of
Commissioners having been promulgated on July 6, 1962, or within the reglementary period for
review.

Sometime in 1973, respondent Gatchalian, as well as the others covered by the July 6, 1962 warrant
of exclusion, filed a motion for re-hearing with the Board of Special Inquiry where the deportion case
against them was assigned.

On March 14, 1973, the Board of Special Inquiry recommended to the then Acting Commissioner
Victor Nituda the reversal of the July 6, 1962 decision of the then Board of Commissioners and the
recall of the warrants of arrest issued therein (Annex "5", counter-petition).

On March 15, 1973, Acting Commissioner Nituda issued an order reaffirming the July 6, 1961
decision of the Board of Special Inquiry thereby admitting respondent Gatchalian as a Filipino citizen
and recalled the warrant of arrest issued against him (Annex "6", counter-petition).

On June 7, 1990, the acting director of the National Bureau of Investigation wrote the Secretary of
Justice recommending that respondent Gatchalian along with the other applicants covered by the
warrant of exclusion dated July 6, 1962 be charged with violation of Sec. 37 (a), pars. 1 and 2, in
relation to Secs. 45 (c), and (d) and (e) of Commonwealth Act No. 613, as amended, also known as
the Immigration Act of 1940 (Annex "G", petition).

On August 1, 1990, the Secretary of Justice indorsed the recommendation of the NBI to the
Commissioner of Immigration for investigation and immediate action (Annex "20", counter-petition).

On August 15, 1990, petitioner Commissioner Domingo of the Commission of Immigration and
Deportation * issued a mission order commanding the arrest of respondent William Gatchalian
(Annex "18", counter-petition). The latter appeared before Commissioner Domingo on August 20,
1990 and was released on the same day upon posting P200,000.00 cash bond.
On August 29, 1990, William Gatchalian filed a petition for certiorari and prohibition with injunction
before the Regional Trial Court of Manila, Br. 29, presided by respondent Judge dela Rosa,
docketed as Civil Case No. 90-54214.

On September 4, 1990, petitioners filed a motion to dismiss Civil Case No. 90-54214 alleging that
respondent judge has no jurisdiction over the Board of Commissioners and/or the Board of Special
Inquiry. Nonetheless, respondent judge dela Rosa issued the assailed order dated September 7,
1990, denying the motion to dismiss.

Meanwhile, on September 6, 1990, respondent Gatchalian's wife and minor children filed before the
Regional Trial Court of Valenzuela, Metro Manila, Br. 172, presided by respondent judge Capulong
Civil Case No. 3431-V-90 for injunction with writ of preliminary injunction. The complaint alleged,
among others, that petitioners acted without or in excess of jurisdiction in the institution of
deportation proceedings against William. On the same day, respondent Capulong issued the
questioned temporary restraining order restraining petitioners from continuing with the deportation
proceedings against William Gatchalian.

The petition is anchored on the following propositions: 1) respondent judges have no jurisdiction
over petitioners (Board of Commissioners, et al.,) and the subject matter of the case, appellate
jurisdiction being vested by BP 129 with the Court of Appeals; 2) assuming respondent judges have
jurisdiction, they acted with grave abuse of discretion in preempting petitioners in the exercise of the
authority and jurisdiction to hear and determine the deportation case against respondent Gatchalian,
and in the process determine also his citizenship; 3) respondent judge dela Rosa gravely abused his
discretion in ruling that the issues raised in the deportation proceedings are beyond the competence
and jurisdiction of petitioners, thereby disregarding the cases of Arocha vs. Vivo and Vivo vs.
Arca (supra), which put finality to the July 6, 1962 decision of the Board of Commissioners that
respondent Gatchalian is a Chinese citizen; and 4) respondent judge Capulong should have
dismissed Civil Case No. 3431-V-90 for forum-shopping.

In his counter-petition, William Gatchalian alleges among others that: 1) assuming that the evidence
on record is not sufficient to declare him a Filipino citizen, petitioners have no jurisdiction to proceed
with the deportation case until the courts shall have finally resolved the question of his citizenship; 2)
petitioners can no longer judiciously and fairly resolve the question of respondent's citizenship in the
deportation case because of their bias, pre-judgment and prejudice against him; and 3) the ground
for which he is sought to be deported has already prescribed.

For purposes of uniformity, the parties herein will be referred to in the order the petitions were filed.

Petitioners argue that under Sec. 9 (3) of BP 129, it is the Court of Appeals which has exclusive
appellate jurisdiction over all final judgments or orders of quasi-judicial agencies, boards or
commissions, such as the Board of Commissioners and the Board of Special Inquiry.

Respondent, on the other hand, contends that petitioners are not quasi-judicial agencies and are not
in equal rank with Regional Trial Courts.

Under Sec. 21 (1) of Batas Pambansa Blg. 129, the Regional Trial Courts have concurrent
jurisdiction with this Court and the Court of Appeals to issue "writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpusand injunction which may be enforced in any
part of their respective regions, . . ." Thus, the RTCs are vested with the power to determine whether
or not there has been a grave abuse of discretion on the part of any branch or instrumentality of the
government.
It is true that under Sec. 9 (3) of Batas Pambansa Blg. 129, the Court of Appeals is vested with —

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, order, or
awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, board or
commission, except those falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the provisions of this Act, and of sub-paragraph (1) of the
third paragraph of and sub-paragraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.

It does not provide, however, that said exclusive appellate jurisdiction of the Court of Appeals
extends to all quasi-judicial agencies. The quasi-judicial bodies whose decisions are exclusively
appealable to the Court of Appeals are those which under the law, Republic Act No. 5434, or their
enabling acts, are specifically appealable to the Court of Appeals (Presidential Anti-Dollar Salting
Task Force vs. Court of Appeals, 171 SCRA 348 [1989]; Lupangco vs. Court of Appeals, 160 SCRA
848 [1988]). Thus, under Republic Act No. 5434, it is specifically provided that the decisions of the
Land Registration Commission (LRC), the Social Security Commission (SSC), Civil Aeronautics
Board (CAB), the Patent Office and the Agricultural Invention Board are appealable to the Court of
Appeals.

In the Presidential Anti-Dollar Salting Task Force (supra), this Court clarified the matter when We
ruled:

Under our Resolution dated January 11, 1983:

. . . The appeals to the Intermediate Appellate Court (now Court of Appeals) from
quasi-judicial bodies shall continue to be governed by the provisions of Republic Act
No. 5434 insofar as the same is not inconsistent with the provisions of B.P. Blg. 129.

The pertinent provisions of Republic Act No. 5434 are as follows:

Sec. 1. Appeals from specified agencies.— Any provision of existing law or Rules of
Court to the contrary notwithstanding, parties aggrieved by a final ruling, award,
order, or decision, or judgment of the Court of Agrarian Relations; the Secretary of
Labor under Section 7 of Republic Act Numbered Six hundred and two, also known
as the "Minimum Wage Law"; the Department of Labor under Section 23 of Republic
Act Numbered Eight hundred seventy-five, also known as the "Industrial Peace Act";
the Land Registration Commission; the Social Security Commission; the Civil
Aeronautics Board; the Patent Office and the Agricultural Inventions Board, may
appeal therefrom to the Court of Appeals, within the period and in the manner herein
provided, whether the appeal involves questions of fact, mixed questions of fact and
law, or questions of law, or all three kinds of questions. From final judgments or
decisions of the Court of Appeals, the aggrieved party may appeal by certiorari to the
Supreme Court as provided under Rule 45 of the Rules of Court.

Because of subsequent amendments, including the abolition of various special courts,


jurisdiction over quasi-judicial bodies has to be, consequently, determined by the
corresponding amendatory statutes. Under the Labor Code, decisions and awards of the
National Labor Relations Commission are final and executory, but, nevertheless, reviewable
by this Court through a petition for certiorari and not by way of appeal.

Under the Property Registration Decree, decision of the Commission of Land


Registration, en consulta, are appealable to the Court of Appeals.
The decisions of the Securities and Exchange Commission are likewise appealable to the
Appellate Court, and so are decisions of the Social Security Commission.

As a rule, where legislation provides for an appeal from decisions of certain administrative
bodies to the Court of Appeals, it means that such bodies are co-equal with the Regional
Trial Courts, in terms of rank and stature, and logically, beyond the control of the latter.
(Emphasis supplied)

There are quasi-judicial agencies, as the National Labor Relations Commissions, whose decisions
are directly appealable to this Court. It is only when a specific law, as Republic Act No. 5434,
provides appeal from certain bodies or commissions to the Court of Appeals as the Land
Registration Commission (LRC), Securities and Exchange Commission (SEC) and others, that the
said commissions or boards may be considered co-equal with the RTCs in terms of rank, stature and
are logically beyond the control of the latter.

However, the Bureau of Immigration (or CID) is not among those quasi-judicial agencies specified by
law whose decisions, orders, and resolutions are directly appealable to the Court of Appeals. In fact,
its decisions are subject to judicial review in accordance with Sec. 25, Chapter 4, Book VII of the
1987 Administrative Code, which provides as follows:

Sec. 25. Judicial Review.—(1) Agency decisions shall be subject to judicial review in
accordance with this chapter and applicable laws.

xxx xxx xxx

(6) The review proceeding shall be filed in the court specified in the statute or, in the absence
thereof, in any court of competent jurisdiction in accordance with the provisions on venue of
the Rules of Court.

Said provision of the Administrative Code, which is subsequent to B.P. Blg. 129 and which thus
modifies the latter, provides that the decision of an agency like the Bureau of Immigration should be
subject to review by the court specified by the statute or in the absence thereof, it is subject to
review by any court of competent jurisdiction in accordance with the provisions on venue of the
Rules of Court.

B.P. Blg. 129 did not intend to raise all quasi-judicial bodies to the same level or rank of the RTC
except those specifically provided for under the law as aforestated. As the Bureau of Immigration is
not of equal rank as the RTC, its decisions may be appealable to, and may be reviewed through a
special civil action for certiorari by, the RTC (Sec. 21, (1) BP 129).

True, it is beyond cavil that the Bureau of Immigration has the exclusive authority and jurisdiction to
try and hear cases against an alleged alien, and in the process, determine also their citizenship (Lao
Gi vs. Court of Appeals, 180 SCRA 756 [1989]). And a mere claim of citizenship cannot operate to
divest the Board of Commissioners of its jurisdiction in deportation proceedings (Miranda vs.
Deportation Board, 94 Phil. 531 [1954]).

However, the rule enunciated in the above-cases admits of an exception, at least insofar as
deportation proceedings are concerned. Thus, what if the claim to citizenship of the alleged deportee
is satisfactory? Should the deportation proceedings be allowed to continue or should the question of
citizenship be ventilated in a judicial proceeding? In Chua Hiong vs. Deportation Board (96 Phil. 665
[1955]), this Court answered the question in the affirmative, and We quote:
When the evidence submitted by a respondent is conclusive of his citizenship, the right to
immediate review should also be recognized and the courts should promptly enjoin the
deportation proceedings. A citizen is entitled to live in peace, without molestation from any
official or authority, and if he is disturbed by a deportation proceeding, he has the
unquestionable right to resort to the courts for his protection, either by a writ of habeas
corpus or of prohibition, on the legal ground that the Board lacks jurisdiction. If he is a citizen
and evidence thereof is satisfactory, there is no sense nor justice in allowing the deportation
proceedings to continue, granting him the remedy only after the Board has finished its
investigation of his undesirability.

. . . And if the right (to peace) is precious and valuable at all, it must also be protected on
time, to prevent undue harassment at the hands of ill-meaning or misinformed administrative
officials. Of what use is this much boasted right to peace and liberty if it can be availed of
only after the Deportation Board has unjustly trampled upon it, besmirching the citizen's
name before the bar of public opinion? (Emphasis supplied)

The doctrine of primary jurisdiction of petitioners Board of Commissioners over deportation


proceedings is, therefore, not without exception (Calacday vs. Vivo, 33 SCRA 413 [1970]; Vivo vs.
Montesa, 24 SCRA 155 [1967]). Judicial intervention, however, should be granted only in cases
where the "claim of citizenship is so substantial that there are reasonable grounds to believe that the
claim is correct. In other words, the remedy should be allowed only on sound discretion of a
competent court in a proper proceeding (Chua Hiong vs. Deportation Board, supra; Co. vs.
Deportation Board, 78 SCRA 107 [1977]). It appearing from the records that respondent's claim of
citizenship is substantial, as We shall show later, judicial intervention should be allowed.

In the case at bar, the competent court which could properly take cognizance of the proceedings
instituted by respondent Gatchalian would nonetheless be the Regional Trial Court and not the Court
of Appeals in view of Sec. 21 (1), BP 129, which confers upon the former jurisdiction over actions for
prohibition concurrently with the Court of Appeals and the Supreme Court and in line with the
pronouncements of this Court in Chua Hiong and Co cases.

Ordinarily, the case would then be remanded to the Regional Trial Court. But not in the case at
bar. Considering the voluminous pleadings submitted by the parties and the evidence presented,
1âw phi 1

We deem it proper to decide the controversy right at this instance. And this course of action is not
without precedent for "it is a cherished rule of procedure for this Court to always strive to settle the
entire controversy in a single proceeding leaving no root or branch to bear the seeds of future
litigation. No useful purpose will be served if this case is remanded to the trial court only to have its
decision raised again to the Court of Appeals and from there to this Court" (Marquez vs. Marquez,
73 Phil. 74; Keramic Industries, Inc. vs. Guerrero, 61 SCRA 265 [1974]) Alger Electric, Inc. vs. Court
of Appeals (135 SCRA 37 [1985]), citing Gayos vs. Gayos (67 SCRA 146 [1975]).

In Lianga Bay Logging Co., Inc. vs. Court of Appeals (157 SCRA 357 [1988]), We also stated:

Remand of the case to the lower court for further reception of evidence is not necessary
where the court is in a position to resolve the dispute based on the records before it. On
many occasions, the Court, in the public interest and the expeditious administration of
justice, has resolved actions on the merits instead of remanding them to the trial court for
further proceedings, such as where the ends of justice would not be subserved by the
remand of the case or when public interest demands an early disposition of the case or
where the trial court had already received all the evidence of the parties (Quisumbing vs. CA,
112 SCRA 703; Francisco, et al., vs. The City of Davao, et al., supra; Republic vs. Security
Credit & Acceptance Corp., et al., 19 SCRA 58; Samal vs. CA, supra; Republic vs. Central
Surety & Insurance Co., 25 SCRA 641).

Likewise in Tejones vs. Gironella (159 SCRA 100 [1988]), We said:

Sound practice seeks to accommodate the theory which avoids waste of time, effort and
expense, both to the parties and the government, not to speak of delay in the disposal of the
case (cf. Fernandez vs. Garcia, 92 Phil. 592, 297). A marked characterstic of our judicial set-
up is that where the dictates of justice so demand . . . the Supreme Court should act, and act
with finality (Li Siu Liat vs. Republic, 21 SCRA 1039, 1046, citingSamal vs. CA, 99 Phil. 230
and US vs. Gimenez, 34 Phil. 74.) (Beautifont, Inc. vs. Court of appeals, et al., Jan. 29,
1988; See also Labo vs. Commission on Elections, 176 SCRA 1 [1989]).

Respondent Gatchalian has adduced evidence not only before the Regional Trial Court but also
before Us in the form of public documents attached to his pleadings. On the other hand, Special
Prosecutor Renato Mabolo in his Manifestation (dated September 6, 1990; Rollo, p. 298, counter-
petition) before the Bureau of Immigration already stated that there is no longer a need to adduce
evidence in support of the deportation charges against respondent. In addition, petitioners invoke
that this Court's decision in Arocha vs. Vivo and Vivo vs. Arca (supra), has already settled
respondent's alienage. Hence, the need for a judicial determination of respondent's citizenship
specially so where the latter is not seeking admission, but is already in the Philippines (for the past
thirty [30] years) and is being expelled (Chua Hiong vs. Deportation Board, supra).

According to petitioners, respondent's alienage has been conclusively settled by this Court in
the Arocha and Vivocases, We disagree. It must be noted that in said cases, the sole issue resolved
therein was the actual date of rendition of the July 6, 1962 decision of the then board of
Commissioners, i.e., whether the decision was rendered on July 6, 1962 or on July 20, 1962 it
appearing that the figure (date) "20" was erased and over it was superimposed the figure "6" thereby
making the decision fall within the one-year reglementary period from July 6, 1961 within which the
decision may be reviewed. This Court did not squarely pass upon any question of citizenship, much
less that of respondent's who was not a party in the aforesaid cases. The said cases originated from
a petition for a writ of habeas corpus filed on July 21, 1965 by Macario Arocha in behalf of Pedro
Gatchalian. Well settled is the rule that a person not party to a case cannot be bound by a decision
rendered therein.

Neither can it be argued that the Board of Commissioners' decision (dated July 6, 1962) finding
respondent's claim to Philippine citizenship not satisfactorily proved, constitute res judicata. For one
thing, said decision did not make any categorical statement that respondent Gatchalian is a Chinese.
Secondly, the doctrine of res judicata does not apply to questions of citizenship (Labo vs.
Commission on Elections (supra); citing Soria vs. Commissioner of Immigration, 37 SCRA 213; Lee
vs. Commissioner of Immigration, 42 SCRA 561 [1971]; Sia Reyes vs. Deportation Board, 122
SCRA 478 [1983]).

In Moy Ya Lim vs. Commissioner of Immigration (41 SCRA 292 [1971]) and in Lee vs. Commissioner
of Immigration (supra), this Court declared that:

(e)verytime the citizenship of a person is material or indispensable in a judicial or


administrative case, whatever the corresponding court or administrative authority decides
therein as to such citizenship is generally not considered as res adjudicata, hence it has to
be threshed out again and again as the occasion may demand.
An exception to the above rule was laid by this Court in Burca vs. Republic (51 SCRA 248
[1973]), viz:

We declare it to be a sound rule that where the citizenship of a party in a case is definitely
resolved by a court or by an administrative agency, as a material issue in the controversy,
after a full-blown hearing with the active participation of the Solicitor General or his
authorized representative, and this finding or the citizenship of the party is affirmed by this
Court, the decision on the matter shall constitute conclusive proof of such party's citizenship
in any other case or proceeding. But it is made clear that in no instance will a decision on the
question of citizenship in such cases be considered conclusive or binding in any other case
or proceeding, unless obtained in accordance with the procedure herein stated.

Thus, in order that the doctrine of res judicata may be applied in cases of citizenship, the following
must be present: 1) a person's citizenship must be raised as a material issue in a controversy where
said person is a party; 2) the Solicitor General or his authorized representative took active part in the
resolution thereof, and 3) the finding or citizenship is affirmed by this Court.

Gauged by the foregoing, We find the pre-conditions set forth in Burca inexistent in
the Arocha and Vivo cases relied upon by petitioners. Indeed, respondent William Gatchalian was
not even a party in said cases.

Coming now to the contention of petitioners that the arrest of respondent follows as a matter of
consequence based on the warrant of exclusion issued on July 6, 1962, coupled with
the Arocha and Vivo cases (Rollo, pp. 33), the Court finds the same devoid of merit.

Sec. 37 (a) of Commonwealth Act No. 613, as amended, otherwise known as the Immigration Act of
1940, reads:

Sec. 37. (a) The following aliens shall be arrested upon the warrant of the Commissioner of
Immigration or of any other officer designated by him for the purpose and deported upon the
warrant of the Commissioner of Immigration after a determination by the Board of
Commissioner of the existence of the ground for deportation as charged against the alien.
(Emphasis supplied)

From a perusal of the above provision, it is clear that in matters of implementing the Immigration Act
insofar as deportation of aliens are concerned, the Commissioner of Immigration may issue warrants
of arrest only after a determination by the Board of Commissioners of the existence of the ground for
deportation as charged against the alien. In other words, a warrant of arrest issued by the
Commissioner of Immigration, to be valid, must be for the sole purpose of executing a final order of
deportation. A warrant of arrest issued by the Commissioner of Immigration for purposes of
investigation only, as in the case at bar, is null and void for being unconstitutional (Ang Ngo Chiong
vs. Galang, 67 SCRA 338 [1975] citing Po Siok Pin vs. Vivo, 62 SCRA 363 [1975]; Vivo vs. Montesa,
24 SCRA 155; Morano vs. Vivo, 20 SCRA 562; Qua Chee Gan vs. Deportation Board, 9 SCRA 27
[1963]; Ng Hua To vs. Galang, 10 SCRA 411; see also Santos vs. Commissioner of Immigration, 74
SCRA 96 [1976]).

As We held in Qua Chee Gan vs. Deportation Board (supra), "(t)he constitution does not distinguish
warrants between a criminal case and administrative proceedings. And if one suspected of having
committed a crime is entitled to a determination of the probable cause against him, by a judge, why
should one suspected of a violation of an administrative nature deserve less guarantee?" It is not
indispensable that the alleged alien be arrested for purposes of investigation. If the purpose of the
issuance of the warrant of arrest is to determine the existence of probable cause, surely, it cannot
pass the test of constitutionality for only judges can issue the same (Sec. 2, Art. III, Constitution).

A reading of the mission order/warrant of arrest (dated August 15, 1990; Rollo, p. 183, counter-
petition) issued by the Commissioner of Immigration, clearly indicates that the same was issued only
for purposes of investigation of the suspects, William Gatchalian included. Paragraphs 1 and 3 of the
mission order directs the Intelligence Agents/Officers to:

xxx xxx xxx

1. Make a warrantless arrest under the Rules of Criminal Procedure, Rule 113, Sec. 5, for
violation of the Immigration Act, Sec. 37, para. a; Secs. 45 and 46 Administrative Code;

xxx xxx xxx

3. Deliver the suspect to the Intelligence Division and immediately conduct custodial
interrogation, after warning the suspect that he has a right to remain silent and a right to
counsel; . . .

Hence, petitioners' argument that the arrest of respondent was based, ostensibly, on the July 6,
1962 warrant of exclusion has obviously no leg to stand on. The mission order/warrant of arrest
made no mention that the same was issued pursuant to a final order of deportation or warrant of
exclusion.

But there is one more thing that militates against petitioners' cause. As records indicate, which
petitioners conveniently omitted to state either in their petition or comment to the counter-petition of
respondent, respondent Gatchalian, along with others previously covered by the 1962 warrant of
exclusion, filed a motion for re-hearing before the Board of Special Inquiry (BSI) sometime in 1973.

On March 14, 1973, the Board of Special Inquiry, after giving due course to the motion for re-
hearing, submitted a memorandum to the then Acting Commissioner Victor Nituda (Annex "5",
counter-petition) recommending 1 the reconsideration of the July 6, 1962 decision of the then Board
of Commissioners which reversed the July 6, 1961 decision of the then Board of Special Inquiry No.
1 and 2 the lifting of the warrants of arrest issued against applicants. The memorandum inferred that
the "very basis of the Board of Commissioners in reversing the decision of the Board of Special
Inquiry was due to a forged cablegram by the then Secretary of Foreign Affairs, . . ., which was
dispatched to the Philippine Consulate in Hong Kong authorizing the registration of applicants as P.I.
citizens." The Board of Special Inquiry concluded that "(i)f at all, the cablegram only led to the
issuance of their Certificate(s) of Identity which took the place of a passport for their authorized
travel to the Philippines. It being so, even if the applicants could have entered illegally, the mere fact
that they are citizens of the Philippines entitles them to remain in the country."

On March 15, 1973, then Acting Commissioner Nituda issued an Order (Annex "6", counter-petition)
which affirmed the Board of Special Inquiry No. 1 decision dated July 6, 1961 admitting respondent
Gatchalian and others as Filipino citizens; recalled the July 6, 1962 warrant of arrest and revalidated
their Identification Certificates.

The above order admitting respondent as a Filipino citizen is the last official act of the government
on the basis of which respondent William Gatchalian continually exercised the rights of a Filipino
citizen to the present. Consequently, the presumption of citizenship lies in favor of respondent
William Gatchalian.
There should be no question that Santiago Gatchalian, grandfather of William Gatchalian, is a
Filipino citizen. As a matter of fact, in the very order of the BOC of July 6, 1962, which reversed the
July 6, 1961 BSI order, it is an accepted fact that Santiago Gatchalian is a Filipino. The opening
paragraph of said order states:

The claim to Filipino citizenship of abovenamed applicants is based on the citizenship of one
Santiago Gatchalian whose Philippine citizenship was recognized by the Bureau of
Immigration in an Order dated July 12, 1960. (Annex "37", Comment with Counter-Petition).

Nonetheless, in said order it was found that the applicants therein have not satisfactorily proven that
they are the children and/or grandchildren of Santiago Gatchalian. The status of Santiago Gatchalian
as a Filipino was reiterated in Arocha and Arca (supra) where advertence is made to the "applicants
being the descendants of one Santiago Gatchalian, a Filipino." (at p. 539).

In the sworn statement of Santiago Gatchalian before the Philippine Consul in Hongkong in 1961
(Annex "1" to the Comment of petitioners to Counter-Petition), he reiterated his status as a Philippine
citizen being the illegitimate child of Pablo Pacheco and Marciana Gatchalian, the latter being a
Filipino; that he was born in Manila on July 25, 1905; and that he was issued Philippine Passport No.
28160 (PA-No. A91196) on November 18, 1960 by the Department of Foreign Affairs in Manila. In
his affidavit of January 23, 1961 (Annex "5", counter-petition), Santiago reiterated his claim of
Philippine citizenship as a consequence of his petition for cancellation of his alien registry which was
granted on February 18, 1960 in C.E.B. No. 3660-L; and that on July 20, 1960, he was recognized
by the Bureau of Immigration as a Filipino and was issued Certificate No. 1-2123.

The dissenting opinions of my esteemed brethrens, Messrs. Justices F.P. Feliciano and H.G.
Davide, Jr., proposing to re-open the question of citizenship of Santiago Gatchalian at this stage of
the case, where it is not even put in issue, is quite much to late. As stated above, the records of the
Bureau of Immigration show that as of July 20, 1960, Santiago Gatchalian had been declared to be a
Filipino citizen. It is a final decision that forecloses a re-opening of the same 30 years later.
Petitioners do not even question Santiago Gatchalian's Philippine citizenship. It is the citizenship of
respondent William Gatchalian that is in issue and addressed for determination of the Court in this
case.

Furthermore, petitioners' position is not enhanced by the fact that respondent's arrest came twenty-
eight (28) years after the alleged cause of deportation arose. Section 37 (b) of the Immigration Act
states that deportation "shall not be effected . . . unless the arrest in the deportation proceedings is
made within five (5) years after the cause of deportation arises." In Lam Shee vs. Bengzon (93 Phil.
1065 [1953]), We laid down the consequences of such inaction, thus:

There is however an important circumstance which places this case beyond the reach of the
resultant consequence of the fraudulent act committed by the mother of the minor when she
admitted that she gained entrance into the Philippines by making use of the name of a
Chinese resident merchant other than that of her lawful husband, and that is, that the mother
can no longer be the subject of deportation proceedings for the simple reason that more than
5 years had elapsed from the date of her admission. Note that the above irregularity was
divulged by the mother herself, who in a gesture of sincerity, made an spontaneous
admission before the immigration officials in the investigation conducted in connection with
the landing of the minor on September 24, 1947, and not through any effort on the part of the
immigration authorities. And considering this frank admission, plus the fact that the mother
was found to be married to another Chinese resident merchant, now deceased, who owned
a restaurant in the Philippines valued at P15,000 and which gives a net profit of P500 a
month, the immigration officials then must have considered the irregularity not serious
enough when, inspire of that finding, they decided to land said minor "as a properly
documented preference quota immigrant" (Exhibit D). We cannot therefore but wonder why
two years later the immigration officials would reverse their attitude and would take steps to
institute deportation proceedings against the minor.

Under the circumstances obtaining in this case, we believe that much as the attitude of the
mother would be condemned for having made use of an improper means to gain entrance
into the Philippines and acquire permanent residence there, it is now too late, not to say
unchristian, to deport the minor after having allowed the mother to remain even illegally to
the extent of validating her residence by inaction, thus allowing the period of prescription to
set in and to elapse in her favor. To permit his deportation at this late hour would be to
condemn him to live separately from his mother through no fault of his thereby leaving him to
a life of insecurity resulting from lack of support and protection of his family. This inaction or
oversight on the part of immigration officials has created an anomalous situation which, for
reasons of equity, should be resolved in favor of the minor herein involved. (Emphasis
supplied)

In the case at bar, petitioners' alleged cause of action and deportation against herein respondent
arose in 1962. However, the warrant of arrest of respondent was issued by Commissioner Domingo
only on August 15, 1990 — 28 long years after. It is clear that petitioners' cause of action has
already prescribed and by their inaction could not now be validly enforced by petitioners against
respondent William Gatchalian. Furthermore, the warrant of exclusion dated July 6, 1962 was
already recalled and the Identification certificate of respondent, among others, was revalidated on
March 15, 1973 by the then Acting Commissioner Nituda.

It is also proposed in the dissenting opinions of Messrs. Justices Feliciano and Davide, Jr., that the
BOC decision dated July 6, 1962 and the warrant of exclusion which was found to be valid
in Arocha should be applicable to respondent William Gatchalian even if the latter was not a party to
said case. They also opined that under Sec. 37 (b) of the Immigration Act, the five (5) years
limitation is applicable only where the deportation is sought to be effected under clauses of Sec. 37
(b) other than clauses 2, 7, 8, 11 and 12 and that no period of limitation is applicable in deportations
under clauses 2, 7, 8, 11 and 12.

The Court disagrees. Under Sec. 39 of the Immigration Act, it is reiterated that such deportation
proceedings should be instituted within five (5) years. Section 45 of the same Act provides penal
sanctions for violations of the offenses therein enumerated with a fine of "not more than P1,000.00
and imprisonment for not more than two (2) years and deportation if he is an alien." Thus:

Penal Provisions

Sec. 45. Any individual who—

(a) When applying for an immigration document personates another individual, or falsely
appears in the name of deceased individual, or evades the immigration laws by appearing
under an assumed name; fictitious name; or

(b) Issues or otherwise disposes of an immigration document, to any person not authorized
by law to receive such document; or

(c) Obtains, accepts or uses any immigration document, knowing it to be false; or


(d) Being an alien, enters the Philippines without inspection and admission by the
immigration officials, or obtains entry into the Philippines by wilful, false, or misleading
representation or wilful concealment of a material fact; or

(e) Being an alien shall for any fraudulent purpose represent himself to be a Philippine citizen
in order to evade any requirement of the immigration laws; or

(f) In any immigration matter shall knowingly make under oath any false statement or
representations; or

(g) Being an alien, shall depart from the Philippines without first securing an immigration
clearance certificates required by section twenty-two of this Act; or

(h) Attempts or conspires with another to commit any of the foregoing acts, shall be guilty of
an offense, and upon conviction thereof, shall be fined not more than one thousand pesos,
and imprisoned for not more than two years, and deported if he is an alien. (Emphasis
supplied)

Such offenses punishable by correctional penalty prescribe in 10 years (Art. 90, Revised Penal
Code); correctional penalties also prescribe in 10 years (Art. 92, Revised Penal Code).

It must be noted, however, that under Sec. 1, Act No. 3326 [1926], as amended, (Prescription for
Violations Penalized by Special Acts and Municipal Ordinances) "violations penalized by special acts
shall, unless otherwise provided in such acts, prescribe in accordance with the following rules: . . .c)
after eight years for those punished by imprisonment for two years or more, but less than six years; .
. ."

Consequently, no prosecution and consequent deportation for violation of the offenses enumerated
in the Immigration Act can be initiated beyond the eight-year prescriptive period, the Immigration Act
being a special legislation.

The Court, therefore, holds that the period of effecting deportation of an alien after entry or a warrant
of exclusion based on a final order of the BSI or BOC are not imprescriptible. The law itself provides
for a period of prescription. Prescription of the crime is forfeiture or loss of the rights of the State to
prosecute the offender after the lapse of a certain time, while prescription of the penalty is the loss or
forfeiture by the government of the right to execute the final sentence after the lapse of a certain time
(Padilla, Criminal Law, Vol. 1, 1974, at p. 855).

"Although a deportation proceeding does not partake of the nature of a criminal action, however,
considering that it is a harsh and extraordinary administrative proceeding affecting the freedom and
liberty of a person, the constitutional right of such person to due process should not be denied. Thus,
the provisions of the Rules of Court of the Philippines particularly on criminal procedure are
applicable to deportation proceedings." (Lao Gi vs. Court of Appeals, supra). Under Sec. 6, Rule 39
of the Rules of Court, a final judgment may not be executed after the lapse of five (5) years from the
date of its entry or from the date it becomes final and executory. Thereafter, it may be enforced only
by a separate action subject to the statute of limitations. Under Art. 1144 (3) of the Civil Code, an
action based on judgment must be brought within 10 years from the time the right of action accrues.

In relation to Sec. 37 (b) of the Immigration Act, the rule, therefore, is:
1. Deportation or exclusion proceedings should be initiated within five (5) years after the cause of
deportation or exclusion arises when effected under any other clauses other than clauses 2, 7, 8, 11
and 12 and of paragraph (a) of Sec. 37 of the Immigration Act; and

2. When deportation or exclusion is effected under clauses 2, 7, 8, 11 and 12 of paragraph (a) of


Sec. 37, the prescriptive period of the deportation or exclusion proceedings is eight (8) years.

In the case at bar, it took petitioners 28 years since the BOC decision was rendered on July 6, 1962
before they commenced deportation or exclusion proceedings against respondent William
Gatchalian in 1990. Undoubtedly, petitioners' cause of action has already prescribed. Neither may
an action to revive and/or enforce the decision dated July 6, 1962 be instituted after ten (10) years
(Art. 1144 [3], Civil Code).

Since his admission as a Filipino citizen in 1961, respondent William Gatchalian has continuously
resided in the Philippines. He married Ting Dee Hua on July 1, 1973 (Annex "8", counter-petition)
with whom he has four (4) minor children. The marriage contract shows that said respondent is a
Filipino (Annex "8"). He holds passports and earlier passports as a Filipino (Annexes "9", "10" &
"11", counter-petition). He is a registered voter of Valenzuela, Metro Manila where he has long
resided and exercised his right of suffrage (Annex 12, counter-petition). He engaged in business in
the Philippines since 1973 and is the director/officer of the International Polymer Corp. and
Ropeman International Corp. as a Filipino (Annexes, "13" & "14", counter-petition). He is a taxpayer.
Respondent claims that the companies he runs and in which he has a controlling investment
provides livelihood to 4,000 employees and approximately 25,000 dependents. He continuously
enjoyed the status of Filipino citizenship and discharged his responsibility as such until petitioners
initiated the deportation proceedings against him.

"The power to deport an alien is an act of the State. It is an act by or under the authority of the
sovereign power. It is a police measure against undesirable aliens whose presence in the country is
found to be injurious to the public good and domestic tranquility of the people" (Lao Gi vs. Court of
Appeals, supra). How could one who has helped the economy of the country by providing
employment to some 4,000 people be considered undesirable and be summarily deported when the
government, in its concerted drive to attract foreign investors, grants Special Resident Visa to any
alien who invest at least US$50,000.00 in the country? Even assuming arguendo that respondent is
an alien, his deportation under the circumstances is unjust and unfair, if not downright illegal. The
action taken by petitioners in the case at bar is diametrically opposed to settled government policy.

Petitioners, on the other hand, claim that respondent is an alien. In support of their position,
petitioners point out that Santiago Gatchalian's marriage with Chu Gim Tee in China as well as the
marriage of Francisco (father of William) Gatchalian to Ong Chiu Kiok, likewise in China, were not
supported by any evidence other than their own self-serving testimony nor was there any showing
what the laws of China were. It is the postulate advanced by petitioners that for the said marriages to
be valid in this country, it should have been shown that they were valid by the laws of China wherein
the same were contracted. There being none, petitioners conclude that the aforesaid marriages
cannot be considered valid. Hence, Santiago's children, including Francisco, followed the citizenship
of their mother, having been born outside of a valid marriage. Similarly, the validity of the Francisco's
marriage not having been demonstrated, William and Johnson followed the citizenship of their
mother, a Chinese national.

After a careful consideration of petitioner's argument, We find that it cannot be sustained.

In Miciano vs. Brimo (50 Phil. 867 [1924]; Lim and Lim vs. Collector of Customs, 36 Phil. 472; Yam
Ka Lim vs. Collector of Customs, 30 Phil. 46 [1915]), this Court held that in the absence of evidence
to the contrary, foreign laws on a particular subject are presumed to be the same as those of the
Philippines. In the case at bar, there being no proof of Chinese law relating to marriage, there arises
the presumption that it is the same as that of Philippine law.

The lack of proof of Chinese law on the matter cannot be blamed on Santiago Gatchalian much
more on respondent William Gatchalian who was then a twelve-year old minor. The fact is, as
records indicate, Santiago was not pressed by the Citizenship Investigation Board to prove the laws
of China relating to marriage, having been content with the testimony of Santiago that the Marriage
Certificate was lost or destroyed during the Japanese occupation of China. Neither was Francisco
Gatchalian's testimony subjected to the same scrutiny by the Board of Special Inquiry. Nevertheless,
the testimonies of Santiago Gatchalian and Francisco Gatchalian before the Philippine consular and
immigration authorities regarding their marriages, birth and relationship to each other are not self-
serving but are admissible in evidence as statements or declarations regarding family reputation or
tradition in matters of pedigree (Sec. 34, Rule 130). Furtheremore, this salutary rule of evidence
finds support in substantive law. Thus, Art. 267 of the Civil Code provides:

Art. 267. In the absence of a record of birth, authentic document, final judgment or
possession of status, legitimate filiation may be proved by any other means allowed by the
Rules of Court and special laws. (See also Art. 172 of the Family Code)

Consequently, the testimonies/affidavits of Santiago Gatchalian and Francisco Gatchalian


aforementioned are not self-serving but are competent proof of filiation (Art. 172 [2], Family Code).

Philippine law, following the lex loci celebrationis, adheres to the rule that a marriage formally valid
where celebrated is valid everywhere. Referring to marriages contracted abroad, Art. 71 of the Civil
Code (now Art. 26 of the Family Code) provides that "(a)ll marriages performed outside of the
Philippines in accordance with the laws in force in the country where they were performed, and valid
there as such, shall also be valid in this country . . ." And any doubt as to the validity of the
matrimonial unity and the extent as to how far the validity of such marriage may be extended to the
consequences of the coverture is answered by Art. 220 of the Civil Code in this manner: "In case of
doubt, all presumptions favor the solidarity of the family. Thus, every intendment of law or facts leans
toward the validity of marriage, the indissolubility of the marriage bonds, the legitimacy of
children, the community of property during marriage, the authority of parents over their children, and
the validity of defense for any member of the family in case of unlawful aggression." (Emphasis
supplied). Bearing in mind the "processual presumption" enunciated in Miciano and other cases, he
who asserts that the marriage is not valid under our law bears the burden of proof to present the
foreign law.

Having declared the assailed marriages as valid, respondent William Gatchalian follows the
citizenship of his father Francisco, a Filipino, as a legitimate child of the latter. Francisco, in turn is
likewise a Filipino being the legitimate child of Santiago Gatchalian who (the latter) is admittedly a
Filipino citizen whose Philippine citizenship was recognized by the Bureau of Immigration in an order
dated July 12, 1960.

Finally, respondent William Gatchalian belongs to the class of Filipino citizens contemplated under
Sec. 1, Article IV of the Constitution, which provides:

Sec. 1. The following are citizens of the Philippines:

(1) Those who are citizens of the Philippines at the time of the adoption of this Constitution. .
..
This forecloses any further question about the Philippine citizenship of respondent William
Gatchalian.

The Court is not unaware of Woong Woo Yiu vs. Vivo (13 SCRA 552 [1965]) relied upon by
petitioners. The ruling arrived thereat, however, cannot apply in the case at bar for the simple reason
that the parties therein testified to have been married in China by a village leader, which undoubtedly
is not among those authorized to solemnize marriage as provided in Art. 56 of the Civil Code (now
Art. 7, Family Code).

Premises considered, the Court deems it unnecessary to resolve the other issues raised by the
parties.

WHEREFORE, G.R. Nos. 95122-23 is DISMISSED for lack of merit; G.R. Nos. 95612-13 is hereby
GRANTED and respondent William Gatchalian is declared a Filipino citizen. Petitioners are hereby
permanently enjoined from continuing with the deportation proceedings docketed as DC No. 90-523
for lack of jurisdiction over respondent Gatchalian, he being a Filipino citizen; Civil Cases No. 90-
54214 and 3431-V-90 pending before respondent judges are likewise DISMISSED. Without
pronouncement as to costs.

SO ORDERED.

Gutierrez, Jr., Gancayco, Sarmiento, Griño-Aquino and Medialdea, JJ., concur.


Fernan, C.J., and Narvasa, J., concur in the result.

Separate Opinions

DAVIDE, JR., J., concurring-dissenting:

I can easily agree with the summary of antecedent facts in the ponencia of Mr. Justice Bidin and the
reiteration therein of the established doctrine that the Bureau of Immigration has the exclusive
authority and jurisdiction to try and hear cases against alleged aliens, and in the process, determine
also their citizenship, and that "a mere claim of citizenship cannot operate to divest the Board of
Commissioners of its jurisdiction in deportation proceedings." I also agree with the conclusion that
the petitioners in G.R. No. 95122-23, the Board of Commissioners and Board of Special Inquiry,
hereinafter referred to as the Boards, are quasi-judicial bodies.

However, I cannot go along with the view that the case of William Gatchalian should be treated as
an exception to that doctrine and, above all, to the law which vests upon the Court of Appeals
exclusive appellate jurisdiction over the Boards. Neither can I have solidarity with his opinion that
this Court should, in this instance, rule on the citizenship of Mr. Gatchalian instead of remanding the
case to the Regional Trial Court. To grant him these benefits would do violence to the law, liberally
stretch the limits of the exceptions or misapply the exceptionary rule, and to unduly pollute the
settled doctrine. No fact or circumstance exists to justify the application of the exceptions for the
benefit of Mr. Gatchalian. On the contrary, substantial facts exist to render immutable the unqualified
application of the law and the doctrine.
To my mind, the questioned acts of the Boards were done absolutely within their quasi-judicial
functions. Therefore, the rule laid down in Filipinas Engineering and Machine Shop vs. Ferrer (135
SCRA 25) and Lupangco vs. Court of Appeals (160 SCRA 848) does not apply.

Consequently, pursuant to paragraph 3 of Section 9 of Batas Pambansa Blg. 129, and Our
resolutions of 15 September 1987 and 2 April 1990 in G.R. No. 79635 (Commissioner of Customs
vs. Court of Tax Appeals, et al.) and G.R. No. 80320 (Commissioner of Internal Revenue vs. Court
of Tax Appeals, et al.), respectively, and Our decisions of 16 March 1989, 22 December 1989, and 6
June 1990 in G.R. No. 83578 (Presidential Anti-Dollar Salting Task Force vs. Court of Appeals, et
al.), 171 SCRA 348, G.R. No. 86625 (Development Bank of the Philippines vs. Court of Tax
Appeals, et al.), 180 SCRA 609, 617, and in G.R. No. L-48113 (Yang vs. Court of Appeals, et al.),
respectively, the Gatchalians should have invoked the exclusive appellate jurisdiction of the Court of
Appeals for appropriate redress instead of filing petitions for certiorari and prohibition with injunction
before the Regional Trial Court of Manila (Civil Case No. 90-54214) and before the Regional Trial
Court of Valenzuela, Metro Manila (Civil Case No. 3431-V-90). The trial courts should have
dismissed the cases. In issuing the questioned orders, respondents Judge Dela Rosa and Judge
Capulong clearly acted without jurisdiction or with grave abuse of discretion.

As to why William Gatchalian filed his petition before the former court and his wife and minor
children filed a separate complaint before the latter has not been explained. It is to be noted that he
is a registered voter of Valenzuela, Metro Manila where he has long resided and exercised his right
of suffrage (Annex 12, Counter-Petition). Therefore, he should have filed his petition with the
Regional Trial Court of Valenzuela. His wife and minor children are not parties to the case before the
Commission on Immigration and Deportation. Their causes of action are based mainly on their claim
that the acts of the Boards against William tend to deprive plaintiff mother consortium and
connubium and the plaintiffs minors protection and support. At once, the viability of their causes of
action is doubtful; however, if indeed they have valid causes of action, they could have been joined
as co-plaintiffs in the case filed by William. It appears then that their filing of a separate complaint
before another court was part of a strategy to frustrate the proceedings before the Boards. As
correctly maintained by the petitioning Boards, we have here a clear case of forum-shopping,
especially considering the fact that on September 4, 1990, or two days before the filing of the case
before the Valenzuela court the government filed a motion to dismiss the case before the Manila
court. Forum-shopping has long been condemned and proscribed. In People vs. Court of Appeals, et
al. (101 SCRA 450, 463), promulgated on 28 November 1980, this Court held that a party "should
not be allowed to pursue simultaneous remedies in two different forums." In the Resolution of 31 July
1986 in E. Razon Inc., et al. vs. Philippine Port Authority, et al., G.R. No. 75197, this Court held:

The acts of petitioners constitute a clear case of forum-shopping, an act of malpractice that is
proscribed and condemned as trifling with the courts and abusing their processes. It is
improper conduct that tends to degrade the administration of justice. (See also Buan vs.
Lopez, Jr., 145 SCRA 34; Palm Avenue Realty Development Corp. vs. PCGG, 153 SCRA
591; Minister of Natural Resources, et al. vs. Heirs of Orval Hughes, et al., 155 SCRA 566;
Limpin vs. IAC, 161 SCRA 98; Collado vs. Hernando, 161 SCRA 639; Villanueva, et al. vs.
Adre, et al., 172 SCRA 877; Danville Maritime, Inc. vs. COA, 175 SCRA 717; Crisostomo vs.
SEC, 179 SCRA 154; Adlawan vs. Tomol, 179 SCRA 42; and Alonto vs. Memoracion, 185
SCRA 73).

William Gatchalian did not stop in his forum-shopping in the regional trial courts. Under the guise of
a counter-petition, he is now before this Court in an active offensive role. This is a very clever, albeit
subtle, ploy to bang directly to this Court the issue of his deportation and to divest the Boards of their
original jurisdiction thereon. He could have done this at the first instance; he did not. He and his wife
and minor children deliberately chose, instead, to separately go to the wrong court, evidently to
delay the proceedings before the Boards, which they accomplished when the two judges separately
issued orders restraining said Boards from commencing or continuing with any of the proceedings
which would lead to the deportation of William Gatchalian (Civil Case No. 90-54214) and from
proceeding with the deportation charges against William Gatchalian (Civil Case No. 3431-V-90).

Chua Hiong vs. Deportation Board (96 Phil. 665) cited in the ponencia as another authority which
allows William Gatchalian to enjoy the protective mantle of the exceptionary rule affecting the
exclusive power of the Commission on Immigration and Deportation to try and hear cases against
aliens and in the process also determine their citizenship is either not applicable or is mis-applied.
This case laid down the principle that "when the evidence submitted by a respondent is conclusive of
his citizenship, the right to immediate review should also be recognized and the courts should
promptly enjoin the deportation proceedings. . . . If he is a citizen and evidence thereof is
satisfactory, there is no sense nor justice in allowing the deportation proceedings to continue,
granting him the remedy only after the Board has finished its investigation of his undesirability. . . ."
(emphasis supplied). The word courts should not now be interpreted to mean or to include the
regional trial courts because, as stated above, said courts do not have any appellate jurisdiction over
the Commission on Immigration and Deportation, the Board of Commissioners and the Board of
Special Inquiry. This case was decided in 1955 yet, or twenty-six years before the effectivity of Batas
Pambansa Blg. 129.

The condition sine qua non then to an authorized judicial intervention is that the evidence submitted
by a respondent is conclusive of his citizenship, or as stated in Co vs. Deportation Board, (78 SCRA
104, 107), the claim of citizenship is so substantial that there are no reasonable grounds for the
belief that the claim is correct.

The facts before this Court do not constitute, or even show, a conclusive or substantial evidence that
William Gatchalian is a Filipino citizen. On the contrary, very serious doubts surround such a claim
from the beginning. His initial entry into the Philippines was made possible through a Certificate of
Identity (as Filipino) which was issued on the basis of a forged cablegram by the then Secretary of
Foreign Affairs. Then on 6 July 1962 the then new Board of Commissioners promulgated a written
decision in I.C. Cases Nos. 61-2108-C to 61-2116-C inclusive (Application for admission as
Philippine citizens of Jose, Elena, Benjamin, Juan, Pedro, Gloria, Francisco, William and Johnson,
all surnamed Gatchalian) reversing the decision of the Board of Special Inquiry No. 1 of 6 July 1961
and ordering the exclusion of William Gatchalian and the others as aliens not properly documented.
Accordingly, a warrant of exclusion, also dated 6 July 1962, was issued by the Commissioners
commanding the deportation officer to exclude William Gatchalian, and others, and to cause their
removal from the country on the first available transportation in accordance with law to the port of the
country of which they were nationals. The pertinent portion of the Decision reads as follows:

The claim to Philippine citizenship of above-named applicants is based on the citizenship of


one Santiago Gatchalian whose Philippine citizenship was recognized by the Bureau of
Immigration in an Order, dated July 12, 1960. It is alleged that applicants JOSE
GATCHALIAN, FRANCISCO GATCHALIAN, ELENA GATCHALIAN and BENJAMIN
GATCHALIAN are the legitimate children of Santiago Gatchalian with one Chiu Gim Tee.
Except for the self-serving testimonies of Santiago Gatchalian and his alleged children, there
has not been submitted any evidence of Santiago Gatchalian's marriage to Chiu Gim Tee
and the birth of the alleged children of the couple. The personal records of Santiago
Gatchalian on file with this office do not reflect the names of applicants as his children, and
while two names listed in his Form 1 (ACR application), Jose and Elena, bear the same
name as two of herein applicants, the difference in the ages of said applicants, casts serious
doubt on their identity. Apropos, the applicants JOSE GATCHALIAN, GLORIA
GATCHALIAN, FRANCISCO GATCHALIAN, ELENA GATCHALIAN and BENJAMIN
GATCHALIAN, not having satisfactorily proved as the children of Santiago Gatchalian,
determination of the citizenship of the other applicants, JUAN GATCHALIAN, PEDRO
GATCHALIAN and JOHNSON GATCHALIAN, whose right to Filipino citizenship are merely
drawn from their fathers, Jose Gatchalian and Francisco Gatchalian, is unnecessary.
(Decision, Annex "E" of Petition).

Looking back to the case of Santiago, William's alleged grandfather, I cannot find sufficient credible
evidence to support his claim of Filipino citizenship. For a long time before 20 July 1960 he
considered himself a Chinese citizen. The "conclusion" of the Bureau of Immigration that Santiago is
a Filipino citizen is based on totally questionable and insufficient evidence which cannot inspire
belief. The Order itself, signed by Associate Commissioner Felix Talabis, supports this conclusion. It
reads in full as follows:

This is a petition for the cancellation of an alien registry of SANTIAGO GATCHALIAN,


registered as Chinese and holder of ACR No. A-219003 issued at Manila on 13 February
1951 and ICR No. 7501 dated 3 May 1946. He is alleged to be the son of Filipino parents
who were not lawfully married.

It is alleged that the petitioner was born in Binondo, Manila, on 25 July 1905, to Pablo
Pacheco and Marciana Gatchalian. It is noted that in his application for alien registration filed
with this Office on 13 January 1951, Santiago Gatchalian stated that his deceased parents
were Pablo Pacheco and Marciana. He was identified by his only brother, Joaquin Pacheco,
who insisted that he and petitioner are illegitimate. It is true that, on record, there is a
certificate signed on 26 October 1902 by Maxima Gatchalian, their maternal grandmother,
giving consent to the marriage of Marciana Gatchalian to Pablo Pacheco (Exh. B), but
Joaquin said that his parents did not actually get married. In proof of this, the baptismal
record of the petitioner expressly states that Santiago Gatchalian was born on 25 July 1905
and baptized on 6 October 1905, being the son of Marciana Gatchalian, "filipina", and an
unknown father (verbatim copy dated 22 June 1907, Parish Priest of Binondo, Manila).

The petitioner, apparently not completely certain about his civil status, has been
interchangeably using his paternal and maternal surnames. In school he was known as
Santiago Pacheco (Class card for 1920-21, Meisic, Manila; Certificates of completion of third
and fourth grades, Meisic Primary School); but in his residence certificate dated 17
September 1937, and in Tax Clearance Certificate issued on 2 October 1937, he is referred
to as Santiago Gatchalian; and in a communication dated 6 June 1941, he was addressed to
as Santiago Pacheco by the Philippine Charity Sweepstakes office.

Considering, however, the positive assertion by his elder brother who is better informed
about their origin, the incontestable entry in his baptismal record that he is illegitimate and
the entry in the marriage contract of his elder brother wherein the father's name is omitted
and the mother, Marciana Gatchalian, is described as Filipina (marriage contract dated 29
November 1936) there is sufficient evidence to establish that Santiago Gatchalian is really
Filipino at birth, being the legitimate child of a Filipino woman.

WHEREFORE, the herein petition to cancel his alien registration is granted, petitioner shall
henceforth be shown in the records of this office as a citizen of the Philippines and the
issuance to him of the appropriate Identification certificate showing his correct status is
hereby authorized. (Order of 12 July 1960, Annex "1" of Comment with Counter-Petition).

As to his alleged marriage to Chu Gim Tee, and their five children, we only have his self-selling oral
testimony, thus:

Q What is the name of your wife?


A Her name is Chu Gim Tee.

Q Is she still alive?

A No, she died in 1951, in Amoy.

Q Do you have children with her, if so, mention their names, ages and sexes?

A Yes. I have five children, all of them alive and they are as follows:

Jose Gatchalian, born on Jan. 2, 1927 in Amoy; Gloria Gatchalian, born February 20, 1929 in
Amoy; Francisco Gatchalian, born on March 3, 1931 in Amoy; Elena Gatchalian, born on
April 4, 1933 in Amoy; Benjamin Gatchalian, born on 31 March 1942 in Amoy.

Q Where are they living now?

A All of them are now living in Macao, with my sister-in-law by the name of Chu Lam Tee. (p.
4, Transcript of the proceedings before the Citizen Evaluation Board on 12 February 1960,
Annex "2" of Comment with Counter-Petition).

If indeed Santiago's parents, Pablo Pacheco and Marciana Gatchalian, were married, what was his
reason for insisting, through his brother Joaquin, that he, is an illegitimate son? The only possible
reason is that Pablo Pacheco is a Chinese citizen, in which case Santiago would follow the
citizenship of Marciana, a "filipina." But to give full faith and credit to the oral insistence of illegitimacy
is to do violence to the presumptions of validity of marriage, the indissolubility of the marriage bonds
and the legitimacy of children. (Art. 220, Civil Code). These are among the presumptions which
the ponencia precisely applied when it rejected the petitioners' claim that Santiago failed to establish
his claimed marriage to Chu Gim Tee and Francisco's (father of William) claimed marriage to Ong
Chiu Kiok, both of which were allegedly celebrated abroad. I cannot find any valid justification why
these presumptions should be liberally applied in favor of claimed marriages allegedly celebrated
abroad but denied to purported marriages celebrated in the Philippines.

Interestingly, Santiago used the surname Pacheco during such proceedings and when he testified,
he gave his name as Santiago Gatchalian Pacheco. This is an incontrovertible proof that he
recognized the legitimate union of his father and mother.

On 18 February 1960, Santiago was recalled to be confronted re his claim as to the number of his
children; he testified thus:

Q In your testimony on February 12, this year, you named as your children the following:
Jose, Gloria, Francisco, Elena and Benjamin, all born in Amoy, arranged according to the
order of their ages. However, in your Form 1 when you secured your ACR in 1951, you
mentioned only Jose Gatchalian and Elena Gatchalian. Why, what is the reason why in this
form that you filled up in 1951, you mentioned only Jose and Elena?

A That form I am not the one who filled it because that is not my handwriting. It is the
handwriting of my broker or the clerk of my broker. However, when they prepared that I
mentioned my children named Jose, Gloria, Francisco, Elena in a piece of paper which I
gave to him, except Benjamin.

Q Why did you not mention Benjamin in the list?


A Because he was not yet baptized then. (Transcript, p. 7, Annex "2" of Comment with
Counter-Petition).

The explanation is very flimsy and does not deserve the respect of a passing glance.

There is no showing that Gatchalian took any immediate definite positive step against the 6 July
1962 decision and the warrant of exclusion.

It was only sometime in 1973, or eleven years after, that he and others covered by the warrant of
expulsion filed a motion for re-hearing with the Board of Special Inquiry. There has been no
explanation for the unreasonable delay in the filing of the motion. It may be surmised that it was due
to his minority, considering that he was allegedly only twelve years old when he arrived in Manila
from Hongkong on 27 June 1961. But, such minority was no obstacle to the filing of any remedial
action for and in his behalf.

The action taken by and the recommendation of the Board of Special Inquiry of 14 March 1973 to
the then Acting Commissioner Victor Nituda for the reversal of the July 6, 1962 decision of the Board
of Commissioners were not only highly anomalous, irregular and improper, it was done without any
semblance of authority. The Board of Special Inquiry did not have the power to review, modify or
reverse a Decision of the Board of Commissioners rendered about eleven years earlier. Then Acting
Commissioner Victor Nituda, acting alone, did not likewise have the power or authority to approve
the recommendation of said Board, to revive and/or reaffirm the July 6, 1961 decision of the Board of
Special Inquiry, to reverse, and nullify, the Decision of 6 July 1962 of the Board of Commissioners,
and to order the admission of William Gatchalian as a Filipino citizen. Pursuant to Sec. 26 (b) of C.A.
No. 613, as amended (The Philippine Immigration Act of 1940), only the Board of
Commissioners can act on the recommendation, if at all it was legally and validly done. The Board of
Commissioners is composed of the Commissioner of Immigration and the two Deputy
Commissioners. In the absence of any member of the Board, the Department Head shall designate
an officer or employee in the Bureau of Immigration to serve as member thereof. In any case coming
before it, the decision of any two members shall prevail. (Sec. 8, C.A. No. 613 as amended). The
Department Head referred to is the Secretary of Justice since the Commission is, for administrative
purposes, under the supervision and control of the Department of Justice.

The decision then of Acting Commissioner Nituda was void and invalid ab initio. In view thereof, the
rationalization in the ponencia that the issue could be re-opened since the decision of the Board of
Commissioners of 6 July 1962 did not constitute res judicata is irrelevant. But even if it is to be
conceded that the 6 July 1962 decision did not constitute res judicata, I find it both strange and
illogical to give full faith and credit to the unilateral action of Mr. Nituda and to use it to bar the
Boards from exercising its power and jurisdiction over William Gatchalian.

Assuming that indeed William is the grandson of Santiago, I find it rather strange why Santiago did
not mention him in his testimony before the Citizenship Evaluation Board. At that time William was
already eleven years old. It is logical to presume that the proceeding initiated by Santiago was
principally for the benefit of his alleged children and grandchildren. It was, as subsequent events
proved, intended to prepare the legal basis for their entry into the country as Filipino citizens. Thus,
eleven months after he obtained a favorable decision from the Board, and on two successive dates,
his alleged children and grandchildren entered the country. On 25 June 1961 his alleged children
Jose, Elena, Benjamin, and his alleged grandchildren Pedro and Juan arrived from Hongkong. On
27 June 1961, his alleged daughter Gloria and son Francisco with his alleged children William and
Johnson also arrived from Hongkong. (pp. 4-5, Petition).
That he has continuously resided in the Philippines since 1961; he is married to Ting Dee Hua on
July 1, 1973, and his marriage contract shows that he is a Filipino citizen; he holds passports and
earlier passports as a Filipino; he is a registered voter of Valenzuela, Metro Manila where he has
long resided and exercised his right of suffrage; he is engaged in business in the Philippines since
1973, and is a director/officer of the International Polymer Corp. and Ropeman International Corp. as
a Filipino, and that the companies he runs and in which he has a controlling investment provided a
livelihood to 4,000 employees and approximately 25,000 dependents; he is a taxpayer; and he has
continuously enjoyed the status of Filipino citizenship, discharged his responsibility as such until
petitioning Boards initiated the deportation proceedings against him, are not of any help to William
Gatchalian. For, they neither confer nor strengthen his claim of Filipino citizenship since they are all
rooted on the illegal and void decision of then Acting Commissioner Victor Nituda of 15 March 1973.
A decision which is void and invalid ab initio cannot be a source of valid acts. Neither can such
substantive infirmity be cured by salutary acts that tend to confirm the status conferred by the void
decision.

In the light of the foregoing, it follows that the warrant of exclusion issued against William Gatchalian
pursuant to and by virtue of the 6 July 1962 Decision of the Board of Commissioners subsists and
remains valid and enforceable.

I disagree with the view advanced in the ponencia that the State can no longer enforce the warrant
of exclusion because it is already barred by prescription considering that Section 37 (b) of the
Immigration Act states that deportation "shall not be effected . . . unless the arrest in the deportation
proceedings is made within five (5) years after the cause of deportation arises."

Said paragraph (b) of Section 37 reads in full as follows:

(b) Deportation may be effected under clauses 2, 7, 8, 11 and 12 paragraph (a) of this
section at any time after entry, but shall not be effected under any other clause unless the
arrest in the deportation proceedings is made within five years after the cause of deportation
arises. Deportation under clauses 3 and 4 shall not be effected if the court or judge thereof,
when sentencing the alien, shall recommend to the Commissioner of Immigration that the
alien be not deported. (As amended by Sec. 13, R.A. No. 503). (Emphasis supplied).

Note that the five-year period applies only to clauses other than 2, 7, 8, 11 and 12 of paragraph (a)
of the Section. In respect to clauses 2, 7, 8, 11 and 12, the limitation does not apply. These clauses
read as follows:

(2) Any alien who enters the Philippines after the effective date of this Act, who was not
lawfully admissible at the time of entry;

xxx xxx xxx

(7) Any alien who remains in the Philippines in violation of any limitation or condition under
which he was admitted as a non- immigrant;

(8) Any alien who believes in, advises, advocates or teaches the overthrow by force and
violence of the Government of the Philippines, or of constituted law and authority, or who
disbelieves in or is opposed to organized government, or who advises, advocates, or
teaches the assault or assassination of public officials because of their office, or who
advises, advocates, or teaches the unlawful destruction of property, or who is a member of
or affiliated with any organization entertaining, advocating or teaching such doctrines, or who
in any manner whatsoever lends assistance, financial or otherwise, to the dissemination of
such doctrines;

xxx xxx xxx

(11) Any alien who engages in profiteering, hoarding, or black-marketing, independent of any
criminal action which may be brought against him;

(12) Any alien who is convicted of any offense penalized under Commonwealth Act
Numbered Four Hundred and Seventy-Three, otherwise known as the Revised
Naturalization Laws of the Philippines, or any law relating to acquisition of Philippine
citizenship;

xxx xxx xxx

Mr. Gatchalian is covered by clause (2); besides, the warrant for his exclusion was issued within a
period of five years following his entry.

Lam Shee vs. Bengzon (93 Phil. 1065) is not applicable to Mr. Gatchalian. In issue in that case was
the deportation of a minor whose mother fraudulently entered the Philippines by using the name of a
resident Chinese merchant who is not her lawful husband but against whom no deportation
proceedings was initiated within five years following her entry. Said mother did in fact acquire
permanent residence status. Furthermore, the minor's mother never claimed to be a Filipino citizen.

IN VIEW OF ALL THE FOREGOING, I vote to GRANT the petition in G.R. Nos. 95122-23, SET
ASIDE the questioned orders of respondents Judge Joselito Dela Rosa and Judge Teresita Dizon
Capulong as having been issued beyond their jurisdiction, ORDER the DISMISSAL of Civil Case
Nos. 90-54214 of the Regional Trial Court of Manila and 3431-V-90 of the Regional Trial Court of
Valenzuela, Metro Manila and to DISMISS for lack of merit the COUNTER-PETITION.

FELICIANO, J., dissenting:

I regret I am unable to join the opinion written by my distinguished brother in the Court, Mr. Justice
A.A. Bidin, and I, therefore, undertake to submit this separate opinion.

For convenience, the following is a precis of the matters discussed in detail below.

1. I agree that the Warrant of Arrest dated 14 August 1990 is defective in its language. The
surrounding facts, however, make quite clear that an amended warrant of arrest or mission order, or
a new one correctly worded, may be issued by Immigration Commissioner Domingo for the purpose
of carrying out an existing and valid Warrant of Exclusion covering respondent William Gatchalian
and his co-applicants for admission.

2. The 6 July 1962 Decision of the Board of Commissioners ("BOC") and Warrant of Exclusion
remain valid and effective and enforceable against respondent William Gatchalian, and his co-
applicants for that matter. That Decision reversed a 6 July 1961 decision of the Board of Special
Inquiry ("BSI") and held that respondent William Gatchalian and his co-applicants failed to
subtantiate and prove their claim to Philippine citizenship in 1961. Respondent William Gatchalian
does not claim Philippine citizenship by any mode of entitlement subsequent to his application for
entry as a citizen of the Philippines in 1961, i.e., by any act or circumstance subsequent to his birth
and supposed filiation as a legitimate son of Francisco Gatchalian, also a supposed citizen of the
Philippines.

3. In its Decision in Arocha vs. Vivo,1 the Supreme Court upheld the validity and legal effect of the 6
July 1962 Decision of the BOC and the Warrant of Exclusion not only against Pedro Gatchalian, the
particular Gatchalian who was taken into custody by immigration authorities in 1965, but also against
Pedro's co-applicants, which include respondent William Gatchalian. The validity of the claim to
Philippine citizenship by Pedro Gatchalian, as a supposed descendant of Santiago Gatchalian,
allegedly a natural born citizen of the Philippines, was directly placed in issue in the 1961-1962
proceedings before the BSI and the BOC, and by the Solicitor General and Pedro Gatchalian
in Arocha vs. Vivo (supra). In upholding the validity and legal effect of the 6 July 1962 BOC Decision
that the Gatchalian applicants had not substantiated their claim to Philippine citizenship, this Court in
effect ruled that the Gatchalian applicants were not Philippine citizens, whatever their true nationality
might be.

4. Should this Court now determine to examine once more the claim to Philippine citizenship of
respondent William Gatchalian, a detailed examination of the facts, including the supposed status of
Santiago Gatchalian as a natural born Philippine citizenship, shows that those claims to Philippine
citizenship were indeed not proven by respondent William Gatchalian and his co-applicants. Since
respondent William Gatchalian does not claim to have been naturalized as a Philippine citizen after
rendition of the 6 July 1962 BOC Decision, he must accordingly be held to be not a Philippine
citizen.

5. Should the legal results thus reached seem harsh to some, I respectfully submit that the remedy
lies not with this Court which is charged with the application of the law as it is in fact written, but with
the political branches of the Government. It is those departments of Government which must
consider the desirability and wisdom of enacting legislation providing for the legalization of the entry
and stay of aliens who may be in the same situation as respondent William Gatchalian and his co-
applicants.

1. Petitioner argues that respondent William Gatchalian's arrest follows as a matter of


"consequence" of the Warrant of Exclusion issued by the BOC on 6 July 1962. This is opposed by
respondent Gatchalian upon the ground that the Mission Order or Warrant of Arrest does not
mention that it is issued pursuant to a final order of deportation or Warrant of Exclusion.

The Mission Order or Warrant of Arrest dated 14 August 1990 issued by petitioner Commissioner
Domingo, CID, reads in part as follows:

Intelligence Officers/Agents: All Teams

Team No.

Subject: William, Juan, Francisco, Jose, Benjamin, Jonathan, Pedro, Gloria, Elena, all
surnamed Gatchalian

Address: Bgy. Canumay, Valenzuela, M.M.


xxx xxx xxx

1. Make a warrantless arrest under the Rules of Criminal Procedure, Rule 113, Section 5, for
violation of the Immigration Act, Section 37, para. a; Secs. 45 and 46 Administrative Code;

2. Make a warrantless search as an incident to a lawful arrest under Rule 125, Section 12.

3. Deliver the suspect to the Intelligence Division and immediately conduct custodial
interrogation, after warning the suspect that he has a right to remain silent and a right to
counsel;

4. Prepare and file an affidavit of arrest with the Special Prosecutor's Office and, in case of a
search, prepare and file an inventory of the properties seized, verified under oath following
Office Memorandum Order No. 45

xxx xxx xxx

The above Mission Order merely referred to Section 37 (a) of the Immigration Act, as amended, and
to Sections 45 and 46 of the Administrative Code (should be Immigration Law), and that its wording
suggests that the arrest is sought to be carried out for the purpose of carrying out a preliminary
investigation or custodial interrogation rather than for the purpose of enforcing a final order of
deportation or warrant of exclusion. More specifically, the Mission Order failed to mention the 6 July
1962 BOC Decision and Warrant of Exclusion. At the same time, there is no gainsaying the fact that
the 6 July 1962 BOC Decision and Warrant of Exclusion do exist and became final and, as
discussed in detail below, remain valid and effective.

It should be noted also that by 6 September 1990, Special Prosecutor Mabolo had filed a
Manifestation or Motion before the Bureau of Immigration explicitly referring to the Warrant of
Exclusion issued against respondent William Gatchalian and his original co-applicants for admission
in 1961, which had been passed upon in Arocha vs. Vivo(supra), and argued that there was,
therefore, no longer any need to adduce evidence in support of the charges against respondent
William Gatchalian.

Thus it appears to me that the Warrant of Arrest or Mission Order dated 15 August 1990, ineptly
worded as it is, may be amended so as to refer explicitly to the mentioned Warrant of Exclusion, or a
new warrant of arrest or mission order issued similarly explicitly referring to the Warrant of Exclusion.

2. It is indispensably necessary to refer to the Warrant of Exclusion of 6 July 1962 which read as
follows:

WHEREAS, upon review, motu proprio of the proceedings had on the application for
admission as Philippine citizens of JOSE GATCHALIAN, ELENA GATCHALIAN, BENJAMIN
GATCHALIAN, JUAN GATCHALIAN, PEDRO GATCHALIAN, GLORIA GATCHALIAN,
FRANCISCO GATCHALIAN, WILLIAM GATCHALIAN, and JOHNSON GATCHALIAN, the
Board of Commissioners found them not entitled to admission as Filipinos in a Decision,
dated July 6, 1962, and ordered their exclusion as persons not properly documented;

AND WHEREAS, the Decision of the Board of Commissioners, dated 6 July 1962, ordering
the exclusion of above-named applicants, has now become final and executory.
NOW THEREFORE, by virtue of the authority vested in the undersigned by law, you are
hereby ordered to exclude the aforenamed individuals and cause their removal from this
country to the port where they came or to the port of the country of which they are nationals,
on the first available transportation, in accordance with law. (Emphasis supplied)

It should be noted that respondent William Gatchalian was a party to the 1961-1962 proceedings
before the Bureau of Immigration which proceedings culminated in the 6 July 1962 Decision of the
BOC and the aforequoted Warrant of Exclusion.

It is, however, insisted by respondent William Gatchalian that the Warrant of Exclusion may no
longer be executed or implemented as against him in view of the passage of approximately twenty-
eight (28) years since the issuance of such Warrant. Respondent Gatchalian here relies upon
Section 37 (b) of the Immigration Act which states that:

Sec. 37 (b). Deportation may be effected under clauses 2, 3, 7, 8, 11 and 12 of the Par. (a)
of this Section at any time after entry, but shall not be effected under any other clauses
unless the arrest in the deportation proceedings is made within five (5) years after the cause
for deportation arises . . . (Emphasis supplied)

Examination of the above quoted Section 37 (b) shows that the five (5) year-limitation is
applicable only where deportation is sought to be effected under clauses of Section 37 (a) other
than clauses 2, 7, 8, 11 and 12; that where deportation or exclusion is sought to be effected under
clauses 2, 7, 8 11 and 12 of Section 37 (a), no period of limitation is applicable; and that, to the
contrary, deportation or exclusion may be effected "at any time after entry."

Examination of contemporaneous facts shows that the Government has sought to effect the
exclusion and deportation of respondent William Gatchalian upon the ground that he had entered the
country as a citizen of the Philippines when he was not lawfully admissible as such at the time of
entry under Section 37 (a) (2), since the BOC had held him and the other Gatchalians there involved
as not properly documented for admission, under Section 29 (a) (17) of the Immigration Act, as
amended. On 7 July 1990, the Acting Director of the National Bureau of Investigation ("NBI") initiated
the proceedings immediately before us by writing to the Secretary of Justice recommending that
respondent William Gatchalian, and his co-applicants covered by the Warrant of Exclusion dated 6
July 1962, be charged with: "Violation of Section 37 (a), paragraphs 1 and 2, in relation to Section 45
(c), (d) and (e) of Commonwealth Act 613 as amended, also known as the Immigration Act of 1940."
The Secretary of Justice endorsed this recommendation to Immigration Commissioner Domingo for
investigation and immediate action. On 20 August 1990, Special Prosecutor Mabolo filed a charge
sheet against respondent William Gatchalian which specified the following charges:

The respondent is an alien national who unlawfully gained entry into the Philippines without
valid travel document in violation of the Immigration Act; Sec. 37 par. a, sub pars. (1) and (2);

That respondent being an alien misrepresented himself as Philippine Citizen by false


statements and fraudulent documents in violation of the Immigration Act, Sec. 45, par. (c),
(d) and (e).

That respondent being an alien national is an undocumented person classified as excludable


under the Immigration Act, Sec. 29 (a) sub par. (17).

xxx xxx xxx

(Emphasis supplied)
Section 37 (a) (1) and (2), of Commonwealth Act No. 613, as amended, provides as follows:

Sec. 37 (a). The following aliens shall be arrested upon the warrant of the Commissioner of
Immigration or of any other officer designated by him for the purpose and deported upon the
warrant of the Commissioner of Immigration after a determination by the Board of
Commissioners of the existence of the ground for deportation as charged against the alien.

(1) Any alien who enters the Philippines after the effective date of this act by means of false
and misleading statements or without inspection and admission by the Immigration
authorities at a designated port of entry or at any place other than at a designated port of
entry; (As amended by Republic Act No. 503).

(2) An alien who enters the Philippines after the effective date of this act, who was not
lawfully admissible at the time of entry.

xxx xxx xxx

(Emphasis supplied)

Section 37 (a) (2), quoted above, relates back to Section 29 (a) of the Immigration Act, as amended,
which lists the classes of alien excluded from entry in the Philippines, as follows:

Sec. 29. (a). The following classes of aliens shall be excluded from entry into the Philippines;

xxx xxx xxx

(17) Persons not properly documented for admission as may be required under the
provisions of this act. (Emphasis supplied)

Thus, in the instant case, the net result is that no time limitation is applicable in respect of the
carrying out of the Warrant of Exclusion issued in 1962.

A little reflection suffices to show why this must be so. What was involved in 1961 when the
supposed children and grandchildren of Santiago Gatchalian first descended upon the Philippines,
was the right of a person claiming to be a Philippine citizen to enter for the first time and reside in the
Philippines. On the part of the Government, what was at stake was the right to exclude from the
country persons who had claimed the right to enter the country as Philippine citizens but who had
failed to substantiate such claimed status. Aliens seeking entry into the Philippines do not acquire
the right to be admitted into the country by the simple passage of time. Exclusion of persons found
not to be entitled to admission as Philippine citizens, must be distinguished from the deportation of
aliens, who, after having been initially lawfully admitted into the Philippines, committed acts which
rendered them liable to deportation.

Normally, aliens excluded are immediately sent back to their country of origin.2 This is so in cases
where the alien has not yet gained a foothold into the country and is still seeking physical
admittance. However, when the alien had already physically gained entry but such entry is later
found unlawful or devoid of legal basis, the alien can be excluded any time after it is found that he
was not lawfully admissible at the time of his entry. Technically, the alien in this case is
being excluded; however, the rules on deportation can be made to apply to him in view of the fact
that the cause for his exclusion is discovered only after he had gained physical entry.
It is worth noting at this point that in Arocha vs. Vivo (supra), this Court upheld the 6 July 1962 Order
of the BOC and the application of the Warrant of Exclusion, in respect of Pedro Gatchalian, even
though more than five (5) years had elapsed by the time the Court's Decision was promulgated on
26 October 1967.

Though respondent William Gatchalian is physically inside the country, it is the government's basic
position that he was never lawfully admitted into the country, having failed to prove his claim of
Philippine citizenship, and hence the Warrant of Exclusion of 6 July 1962, or a new Warrant of
Exclusion for that matter, may be executed "at any time" under Section 37 (b). It is the correctness of
that basic position which must be ascertained and in that ascertainment, the mere passage of time is
quite peripheral in relevance considering the express language of Section 37 (b).

My distinguished brother, Bidin, J., finally invokes Act No. 3326, and on the basis of Section 1
thereof, would hold that where the arrest for purpose of deportation is made more than five (5) years
after the cause for deportation arose, the prescriptive period of eight (8) years should be applied. Act
No. 3326 which took effect on 4 December 1926, establishes prescriptive periods in respect
of criminal prosecutions for violations penalized not by the Revised Penal Code but rather by special
acts which do not otherwise establish a period of prescription. In other words, Act No. 3326
establishes a statute of limitations for the institution of criminal proceedings. It is, however, quite
settled that deportation proceedings cannot be assimilated to criminal prosecutions for violation
either of the Revised Penal Code or of special statutes.3 Moreover, Act No. 3326 purports to be
applicable only where the special act itself has not established an applicable statute of limitations for
criminal proceedings. It cannot, however, be said that Article 37 (b) of the Immigration Act (quoted
earlier) has not established an applicable statute of limitations. For, precisely, Section 37 (b) of the
Immigration Act states that deportation may be effected under certain clauses of Section 37 (a) "at
any time after entry." One of those instances is, precisely, deportation upon the ground specified in
Clause (2) of 37 (a) which relates to "any alien who enters the Philippines after the effective date of
this act, who was not lawfully admissible at the time of entry." Thus, the Immigration Act, far from
failing to specify a prescriptive period for deportation under Section 37 (a) (2), expressly authorizes
deportation under such ground "at any time after entry." It is, thus, very difficult to see how Act No.
3326 could apply at all to the instant case.

Finally, we must recall once more that what is actually involved in the case at bar is exclusion,
not deportation.

3. It is urged by the government that Arocha vs. Vivo (supra) has already resolved the claim to
Philippine citizenship of respondent William Gatchalian adversely to him and that such ruling
constitutes res judicata. Upon the other hand, respondent William Gatchalian vehemently argues
that neither the 6 July 1962 BOC's Decision nor Arochadefinitely settled the question of his
citizenship.

My respectful submission is that respondent William Gatchalian's argument constitutes a highly


selective reading of both the BOC Decision and the Decision in Arocha Written by J.B.L. Reyes, J.
for a unanimous court. The 6 July 1962 Decision of the BOC, in its dispositive portion, reads as
follows:

IN VIEW OF THE FOREGOING CONSIDERATIONS, this Board finds and hereby holds
that the applicants[Jose Gatchalian, Elena Gatchalian, Benjamin Gatchalian, Juan
Gatchalian, Pedro Gatchalian, Gloria Gatchalian, Francisco Gatchalian, William Gatchalian
and Johnson Gatchalian] herein have not satisfactorily proved their claim to Philippine
citizenship and therefore the Decision of the Board of Special Inquiry, dated July 6, 1961
admitting them as Filipinos is hereby reversed, and said applicants should be, as they are
hereby ordered excluded as persons not properly documented.

SO ORDERED. (Emphasis supplied)

Since respondent William Gatchalian and his co-applicants in 1961 claimed the right to enter the
country as Philippine citizens, determination of their right to enter the Philippines thus indispensably
involved the resolution of their claim to Philippine citizenship. In other words, the determination of
that citizenship in the instant case was not a mere incident of the case; it was rather the central and
indeed the only issue that had to be resolved by the BOC. Review of the 1961 proceedings before
the BSI shows that the sole issue before it was the supposed Philippine citizenship of the applicants.
Thus, the very same issue of claimed Philippine citizenship was resolved by the BOC when it
reversed the 6 July 1961 decision of the BSI. This case may be distinguished from other types of
cases, e.g., applications for public utility franchises, petitions for change of name, applications for
registration as voter, filing of certificates of candidacy for an elective position, etc., where the central
issue is not citizenship although resolution of that issue requires a determination of the citizenship of
the applicant, candidate or petitioner.

The ruling of the BOC that respondent William Gatchalian and his co-applicants for admission as
Philippine citizens had not satisfactorily proved their claim to Philippine citizenship, can only be
reasonably read as a holding that respondent William Gatchalian and his co-applicants
were not Philippine citizens, whatever their true nationality or nationalities might be. Thus, it appears
to be merely semantic play to argue, as respondent William Gatchalian argues, that the 1962 BOC
Decision did not categorically hold him to be an "alien" and that the BOC had merely held him and
his co-applicants as "not properly documented." The phrase "not properly documented" was strictly
and technically correct. For William Gatchalian and his co-applicants had presented themselves as
Philippine citizens and as such entitled to admission into the country. Since the BOC rejected their
claims to Philippine citizenship, William Gatchalian and his co-applicants were non-Filipinos "not
properly documented for admission" under Section 29 (a) (17), Immigration Act as amended.

4. In Arocha vs. Vivo (supra), the Supreme Court had before it the following items:

1. The 6 July 1961 Decision of the BSI which allowed the entry of respondent Gatchalian and
his co-applicants as citizens of the Philippines;

2. A split BOC Decision approving the 6 July 1961 BSI decision, which had been "noted" by
two (2) Commissioners but rejected by Commissioner Galang on 14 and 26 July 1961 and
21 August 1961, respectively;

3. The 6 July 1962 Decision of the BOC in which the BOC had reviewed motu proprio the
Gatchalian proceedings before the BSI and reversed the BSI decision of 6 July 1961;

4. The Warrant of Exclusion dated 6 July 1962 issued pursuant to the 6 July 1962 Decision
of the BOC; and

5. A decision of the Manila Court of First Instance dated 31 July 1965, rendered in a habeas
corpusproceeding brought to effect the release of Pedro Gatchalian who had been taken into
custody by immigration officials pursuant to the 6 July 1962 Warrant of Exclusion.

The Court of First Instance ("CFI") decision ordered Pedro Gatchalian's release upon the ground that
the 6 July 1962 BOC Decision had been issued beyond the one (1) year period for review of the BSI
decision of 6 July 1961. The CFI decision was reversed and nullified by the Supreme Court.
The Supreme Court held that the BOC Decision of 6 July 1962 had not been antedated and that it
was valid and effective to reverse and nullify the BSI order granting admission to the Gatchalians as
citizens of the Philippines.

The Court also held that the split BOC decision of July-August 1961 did not operate to confirm and
render final the BSI decision of 6 July 1961, the split decision being null and void because it had not
been rendered by the BOC as a body.

The Court further rejected Pedro Gatchalian's argument that he was not bound by the 6 July 1962
BOC Decision:

It is argued for the appellee that the minutes in Exh. 5-A refer only to the cases of Gloria,
Francisco and Benjamin Gatchalian. But the designation of the case is "Gloria Gatchalian, et
al." No reason is shown why the case of these three should be considered and voted upon
separately, considering that the claims to citizenship and entry of all were based on the same
circumstances, applicants being the descendants of one Santiago Gatchalian, a Filipino and
that all their applications for entry were in fact jointly resolved by the Board of Inquiry in one
single decision (Annex 1, petition, G.R. No. L-24844).4

I respectfully submit that the above-quoted ruling in Arocha disposes of the contention here being
made by respondent William Gatchalian that he is not bound by the Decision in Arocha vs. Vivo,
Arocha held that the 1962 BOC Decision was valid and effective and William was certainly one of
the applicants for admission in the proceedings which began in 1961 before the BSI.

Respondent William Gatchalian contends that the Court in Arocha did not find him nor any of his co-
applicants to be aliens and that all the Court did was to hold that the 6 July 1962 Board of
Commissioners decision had not been antedated. This contention cannot be taken seriously. As has
already been pointed out several times, the 1962 Board of Commissioners decision held that William
Gatchalian and his eight (8) other co-applicants for admission had not proved their claim to
Philippine citizenship; not being Filipinos, they must have been aliens, to be excluded as persons not
properly documented. Moreover, a review of the Rollo in Arocha vs. Vivo shows that the parties
there had expressly raised the issue of the citizenship of Pedro Gatchalian in their pleadings. The
Solicitor General, in his fifth assignment of error, argued that the Court of First Instance had erred in
declaring Pedro Gatchalian a Filipino, and simultaneously urged that the 6 July 1962 decision of the
Board of Commissioners was quite correct. Pedro Gatchalian, upon the other hand, contended that
precisely because he was a Filipino, the Bureau of Immigration had no jurisdiction to exclude him.5

The Court also said in Arocha:

Finally, it is well to note that appellee did not traverse the allegation of appellant
Commissioners in their return to the writ of Habeas Corpus that appellee Pedro Gatchalian
gained entry on the strength of a forged cablegram, purportedly signed by the former
Secretary of Foreign Affairs Felixberto Serrano, and apparently authorizing appellee's
documentation as a Filipino (par. 3[a] of Return, C.F.I. Rec., pp. 15-16). Such failure to deny
imports admission of its truth by the appellee, establishes that his entry was irregular. Neither
has he appealed the decision of the Commissioners of Immigration to the Department Head.6

Since the physical entry of Pedro Gatchalian was effected simultaneously with that of Francisco and
William Gatchalian, on exactly the same basis and on the strength of the same forged cablegram
allegedly from then Secretary of Foreign Affairs Felixberto Serrano, it must follow that the entry of
Francisco and William Gatchalian was similarly irregular. The applications for admission of the nine
(9) Gatchalians were all jointly resolved by the BSI on 6 July 1961 on the identical basis that they
were all descendants of Santiago Gatchalian, a supposed natural born Philippine citizen.

5. The purported reversal of the 1962 BOC Decision by Commissioner Nituda in 1973, cannot be
given any effect. A close examination of the same reveals that such purported reversal was highly
irregular.

Respondent William Gatchalian alleges that Mr. Nituda, being in 1973 Acting Commissioner of
Immigration, had the authority to reverse the BOC Decision of 6 July 1962, since he (Nituda) had
immediate control, direction and supervision of all officers, clerks and employees of the Bureau of
Immigration. Control means, respondent Gatchalian continues, the power to alter or modify or nullify
or set aside what a subordinate officer had done in the performance of his duties and to substitute
the judgment of the former for that of the latter.7

Respondent Gatchalian's view is obviously flawed. The Commissioner's power of control over the
officers and employees of the Bureau of Immigration cannot be compared to the power of control
and supervision vested by the Constitution in the President of the Philippines (which was
what Ham was all about), for the Commissioner's general power of control cannot be said to include
the power to review and set aside the prior final decision reached by the BOC. The Commissioner of
Immigration, acting alone, cannot be regarded as an authority higher than the BOC itself (constituted
by the Commissioner and the two [2] Associate Commissioners), in respect of matters vested by the
governing statute in such Board itself. One of these matters is precisely the hearing and deciding of
appeals from decisions of the BSI, and the motu proprio review of the entire proceedings of a case
within one (1) year from the promulgation of a decision by the BSI.8

Respondent Gatchalian points to Section 29 (b) of the Immigration Act as amended, as empowering
Nituda to reverse the 1962 BOC Decision. Section 29 (b) reads as follows:

Section 29. . . .

xxx xxx xxx

(b) Notwithstanding the provisions of this section, the Commissioner of Immigration, in his
discretion, may permit to enter (sic) any alien properly documented, who is subject to
exclusion under this section, but who is —

(1) an alien lawfully resident in the Philippines who is returning from a temporary visit
abroad;

(2) an alien applying for temporary admission.

It is difficult to understand respondent's argument. For one thing, Section 29 (b) relates to an
"alien properly documented" while respondent Gatchalian precisely claims to be a citizen of
the Philippines rather than a resident alien returning from a temporary visit abroad or an alien
applying for temporary admission.

It should be recalled that Nituda's 1973 Decision approved a ruling rendered by a Board of
Special Inquiry in 1973 that respondent Gatchalian was properly documented, a ruling which
was precipitated by a "Petition for Rehearing" filed by respondent Gatchalian and his co-
applicants in 8 March 1972 before the BSI. There are a number of obvious defects in the
action of the BSI. Firstly, the motion for rehearing was filed way out of time.Rule 3, B 22 of
the Immigration Rules and Regulations of 1 January 1941 provides as follows:

At any time before the alien is deported, but not later than seven days from the date
he receives notice of the decision on appeal of the Board of Commissioners, the
applicant or his attorney or counsel may file a petition for rehearing only on the
ground of newly discovered evidence. Such petition shall be in writing and shall set
forth the nature of the evidence discovered and the reason or reasons why it was not
produced before. . . . (Emphasis supplied)

Respondent Gatchalian's and his co-applicants' motion for rehearing was filed, not seven (7)
days but rather ten (10) years after notice of the 1962 BOC Decision had been received by
them. Secondly, Rule 3, B 25 of the Immigration Rules and Regulations prescribed that any
motion for rehearing shall be filed only with the Board of Commissioners; the Gatchalians'
motion for rehearing was filed with the BSI which then purported to reopen the case "without
first securing the consent in writing of the Commissioner of Immigration" as required by Rule
2, D 20.

Furthermore, the purported reversal of the 1962 BOC Decision was made not by the duly
constituted BOC in 1973, but only by its Chairman, then Acting Commissioner Nituda. Mr.
Nituda's action flew in the face of Rule 3, B 22 of the Immigration Rules and Regulation,
which mandates that the decision of any two (2) members of the BOC shall prevail. It thus
appears that Mr. Nituda purported to act as if he were the entire BOC. Indeed, even the BOC
itself in 1973 could not have lawfully reversed a final decision rendered by the BOC ten (10)
years ago.9

We must, finally, not lose sight of the ruling in Arocha vs. Vivo (supra) where the Supreme Court
expressly outlined the procedure to be followed by the BOC in resolving cases before them. This
court was very explicit in holding that individual actions of members of the BOC are legally
ineffective:

. . . [T]he former Immigration Commissioners appeared to have acted individually in this


particular instance and not as a Board. It is shown by the different dates affixed to their
signatures that they did not actually meet to discuss and vote on the case. This was officially
made to record by the Secretary of Justice in his Memorandum Order No. 9, on January 24,
1962, wherein he stated.

that for the past several years, the Board of Commissioners of Immigration has not
met collectively to discuss and deliberate in the cases coming before it. [Citation
omitted]

Individual action by members of a board plainly renders nugatory the purpose of its
constitution as a Board. The Legislature organized the Board of Commissioners precisely in
order that they should deliberate collectively and in order that their views and Ideas should
be exchanged and examined before reaching a conclusion (See Ryan vs. Humphrise, LRA
1915F 1047). This process is of the essence of a board's action, save where otherwise
provided by law, and the salutary effects of the rule would be lost were the members to act
individually, without benefit of discussion.

The powers and duties of boards and commissions may not be exercised by the
individual members separately. Their acts are official only when done by the
members convened in sessions, upon a concurrence of at least a majority and with
at least a quorum present. [Citation omitted]

Where the action needed is not of the individuals composing a board but of the
official body, the members must be together and act in their official capacity, and the
action should appear on the records of the board. [Citation omitted]

Where a duty is entrusted to a board, composed of different individuals, that board


can act officially only as such, in convened sessions, with the members, or
a quorum thereof, present. [Citation omitted]10 (Emphasis supplied)

The act of Mr. Nituda of reversing the 1962 Decision of the BOC could not hence be
considered as the act of the BOC itself.

The pretended act of reversal 0of Mr. Nituda must, therefore, be stricken down and
disregarded for having been made in excess of his lawful authority. The 1973 order of Nituda
was ineffective to vest any right upon respondent Gatchalian who, it is worth nothing, did not
pretend to submit any newly discovered evidence to support their claim to Philippine
citizenship already rejected by the 1962 BOC. In essence, Mr. Nituda purported not merely
to set aside the 1962 BOC Decision but also the 1967 Decision of this Court in Arocha vs.
Vivo.

II

I turn to an examination of the underlying facts which make up the basis of the claim of
William Gatchalian to Philippine citizenship. The most striking feature of this claim to
Philippine citizenship is that it rests upon a fragile web constructed out of self-serving oral
testimony, a total lack of official documentation whether Philippine or foreign, of negative
facts and of invocation of presumptions without proof of essential factual premises. Put in
summary terms, the claim of William Gatchalian to Philippine citizenship rests upon three (3)
premises, to wit:

a. that Santiago Gatchalian was a Philippine citizen;

b. the supposed filiation of Francisco Gatchalian as a legitimate son of Santiago


Gatchalian, which leads to the intermediate conclusion that Francisco was a
Philippine citizen; and

c. the supposed filiation of William Gatchalian as a legitimate son of Francisco


Gatchalian leading to the final conclusion that William Gatchalian is a Philippine
citizen.

I respectfully submit that a careful examination of the facts made of record will show that the
correctness and factual nature of each of these layered premises are open to very serious
doubt, doubts which can only lead to the same conclusion which the BOC reached on 6 July
1962 when it reversed the BSI, that is, that there was failure to prove the Philippine
citizenship of William Gatchalian and of his eight (8) alleged uncles, aunts and brother in
1961 when they first arrived in the Philippines.

1. The supposed Philippine citizenship of Santiago Gatchalian must be considered first.


Santiago was allegedly born in Binondo, Manila, on 25 July 1905 to Pablo Pacheco and
Marciana Gatchalian. The records do not disclose anything about Pablo Pacheco but
everyone, including William Gatchalian, assumes that Pablo Pacheco was a Chinese subject
and never became a citizen of the Philippine Islands. The basic claim of Santiago was that
his mother Marciana Gatchalian was a Philippine citizen and that Marciana was not lawfully
married to Pablo Pacheco and that consequently, he (Santiago) was an illegitimate son of
Marciana Gatchalian.

The first point that should be made in respect of Santiago's claim was that he had always
regarded himself as a Chinese citizen until around 1958 or 1960, that is, when he reached
the age of 53 or 55 years. Santiago, by his own testimony, lived the bulk of his adult life in
China where he went in 1924 at age 19 and where he stayed for about 13 years returning to
the Philippines for the first time in 1937. He returned in the same year to China, stayed there
for another nine (9) years, and then came back to the Philippines again in 1946. He once
more left the Philippines for China on 14 April 1947 and returned on 14 June 1947. Upon his
second return to the Philippines in 1946, he documented himself as a Chinese national: he
was holder of ICR No. 7501 dated 3 May 1946. He continued to be documented as such, the
record showing that he was also holder of an ACR No. A-219003 dated 13 January 1951.
Santiago, again by his own statement, married in China a Chinese woman. This Chinese
wife, however, Santiago never brought or attempted to bring to the Philippines and she
allegedly died in China in 1951, or four (4) years after Santiago had permanently returned to
the Philippines.

In 1958, when he was 53 years of age, Santiago obtained a residence certificate where for
the first time he described himself as a Filipino. It was also only in 1960, that is, when
Santiago was 55 years of age, that he filed a petition for cancellation of his ACR obviously
upon the theory that he had always been a Philippine citizen. It was at the hearing of his
petition for cancellation of his ACR that Santiago made his oral statements concerning the
supposed circumstances of his birth, parentage and marriage. Santiago's petition to cancel
his ACR was apparently made in preparation for efforts to bring in, the succeeding year, a
whole group of persons as his supposed descendants.

The second point that needs to be made in respect of Santiago's claim of citizenship resting
on his supposed status as an illegitimate son of a Filipina woman, is that no birth certificate
bearing the name of Santiago Gatchalian was ever presented.

Instead, a baptismal certificate bearing the name Santiago Gatchalian was presented
showing the name of Marciana Gatchalian, Filipina, as mother, with the name of the father
unknown. There was also presented a marriage certificate dated 1936 of Joaquin Pacheco,
alleged brother of Santiago Gatchalian, also showing Marciana Gatchalian as mother with
the name of the father similarly left blank. These two (2) pieces of paper, together with
Santiago's own statements to the Citizenship Evaluation Board as well as the statements of
Joaquin Pacheco to the same Board, constituted the sum total of the evidence supporting
Santiago's claim to Philippine citizenship and on the basis of which an Order dated 12 July
1960, signed by Felix S. Talabis, Associate Commissioner, granted the petition to cancel
Santiago's alien registry.

In so issuing his Order granting cancellation of Santiago's ACR, Commissioner Talabis


disregarded Santiago's failure to present a birth certificate, in obvious violation of rules of the
Bureau of Immigration which expressly require the submission of a birth certificate, or a
certified true copy thereof, in proceedings brought for cancellation of an ACR upon the
ground that the petitioner is an illegitimate son of a Filipina mother.11 It is well-settled that a
baptismal certificate is proof only of the administration of baptism to the person named
therein, and that such certificate is not proof of anything else and certainly not proof
of parentage nor of the status of legitimacy or illegitimacy.12

That Order also casually disregarded a number of other things, one of which was a
document dated 1902 signed by Maxima Gatchalian, the mother of Marciana Gatchalian,
stating that Maxima —

. . . residing in the City of Manila, mother of Marciana Gatchalian, unmarried, of 18


years of age, her father being dead, do hereby freely consent to her marriage with
Pablo C. Pacheco, of Manila, and that I know of no legal impediment to such
marriage. (Emphasis supplied)

Such parental consent indicated that a marriage ceremony would have taken place shortly
thereafter as a matter of course; otherwise, the consent would have been totally pointless.
Even more importantly, Commissioner Talabis' Order disregarded the testimony of Santiago
Gatchalian himself in the same cancellation proceedings that he (Santiago) believed that his
parents had been married by the Justice of the Peace of Pasig, Rizal.13 In his Order,
Commissioner Talabis referred to the fact that Santiago Gatchalian had been
"interchangeably using his parental and maternal surnames. In school, he was known
as Santiago Pacheco (Class Card for 1920-1921, Meisic Manila; Certificates of Completion
of Third and Fourth Grades, Meisic Primary School). But in his Special Cedula Certificate No.
676812 dated 17 September 1937, and in tax clearance certificate issued on 2 October
1937, he is referred to as Santiago Gatchalian; and in a Communication dated 6 June 1941,
he was addressed to as Santiago Pacheco by the Philippine Charity Sweepstakes Office." At
the very least, such use of both paternal and maternal surnames indicated that Santiago was
uncertain as to his supposed illegitimacy. In our case law, moreover, the use of a paternal
surname may be regarded as an indication of possession of the status of a legitimate or
acknowledged natural child.14

Perhaps the most important aspect of Commissioner Talabis Order granting cancellation of
Santiago's ACR, is that such Order failed to give any weight to the presumption in law in
favor of marriage, a presumption significantly reinforced by the parental consent given by
Maxima Gatchalian to the marriage of her daughter Marciana Gatchalian to one Pablo C.
Pacheco. A related presumption is that in favor of the legitimacy of offspring born of a man
and woman comporting themselves as husband and wife.15 I respectfully submit that these
presumptions cannot be successfully overthrown by the simple self-serving testimony of
Santiago and of his alleged brother Joaquin Pacheco and by the two (2) pieces of paper (the
baptismal certificate of Santiago and the marriage certificate of Joaquin Pacheco). It seems
relevant to point out that Joaquin Pacheco, too, was unable to present any birth certificate to
prove his supposed common parentage with Santiago Gatchalian; Joaquin was allegedly
born in 1902, the same year that Maxima Gatchalian gave her consent to the marriage of
Marciana Gatchalian and Pablo C. Pacheco.

The third point that needs to be underscored is that Santiago Gatchalian did nothing to try to
bring into the Philippines his supposed sons and daughters and grandchildren since 1947,
when he returned permanently to the Philippines, and until 1960. The story given by the nine
(9) supposed descendants of Santiago when they first arrived in the Philippines was that
they had left the People's Republic of China and had gone to Macao in 1952 and there they
stayed until they moved to Hongkong in 1958. It should also be noted that the youngest
supposed child of Santiago, Benjamin Gatchalian, was said to have been born in China in
1942 and was consequently only five (5) years old when Santiago returned permanently to
the Philippines in 1947. In other words, Santiago Gatchalian behaved as if the nine (9)
supposed descendants did not exist until 1960 when Commissioner Talabis' Order cancelling
Santiago's ACR was issued.

It may also be noted that Santiago's 1951 ACR application mentioned only two (2) children of
Santiago: Jose and Elena. In 1961, however, Santiago stated before the immigration
investigator that he had a total of five (5) children: Jose, Elena, Francisco, Gloria and
Benjamin. Santiago's explanation strongly echoes a common lawyer's excuse for failure to
seasonably file some pleading, and, it is respectfully submitted, is equally contrived and
unpersuasive; that he had his clerk fill up the ACR; that he gave his clerk four (4) names (not
five [5]); that the clerk had simply failed to fill up the ACR correctly. In its 6 July 1962
Decision, the BOC noted that "while the two (2) names listed in [Santiago's] [ACR
application] Jose and Elena, bear the same names as two of the [9] applicants, the
difference in the ages of said persons compared to the said applicants, casts serious doubts
on their Identity."16

It is suggested in the majority opinion that the question of citizenship of Santiago Gatchalian
is a closed matter which cannot be reviewed by this Court; that per the records of the Bureau
of Immigration, as of 20 July 1960, Santiago Gatchalian had been declared to be a Filipino
citizen and that this forecloses re-opening of that question thirty (30) years later. I must, with
respect, disagree with this suggestion. The administrative determination by the Bureau of
Immigration as of 20 July 1960 certainly does not constitute res adjudicatathat forecloses this
Court from examining the supposed Philippine citizenship of Santiago Gatchalian upon which
private respondent William Gatchalian seeks to rely. The Court cannot avoid examining the
Philippine nationality claimed by Santiago Gatchalian or, more accurately, claimed on his
behalf by William Gatchalian, considering that one of the central issues here is the tanability
or untenability of the claim of William Gatchalian to Philippine citizenship and hence to entry
or admission to the Philippines as such citizen.

2. The second of the three (3) premises noted in the beginning of this section is: that
Francisco Gatchalian was the legitimate son of Santiago Gatchalian and therefore followed
the supposed Philippine citizenship of Santiago. This premise has in fact two (2) parts: (a)
the physical filiation of Francisco Gatchalian as the son of Santiago Gatchalian; and (b) that
Santiago Gatchalian was lawfully married to the Chinese mother of Francisco Gatchalian.
This premise is remarkable for the total absence of documentary support for either of its two
(2) parts. Francisco was born in Amoy, China in 1931, according to Santiago. The sum total
of the evidence on this premise consists of Francisco Gatchalian's own statement and that of
Santiago. No birth certificate or certified true copy thereof, or comparable documentation
under Chinese law, was submitted by either Santiago or by Francisco. No secondary
evidence of any kind was submitted. No testimony of a disinterested person was offered.

Santiago Gatchalian claimed to have been married in China in 1926 to a Chinese woman,
Chua Gim Tee, out of which marriage Francisco was allegedly born. No documentary proof
of such marriage in China, whether primary or secondary, was ever submitted. Neither was
there ever presented any proof of the contents of the Chinese law on marriage in 1926 and
of compliance with its requirements.

It is firmly settled in our jurisdiction that he who asserts and relies upon the existence of a
valid foreign marriage must prove not only the foreign law on marriage and the fact of
compliance with the requisites of such law, but also the fact of the marriage itself. In Yao Kee
vs. Sy-Gonzales,17 the issue before the Court was whether the marriage of petitioner Yao
Kee to the deceased Sy Kiat in accordance with Chinese law and custom had been
adequately proven. In rendering a negative answer, this Court, speaking through Cortes, J.,
said:

These evidence may very well prove the fact of marriage between Yao Kee and Sy
Kiat. However, the same do not suffice to establish the validity of said marriage in
accordance with Chinese law and custom.

Custom is defined as "a rule of conduct formed by repetition of acts, uniformly


observed (practiced) as a social rule, legally binding and obligatory." The law
requires that "a custom must be proved as a fact, according to the rules of evidence"
[Article 12, Civil Code]. On this score the Court had occasion to state that "a local
custom as a source of right can not be considered by a court of justice unless such
custom is properly established by competent evidence like any other fact" [Patriarca
vs. Orato, 7 Phil. 390, 395 (1907)]. The same evidence, if not one of a higher degree,
should be required of a foreign custom.

The law on foreign marriages is provided by Article 71 of the Civil Code which states
that:

Art. 71. All marriages performed outside the Philippines in accordance with
the laws in force in the country where they were performed, and valid there
as such, shall also be valid in this country, except bigamous, polygamous, or
incestuous marriages, as determined by Philippine law.

Construing this provision of law the Court has held that to establish a valid foreign
marriage two things must be proven, namely: (1) the existence of the foreign law as a
question of fact; and (2) the alleged foreign marriage by convincing evidence [Adong
vs. Cheong Seng Gee, 43 Phil. 43, 49 (1922).18(Emphasis supplied)

In the instant case, there was absolutely no proof other than Santiago's bare assertion that a
marriage ceremony between Santiago and Chua Gim Tee had taken place in China in accordance
with Chinese law. The contents of the relevant Chinese law on marriage at the time of the supposed
marriage, was similarly not shown. Should it be assumed simply that the requirements of the 1926
Chinese law on marriage are identical with the requirements of the Philippine law on marriage, it
must be pointed out that neither Santiago nor Francisco Gatchalian submitted proof that any of the
requirements of a valid marriage under Philippine law had been complied with.

I respectfully urge, therefore, that the reliance in the majority opinion upon our conflicts rule on
marriage embodied in Article 71 of the Civil Code (now Article 26 of the Family Code; then Section
19 of Act No. 3630) is unwarranted. The rule that a foreign marriage valid in accordance with the law
of the place where it was performed shall be valid also in the Philippines, cannot begin to
operate until after the marriage performed abroad and its compliane with the requirements for
validity under the marriage law of the place where performed, are first shown as factual matters.
There is, in other words, no factual basis for a presumption that a lawful marriage under Chinese law
had taken place in 1926 in China between Santiago Gatchalian and Chua Gim Tee.

It must follow also that Francisco Gatchalian cannot simply rely upon a presumption of legitimacy of
offspring of a valid marriage. As far as the record here is concerned, there could well have been no
1âw phi 1

marriage at all in China between Santiago Gatchalian and Chua Gim Tee (just as Santiago had
insisted that his father and mother had never married each other) and that consequently Francisco
Gatchalian could just as well have followed the nationality of his admittedly Chinese mother.
3. The last premise noted earlier is the supposed filiation of William Gatchalian as a legitimate son of
Francisco which resulted in William's following the supposed Philippine citizenship of Francisco
Gatchalian. William was, according to Santiago Gatchalian, born in Amoy, China in 1949. Here
again, just in the case of Francisco Gatchalian, there is a complete absence of contemporaneous
documentary evidence of the supposed filiation of William Gatchalian as a legitimate son of
Francisco Gatchalian.19 The only support ever presented for such alleged filiation consisted of the
oral statements of Santiago Gatchalian, Francisco Gatchalian and William Gatchalian. It is difficult to
resist the impression that there took place here a pyramiding of oral statements, each resting upon
another oral statement and all going back to the supposed bastardy of Santiago, a status suddenly
discovered or asserted by Santiago in his 55th year in life. No birth certificate, or comparable
documentation under Chinese law, exhibiting the name of William Gatchalian was submitted.

Francisco Gatchalian stated that he had married a Chinese woman, Ong Siu Kiok, in Amoy in 1947
according to Chinese custom. Once again, we must note that there was no proof submitted that a
marriage ceremony satisfying the requirements of "Chinese custom" had ever taken place in China
between Francisco and Ong Siu Kiok; neither was there any proof that a marriage "according to
Chinese custom" was valid and lawful under Chinese law in 1947 and of factual compliance with the
requirements of the law and custom in China concerning marriage.20 Ong Siu Kiok was alleged to
have died in Macau and never came to the Philippines. It must then follow, once again, that no
presumption of a lawful marriage between Francisco Gatchalian and his alleged Chinese wife can be
invoked by William Gatchalian. It follows still further that William Gatchalian cannot invoke any
presumption of legitimacy in his own favor. As in the case of his putative father Francisco, William
could as well have followed the nationality of his concededly Chinese mother.

One final note: it might be thought that the result I have reached is unduly harsh considering the
prolonged physical stay of William Gatchalian in the country. But this Court must apply the law as it
is in fact written. I respectfully submit that the appropriate recourse of respondent William
Gatchalian, should he feel that he has some humanitarian claim to a right to stay in the Philippines,
is to the political departments of Government. Those departments of Government may then consider
the wisdom and desirability, in the light of the interests of the country, of legislation permitting the
legalization of the entry and stay in the Philippines of respondent William Gatchalian and those
similarly situated. Unless and until such legislation is enacted, this Court really has no choice save to
apply and enforce our immigration law and regulations and our law on citizenship.

Accordingly, I vote to GRANT the Petition for Certiorari and Prohibition in G.R. Nos. 95122-23, and
to SET ASIDE the Resolution/Temporary Restraining Order dated 7 September 1990 issued by
respondent Judge Dela Rosa in Civil Case No. 90-5214, as well as the Order of respondent Judge
Capulong dated 6 September 1990 in Civil Case No. 3431-V-90; and to RE-AFFIRM that respondent
William Gatchalian is not a Philippine citizen.

Melencio-Herrera, Cruz, Paras, Padilla, Regalado, JJ., concur

Footnotes

* Renamed Bureau of Immigration as per Executive Order No. 292.

FELICIANO, J.: dissenting:

1
21 SCRA 532 (1967); 128 Phil. 566 (1967).
2
Section 36, Commonwealth Act No. 613 as amended, or Immigration Law.

3
Tiu Chun Hai and Go Tam vs. Commission of Immigration and the Director of National
Bureau of Investigation, 104 Phil. 949 (1958); La Tang Bun vs. Fabre, 81 Phil. 683 (1948).

4
21 SCRA at 539.

5
Rollo of G.R. No. 24844, p. 32 (Brief for the Respondents-Appellants, p. 28); Rollo of G.R.
No. 24844, p. 41 (Brief for the Petitioner-Appellee, p. 8).

6
21 SCRA at 541.

7
Citing Ham vs. Bachrach, 109 Phil. 949 (1968).

8
Section 27 (d), Commonwealth Act No. 613, as amended.

9
See Commissioner of Immigration vs. Hon. Fernandez, et al., 120 Phil. 178 (1964).

10
21 SCRA at 540.

Memorandum Circular, Department of Justice, dated 28 August 1958; Administrative


11

Memorandum, Bureau of Immigration, dated 17 March 1952, cited in E.F. Hernandez and
O.A. Domingo, Philippine Immigration Law and Procedure, (1970 ed.,) p. 437.

See, e.g., People vs. Villeza, 127 SCRA 349 (1984); Macadangdang vs. Court of Appeals,
12

100 SCRA 73 (1980); Fortus vs. Novero, 23 SCRA 1331 (1968); Cid vs. Burnaman, 24
SCRA 434 (1968); Vidaurraza vs. Court of Appeals, 91 Phil. 492 (1952); and Capistrano vs.
Gabino, 8 Phil. 135 (1907).

13
The transcript of the investigation conducted on 12 February 1960 in CEB No. 3860-R, In
Re Petition to Cancel Alien Registry, Santiago Gatchalian, petitioner, Annex "2" of private
respondent Gatchalian's "Comment with Counter-Petition" in G.R. Nos. 95612-13 states:

"[Immigration Investigator]

Q It says here, "this is to certify that I, the undersigned, residing in the City of Manila,
mother of Marciana Gatchalian, unmarried, of 18 years of age, her father being dead,
do hereby freely consent to her marriage with Pablo C. Pacheco, of Manila, and that I
know of no legal impediment to such marriage." Was your father, Pablo C. Pacheco,
and mother, Marciana Gatchalian, ultimately or eventually married because of this
consent of your grandmother?

[Santiago Gatchalian]

A Yes, I was informed by my brother Joaquin Pacheco that our parents were married
by the justice of the peace of Pasig, Rizal." (Emphasis supplied)

In his subsequent testimony in the same proceedings, Joaquin Pacheco, and a


singularly accommodating immigration investigator who posed obviously leading
questions, sought to soften the impact of Santiago's admission that his parents were
married:
"[Immigration Investigator]

Q Or is it because [Santiago] was ashamed to admit that he was a legitimate child


and that is the reason why he said your parents were married?

[Joaquin Gatchalian]

A It may be also that he is ashamed to make it be known that he is a legitimate child


that is why he said our parents are married." (Annex "B-9" of private respondent
Gatchalian's "Comment with Counter-Petition" in G.R. Nos. 95612-13)

14
E.g., In Re Mallare, 59 SCRA 45 (1974); and Adriano vs. De Jesus, 23 Phil. 350 (1912).

15
See, in this connection, Rule 131, Section 5 (cc) and (dd) of the Rules of Court.

16
Annex "37" of Comment with Counter-Petition, G.R. Nos. 95612-13.

17
167 SCRA 736 (1988).

18
167 SCRA at 743-744.

William Gatchalian presented his own marriage contract executed in 1973, which showed
19

as his parents Francisco Gatchalian and Ong Siu Kiok. This, of course, has no probative
value for present purposes.

20
Yao Kee vs. Sy-Gonzales, supra.
3) Qualitrans vs Royal Class

G.R. No. 79886 November 22, 1989

QUALITRANS LIMOUSINE SERVICE, INC., petitioner,


vs.
ROYAL CLASS LIMOUSINE SERVICE, LAND TRANSPORTATION COMMISSION, COURT OF
APPEALS, respondents.

G.R. No. 79887 November 22, 1989

QUALITRANS LIMOUSINE SERVICE, INC.,


vs.
ROYAL CLASS LIMOUSINE SERVICE, JUDGE PERPETUA COLOMA, and COURT OF
APPEALS, respondents.

SARMIENTO, J.:

These two petitions, in the nature of appeals by certiorari, from a joint judgment of the Court
of Appeals, were brought by Qualitrans Limousine Service, Inc., grantee of a certificate of
public convenience issued by the defunct Board of Transportation to operate a "garage
(tourist) air-conditioned service" 1 in Manila to any point in the island of Luzon. By our
Resolution of September 7, 1988, we consolidated the twin cases. We also gave due course
thereto.

The facts, never disputed, are stated in the decision of the Court of Appeals. We quote:

xxx xxx xxx

On June 22, 1982, the then Board of Transportation, now the Land
Transportation Commission, rendered a Decision granting petitioner a
certificate of public convenience to operate a garage (tourist) air-conditioned
service within the City of Manila and from said place to any point in Luzon, and
vice-versa (Annex A, CA-G.R. SP No. 10049).

On June 25, 1982, said Decision was amended by converting petitioner's


certificate of public convenience for garage service into one for limousine
tourist service for the transportation of all outgoing passengers of the Manila
International Airport (Annex B, CA-G.R. SP No. 10049).

On October 14, 1985, a Deed of Absolute Sale (Annex I of both Records) was
executed by private respondent with Transcare, Inc., a duly licensed limousine
service operator and likewise, a holder of a certificate of public convenience
(Annex 2 of both Records). By virtue of said sale, the franchise granted to
Transcare, Inc. for the use of 40 units of tourist cars was sold to private
respondent.
On December 27, 1985, upon application filed for the approval of
aforementioned sale, an Order was issued by the Land Transportation
Commission granting a provisional permit in favor of private respondent
(Annexes C and 3, CA-G.R. SP No. 10049); Annexes B and 3 CA-G.R. No.
10370-SP). The prefatory portion thereof states:

The application filed in this case is for the approval of sale made
by TRANSCARE, INC., in favor of ROYAL CLASS LIMOUSINE
SERVICE of the Certificate of Public Convenience issued in Case
Nos. 81-4405 and 82-415 authorizing the operation of a TOURIST
CAR (AIR-CONDITIONED) SERVICE within the New Manila
International Airport and from said place to any point in the
Island of Luzon accessible to motor vehicle traffic and vice-
versa, involving the right to operate forty (40) units authorized
therein. ... (Emphasis supplied).

On June 17, 1986, petitioner filed a motion for reconsideration before the Land
Transportation Commission to correct the route specified in the prefatory
portion of its December 27, 1986 Order (Annex 4 of both Records). Petitioner
argues that the application filed by private respondent was for the route from
the "New Manila International Airport to hotels and from said hotels to any
point in Luzon accessible to vehicular traffic and vice-versa", and not from the
"New Manila International Airport ... to any point in the Island of Luzon ... "
(ibidem). Petitioner claims that respondent has been soliciting passengers
from the New Manila International Airport to transport them to any point in
Luzon to the prejudice of petitioner's business.

On September 1, 1986, petitioner filed Civil Case No. 4275-P before the Pasay
City Regional Trial Court for damages with prayer for issuance of a writ of
mandatory injunction against private respondent (Annex D, CA-G.R. SP No.
10049: Annex 5, CA-G.R. SP No. 10370).

On same date, Hon. Fermin A. Martin. Jr., Vice-Executive Judge of the Pasay
City Regional Trial Court, issued a Restraining Order directing private
respondent to desist from ferrying passengers from the New Manila
International Airport to their residences (Annex E, CA-G.R. SP No. 10049;
Annex 6, CA-G.R. SP No. 10370). The petition for preliminary injunction was set
for hearing on September 5, 1986.

On September 3, 1986, private respondent, defendant in Civil Case No. 4275,


filed an Urgent Motion to Dissolve/Lift Restraining Order issued by Hon.
Fermin A. Martin, Jr. (Annex F, CA-G.R. SP No. 10049). Thereafter, same
respondent filed an Opposition to petitioner's application for a writ of
preliminary mandatory injunction (Annex G, CA-G.R. SP No. 10049).

In the hearing of September 5, 1986, respondent Hon. Perpetua D. Coloma, in


whose Branch the civil case was raffled, gave petitioner up to September 8,
1986 within which to file an opposition, if any, to respondent urgent motion.

On September 8, 1986, petitioner filed the required opposition (Annex 1, CA-


G.R. SP No. 10049). On that same date, respondent Judge ruled on said urgent
motion and petitioner's earlier prayer for the issuance of a preliminary
mandatory injunction. Pertinent portions of respondent Judge's Order read as
follows:

After a careful examination of the arguments of both parties to


support their respective claims, this Court believes that the
defendant's contention finds justification under the doctrine of
exhaustion of Administrative remedies.

xxx xxx xxx

Further, this Court doesn't have jurisdiction over this case under
Sec. 19 BP Blg. 129.

RTC shall have Exclusive jurisdiction.— SEC. 19, BP Blg. 129.

6. In all cases not within the exclusive jurisdiction


of a any Court, Tribunal, person or body
exercising judicial or quasi-judicial functions.

IN VIEW OF ALL THE FOREGOING, this Court is constrained to


Lift as it does lift the Restraining Order dated September 1, 1986
and hereby denies the Issuance of Preliminary Mandatory. (Sic)
(Annex H, CA-G.R. SP No. 10049; Annex 8, CA-G.R. SP No.
10370).

On September 16, 1986, petitioner filed a Motion for Reconsideration (Annex J,


CA-G.R. SP No. 10049) which was denied by respondent Court on September
19, 1986.

In the meantime, private respondent filed in respondent Commission a Petition


for Declaratory Relief (sic) requestioning the latter to declare the extent of its
rights under its provisional authority (Annex C, CA-G.R. SP No. 10370).

On September 17, 1986, petitioner was able to secure from respondent


Commission an Order directing private respondent "to immediately cease and
desist from operating its units from the New Manila International Airport to any
point in Luzon" (Annexes D and 9, CA-G.R. SP No. 10370). Two days later,
however, this Order was lifted by respondent Commission upon motion of
private respondent (Annex 5, CA-G.R. SP No. 10049; Annexes 10 and 11, CA-
G.R. SP No. 10370).

On September 23, 1986, petitioner filed before this Court CA-G.R. SP No. 10049
praying, among others, that a Restraining Order issue to prevent
implementation of the September 8, and 19, 1986 Orders of respondent Court
and to direct said Court to grant the injunction prayed for therein.

On October 1, 1986, petitioner filed its Opposition to private respondent's


Petition for Declaratory Relief pending before respondent Commission (Annex
F, CA-G.R. SP No. 10370).
On October 9, 1986, respondent Commission acted on private respondent's
Petition for Declaratory Relief ruling that the provisional authority granted to
private respondent was "to transport passengers from the New Manila
International Airport and from said place to any point in the Island of Luzon ...."
(Annex G, CA-G.R. SP No. 10370).

On October 15, 1986, petitioner filed a motion for respondent Commission to


reconsider its Order of October 9, 1986 (Annex H, CA-G.R. SP No. 10370). This
was denied by said Commission in its Order dated October 17, 1986 (Annex I,
CA-G.R. SP No. 10370). 2

xxx xxx xxx

The Court of Appeals dismissed both of Qualitrans' petitions and directed it to respect the issuance
of a certificate of public convenience (CPC) in favor of Royal Class Limousine Service. The
petitioner now holds the Appellate Court to be in error, in these respects:

THE COURT OF APPEALS ERRED IN RULING THAT THE LAND TRASPORTATION


COMMISSION HAD JURISDICTION OVER PETITIONS FOR DECLARATORY RELIEF,

II

THE COURT OF APPEALS ERRED IN RULING THAT THE PETITION FOR DECLARATORY
RELIEF OF PRIVATE RESPONDENT WAS PROPER.

III

THE COURT OF APPEALS ERRED IN NOT RULING THAT THE DECISIONS OF THE LAND
TRANSPORTATION COMMISSION IN CASES NOS. 81-4405 AND 82-416 ARE VOID FOR BEING
CONTRARY TO MINISTRY ORDER NO. 81-054.

IV

THE COURT OF APPEALS ERRED IN NOT RULING THAT THE LAND TRANSPORTATION
COMMISSION DENIED PETITIONER DUE PROCESS OF LAW, BECAUSE IT ADVANCED THE
TIME OF THE HEARING WITHOUT NOTICE TO PETITIONER.

THE COURT OF APPEALS ERRED IN RULING THAT THE ORDERS OF OCTOBER 9 AND 17,
1986 OF THE LAND TRANSPORTATION COMMISSION WAS SUPPORTED BY THE EVIDENCE,
WHEN NONE WAS EVER ADDUCED.

VI

THE COURT OF APPEALS ERRED IN NOT RULING THAT PRIVATE RESPONDENT IS NOT
AUTHORIZED TO TRANSPORT PASSENGERS DIRECTLY FROM THE MANILA
INTERNATIONAL AIRPORT TO DESTINATIONS OTHER THAN HOTELS. 3
Anent the said Appellate Court's affirmance of the Regional Trial Court's Order 4 dismissing
Qualitrans' complaint for injunction and damages, Qualitrans assigns the following errors:

THE REGIONAL TRIAL COURT HAS JURISDICTION OVER CIVIL CASE NO. 4275-P.

II

THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES IS NOT APPLICABLE TO


THIS CASE.

III

PETITIONER IS ENTITLED TO THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION. 5

We sustain the Court of Appeals in both cases.

I (G.R. No 79886)

1. As to claims that the Land Transportation Commission can not entertain suits for
declaratory relief, there is merit in the ruling under question to the effect that the
Commission, under its enabling law, Executive Order No. 1011, has ample powers to
modify certificates of public convenience, including the grant of latitudinarian
franchises in favor of public utilities. We quote:

... The (Land Transportation) Commission shall have, among others, the following
powers and functions:

(a) Quasi-judicial powers and functions which require notice and


hearing—

xxx xxx xxx

(2) To issue, amend, revise, suspend or cancel Certificates of Public


Convenience or permits authorizing the operation of public land
transportation services provided by motorized vehicles, and to
prescribe the appropriate terms and conditions therefor; 6

xxx xxx xxx

Royal Class' application is, quintessentially, a petition for an expanded route, over which the Board
exercises jurisdiction under its charter. If it seemed like an "action for declaratory relief", it is only a
coincidence, for the nature of an action is to be determined by what the petition alleges and not by
the appellation the parties have attached to their pleadings.7 Whether it is a petition for declaratory
relief or for revision or grant or cancellation of an existing CPC, the authority of the Commission to
act is justified, so long as it has been properly invoked.

The fact that Qualitrans had, meanwhile, commenced suit in the Regional Trial Court (RTC) does not
oust the Commission of its jurisdiction. The Commission had a primacy of authority to take
cognizance of Royal Class 'inquiry. It is to be noted, indeed, that the very trial court, by its order of
September 8, 1986, 8 denied the issuance of preliminary injunctive relief sought by Qualitrans, in
deference, precisely, to the Board's primal and preferential jurisdiction.

2. Of course, the Commission's action must have been preceded by due notice and
hearing, 9 and precisely, it is Qualitrans' complaint that it had been deprived of due
process for failure of the transportation body to give it notice and hearing (in
particular, of Royal Class' motion to lift cease and desist order). The records show,
however, that the decision of the Board is founded on substantial
evidence.10 Moreover, in administrative cases, notice" is not indispensable, but the
deprivation of opportunity to be heard. That is not the case here. The reality is that on
October 1, 1986, Qualitrans opposed Royal Class' application for "declaratory
relief." 11 It can not therefore be heard to say that the Commission had acted without
giving the petitioner an avenue to air its side of the story.

3. Anent charges that the Commission issued the questioned certificate of public
convenience without evidence, suffice it to say that:

xxx xxx xxx

. . .the courts cannot or will not determine a controversy involving a question which is
within the jurisdiction of an administrative tribunal prior to the decision of that
question by the administrative tribunal, where the question demands the exercise of
sound administrative discretion requiring the special knowledge, experience, and
services of the administrative tribunal to determine technical and intricate matters of
fact, and a uniformity of ruling is essential to comply with the purposes of the
regulatory statute administered." Recently, this Court speaking thru Mr. Chief Justice
Claudio Teehankee said:

In this era of clogged court dockets, the need for specialized administrative boards or
commissions with the special knowledge, experience and capability to hear and
determine promptly disputes on technical matters or essentially factual matters,
subject to judicial review in case of grave abuse of discretion, has become well nigh
indispensable. 12

The records also reveal that there were sound reasons for the lifting of the Commission's cease and
desist order, to wit:

xxx xxx xxx

1. Complaint's (sic) Motion for Reconsideration of the order dated


December 27, 1985, in Case No. 85-9619 filed on June 17, 1986, has
not yet been resolved by this Commission;

2. Respondent's Petition for Declaratory Relief filed on September 15,


1986, is still pending resolution by this Commission;

3. Considerable losses and irreparable injury will be sustained by


respondent, not to mention the loss of income of its
drivers/employees whose only source of livelihood is dependent on
the present and continuous operation of respondent; and
4. Above all, public interest and convenience will suffer and be
prejudiced if respondent is restrained from ferrying passengers from
the New MIA directly to their respective residences;

5. Likewise, a restraining order should be granted only where there is


a clear showing that there is indeed a flagrant violation on (sic) the
property right of another. Absence of which or in case of ambiguity, a
restraining order is unavailing. And in the present case there is really
that ambiguity attendant to the issues involved, which this
Commission shall have to resolve on the merits so as not to prejudice
either party. 13

3. As to charges that the certificate of public convenience of the private respondent


had allowed it to transport clients from the Ninoy Aquino International Airport only to
hotels but not to any other destination, the Court is agreed that the controlling
jurisprudence is Carmelo and Oriol v. Monserrat, 14in which we held:

xxx xxx xxx

Everything else being equal, the real, primary question involved is whether it is better
and more convenient for the travelling public in the City of Manila to have two taxicab
companies in operation than it is to have one, and whether in truth and in fact the
granting of another similar license to the petitioners would operate as a real injury to
Monserrat. He is the first in the field and so long as he maintains good and efficient
service and meets the demand of the public, it is fair to assume that he will hold his
present customers and would have nothing to fear from the granting of a license to
the petitioners, and if for any reason he does not give the required kind of service or
satisfy the needs of the public, then he would have no right to complain.

xxx xxx xxx

That is to say, taxies are not operated on any schedule or over any certain route or
between certain points or in any direction, and that the certificate granted to
Monserrat is in the nature of a blanket franchise to operate a taxicab service over
any and all of the streets and alleys of the city, in any direction, from any place, and
at any time, subject to the call and wish of the customer only both as to time, place,
and route of travel. That is to say, it is in the sole discretion of the person desiring to
travel whether he shall call a taxi or an auto garage car, and as to when he shall call
it, and where he shall go, and in the operation of an autobus line, the operator must
maintain a fixed schedule over a specified route between certain points, and must
make his trips with or without passengers. 15

The abovestated doctrine applies with equal force to the case under consideration. For
although Monserrat involved a fleet of taxicabs, the taxicab business is no different, fundamentally,
from a limousine service because both have very broad destinations.

That Royal Class had, itself, admitted that its franchise covered the NAIA-hotel route alone, does not
weaken the Commission's ruling. The yardstick, so Monserrat tells us, is that:

xxx xxx xxx


In the granting or refusal of a certificate of public convenience, all things considered,
the question is what is for the best interests of the public.16

Like Monserrat, the Court finds it "hard to conceive how it would be for the best interests of the
public" 17, to have one line only, "and how the public would be injured by the granting of the certificate
in question, for it must be conceded that two companies in the field would stimulate the business..." 18

It is simply bellyaching to say that Royal Class had transcended the bounds of the certificate of
public convenience granted to it. What Qualitrans is plainly carping about is the threat the Royal
Class' certificate of public convenience poses on its foothold in the "limo" service business. This is
monopolism, plainly and simply, and we can not tolerate it. The constitutional mandate is for "a more
equitable distribution of opportunities, income, and wealth" 19 and for the State to regulate or prohibit
monopolies." 20

As we have held furthermore, a provisional authority is given on showing of public need. 21 Thus, it
may be issued ex-parte.

II (G.R. No. 79887)

1. For the same reasons, the above appeal must also fail. The Regional Trial Court
(RTC) had acted correctly in dismissing Qualitrans' damage suit.

Ramos v. Court of First Instance of Tayabas, 22 in which we sustained the jurisdiction of the CFI
(now, RTC) at the expense of Public Service Commission (now, the Land Transportation
Commission), has no application. In that case, the aggrieved party had denounced his adversary's
action before the PSC. The latter, however, had failed to act. We stamped our imprimatur on the
CFI's jurisdiction because of temporal constraints. ("Damages pile up day by day as infringement
continues. The Public Service Commission has been afforded an opportunity to give relief and has
not done so." 23

In addition, there is a need to square the functioning of administrative bodies vis-a-vis contemporary
realities. As we have observed, the increasing pattern of law and legal development has been to
entrust "special cases" to "special bodies" rather than the courts. As we have also held, the shift of
emphasis is attributed to the need to slacken the encumbered dockets of the judiciary and so also, to
leave "special cases" to specialists and persons trained therefor.

There is no merit in the claims that Royal Class has been guilty of unfair competition. For starters, its
CPC has been duly issued. It (CPC) can not therefore be said to have been acquired through duress
or deceit to warrant such a charge.

2. Failure to exhaust administrative remedies is arrayed against Qualitrans. Hence, it


can not validly revoke our ruling in Arrow Transportation Corp. v. Board of
Transportation. 24 That case was impelled by urgent need, which the courts could
address more swiftly. It is not the case here. Not much is at stake in the "limo"
business. We hold that the Commission should have better been left alone to
discharge its duty without court interference.

3. We are not impressed that Qualitrans has successfully shown that it is entitled to
the injunctive writ. Its appeal to "ruinous competition" 25 is not well-taken. Under the
Constitution, the national economy stands for, "competi[tion] in both domestic and
foreign markets." 26 Obviously, not every kind of competition is "ruinous competition".
All things considered and all things equal, competition is a healthy thing. Besides,
there is no showing that Qualitrans stood to lose its capital investment with the
approval of Royal Class' franchise. 27 Our considered opinion is that Qualitrans
should improve its services as a counter-balance to Royal Class' own toehold in the
market. And let that be its challenge.

WHEREFORE, the petitions are DENIED. The decision appealed from is AFFIRMED in toto. No
costs.

SO ORDERED.

Paras, Padilla and Regalado, JJ., concur.

Melencio-Herrera (Chairperson), J., is on leave.

Footnotes

1 Rollo, G.R. No. 79886, 70; rollo, G.R. No. 79887, 51.

2 Id., 70-73, id., 51-54; emphasis in the original.

3 Id., 13.

4 Id., 44-47.

5 Id .,17-18.

6 Exec. Order No. 1011, sec. 5.

7 See Enriquez v. Macadaeg, 84 Phil.. 674 (1949); Aquino v. COMELEC, No. L-


40004, January 31, 1975, 62 SCRA 275.

8 Rollo, G.R. No. 79887, id., 44 - 47.

9 See Exec. Order No. 1011, sec. 5, supra.

10 Ang Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940).

11 Rollo, id., 73; Id., 54.

12 Saavedra, Jr. v. Securities & Exchange Commission, No. 80879, March 21, 1988,
159 SCRA 57; also Abejo v. Dela Cruz, Nos. 63558, 68450-51, May 19, 1987, 149
SCRA 654; also Blue Bar Coconut Philippines v. Tantuico, Jr., No. L-47501; July 29,
1988,163 SCRA 716.

13 Rollo, id., G.R. No. 79886, 52-53.

1 4 55 Phil. 644 (1931).


15 Supra, 648; 649.

16 Supra, 649.

17 Supra.

18 Supra, 649-650.

19 CONST. (1987), art. XII, sec. 1.

20 Supra, sec. 19.

21 Arrow Transportation Corp. v. Board of Transportation, No. L-39655, March 21,


1975, 63 SCRA 193.

22 58 Phil. 374 (1933).

23 Supra, 377.

24 Supra.

25 Rollo, id., G.R. No. 79887, 26.

26 CONST., supra, art. XII, see. 1.

27 Vda. de Lat v. Public Service Commission, No. L-34987, February 26, 1988,158
SCRA 180.
4) Solid Homes vs Payawal

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 84811 August 29, 1989

SOLID HOMES, INC., petitioner,


vs.
TERESITA PAYAWAL and COURT OF APPEALS, respondents.

CRUZ, J.:

We are asked to reverse a decision of the Court of Appeals sustaining the jurisdiction of the
Regional Trial Court of Quezon City over a complaint filed by a buyer, the herein private respondent,
against the petitioner, for delivery of title to a subdivision lot. The position of the petitioner, the
defendant in that action, is that the decision of the trial court is null and void ab initio because the
case should have been heard and decided by what is now called the Housing and Land Use
Regulatory Board.

The complaint was filed on August 31, 1982, by Teresita Payawal against Solid Homes, Inc. before
the Regional Trial Court of Quezon City and docketed as Civil Case No. Q-36119. The plaintiff
alleged that the defendant contracted to sell to her a subdivision lot in Marikina on June 9, 1975, for
the agreed price of P 28,080.00, and that by September 10, 1981, she had already paid the
defendant the total amount of P 38,949.87 in monthly installments and interests. Solid Homes
subsequently executed a deed of sale over the land but failed to deliver the corresponding certificate
of title despite her repeated demands because, as it appeared later, the defendant had mortgaged
the property in bad faith to a financing company. The plaintiff asked for delivery of the title to the lot
or, alternatively, the return of all the amounts paid by her plus interest. She also claimed moral and
exemplary damages, attorney's fees and the costs of the suit.

Solid Homes moved to dismiss the complaint on the ground that the court had no jurisdiction, this
being vested in the National Housing Authority under PD No. 957. The motion was denied. The
defendant repleaded the objection in its answer, citing Section 3 of the said decree providing that
"the National Housing Authority shall have exclusive jurisdiction to regulate the real estate trade and
business in accordance with the provisions of this Decree." After trial, judgment was rendered in
favor of the plaintiff and the defendant was ordered to deliver to her the title to the land or, failing
this, to refund to her the sum of P 38,949.87 plus interest from 1975 and until the full amount was
paid. She was also awarded P 5,000.00 moral damages, P 5,000.00 exemplary damages, P
10,000.00 attorney's fees, and the costs of the suit.1

Solid Homes appealed but the decision was affirmed by the respondent court, 2 which also berated
the appellant for its obvious efforts to evade a legitimate obligation, including its dilatory tactics
during the trial. The petitioner was also reproved for its "gall" in collecting the further amount of P
1,238.47 from the plaintiff purportedly for realty taxes and registration expenses despite its inability
to deliver the title to the land.

In holding that the trial court had jurisdiction, the respondent court referred to Section 41 of PD No.
957 itself providing that:

SEC. 41. Other remedies.-The rights and remedies provided in this Decree shall be
in addition to any and all other rights and remedies that may be available under
existing laws.

and declared that "its clear and unambiguous tenor undermine(d) the (petitioner's) pretension that
the court a quowas bereft of jurisdiction." The decision also dismissed the contrary opinion of the
Secretary of Justice as impinging on the authority of the courts of justice. While we are disturbed by
the findings of fact of the trial court and the respondent court on the dubious conduct of the
petitioner, we nevertheless must sustain it on the jurisdictional issue.

The applicable law is PD No. 957, as amended by PD No. 1344, entitled "Empowering the National
Housing Authority to Issue Writs of Execution in the Enforcement of Its Decisions Under Presidential
Decree No. 957." Section 1 of the latter decree provides as follows:

SECTION 1. In the exercise of its function to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957,
the National Housing Authority shall haveexclusive jurisdiction to hear and decide
cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and

C. Cases involving specific performance of contractuala statutory obligations filed by


buyers of subdivision lot or condominium unit against the owner, developer, dealer,
broker or salesman. (Emphasis supplied.)

The language of this section, especially the italicized portions, leaves no room for doubt that
"exclusive jurisdiction" over the case between the petitioner and the private respondent is vested not
in the Regional Trial Court but in the National Housing Authority. 3

The private respondent contends that the applicable law is BP No. 129, which confers on regional
trial courts jurisdiction to hear and decide cases mentioned in its Section 19, reading in part as
follows:

SEC. 19. Jurisdiction in civil cases.-Regional Trial Courts shall exercise exclusive
original jurisdiction:

(1) In all civil actions in which the subject of the litigation is incapable of pecuniary
estimation;

(2) In all civil actions which involve the title to, or possession of, real property, or any
interest therein, except actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts;

xxx xxx xxx

(8) In all other cases in which the demand, exclusive of interest and cost or the value
of the property in controversy, amounts to more than twenty thousand pesos (P
20,000.00).

It stresses, additionally, that BP No. 129 should control as the later enactment, having been
promulgated in 1981, after PD No. 957 was issued in 1975 and PD No. 1344 in 1978.

This construction must yield to the familiar canon that in case of conflict between a general law and
a special law, the latter must prevail regardless of the dates of their enactment. Thus, it has been
held that-

The fact that one law is special and the other general creates a presumption that the
special act is to be considered as remaining an exception of the general act, one as
a general law of the land and the other as the law of the particular case. 4

xxx xxx xxx

The circumstance that the special law is passed before or after the general act does
not change the principle. Where the special law is later, it will be regarded as an
exception to, or a qualification of, the prior general act; and where the general act is
later, the special statute will be construed as remaining an exception to its terms,
unless repealed expressly or by necessary implication. 5

It is obvious that the general law in this case is BP No. 129 and PD No. 1344 the special law.

The argument that the trial court could also assume jurisdiction because of Section 41 of PD No.
957, earlier quoted, is also unacceptable. We do not read that provision as vesting concurrent
jurisdiction on the Regional Trial Court and the Board over the complaint mentioned in PD No. 1344
if only because grants of power are not to be lightly inferred or merely implied. The only purpose of
this section, as we see it, is to reserve. to the aggrieved party such other remedies as may be
provided by existing law, like a prosecution for the act complained of under the Revised Penal
Code. 6

On the competence of the Board to award damages, we find that this is part of the exclusive power
conferred upon it by PD No. 1344 to hear and decide "claims involving refund and any other
claims filed by subdivision lot or condominium unit buyers against the project owner, developer,
dealer, broker or salesman." It was therefore erroneous for the respondent to brush aside the well-
taken opinion of the Secretary of Justice that-

Such claim for damages which the subdivision/condominium buyer may have against
the owner, developer, dealer or salesman, being a necessary consequence of an
adjudication of liability for non-performance of contractual or statutory obligation, may
be deemed necessarily included in the phrase "claims involving refund and any other
claims" used in the aforequoted subparagraph C of Section 1 of PD No. 1344. The
phrase "any other claims" is, we believe, sufficiently broad to include any and all
claims which are incidental to or a necessary consequence of the claims/cases
specifically included in the grant of jurisdiction to the National Housing Authority
under the subject provisions.

The same may be said with respect to claims for attorney's fees which are
recoverable either by agreement of the parties or pursuant to Art. 2208 of the Civil
Code (1) when exemplary damages are awarded and (2) where the defendant acted
in gross and evident bad faith in refusing to satisfy the plaintiff 's plainly valid, just
and demandable claim.

xxx xxx xxx

Besides, a strict construction of the subject provisions of PD No. 1344 which would
deny the HSRC the authority to adjudicate claims for damages and for damages and
for attorney's fees would result in multiplicity of suits in that the subdivision
condominium buyer who wins a case in the HSRC and who is thereby deemed
entitled to claim damages and attorney's fees would be forced to litigate in the
regular courts for the purpose, a situation which is obviously not in the contemplation
of the law. (Emphasis supplied.)7

As a result of the growing complexity of the modern society, it has become necessary to create more
and more administrative bodies to help in the regulation of its ramified activities. Specialized in the
particular fields assigned to them, they can deal with the problems thereof with more expertise and
dispatch than can be expected from the legislature or the courts of justice. This is the reason for the
increasing vesture of quasi-legislative and quasi-judicial powers in what is now not unreasonably
called the fourth department of the government.

Statutes conferring powers on their administrative agencies must be liberally construed to enable
them to discharge their assigned duties in accordance with the legislative purpose. 8 Following this
policy in Antipolo Realty Corporation v. National Housing Authority, 9 the Court sustained the
competence of the respondent administrative body, in the exercise of the exclusive jurisdiction
vested in it by PD No. 957 and PD No. 1344, to determine the rights of the parties under a contract
to sell a subdivision lot.

It remains to state that, contrary to the contention of the petitioner, the case of Tropical Homes v.
National Housing Authority 10 is not in point. We upheld in that case the constitutionality of the
procedure for appeal provided for in PD No. 1344, but we did not rule there that the National
Housing Authority and not the Regional Trial Court had exclusive jurisdiction over the cases
enumerated in Section I of the said decree. That is what we are doing now.

It is settled that any decision rendered without jurisdiction is a total nullity and may be struck down at
any time, even on appeal before this Court. 11 The only exception is where the party raising the issue
is barred by estoppel, 12 which does not appear in the case before us. On the contrary, the issue was
raised as early as in the motion to dismiss filed in the trial court by the petitioner, which continued to
plead it in its answer and, later, on appeal to the respondent court. We have no choice, therefore,
notwithstanding the delay this decision will entail, to nullify the proceedings in the trial court for lack
of jurisdiction.

WHEREFORE, the challenged decision of the respondent court is REVERSED and the decision of
the Regional Trial Court of Quezon City in Civil Case No. Q-36119 is SET ASIDE, without prejudice
to the filing of the appropriate complaint before the Housing and Land Use Regulatory Board. No
costs.

SO ORDERED.

Narvasa, Gancayco, Griñ;o-Aquino and Medialdea, JJ., concur.

Footnotes

1 Rollo, pp. 6 & 14.

2 Tensuan, J., ponente, with Nocon and Kalalo, JJ., concurring.

3 Under E.O. No. 648 dated Feb. 7, 1981, the regulatory functions conferred on the
National Housing Authority under P.D. Nos. 957, 1216, 1344 and other related laws
were transferred to the Human Settlements Regulatory Commission, which was
renamed Housing and Land Use Regulatory Board by E.O. No. 90 dated Dec. 17,
1986.

4 Manila Railroad Co. v. Rafferty, 40 Phil. 224 (1919); Butuan Sawmill, Inc. v. City of
Butuan, 16 SCRA 758-1 Bagatsing v. Ramirez, 74 SCRA 306.

5 59 C.J., 1056-1058.

6 Article 316.

7 Min. of Justice Op. No. 271, s. 1982.

8 Cooper River Convalescent Ctr., Inc. v. Dougherty, 356 A. 2d 55, 1975.

9 153 SCRA 399.

10 152 SCRA 54.

11 Trinidad v. Yatco, 1 SCRA 866; Corominas, Jr. v. Labor Standards Commission, 2


SCRA 721; Sebastian v. Gerardo, 2 SCRA 763; Buena v. Sapnay, 6 SCRA 706.

12 Tijam v. Sibonghanoy, 23 SCRA 29; Philippine National Bank v. IAC, 143 SCRA
299; Tan Boon Bee & Company, Inc. v. Judge Jarencio, G.R. No. 41337, June 30,
1988.

5) CT Torres vs Hibionada 23 Sep 2003


Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 80916 November 9, 1990

C.T. TORRES ENTERPRISES, INC., petitioner,


vs.
HON. ROMEO J. HIBIONADA, EFREN DIONGON, and PLEASANTVILLE DEVELOPMENT
CORPORATION, respondents.

Federico T. Tabino Jr. for petitioner.

Depasucat, Depasucat & Su Law Offices for Efren Diongon.

CRUZ, J.:

The same issue of jurisdiction that was raised in Solid Homes v. Payawal 1 is raised in the case at
bar. The same ruling laid down in that earlier case must be applied in the present controversy.

The petitioner as agent of private respondent Pleasantville Development Corporation sold a


subdivision lot on installment to private respondent Efren Diongon. The installment payments having
been completed, Diongon demanded the delivery of the certificate of title to the subject land. When
neither the petitioner nor Pleasantville complied, he filed a complaint against them for specific
performance and damages in the Regional Trial Court of Negros Occidental. This was docketed as
Civil Case No. 3514. The two defendants each filed an answer with cross-claim and counterclaim.
The plaintiff filed a reply and answered the counterclaims. Pre-trial was scheduled and heard and
trial briefs were submitted by Pleasantville and Diongon. The case was set for initial hearing. It was
then that C.T. Torres Enterprises filed a motion to dismiss for lack of jurisdiction, contending that the
competent body to hear and decide the case was the Housing and Land Use Regulatory Board. The
motion was heard and Diongon later filed an opposition. On September 17, 1987, the trial
court 2 denied the motion to dismiss in an order reading as follows:

Before this Court for resolution is the Motion to Dismiss filed by defendant C.T.
Torres Enterprises, Inc. alleging among other things, that this Court has no
jurisdiction over the subject matter considering that the present action falls within the
jurisdiction of the Housing and Land Use Regulatory Board by virtue of Executive
Order No. 90 dated December 17, 1986.

Plaintiff filed an opposition to the said motion to dismiss traversing the allegations
therein stated. A perusal of both pleadings and the complaint filed by plaintiff, the
issue to be determined are basically governed by the provisions of the New Civil
Code, particularly on contracts. The complaint is one for specific performance with
damages which is a justiciable issue under the Civil Code and jurisdiction to hear the
said issue is conferred on the regular Courts pursuant to Batas Pambansa Blg. 129.
It is, therefore, the finding of this Court that jurisdiction as conferred by law is vested
in the regular courts and not in the Housing and Land Use Regulatory Board. The
Motion to Dismiss is, therefore, DENIED for lack of merit.

SO ORDERED.

The petitioner is now before this Court on certiorari to question this order.

In holding that the complaint for specific performance with damages was justiciable under the Civil
Code and so came under the jurisdiction of the regular courts under B.P. 129, the trial court failed to
consider the express provisions of P.D. No. 1344 and related decrees. It also erred in supposing that
only the regular courts can interpret and apply the provisions of the Civil Code, to the exclusion of
the quasi-judicial bodies.

P.D. No. 957, promulgated July 12, 1976 and otherwise known as "The Subdivision and
Condominium Buyers' Protective Decree," provides that the National Housing Authority shall have
exclusive authority to regulate the real estate trade and business.

The scope of the regulatory authority lodged in the National Housing Authority is indicated in the
second and third paragraphs of the preamble, thus:

WHEREAS, the numerous reports reveal that many real estate subdivision owners,
developers, operators, and/or sellers have reneged on their representations and
obligations to provide and maintain properly subdivision roads, drainage, sewerage,
water systems, lighting systems and other similar basic requirements, thus
endangering the health and safety of home and lot buyers;

WHEREAS, reports of alarming magnitude also show cases of swindling and


fraudulent manipulations perpetrated by unscrupulous subdivision and condominium
sellers and operators, such as failure to deliver titles to the buyers or titles free from
hens and encumbrances, and to pay real estate taxes and fraudulent sales of the
same subdivision lots to different innocent purchasers for value. (Emphasis supplied)

P.D. No. 1344, which was promulgated April 2, 1978, and empowered the National Housing
Authority to issue writs of execution in the enforcement of its decisions under P.D. No. 957, specified
the quasi-judicial jurisdiction of the agency as follows:

SECTION 1. In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957,
the National Housing Authority shall have exclusive jurisdiction to hear and decide
cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner developer, dealer, broker or
salesman; and

C. Cases involving specific performance of contractual and statutory obligations filed


by buyers of subdivision lots or condominium units against the owner, developer,
dealer, broker or salesman. (Emphasis supplied)
Under E.O. No. 648 dated February 7, 1981, the regulatory functions conferred on the National
Housing Authority under P.D. Nos. 957,1344 and other related laws were transferred to the Human
Settlements Regulatory Commission, which was renamed Housing and Land Use Regulatory Board
by E.O. No. 90 dated December 17, 1986.

It is clear from Section 1(c) of the above quoted PD No. 1344 that the complaint for specific
performance with damages filed by Diongon with the Regional Trial Court of Negros Occidental
comes under the jurisdiction of the Housing and Land Use Regulatory Board. Diongon is a buyer of
a subdivision lot seeking specific performance of the seller's obligation to deliver to him the
corresponding certificate of title.

The argument that only courts of justice can adjudicate claims resoluble under the provisions of the
Civil Code is out of step with the fast-changing times. There are hundreds of administrative bodies
now performing this function by virtue of a valid authorization from the legislature. This quasi-judicial
function, as it is called, is exercised by them as an incident of the principal power entrusted to them
of regulating certain activities falling under their particular expertise.

In the Solid Homes case, for example, the Court affirmed the competence of the Housing and Land
Use Regulatory Board to award damages although this is an essentially judicial power exercisable
ordinarily only by the courts of justice. This departure from the traditional allocation of governmental
powers is justified by expediency, or the need of the government to respond swiftly and competently
to the pressing problems of the modem world.

Thus we have held:

It is by now commonplace learning that many administrative agencies exercise and


perform adjudicatory powers and functions, though to a limited extent only. Limited
delegation of judicial or quasi-judicial authority to administrative agencies (e.g. the
Securities and Exchange Commission and the National Labor Relations
Commission) is well recognized in our jurisdiction, basically because the need for
special competence and experience has been recognized as essential in the
resolution of questions of complex or specialized character and because of a
companion recognition that the dockets of our regular courts have remained crowded
and clogged. 3

xxx xxx xxx

As a result of the growing complexity of the modern society, it has become


necessary to create more and more administrative bodies to help in the regulation of
its ramified activities. Specialized in the particular fields assigned to them, they can
deal with the problems thereof with more expertise and dispatch than can be
expected from the legislature or the courts of justice. This is the reason for the
increasing vesture of quasi-legislative and quasi-judicial powers in what is now not
unquestionably called the fourth department of the government. 4

xxx xxx xxx

There is no question that a statute may vest exclusive original jurisdiction in an


administrative agency over certain disputes and controversies falling within the
agency's special expertise. The very definition of an administrative agency includes
its being vested with quasi-judicial powers. The ever increasing variety of powers and
functions given to administrative agencies recognizes the need for the active
intervention of administrative agencies in matters calling for technical knowledge and
speed in countless controversies which cannot possibly be handled by regular
courts. 5

The argument of the private respondents that the petition is premature because no motion for
reconsideration of the questioned order of trial court had been filed stresses the rule but disregards
the exception. It is settled that the motion for reconsideration may be dispensed with if the issue
raised is a question of law, 6 as in the case at bar. The issue pleaded here is lack of jurisdiction. It
could therefore be raised directly and immediately with this Court without the necessity of an
antecedent motion for reconsideration.

We hold, in sum, that the complaint for specific performance and damages was improperly filed with
the respondent court, jurisdiction over the case being exclusively vested in the Housing and Land
Use Regulatory Board. We also hold that the order denying the motion to dismiss was subject to
immediate challenge before this Court as the filing (and denial) of a motion for reconsideration was
not an indispensable requirement.

WHEREFORE, the petition is GRANTED. The questioned Order of September 17, 1987, is SET
ASIDE and Civil Case No. 3514 in the Regional Trial Court of Negros Occidental is hereby
DISMISSED, without prejudice to the filing of the proper complaint with the Housing and Land Use
Regulatory Board if so desired. No costs.

SO ORDERED.

Narvasa (Chairman), Gancayco, Griño-Aquino and Medialdea, JJ., concur.

Footnotes

1 Solid Homes, Inc. vs. Payawal, 177 SCRA 72.

2 Through Judge Romeo J. Hibionada.

3 Antipolo Realty Corp. vs. NHA, 153 SCRA 399.

4 Solid Homes, Inc. vs. Payawal, supra.

5 Tropical Homes, Inc. vs. NHA, 152 SCRA 540.

6 Quirino vs. Gorospe, 169 SCRA 702; Gonzales, Jr. vs. IAC, 131 SCRA 468; PALEA
vs. PAL, 111 SCRA 215.
6) HLC Const vs Emily Homes

THIRD DIVISION

[G.R. No. 139360. September 23, 2003]

HLC CONSTRUCTION AND DEVELOPMENT CORPORATION AND


HENRY LOPEZ CHUA, petitioners, vs. EMILY HOMES
SUBDIVISION HOMEOWNERS ASSOCIATION (EHSHA), LUCIO
ABBOT, JAIME ABRIS, MARINA ACUA, PATROCENIO ALCOBA,
MARCILINA ALFAFARA, JOSE ALMARIO, CELISTINO
AMBAYEN, PERLITA ANDRADE, ALBINO ANGELES, RONALDO
ANGELES, REYNALDO ANGELITUD, ROMEO ANITO, NICASIO
ARENDAIN, ERNESTO ARENDAIN, MAGELLAN ARO, ROSCIANA
ASILUM, PURIFICACION BALGUE, WILFREDA BALO, HILARION
BENTILANON, JUDITH BERNAL, AURELIA BERNAT, GEMMA
BORNON, VIRGINIA BOYOSE, SAMAON BUAT, ANNETE BUESA,
ZENAIDA CADOYAS, MARIA GILDA CALAMBA, FLORDELIZ
CALLIDO, MANUEL CAMAHALAN, MARIA LOURDES CANO,
NOEL CAPINPIN, ANNIE CAMPOREDONDO, REBECCA
CARBELLIDO, SHIRLEY CARTALABA, BRIGGITTE CARVAJAL,
ANNIE CENTINA, SILVERIO CHUAN, JOSEPHINE CONOMAN,
VICTOR CORRAL, REZIE CRISPINO, OFELIA CUSTODIO,
ALEJANDRO DERECHO, MERLYN DIAZ, PAQUITO DOMINGO,
EFREN DURANO, FELECIDAD ESCALARIS, VIOLETA ESPIJA,
EUGENE FERNANDEZ, DOMINADOR FLORENTINO, GALILEO
FLORES, HERMINIGILDO FLORES, PETE FLORES, GLORIA
FONTILLA, WILLIAM GALIDO, RENE ELPIDIO GALILIA, RENATO
GAZO, CESAR GEGARE JR., ANGELI GELIA, MONINA GENTICA,
PEDRO GERSALIA, ARACELI GIMAY, ARTHUR GOC-ONG,
RICARDO GONZAGA, WILMA GONZALES, ALSON GRANADA,
MERLIE GUILLERMO, GABRIEL HERNANDEZ JR., ANTONIO
IBIS, HOMER IMPERIAL, ROMEO JANOTO, EDGAR JERA,
ROMEO LITO JESURO, RODRIGO JUMALIN, FURTONATO
JUSON, ARLYN LABOR, LETICIA LAGUNSAY, HAZEL MARIE
LAINGO, ROSIELYN DE LEON, WILMA LIMBURAN, JEANA
LINAO, VICENTA MIGUELITA LLOREN, MYRNA LOFRANCO,
ESTELA LOVITOS, LORNA MACATUAL, NELIA MADELO, MARIO
MAGHANOY, GILBERT MAGHANOY, MARY ANN MANALO,
ROGER MANAPOL, QUIRICO MARI, EMELITA MARTINEZ,
MIRRIAM MASUELA, MILAGROS MEDINA, SUSAN MELCHOR,
AMELIA MONDEJAR, PABLO MORENO JR., LAZARO NAMOCO,
DARWIN NARAGA, FEDERICO NARAGA, GRACE NECOR, MARY
JEAN JAURIGUE NONOL, DANILO NOVERO SR., BERNARDO
NUEZ JR., RICARDO OBTINARIO, JOJO CAESAR OCAMPO,
THELMA OLAC, JENNIFER OLARTE, ANTONIO PACE JR.,
RODRIGO PACHORO, NOLI PADASAY, EVA PALMA, IMELDA
PALMA, REUBEN PANCER, CORAZON RAMA PEDROSA,
MELODIA PEPITO, IRENE PIAMONTE, GEORGE POPA, MARINA
QUIONEZ, JOSEPHINE QUITAYEN, CERINA RABOR, HAIDE
RAMOS, SABAS RELACION III, ERICSON RELATADO,
VICTORINO RELATORRES, RAQUEL RELLON, EDUARDO
REVILLIEZA, RONNIE RIOJA, LUNESTO ROJAS, TEODORA DEL
ROSARIO, LILIA ROSIL, FLORECITA SALERA, CARLITO
SANORIA, DELINO SARDIDO, JOSELITO SARMIENTO, GLADYS
JOY SEGISMUNDO, RENATO SELMA, NORMA SULTAN,
PRESCILLA TABAR, ANDRES TAC-AN JR., RODOLFO
TAJONERA JR., ELVIRA TALON, ALBERTO TAMBA, LILIA
TAMBA, SOLITA TAPANG, TERESA VALDEZ, ALEXANDER
VILLARBA, DANILO WONG, MANUEL YOLORES, NAPOLEON
FEROLIN, AGNES CRISPINO and HILARIO I. MAPAYO, in his
capacity as Presiding Judge of Regional Trial Court, Branch 19,
Digos, Davao del Sur, respondents.

DECISION
CORONA, J.:

Assailed in the instant petition for certiorari under Rule 65[1] of the Rules of Court is
the March 15, 1999 order[2] of the Regional Trial Court of Davao del Sur, Branch 19,
denying the motion to dismiss of petitioners HLC Construction and Development
Corporation and Henry Lopez Chua, on the ground of lack of jurisdiction and a defective
certification against non-forum shopping.
Respondents Emily Homes Subdivision Homeowners Association (EHSHA) and the
150 individual members thereof filed on October 21, 1998 a civil action for breach of
contract, damages and attorneys fees with the Regional Trial Court of Davao del Sur,
Branch 19, against petitioners, the developers of low-cost housing units like Emily
Homes Subdivision. Respondents alleged that petitioners used substandard materials in
the construction of their houses, like coco lumber and termite-infested door
jambs. Petitioners furthermore allegedly did not adhere to the house plan specifications
because the ceiling lines were sagging and there were deviations from the plumb line of
the mullions, door jams (sic) and concrete columns. [3] Respondents asked petitioners to
repair their defective housing units but petitioners failed to do so. Respondents had to
repair their defective housing units using their own funds. Hence, they prayed for actual
and moral damages arising from petitioners breach of the contract plus exemplary
damages and attorneys fees.
On December 11, 1998, petitioners filed a motion to dismiss the complaint, claiming
that it was the Housing and Land Use Regulatory Board (HLURB) and not the trial court
which had jurisdiction over the case. They also cited the defective certification on non-
forum shopping which was signed only by the president of EHSHA and not by all its
members; such defect allegedly warranted the dismissal of the complaint. The trial court
denied petitioners motion to dismiss on the ground that the case fell within its
jurisdiction, not with the HLURB, and that respondents certificate of non-forum shopping
substantially complied with Rule 7, Section 5 of the 1997 Rules of Civil Procedure. It
also denied petitioners motion for reconsideration.
Aggrieved, petitioners filed the instant petition for certiorari, alleging that the trial
court committed grave abuse of discretion amounting to lack or in excess of jurisdiction
in holding (1) that the case between petitioners and respondents fell within the
jurisdiction of the civil courts and (2) that respondents had substantially complied with
the rules on forum shopping despite the fact that only one of the 150 respondents had
signed the certificate therefor.
Petitioners are correct that the case between them and respondents fell within the
jurisdiction of the HLURB, not the trial court. However, we cannot sustain petitioners
contention that respondents certificate of non-forum shopping was defective, thus
allegedly warranting the outright dismissal thereof by the trial court.
The general rule is that the certificate of non-forum shopping must be signed by all
the plaintiffs in a case and the signature of only one of them is insufficient.[4] However,
the Court has also stressed that the rules on forum shopping were designed to promote
and facilitate the orderly administration of justice and thus should not be interpreted with
such absolute literalness as to subvert its own ultimate and legitimate objective. [5] The
strict compliance with the provisions regarding the certificate of non-forum shopping
merely underscores its mandatory nature in that the certification cannot be altogether
dispensed with or its requirements completely disregarded. It does not thereby prohibit
substantial compliance with its provisions under justifiable circumstances. [6]
Thus in the recent case of Cavile, et al. vs. Heirs of Clarita Cavile, et al.,[7] we ruled:

[T]he execution by Thomas George Cavile, Sr., in behalf of all the other petitioners of
the certificate of non-forum shopping constitute substantial compliance with the
Rules. All the petitioners, being relatives and co-owners of the properties in dispute,
share a common interest thereon. They also share a common defense in the complaint
for partition filed by respondents. Thus, when they filed the instant petition, they filed
it as a collective, raising only one argument to defend their rights over the properties
in question. There is sufficient basis, therefore, for Thomas George Cavile, Sr. to
speak for and in behalf of his co-petitioners that they have not filed any action or
claim involving the same issues in another court or tribunal, nor is there other pending
action or claim in another court or tribunal involving the same issues. Moreover, it has
been held that the merits of the substantive aspects of the case may be deemed as
special circumstances for the Court to take cognizance of a petition for review
although the certification against forum shopping was executed and signed by only
one of the petitioners.

The above ruling is squarely applicable to the present case. Respondents (who
were plaintiffs in the trial court) filed the complaint against petitioners as a group,
represented by their homeowners association president who was likewise one of the
plaintiffs, Mr. Samaon M. Buat. Respondents raised one cause of action which was the
breach of contractual obligations and payment of damages. They shared a common
interest in the subject matter of the case, being the aggrieved residents of the poorly
constructed and developed Emily Homes Subdivision. Due to the collective nature of
the case, there was no doubt that Mr. Samaon M. Buat could validly sign the certificate
of non-forum shopping in behalf of all his co-plaintiffs. In cases therefore where it is
highly impractical to require all the plaintiffs to sign the certificate of non-forum
shopping, it is sufficient, in order not to defeat the ends of justice, for one of plaintiffs,
acting as representative, to sign the certificate provided that, as in Cavile et al., the
plaintiffs share a common interest in the subject matter of the case or filed the case as a
collective, raising only one common cause of action or defense.
In any case, even if it was correct for the trial court to rule that respondents had
substantially complied with the rules on forum shopping and thus, their complaint before
it should not be dismissed, we find that the trial court should have nonetheless
dismissed the complaint for a more important reason it had no jurisdiction over it. It is
the HLURB, not the trial court, which had jurisdiction over respondents complaint. The
HLURB[8] is the government agency empowered to regulate the real estate trade and
business, having exclusive jurisdiction to hear and decide cases involving:
(a) unsound real estate business practices;
(b) claims involving refunds and any other claims filed by subdivision lot or
condominium unit buyers against the project owner, developer, dealer,
broker or salesman;
(c) and cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lots or condominium units against
the owner, developer, dealer, broker or salesman.[9]
In this case, respondents complaint was for the reimbursement of expenses
incurred in repairing their defective housing units constructed by petitioners. Clearly, the
HLURB had jurisdiction to hear it. In the case of Arranza vs. B.F Homes, Inc.,[10] this
Court ruled that:
xxx the HLURB has jurisdiction over complaints arising from contracts between the
subdivision developer and the lot buyer or those aimed at compelling the subdivision
developer to comply with its contractual and statutory obligations to make the
subdivision a better place to live in. [11]

The fact that the subject matter of the complaint involved defective housing units did
not remove the complaint from the HLURBs jurisdiction. The delivery of habitable
houses was petitioners responsibility under their contract with respondents. The trial
court should have granted the motion to dismiss filed by petitioners so that the issues
therein could be expeditiously heard and resolved by the HLURB.
WHEREFORE, the petition is hereby GRANTED. The March 15, 1999 order of the
Regional Trial Court of Davao del Sur, Branch 19, denying the petitioners motion to
dismiss, is ANNULLED and Civil Case No. 3731 before it (trial court) is hereby
DISMISSED for lack of jurisdiction. This is without prejudice to the re-filing of the
respondents complaint in the HLURB.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ.,
concur.

[1]
Given due course by this Court on September 27, 2000; Rollo, p. 51.
[2]
Penned by Judge Hilario I. Mapayo.
[3]
Complaint, Rollo, pp. 20, 25.
[4]
Loquias vs. Office of the Ombudsman, 388 SCRA 62 [2000]; Docena vs. Lapesura, 355 SCRA 658
[2001].
[5]
BPI vs. Court of Appeals, G.R. No. 146923, April 30, 2003; Cavile et al., vs. Heirs of Clarita Cavile, et
al., G.R. No. 148635, April 1, 2003; Twin Towers Condominium Corporation vs. Court of Appeals,
G.R. No. 123552, February 27, 2003.
[6]
Cavile et al., vs. Heirs of Clarita Cavile, et al., G.R. No. 148635, April 1, 2003.
[7]
Ibid.
[8]
Formerly the Human Settlements Regulatory Commission (HSRC), it was renamed Housing and Land
Use Regulatory Board (HLURB) by virtue of Executive Order No. 90 dated December 17,
1986. The regulatory and quasi-judicial functions of the National Housing Authority (NHA) were
transferred to it by virtue of Executive Order No. 648 dated February 7, 1981.
[9]
Presidential Decree No. 957 (The Subdivision and Condominium Buyers Protective Decree), as
amended by Presidential Decree No. 1344 (Empowering the National Housing Authority to Issue
Writ of Execution in the Enforcement of its Decision under Presidential Decree No. 957).
[10]
333 SCRA 799, 817 [2000].
[11]
Ibid. at p. 814.
7) Marina Prop vs CA

FIRST DIVISION

[G.R. No. 125447. August 14, 1998]

MARINA PROPERTIES CORPORATION, petitioner, vs. COURT OF


APPEALS and H.L. CARLOS CONSTRUCTION,
INC., respondents.

[G.R. No. 125475. August 14, 1998]

H.L. CARLOS CONSTRUCTION, INC., petitioner, vs. COURT OF


APPEALS and MARINA PROPERTIES
CORPORATION, respondents.

DECISION
DAVIDE, JR., J.:

We resolve here two (2) separate appeals from the decision [1] of the Court of
Appeals of 27 June 1996 in CA-G.R. SP No. 37927, which affirmed with modification
the 15 March 1995 Order[2] of the Office of the President in O.P. Case No. 5462 which,
in turn, affirmed in toto the 14 June 1993 decision[3] of the Housing and Land Use
Regulatory Board (HLURB) in the case filed by H.L. Carlos Construction, Inc. (hereafter
H.L. CARLOS) against MARINA Properties Corporation (hereafter MARINA) for Specific
Performance with Damages and docketed as REM-A-1179.[4]
The factual antecedents, as summarized by the Court of Appeals, are as follows:

Petitioner Marina Properties Corporation (MARINA for short) is a domestic


corporation engaged in the business of real estate development. Among its
projects is a condominium complex project, known as the MARINA
BAYHOMES CONDOMINIUM PROJECT consisting of 10 building clusters
with 31 housing units to be built on a parcel of land at Asiaworld City, Coastal
Road in Paranaque, Metro Manila. The area is covered by T.C.T. No.
(121211) 42201 of the Registry of Deeds of the same municipality.

The construction of the project commenced sometime in 1988, with


respondent H.L. Carlos Construction, Inc. (H.L. CARLOS for brevity) as the
principal contractor, particularly of Phase III.

As an incentive to complete the construction of Phase III, MARINA allowed


H.L. CARLOS to purchase a condominium unit therein known as Unit B-
121. Thus, on October 9, 1988, the parties entered into a Contract to
Purchase and to Sell covering Unit B-121 for P3,614,000.00. H.L. CARLOS
paid P1,034,200.00 as downpayment, P50,000.00 as cash deposit
and P67,024.22 equivalent to 13 monthly amortizations.

After paying P1,810,330.70, which was more than half of the contract price,
H.L. CARLOS demanded for the delivery of the unit, but MARINA
refused. This prompted H.L. CARLOS to file with the Regional Trial Court of
Makati, Branch 61 a complaint for damages against MARINA, docketed as
Civil Case No. 89-5870.

Meanwhile, on April 20, 1990, MARINA wrote H.L. CARLOS that it was
exercising its option under their Contract to Purchase and to Sell to take over
the completion of the project due to its (H.L. CARLOS) abandonment of the
construction of the Phase III project.

In a letter dated March 15, 1991, H.L. CARLOS inquired from MARINA about
the turn-over status of the condominium unit. MARINA replied that it was
cancelling the Contract to Purchase and Sell due to H.L. CARLOS
abandonment of the construction of the Phase III Project and its filing of
baseless and harassment suits against MARINA and its officers.

Forthwith, H.L. CARLOS filed the instant complaint for specific performance
with damages against MARINA with the Housing and Land Use Regulatory
Board (HLURB), alleging among others, that it has substantially complied with
the terms and conditions of the Contract to Purchase and Sell, having paid
more than 50% of the contract price of the condominium unit; and that
MARINAs act of cancelling the contract was done with malice and bad
faith. H.L. CARLOS prays that MARINA be ordered to deliver to it the subject
unit, accept the monthly amortizations on the remaining balance, execute the
final deed of sale and deliver the title of the unit upon full payment of the
contract price. Also, H.L. CARLOS prays for the award of actual and
exemplary damages as well as attorneys fees.
In its answer, MARINA claimed that its cancellation of the Contract to
Purchase and Sell is justified since H.L. CARLOS has failed to pay its monthly
installment since October 1989 or for a period of almost two (2) years; that
H.L. CARLOS abandoned its work on the project as of December 1989; and
that the instant case should have been suspended in view of the pendency of
Civil Case No. 89-5870 for damages in the Makati RTC involving the same
issues.

On February 21, 1992, the HLURB, through Atty. Abraham N. Vermudez,


Arbiter, rendered a decision, the dispositive portion of which reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered


declaring the cancellation of the subject Contract to Sell as null and void and
ordering respondent Marina Properties Corporation as follows:

1. To turn over the subject condominium unit to herein complainant, accept


monthly amortization[s] on the remaining balance and to execute the final
deed of sale and deliver title/ownership of the subject property to the
complainant upon full payment of the contract price.

2. To pay complainant actual damages of P30,000.00 per month commencing


from March 1990 until the delivery of the subject property and the amount
of P50,000.00 as exemplary damages.

3. To pay complainant the amount of P50,000.00 as and by way of attorneys


fees.

4. To pay to this Board the amount of P5,000.00 as [an] administrative fine.

IT IS SO ORDERED.

In ruling for H.L. CARLOS, the HLURB Arbiter held:

x x x.

Respondents position that the case is a complex one is more imaginary than
real. Clearly, the cancellation of the subject Contract to Purchase and to Sell
was in violation of Republic Act No. 6552, otherwise known as the Realty
Installment Buyers Protection Act, which prescribes the procedure for
cancellation of installment contracts for the purchase of subdivision lots and/or
condominium units.
In the case at bar, the complainant had already paid P1,810,330.70 or more
than 50% of the contract price of P3,614,000.00 and more than the total of
two years (24 months) installments computed at the monthly installment
of P67,024.22, inclusive of the downpayment, which is more than 24
installments. Under R.A. 6552, notarial cancellation of the installment contract
becomes effective only upon payment of the cash surrender value to the
purchaser, which however respondent did not do.

Respondents cancellation of the subject contract was clearly illegal, void and
cannot be sanctioned.

Neither can this Office find merit in respondents contention that this case
should be suspended because of the pending civil case between the parties,
said pending case, Civil Case No. 89-5870 in the Regional Trial Court, Branch
61, Makati, Metro Manila, was filed by the same complainant herein against
the same respondent for collection of unpaid billings in the amount of
about P10,000,000.00.

On the other hand, this Office finds that respondents act in cancelling the
subject installment sales contract without following the provisions of R.A. 6552
is an unsound real estate business practice for which respondent is fined the
sum of P5,000.00.

As to damages and attorneys fees claimed by complainant and borne out by


the records, this Office finds that respondent should be held liable for
unearned rental income of P30,000.00 per month, commencing from March
1990 when the condominium unit should have been delivered until actual
delivery thereof, and attorneys fees of P50,000.00, both amounts to be
deducted from the unpaid balance due on the subject condominium unit.

Likewise, for its wanton breach of the subject contract, respondent is ordered
to pay exemplary damages in the amount of P50,000.00 as an example for
the public good, deductible from the balance due on the subject condominium
unit.

x x x.

Whereupon, MARINA interposed an appeal to the Board of Commissioners of HLURB


(First Division) which affirmed the assailed decision.

On further appeal to the Office of the President, the decision of the Board of
Commissioners (First Division) was affirmed.
MARINA filed a motion for reconsideration but was denied.[5]

MARINA filed a petition for review with the Court of Appeals ascribing the following
errors to the Office of the President:
(1) In sustaining the award of actual damages for unrealized profits in favor of private
respondent H.L. CARLOS which were unliquidated, speculative and patently
unreasonable;
(2) In declaring the motion for reconsideration filed by MARINA pro-forma and
depriving it of the right of appeal; and
(3) In not dismissing the case on the grounds of litis pendentia, forum-shopping
and splitting a single cause of action.[6]
The Court of Appeals sustained MARINA as regards the award of actual damages,
finding that no evidence was presented to prove the P30,000.00 award as monthly
rental for the condominium unit. However, as to the pronouncement of the Office of the
President that MARINAs motion for reconsideration was merely pro-forma, the Court of
Appeals noted that MARINA did not raise any new issue in its motion for
reconsideration. In the same vein, respondent court ruled that MARINA was not
deprived of its right to appeal.
The Court of Appeals likewise brushed aside MARINAs assertion that the complaint
should have been dismissed on the ground of litis pendentia thus:

The requisites of lis pendens as a ground for dismissal of a complaint are: (1) identity of
parties or at least such representing the same interest in both actions; (2) identity of
rights asserted as prayed for, the reliefs being founded on the same facts; and (3)
identity in both cases is such that the judgment that may be rendered in the pending
case, regardless of which party is successful, would amount to res judicata to the other
case.

There is no dispute that the case at bench and Civil Case No. 89-5870 for
damages at the Makati RTC involves the same parties although in the civil
case, the officers of MARINA have been impleaded as co-defendants. While
the first requisite obtains in this case, the last two are conspicuously absent.

It will be observed that the two cases involve distinct and separate causes of
action or rights asserted. Civil Case No. 89-5870 is for the collection of sums
of money corresponding to unpaid billings and labor costs incurred by H.L.
CARLOS in the construction of the project under the Construction
Contract agreed upon by the parties. Upon the other hand, the case at bench
is for specific performance (delivery of the condominium unit) and damages
arising from the unilateral cancellation of the Contract to Purchase and to Sell
by MARINA.
Moreover, the reliefs sought are also different. In the civil case, H.L. CARLOS
prays for the award of P7,065,885.03 representing unpaid labor costs, change
orders and price escalations including the sum of P2,000,000.00 as additional
compensatory damages. In the instant case, H.L. CARLOS seeks not only the
awa[r]d of actual and exemplary damages but also the delivery of the
condominium unit upon MARINAs acceptance of the monthly amortization on
the remaining balance, the execution of a final deed of sale and the delivery of
the title to the said private respondent.

MARINAs claim that the present complaint should be dismissed on the ground of
splitting a cause of action, deserves scant consideration. The two complaints did not
arise from a single cause of action but from two separate causes of action. It bears
emphasis that H.L. CARLOS cause of action in the civil case stemmed from the breach
by MARINA of its contractual obligation under the Construction Contract, while in the
case at bench, H.L. CARLOS cause of action is premised on the unilateral cancellation
of the Contract to Purchase and Sell by MARINA.[7]

Accordingly, the Court of Appeals affirmed the Order of the Office of the President
but deleted the award of actual damages. As such, the parties sought redress from this
Court by way of separate petitions.
In G.R. No. 125447, MARINA asserts that the Court of Appeals erred: (1) in finding
that petitioner should turn over the subject condominium unit to H.L. CARLOS and
accept monthly amortizations on the remaining balance; and (2) in not ordering the
dismissal of the case on the grounds of litis pendentia, forum-shopping and splitting of a
single cause of action.
On the other hand, in G.R. No. 125475, H.L. CARLOS contends that the Court of
Appeals gravely erred in: (1) finding that the award of actual damages equivalent
to P30,000.00 in unearned monthly rentals was not sustained by evidence; (2) in not
declaring that the petition for review was filed out of time and fatally defective for lack of
verification and certification by MARINA Properties, and in not declaring the decision of
the Office of the President final and executory; and 3) in not dismissing MARINAs
appeal as without merit.
MARINAs motion to consolidate both cases was granted in a resolution dated 27
January 1997.[8]
We first address the lone procedural issue of the timeliness of the petition for review
filed by MARINA with the Court of Appeals and the supposed lack of verification and
certification.
We find without merit the allegation that MARINAs petition for review before the
Court of Appeals was filed out of time as MARINAs motion for reconsideration (of the
order of the Office of the President) was found to be pro forma and, therefore, did not
stop the running of its period to appeal.
MARINA filed its Motion for Reconsideration[9] on the last day of its period to appeal,
specifically, on 3 May 1995. However, the motion was found by the Office of the
President to be pro forma as the issues of litis pendentia, forum-shopping and splitting
of a cause of action as well as the issue of unliquidated, speculative and unreasonable
damages raised therein were basically the same issues raised and discussed
extensively in the Appeal Memorandum and which were already weighed, discussed
and considered by this Office in its Order dated March 15, 1995.[10] As a consequence,
the Office of the President declared its decision final and executory.
Under our rules of procedure, a party adversely affected by a decision of a trial
court may move for reconsideration thereof on the following grounds: (a) the damages
awarded are excessive; (b) the evidence is insufficient to justify the decision; or (c) the
decision is contrary to law.[11] A motion for reconsideration interrupts the running of the
period to appeal, unless the motion is pro forma.[12] This is now expressly set forth in the
last paragraph of Section 2, Rule 37, 1997 Rules of Civil Procedure.
A motion for reconsideration based on the foregoing grounds is deemed pro forma if
the same does not specify the findings or conclusions in the judgment which are not
supported by the evidence or contrary to law, making express reference to the pertinent
evidence or legal provisions.[13] It is settled that although a motion for reconsideration
may merely reiterate issues already passed upon by the court, that by itself does not
make it pro forma and is immaterial because what is essential is ompliance with the
requisites of the Rules.[14] Thus, in Guerra Enterprises, Co. Inc. v. CFI of Lanao del
Sur,[15] we ruled:

Among the ends to which a motion for reconsideration is addressed, one


is precisely to convince the court that its ruling is erroneous and improper,
contrary to the law or the evidence; and in doing so, the movant has to
dwell of necessity upon the issues passed upon by the court. If a motion
for reconsideration may not discuss these issues, the consequence would
be that after a decision is rendered, the losing party would be confined to
filing only motions for reopening and new trial. We find in the Rules of
Court no warrant for ruling to that effect, a ruling that would, in effect
eliminate subsection (c) of Section 1 of Rule 37.

On this note, it has also been fittingly observed that:

Where the circumstances of a case do not show an intent on the part of the pleader to
merely delay the proceedings, and his motion reveals a bona fide effort to present
additional matters or to reiterate his arguments in a different light, the courts should be
slow to declare the same outright as pro forma. The doctrine relating to pro
forma motions has a direct bearing upon the movants valuable right to appeal. It would
be in the interest of justice to accord the appellate court the opportunity to review the
decision of the trial court on the merits than to abort the appeal by declaring the
motion pro forma, such that the period to appeal was not interrupted and had
consequently lapsed.[16]
We are thus unable to hold that MARINAs motion for reconsideration was
merely pro forma. Our review of the records reveals that said motion adequately pointed
out the conclusions MARINA regarded as erroneous and contrary to law, and even
referred to findings not supported by evidence as well as jurisprudence to sustain
MARINAs claims. As to the justification proffered by the Office of the President that it
had already passed upon the issues raised by MARINA in its motion, plainly, the
authorities cited above readily refute such a position.
It may be pointed out that under Supreme Court Circular No. 1-91 dated 27
February 1991 and Revised Administrative Circular No. 1-95 dated 16 May 1995, which
took effect on 1 June 1995, an aggrieved party is allowed one motion for
reconsideration of the assailed decision or final order before he may file a petition for
review with the Court of Appeals. All told, MARINAs motion for reconsideration was but
proper under the adjective rules extant in this jurisdiction.
The charge of a lack of verification or certification in MARINAs petition before the
Court of Appeals is baseless. Even the most cursory of reviews will disclose that such
may be found on pages 30 and 31 of the Petition.[17]
We agree with the conclusion of the Court of Appeals that the award of P30,000.00
as actual damages for unearned monthly rental income starting from March 1990 until
the delivery of the property to H.L. CARLOS was arbitrary. Article 2199 of the Civil Code
provides that one is entitled to adequate compensation only for such pecuniary loss
suffered by him as is duly proved.[18] Actual damages, to be recoverable, must not only
be capable of proof, but must actually be proved with a reasonable degree of
certainty.[19]Courts cannot simply rely on speculation, conjecture or guesswork in
determining the fact and amount of damages.[20] As the Court of Appeals correctly found
here that no proof was submitted by H.L. CARLOS to substantiate the recovery of
actual damages in the form of monthly rentals, the deletion of such award was but
appropriate.
The issue of forum shopping raised by MARINA deserves scant consideration. H.L.
CARLOS was not guilty of forum shopping when it sued MARINA before the HLURB to
enforce their Contract To Purchase and To Sell. Forum shopping is the act of a party
against whom an adverse judgment has been rendered in one forum, of seeking
another (and possibly favorable) opinion in another forum other than by appeal or the
special civil action of certiorari, or the institution of two (2) or more actions or
proceedings grounded on the same cause on the supposition that one or the other court
might look with favor upon the party.[21] Contrary to MARINAs assertion, H.L. CARLOS
complaint was hardly a duplication of Civil Case No. 89-5870 which was filed to collect
the sum of money corresponding to unpaid billings from their Construction
Contract. The cause of action in the civil case was, therefore, totally distinct from the
cause of action in the complaint before the HLURB. For this reason, neither could there
have been splitting of a cause of action.
Anent the absence of litis pendentia, the Court of Appeals meticulous analysis of
this issue leaves no room for improvement and we adopt it as our own.
We likewise uphold the finding that MARINAs cancellation of the Contract To Buy
and To Sell was clearly illegal. Prior to MARINAs unilateral act of rescission, H.L.
CARLOS had already paid P1,810,330.70, or more than 50% of the contract price
of P3,614,000.00. Moreover, the sum H.L. CARLOS had disbursed amounted to more
than the total of 24 installments, i.e., two years worth of installments computed at a
monthly installment rate of P67,024.22, inclusive of the downpayment.
As to the governing law, Section 24 of P.D. 957[22] provides:

SEC.24. Failure to pay installments. -- The rights of the buyer in the event of
his failure to pay the installments due for reasons other than failure of the
owner or developer to develop the project shall be governed by Republic Act
No. 6552.

Then among the requirements of R.A. No. 6552,[23] in order to effect the cancellation of a
contract, a notarial cancellation must first be had.[24] Therefore, absent this, MARINAs
cancellation of its contract with H.L. CARLOS was void.
In conclusion, cases involving specific performance of contractual and statutory
obligations, filed by buyers of subdivision lots or condominium units against the owner,
developer, dealer, broker or salesman fall under the jurisdiction of the HLURB. [25] It is
incumbent upon said administrative agency, in the exercise of its powers and functions,
to interpret and apply contracts, determine the rights of the parties under these
contracts, and award damages whenever appropriate.[26]
WHEREFORE, the petitions in these consolidated cases, G.R. No. 125447 and
G.R. No. 125475 are DENIED and the assailed decision of respondent Court of Appeals
of 27 June 1996 is hereby AFFIRMED.
Costs against petitioner in each case.
SO ORDERED.
Bellosillo, Vitug and Panganiban, JJ., concur.

[1]
Original Record (OR), CA-G.R. SP No. 37927, 153-161; Annex G of Petition, Rollo, G.R. No. 125447,
80-89; Annex A of Petition, Rollo, G.R. No. 125475, 32-40. Per Sandoval-Gutierrez, A., J., with the
concurrence of Buena, A. and Vasquez, C., JJ.
[2] Id., 66-75.
[3] OR, 62-65.
[4]
The Boards decision affirmed the 21 February 1992 decision of Housing and Land Use Arbiter
Abraham N. Vermudez in REM-041591-4794.
[5]
OR, 153-157; Annex G of Petition, Rollo, G.R. No. 125447, 81-86; Annex A of Petition, Rollo, G.R. No.
125475, 32-37.
[6] Id., 158.
[7] OR, 159-160.
[8] Rollo, G.R. No. 125475, 46, et seq.
[9] O.R., CA-G.R. SP No. 37927, 76-90.
[10] Id., 92.

[11] Rule 37, Sec. 1(c) Rules of Court, now Rule 37, Sec. 1, final par., 1997 Rules of Civil Procedure.
[12] Ravelo v. Court of Appeals, 207 SCRA 254, 261 [1992].
[13]
Rule 37, Sec. 2, 3rd par., Rules of Court, now modified under Rule 37, Sec. 2, last two paragraphs,
1997 Rules of Civil Procedure.
[14] Cruz v. Villaluz, 88 SCRA 506, 511 [1979]; People v. Rodriguez, 213 SCRA 171, 174 [1992].
[15]32 SCRA 314, 317 [1970]. See also Dineros v. Roque, 88 SCRA 540, 544 [1979]; Continental Cement
Corporation v. Court of Appeals, 184 SCRA 728, 734 [1990]; Marikina Valley Development Corporation v.
Flojo, 251 SCRA 87, 95 [1995]; 1 FLORENZ D. REGALADO, REMEDIAL LAW COMPENDIUM 379-380
(6th ed., 1997) (hereafter 1REGALADO).
[16] 1REGALADO 380.
[17] Rollo, CA-G.R. SP No. 37927, 30-31.
[18]
Scott Consultants & Resource Development Corporation, Inc. v. Court of Appeals, 242 SCRA 393, 405
[1995].
[19] Del Mundo v. Court of Appeals, 240 SCRA 348, 357 [1995].
[20] Fuentes, Jr. v. Court of Appeals, 253 SCRA 430, 438 [1996].
[21] Ortigas
& Company Limited Partnership v. Velasco, 234 SCRA 455, 500 [1994]; See First Philippine
International Bank v. Court of Appeals, 252 SCRA 259, 283 [1996].
[22] The Subdivision and Condominium Buyers Protective Decree.
[23] An Act to Provide Protection to Buyers of Real Estate on Installment Payments.
[24] Realty Exchange v. Sendino, 233 SCRA 665, 677 [1994].
[25] Realty Exchange v. Sendino, 233 SCRA 665, 677 [1994], 673, quoting United Housing Corporation v.
Hon. Dayrit, 181 SCRA 295 [1990].
[26] Id., 674.
8) Arranza vs BF Homes 19 Jun 2000

FIRST DIVISION

[G.R. No. 131683. June 19, 2000]

JESUS LIM ARRANZA; LORENZO CINCO; QUINTIN TAN; JOSE


ESCOBAR; ELBERT FRIEND; CLASSIC HOMES VILLAGE
ASSOCIATION, INC.; BF NORTHWEST HOMEOWNERS ASSOCIATION,
INC.; and UNITED BF HOMEOWNERS ASSOCIATIONS, INC., petitioners,
vs. B.F. HOMES, INC. AND THE HONORABLE COURT OF
APPEALS, respondent.

DECISION

DAVIDE, JR., C.J.:

For resolution in this petition is the issue of whether it is the Securities and Exchange
Commission (SEC) or the Housing and Land Use Regulatory Board (HLURB) that has
jurisdiction over a complaint filed by subdivision homeowners against a subdivision
developer that is under receivership for specific performance regarding basic
homeowners needs such as water, security and open spaces.

Respondent BF Homes, Inc. (BFHI), is a domestic corporation engaged in developing


subdivisions and selling residential lots. One of the subdivisions that respondent
developed was the BF Homes Paraaque Subdivision, which now sprawls across not
only a portion of the City of Paraaque but also those of the adjoining cities of Las Pias
and Muntinlupa.

When the Central Bank ordered the closure of Banco Filipino, which had substantial
investments in respondent BFHI, respondent filed with the SEC a petition for
rehabilitation and a declaration that it was in a state of suspension of payments. On 18
March 1985, the SEC placed respondent under a management committee. Upon that
committees dissolution on 2 February 1988, the SEC appointed Atty. Florencio B.
Orendain as a Receiver, and approved a Revised Rehabilitation Plan.

As a Receiver, Orendain instituted a central security system and unified the sixty~five
homeowners associations into an umbrella homeowners association called United BF
Homeowners Associations, Inc. (UBFHAI), which was thereafter incorporated with the
Home Insurance and Guaranty Corporation (HIGC).[1]

In 1989, respondent, through Orendain, turned over to UBFHAI control and


administration of security in the subdivision, the Clubhouse and the open spaces along
Concha Cruz Drive. Through the Philippine Waterworks and Construction Corporation
(PWCC), respondents managing company for waterworks in the various BF Homes
subdivisions, respondent entered into an agreement with UBFHAI for the annual
collection of community assessment fund and for the purchase of eight new pumps to
replace the over~capacitated pumps in the old wells.

On 7 November 1994, Orendain was relieved by the SEC of his duties as a Receiver,
and a new Board of Receivers consisting of eleven members of respondents Board of
Directors was appointed for the implementation of Phases II and III of respondents
rehabilitation.[2] The new Board, through its Chairman, Albert C. Aguirre, revoked the
authority given by Orendain to use the open spaces at Concha Cruz Drive and to collect
community assessment funds; deferred the purchase of new pumps; recognized BF
Paraaque Homeowners Association, Inc., (BFPHAI) as the representative of all
homeowners in the subdivision; took over the management of the Clubhouse; and
deployed its own security guards in the subdivision.

Consequently, on 5 July 1995, herein petitioners filed with the HLURB a class suit "for
and in behalf of the more than 7,000 homeowners in the subdivision" against
respondent BFHI, BF Citiland Corporation, PWCC and A.C. Aguirre Management
Corporation "to enforce the rights of purchasers of lots" in BF Homes Paraaque. [3] They
alleged that:

1......The forty (40) wells, mostly located at different elevations in Phases 3


and 4 of the subdivision and with only twenty~seven (27) productive, are
the sources of the inter~connected water system in the 765~hectare
subdivision;

2......There is only one drainage and sewer system;

3......There is one network of roads;

4......There are eight (8) entry and exit points to the subdivision and from
three (3) municipalities (now cities), a situation obtaining in this subdivision
only and nowhere else;

5......There was no security force for the entire subdivision until 1988;

6......There are not enough open spaces in the subdivision in relation to


the total land area developed; and whatever open spaces are available
have been left unkempt, undeveloped and neglected;

7......There are no zoning guidelines which resulted in unregulated


constructions of structures and the proliferation of business
establishments in residential areas; and
8......The BFPHAI became "moribund" sometime in 1980 on account of its
failure to cope with the delivery of basic services except for garbage
collection.

Petitioners raised "issues" on the following basic needs of the homeowners:


rights~of~way; water; open spaces; road and perimeter wall repairs; security; and the
interlocking corporations that allegedly made it convenient for respondent "to
compartmentalize its obligations as general developer, even if all of these are hooked
into the water, roads, drainage and sewer systems of the subdivision." [4] Thus,
petitioners prayed that:

A. A cease~and~desist order from selling any of the properties within the


subdivision be issued against respondent BFHI, BF Citi, ACAMC, and/or
any and all corporations acting as surrogates/alter~egos, sister companies
of BFHI and/or its stockholders until the warranties, facilities and
infrastructures shall have been complied with or put up (and) the
advances of UBFHAI reimbursed, otherwise, to cease and desist from
rescinding valid agreements or contracts for the benefit of complainants,
or committing acts diminishing, diluting or otherwise depriving
complainants of their rights under the law as homeowners;

B. .....After proper proceedings the bond or deposit put up by respondent


BF Homes, Inc. be forfeited in favor of petitioners;

C. .....Respondent BFHI be ordered to immediately turnover the roads,


open spaces, and other facilities built or put up for the benefit of lot
buyers/homeowners in the subdivision to complainant UBFHAI as
representative of all homeowners in BF Homes Paraaque, free from all
liens, encumbrances, and taxes in arrears;

D. If the open spaces in the subdivision are not sufficient as required by


law, to impose said penalties/sanctions against BFHI or the persons
responsible therefor;

E. .....Order the reimbursement of advances made by UBFHAI;

F. .....Turn over all amounts which may have been collected from users
fees of the strip of open space at Concha Cruz Drive;

G. .....Order PWCC to effect and restore 24~hour water supply to all


residents by adding new wells replacing over~capacitated pumps and
otherwise improving water distribution facilities;

H. Order PWCC to continue collecting the Community Development Fund


and remit all amounts collected to UBFHAI;
I......Order BFHI to immediately withdraw the guards at the clubhouse and
the 8 entry and exit points to the subdivision, this being an act of
usurpation and blatant display of brute force;

J. .....The appropriate penalties/sanctions be imposed against BF Citi,


ACAMC or any other interlocking corporation of BFHI or any of its principal
stockholders in respect of the diminution/encroaching/violation on the
rights of the residents of the subdivision to enjoy/avail of the
facilities/services due them; and

K......Respondents be made to pay attorneys fees and the costs of this


suit.[5]

In its answer, respondent claimed that (a) it had complied with its contractual obligations
relative to the subdivisions development; (b) respondent could not be compelled to
abide by agreements resulting from Orendains ultra vires acts; and (c) petitioners were
precluded from instituting the instant action on account of Section 6(c) of P.D. No.
902~A providing for the suspension of all actions for claims against a corporation under
receivership. Respondent interposed counterclaims and prayed for the dismissal of the
complaint.[6]

Petitioners thereafter filed an urgent motion for a cease~and~desist/status quo order.


Acting on this motion, HLURB Arbiter Charito M. Bunagan issued a 20~day temporary
restraining order to avoid rendering nugatory and ineffectual any judgment that could be
issued in the case;[7] and subsequently, an Order granting petitioners prayer for
preliminary injunction was issued

enjoining and restraining respondent BF Homes, Incorporated, its agents


and all persons acting for and in its behalf from taking over/administering
the Concha Garden Row, from issuing stickers to residents and non-
residents alike for free or with fees, from preventing necessary
improvements and repairs of infrastructures within the authority and
administration of complainant UBFHAI, and from directly and indirectly
taking over security in the eight (8) exit points of the subdivision or in any
manner interfering with the processing and vehicle control in subject gates
and otherwise to remove its guards from the gates upon posting of a bond
of One Hundred Thousand Pesos (P100,000.00) which bond shall answer
for whatever damages respondents may sustain by reason of the issuance
of the writ of preliminary injunction if it turns out that complainant is not
entitled thereto.[8]

Respondent thus filed with the Court of Appeals a petition for certiorari and prohibition
docketed as CA~G.R. SP No. 39685. It contended in the main that the HLURB acted
"completely without jurisdiction" in issuing the Order granting the writ of preliminary
injunction considering that inasmuch as respondent is under receivership, the "subject
matter of the case is one exclusively within the jurisdiction of the SEC." [9]
On 28 November 1997, the Court of Appeals rendered a decision [10] annulling and setting
aside the writ of preliminary injunction issued by the HLURB. It ruled that private
respondents action may properly be regarded as a "claim" within the contemplation of
PD No. 902~A which should be placed on equal footing with those of petitioners other
creditor or creditors and which should be filed with the Committee of Receivers. In any
event, pursuant to Section 6(c) of P.D. No. 902~A and SECs Order of 18 March 1985,
petitioners action against respondent, which is under receivership, should be
suspended.

Hence, petitioners filed the instant petition for review on certiorari. On 26 January 1998,
the Court issued a temporary restraining order (TRO) enjoining respondent, its officers,
representatives and persons acting upon its orders from

(a) taking over/administering the Concha Garden Row; (b) issuing stickers
to residents and non~residents alike for free or with fees; (c) preventing
necessary improvements and repairs of infrastructures within the authority
and administration of complainant United BF Homeowners Association,
Inc. (UBFHAI); (d) directly and indirectly taking over security in the eight
(8) exit points of all of BF Homes Paraaque Subdivision or in any manner
interfering with the processing and vehicle control in the subject gates;
and (e) otherwise to remove its guards from the gates.[11]

Respondents motion to lift the TRO was denied.

At the hearing on 1 July 1998, the primary issue in this case was defined as "which
body has jurisdiction over petitioners claims, the Housing and Land Use Regulatory
Board (HLURB) or the Securities and Exchange Commission (SEC)?" The collateral
issue to be addressed is "assuming that the HLURB has jurisdiction, may the
proceedings therein be suspended pending the outcome of the receivership before the
SEC?"

For their part, petitioners argue that the complaint referring to rights of way, water, open
spaces, road and perimeter wall repairs, security and respondents interlocking
corporations that facilitated circumvention of its obligation involves unsound real estate
practices. The action is for specific performance of a real estate developers obligations
under P.D. No. 957, and the relief sought is revocation of the subdivision projects
registration certificate and license to sell. These issues are within the jurisdiction of the
HLURB. Even if respondent is under receivership, its obligations as a real estate
developer under P.D. No. 957 are not suspended. Section 6(c) of P.D. No. 902~A, as
amended by P.D. No. 957, on "suspension of all actions for claims against corporations"
refers solely to monetary claims which are but incidental to petitioners complaints
against BFHI, and if filed elsewhere than the HLURB, it would result to splitting causes
of action. Once determined in the HLURB, however, the monetary awards should be
submitted to the SEC as established claims. Lastly, the acts enjoined by the HLURB are
not related to the disposition of BFHIs assets as a corporation undergoing its final phase
of rehabilitation.
On the other hand, respondent asserts that the SEC, not the HLURB, has jurisdiction
over petitioners complaint based on the contracts entered into by the former receiver.
The SEC, being the appointing authority, should be the one to take cognizance of
controversies arising from the performance of the receivers duties. Since respondents
properties are under the SECs custodia legis, they are exempt from any court process.

Jurisdiction is the authority to hear and determine a cause the right to act in a case. [12] It
is conferred by law and not by mere administrative policy of any court or tribunal. [13] It is
determined by the averments of the complaint and not by the defense contained in the
answer.[14] Hence, the jurisdictional issue involved here shall be determined upon an
examination of the applicable laws and the allegations of petitioners complaint before
the HLURB.

Presidential Decree No. 957 (The Subdivision and Condominium Buyers Protective
Decree) was issued on 12 July 1976 in answer to the popular call for correction of
pernicious practices of subdivision owners and/or developers that adversely affected the
interests of subdivision lot buyers. Thus, one of the "whereas clauses" of P.D. No. 957
states:

WHEREAS, numerous reports reveal that many real estate subdivision


owners, developers, operators, and/or sellers have reneged on their
representations and obligations to provide and maintain properly
subdivision roads, drainage, sewerage, water systems, lighting systems,
and other similar basic requirements, thus endangering the health and
safety of home and lot buyers.

Section 3 of P.D. No. 957 empowered the National Housing Authority (NHA) with the
"exclusive jurisdiction to regulate the real estate trade and business." On 2 April 1978,
P.D. No. 1344 was issued to expand the jurisdiction of the NHA to include the following:

SECTION 1. In the exercise of its functions to regulate the real estate


trade and business and in addition to its powers provided for in
Presidential Decree No. 957, the National Housing Authority shall have
exclusive jurisdiction to hear and decide cases of the following nature:

A......Unsound real estate business practices;

B......Claims involving refund and any other claims filed by subdivision lot
or condominium unit buyer against the project owner, developer, dealer,
broker or salesman; and

C......Cases involving specific performance of contractual and statutory


obligations filed by buyers of subdivision lot or condominium unit against
the owner, developer, dealer, broker or salesman. (Italics supplied.)
Thereafter, the regulatory and quasi~judicial functions of the NHA were transferred to
the Human Settlements Regulatory Commission (HSRC) by virtue of Executive Order
No. 648 dated 7 February 1981. Section 8 thereof specifies the functions of the NHA
that were transferred to the HSRC including the authority to hear and decide "cases on
unsound real estate business practices; claims involving refund filed against project
owners, developers, dealers, brokers or salesmen and cases of specific performance."
Executive Order No. 90 dated 17 December 1986 renamed the HSRC as the Housing
and Land Use Regulatory Board (HLURB).[15]

The boom in the real estate business all over the country resulted in more litigation
between subdivision owners/developers and lot buyers with the issue of the jurisdiction
of the NHA or the HLURB over such controversies as against that of regular courts. In
the cases [16] that reached this Court, the ruling has consistently been that the NHA or
the HLURB has jurisdiction over complaints arising from contracts between the
subdivision developer and the lot buyer or those aimed at compelling the subdivision
developer to comply with its contractual and statutory obligations to make the
subdivision a better place to live in.

Notably, in Antipolo Realty Corporation v. National Housing Authority,[17] one of the


issues raised by the homeowners was the failure of Antipolo Realty to develop the
subdivision in accordance with its undertakings under the contract to sell. Such
undertakings include providing the subdivision with concrete curbs and gutters,
underground drainage system, asphalt paved roads, independent water system,
electrical installation with concrete posts, landscaping and concrete sidewalks,
developed park or amphitheater and 24~hour security guard service. The Court held
that the complaint filed by the homeowners was within the jurisdiction of the NHA.

Similarly, in Alcasid v. Court of Appeals,[18] the Court ruled that the HLURB, not the RTC,
has jurisdiction over the complaint of lot buyers for specific performance of alleged
contractual and statutory obligations of the defendants, to wit, the execution of contracts
of sale in favor of the plaintiffs and the introduction in the disputed property of the
necessary facilities such as asphalting and street lights.

In the case at bar, petitioners complaint is for specific performance to enforce their
rights as purchasers of subdivision lots as regards rights of way, water, open spaces,
road and perimeter wall repairs, and security. Indisputably then, the HLURB has
jurisdiction over the complaint.

The fact that respondent is under receivership does not divest the HLURB of that
jurisdiction. A receiver is a person appointed by the court, or in this instance, by a
quasi~judicial administrative agency, in behalf of all the parties for the purpose of
preserving and conserving the property and preventing its possible destruction or
dissipation, if it were left in the possession of any of the parties.[19] It is the duty of the
receiver to administer the assets of the receivership estate; and in the management and
disposition of the property committed to his possession, he acts in a fiduciary capacity
and with impartiality towards all interested persons.[20] The appointment of a receiver
does not dissolve a corporation, nor does it interfere with the exercise of its corporate
rights.[21] In this case where there appears to be no restraints imposed upon respondent
as it undergoes rehabilitation receivership,[22] respondent continues to exist as a
corporation and hence, continues or should continue to perform its contractual and
statutory responsibilities to petitioners as homeowners.

Receivership is aimed at the preservation of, and at making more secure, existing
rights; it cannot be used as an instrument for the destruction of those rights. [23]

No violation of the SEC order suspending payments to creditors would result as far as
petitioners complaint before the HLURB is concerned. To reiterate, what petitioners
seek to enforce are respondents obligations as a subdivision developer. Such claims
are basically not pecuniary in nature although it could incidentally involve monetary
considerations. All that petitioners claims entail is the exercise of proper subdivision
management on the part of the SEC~appointed Board of Receivers towards the end
that homeowners shall enjoy the ideal community living that respondent portrayed they
would have when they bought real estate from it.

Neither may petitioners be considered as having "claims" against respondent within the
context of the following proviso of Section 6 (c) of P.D. No. 902~A, as amended by P.D.
Nos. 1653, 1758 and 1799, to warrant suspension of the HLURB proceedings:

[U]pon appointment of a management committee, rehabilitation receiver,


board or body, pursuant to this Decree, all actions for claims against
corporations, partnerships or associations under management or
receivership pending before any court, tribunal, board or body shall be
suspended accordingly. (Italics supplied.)

In Finasia Investments and Finance Corporation v. Court of Appeals, [24] this Court
defined and explained the term "claim" in Section 6 (c) of P.D. No. 902~A, as amended,
as follows:

We agree with the public respondent that the word "claim" as used in Sec.
6 (c) of P.D. 902~A, as amended, refers to debts or demands of a
pecuniary nature. It means "the assertion of a right to have money paid.
It is used in special proceedings like those before administrative court, on
insolvency." (Emphasis supplied.)

Hence, in Finasia Investments, the Court held that a civil case to nullify a special power
of attorney because the principals signature was forged should not be suspended upon
the appointment of a receiver of the mortgagee to whom a person mortgaged the
property owned by such principal. The Court ruled that the cause of action in that civil
case "does not consist of demand for payment of debt or enforcement of pecuniary
liability." It added:
It has nothing to do with the purpose of Section 6 (c) of P.D. 902~A, as
amended, which is to prevent a creditor from obtaining an advantage or
preference over another with respect to action against corporation,
partnership, association under management or receivership and to protect
and preserve the rights of party litigants as well as the interest of the
investing public or creditors. Moreover, a final verdict on the question of
whether the special power of attorney in question is a forgery or not will
not amount to any preference or advantage to Castro who was not shown
to be a creditor of FINASIA.[25]

In this case, under the complaint for specific performance before the HLURB, petitioners
do not aim to enforce a pecuniary demand. Their claim for reimbursement should be
viewed in the light of respondents alleged failure to observe its statutory and contractual
obligations to provide petitioners a "decent human settlement" and "ample opportunities
for improving their quality of life."[26] The HLURB, not the SEC, is equipped with the
expertise to deal with that matter.

On the other hand, the jurisdiction of the SEC is defined by P.D. No. 902~A, as
amended, as follows:

SEC. 5. In addition to the regulatory and adjudicative functions of the


Securities and Exchange Commission over corporations, partnerships and
other forms of associations registered with it as expressly granted under
existing laws and decrees, it shall have original and exclusive jurisdiction
to hear and decide cases involving:

a).....Devices or schemes employed by or any act of the board of


directors, business associates, its officers or partners, amounting to fraud
and misrepresentation which may be detrimental to the interest of the
public and/or of the stockholders, partners, members of associations or
organizations registered with the Commission;

b).....Controversies arising out of intra~corporate or partnership relations,


between and among stockholders, members of associates; between any
or all of them and the corporation, partnership or association of which they
are stockholders, members, or associates, respectively; and between
such corporation, partnership or association and the State insofar as it
concerns their individual franchise or right to exist as such entity; [and]

c).....Controversies in the election or appointments of directors, trustees,


officers, or managers of such corporation, partnerships or associations.

For the SEC to acquire jurisdiction over any controversy under these provisions, two
elements must be considered: (1) the status or relationship of the parties; and (2) the
nature of the question that is the subject of their controversy.[27] The first element
requires that the controversy must arise "out of intra~corporate or partnership relations
between and among stockholders, members or associates; between any or all of them
and the corporation, partnership or association of which they are stockholders,
members or associates, respectively; and between such corporation, partnership or
association and the State in so far as it concerns their individual
franchises."[28] Petitioners are not stockholders, members or associates of respondent.
They are lot buyers and now homeowners in the subdivision developed by the
respondent.

The second element requires that the dispute among the parties be intrinsically
connected with the regulation or the internal affairs of the corporation, partnership or
association.[29] The controversy in this case is remotely related to the "regulation" of
respondent corporation or to respondents "internal affairs."

It should be stressed that the main concern in this case is the issue of jurisdiction over
petitioners complaint against respondent for specific performance. P.D. No. 902~A, as
amended, defines the jurisdiction of the SEC; while P.D. No. 957, as amended,
delineates that of the HLURB. These two quasi~judicial agencies exercise functions that
are distinct from each other. The SEC has authority over the operation of all kinds of
corporations, partnerships or associations with the end in view of protecting the
interests of the investing public and creditors. On the other hand, the HLURB has
jurisdiction over matters relating to observance of laws governing corporations engaged
in the specific business of development of subdivisions and condominiums. The HLURB
and the SEC being bestowed with distinct powers and functions, the exercise of those
functions by one shall not abate the performance by the other of its own functions. As
respondent puts it, "there is no contradiction between P.D. No. 902~A and P.D. No.
957."[30]

What complicated the jurisdictional issue in this case is the fact that petitioners are
primarily praying for the retention of respondents obligations under the Memorandum of
Agreement that Receiver Orendain had entered into with them but which the present
Board of Receivers had revoked.

In Figueroa v. SEC,[31] this Court has declared that the power to overrule or revoke the
previous acts of the management or Board of Directors of the entity under receivership
is within a receivers authority, as provided for by Section 6 (d) (2) of P.D. No. 902~A.
Indeed, when the acts of a previous receiver or management committee prove
disadvantageous or inimical to the rehabilitation of a distressed corporation, the
succeeding receiver or management committee may abrogate or cast aside such acts.
However, that prerogative is not absolute. It should be exercised upon due
consideration of all pertinent and relevant laws when public interest and welfare are
involved. The business of developing subdivisions and corporations being imbued with
public interest and welfare, any question arising from the exercise of that prerogative
should be brought to the proper agency that has technical know~how on the matter.

P.D. No. 957 was promulgated to encompass all questions regarding subdivisions and
condominiums. It is aimed at providing for an appropriate government agency, the
HLURB, to which all parties aggrieved in the implementation of its provisions and the
enforcement of contractual rights with respect to said category of real estate may take
recourse. Nonetheless, the powers of the HLURB may not in any way be deemed as in
derogation of the SECs authority. P.D. Nos. 902~A and 957, as far as both are
concerned with corporations, are laws in pari materia. P.D. No. 902~A relates to all
corporations, while P.D. No. 957 pertains to corporations engaged in the particular
business of developing subdivisions and condominiums. Although the provisions of
these decrees on the issue of jurisdiction appear to collide when a corporation engaged
in developing subdivisions and condominiums is under receivership, the same decrees
should be construed as far as reasonably possible to be in harmony with each other to
attain the purpose of an expressed national policy.[32]

Hence, the HLURB should take jurisdiction over petitioners complaint because it
pertains to matters within the HLURBs competence and expertise. The HLURB should
view the issue of whether the Board of Receivers correctly revoked the agreements
entered into between the previous receiver and the petitioners from the perspective of
the homeowners interests, which P.D. No. 957 aims to protect. Whatever monetary
awards the HLURB may impose upon respondent are incidental matters that should be
addressed to the sound discretion of the Board of Receivers charged with maintaining
the viability of respondent as a corporation. Any controversy that may arise in that
regard should then be addressed to the SEC.

It is worth noting that the parties agreed at the 1 July 1998 hearing that should the
HLURB establish and grant petitioners claims, the same should be referred to the SEC.
Thus, the proceedings at the HLURB should not be suspended notwithstanding that
respondent is still under receivership. The TRO that this Court has issued should
accordingly continue until such time as the HLURB shall have resolved the controversy.
The present members of the Board of Receivers should be reminded of their duties and
responsibilities as an impartial Board that should serve the interests of both the
homeowners and respondents creditors. Their interests, financial or otherwise, as
members of respondents Board of Directors should be circumscribed by judicious and
unbiased performance of their duties and responsibilities as members of the Board of
Receivers. Otherwise, respondents full rehabilitation may face a bleak future. Both
parties should never give full rein to acts that could prove detrimental to the interests of
the homeowners and eventually jeopardize respondents rehabilitation.

WHEREFORE, the questioned Decision of the Court of Appeals is hereby REVERSED


and SET ASIDE. This case is REMANDED to the Housing and Land Use Regulatory
Board for continuation of proceedings with dispatch as the Securities and Exchange
Commission proceeds with the rehabilitation of respondent BF Homes, Inc., through the
Board of Receivers. Thereafter, any and all monetary claims duly established before the
HLURB shall be referred to the Board of Receivers for proper disposition and thereafter,
to the SEC, if necessary. No costs.

SO ORDERED.
Puno, Kapunan, Pardo and Ynares-Santiago, JJ., concur.

[1]
The UBFHAI filed with the HIGC a petition docketed as HIGC Case No. 138 praying that it be declared the
"umbrella organization and sole representative of all homeowners in BF Homes Paraaque Subdivision." The HIGC
hearing officer having granted that prayer, therein respondent BFPHAI appealed under HIGC-AB-HOA 93-013, but
the appeal was dismissed for lack of merit. BFPHAI then filed an "appeal/petition for review" with the Court of
Appeals under CA-G.R. SP No. 33482, but said appellate court dismissed the petition. Hence, BFPHAI filed a
petition for certiorari with this Court under G.R. No. 117370. On 24 October 1994, this Court dismissed the petition
for noncompliance with requirement No. 4 of Circular No. I-88 and failure to file the petition within a reasonable
time. On 18 January 1995, the Court denied with finality BFPHAIs motion for reconsideration of the Resolution of
24 October 1994. Entry of judgment was made on 15 February 1995.
[2]
Phase I was aimed at the payment of external creditors, while Phase II was for the purpose of paying off
respondent BFHIs liabilities of over P500 million to Banco Filipino. According to petitioners, respondent is now in
the final phase of receivership (Rollo, 59)
[3]
Rollo, 44.
[4]
Rollo, 59.
[5]
Rollo, 61-63.
[6]
Id., 66-86.
[7]
Id., 119.
[8]
Id., 128-129.
[9]
Rollo, 135.
[10]
Per Morales, C.A., J., with Garcia, C. and Hormachuelos, P.A., JJ., concurring. Rollo, 180-192.
[11]
Ibid., 208.
[12]
Herrera v. Barretto, 25 Phil. 245, 251 (1913)
[13]
Cudia v. Court of Appeals, 348 Phil. 190, 199 (1998)
[14]
Chico v. Court of Appeals, 348 Phil. 37, 41 (1998)
[15]
Section 1(c)
[16]
Tejada v. Homestead Property Corporation, 178 SCRA 164 (1989); Sandoval v. Caeba, 190 SCRA 77 (1990);
C.T. Torres Enterprises, Inc. v. Hibionada, 191 SCRA 268 (1990); Union Bank of the Philippines v. HLURB, 210
SCRA 558 (1992); Estate Developers and Investors Corporation v. Court of Appeals, 213 SCRA 353 (1992);
Alcasid v. Court of Appeals, 217 SCRA 437 (1993); Fajardo v. Bautista, 232 SCRA 291 (1994); Realty Exchange
Venture Corporation v. Sendino, 233 SCRA 665 (1994)
[17]
153 SCRA 399 (1987)
[18]
Supra note 16.
[19]
Commodities Storage & Ice Plant Corporation v. Court of Appeals, 274 SCRA 439, 446 (1997)
[20]
75 C.J.S Receivers 163, 802 (1952)
[21]
Teal Motor Co., Inc. v. Court of First Instance of Manila, 51 Phil. 549, 563 (1928)
[22]
See Provident Savings Bank v. Court of Appeals, 222 SCRA 125, 130-131 (1993)
[23]
Ysasi v. Hon. Fernandez, 132 Phil. 526, 533 (1968)
[24]
237 SCRA 446, 450 (1994)
[25]
Id., 450-451.
[26]
P.D. No. 957, first "whereas clause."
[27]
Viray v. Court of Appeals, 191 SCRA 308, 323 (1990); Macapalan v. Katalbas-Moscardon, 227 SCRA 49, 54
(1993); Torio v. Court of Appeals, 230 SCRA 626, 632 (1994); Bernardo, Sr. v. Court of Appeals, 331 Phil. 962,
980 (1996); Lozano v. De los Santos, 274 SCRA 452, 457 (1997)
[28]
Lozano v. De los Santos, supra, citing Union Glass & Container Corporation v. SEC, 126 SCRA 31, 38 (1983)
and AGPALO, COMMENTS ON THE CORPORATION CODE OF THE PHILIPPINES, 447-448 (1993)
[29]
Lozano v. De los Santos, supra, at 457-458 citing Dee v. SEC, 199 SCRA 238 (1991) and Union Glass &
Container Corporation v. SEC, supra.
[30]
Rollo, 492.
[31]
162 SCRA 689 (1988
9) UP board og Reg vs CA

SECOND DIVISION

[G.R. No. 134625. August 31, 1999]

UNIVERSITY OF THE PHILIPPINES BOARD OF REGENTS,


CHANCELLOR ROGER POSADAS, DR. EMERLINDA ROMAN,
DEAN CONSUELO PAZ, DR. ISAGANI MEDINA, DR. MARIA
SERENA DIOKNO, DR. OLIVIA CAOILI, DR. FRANCISCO
NEMENZO II, DEAN PACIFICO AGABIN, CARMELITA GUNO,
and MARICHU LAMBINO, petitioners, vs. HON. COURT OF
APPEALS and AROKIASWAMY WILLIAM MARGARET
CELINE, respondents.

DECISION
MENDOZA, J.:

For review before the Court is the decision of the Court of Appeals[1] in CA-G.R. SP No.
42788, dated December 16, 1997, which granted private respondents application for a writ of
mandatory injunction, and its resolution, dated July 13, 1998, denying petitioners motion for
reconsideration.
The antecedent facts are as follows:
Private respondent Arokiaswamy William Margaret Celine is a citizen of India and holder of
a Philippine visitors visa. Sometime in April 1988, she enrolled in the doctoral program in
Anthropology of the University of the Philippines College of Social Sciences and Philosophy
(CSSP) in Diliman, Quezon City.
After completing the units of course work required in her doctoral program, private
respondent went on a two-year leave of absence to work as Tamil Programme Producer of the
Vatican Radio in the Vatican and as General Office Assistant at the International Right to Life
Federation in Rome. She returned to the Philippines in July 1991 to work on her dissertation
entitled, Tamil Influences in Malaysia, Indonesia and the Philippines.
On December 22, 1992, Dr. Realidad S. Rolda, chairperson of the U.P. Department of
Anthropology, wrote a letter to Dr. Maria Serena Diokno, CSSP Associate Dean and Graduate
Program Director, certifying that private respondent had finished her dissertation and was ready
for her oral defense. Dr. Rolda suggested that the oral defense be held on January 6, 1993 but, in
a letter, dated February 2, 1993, Dr. Serena Diokno rescheduled it on February 5, 1993. Named
as members of the dissertation panel were Drs. E. Arsenio Manuel, Serafin Quiason, Sri
Skandarajah, Noel Teodoro, and Isagani Medina, the last included as the deans representative.
After going over private respondents dissertation, Dr. Medina informed CSSP Dean
Consuelo Joaquin-Paz that there was a portion in private respondents dissertation that was lifted,
without proper acknowledgment, from Balfours Cyclopaedia of India and Eastern and Southern
Asia(1967), volume I, pp. 392-401 (3 v., Edward Balfour 1885 reprint) and from John Edyes
article entitled Description of the Various Classes of Vessels Constructed and Employed by the
Natives of the Coasts of Coromandel, Malabar, and the Island of Ceylon for their Coasting
Navigation in the Royal Asiatic Society of Great Britain and Ireland Journal, volume I, pp. 1-14
(1833).[2]
Nonetheless, private respondent was allowed to defend her dissertation on February 5,
1993. Four (4) out of the five (5) panelists gave private respondent a passing mark for her oral
defense by affixing their signatures on the approval form. These were Drs. Manuel, Quiason,
Skandarajah, and Teodoro. Dr. Quiason added the following qualification to his signature:

Ms. Arokiaswamy must incorporate the suggestions I made during the successful
defense of her Ph.D. thesis.[3]

Dr. Medina did not sign the approval form but added the following comment:

Pipirmahan ko ang pagsang-ayon/di pagsang-ayon kapag nakita ko na ang mga


revisions ng dissertation.[4]

Dr. Teodoro added the following note to his signature:

Kailangang isagawa ang mga mahahalagang pagbabago at ipakita sa panel ang bound
copies.[5]

In a letter, dated March 5, 1993 and addressed to her thesis adviser, Dr. Manuel, private
respondent requested a meeting with the panel members, especially Dr. Medina, to discuss the
amendments suggested by the panel members during the oral defense. The meeting was held at
the deans office with Dean Paz, private respondent, and a majority of the defense panel
present.[6] During the meeting, Dean Paz remarked that a majority vote of the panel members was
sufficient for a student to pass, notwithstanding the failure to obtain the consent of the Deans
representative.
On March 24, 1993, the CSSP College Faculty Assembly approved private respondents
graduation pending submission of final copies of her dissertation.
In April 1993, private respondent submitted copies of her supposedly revised dissertation to
Drs. Manuel, Skandarajah, and Quiason, who expressed their assent to the
dissertation. Petitioners maintain, however, that private respondent did not incorporate the
revisions suggested by the panel members in the final copies of her dissertation.
Private respondent left a copy of her dissertation in Dr. Teodoros office on April 15, 1993
and proceeded to submit her dissertation to the CSSP without the approvals of Dr. Medina and
Dr. Teodoro, relying on Dean Pazs March 5, 1993 statement.
Dr. Teodoro later indicated his disapproval, while Dr. Medina did not sign the approval
form.[7]
Dean Paz then accepted private respondents dissertation in partial fulfillment of the course
requirements for the doctorate degree in Anthropology.
In a letter to Dean Paz, dated April 17, 1993, private respondent expressed concern over
matters related to her dissertation. She sought to explain why the signature of Dr. Medina was
not affixed to the revision approval form. Private respondent said that since she already had the
approval of a majority of the panel members, she no longer showed her dissertation to Dr.
Medina nor tried to obtain the latters signature on the revision approval form. She likewise
expressed her disappointment over the CSSP administration and charged Drs. Diokno and
Medina with maliciously working for the disapproval of her dissertation, and further warned
Dean Paz against encouraging perfidious acts against her.
On April 17, 1993, the University Council met to approve the list of candidates for
graduation for the second semester of school year 1992-1993. The list, which was endorsed to
the Board of Regents for final approval, included private respondents name.
On April 21, 1993, Dean Paz sent a letter to Dr. Milagros Ibe, Vice Chancellor for
Academic Affairs, requesting the exclusion of private respondents name from the list of
candidates for graduation, pending clarification of the problems regarding her dissertation. Her
letter reads:[8]

Abril 21, 1993

Dr. Milagros Ibe


Vice Chancellor for Academic Affairs
Unibersidad ng Pilipinas
Quezon Hall, Diliman, Q.C.

Mahal na Dr. Ibe,

Mahigpit ko pong hinihiling na hwag munang isama ang pangalan ni Ms.


Arokiaswam[y] William Margaret Celine sa listahan ng mga bibigyan ng degri na
Ph.D. (Anthropology) ngayon[g] semester, dahil sa mga malubhang bintang nya sa
ilang myembro ng panel para sa oral defense ng disertasyon nya at sa mga akusasyon
ng ilan sa mga ito sa kanya.

Naniniwala po kami na dapat mailinaw muna ang ilang bagay bago makonfer ang
degri kay Ms. Arokiaswam[y]. Kelangan po ito para mapangalagaan ang istandard ng
pinakamataas na degree ng Unibersidad.
(Sgd.)

CONSUELO JOAQUIN-PAZ, Ph.D.

Dekano

Apparently, however, Dean Pazs letter did not reach the Board of Regents on time, because
the next day, April 22, 1993, the Board approved the University Councils recommendation for
the graduation of qualified students, including private respondent. Two days later, on April 24,
1993, private respondent graduated with the degree of Doctor of Philosophy in Anthropology.
On the other hand, Dean Paz also wrote a letter to private respondent, dated April 21, 1993,
that she would not be granted an academic clearance unless she substantiated the accusations
contained in her letter dated April 17, 1993.
In her letter, dated April 27, 1993, private respondent claimed that Dr. Medinas unfavorable
attitude towards her dissertation was a reaction to her failure to include him and Dr. Francisco in
the list of panel members; that she made the revisions proposed by Drs. Medina and Teodoro in
the revised draft of her dissertation; and that Dr. Diokno was guilty of harassment.
In a letter addressed to Dean Paz, dated May 1, 1993, Dr. Medina formally charged private
respondent with plagiarism and recommended that the doctorate granted to her be withdrawn.[9]
On May 13, 1993, Dean Paz formed an ad hoc committee, composed of faculty members
from various disciplines and chaired by Dr. Eva Duka-Ventura, to investigate the plagiarism
charge against private respondent. Meanwhile, she recommended to U.P. Diliman Chancellor,
Dr. Emerlinda Roman, that the Ph.D. degree conferred on private respondent be withdrawn.[10]
In a letter, dated June 7, 1993, Dean Paz informed private respondent of the charges against
her.[11]
On June 15, 1993, the Ventura Committee submitted a report to Dean Paz, finding at least
ninety (90) instances or portions in private respondents thesis which were lifted from sources
without proper or due acknowledgment.
On July 28, 1993, the CSSP College Assembly unanimously approved the recommendation
to withdraw private respondents doctorate degree and forwarded its recommendation to the
University Council. The University Council, in turn, approved and endorsed the same
recommendation to the Board of Regents on August 16, 1993.
On September 6, 1993, the Board of Regents deferred action on the recommendation to
study the legal implications of its approval.[12]
Meanwhile, in a letter, dated September 23, 1993, U.P. Diliman Chancellor Emerlinda
Roman summoned private respondent to a meeting on the same day and asked her to submit her
written explanation to the charges against her.
During the meeting, Chancellor Roman informed private respondent of the charges and
provided her a copy of the findings of the investigating committee.[13] Private respondent, on the
other hand, submitted her written explanation in a letter dated September 25, 1993.
Another meeting was held on October 8, 1993 between Chancellor Roman and private
respondent to discuss her answer to the charges. A third meeting was scheduled on October 27,
1993 but private respondent did not attend it, alleging that the Board of Regents had already
decided her case before she could be fully heard.
On October 11, 1993, private respondent wrote to Dr. Emil Q. Javier, U.P. President,
alleging that some members of the U.P. administration were playing politics in her case. [14] She
sent another letter, dated December 14, 1993, to Dr. Armand Fabella, Chairman of the Board of
Regents, complaining that she had not been afforded due process and claiming that U.P. could no
longer withdraw her degree since her dissertation had already been accepted by the CSSP.[15]
Meanwhile, the U.P. Office of Legal Services justified the position of the University
Council in its report to the Board of Regents. The Board of Regents, in its February 1, 1994 and
March 24, 1994 meetings, further deferred action thereon.
On July 11, 1994, private respondent sent a letter to the Board of Regents requesting a re-
investigation of her case. She stressed that under the Rules and Regulations on Student Conduct
and Discipline, it was the student disciplinary tribunal which had jurisdiction to decide cases of
dishonesty and that the withdrawal of a degree already conferred was not one of the authorized
penalties which the student disciplinary tribunal could impose.
On July 28, 1994, the Board of Regents decided to release private respondents transcript of
grades without annotation although it showed that private respondent passed her dissertation with
12 units of credit.
On August 17, 1994, Chancellor Roger Posadas issued Administrative Order No. 94-94
constituting a special committee composed of senior faculty members from the U.P. units outside
Diliman to review the University Councils recommendation to withdraw private respondents
degree.With the approval of the Board of Regents and the U.P. Diliman Executive Committee,
Posadas created a five-man committee, chaired by Dr. Paulino B. Zafaralla, with members
selected from a list of nominees screened by Dr. Emerenciana Arcellana, then a member of the
Board of Regents.On August 31, 1994, the members of the Zafaralla committee and private
respondent met at U.P. Los Baos.
Meanwhile, on August 23, 1994, the U.P. Diliman Registrar released to private respondent a
copy of her transcript of grades and certificate of graduation.
In a letter to Chancellor Posadas, dated September 1, 1994, private respondent requested that
the Zafaralla committee be provided with copies of the U.P. Charter (Act No. 1870), the U.P.
Rules and Regulations on Student Conduct and Discipline, her letter-response to Chancellor
Roman, dated September 25, 1993, as well as all her other communications.
On September 19, 1994, Chancellor Posadas obtained the Zafaralla Committees report,
signed by its chairman, recommending the withdrawal of private respondents doctorate
degree. The report stated:[16]

After going through all the pertinent documents of the case and interviewing Ms.
Arokiaswamy William, the following facts were established:
1. There is overwhelming evidence of massive lifting from a published source word for word
and, at times, paragraph by paragraph without any acknowledgment of the source, even by a
mere quotation mark. At least 22 counts of such documented liftings were identified by the
Committee. These form part of the approximately ninety (90) instances found by the
Committee created by the Dean of the College and subsequently verified as correct by the
Special Committee. These instances involved the following forms of intellectual
dishonesty: direct lifting/copying without acknowledgment, full/partial lifting with improper
documentation and substitution of terms or words (e.g., Tamil in place of Sanskrit,
Tamilization in place of Indianization) from an acknowledged source in support of her thesis
(attached herewith is a copy of the documents for reference); and
2. Ms. Arokiaswamy William herself admits of being guilty of the allegation of plagiarism. Fact
is, she informed the Special Committee that she had been admitting having lifted several
portions in her dissertation from various sources since the beginning.

In view of the overwhelming proof of massive lifting and also on the admission of
Ms. Arokiaswamy William that she indeed plagiarized, the Committee strongly
supports the recommendation of the U.P. Diliman Council to withdraw the doctoral
degree of Ms. Margaret Celine Arokiaswamy William.

On the basis of the report, the University Council, on September 24, 1994, recommended to
the Board of Regents that private respondent be barred in the future from admission to the
University either as a student or as an employee.
On January 4, 1995, the secretary of the Board of Regents sent private respondent the
following letter:[17]

4 January 1995

Ms. Margaret Celine Arokiaswamy William


Department of Anthropology
College of Social Sciences and Philosophy
U.P. Diliman, Quezon City

Dear Ms. Arokiaswamy William:

This is to officially inform you about the action taken by the Board of Regents at its 1081 st and
1082nd meetings held last 17 November and 16 December 1994 regarding your case, the excerpts
from the minutes of which are attached herewith.

Please be informed that the members present at the 1081st BOR meeting on 17 November 1994
resolved, by a majority decision, to withdraw your Ph.D. degree as recommended by the U.P.
Diliman University Council and as concurred with by the External Review Panel composed of
senior faculty from U.P. Los Baos and U.P. Manila. These faculty members were chosen by lot
from names submitted by the University Councils of U.P. Los Baos and U.P. Manila.
In reply to your 14 December 1994 letter requesting that you be given a good lawyer by the
Board, the Board, at its 1082nd meeting on 16 December 1994, suggested that you direct your
request to the Office of Legal Aid, College of Law, U.P. Diliman.

Sincerely yours,

(Sgd.)

VIVENCIO R. JOSE
Secretary of the University
and of the Board of Regents

On January 18, 1995, private respondent wrote a letter to Commissioner Sedfrey Ordoez,
Chairman of the Commission on Human Rights, asking the commissions intervention.[18] In a
letter, dated February 14, 1995, to Secretary Ricardo Gloria, Chairman of the Board of Regents,
she asked for a reinvestigation of her case. She also sought an audience with the Board of
Regents and/or the U.P. President, which request was denied by President Javier, in a letter dated
June 2, 1995.
On August 10, 1995, private respondent then filed a petition for mandamus with a prayer for
a writ of preliminary mandatory injunction and damages, which was docketed as Civil Case No.
Q-95-24690 and assigned to Branch 81 of the Regional Trial Court of Quezon City.[19] She
alleged that petitioners had unlawfully withdrawn her degree without justification and without
affording her procedural due process. She prayed that petitioners be ordered to restore her degree
and to pay her P500,000.00 as moral and exemplary damages and P1,500,000.00 as
compensation for lost earnings.
On August 6, 1996, the trial court, Branch 227, rendered a decision dismissing the petition
for mandamus for lack of merit.[20] Private respondent appealed to the Court of Appeals, which
on December 16, 1997, reversed the lower court. The dispositive portion of the appellate courts
decision reads:[21]

WHEREFORE, the decision of the court a quo is hereby reversed and set
aside. Respondents are ordered to restore to petitioner her degree of Ph.D. in
Anthropology.

No pronouncement as to costs.

SO ORDERED.

Hence, this petition. Petitioners contend:


I
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN GRANTING
THE WRIT OF MANDAMUS AND ORDERING PETITIONERS TO RESTORE
RESPONDENTS DOCTORAL DEGREE.
II

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN HOLDING


THAT THE DOCTORAL DEGREE GIVEN RESPONDENT BY U.P. CANNOT BE
RECALLED WITHOUT VIOLATING HER RIGHT TO ENJOYMENT OF
INTELLECTUAL PROPERTY AND TO JUSTICE AND EQUITY.
III

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN DEPRIVING


PETITIONERS OF THEIR RIGHT TO SUBSTANTIVE DUE PROCESS.[22]

Petitioners argue that private respondent failed to show that she had been unlawfully
excluded from the use and enjoyment of a right or office to which she is entitled so as to justify
the issuance of the writ of mandamus. They also contend that she failed to prove that the
restoration of her degree is a ministerial duty of U.P. or that the withdrawal of the degree
violated her right to the enjoyment of intellectual property.
On the other hand, private respondent, unassisted by counsel, argue that petitioners acted
arbitrarily and with grave abuse of discretion in withdrawing her degree even prior to verifying
the truth of the plagiarism charge against her; and that as her answer to the charges had not been
forwarded to the members of the investigating committees, she was deprived of the opportunity
to comment or refute their findings.
In addition, private respondent maintains that petitioners are estopped from withdrawing her
doctorate degree; that petitioners acted contrary to 9 of the U.P. Charter and the U.P. Rules and
Regulations on Student Conduct and Discipline of the University, which according to her, does
not authorize the withdrawal of a degree as a penalty for erring students; and that only the
college committee or the student disciplinary tribunal may decide disciplinary cases, whose
report must be signed by a majority of its members.
We find petitioners contention to be meritorious.
Mandamus is a writ commanding a tribunal, corporation, board or person to do the act
required to be done when it or he unlawfully neglects the performance of an act which the law
specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes
another from the use and enjoyment of a right or office to which such other is entitled, there
being no other plain, speedy, and adequate remedy in the ordinary course of law.[23] In University
of the Philippines Board of Regents v. Ligot-Telan,[24] this Court ruled that the writ was not
available to restrain U.P. from the exercise of its academic freedom. In that case, a student who
was found guilty of dishonesty and ordered suspended for one year by the Board of Regents,
filed a petition for mandamus and obtained from the lower court a temporary restraining order
stopping U.P. from carrying out the order of suspension. In setting aside the TRO and ordering
the lower court to dismiss the students petition, this Court said:
[T]he lower court gravely abused its discretion in issuing the writ of preliminary
injunction of May 29, 1993. The issuance of the said writ was based on the lower
courts finding that the implementation of the disciplinary sanction of suspension on
Nadal would work injustice to the petitioner as it would delay him in finishing his
course, and consequently, in getting a decent and good paying job. Sadly, such a
ruling considers only the situation of Nadal without taking into account the
circumstances, clearly of his own making, which led him into such a
predicament. More importantly, it has completely disregarded the overriding issue of
academic freedom which provides more than ample justification for the imposition of
a disciplinary sanction upon an erring student of an institution of higher learning.

From the foregoing arguments, it is clear that the lower court should have restrained
itself from assuming jurisdiction over the petition filed by Nadal. Mandamus is never
issued in doubtful cases, a showing of a clear and certain right on the part of the
petitioner being required. It is of no avail against an official or government agency
whose duty requires the exercise of discretion or judgment.[25]

In this case, the trial court dismissed private respondents petition precisely on grounds of
academic freedom but the Court of Appeals reversed holding that private respondent was denied
due process. It said:

It is worthy to note that during the proceedings taken by the College Assembly
culminating in its recommendation to the University Council for the withdrawal of
petitioners Ph.D. degree, petitioner was not given the chance to be heard until after the
withdrawal of the degree was consummated.Petitioners subsequent letters to the U.P.
President proved unavailing.[26]

As the foregoing narration of facts in this case shows, however, various committees had
been formed to investigate the charge that private respondent had committed plagiarism and, in
all the investigations held, she was heard in her defense. Indeed, if any criticism may be made of
the university proceedings before private respondent was finally stripped of her degree, it is that
there were too many committee and individual investigations conducted, although all resulted in
a finding that private respondent committed dishonesty in submitting her doctoral dissertation on
the basis of which she was conferred the Ph.D. degree.
Indeed, in administrative proceedings, the essence of due process is simply the opportunity
to explain ones side of a controversy or a chance to seek reconsideration of the action or ruling
complained of.[27] A party who has availed of the opportunity to present his position cannot
tenably claim to have been denied due process.[28]
In this case, private respondent was informed in writing of the charges against her[29] and
afforded opportunities to refute them. She was asked to submit her written explanation, which
she forwarded on September 25, 1993.[30] Private respondent then met with the U.P. chancellor
and the members of the Zafaralla committee to discuss her case. In addition, she sent several
letters to the U.P. authorities explaining her position.[31]
It is not tenable for private respondent to argue that she was entitled to have an audience
before the Board of Regents. Due process in an administrative context does not require trial-type
proceedings similar to those in the courts of justice.[32] It is noteworthy that the U.P. Rules do not
require the attendance of persons whose cases are included as items on the agenda of the Board
of Regents.[33]
Nor indeed was private respondent entitled to be furnished a copy of the report of the
Zafaralla committee as part of her right to due process. In Ateneo de Manila University v.
Capulong,[34] we held:

Respondent students may not use the argument that since they were not accorded the
opportunity to see and examine the written statements which became the basis of
petitioners February 14, 1991 order, they were denied procedural due
process. Granting that they were denied such opportunity, the same may not be said to
detract from the observance of due process, for disciplinary cases involving students
need not necessarily include the right to cross examination. An administrative
proceeding conducted to investigate students participation in a hazing activity need
not be clothed with the attributes of a judicial proceeding. . .

In this case, in granting the writ of mandamus, the Court of Appeals held:

First. Petitioner graduated from the U.P. with a doctorate degree in


Anthropology. After graduation, the contact between U.P. and petitioner
ceased. Petitioner is no longer within the ambit of the disciplinary powers of the
U.P. As a graduate, she is entitled to the right and enjoyment of the degree she has
earned. To recall the degree, after conferment, is not only arbitrary, unreasonable, and
an act of abuse, but a flagrant violation of petitioners right of enjoyment to intellectual
property.

Second. Respondents aver that petitioners graduation was a mistake.

Unfortunately this mistake was arrived at after almost a year after


graduation. Considering that the members of the thesis panel, the College Faculty
Assembly, and the U.P. Council are all men and women of the highest intellectual
acumen and integrity, as respondents themselves aver, suspicion is aroused that the
alleged mistake might not be the cause of withdrawal but some other hidden agenda
which respondents do not wish to reveal.

At any rate, We cannot countenance the plight the petitioner finds herself enmeshed in
as a consequence of the acts complained of. Justice and equity demand that this be
rectified by restoring the degree conferred to her after her compliance with the
academic and other related requirements.
Art. XIV, 5 (2) of the Constitution provides that [a]cademic freedom shall be enjoyed in all
institutions of higher learning. This is nothing new. The 1935 Constitution[35] and the 1973
Constitution[36] likewise provided for the academic freedom or, more precisely, for the
institutional autonomy of universities and institutions of higher learning. As pointed out by this
Court in Garcia v. Faculty Admission Committee, Loyola School of Theology,[37] it is a freedom
granted to institutions of higher learning which is thus given a wide sphere of authority certainly
extending to the choice of students. If such institution of higher learning can decide who can and
who cannot study in it, it certainly can also determine on whom it can confer the honor and
distinction of being its graduates.
Where it is shown that the conferment of an honor or distinction was obtained through fraud,
a university has the right to revoke or withdraw the honor or distinction it has thus
conferred. This freedom of a university does not terminate upon the graduation of a student, as
the Court of Appeals held. For it is precisely the graduation of such a student that is in
question. It is noteworthy that the investigation of private respondents case began before her
graduation. If she was able to join the graduation ceremonies on April 24, 1993, it was because
of too many investigations conducted before the Board of Regents finally decided she should not
have been allowed to graduate.
Wide indeed is the sphere of autonomy granted to institutions of higher learning, for the
constitutional grant of academic freedom, to quote again from Garcia v. Faculty Admission
Committee, Loyola School of Theology, is not to be construed in a niggardly manner or in a
grudging fashion.
Under the U.P. Charter, the Board of Regents is the highest governing body of the
University of the Philippines.[38] It has the power to confer degrees upon the recommendation of
the University Council.[39] It follows that if the conferment of a degree is founded on error or
fraud, the Board of Regents is also empowered, subject to the observance of due process, to
withdraw what it has granted without violating a students rights. An institution of higher learning
cannot be powerless if it discovers that an academic degree it has conferred is not rightfully
deserved. Nothing can be more objectionable than bestowing a universitys highest academic
degree upon an individual who has obtained the same through fraud or deceit. The pursuit of
academic excellence is the universitys concern. It should be empowered, as an act of self-
defense, to take measures to protect itself from serious threats to its integrity.

While it is true that the students are entitled to the right to pursue their education, the
USC as an educational institution is also entitled to pursue its academic freedom and
in the process has the concomitant right to see to it that this freedom is not
jeopardized.[40]

In the case at bar, the Board of Regents determined, after due investigation conducted by a
committee composed of faculty members from different U.P. units, that private respondent
committed no less than ninety (90) instances of intellectual dishonesty in her dissertation. The
Board of Regents decision to withdraw private respondents doctorate was based on documents
on record including her admission that she committed the offense.[41]
On the other hand, private respondent was afforded the opportunity to be heard and explain
her side but failed to refute the charges of plagiarism against her. Her only claim is that her
responses to the charges against her were not considered by the Board of Regents before it
rendered its decision. However, this claim was not proven. Accordingly, we must presume
regularity in the performance of official duties in the absence of proof to the contrary.[42]
Very much the opposite of the position of the Court of Appeals that, since private
respondent was no longer a student of the U.P., the latter was no longer within the ambit of
disciplinary powers of the U.P., is private respondents contention that it is the Student
Disciplinary Tribunal which had jurisdiction over her case because the charge is
dishonesty. Private respondent invokes 5 of the U.P. Rules and Regulations on Student Conduct
and Discipline which provides:

Jurisdiction. All cases involving discipline of students under these rules shall be
subject to the jurisdiction of the student disciplinary tribunal, except the following
cases which shall fall under the jurisdiction of the appropriate college or unit;

(a) Violation of college or unit rules and regulations by students of the college, or
(b) Misconduct committed by students of the college or unit within its classrooms or premises
or in the course of an official activity;

Provided, that regional units of the University shall have original jurisdiction over all
cases involving students of such units.

Private respondent argues that under 25 (a) of the said Rules and Regulations, dishonesty in
relation to ones studies (i.e., plagiarism) may be punished only with suspension for at least one
(1) year.
As the above-quoted provision of 5 of the Rules and Regulations indicates, the jurisdiction
of the student disciplinary tribunal extends only to disciplinary actions. In this case, U.P. does
not seek to discipline private respondent. Indeed, as the appellate court observed, private
respondent is no longer within the ambit of disciplinary powers of the U.P. Private respondent
cannot even be punished since, as she claims, the penalty for acts of dishonesty in administrative
disciplinary proceedings is suspension from the University for at least one year. What U.P.,
through the Board of Regents, seeks to do is to protect its academic integrity by withdrawing
from private respondent an academic degree she obtained through fraud.
WHEREFORE, the decision of the Court of Appeals is hereby REVERSED and the
petition for mandamus is hereby DISMISSED.
SO ORDERED.
Bellosillo, (Chairman), Quisumbing, and Buena, JJ., concur.

[1]
Per Associate Justice Artemio G. Tuquero and concurred in by Associate Justices Jorge S. Imperial and Eubulo G.
Verzola.
[2]
Stated as 1883 in the Petition for Certiorari.
[3]
Records, p. 26.
[4]
Ibid.
[5]
Supra, note 3.
[6]
Dr. Manuel Teodoro was absent during the meeting.
[7]
Records, p. 173.
[8]
Records, p. 39.
[9]
Rollo, pp. 201-202.
[10]
Id., p. 133.
[11]
Records, p. 346.
[12]
Id., p. 179.
[13]
Records, p. 49.
[14]
Id., p. 409.
[15]
Id., pp. 403-406.
[16]
Rollo, p. 137.
[17]
Records, p. 192.
[18]
Commissioner Ordoez sent a letter to the Board of Regents requesting it to defer action on private respondents
case until the latter had been given the opportunity to be heard. U.P. President Emil Q. Javier responded with a
letter, dated February 17, 1995, assuring Commissioner Ordoez that the decision on private respondents case was
arrived at after compliance with the requirements of due process.
[19]
It appears that the case was later transferred to Branch 227.
[20]
Rollo, pp. 83-97.
[21]
Id., p. 56.
[22]
Rollo, pp. 33-34.
[23]
RULES OF COURT, RULE 65, 3; Anchangco, Jr. v. Ombudsman, 268 SCRA 301 (1997).
[24]
227 SCRA 342 (1993).
[25]
Supra, at 361-362.
[26]
Rollo, pp. 54-55.
[27]
Helpmate, Inc. v. National Labor Relations Commission, G.R. 112323, July 28, 1997; M. Ramirez Industries v.
The Honorable Secretary of Labor and Employment, G.R. 89894, January 3, 1997.
[28]
Naguiat v. National Labor Relations Commission, 269 SCRA 564 (1997).
[29]
Records, pp. 48-49.
[30]
Id., pp. 50-58.
[31]
Id., pp. 59-65; 79-80.
[32]
National Federation of Labor v. NLRC, 283 SCRA 275 (1997).
[33]
University of the Philippines v. Ligot-Telan, 227 SCRA 342 (1993).
[34]
222 SCRA 644 (1993).
[35]
Art. XIV, 5.
[36]
Art. XV, 8 (2).
[37]
68 SCRA 277 (1975).
[38]
Act No. 1870, 4.
[39]
Id., 9.
[40]
Licup v. University of San Carlos, 178 SCRA 637 (1989).
[41]
Records, p. 192.
[42]
RULES OF COURT, RULE 131, 3 (m).
10) Carino vs CHR

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. 96681 December 2, 1991

HON. ISIDRO CARIÑO, in his capacity as Secretary of the Department of Education, Culture &
Sports, DR. ERLINDA LOLARGA, in her capacity as Superintendent of City Schools of
Manila, petitioners,
vs.
THE COMMISSION ON HUMAN RIGHTS, GRACIANO BUDOY, JULIETA BABARAN, ELSA
IBABAO, HELEN LUPO, AMPARO GONZALES, LUZ DEL CASTILLO, ELSA REYES and
APOLINARIO ESBER, respondents.

NARVASA, J.:

The issue raised in the special civil action of certiorari and prohibition at bar, instituted by the
Solicitor General, may be formulated as follows: where the relief sought from the Commission on
Human Rights by a party in a case consists of the review and reversal or modification of a decision
or order issued by a court of justice or government agency or official exercising quasi-judicial
functions, may the Commission take cognizance of the case and grant that relief? Stated otherwise,
where a particular subject-matter is placed by law within the jurisdiction of a court or other
government agency or official for purposes of trial and adjudgment, may the Commission on Human
Rights take cognizance of the same subject-matter for the same purposes of hearing and
adjudication?

The facts narrated in the petition are not denied by the respondents and are hence taken as
substantially correct for purposes of ruling on the legal questions posed in the present action. These
facts, 1 together with others involved in related cases recently resolved by this Court 2 or otherwise
undisputed on the record, are hereunder set forth.

1. On September 17, 1990, a Monday and a class day, some 800 public school teachers, among
them members of the Manila Public School Teachers Association (MPSTA) and Alliance of
Concerned Teachers (ACT) undertook what they described as "mass concerted actions" to
"dramatize and highlight" their plight resulting from the alleged failure of the public authorities to act
upon grievances that had time and again been brought to the latter's attention. According to them
they had decided to undertake said "mass concerted actions" after the protest rally staged at the
DECS premises on September 14, 1990 without disrupting classes as a last call for the government
to negotiate the granting of demands had elicited no response from the Secretary of Education. The
"mass actions" consisted in staying away from their classes, converging at the Liwasang Bonifacio,
gathering in peaceable assemblies, etc. Through their representatives, the teachers participating in
the mass actions were served with an order of the Secretary of Education to return to work in 24
hours or face dismissal, and a memorandum directing the DECS officials concerned to initiate
dismissal proceedings against those who did not comply and to hire their replacements. Those
directives notwithstanding, the mass actions continued into the week, with more teachers joining in
the days that followed. 3
Among those who took part in the "concerted mass actions" were the eight (8) private respondents herein, teachers at the Ramon Magsaysay High School, Manila, who had agreed to support the non-political demands of the MPSTA. 4

2. For failure to heed the return-to-work order, the CHR complainants (private respondents) were administratively charged on the basis of the principal's report and given five (5) days to answer the charges. They were also preventively
suspended for ninety (90) days "pursuant to Section 41 of P.D. 807" and temporarily replaced (unmarked CHR Exhibits, Annexes F, G, H). An investigation committee was consequently formed to hear the charges in accordance with
P.D. 807. 5

the latter
3. In the administrative case docketed as Case No. DECS 90-082 in which CHR complainants Graciano Budoy, Jr., Julieta Babaran, Luz del Castillo, Apolinario Esber were, among others, named respondents, 6

filed separate answers, opted for a formal investigation, and also moved "for suspension of the
administrative proceedings pending resolution by . . (the Supreme) Court of their application for
issuance of an injunctive writ/temporary restraining order." But when their motion for suspension was
denied by Order dated November 8, 1990 of the Investigating Committee, which later also denied
their motion for reconsideration orally made at the hearing of November 14, 1990, "the respondents
led by their counsel staged a walkout signifying their intent to boycott the entire proceedings." 7 The
case eventually resulted in a Decision of Secretary Cariño dated December 17, 1990, rendered after
evaluation of the evidence as well as the answers, affidavits and documents submitted by the
respondents, decreeing dismissal from the service of Apolinario Esber and the suspension for nine
(9) months of Babaran, Budoy and del Castillo. 8
4. In the meantime, the "MPSTA filed a petition for certiorari before the Regional Trial Court of Manila against petitioner (Cariño), which was dismissed (unmarked CHR Exhibit, Annex I). Later, the MPSTA went to the Supreme Court
(on certiorari, in an attempt to nullify said dismissal, grounded on the) alleged violation of the striking teachers" right to due process and peaceable assembly docketed as G.R. No. 95445, supra. The ACT also filed a similar petition

Both petitions in this Court were filed in behalf of the teacher


before the Supreme Court . . . docketed as G.R. No. 95590." 9

associations, a few named individuals, and "other teacher-members so numerous similarly situated"
or "other similarly situated public school teachers too numerous to be impleaded."

5. In the meantime, too, the respondent teachers submitted sworn statements dated September 27,
1990 to the Commission on Human Rights to complain that while they were participating in peaceful
mass actions, they suddenly learned of their replacements as teachers, allegedly without notice and
consequently for reasons completely unknown to them. 10
6. Their complaints — and those of other teachers also "ordered suspended by the . . . (DECS)," all numbering forty-two (42) — were docketed as "Striking Teachers CHR Case No. 90775." In connection therewith the Commission
scheduled a "dialogue" on October 11, 1990, and sent a subpoena to Secretary Cariño requiring his attendance therein. 11

On the day of the "dialogue," although it said that it was "not certain whether he (Sec. Cariño) received the subpoena which was served at his office, . . . (the) Commission, with the Chairman presiding, and Commissioners Hesiquio R.
Mallilin and Narciso C. Monteiro, proceeded to hear the case;" it heard the complainants' counsel (a) explain that his clients had been "denied due process and suspended without formal notice, and unjustly, since they did not join the

The Commission
mass leave," and (b) expatiate on the grievances which were "the cause of the mass leave of MPSTA teachers, (and) with which causes they (CHR complainants) sympathize." 12

thereafter issued an Order 13reciting these facts and making the following disposition:

To be properly apprised of the real facts of the case and be accordingly guided in its
investigation and resolution of the matter, considering that these forty two teachers are now
suspended and deprived of their wages, which they need very badly, Secretary Isidro Cariño,
of the Department of Education, Culture and Sports, Dr. Erlinda Lolarga, school
superintendent of Manila and the Principal of Ramon Magsaysay High School, Manila, are
hereby enjoined to appear and enlighten the Commission en banc on October 19, 1990 at
11:00 A.M. and to bring with them any and all documents relevant to the allegations
aforestated herein to assist the Commission in this matter. Otherwise, the Commission will
resolve the complaint on the basis of complainants' evidence.
xxx xxx xxx

7. Through the Office of the Solicitor General, Secretary Cariño sought and was granted leave to file
a motion to dismiss the case. His motion to dismiss was submitted on November 14, 1990 alleging
as grounds therefor, "that the complaint states no cause of action and that the CHR has no
jurisdiction over the case." 14

8. Pending determination by the Commission of the motion to dismiss, judgments affecting the "striking teachers" were promulgated in two (2) cases,
as aforestated, viz.:

a) The Decision dated December l7, 1990 of Education Secretary Cariño in Case No. DECS 90-082, decreeing dismissal from the service of Apolinario Esber and the suspension for nine (9) months of Babaran, Budoy
and del Castillo; 15 and

b) The joint Resolution of this Court dated August 6, 1991 in G.R. Nos. 95445 and 95590 dismissing the petitions "without prejudice to any appeals, if still timely, that the individual petitioners may take to the Civil
Service Commission on the matters complained of," 16 and inter alia "ruling that it was prima facie lawful for petitioner Cariño to issue return-to-work orders, file administrative charges against recalcitrants, preventively
suspend them, and issue decision on those charges." 17

9. In an Order dated December 28, 1990, respondent Commission denied Sec. Cariño's motion to dismiss and required him and Superintendent Lolarga "to submit their counter-affidavits within ten (10) days . . . (after which) the

It held that the "striking teachers" "were denied


Commission shall proceed to hear and resolve the case on the merits with or without respondents counter affidavit." 18

due process of law; . . . they should not have been replaced without a chance to reply to the
administrative charges;" there had been a violation of their civil and political rights which the
Commission was empowered to investigate; and while expressing its "utmost respect to the
Supreme Court . . . the facts before . . . (it) are different from those in the case decided by the
Supreme Court" (the reference being unmistakably to this Court's joint Resolution of August 6, 1991
in G.R. Nos. 95445 and 95590, supra).

It is to invalidate and set aside this Order of December 28, 1990 that the Solicitor General, in behalf
of petitioner Cariño, has commenced the present action of certiorari and prohibition.

The Commission on Human Rights has made clear its position that it does not feel bound by this
Court's joint Resolution in G.R. Nos. 95445 and 95590, supra. It has also made plain its intention "to
hear and resolve the case (i.e., Striking Teachers HRC Case No. 90-775) on the merits." It intends,
in other words, to try and decide or hear and determine, i.e., exercise jurisdiction over the following
general issues:

1) whether or not the striking teachers were denied due process, and just cause exists for the
imposition of administrative disciplinary sanctions on them by their superiors; and

2) whether or not the grievances which were "the cause of the mass leave of MPSTA teachers, (and)
with which causes they (CHR complainants) sympathize," justify their mass action or strike.

The Commission evidently intends to itself adjudicate, that is to say, determine with character of
finality and definiteness, the same issues which have been passed upon and decided by the
Secretary of Education, Culture & Sports, subject to appeal to the Civil Service Commission, this
Court having in fact, as aforementioned, declared that the teachers affected may take appeals to the
Civil Service Commission on said matters, if still timely.

The threshold question is whether or not the Commission on Human Rights has the power under the
Constitution to do so; whether or not, like a court of justice, 19 or even a quasi-judicial agency, 20 it has
jurisdiction or adjudicatory powers over, or the power to try and decide, or hear and determine,
certain specific type of cases, like alleged human rights violations involving civil or political rights.

The Court declares the Commission on Human Rights to have no such power; and that it was not
meant by the fundamental law to be another court or quasi-judicial agency in this country, or
duplicate much less take over the functions of the latter.

The most that may be conceded to the Commission in the way of adjudicative power is that it
may investigate, i.e., receive evidence and make findings of fact as regards claimed human rights
violations involving civil and political rights. But fact finding is not adjudication, and cannot be likened
to the judicial function of a court of justice, or even a quasi-judicial agency or official. The function of
receiving evidence and ascertaining therefrom the facts of a controversy is not a judicial function,
properly speaking. To be considered such, the faculty of receiving evidence and making factual
conclusions in a controversy must be accompanied by the authority of applying the law to those
factual conclusions to the end that the controversy may be decided or determined authoritatively,
finally and definitively, subject to such appeals or modes of review as may be provided by law. 21 This
function, to repeat, the Commission does not have. 22

The proposition is made clear by the constitutional provisions specifying the powers of the Commission on Human Rights.

Upon its constitution, it succeeded and superseded the


The Commission was created by the 1987 Constitution as an independent office. 23

Presidential Committee on Human Rights existing at the time of the effectivity of the
Constitution. 24 Its powers and functions are the following 25

(1) Investigate, on its own or on complaint by any party, all forms of human rights violations involving civil and political rights;

(2) Adopt its operational guidelines and rules of procedure, and cite for contempt for violations thereof in accordance with the Rules of
Court;

(3) Provide appropriate legal measures for the protection of human rights of all persons within the Philippines, as well as Filipinos residing
abroad, and provide for preventive measures and legal aid services to the underprivileged whose human rights have been violated or need
protection;

(4) Exercise visitorial powers over jails, prisons, or detention facilities;

(5) Establish a continuing program of research, education, and information to enhance respect for the primacy of human rights;

(6) Recommend to the Congress effective measures to promote human rights and to provide for compensation to victims of violations of
human rights, or their families;

(7) Monitor the Philippine Government's compliance with international treaty obligations on human rights;

(8) Grant immunity from prosecution to any person whose testimony or whose possession of documents or other evidence is necessary or
convenient to determine the truth in any investigation conducted by it or under its authority;
(9) Request the assistance of any department, bureau, office, or agency in the performance of its functions;

(10) Appoint its officers and employees in accordance with law; and

(11) Perform such other duties and functions as may be provided by law.

As should at once be observed, only the first of the enumerated powers and functions bears any resemblance to adjudication or adjudgment. The Constitution clearly and categorically grants to the Commission the power to investigate
all forms of human rights violations involving civil and political rights. It can exercise that power on its own initiative or on complaint of any person. It may exercise that power pursuant to such rules of procedure as it may adopt and, in
cases of violations of said rules, cite for contempt in accordance with the Rules of Court. In the course of any investigation conducted by it or under its authority, it may grant immunity from prosecution to any person whose testimony or
whose possession of documents or other evidence is necessary or convenient to determine the truth. It may also request the assistance of any department, bureau, office, or agency in the performance of its functions, in the conduct of
its investigation or in extending such remedy as may be required by its findings. 26

But it cannot try and decide cases (or hear and determine causes) as courts of justice, or even quasi-judicial bodies do. To investigate is not to
adjudicate or adjudge. Whether in the popular or the technical sense, these terms have well understood and quite distinct meanings.

"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into systematically. "to search or inquire

The purpose of investigation, of course, is to discover, to find out, to


into: . . . to subject to an official probe . . .: to conduct an official inquiry." 27

learn, obtain information. Nowhere included or intimated is the notion of settling, deciding or
resolving a controversy involved in the facts inquired into by application of the law to the facts
established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient
inquiry or observation. To trace or track; to search into; to examine and inquire into with care and
accuracy; to find out by careful inquisition; examination; the taking of evidence; a legal inquiry;" 28 "to
inquire; to make an investigation," "investigation" being in turn describe as "(a)n administrative
function, the exercise of which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; . . .
an inquiry, judicial or otherwise, for the discovery and collection of facts concerning a certain matter
or matters." 29
"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine, resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of the parties to a court case) on

And "adjudge" means "to decide or rule upon as a judge or


the merits of issues raised: . . . to pass judgment on: settle judicially: . . . act as judge." 30

with judicial or quasi-judicial powers: . . . to award or grant judicially in a case of controversy . . . ." 31
In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally. Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide, settle or decree, or to
sentence or condemn. . . . Implies a judicial determination of a fact, and the entry of a judgment." 32

Hence it is that the Commission on Human Rights, having merely the power "to investigate," cannot and should not "try and resolve on the merits"
(adjudicate) the matters involved in Striking Teachers HRC Case No. 90-775, as it has announced it means to do; and it cannot do so even if there be
a claim that in the administrative disciplinary proceedings against the teachers in question, initiated and conducted by the DECS, their human rights, or
civil or political rights had been transgressed. More particularly, the Commission has no power to "resolve on the merits" the question of (a) whether or
not the mass concerted actions engaged in by the teachers constitute and are prohibited or otherwise restricted by law; (b) whether or not the act of
carrying on and taking part in those actions, and the failure of the teachers to discontinue those actions, and return to their classes despite the order to
this effect by the Secretary of Education, constitute infractions of relevant rules and regulations warranting administrative disciplinary sanctions, or are
justified by the grievances complained of by them; and (c) what where the particular acts done by each individual teacher and what sanctions, if any,
may properly be imposed for said acts or omissions.
These are matters undoubtedly and clearly within the original jurisdiction of the Secretary of Education, being within the scope of the disciplinary
powers granted to him under the Civil Service Law, and also, within the appellate jurisdiction of the Civil Service Commission.

and it appears that appeals have been


Indeed, the Secretary of Education has, as above narrated, already taken cognizance of the issues and resolved them, 33

seasonably taken by the aggrieved parties to the Civil Service Commission; and even this Court
itself has had occasion to pass upon said issues. 34

Now, it is quite obvious that whether or not the conclusions reached by the Secretary of Education in disciplinary cases are correct and are adequately
based on substantial evidence; whether or not the proceedings themselves are void or defective in not having accorded the respondents due process;
and whether or not the Secretary of Education had in truth committed "human rights violations involving civil and political rights," are matters which may
be passed upon and determined through a motion for reconsideration addressed to the Secretary Education himself, and in the event of an adverse
verdict, may be reviewed by the Civil Service Commission and eventually the Supreme Court.

The Commission on Human Rights simply has no place in this scheme of things. It has no business intruding into the jurisdiction and functions of the
Education Secretary or the Civil Service Commission. It has no business going over the same ground traversed by the latter and making its own
judgment on the questions involved. This would accord success to what may well have been the complaining teachers' strategy to abort, frustrate or
negate the judgment of the Education Secretary in the administrative cases against them which they anticipated would be adverse to them.

This cannot be done. It will not be permitted to be done.

In any event, the investigation by the Commission on Human Rights would serve no useful purpose. If its investigation should result in conclusions contrary to those reached by Secretary Cariño, it would have no power anyway to
reverse the Secretary's conclusions. Reversal thereof can only by done by the Civil Service Commission and lastly by this Court. The only thing the Commission can do, if it concludes that Secretary Cariño was in error, is to refer the

matter to the appropriate Government agency or tribunal for assistance; that would be the Civil Service Commission. 35
It cannot arrogate unto itself the appellate
jurisdiction of the Civil Service Commission.

WHEREFORE, the petition is granted; the Order of December 29, 1990 is ANNULLED and SET
ASIDE, and the respondent Commission on Human Rights and the Chairman and Members thereof
are prohibited "to hear and resolve the case (i.e., Striking Teachers HRC Case No. 90-775) on the
merits."

SO ORDERED.

Melencio-Herrera, Cruz, Feliciano, Bidin, Griño-Aquino, Medialdea, Regalado, Davide, Jr. and
Romero, JJ, concur.

Separate Opinions

GUTIERREZ, JR., J., concurring:


I concur in the result. The teachers are not to be blamed for exhausting all means to overcome the
Secretary's arbitrary act of not reinstating them.

PARAS, J., concurring:

I concur with the brilliant and enlightening decision of Chief Justice Andres R. Narvasa

I wish to add however that the Commission on Human Rights should concern itself in this case and
in many other similar cases:

(1) not only with the human rights of striking teachers but also the human rights of students
and their parents;

(2) not only with the human rights of the accused but also the human rights of the victims and
the latter's families;

(3) not only with the human rights of those who rise against the government but also those
who defend the same;

(4) not only the human rights of striking laborers but also those who as a consequence of
strikes may be laid off because of financial repercussions.

The defense of human rights is not a monopoly of a government agency (such as the Commission
on Human Rights) nor the monopoly of a group of lawyers defending so-called "human rights' but the
responsibility of ALL AGENCIES (governmental or private) and of ALL LAWYERS, JUDGES, and
JUSTICES.

Finally, the Commission should realize that while there are "human rights", there are also
corresponding "human obligations."

PADILLA, J., dissenting:

I vote to dismiss the petition for the same reasons stated in my earlier separate opinion filed in this
case.

# Separate Opinions

GUTIERREZ, JR., J., concurring:


I concur in the result. The teachers are not to be blamed for exhausting all means to overcome the
Secretary's arbitrary act of not reinstating them.

PARAS, J., concurring:

I concur with the brilliant and enlightening decision of Chief Justice Andres R. Narvasa

I wish to add however that the Commission on Human Rights should concern itself in this case and
in many other similar cases:

(1) not only with the human rights of striking teachers but also the human rights of students
and their parents;

(2) not only with the human rights of the accused but also the human rights of the victims and
the latter's families;

(3) not only with the human rights of those who rise against the government but also those
who defend the same;

(4) not only the human rights of striking laborers but also those who as a consequence of
strikes may be laid off because of financial repercussions.

The defense of human rights is not a monopoly of a government agency (such as the Commission
on Human Rights) nor the monopoly of a group of lawyers defending so-called "human rights' but the
responsibility of ALL AGENCIES (governmental or private) and of ALL LAWYERS, JUDGES, and
JUSTICES.

Finally, the Commission should realize that while there are "human rights", there are also
corresponding "human obligations."

PADILLA, J., dissenting:

I vote to dismiss the petition for the same reasons stated in my earlier separate opinion filed in this
case.

Footnotes

1 Rollo, pp. 6-13.

2 G.R. No. 95445 (Manila Public School Teachers Association, et al. v. Hon. Perfecto
Laguio, Jr., etc., et al) and G.R. No. 95590 (Alliance of Concerned Teachers [ACT], et
al. v. Hon. Isidro Cariño, etc., et al.).

3 (Joint) Resolution, G.R. Nos. 95445 and 95590, prom. Aug. 6, 1991, pp. 3-4.

4 Rollo, p. 7.
5 Id., p. 7.

6 Also impleaded as respondents were other teachers, Adelaida dela Cruz, Ma. Teresa
Rizardo, Rita Atabelo and Digna Operiano (Rollo, p. 77).

7 Rollo, pp. 77-78.

8 Id., pp. 77-81.

9 Id., pp. 7-8, and 47-50 (Annex "I," petition: Decision of Judge Perfecto A.S. Laguio in
Civil Case No. 90-54468 of the RTC of Manila [Branch 18] entitled Manila Public School
Teachers Association, et al. v. Hon. Isidro Cariño and Hon. Erlinda Lolarga).

10 Id., pp. 8; 51-52 (Annex J, Petition: Pinagsamang Sinumpaang Salaysay of 7


affiants including respondents Budoy, Babaran, and del Castillo), and 53-54 (Annex K,
petition: sworn statement given by Apolinario Esber under questioning by Nicanor S.
Agustin, CHR).

11 Id., p. 56: Order in Striking Teachers CHR Case No. 90-775, 1st par., p. 1.

12 Id., 1st and 2nd pars., p. 1.

13 Id., pp, 56-57.

14 Id., pp, 11-58-76 (Annex M, petition).

15 SEE footnote 8 and related text, supra.

16 SEE footnote 3, supra.

17 Rollo, p. 11.

18 Id., pp. 12-13.

19 Including Regional Trial Courts designated and acting as Special Agrarian Courts,
and the Court of Tax Appeals. SEE Supreme Court Circular No. 1-91 eff. April 1, 1991.

20 Vested with judicial authority or quasi-judicial powers are such agencies, boards or
officers like the Securities & Exchange Commission, Land Registration Authority,
Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks
and Technology Transfer, National Electrification Administration, Energy Regulatory
Board, National Telecommunications Commission, Department of Agrarian Reform,
Government Service Insurance System, Employees' Compensation Commission,
Philippine Atomic Energy Commission. SEE Circular No. 1-91, supra. Also possessed
of quasi-judicial authorities are department heads and heads of office under the Civil
Service Law, and the Ombudsman.

21 The nature of a "judicial function" was inter alia described in Republic of the
Philippines (PCGG) v. Sandiganbayan, et al., G.R. No. 90478 as follows: "The
resolution of controversies is, as everyone knows, the raison d'etre of courts. This
essential function is accomplished by first, the ascertainment of all the material and
relevant facts from the pleadings and from the evidence adduced by the parties,
and second after that determination of the facts has been completed, by the
application of the law thereto to the end that the controversy may be settled
authoritatively, definitively and finally."

. . . "It may be said generally that the exercise of judicial functions is to determine
what the law is, and what the legal rights of parties are, with respect to a matter in
controversy; and whenever an officer is clothed with that authority, and undertakes to
determine those questions, he acts judicially." . . . Mun. Council of Lemery v. Prov.
Board of Batangas, 56 Phil. 260, 270, citing State ex rel. Boards of Commrs. v. Dunn,
86 Minn. 301, 304.

It has been held that a special civil action of certiorari "would not lie to challenge
action of the "Integrity Board" set up by Executive

Order No. 318 of May 25, 1950, because that board, like the later Presidential
Complaints and Action Commission, was not invested with judicial functions but only
with power to investigate charges of graft and corruption in office and to submit the
record, together with findings and recommendations, to the President." Ruperto v.
Torres G.R. No. L-8785, Feb. 25, 1957 (Unrep., 100 Phil. 1098) (Rep. of the Phil. Digest,
Vol. 1, Certiorari, Sec. 22, p. 430).

Ballentine's Law Dictionary, 3rd Ed., treating of "jurisdiction" in relation to a criminal


case, states it to be "the power of a court to inquire into the fact, to apply the law, and
to declare the punishment, in a regular course of judicial proceeding . . ." In Black's
Law Dictionary 5th Ed., "adjudge" is defined as: "To pass on judicially, to decide,
settle or decree, or to sentence or condemn. . . . Implies a judicial determination of a
fact, and the entry of a judgment (emphasis supplied).

22 A distinguished Member of the Constitutional Commission that drew up the 1987


Constitution, Fr. Joaquin Bernas, S.J., citing the Commission's official records, states
that the "principal function of the Commission (on Human Rights) is investigatory. In
fact, in terms of law enforcement, this pretty much is the limit of its function. Beyond
investigation, it will have to rely on the Justice Department which has full control over
prosecutions. Thus, under Section 18 (9) it can only request assistance from
executive offices." (Bernas, The Constitution of the Republic of the Philippines, a
Commentary,1988 ed., Vol. II p. 503/).

23 Art. XIII, Sec. 17. (1).

24 Id., Sec. 17. (3).

25 Id., Sec. 18.

26 E.g.: the prosecution of persons guilty of crimes, or institution of civil or


administrative proceedings; exercise of visitorial powers over jails, prisons, or
detention facilities; the submission of recommendations to the Congress of measures
to promote human rights provide for compensation to victims of violations thereof,
etc.

27 Webster's Third New International Dictionary. The Oxford English Dictionary (2d
ed., 1961) definition is: "To search or inquire into; to examine (a matter) systematically
or in detail; to make an inquiry or examination into." The American College
Encyclopedic Dictionary (1959 ed.) defines (a) "investigate" as "to search or examine
into the particulars of; examine in detail;" and (b) "investigation," an act or process of
investigating; a searching inquiry in order to ascertain facts; a detailed or careful
examination.

28 Black's Law Dictionary, 5th ed.

29 Ballentine's Law Dictionary, 3rd Ed.

30 Webster's Third New International Dictionary. The Oxford English Dictionary (2d
ed., 1961) definition is "To adjudge; to award; "to give something controverted to one
of the litigants, by a sentence or decision. . . . To try and determine judicially; to
pronounce by sentence of court. . . . To sit in judgment and pronounce sentence; to
act as a judge, or court of judgment."

31 Id., the Oxford English Dictionary (2d ed., 1961) definition is "To settle, determine,
or decide judicially; to adjudicate upon; . . . To pronounce or decree by judicial
sentence . . . To award judicially; to grant, bestow, or impose by judicial sentence . . .
."

32 Black's Law Dictionary, 5th ed.; in Ballentine's Law Dictionary, "adjudicate" is


defined as: "To give judgment; to render or award judgment," and "adjudge" as: "To
give judgment; to decide, to sentence." In Bouvier's Law Dictionary Third Revision
(8th Ed.), "adjudication" is defined as "A judgment; giving or pronouncing judgment
in a case. Determination in the exercise of judicial power."

33 SEE footnotes 6 to 8, and 15, and related text, supra.

34 SEE footnotes 16 and 17 related text, supra.

35 SEE footnote 26, supra.


11) Eastern Telecom vs Intl Comm

SECOND DIVISION

[G.R. No. 135992. July 23, 2004]

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. and


TELECOMMUNICATIONS TECHNOLOGIES, INC., petitioners,
vs. INTERNATIONAL COMMUNICATION
CORPORATION, respondent.

DECISION
AUSTRIA-MARTINEZ, J.:

The role of the telecommunications industry in Philippine progress and development


cannot be understated. Time was when the industry was dominated by a few -- an
oligarchy of sorts where the elite made the decisions and serfdom had no choice but
acquiesce. Sensing the need to abrogate their dominion, the government formulated
policies in order to create an environment conducive to the entry of new players. Thus,
in October 1990, the National Telecommunications Development Plan 1991-2010
(NTDP) was formulated and came into being. Designed by the Department of
Transportation and Communications (DOTC), the NTDP provides for the framework of
government policies, objectives and strategies that will guide the industrys development
for the next 20 years. As expected, with it came the increase in the demand for
telecommunications services, especially in the area of local exchange carrier service
(LECS).[1]
Concomitantly, the DOTC issued guidelines for the rationalization of local exchange
telecommunications service. In particular, the DOTC issued on September 30, 1991,
Department Circular No. 91-260, with the purpose of minimizing or eliminating situations
wherein multiple operators provide local exchange service in a given area. Pursuant
thereto, the National Telecommunications Commission (NTC) was tasked to define the
boundaries of local exchange areas and authorize only one franchised local exchange
carrier to provide local exchange service within such areas.
Thereafter, on July 12, 1993, then President Fidel V. Ramos issued Executive
Order No. 109 entitled Local Exchange Carrier Service. Section 2 thereof provides that
all existing International Gateway Facility (IGF) operators[2] are required to provide local
exchange carrier services in unserved and underserved areas, including Metro Manila,
thereby promoting universal access to basic telecommunications service.
The NTC promulgated Memorandum Circular No. 11-9-93 on September 17, 1993
implementing the objectives of E.O. No. 109.[3] Section 3 of the Circular mandates
existing IGF operators to file a petition for the issuance of Certificate of Public
Convenience and Necessity (CPCN) to install, operate and maintain local exchange
carrier services within two years from effectivity thereof. Section 4 further requires IGF
operators to provide a minimum of 300 local exchange lines per one international switch
termination and a minimum of 300,000 local exchange lines within three years from
grant of authority.
To cap the governments efforts, Republic Act No. 7925, otherwise known as the
Public Telecommunications Policy Act of the Philippines, was enacted on March 23,
1995. With regard to local exchange service, Section 10 thereof mandates an
international carrier to comply with its obligation to provide local exchange service in
unserved or underserved areas within three years from the grant of authority as
required by existing regulations. On September 25, 1995, the NTC issued the
Implementing Rules and Regulations for R.A. No. 7925 per its NTC MC No. 8-9-95.
Taking advantage of the opportunities brought about by the passage of these laws,
several IGF operators applied for CPCN to install, operate and maintain local exchange
carrier services in certain areas. Respondent International Communication Corporation,
now known as Bayan Telecommunications Corporation or Bayantel, [4] applied for and
was given by the NTC a Provisional Authority (PA)[5] on March 3, 1995, to install, operate
and provide local exchange service in Quezon City, Malabon and Valenzuela, Metro
Manila, and the entire Bicol region. Meanwhile, petitioner Telecommunications
Technologies Philippines, Inc. (TTPI), as an affiliate of petitioner Eastern
Telecommunications Philippines, Inc. (ETPI), was granted by the NTC a PA on
September 25, 1996, to install, operate and maintain a local exchange service in the
Provinces of Batanes, Cagayan Valley, Isabela, Kalinga-Apayao, Nueva Vizcaya,
Ifugao, Quirino, the cities of Manila and Caloocan, and the Municipality of Navotas,
Metro Manila.
It appears, however, that before TTPI was able to fully accomplish its rollout
obligation, ICC applied for and was given a PA by the NTC on November 10, 1997, to
install, operate and maintain a local exchange service in Manila and Navotas, [6] two
areas which were already covered by TTPI under its PA dated September 25, 1996.
Aggrieved, petitioners filed a petition for review with the Court of Appeals with
application for a temporary restraining order and a writ of preliminary injunction,
docketed as CA-G.R. SP No. 46047, arguing that the NTC committed grave abuse of
discretion in granting a provisional authority to respondent ICC to operate in areas
already assigned to TTPI.
On April 30, 1998, the Court of Appeals dismissed[7] the petition for review on the
ground that the NTC did not commit any grave abuse of discretion in granting the PA to
TTPI. It sustained the NTCs finding that ICC is legally and financially competent and its
network plan technically feasible. The Court of Appeals also ruled that there was no
violation of the equal protection clause because the PA granted to ICC and TTPI were
given under different situations and there is no point of comparison between the two. [8]
Hence, the present petition for review on certiorari, raising the following issues:
I

Whether or not the Honorable Court of Appeals committed a serious error of law in
upholding the Order of the NTC granting a PA to Respondent to operate LEC services
in Manila and Navotas which are areas already assigned to petitioner TTPI under a
prior and subsisting PA.

II

Whether or not Petitioner is entitled to a Writ of Preliminary Injunction to restrain


Respondent from installing LEC services in the areas granted to it by the Order under
review. [9]

In support thereof, petitioners posit the following arguments:


(1) The assignment to ICC of areas already allocated to TTPI violates the Service
Area Scheme (SAS), which is the guidepost of the laws and issuances governing local
exchange service;
(2) ICC did not make any showing that an existing operator, TTPI in this case, failed
to comply with the service performance and technical standards prescribed by the NTC,
and that the area is underserved, as required under Section 23 of MC No. 11-9-93;
(3) The facts and figures cited by the NTC, i.e., ICCs alleged remarkable
performance in fulfilling its rollout obligation and the growth rate in the installation of
telephone lines in Manila and Navotas, do not justify the grant of the PA in favor of ICC,
nor are they supported by the evidence on record as these were not presented during
the proceedings before the NTC;
(4) ICC did not comply with the requirement of prior consultation with the NTC
before it filed its application, in violation of Sections 3 and 3.1 of MC 11-9-93;
(5) ICC did not comply with Section 27 of MC 11-9-93 requiring that an escrow
deposit be made equivalent to 20% and a performance bond equivalent to 10% of the
investment required for the first two years of the project;
(6) ICC is not financially and technically capable of undertaking the project;
(7) The grant of a PA in favor of ICC to operate in areas covered by TTPI will render
it difficult for the latter to cross-subsidize its operations in less profitable areas covered
by it and will threaten its viability to continue as a local exchange operator. [10]
After a review of the records of this case, the Court finds no grave abuse of
discretion committed by the Court of Appeals in sustaining the NTCs grant of provisional
authority to ICC.
The power of the NTC to grant a provisional authority has long been settled. As the
regulatory agency of the national government with jurisdiction over all
telecommunications entities, it is clothed with authority and given ample discretion to
grant a provisional permit or authority.[11] It also has the authority to issue Certificates of
Public Convenience and Necessity (CPCN) for the installation, operation, and
maintenance of communications facilities and services, radio communications systems,
telephone and telegraph systems, including the authority to determine the areas of
operations of applicants for telecommunications services. [12] In this regard, the NTC is
clothed with sufficient discretion to act on matters solely within its competence. [13]
In granting ICC the PA to operate a local exchange carrier service in the Manila and
Navotas areas, the NTC took into consideration ICCs financial and technical resources
and found them to be adequate. The NTC also noted ICCs performance in complying
with its rollout obligations under the previous PA granted to it, thus:

With the proven track record of herein applicant as one of the pacesetters in carrying
out its landlines commitment in its assigned areas, applicant can best respond to
public demand for faster installation of telephone lines in Manila and Navotas.

The grant of this application is, therefore, a fitting recognition that should be accorded
to any deserving applicant, such as herein applicant ICC whose remarkable
performance in terms of public service as mandated by Executive Order 109 and
Republic Act No. 7925 has persuaded this Commission to affix the stamp of its
approval. [14]

The Court will not interfere with these findings of the NTC, as these are matters that
are addressed to its sound discretion, being the government agency entrusted with the
regulation of activities coming under its special and technical forte. [15] Moreover, the
exercise of administrative discretion is a policy decision and a matter that can best be
discharged by the government agency concerned, and not by the courts. [16]
Petitioner insists compliance with the service area scheme (SAS) mandated by
DOTC Dept. Circular No. 91-260, to wit:

1. The National Telecommunications Commission (NTC) shall define the


boundaries of local exchange areas, and shall henceforth authorize only
one franchised Local Exchange Carrier (LEC) to provide LEC service
within such areas.

The Court is not persuaded. Said department circular was issued by the DOTC in 1991,
before the advent of E.O. No. 109 and R.A. No. 7925. When E.O. No. 109 was
promulgated in 1993, and R.A. No. 7925 enacted in 1995, the service area scheme was
noticeably omitted therefrom. Instead, E.O. No. 109 and R.A. No. 7925 adopted a policy
of healthy competition among the local exchange carrier service providers.
The need to formulate new policies is dictated by evolving goals and demands in
telecommunications services. Thus, E.O. No. 109 acknowledges that there is a need to
promulgate new policy directives to meet the targets of Government through the
National Telecommunications Development Plan (NTDP) of the Department of
Transportation and Communications (DOTC), specifically: (1) to ensure the orderly
development of the telecommunications sector through the provision of service to all
areas of the country; (2) to satisfy the unserviced demand for telephones; and (3) to
provide healthy competition among authorized service providers. Likewise, one of the
national policies and objectives of R.A. No. 7925 is to foster the improvement and
expansion of telecommunications services in the country through a healthy competitive
environment, in which telecommunications carriers are free to make business decisions
and to interact with one another in providing telecommunications services, with the end
in view of encouraging their financial viability while maintaining affordable rates.[17]
Recently, in Pilipino Telephone Corporation vs. NTC,[18] the Court had occasion to
rule on a case akin to the present dispute, involving the same respondent ICC, and the
Pilipino Telephone Corporation (Piltel). In the Piltel case, ICC applied for a provisional
authority to operate a local exchange service in areas already covered by Piltel, which
includes Misamis Occidental, Zamboanga del Sur, Davao del Sur, South Cotabato and
Saranggani. Piltel opposed ICCs application but the NTC denied it, and granted ICCs
application. The Court of Appeals dismissed Piltels petition for review, and
on certiorari before this Court, we affirmed the dismissal. The Court found that the NTC
did not commit any grave abuse of discretion when it granted the ICC a provisional
authority to operate in areas covered by Piltel. We held:

We will not disturb the factual findings of the NTC on the technical and financial
capability of the ICC to undertake the proposed project. We generally accord great
weight and even finality to factual findings of administrative bodies such as the NTC,
if substantial evidence supports the findings as in this case. The exception to this rule
is when the administrative agency arbitrarily disregarded evidence before it or
misapprehended evidence to such an extent as to compel a contrary conclusion had it
properly appreciated the evidence. PILTEL gravely failed to show that this exception
applies to the instant case. Moreover, the exercise of administrative discretion, such as
the issuance of a PA, is a policy decision and a matter that the NTC can best
discharge, not the courts.

PILTEL contends that the NTC violated Section 23 of NTC Memorandum Circular
No. 11-9-93, otherwise known as the Implementing Guidelines on the Provisions of
EO 109 which states:

Section 23. No other company or entity shall be authorized to provide local exchange
service in areas where the LECs comply with the relevant provisions of MTC MC No.
10-17-90 and NTC MC No. 10-16-90 and that the local exchange service area is not
underserved. (Emphasis supplied)

Section 23 of EO 109 does not categorically state that the issuance of a PA is


exclusive to any telecommunications company. Neither Congress nor the NTC can
grant an exclusive franchise, certificate, or any other form of authorization to operate
a public utility. In Republic v. Express Telecommunications Co., the Court held that
the Constitution is quite emphatic that the operation of a public utility shall not be
exclusive. Section 11, Article XII of the Constitution provides:

Sec. 11. No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines at least
sixty per centum of whose capital is owned by such citizens, nor shall such
franchise, certificate or authorization be exclusive in character or for a longer
period than fifty years. Neither shall any such franchise or right be granted except
under the condition that it shall be subject to amendment, alteration, or repeal by the
Congress when the common good so requires. xxx (Emphasis supplied)

Thus, in Radio Communications of the Philippines, Inc. v. National


Telecommunications Commission, the Court ruled that the Constitution mandates
that a franchise cannot be exclusive in nature.

...

Among the declared national policies in Republic Act No. 7925, otherwise known as
the Public Telecommunications Policy Act of the Philippines, is the healthy
competition among telecommunications carriers, to wit:

Obviously, the need for a healthy competitive environment in telecommunications is


sufficient impetus for the NTC to consider all those applicants, who are willing to
offer competition, develop the market and provide the environment necessary for
greater public service.

Furthermore, free competition in the industry may also provide the answer to a much-
desired improvement in the quality and delivery of this type of public utility, to
improved technology, fast and handy mobil[e] service, and reduced user
dissatisfaction.

PILTELs contention that the NTC Order amounts to a confiscation of property


without due process of law is untenable. Confiscation means the seizure of private
property by the government without compensation to the owner. A franchise to
operate a public utility is not an exclusive private property of the franchisee. Under
the Constitution, no franchisee can demand or acquire exclusivity in the operation of a
public utility. Thus, a franchisee of a public utility cannot complain of seizure or
taking of property because of the issuance of another franchise to a competitor. Every
franchise, certificate or authority to operate a public utility is, by constitutional
mandate, non-exclusive. PILTEL cannot complain of a taking of an exclusive right
that it does not own and which no franchisee can ever own.

Likewise, PILTELs argument that the NTC Order violates PILTELs rights as a prior
operator has no merit. The Court resolved a similar question in Republic v. Republic
Telephone Company, Inc. In striking down Retelcos claim that it had a right to be
protected in its investment as a franchise-holder and prior operator of a telephone
service in Malolos, Bulacan, the Court held:

RETELCOs foremost argument is that such operations and maintenance of the


telephone system and solicitation of subscribers by [petitioners] constituted an unfair
and ruinous competition to the detriment of [RETELCO which] is a grantee of both
municipal and legislative franchises for the purpose. In effect, RETELCO pleads for
protection from the courts on the assumption that its franchises vested in it an
exclusive right as prior operator. There is no clear showing by RETELCO, however,
that its franchises are of an exclusive character. xxx At any rate, it may very well be
pointed out as well that neither did the franchise of PLDT at the time of the
controversy confer exclusive rights upon PLDT in the operation of a telephone
system. In fact, we have made it a matter of judicial notice that all legislative
franchises for the operation of a telephone system contain the following provision:

It is expressly provided that in the event the Philippine Government should desire to
maintain and operate for itself the system and enterprise herein authorized, the grantee
shall surrender his franchise and will turn over to the Government said system and all
serviceable equipment therein, at cost, less reasonable depreciation. [19]

Similarly in this case, the grant of a PA to ICC to operate in areas covered by TTPI
is not tainted with any grave abuse of discretion as it was issued by the NTC after taking
into account ICCs technical and financial capabilities, and in keeping with the policy of
healthy competition fostered by E.O. No. 109 and R.A. No. 7925.
In addition, Section 6 of R.A. No. 7925 specifically limits the DOTC from exercising
any power that will tend to influence or effect a review or a modification of the NTCs
quasi-judicial functions, to wit:

Section 6. Responsibilities of and Limitations to Department Powers. -- The


Department of Transportation and Communications (Department) shall not exercise
any power which will tend to influence or effect a review or a modification of the
Commissions quasi-judicial function.

The power of the NTC in granting or denying a provisional authority to operate a


local exchange carrier service is a quasi-judicial function,[20] a sphere in which the DOTC
cannot intrude upon. If at all, the service area scheme provided in DOTC Dept. Circular
No. 91-260 is only one of the factors, but should not in any way, tie down the NTC in its
determination of the propriety of a grant of a provisional authority to a qualified applicant
for local exchange service.
True, NTC MC No. 11-9-93 requires prior consultation with the NTC of the proposed
service areas. As petitioners themselves argue, prior consultation allows the NTC to
assess the impact of the proposed application on the viability of the local exchange
operator in the area desired by the would-be applicant and on the viability of the entire
telecommunications industry as well as rationalize the plans to minimize any adverse
impact.[21] In this case, prior consultation was substantially complied with and its purpose
accomplished, when ICC filed its application and the NTC was given the opportunity to
assess ICCs viability to render local exchange service in the Manila and Navotas areas,
and its impact on the telecommunications industry.
It is also true that NTC MC No. 8-9-95 allows a duly enfranchised entity to maintain
a local exchange network if it is shown that an existing authorized local exchange
operator fails to satisfy the demand for local exchange service. [22] In this case, the NTC
noted the increasing rate in the demand for local lines within the Manila and Navotas
areas, and in order for these areas to catch up with its neighboring cities, installation of
lines must be sped up.[23] This, in fact, is tantamount to a finding that the existing local
exchange operator failed to meet the growing demand for local lines.
ICCs technical and financial capabilities, as well as the growth rate in the number of
lines in particular areas, are matters within NTCs competence and should be accorded
respect. The NTC is given wide latitude in the evaluation of evidence and in the
exercise of its adjudicative functions, and this includes the authority to take judicial
notice of facts within its special competence.[24]
TTPI anticipates that allowing ICC to enter its service areas will make it difficult for it
to cross-subsidize its operations in the less profitable areas. Such argument, however,
is futile. The cross-subsidy approach is apparently the governments response to the
foreseen situation wherein given its policy of universal access, a local exchange
provider will find itself operating in areas where the demand and the publics capacity to
subscribe will be lesser than in other areas, making these areas more of a liability than
an asset. Thus, Section 4 of E.O. No. 109 provides:

SEC. 4. Cross-Subsidy. Until universal access to basic telecommunications is


achieved, and such service is priced to reflect actual costs, local
exchange service shall continue to be cross-subsidized by other
telecommunications services within the same company.

Meanwhile, NTC MC No. 8-9-95 provides:

ACCESS CHARGES

GENERAL
(a) Until the local exchange service is priced reflecting actual costs, the local
exchange service shall be cross-subsidized by other
telecommunications services.

(c) The subsidy need by the LE service operator to earn a rate of return at
parity with other segments of telecommunications industry shall be
charged against the international and domestic toll and CMTS
interconnect services. [25]

Both issuances allow a local exchange operator to cross-subsidize its operations from
its other telecommunications services, and not solely on the revenues derived from the
operators local exchange service.
Notably, R.A. No. 7617, as amended by R.A. No. 7674, grants TTPI the legislative
franchise to install, operate and maintain telecommunications systems throughout the
Philippines but not limited to the operations of local exchange service or public switched
network, public-calling stations, inter-exchange carrier or national toll transmission,
value-added or enhanced services intelligent networks, mobile or personal
communications services, international gateway facility, and paging services, among
others.[26] From these services, TTPI has other sources of revenue from which it may
cross-subsidize its local exchange operations.
The Court, however, agrees with petitioners that the NTC erred when it failed to
require ICC to make an escrow deposit and a performance bond. Section 27 of NTC
MC No. 11-9-93 specifically provides:

SEC. 27. Authorized public telecommunications carriers shall be required to


deposit in escrow in a reputable bank 20% of the investment
required for the first two years of the implementation of
the proposed project.

In addition to escrow, the authorized public telecommunications


carriers shall be required to post a performance
bond equivalent to 10% of the investment required for the first
two years of the approved project but not to exceed P500
Million. The performance bond shall be forfeited in favor of the
government in the event that the authorized PTC fail to comply
with the terms and conditions of the authority granted. (Emphases
Ours)

The escrow deposit and the posting of a performance bond are required in each
proposed and approved project of a local exchange operator. Project refers to a
planned undertaking.[27] ICCs project for local exchange service in the Manila and
Navotas areas is separate and distinct from its projects in other areas; hence, the NTC
should have directed ICC to submit such requirements. Evidently, the escrow deposit is
required to ensure that there is available money on hand to defray ICCs expenditures
for its project, while the performance bond will answer for the faithful compliance and
performance of ICCs rollout obligation and to compensate the government for any
damages incurred in case of ICCs default. Without these, the government will be left
holding an empty bag in the event ICC reneges in its rollout obligation.
Section 27 of NTC MC No. 11-9-93 is silent as to whether the posting of an escrow
deposit and performance bond is a condition sine qua non for the grant of a provisional
authority. While the provision uses the term shall, said directive pertains to the NTC,
which shall require the public telecommunications carrier to make such deposit and
posting. In any event, records show that as of May 20, 2004, ICC has been granted an
extension of its provisional authority up to November 10, 2006.[28] Records also show
that ICC has already been providing local exchange carrier service in the areas
concerned, having installed 16,000 lines in the City of Manila, 12,000 of which have
already been subscribed, 624 lines in Caloocan City, all of which have been subscribed,
while the roll-out plan for facilities and provisioning in the City of Navotas is being
finalized.[29] Hence, so as not to disrupt ICCs rollout plan compliance, it would be
more judicious for the Court to merely require ICC to comply with Section 27 of NTC
MC No. 11-9-93, within such period to be determined by the NTC.
Furthermore, it is well to stress that petitioner TTPI cannot claim any exclusive right
to render telecommunications service in areas which the NTC considers to be in need of
additional providers. R.A. No. 7925 is quite emphatic on this score, viz.:

SEC. 23. Equality of Treatment in the Telecommunications Industry. Any advantage,


favor, privilege, exemption, or immunity granted under existing franchises, or may
hereafter be granted, shall ipso facto become part of previously granted
telecommunications franchises and shall be accorded immediately and
unconditionally to the grantees of such franchises: Provided, however, That the
foregoing shall neither apply to nor affect provisions of telecommunications
franchises concerning territory covered by the franchise, the life span of the
franchise, or the type of service authorized by the franchise. (Emphasis Ours)

More than anything else, public service should be the primordial objective of local
exchange operators. The entry of another provider in areas covered by TTPI should
pose as a challenge for it to improve its quality of service. Ultimately, it will be the public
that will benefit. As pointed out in Republic of the Phils. vs. Rep. Telephone Co,
Inc.:[30]

Free competition in the industry may also provide the answer to a much-desired
improvement in the quality and delivery of this type of public utility, to improved
technology, fast and handy mobil service, and reduced user dissatisfaction. After all,
neither PLDT nor any other public utility has a constitutional right to a monopoly
position in view of the Constitutional proscription that no franchise certificate or
authorization shall be exclusive in character or shall last longer than fifty (50) years
(ibid., Section 11; Article XIV, Section 5, 1973 Constitution; Article XIV, Section 8,
1935 Constitution).

WHEREFORE, the petition for review on certiorari is PARTIALLY GRANTED. The


Order of the National Telecommunications Commission dated November 10, 1997 in
NTC Case No. 96-195 is AFFIRMED with the following modifications:
Respondent International Communication Corporation, in accordance with Section
27 of NTC MC No. 11-9-93, is required to:

(1) Deposit in escrow in a reputable bank 20% of the investment required for
the first two years of the implementation of the proposed project; and

(2) Post a performance bond equivalent to 10% of the investment required for
the first two years of the approved project but not to exceed P500
Million.

within such period to be determined by the National Telecommunications Commission.


No pronouncement as to costs.
SO ORDERED.
Puno, (Chairman), Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

[1]
Under E.O. No. 109, Section 1 (c), Local Exchange Carrier Service refers to a telecommunications
service, primarily but is not limited to voice-to-voice service, within a contiguous geographic area
furnished to individual subscribers under a common local exchange rate schedule.
[2]
An International Gateway Facility (IGF) Operator is a public telecommunications carrier providing IGF
services consisting of international transmissions, switching and network management facilities
which serve as point of entry and exit in the Philippines of international traffic between the
national network and point/s outside the Philippines, per NTC MC No. 9-7-93, re: Guidelines on
the Interconnection of Public Telecommunications Carriers.
[3]
Entitled Guidelines on the Policy to Improve Local Exchange Carrier Service.
[4]
Republic vs. Express Telecommunication Co., Inc. (Extelcom), G.R. Nos. 147210 & 147096, January
15, 2002, 373 SCRA 316.
[5]
Defined in NTC MC No. 8-9-95, as an authority for a limited period, granted to a qualified applicant to
operate and maintain a public telecommunications facility/service by the Commission, pending
the grant of the CPCN.
[6]
Docketed as NTC Case No. 96-195.
[7]
Penned by Justice Ruben T. Reyes and concurred in by Justices Quirino D. Abad Santos, Jr. and Eloy
R. Bello, Jr.
[8]
CA Rollo, pp. 161-171.
[9]
Rollo, p. 28.
[10]
Id., pp. 29-60.
[11]
PLDT vs. NTC, G.R. No. 88404, October 18, 1990, 190 SCRA 717, 726.
[12]
Extelcom case, supra., Note 4, p. 334.
[13]
Id., p. 342.
[14]
Rollo, pp. 164-165; NTC Order dated November 10, 1997, pp. 9-10.
[15]
Extelcom case, supra., Note 4, p. 346.
[16]
Ibid.
[17]
Section 4 (f), Article II, Rep. Act No. 7925.
[18]
G.R. No. 138295, August 28, 2003.
[19]
Ibid.
[20]
Saado vs. Court of Appeals, G.R. No. 108338, April 17, 2001, 356 SCRA 546, 558; citing De Leon,
Administrative Law: Text and Cases, 1993 ed., pp. 143-144.
[21]
Rollo, p. 44; Petition, p. 36, citing the Dissenting Opinion of Commissioner Kintanar in NTC Order
dated 28 October 1997, NTC Case No. 94-229.
[22]
Provision on Local Exchange (LE) Services, (d).
[23]
Rollo, p. 164; NTC Order dated November 10, 1997, p. 9.
[24]
Extelcom case, supra., Note 4, p. 347.
[25]
CMTS stands for Cellular Mobile Telephone System.
[26]
Section 1.
[27]
Websters Third New International Dictionary, 1981 Ed.
[28]
NTC Records, Volume 3.
[29]
Ibid.
[30]
G.R. No. 64888, November 28, 1996, 265 SCRA 1, 13, citing PLDT vs. NTC, 190 SCRA 717 (1990).
12) PCGG vs Judge Pena

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. 77663 April 12, 1988

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, petitioner,


vs.
HON. EMMANUEL G. PEÑA, as Presiding Judge, RTC, NCJR, Br. CLII, Pasig, Metropolitan
Manila, and YEUNG CHUN KAM, YEUNG CHUM HO and ARCHIE CHAN represented by YIM
KAM SHING, respondents.

TEEHANKEE, C.J.:

This special civil action for certiorari, prohibition and mandamus with preliminary injunction and/or restraining order seeks to set aside the
orders, dated February 16 and March 5, 1987, rendered by respondent trial judge on grounds of lack of jurisdiction and grave abuse of
discretion. The main issue is whether regional trial courts have jurisdiction over the petitioner Presidential Commission on Good Government
(hereinafter referred to as the Commission) and properties sequestered and placed in its custodia legis in the exercise of its powers under
Executive Orders Nos. 1, 2 and 14, as amended, and whether said regional trial courts may interfere with and restrain or set aside the orders
and actions of the Commission. The Court holds that regional trial courts do not have such jurisdiction over the Commission and accordingly
grants the petition. To eliminate all doubts, the Court upholds the primacy of administrative jurisdiction as vested in the Commission and
holds that jurisdiction over all sequestration cases of ill-gotten wealth, assets and properties under the past discredited regime fall within the
exclusive and original jurisdiction of the Sandiganbayan, subject to review exclusively by this Court. *

The antecedent facts are:

On March 25, 1986, the Commission issued an order freezing the assets, effects, documents and
records of two export garment manufacturing firms denominated as American Inter-fashion
Corporation and De Soleil Apparel Manufacturing Corporation. Said firms had both been organized
by joint venture agreement on July 2,1984 with the approval of the Garments & Textile Export Board.
Two-thirds or 67% of the stock of both corporations were subscribed by so-called Local Investors
represented by Renato Z. Francisco and Atty. Gregorio R. Castillo and one-third or 33% thereof
were subscribed by the so-called Hongkong Investors, namely respondents Yeung Chun Kam and
Yeung Chun Ho. The Commission appointed Ms. Noemi L. Saludo as Officer-in-Charge (OIC) of the
said corporations with full authority to manage and operate the same. On June 27, 1986, the
Commission designated the OIC, Saludo, and Mr.Yeung Chun Ho private respondent herein, as
authorized signatories to effect deposits and withdrawals of the funds of the two corporations. On
September 4, 1986, the Commission designated Mr. Yim Kam Shing as co-signatory, in the absence
of Mr. Yeung Chun Ho and Mr. Marcelo de Guzman, in the absence of Ms. Saludo. However, in a
memorandum dated February 3, 1987, and addressed to depository banks of the said two
corporations, Ms. Saludo revoked the authorizations previously issued upon finding that Mr. Yim
Kam Shing was a Hongkong Chinese national staying in the country on a mere tourist visa, and
designated James Dy as her co-signatory and Enrico Reyes Santos as the other authorized
signatory with Teresita Yu as the latter's co-signatory. The said memorandum was approved by then
Commissioner Mary Concepcion Bautista of the Commission.
On February 11, 1987, the OIC withdrew the amount of P400,000.00, more or less, from the
Metropolitan Bank and Trust Company against the accounts of the said corporations for payment of
the salaries of the staff, employees and laborers of the same for the period from February 1 to 15 of
1987. On February 13, 1987, respondents Yeung Chun Kam Yeung Chun Ho and Archie Chan who
are all in Hongkong, instituted through Yim Kam Shing an action for damages with prayer for a writ
of preliminary injunction against the said bank, the Commission, then Commissioner Mary
Concepcion Bautista and the OIC, Saludo, docketed as Civil Case No. 54298 of Branch 152 of the
Regional Trial Court at Pasig, Metro Manila, presided by respondent judge, and questioning the
aforesaid revocation of the authorization as signatory previously granted to Mr. Yim Kam Shing as
private respondents' representative. On February 16, 1987, respondent judge issued ex-parte the
questioned temporary restraining order enjoining the bank, its attorneys, agents or persons acting in
their behalf "from releasing any funds of American Inter-fashion Corporation without the signature of
plaintiff Yim Kam Shing and to desist from committing any other acts complained of ..." and the
Commission "from enforcing the questioned memorandum dated February 3, 1987" (Annex "J"
Petition).

On February 20, 1987, the Commission filed a motion to dismiss with opposition to plaintiffs' (private
respondents herein) prayer for a writ of preliminary injunction on the ground that the trial court has
no jurisdiction over the Commission or over the subject of the case and that assuming arguendo its
jurisdiction, it acted with grave abuse of discretion since private respondents as 33% minority
shareholders are not entitled to any restraining order or preliminary injunction. On March 5, 1987,
respondent judge issued the other assailed order denying the Commission's motion to dismiss and
granting private respondents prayer for a writ of preliminary injunction on a P10,000 bond (Annex
"L," Petition). On March 20, 1987, the Commission filed the petition at bar questioning the jurisdiction
of respondent judge's court over it and praying for (a) the nullification of the aforesaid February 16
and March 5, 1987 orders and (b) the issuance of a writ of prohibition ordering the respondent judge
to cease and desist from proceeding with the said case.

On March 24, 1987, the Court issued a temporary restraining order, "ordering respondent judge to
cease and desist from enforcing his orders dated February 16 and March 5, 1987 and from
proceeding with Civil Case No. 54298 ... subject to the condition that the amounts that the petitioner
may withdraw from the accounts of (the sequestered corporations) with the Metropolitan Bank and
Trust Company, Inc., shall be limited to the 'necessary operating expenses of the two companies
and for the payment of the salaries, wages and allowances of the companies" staff, employees and
laborers" ... and that the proceeds and income received shall likewise in due course be deposited
with the said companies' accounts with the said Metropolitan Bank and Trust Company, Inc."

On the issue of jurisdiction squarely raised, as above indicated, the Court sustains petitioner's stand
and holds that regional trial courts and the Court of Appeals for that matter have no jurisdiction over
the Presidential Commission on Good Government in the exercise of its powers under the applicable
Executive Orders and Article XVIII, section 26 of the Constitution and therefore may not interfere
with and restrain or set aside the orders and actions of the Commission. Under section 2 of the
President's Executive Order No. 14 issued on May 7, 1986, all cases of the Commission regarding
"the Funds, Moneys, Assets, and Properties Illegally Acquired or Misappropriated by Former
President Ferdinand Marcos, Mrs. Imelda Romualdez Marcos, their Close Relatives, Subordinates,
Business Associates, Dummies, Agents, or Nominees" 1 whether civil or criminal, are lodged within
the "exclusive and original jurisdiction of the Sandiganbayan" 2 and all incidents arising from,
incidental to, or related to, such cases necessarily fall likewise under the Sandiganbayan's exclusive
and original jurisdiction, subject to review on certiorari exclusively by the Supreme Court. 3

The Constitution and the applicable Executive Orders and established legal principles and
jurisprudence fully support the Court's ruling at bar.
1. The very first Executive Order issued by President Corazon C. Aquino after her assumption of
office and the ouster of deposed President Ferdinand E. Marcos on February 25, 1986 was
Executive Order No. 1 issued on February 28, 1986 creating the Presidential Commission on Good
Government, charging it with the task of assisting the President in regard to the "recovery of all ill-
gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family,
relatives, subordinates and close associates, whether located in the Philippines or abroad, including
the takeover or sequestration of all business enterprises and entities owned or controlled by them,
during his administration, directly or through nominees, by taking undue advantage of their public
office and/or using their powers, authority, influence, connections or relationship." 4

In the discharge of its vital task "to recover the tremendous wealth plundered from the people by the
past regime in the most execrable thievery perpetrated in all history," 5 or "organized pillage" (to
borrow a phrase from the articulate Mr. Blas Ople 6 ), the Commission was vested with the ample
power and authority

(a) x x x

(b) to sequester or place or cause to be placed under its control or possession any
building or office wherein any ill-gotten wealth or properties may be found, and any
records pertaining thereto, in order to prevent their destruction, concealment or
disappearance which would frustrate or hamper the investigation or otherwise
prevent the Commission from accomplishing its task.

(c) to provisionally takeover in the public interest or to prevent the disposal or


dissipation of business enterprises and properties taken over by the government of
the Marcos Administration or by entities or persons close to former President
Marcos, until the transactions leading to such acquisition by the latter can be
disposed of by the appropriate authorities.

(d) to enjoin or restrain any actual or threatened commission of acts by any person or
entity that may render moot and academic, or frustrate or otherwise make ineffectual
the efforts of the Commission to carry out its task under this Order. ... 7

As stressed in Baseco "So that it might ascertain the facts germane to its objectives, it [the
Commission] was granted power to conduct investigations; require submission of evidence by
subpoena ad testificandum and duces tecum; administer oaths; punish for contempt. It was given
power also to promulgate such rules and regulations as may be necessary to carry out the purposes
of (its creation)." 8

2. These ample powers and authority vested in the Commission by the President in the exercise of
legislative power granted her in the Provisional (Freedom) Constitution 9 were confirmed in said
Constitution and in the 1987 Constitution. Thus, the Freedom Constitution (Proc. No. 3) mandated
that 'The President shall give priority to measures to achieve the mandate of the people to: .. (d)
recover ill-gotten properties amassed by the leaders and supporters of the previous regime and
protect the interest of the people through orders of sequestration or freezing of assets or accounts.
..." 10 The Constitution overwhelmingly ratified by the people in the February 2, 1987 plebiscite
likewise expressly confirmed that:

Sec. 26. The authority to issue sequestration or freeze orders under Proclamation
No. 3 dated March 25, 1986 in relation to the recovery of ill- gotten wealth shall
remain operative for not more than eighteen months after the ratification of this
Constitution. However, in the national interest, as certified by the President, the
Congress may extend said period.

A sequestration or freeze order shall be issued only upon showing of a prima


facie case. The order and the list of the sequestered or frozen properties shall
forthwith be registered with the proper court. For orders issued before the ratification
of this Constitution, the corresponding judicial action or proceeding shall be filed
within six months from its ratification. For those issued after such ratification, the
judicial action or proceeding shall be commenced within six months from the
issuance thereof.

The sequestration or freeze order is deemed automatically lifted if no judicial action


or proceeding is commenced as herein provided. 11

3. As can be readily seen from the foregoing discussion of the duties and functions and the power
and authority of the Commission, it exercises quasi-judicial functions. In the exercise of quasi-judicial
functions, the Commission is a co-equal body with regional trial courts and "co-equal bodies have no
power to control the other." 12 The Solicitor General correctly submits that the lack of jurisdiction of
regional trial courts over quasi-judicial agencies is recognized in section 9, paragraph 3 of Batas
Pambansa Blg. 129 (the Judiciary Reorganization Act of 1980), which otherwise vests exclusive
appellate jurisdiction in the Court of Appeals over all final judgment, decisions, resolutions, orders, or
awards of regional trial courts and quasi judicial agencies, instrumentalities, boards or commissions.
But as already indicated hereinabove, the Court of Appeals is not vested with appellate or
supervisory jurisdiction over the Commission. Executive Order No. 14, which defines the jurisdiction
over cases involving the ill-gotten wealth of former President Marcos, his wife, Imelda, members of
their immediate family, close relatives, subordinates, close and/or business associates, dummies,
agents and nominees, specifically provides in section 2 that "The Presidential Commission on Good
Government shall file all such cases, whether civil or criminal, with the Sandiganbayan which shall
have exclusive and original jurisdiction thereof." Necessarily, those who wish to question or
challenge the Commission's acts or orders in such cases must seek recourse in the same court, the
Sandiganbayan, which is vested with exclusive and original jurisdiction. The Sandiganbayan's
decisions and final orders are in turn subject to review on certiorari exclusively by this Court.

4. Having been charged with the herculean task of bailing the country-out of the financial bankruptcy
and morass of the previous regime and returning to the people what is rightfully theirs, the
Commission could ill-afford to be impeded or restrained in the performance of its functions by writs
or injunctions emanating from tribunals co-equal to it and inferior to this Court. Public policy dictates
that the Commission be not embroiled in and swamped by legal suits before inferior courts all over
the land, since the loss of time and energy required to defend against such suits would defeat the
very purpose of its creation. Hence, section 4(a) of Executive Order No. 1 has expressly accorded
the Commission and its members immunity from suit for damages in that: "No civil action shall lie
against the Commission or any member thereof for anything done or omitted in the discharge of the
task contemplated by this order."

The law and the courts frown upon split jurisdiction and the resultant multiplicity of actions. To
paraphrase the leading case of Rheem of the Phil., Inc. vs. Ferrer, et al,12-a to draw a tenuous
jurisdiction line is to undermine stability in litigations. A piecemeal resort to one court and another
gives rise to multiplicity of suits, To force the parties to shuttle from one court to another to secure
full determination of their suit is a situation gravely prejudicial to the administration of justice. The
time lost, the effort wasted, the anxiety augmented, additional expenses incurred, the irreparable
injury to the public interest – are considerations which weigh heavily against split jurisdiction.
Civil Case No. 54298 pending before respondent judge is expressly denominated as one "for
damages with prayer for a writ of preliminary injunction" (Annex "I," petition) filed by private
respondents against the Commission and then Commissioner Mary Concepcion Bautista. The said
case is clearly barred by the aforequoted immunity provision of Executive Order No. 1, as buttressed
by section 4(b) thereof which further provides that: "No member or staff of the Commission shall be
required to testify or produce evidence in any judicial, legislative or administrative proceeding
concerning matters within its official cognizance."

Executive Order No. 1 thus effectively withholds jurisdiction over cases against the Commission from
all lower courts, including the Court of Appeals, except the Sandiganbayan in whom is vested
original and exclusive jurisdiction and this Court. Early on, in special civil actions questioning
challenged acts of the Commission, its submittal that the cited Executive Order bars such actions in
this Court was given short shrift because this Court, as the third great department of government
vested with the judicial power and as the guardian of the Constitution, cannot be deprived of its
certiorari jurisdiction to pass upon and determine alleged violations of the citizens' constitutional and
legal rights under the Rule of Law.

5. The rationale of the exclusivity of such jurisdiction is readily understood. Given the magnitude of
the past regime's "organized pillage" and the ingenuity of the plunderers and pillagers with the
assistance of the experts and best legal minds available in the market, it is a matter of sheer
necessity to restrict access to the lower courts, which would have tied into knots and made
impossible the Commission's gigantic task of recovering the plundered wealth of the nation, whom
the past regime in the process had saddled and laid prostrate with a huge $27 billion foreign debt
that has since ballooned to $28.5 billion.

To cite an example as recorded in Baseco, "in the ongoing case filed by the government to recover
from the Marcoses valuable real estate holdings in New York and the Lindenmere estate in Long
Island, former PCGG chairman Jovito Salonga has revealed that their names do not appear on any
title to the property. Every building in New York is titled in the name of a Netherlands Antilles
Corporation, which in turn is purportedly owned by three Panamanian corporations, with bearer
shares. This means that the shares of this corporation can change hands any time, since they can
be transferred, under the law of Panama, without previous registration on the books of the
corporation. One of the first documents that we discovered shortly after the February revolution was
a declaration of trust handwritten by Mr. Joseph Bernstein on April 4, 1982 on a Manila Peninsula
Hotel stationery stating that he would act as a trustee for the benefit of President Ferdinand Marcos
and would act solely pursuant to the instructions of Marcos with respect to the Crown Building; in
New York." 13 Were it not for this stroke of good fortune, it would have been impossible, legally and
technically, to prove and recover this ill-gotten wealth from the deposed President and his family,
although their ownership of these fabulous real estate holdings were a matter of public notoriety

Hence, the imperative need for the Government of the restored Republic as its first official act to
create the Commission as an administrative and quasi- judicial commission to recover the ill-gotten
wealth "amassed from vast resources of the government by the former President, his immediate
family, relatives and close associates." 14

This is the only possible and practical way to enable the Commision to begin to do its formidable job.
Thus, in the fifties in an analogous case, the Court taking cognizance of the trend to vest jurisdiction
in administrative commissions and boards the power to resolve specialized disputes ruled that
Congress in requiring the Industrial Court's intervention in the resolution of labor-management
controversies likely to cause strikes or lockouts meant such jurisdiction to be exclusive, although it
did not so expressly state in the law. The court held that under the sense-making and expeditious
doctrine of primary jurisdiction ... the courts cannot or will not determine a controversy involving a
question which is within the jurisdiction of an administrative tribunal, where the question demands
the exercise of sound administrative discretion requiring the special knowledge, experience, and
services of the administrative tribunal to determine technical and intricate matters of fact, and of the
regulatory statute administered.15

In this era of clogged court dockets, the need for specialized administrative boards or commissions
with the special knowledge, experience and capability to hear and determine promptly disputes on
technical matters or essentially factual matters, subject to judicial review in case of grave abuse of
discretion, has become well nigh indispensable. For example, the Court in the case of Ebon vs. de
Guzman16 noted that the lawmaking authority, in restoring to the labor arbiters and the NLRC their
jurisdiction to award all kinds of damages in labor cases, as against the previous P.D. amendment
splitting their jurisdiction with the regular courts, "evidently..... had second thoughts about depriving
the Labor Arbiters and the NLRC of the jurisdiction to award damages in labor cases because that
setup would mean duplicity of suits, splitting the cause of action and possible conflicting findings and
conclusions by two tribunals on one and the same claim."

6. The Court recently had occasion to stress once more, in G.R. No. 82218, Reyes vs.
Caneba March 17, 1988, that "(T)he thrust of the related doctrines of primary administrative
jurisdiction and exhaustion of administrative remedies is that courts must allow administrative
agencies to carry out their functions and discharge their responsibilities within the specialized areas
of their respective competence. Acts of an administrative agency must not casually be overturned by
a court, and a court should as a rule not substitute its judgment for that of the administrative agency
acting within the perimeters of its own competence." Applying these fundamental doctrines to the
case at bar, the questions and disputes raised by respondents seeking to controvert the
Commission's finding of prima facie basis for the issuance of its sequestration orders as well as the
interjection of the claims of the predecessor of American Inter-fashion and De Soleil Corporations,
viz. Glorious Sun Phil., headed by Nemesis Co are all questions that he within the primary
administrative jurisdiction of the Commission that cannot be prematurely brought up to clog the court
dockets without first resorting to the exhaustion of the prescribed administrative remedies. The
administrative procedure and remedies for contesting orders of sequestration issued by the
Commission are provided for in its rules and regulations. Thus, the person against whom a writ of
sequestration is directed may request the lifting thereof, in writing; after due hearing or motu
proprio for good cause shown, the Commission may lift the writ unconditionally or subject to such
conditions as it may deem necessary, taking into consideration the evidence and the circumstances
of the case. The resolution of the Commission is appealable to the President of the Philippines. The
Commission conducts a hearing, after due notice to the parties concerned to ascertain whether any
particular asset, property or enterprise constitutes ill-gotten wealth. The Commission's order of
sequestration is not final, at the proper time, the question of ownership of the sequestered properties
shall be exclusively determined in the Sandiganbayan, whose own decisions in turn are subject to
review exclusively by the Supreme Court.

It should be emphasized here, as again stressed by the Court in the recent case of Republic, et al.
vs. De los Angeles, et al., G.R. No. L-30240, March 25, 1988, that "it is well-recognized principle that
purely administrative and discretionary function may not be interfered with by the courts. In general,
courts have no supervising power over the proceedings and actions of the administrative
departments of government. This is generally true with respect to acts involving the exercise of
judgment or discretion, and findings of fact. There should be no thought of disregarding the
traditional line separating judicial and administrative competence, the former being entrusted with
the determination of legal questions and the latter being limited as a result of its expertise to the
ascertainment of the decisive facts." This is specially true in sequestration cases affected by the
Commission for the recovery of the nation' s plundered wealth that may affect the nation's very
survival, in the light of the constitutional mandate that such sequestration or freeze orders "shall be
issued only upon showing of a prima facie case" 17 and the settled principle that findings by
administrative or quasi-judicial agencies like the Commission are entitled to the greatest respect and
are practically binding and conclusive, like the factual findings of the trial and appellate courts, save
where they are patently arbitrary or capricious or are not supported by substantial evidence.

7. The Solicitor General has herein picturesquely submitted its "more than prima facie evidence" for
its sequestration and provisional take-over of the subject assets and properties as follows:

... the subject sequestered assets are completely owned and/or completely utilized
and/or otherwise taken over by the Marcoses, with due 'compensation' to their co-
participants in terms of tacitly agreed upon 'mutual benefits,' for their personal
benefits and selfish economic interests, including particularly the salting, stashing
and secreting of dollars abroad, cum loculo et pera as witness the following, by way
of summarizing PCGG's submission, ... as supported by more than prima facie
evidence:

The fun: Glorious Sun, Phils., headed by Nemesio G. Co and with private
respondents herein holding 40% of the shares of stock, soon after its incorporation
on June 8, 1977, engaged in dollar salting, among other business unlawful
manipulations. This was unearthed by the Garments and Textiles Export Board
(GTEB) in January 1984. At that time, in the reign of Marcos, it had been decreed
that the matter of dollar salting was the exclusive domain of the so-called 'Binondo
Central Bank,' and any other person or en entity found engaging therein was guilty of
'economic sabotage,' more so where the 'saboteurs' are aliens like the herein private
respondents who are otherwise known as the 'Hongkong investors.

The squeeze: GTEB, under the Ministry of Trade, under then .Minister Roberto V.
Ongpin, on April 27,1984 choked the lifeliness of Glorious Sun in terms of cancelling
its export quotas, export authorizations, and license to maintain bonded warehouses
and of disqualifying its 'major stockholders and officers from engaging in exports.'
With protestations of innocence, Glorious Sun on May 25, 1984 even had the
temerity to file a Petition with the Supreme Court (G.R. No. 67180). How did Glorious
Sun extricate itself from the tightening .screws let loose upon its neck by the then
reigning Ceasar with his apparently legal contretemps?

Easy: Give unto Ceasar what is Ceasar's. In July, 1984, herein private respondents
came up with two (2) joint venture agreements. and within the month, respondents
themselves withdrew their Petition in G.R. No. 67180. Pursuant to the two (2) joint
venture agreements, American Inter-Fashion Co. was incorporated on August 22,
1984 and De Soleil on September 3, 1984, in each of which herein private
respondents, the Hongkong investors, held 33% of the shares of stock while the
'Filipino investors' held 67%.

The sting:

In August, 1984, the GTEB informed Glorious Sun, Phils., that the
substantial portion of the latter's cancelled export quotas had been
awarded to American Inter-Fashion and De Soleil. But while the
Yeung brothers control only 33% of the two corporations, they,
however, operated and managed said corporation and utilized 100%
of their export quota allocations. The Yeung brothers paid
the nominees of the Filipino investors controlling 67%, the amount
of $3.75 per dozen as royalty for the utilization of the 67% export
quotaof said two corporations. It may also be stated that even before
the export quota allocations were awarded to American Inter-Fashion
and De Soleil Glorious Sun, Phils., despite the GTEB decision, Annex
A hereof, was allowed to ship out garments worth US $1,261,794.00
under its [previously cancelled] quota from April 27 to May 30,1984.
And on petition of a foreign buyer, Generra Sports Company of
Seattle, Washington, Glorious Sun, Phils., was allowed to fin its 3rd
and 4th fashion-quarter orders of 186,080 pieces valued at about US
$1,159,531.00. As a result, Glorious Sun, Phils. continued to operate
its bonded manufacturing warehouse ordered closed by the GTEB
(Please see GTEB Comment dated June 4, 1984 in G.R. No.
67180.). (pp. 9-10, Consolidated Reply, May 15, 1987).

The end of the fun: All was fun that ended in fun for all the participants in the fun, the
squeeze and the sting, until of course the EDSA Revolution, when PCGG shortly
sequestered the subject assets and provisionally took over the conservation thereof
pursuant to law (Secs. 2 & 3, Executive Order No. 1 and related issuances) and
pursuant to the very Baseco case cited ironically in the Motion at bar. Again, with
protestations of innocence, the herein private respondents through their counsel and
now Congressman Francisco Sumulong with the game temerity have gone to the
courts and other forum (Civil Case No. 54298 entitled Yeung Chun Kam et al. vs.
PCGG, et al., RTC, Branch 151, Pasig, Metro Manila: SEC Case No. 003144 entitled
Yeung Chun Kam et al. vs. PCGG, et al., Securities and Exchange Commission) just
as Nemesio Co allegedly President and owner of Glorious Sun, through counsel
Benjamin C. Santos, has gone to the courts with the same protestations of innocence
and equal temerity (Civil Cases Nos. 86-37220 and 86-37221 before RTC, Branches
33 and 36, Manila; Civil Cases Nos. 761-87 and 762-87, Metropolitan Trial Court,
Branch 56, Malabon; Civil Case No. 54911, RTC, Branch 151 Pasig, Metro Manila)
and with his own 'brand' of private army to boot, resorted to the midnight plunder of
the subject sequestered assets under a "midnight" writ (issued in Civil Case No.
54911 by Judge Eutropio Migriño). Obviously, the herein private respondent as well
as Nemesio Co would like to continue their fun. 18

Such proliferation of suits filed against the Commission in the trial courts, and gross disregard of the
Commission's primacy of administrative jurisdiction has of course compelled the Commission to
question in turn in this Court and obtain restraining orders against the lower courts' usurpation of
jurisdiction, in the following pending cases:

1. G.R. No. 79901 (PCGG v. Hon. Eutropio Migriño Executive Judge, Regional Trial
Court of Pasig and Glorious Sun Fashion Manufacturing Co., Inc. and Nemesio Co )

2. G.R. No. 80072 (PCGG v. Emilio Opinion, Presiding Judge of the Metropolitan
Trial Court, Branch 56, Malabon, Metro Manila; Glorious Sun Fashion Manufacturing
Co., Inc. and Nemesio Co )

3. G.R. No. 80121 (PCGG v. Hon. Maximo M. Japzon as Presiding Judge of the
Regional Trial Court, Branch 36, Manila; Glorious Sun Fashion Garments
Manufacturing Co., Inc. and Nemesio Co.)

4. G.R. No. 80281 (PCGG v. Hon. Felix Barbers as Presiding Judge of the Regional
Trial Court, Branch 33, Manila, Deputy Sheriff Salvador A. Pueca and Glorious Sun
Fashion Garments Manufacturing Co., Inc. and Nemesio Co )
5. G.R. No. 80395 (PCGG v. Hon. Emiho C. Opinion as Presiding Judge of Branch
56 of the Metropolitan Trial Court, Malabon, Metro Manila; Glorious Sun Garments
Manufacturing Co., Inc. and Nemesio Co)

Going back to the pre-EDSA squeeze and scam, it need only be added that everything at the time
seemingly ended to everybody's satisfaction. Nemesio Co's Glorious Sun, Phil. notwithstanding the
GTEB's closure order, continued to operate its bonded warehouse and to ship out millions of dollars
of garments under its supposedly cancelled export quotas and peremptorily withdrew on August 20,
1984 19 its petition in G.R. No. 67180 from this Court . The two new substitute corporations American
Inter-Fashion Co. and De Soleil cropped out of nowhere to take over the factories and export quotas
and it was of public notoriety, particularly in the trade, that the family had taken over.

8. This is the thrust of the complaint filed on July 16, 1987 [well ahead of the Constitutional deadline
of August 2, 1987]by the Solicitor General on behalf of the Commission representing Plaintiff
Republic of the Philippines docketed as Civil Case No. 0002, PCGG-3, with the Sandiganbayan,
against therein defendants Ferdinand E. Marcos, Imelda R. Marcos, Imelda (Imee) R. Marcos,
Tomas Manotoc, Irene R. Marcos Araneta, Gregorio Ma. Araneta III and Ferdinand R. Marcos,
Jr., for reversion, reconveyance, restitution, accounting and damages, involving, among others,
the subject matter of the petition at bar, namely, American Inter-Fashion and De Soleil Corporations,
together with their assets, shares of stocks, effects, evidence and records, which the Commission
avers, based on documents in its possession, were "illegally acquired by said defendants in unlawful
concert with one another and with gross abuse of power and authority. ... 20 The Commission
correctly submits that "questions on whether or not the Plaintiff Republic of the Philippines is entitled
to reversion, reconveyance, restitution, accounting or damages in respect of the above-subject
matter is for the Sandiganbayan to resolve" — not in any of the scattershot cases that respondents
have filed in the various courts of the land.

The Court has so held in various cases, among them, Ofelia Trinidad vs. PCGG, et al., G.R. No.
77695, June 16, 1987, wherein We pointed out that — "The Supreme Court is not a trier of facts: it
cannot conceivably go over all the minute evidence that may be presented by the PCGG. What is
significant is that this Court believes that in the instant case no abuse, much less a grave abuse of
discretion has been exercised by the PCGG," and Agro-Industrial Foundation Colleges of Southern
Philippines, et al. vs. Regional XI Operating Team No. Five and/or the PCGG, G.R. No. 78116, July
28, 1987, wherein We ruled that the parties affected "may raise their defenses at the appropriate
time and before the proper forum [the Sandiganbayan]. They will have their day in court."

9. What has not been appreciated by respondents and others similarly situated is that the provisional
remedies (including the encompassing and rarely availed of remedy of provisional takeover) granted
to the Commission in pursuing its life-and-death mission to recover from a well-entrenched
plundering regime of twenty years, the ill-gotten wealth which rightfully belongs to the Republic
although pillaged and plundered in the name of dummy or front companies, in several known
instances carried out with the bold and mercenary, if not reckless, cooperation and assistance of
members of the bar as supposed nominees, the full extent of which has yet to be uncovered, are
rooted in the police power of the State, the most pervasive and the least limitable of the powers of
Government since it represents "the power of sovereignty, the power to govern men and things
within the limits of its domain." 21Police power has been defined as the power inherent in the State "to
prescribe regulations to promote the health, morals, education, good order or safety, and general
welfare of the people."22 Police power rests upon public necessity and upon the right of the State and
of the public to self-protection. 23 " Salus populi suprema est lex" — the welfare of the people is the
supreme law. For this reason, it is coextensive with the necessities of the case and the safeguards
of public interest. Its scope expands and contracts with changing needs. 24 "It may be said in a
general way that the police power extends to all the great public needs. It may be put forth in aid of
what is sanctioned by usage, or held by the prevailing morality or strong and preponderant opinion to
be greatly and immediately necessary to the public welfare." 25

That the public interest and the general welfare are subserved by sequestering the purported ill-
gotten assets and properties and taking over stolen properties of the government channeled to
dummy or front companies is stating the obvious. The recovery of these ill-gotten assets and
properties would greatly aid our financially crippled government and hasten our national economic
recovery, not to mention the fact that they rightfully belong to the people. While as a measure of self-
protection, if, in the interest of general welfare, police power, may be exercised to protect citizens
and their businesses in financial and economic matters, it may similarly be exercised to protect the
government itself against potential financial loss and the possible disruption of governmental
functions. Police power as the power of self-protection on the part of the community that the principle
of self-defense bears to the individual. 26 Truly, it may be said that even more than self-defense, the
recovery of ill-gotten wealth and of the government's own properties involves the material and moral
survival of the nation, marked as the past regime was by the obliteration of any line between private
funds and the public treasury and abuse of unlimited power and elimination of any accountability in
public office, as is a matter of public record and knowledge.

10 Despite all the complexities and difficulties, the original Commission created under Executive
Order No. 1 headed by its first chairman, now Senate President Jovito R. Salonga, and composed of
Hon. Ramon Diaz, the incumbent chairman, now Associate Justice Pedro L. Yap of this Court, Hon.
Raul Daza, now a ranking member of the House of Representatives, and Hon.. Mary Concepcion
Bautista, now chairman of the Human Rights Commission, and the present Commission headed by
Chairman Ramon Diaz have produced unprecedented positive results for which they fully deserve
the inadequately expressed (– at times – ) appreciation and gratitude of the nation. The report as of
the end of 1987 of Chairman Ramon Diaz shows the great extent of the Commission's
accomplishments despite its limited resources, but fortunately bolstered by the spontaneous and
welcome assistance of friendly foreign governments and lawyers, in the brief period of less than two
years since its creation and which are regarded yet as the tip of the iceberg:

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT SUMMARY OF


ACCOMPLISHMENTS As of January 05, 1988

1. CASH & OTHER CASH ITEMS

Funds turned over to

the treasury — Gen. Fund 592,350,799.00

Proceeds of Sale of

Princeton Property with

PNB—New York 20,500,000.00

Proceeds of New Jersey

Settlement 9,669,781.00
Proceeds of Auction Sale 17,231,429.00

Proceeds of Sale of

Paintings 8,879,500.00

SBTC (1st payment Seq. T/Ds) 250,000,000.00

UPCB Bal of Profit Sharing 77,678,854.00

Other Cash Items

(Certificate of Time

Deposits) 1,492,951.00

Contribution to CARP 140,000,000.00

Sub-Total P1,117,803,314.00

2. OTHER RECOVERED FUNDS

Government Funds in TRB/

National Treasury

(Casino Funds) 1,138,000,000.00

T-Bills delivered to the

office of the President 100,020,000.00

Funds from Filbakers 59,884,453.00

P1,297,904,453.00

3. RECEIVABLES

Projected Proceeds of Sale

of knick-knacks and

Furnitures from Hachensach

in Olympic Towers 20,720,000.00

Projected Proceeds of New York


Properties (Lindenmere,

Olympic Towers Apartments,

Makiki Properties) $9.0M 184,500,000.00

SBTC Certificates of Time

Deposits 731,407,842.00

Sub-total P936,627,842.00

4. FUNDS HELD IN TRUST

Funds with the Treasury 71,975,722.00

Funds with PNB-Ortigas 52,535,298.00

Sub-Total P124,511,020.00

GRAND TOTAL P3,476,846,629.00

5. JEWELRY

Estimated Value P250 M

6. COMPANIES WHICH WERE AFFECTED

BY SEQUESTRATION ORDER INCLUDING

RADION AND TV STATIONS

297 Companies were subject to

sequestration (including those

whose sequestrations was lifted and those surrendered companies

by J.Y. Campos and those holding


companies whose investments in

shares were affected by Writs of

Sequestration)

74 Companies have available

financial statements with

estimated total assets of P44B

223 Companies still without

financial statements

18 TV Stations were sequestered

38 Radio Stations were sequestered

7. REAL PROPERTIES (BUILDING AND

IMPROVEMENTS)

Coconut Palace

13 Houses and improvements

12 Condominium units

Offices of R.S. Benedicto, E. Garcia, etc.

2 National Art and Museum Centers

2 Fishponds

8. SEQUESTERED LANDS (INCLUDING

IMPROVEMENTS)
450 parcels of land (including

improvements) have been issued

with specific Writs of Sequestration

of which only 148 have an area of

19,276,970.76 sq. m.

23 Haciendas of which 13 haciendas

constituting RSB Farms, Inc. have

an area of 27,859,207.00 sq m.

9. SURRENDERED LANDS BY JOSE YAO CAMPOS

Total area in sq. m. of all surrendered

properties 19,684,435.45 sq. m.

Disposed to DAR (202 IRC titles) with

total area of 13,997,529 sq. m.

Remaining balance of 75 titles recommended for

disposal, with total area of 5,686,906.45 sq. m.

OTHER INFORMATION:

81 Sequestered Vehicles

29 Sequestered Aircrafts
13 Sequestered Vessels

11. A final word about the alleged misdeeds of the OIC which the Solicitor General has denounced
as false and unfounded. 27 Such alleged misdeeds, even if taken as true for the nonce, do not and
cannot detract from the Commission's accomplishments in the unselfish service of the nation,
rendered with integrity and honor and without the least taint of scandal and self-interest (in welcome
contrast to the past regime's rape and plunder sub-silentio of the nation!). In our free and democratic
space now, with full restoration of a free press and the people's liberties, it should be acknowledged
with some sort of appreciation that any such misdeeds on the part of the Commission's
representative or agents have been subjected to full public exposure and the erring parties
dismissed and replaced.

ACCORDINGLY, the writs of certiorari and prohibition shall issue. The orders of respondent Judge
dated February 16, 1987 and March 5, 1987 are hereby set aside as null and void. Respondent
Judge is ordered to cease and desist from any further proceeding in Civil Case No. 54298 which is
hereby ordered DISMISSED. This decision is IMMEDIATELY EXECUTORY, **

Yap, Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Gancayco, Padilla, Bidin, Sarmiento and
Cortes, JJ., concur.

Griño-Aquino, J., took no part.

Separate Opinions

ADDENDUM

TEEHANKEE, C.J.: concurring:

I make this Addendum to the foregoing main opinion of the Court to express briefly my views on
certain statements made in the dissenting opinion of Mr. Justice Gutierrez and the separate
concurring opinion with qualifications of Mr. Justice Feliciano, which for lack of time I have not been
able to submit to the majority who have concurred with the opinion written by me for the Court. *** It is
not that the statements I make in this Addendum are in any way incompatible with those made in the main opinion; in fact, they are made
simply by way of clarification of amplification.

It can be readily seen from a reading of the main and the dissenting opinions that while both are
agreed that 67% of the shares and assets of the two corporations were taken over by the family and
crony of the deposed President, they view such takeover in different lights: The main opinion
gives prima facie status to the position taken by the petitioner Commission that Nemesio G. Co, the
previous majority shareholder of Glorious Sun Fashion Garments Mfg. Co., predecessor of the two
corporations, had made a deal with Mr. Marcos and transferred his interest to the nominees of Mr.
Marcos in return for benefits and concessions received; while the dissenting opinion views Mr. Co as
a "poor victim" of Mr. Marcos. This dispute, involving as it does PCGG-sequestered properties, as
held by the majority on the basis of the provisions of the law, Executive Order. No. 14, comes within
the exclusive and original jurisdiction of the Sandiganbayan's jurisdiction limited to the PCGG acting
against the nominees of Mr. Marcos holding 67% of the shares and assets of the two corporations,
and Mr. Co being free to sue the PCGG in the regular courts. To force the State to draw a tenuous
jurisdiction line and split jurisdiction is to undermine stability in litigations and to force the parties,
particularly the government as represented by the PCGG to shuttle from one court to another to
secure full determination of its suit for reversal, reconveyance, restitution, etc., of the subject mater
of the petition, that is, the two corporations, together with the assets, shares of stock, evidence of
record, etc. It would be to create an intolerable situation gravely prejudicial to the administration of
justice, that undermines the tremendous task given to the PCGG to recover ill-gotten wealth
accumulated by Mr. Marcos, his immediate family, relatives, subordinates and close associates,
directly or through nominees.

The main opinion's quoting the "picturesque" submittal by the Solicitor General of prima
facie evidence for its case should not connote, as misperceived in the dissenting opinion, that said
submittals represent the facts. At this stage, neither the submittals of the Solicitor General nor those
of Mr. Co as stated in the dissenting opinion can be taken as established facts. These issues have to
be threshed out in a proper trial before the Sandiganbayan.

The dissenting opinion states that "(I)f the PCGG investigation action were solely against the 67%
allegedly misappropriated by a Marcos daughter and a Marcos crony, I will have no hesitation in
concurring with the majority opinion that this is a case where exclusive jurisdiction over all incidents
is vested in the Sandiganbayan.

In response, it should be stressed that this is a case precisely where jurisdiction over all incidents
should be vested in one court, the Sandiganbayan. The issues are not simplistic and precisely
because of this, all hearings and processes should be limited exclusively in one court, subject to
review by the Supreme Court. Otherwise, as already pointed out, given the magnitude of the past
regime's organized pillage" and the ingenuity of the plunderers and pillagers with the assistance of
the experts and best legal minds available in the market, and in several known instances carried out
with the questionable and mercenary cooperation and assistance of members of the bar as
supposed nominees, the government's claims would have been tied into knots throughout the land
as in this case and made impossible the Commission's gigantic task of seeking to recover the
plundered wealth of the nation for the benefit of the people to whom it rightfully belongs.

Again, it should also be stressed that jurisdiction is conferred by law which, in the case of ill-gotten
wealth of Mr. Marcos, has been vested exclusively in the Sandiganbayan. the question of the
wisdom of vesting such exclusive jurisdiction in one court, the Sandiganbayan, is not for this Court to
encroach upon or legislate.

With respect to the qualifications expressed by Mr. Justice Feliciano in his separate opinion, I just to
point out two things: First, the main opinion does not claim absolute immunity for the members of the
Commission. The cited section of Executive Order No. 1 provides the Commission's members
immunity from suit thus: "No civil action shall lie against the Commission or any member thereof for
anything done or omitted in the discharge of the task contemplated by this order." No absolute
immunity like that sought by Mr. Marcos in his Constitution for himself and his subordinates is herein
involved. It is understood that the immunity granted the members of the Commission by virtue of the
unimaginable magnitude of its task to recover the plundered wealth and the State's exercise of
police power was immunity from liability for damages in the official discharge of the task granted the
members of the Commission much in the same manner that judges are immune from suit in the
official discharge of the functions of their office. Secondly, as to the seemingly grudging
acknowledgment of the achievements so far of the Commission in terms of recovered funds and
properties, the observation that the Sandiganbayan still has to rule that these funds and assets
constitute ill-gotten wealth of Mr. Marcos and his associates ignores two facts: (1) many of these
recovered funds and properties were turned over to the Commission by self-confessed cronies and
dummies of Mr. Marcos, who, as Mr. Marcos stated, had proper documentation to the properties in
their names, but who, because they were stricken by their conscience or because of other
extraneous considerations have voluntarily confessed to being Mr. Marcos' dummies and turned
over these recovered property and assets in tens if not in hundreds of millions of pesos to the
Commission; and (2) Rep. Act No. 1379 provides that whenever any public officer or employee has
acquired during his incumbency an amount of property which is manifestly out of proportion to his
salary as such public officer or employee and to his other lawful income and the income from
legitimately acquired property, such unexplained wealth shall be presumed prima facie to have been
unlawfully acquired, in an appropriate proceeding, such as that filed in the Sandiganbayan, and the
burden is placed upon such public official or employee to show cause why the property aforesaid or
any part thereof should not be forfeited and declared property of the State. This provision is fully
applicable to Mr. Marcos and members of his family, all of whom were public officials during his
regime, as well as many of his cronies and associates who held public office and the burden is on
them and not on the Commission or the Republic to show that their property is not ill-gotten wealth.

FELICIANO, J., concurring:

I concur with the great bulk of the majority opinion so vigorously written by the Chief Justice. I seek
below to clarify, principally to myself, certain qualifications which do not affect the result reached but
which, to my mind, should be made.

The Presidential Commission on Good Government (PCGG) is, of course, an administrative agency
which has been charged with the vitally important task of investigating and recovering "all ill-gotten
wealth accummulated by former President Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates, whether located in the Philippines or abroad — during his
administration, directly or through nominees, by taking undue advantage of their public office and/or
using their powers, authority, influence, connections or relations." (Section 2[a], Executive Order No.
1, dated 28 February 1986; 82 Official Gazette, p. 1234 [3 March 1986]).

In the carrying out of this fundamental task, the PCGG has been authorized to sequester or place
under its control or possession assets which it believes constitute "ill-gotten wealth" of Mr. Marcos or
his associates. Necessarily, the PCGG is authorized to determine whether or not there is
sufficient prima facie basis to warrant sequestering particular assets as probably constituting such
"ill-gotten wealth." In Bataan Shipyard & Engineering Co., Inc. (Baseco) v. Presidential Commission
on Good Government, et al., G.R. No. 75885, 27 May 1987, it was made abundantly clear that under
Executive Order No. 14, dated 7 May 1986, the PCGG's own rules and regulations and Article No.
XVIII, Section 26 of the 1987 Constitution, sequestration and take over orders issued by the PCGG
must rest upon a prima facie basis.

It is also quite clear that the determinations made by the PCGG at the time of issuing sequestration
or provisional take over orders cannot be regarded as final determinations; that the assets
sequestered or provisionally taken over in fact constitute "ill-gotten wealth" within the meaning of
Executive Order No. 1 is a determination which can be finally made only by a court; and that the
court vested with jurisdiction to make that determination is the Sandiganbayan. Thus, the PCGG was
required to bring suit for recovery or reconveyance of "ill-gotten wealth" before
the Sandiganbayan by Executive Order No. 14 As pointed out in the majority opinion,
the Sandiganbayan is vested with exclusive original jurisdiction over such cases.
The principal thrust of the Chief Justice's opinion is that to prevent the splitting of jurisdiction and
consequent multiplicity of cases relating to the ownership of assets which may have been placed
under sequestration or provisional take over orders, all such cases which are reasonably related to
the question of ownership and characterization of such assets, are properly regarded as embraced
within the exclusive original jurisdiction vested upon the Sandiganbayan. I entirely agree with the
basic holding. It would follow that all parties who claim ownership of or rights to assets which have
been subjected to sequestration and which are the subject matter of proceedings before
the Sandiganbayan must be regarded as having a right to intervene in the proceedings before
the Sandiganbayan. It seems equally clear that parties who are not allowed to intervene in
proceedings before the Sandiganbayan cannot, consistently with the Due Process Clause of the
Constitution, be regarded as bound by any decision which the Sandiganbayan may render in respect
of ownership of such assets. There appears no basis for supposing that proceedings before
the Sandiganbayan are in the nature of in rem proceedings.

I would submit, with respect, that the foregoing is all that is necessary to arrive at the resolution of
this case. The PCGG is clearly not a court. The majority opinion states that the PCGG "exercise
quasi-judicial functions" and that "in the exercise of quasi-judicial functions, the PCGG is a co-equal
body with Regional Trial Courts." It seems to me that PCGG can be regarded as exercising quasi-
judicial functions only in a loose and non-technical sense. The PCGG is not a quasi-judicial body in
the same sense that the National Labor Relations Commission (NLRC), the Securities and
Exchange Commission (SEC) and the Office of the Insurance Commissioner (OIC) exercise quasi-
judicial functions. The PCGG in issuing sequestration or take over orders is not properly regarded as
determining private rights, even though subject to judicial review in a proper case. All that the PCGG
is really doing in so issuing such orders is determining that the exist prima facie basis for filing the
appropriate proceedings before the Sandiganbayan to seek recovery and reconveyance, etc., of the
sequestered assets as probably belonging to the category of "ill-gotten wealth." Without pre-empting
the question of the civil or criminal nature of such proceedings, the PCGG is appropriately
analogized not to a court or to a quasi-judicial body rather to a fiscal or public prosecutor.

I do not consider that this is simply a matter of verbal description or of semantic equivalency. The
preliminary or prima facie findings of the PCGG implicit in each issuance of sequestration orders,
are not entitled to the same respect that findings of fact of administrative agencies or tribunals
exercising quasi-judicial functions are ordinarily accorded by courts. The PCGG must still carry the
burden of proving before the Sandiganbayan that the assets it has sequestered in fact belong to Mr.
Marcos or his associates and that such assets constitute "ill-gotten wealth" within the meaning of
Executive Order No. 1 and Article No. XVIII (26) of the 1987 Constitution or "ill-gotten properties"
within the meaning of Article No. 2 [1] [b] of the Provisional Constitution dated 25 March 1986.

In Section No. 4 of the majority opinion, it is said:

4. Having been charged with the herculean task of bailing the country out of the
financial bankruptcy and morass of the previous regime and returning to the people
what is rightfully theirs, the Commission could ill-afford to be impeded or restrained in
the performance of its functions by writ or injuctions emanating from tribunals co-
equal to it and inferior to this Court. Public policy dictates that the Commission be not
embroiled in and swamped by legal suits before inferior courts all over that land,
since the loss of time and energy required to defend against such suits would defeat
the very purpose of its creation. Hence, Section 4 (a) of Executive Order No. 1 has
expressly accorded the Commission and its members immunity from suit for
damages in that: 'No civil action shall like against the Commission or any member
thereof for anything done or omitted in the discharge of the task contemplated by this
order.'
xxx xxx xxx

Civil Case No. 54298 pending before respondent judge is expressly denominated as
one "for damages with prayer for a writ of preliminary injunction (Annex "I", petition)
filed by private respondents against the Commission and then Commissioner Mary
Concepcion Bautista. The said case is clearly barred by the aforequoted immunity
provision of Executive Order No. 1, as buttressed by Section 4 (b) thereof which
further provides that: "No member or staff of the Commission shall be required to
testify or produce evidence in any judicial, legislative or administrative proceeding
concerning matters within its official cognizance."

xxx xxx xxx

(Emphasis supplied)

The above underscored portions are, it is respectfully submitted, clearly obiter. It is important to
make clear that the Court is not here interpreting, much less upholding as valid and constitutional,
the literal terms of Section 4 (a), (b) of Executive Order No. 1. If Section 4 (a) were given its literal
import as immunizing the PCGG or any member thereof from civil liability "for anything done or
omitted in the discharge of the task contemplated by this Order," the constitutionality of Section 4 (a)
would, in my submission, be open to most serious doubt. For so viewed, Section 4 (a) would
institutionalize the irresponsibility and non-accountability of members and staff of the PCGG, a
notion that is clearly repugnant to both the 1973 and the 1987 Constitutions and a privileged status
not claimed by any other official of the Republic under the 1987 Constitution. Article No. XIII, Section
1 of the 1973 Constitution which formed part of the Provisional Constitution of 25 March 1986, under
Section 2 thereof, provided as follows:

Section 1. Public office is a public trust. Public officers and employees shall serve
with the highest degree of responsibility, integrity, loyalty, and efficiency and shall
remain accountable to the people. (Emphasis supplied)

In closely comparable language, Article No. XI, Section 1 of the 1987 Constitution stresses that:

Section 1. Public office is a public trust. Public officers and employees must at all
times be accountable to the people, serve them with utmost responsibility, integrity,
loyalty, and efficiency, act with patriotism and justice, and lead modest lives.
(Emphasis supplied)

It may be further submitted, with equal respect, that Section 4 (a) of Executive Order No. 1 was
intended merely to restate the general principle of the law of public officers that the PCGG or any
member thereof may not be held civilly liable for acts done in the performance of official
duty, provided that such member had acted in good faith and within the scope of his lawful authority.
It may also be assumed that the Sandiganbayan would have jurisdiction to determine whether the
PCGG or any particular official thereof may be held liable in damages to a private person injured by
acts of such member. It would seem constitutionally offensive to suppose that a member or staff
member of the PCGG could not be required to testify before the Sandiganbayan or that such
members were exempted from complying with orders of this Court.

Turning, finally, to Section No. 10 of the majority opinion, the information there set out is, of course,
impressive and heartening; it is, however, at once obiter and gratis. Neither the magnitude of the
figures nor the use of phrases such as "funds turned over to the treasury" and "other recovered
funds" should obscure the fact that the Sandiganbayan still has to rule that all these funds and
assets do constitute "ill-gotten wealth" of Mr. Marcos and his associates. It seems important to bear
in mind that no transfer of ownership to the Republic of the Philippines can legally take place until a
final ruling to that effect is rendered by the Sandiganbayan and, ultimately, this Court.

GUTIERREZ, JR., J., dissenting:

It is with no little trepidation that I write this dissent to one of the valedictory decisions of the Chief
Justice. However, I have carefully gone over the pleadings and pertinent records and am convinced
that this is again one case where the Presidential Commission on Good Government (PCGG) has
stepped beyond legal and constitutional boundaries. I find no alternative but to dissent.

The PCGG has been given unprecedented powers by Executive Orders of a revolutionary
Government and by the Transitory Provisions of the Constitution.

Not content with powers which are more than sufficient to accomplish the purposes for which it was
created, the PCGG has, in various cases now before us, strained and broken beyond what I view as
the unduly generous guidelines of BASECO v. PCGG (150 SCRA 151). The instant case is an
example of how the PCGG may mindlessly encroach on the rights of hapless individuals who are
themselves victims of oppression and make it difficult if not virtually impossible for them to readily
recover what was seized against their will by persons close to the former regime.

Since the PCGG has often acted as if the noble ends for which it was created perhaps justify the
employment of extreme and supra-legal measures, I submit, that the Supreme Court's function is
more to find out how the rights of parties caught by an unfeeling steam-roller may be protected
instead of going out of its way to shield the PCGG from legal suits and other actions. The powerful
PCGG needs no protection or succor from us. Private persons who plead with PCGG for the
maintenance of their rights but who are brusquely turned away are the ones we should assist.

Notwithstanding the Court's decision in this case, the factual antecedents of the controversy will still
have to be determined after a protracted trial before the Sandiganbayan. However, by calling the
petitioner's picturesque (but illusive) presentation as "more than prima facie evidence," the majority
opinion might give the Sandiganbayan the wrong impression that said submissions indeed represent
the facts. I urge that this is not so. The facts are still to be established.

We had occasion to look into the beginnings of this case in 1984 in G.R. No. 67180, Glorious Sun
Fashion Garments Manufacturing Co. v. Garments and Textile Export Board (GTEB), et al.

Glorious Sun started with a P600,000.00 capitalization in 1977. It has steadfastly contended that far
from salting dollars abroad, it invested every available centavo of its earnings in expanding its export
potentials such that by 1983 its capital was already P9,500,000.00. The private respondents in the
petition now before us owned 40% of the shares of stock while 60% was owned by the Nemesio Co
group.

By 1983, Glorious Sun was exporting more than 309,000 dozens of garments valued at
US$19,900,000.00 annually. It was employing more than 3,000 workers. As the second biggest
garment exporter of the Philippines, covetous eyes fell upon it. Glorious Sun's lifelines were choked
(to use the Solicitor General's words) by the GTEB under then Minister Roberto V. Ongpin which
cancelled its export quotas, authority to engage in exports, and license to maintain bonded
warehouses in order, it now appears, to give opportunity to certain parties to acquire the business.

I participated in the deliberations and hearings of the Glorious Sun case in 1984 and I recall that
there was not the slightest scintilla of evidence to support the charges of dollar salting made by
GTEB. A scrap of yellow pad paper on which were pencilled a few computations and with nothing to
support them, a graph of import prices of four local importers Identified only by letters, and another
piece of paper with supposed 1983 prices of fabrics were the only "proof" that the respondent
Minister with all the power (he was issuing warrants of arrest) and resources at his command could
produce before the Court. So patently arbitrary was the finding of dollars salting that it would have
been easy for the First Division of the Court to uphold the exporter's rights. Unfortunately, Glorious
Sun in an act of business "prudence" and possibly worried that retaliatory acts would be taken
against its stockholders' other firms and enterprises decided to withdraw the petition and rely
completely on the GTEB's sense of justice and compassion. It turned out to be a fatal error.

Glorious Sun's export quotas were turned over to hastily organized corporations — the American
Inter-Fashion Co. and De Soleil. The Hongkong businessmen and minority owners Glorious Sun
were allowed to hold 33% of the stocks of these two corporations while 67% was given, according to
PCGG, to a daughter and crony of then President Marcos.

Hence, the PCGG freeze orders on the two corporations.

If the PCGG investigate action were solely against the 67% allegedly misappropriated by a Marcos
daughter and a Marcos crony, I will have no hesitation in concurring with the majority opinion that
this is a case where exclusive jurisdiction over all incidents is vested in the Sandiganbayan.

Unfortunately, the issues are not that simplistic. The respondents as well as the so-called
"interjector" are not cronies.

What is the recourse of the poor victims whose properties were seized on charges so hastily
trumped up that not a semblance of due process appears in the records?

Not only were the export quotas and business licenses cancelled but millions of pesos worth of
machines and physical plant were unceremoniously confiscated. No compensation was given and
no rentals are now paid for the use of manufacturing facilities which are not owned by the two new
corporations, which have never appeared in their balance sheets as assets, and which the two new
corporations have clearly never claimed. Why should we not allow the owners to use summary
remedies for acquiring possession, assuming that the issue of ownership has to be resolved
somewhere else? I feel this issue is not exclusive for the Sandiganbayan.

There is nothing in the records to show that the members of the Nemesio Co group are tainted with
the slightest color of cronyism. They can only be victims of the illegal acquisition charged in CC No.
0002, PCGG-3 before the Sandiganbayan, not malefactors who spirited away public funds or
properties. They are not parties and have no standing in a recovery of illegal wealth case before the
Sandiganbayan.

If citizens similarly situated as the members of the Nemesio Co group are summarily shunted aside
and even maligned when they plead with the PCGG for the return of their properties, why should not
regular courts have jurisdiction over the issues they raise? How can private persons file an action
with the anti-graft court private parties who took away their quotas and factories? Why should the
PCGG be immune from suit where the complainants insist that it continues the illegal seizure
inflicted by the GTEB, the Marcos daughter and the Marcos crony?

If the PCGG keeps flip-flopping, promising to pay rent at one time, then reneging on the promise,
only to reiterate it again, to which court should the victims apply? If the owners sue the PCGG
officers-in-charge who mismanage their firms and lead them to destruction, why should the former
not seek redress before regular courts familiar with the handling of these types of grievances against
government action? Do the owners have to wait for years while the Sandiganbayan and the
Tanodbayan wade through all the illegal wealth cases before they can hope for redress for injustices
committed during a past regime.?

Under the sweeping declaration of the majority opinion, everything – including issues which have
nothing to do with cronyism or illegal acquisition of wealth but where alleged cronies or members of
the "family" are somehow involved – must go to the Sandiganbayan.

I have the highest respect for the Chief Justice and the other members of the Court but I regret most
sincerely that I cannot join them in such an artless and simplistic approach.

The private respondents in this petition are foreign nationals but they, too, have rights. As foreign
investors, they have cast their lot with us in our financial travails and our hopes for a better
tomorrow. They claim that owning only 33% of the two corporations on paper, in truth they solely and
exclusively financed the operations of the garment firms. They point out that De Soleil and American
Inter-Fashion do not own any assets except the export quotas. All machinery, equipment, and
leasehold rights are owned by Glorious Sun. Inspite of the injustices perpetrated by the previous
regime, the private respondent to the 3,000 employees, and tried their best not to allow any
disruptions and to keep the corporations alive. As far as I can gather from the records, the private
respondents have not been charged before the Sandiganbayan for anything. They have no standing
there.

The private respondents are only trying to protect their proprietary rights against what they perceive
are arbitrary PCGG incursions when they went to the civil courts. I must again stress that no illegal
wealth cases have been brought against them. The civil suit they filed with the Pasig Regional Trial
Court is simply to annul the joint venture agreement between local investors of American Inter-
Fashion and the private respondents on the ground of vitiated consent. It has nothing to do with
plundered wealth, organized pillage, or sequestration of ill-gotten wealth. Like the group of Nemesio
Co, the private respondents also profess to be victims. They charge the OIC appointed by the PCGG
with anomalies, including irresponsible, capricious, and arbitrary acts (See pp. 16-21 of the
respondents' April 3, 1987 Comments). Why do they have to be haled and dragged before the
Sandiganbayan when they are the complainants in an annulment of contract case and not the
defendants?

The PCGG may be a powerful agency of government but in cases not involving its basic functions, I
believe it is not above or beyond the jurisdiction of regular courts of justice. I continue to have great
faith in our Regional Trial Courts and in the Court of Appeals.

According to the majority opinion, the PCGG, in the exercise of quasi-judicial functions is co-equal
with regional trial courts. I am afraid that such an all-embracing dictum is fraught with dangerous
implications. In the two years we have reviewed PCGG actions, I have yet to see the PCGG
deliberately avoid questionable shortcuts or studiedly apply the fine points and the established
principles of investigative due process. For this reason, it is better reined in rather than emboldened
by a too expansive definition of its powers.

The PCGG is an investigator and prosecutor, not a judge. It is not a quasi-judicial tribunal. More
appropriate is the majority opinion in BASECO V. PCGG (supra) where the Court stated:

PCGG not a "Judge": General Functions

It should also by now be reasonably evident from what has thus far been said that
the PCGG is not, and was never intended to act as, a judge. Its general function is to
conduct investigations in order to collect evidence establishing instances of 'ill-gotten
wealth;' issue sequestration, and such orders as may be warranted by the evidence
thus collected and as may be necessary to preserve and conserve the assets of
which it takes custody and control and prevent their disappearance, loss or
dissipation; and eventually file and prosecute in the proper court of competent
jurisdiction all cases investigated by it as may be warranted by is findings. It does not
try and decide, or hear and determine, or adjudicate with any character of finality or
compulsion, cases involving the essential issue of whether or not property should be
forfeited and transferred to the State because 'ill-gotten' within the meaning of the
Constitution and the executive orders. This function is reserved to the designated
court, in this case, the Sandiganbayan. (Ex. Ord. No. 14). There can therefore be no
serious regard accorded to the accusation, leveled by BASECO, (Rollo, pp. 695-697)
that the PCGG plays the perfidious role of prosecutor and judge at the same time.
(Id. p. 218)

It is the Sandiganbayan and not the PCGG which should be equated with courts of justice.

I share with all right thinking Filipinos the hope that the PCGG succeeds in its vital but unenviably
difficult function of ferreting out and recovering ill-gotten wealth through courts of justice. Needles to
say, only legitimate and praiseworthy procedures, must, of course, be applied in this task. Perhaps
even more important than the recovery of much-needed money is our standing true by principles of
due process, fair play, and other aspects of civil liberties.

I am not privy to the methods used in the acquisition, or the motivations behind the surrender, of the
properties such as casino funds, surrendered lands, SBTC cash items, etc., mentioned in pages 28-
30 of the majority opinion. Since the PCGG accomplishments, according to the Court, are only the
tip of the iceberg and there must be much more to come, the report is indeed impressive. However, I
wonder if encomiums are appropriate in a court decision at this time. Granting that the PCGG has
done such a great job in the two years of its existence, I feel that the dispensing of commendations
should be left to the Press Secretary, independent media, or public opinion. The trial of the illegal
wealth cases has not even started. The Sandiganbayan decisions on these cases will undoubtedly
be elevated to us. I am sorry and I regret very much my inability to join the rest of the Court in
prematurely singing Hallelujahs for the Presidential Commission on Good Government.

I, therefore, register my dissent and vote to DISMISS the instant petition.

Separate Opinions

ADDENDUM

TEEHANKEE, C.J.: concurring:

I make this Addendum to the foregoing main opinion of the Court to express briefly my views on
certain statements made in the dissenting opinion of Mr. Justice Gutierrez and the separate
concurring opinion with qualifications of Mr. Justice Feliciano, which for lack of time I have not been
able to submit to the majority who have concurred with the opinion written by me for the Court. *** It is
not that the statements I make in this Addendum are in any way incompatible with those made in the main opinion; in fact, they are made
simply by way of clarification of amplification.
It can be readily seen from a reading of the main and the dissenting opinions that while both are
agreed that 67% of the shares and assets of the two corporations were taken over by the family and
crony of the deposed President, they view such takeover in different lights: The main opinion
gives prima facie status to the position taken by the petitioner Commission that Nemesio G. Co, the
previous majority shareholder of Glorious Sun Fashion Garments Mfg. Co., predecessor of the two
corporations, had made a deal with Mr. Marcos and transferred his interest to the nominees of Mr.
Marcos in return for benefits and concessions received; while the dissenting opinion views Mr. Co as
a "poor victim" of Mr. Marcos. This dispute, involving as it does PCGG-sequestered properties, as
held by the majority on the basis of the provisions of the law, Executive Order. No. 14, comes within
the exclusive and original jurisdiction of the Sandiganbayan's jurisdiction limited to the PCGG acting
against the nominees of Mr. Marcos holding 67% of the shares and assets of the two corporations,
and Mr. Co being free to sue the PCGG in the regular courts. To force the State to draw a tenuous
jurisdiction line and split jurisdiction is to undermine stability in litigations and to force the parties,
particularly the government as represented by the PCGG to shuttle from one court to another to
secure full determination of its suit for reversal, reconveyance, restitution, etc., of the subject mater
of the petition, that is, the two corporations, together with the assets, shares of stock, evidence of
record, etc. It would be to create an intolerable situation gravely prejudicial to the administration of
justice, that undermines the tremendous task given to the PCGG to recover ill-gotten wealth
accumulated by Mr. Marcos, his immediate family, relatives, subordinates and close associates,
directly or through nominees.

The main opinion's quoting the "picturesque" submittal by the Solicitor General of prima
facie evidence for its case should not connote, as misperceived in the dissenting opinion, that said
submittals represent the facts. At this stage, neither the submittals of the Solicitor General nor those
of Mr. Co as stated in the dissenting opinion can be taken as established facts. These issues have to
be threshed out in a proper trial before the Sandiganbayan.

The dissenting opinion states that "(I)f the PCGG investigation action were solely against the 67%
allegedly misappropriated by a Marcos daughter and a Marcos crony, I will have no hesitation in
concurring with the majority opinion that this is a case where exclusive jurisdiction over all incidents
is vested in the Sandiganbayan.

In response, it should be stressed that this is a case precisely where jurisdiction over all incidents
should be vested in one court, the Sandiganbayan. The issues are not simplistic and precisely
because of this, all hearings and processes should be limited exclusively in one court, subject to
review by the Supreme Court. Otherwise, as already pointed out, given the magnitude of the past
regime's organized pillage" and the ingenuity of the plunderers and pillagers with the assistance of
the experts and best legal minds available in the market, and in several known instances carried out
with the questionable and mercenary cooperation and assistance of members of the bar as
supposed nominees, the government's claims would have been tied into knots throughout the land
as in this case and made impossible the Commission's gigantic task of seeking to recover the
plundered wealth of the nation for the benefit of the people to whom it rightfully belongs.

Again, it should also be stressed that jurisdiction is conferred by law which, in the case of ill-gotten
wealth of Mr. Marcos, has been vested exclusively in the Sandiganbayan. the question of the
wisdom of vesting such exclusive jurisdiction in one court, the Sandiganbayan, is not for this Court to
encroach upon or legislate.

With respect to the qualifications expressed by Mr. Justice Feliciano in his separate opinion, I just to
point out two things: First, the main opinion does not claim absolute immunity for the members of the
Commission. The cited section of Executive Order No. 1 provides the Commission's members
immunity from suit thus: "No civil action shall lie against the Commission or any member thereof for
anything done or omitted in the discharge of the task contemplated by this order." No absolute
immunity like that sought by Mr. Marcos in his Constitution for himself and his subordinates is herein
involved. It is understood that the immunity granted the members of the Commission by virtue of the
unimaginable magnitude of its task to recover the plundered wealth and the State's exercise of
police power was immunity from liability for damages in the official discharge of the task granted the
members of the Commission much in the same manner that judges are immune from suit in the
official discharge of the functions of their office. Secondly, as to the seemingly grudging
acknowledgment of the achievements so far of the Commission in terms of recovered funds and
properties, the observation that the Sandiganbayan still has to rule that these funds and assets
constitute ill-gotten wealth of Mr. Marcos and his associates ignores two facts: (1) many of these
recovered funds and properties were turned over to the Commission by self-confessed cronies and
dummies of Mr. Marcos, who, as Mr. Marcos stated, had proper documentation to the properties in
their names, but who, because they were stricken by their conscience or because of other
extraneous considerations have voluntarily confessed to being Mr. Marcos' dummies and turned
over these recovered property and assets in tens if not in hundreds of millions of pesos to the
Commission; and (2) Rep. Act No. 1379 provides that whenever any public officer or employee has
acquired during his incumbency an amount of property which is manifestly out of proportion to his
salary as such public officer or employee and to his other lawful income and the income from
legitimately acquired property, such unexplained wealth shall be presumed prima facie to have been
unlawfully acquired, in an appropriate proceeding, such as that filed in the Sandiganbayan, and the
burden is placed upon such public official or employee to show cause why the property aforesaid or
any part thereof should not be forfeited and declared property of the State. This provision is fully
applicable to Mr. Marcos and members of his family, all of whom were public officials during his
regime, as well as many of his cronies and associates who held public office and the burden is on
them and not on the Commission or the Republic to show that their property is not ill-gotten wealth.

FELICIANO, J., concurring:

I concur with the great bulk of the majority opinion so vigorously written by the Chief Justice. I seek
below to clarify, principally to myself, certain qualifications which do not affect the result reached but
which, to my mind, should be made.

The Presidential Commission on Good Government (PCGG) is, of course, an administrative agency
which has been charged with the vitally important task of investigating and recovering "all ill-gotten
wealth accummulated by former President Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates, whether located in the Philippines or abroad — during his
administration, directly or through nominees, by taking undue advantage of their public office and/or
using their powers, authority, influence, connections or relations." (Section 2[a], Executive Order No.
1, dated 28 February 1986; 82 Official Gazette, p. 1234 [3 March 1986]).

In the carrying out of this fundamental task, the PCGG has been authorized to sequester or place
under its control or possession assets which it believes constitute "ill-gotten wealth" of Mr. Marcos or
his associates. Necessarily, the PCGG is authorized to determine whether or not there is
sufficient prima facie basis to warrant sequestering particular assets as probably constituting such
"ill-gotten wealth." In Bataan Shipyard & Engineering Co., Inc. (Baseco) v. Presidential Commission
on Good Government, et al., G.R. No. 75885, 27 May 1987, it was made abundantly clear that under
Executive Order No. 14, dated 7 May 1986, the PCGG's own rules and regulations and Article No.
XVIII, Section 26 of the 1987 Constitution, sequestration and take over orders issued by the PCGG
must rest upon a prima facie basis.

It is also quite clear that the determinations made by the PCGG at the time of issuing sequestration
or provisional take over orders cannot be regarded as final determinations; that the assets
sequestered or provisionally taken over in fact constitute "ill-gotten wealth" within the meaning of
Executive Order No. 1 is a determination which can be finally made only by a court; and that the
court vested with jurisdiction to make that determination is the Sandiganbayan. Thus, the PCGG was
required to bring suit for recovery or reconveyance of "ill-gotten wealth" before
the Sandiganbayan by Executive Order No. 14 As pointed out in the majority opinion,
the Sandiganbayan is vested with exclusive original jurisdiction over such cases.

The principal thrust of the Chief Justice's opinion is that to prevent the splitting of jurisdiction and
consequent multiplicity of cases relating to the ownership of assets which may have been placed
under sequestration or provisional take over orders, all such cases which are reasonably related to
the question of ownership and characterization of such assets, are properly regarded as embraced
within the exclusive original jurisdiction vested upon the Sandiganbayan. I entirely agree with the
basic holding. It would follow that all parties who claim ownership of or rights to assets which have
been subjected to sequestration and which are the subject matter of proceedings before
the Sandiganbayan must be regarded as having a right to intervene in the proceedings before
the Sandiganbayan. It seems equally clear that parties who are not allowed to intervene in
proceedings before the Sandiganbayan cannot, consistently with the Due Process Clause of the
Constitution, be regarded as bound by any decision which the Sandiganbayan may render in respect
of ownership of such assets. There appears no basis for supposing that proceedings before
the Sandiganbayan are in the nature of in rem proceedings.

I would submit, with respect, that the foregoing is all that is necessary to arrive at the resolution of
this case. The PCGG is clearly not a court. The majority opinion states that the PCGG "exercise
quasi-judicial functions" and that "in the exercise of quasi-judicial functions, the PCGG is a co-equal
body with Regional Trial Courts." It seems to me that PCGG can be regarded as exercising quasi-
judicial functions only in a loose and non-technical sense. The PCGG is not a quasi-judicial body in
the same sense that the National Labor Relations Commission (NLRC), the Securities and
Exchange Commission (SEC) and the Office of the Insurance Commissioner (OIC) exercise quasi-
judicial functions. The PCGG in issuing sequestration or take over orders is not properly regarded as
determining private rights, even though subject to judicial review in a proper case. All that the PCGG
is really doing in so issuing such orders is determining that the exist prima facie basis for filing the
appropriate proceedings before the Sandiganbayan to seek recovery and reconveyance, etc., of the
sequestered assets as probably belonging to the category of "ill-gotten wealth." Without pre-empting
the question of the civil or criminal nature of such proceedings, the PCGG is appropriately
analogized not to a court or to a quasi-judicial body rather to a fiscal or public prosecutor.

I do not consider that this is simply a matter of verbal description or of semantic equivalency. The
preliminary or prima facie findings of the PCGG implicit in each issuance of sequestration orders,
are not entitled to the same respect that findings of fact of administrative agencies or tribunals
exercising quasi-judicial functions are ordinarily accorded by courts. The PCGG must still carry the
burden of proving before the Sandiganbayan that the assets it has sequestered in fact belong to Mr.
Marcos or his associates and that such assets constitute "ill-gotten wealth" within the meaning of
Executive Order No. 1 and Article No. XVIII (26) of the 1987 Constitution or "ill-gotten properties"
within the meaning of Article No. 2 [1] [b] of the Provisional Constitution dated 25 March 1986.

In Section No. 4 of the majority opinion, it is said:

4. Having been charged with the herculean task of bailing the country out of the
financial bankruptcy and morass of the previous regime and returning to the people
what is rightfully theirs, the Commission could ill-afford to be impeded or restrained in
the performance of its functions by writ or injuctions emanating from tribunals co-
equal to it and inferior to this Court. Public policy dictates that the Commission be not
embroiled in and swamped by legal suits before inferior courts all over that land,
since the loss of time and energy required to defend against such suits would defeat
the very purpose of its creation. Hence, Section 4 (a) of Executive Order No. 1 has
expressly accorded the Commission and its members immunity from suit for
damages in that: 'No civil action shall like against the Commission or any member
thereof for anything done or omitted in the discharge of the task contemplated by this
order.'

xxx xxx xxx

Civil Case No. 54298 pending before respondent judge is expressly denominated as
one "for damages with prayer for a writ of preliminary injunction (Annex "I", petition)
filed by private respondents against the Commission and then Commissioner Mary
Concepcion Bautista. The said case is clearly barred by the aforequoted immunity
provision of Executive Order No. 1, as buttressed by Section 4 (b) thereof which
further provides that: "No member or staff of the Commission shall be required to
testify or produce evidence in any judicial, legislative or administrative proceeding
concerning matters within its official cognizance."

xxx xxx xxx

(Emphasis supplied)

The above underscored portions are, it is respectfully submitted, clearly obiter. It is important to
make clear that the Court is not here interpreting, much less upholding as valid and constitutional,
the literal terms of Section 4 (a), (b) of Executive Order No. 1. If Section 4 (a) were given its literal
import as immunizing the PCGG or any member thereof from civil liability "for anything done or
omitted in the discharge of the task contemplated by this Order," the constitutionality of Section 4 (a)
would, in my submission, be open to most serious doubt. For so viewed, Section 4 (a) would
institutionalize the irresponsibility and non-accountability of members and staff of the PCGG, a
notion that is clearly repugnant to both the 1973 and the 1987 Constitutions and a privileged status
not claimed by any other official of the Republic under the 1987 Constitution. Article No. XIII, Section
1 of the 1973 Constitution which formed part of the Provisional Constitution of 25 March 1986, under
Section 2 thereof, provided as follows:

Section 1. Public office is a public trust. Public officers and employees shall serve
with the highest degree of responsibility, integrity, loyalty, and efficiency and shall
remain accountable to the people. (Emphasis supplied)

In closely comparable language, Article No. XI, Section 1 of the 1987 Constitution stresses that:

Section 1. Public office is a public trust. Public officers and employees must at all
times be accountable to the people, serve them with utmost responsibility, integrity,
loyalty, and efficiency, act with patriotism and justice, and lead modest lives.
(Emphasis supplied)

It may be further submitted, with equal respect, that Section 4 (a) of Executive Order No. 1 was
intended merely to restate the general principle of the law of public officers that the PCGG or any
member thereof may not be held civilly liable for acts done in the performance of official
duty, provided that such member had acted in good faith and within the scope of his lawful authority.
It may also be assumed that the Sandiganbayan would have jurisdiction to determine whether the
PCGG or any particular official thereof may be held liable in damages to a private person injured by
acts of such member. It would seem constitutionally offensive to suppose that a member or staff
member of the PCGG could not be required to testify before the Sandiganbayan or that such
members were exempted from complying with orders of this Court.

Turning, finally, to Section No. 10 of the majority opinion, the information there set out is, of course,
impressive and heartening; it is, however, at once obiter and gratis. Neither the magnitude of the
figures nor the use of phrases such as "funds turned over to the treasury" and "other recovered
funds" should obscure the fact that the Sandiganbayan still has to rule that all these funds and
assets do constitute "ill-gotten wealth" of Mr. Marcos and his associates. It seems important to bear
in mind that no transfer of ownership to the Republic of the Philippines can legally take place until a
final ruling to that effect is rendered by the Sandiganbayan and, ultimately, this Court.

GUTIERREZ, JR., J., dissenting:

It is with no little trepidation that I write this dissent to one of the valedictory decisions of the Chief
Justice. However, I have carefully gone over the pleadings and pertinent records and am convinced
that this is again one case where the Presidential Commission on Good Government (PCGG) has
stepped beyond legal and constitutional boundaries. I find no alternative but to dissent.

The PCGG has been given unprecedented powers by Executive Orders of a revolutionary
Government and by the Transitory Provisions of the Constitution.

Not content with powers which are more than sufficient to accomplish the purposes for which it was
created, the PCGG has, in various cases now before us, strained and broken beyond what I view as
the unduly generous guidelines of BASECO v. PCGG (150 SCRA 151). The instant case is an
example of how the PCGG may mindlessly encroach on the rights of hapless individuals who are
themselves victims of oppression and make it difficult if not virtually impossible for them to readily
recover what was seized against their will by persons close to the former regime.

Since the PCGG has often acted as if the noble ends for which it was created perhaps justify the
employment of extreme and supra-legal measures, I submit, that the Supreme Court's function is
more to find out how the rights of parties caught by an unfeeling steam-roller may be protected
instead of going out of its way to shield the PCGG from legal suits and other actions. The powerful
PCGG needs no protection or succor from us. Private persons who plead with PCGG for the
maintenance of their rights but who are brusquely turned away are the ones we should assist.

Notwithstanding the Court's decision in this case, the factual antecedents of the controversy will still
have to be determined after a protracted trial before the Sandiganbayan. However, by calling the
petitioner's picturesque (but illusive) presentation as "more than prima facie evidence," the majority
opinion might give the Sandiganbayan the wrong impression that said submissions indeed represent
the facts. I urge that this is not so. The facts are still to be established.

We had occasion to look into the beginnings of this case in 1984 in G.R. No. 67180, Glorious Sun
Fashion Garments Manufacturing Co. v. Garments and Textile Export Board (GTEB), et al.

Glorious Sun started with a P600,000.00 capitalization in 1977. It has steadfastly contended that far
from salting dollars abroad, it invested every available centavo of its earnings in expanding its export
potentials such that by 1983 its capital was already P9,500,000.00. The private respondents in the
petition now before us owned 40% of the shares of stock while 60% was owned by the Nemesio Co
group.
By 1983, Glorious Sun was exporting more than 309,000 dozens of garments valued at
US$19,900,000.00 annually. It was employing more than 3,000 workers. As the second biggest
garment exporter of the Philippines, covetous eyes fell upon it. Glorious Sun's lifelines were choked
(to use the Solicitor General's words) by the GTEB under then Minister Roberto V. Ongpin which
cancelled its export quotas, authority to engage in exports, and license to maintain bonded
warehouses in order, it now appears, to give opportunity to certain parties to acquire the business.

I participated in the deliberations and hearings of the Glorious Sun case in 1984 and I recall that
there was not the slightest scintilla of evidence to support the charges of dollar salting made by
GTEB. A scrap of yellow pad paper on which were pencilled a few computations and with nothing to
support them, a graph of import prices of four local importers Identified only by letters, and another
piece of paper with supposed 1983 prices of fabrics were the only "proof" that the respondent
Minister with all the power (he was issuing warrants of arrest) and resources at his command could
produce before the Court. So patently arbitrary was the finding of dollars salting that it would have
been easy for the First Division of the Court to uphold the exporter's rights. Unfortunately, Glorious
Sun in an act of business "prudence" and possibly worried that retaliatory acts would be taken
against its stockholders' other firms and enterprises decided to withdraw the petition and rely
completely on the GTEB's sense of justice and compassion. It turned out to be a fatal error.

Glorious Sun's export quotas were turned over to hastily organized corporations — the American
Inter-Fashion Co. and De Soleil. The Hongkong businessmen and minority owners Glorious Sun
were allowed to hold 33% of the stocks of these two corporations while 67% was given, according to
PCGG, to a daughter and crony of then President Marcos.

Hence, the PCGG freeze orders on the two corporations.

If the PCGG investigate action were solely against the 67% allegedly misappropriated by a Marcos
daughter and a Marcos crony, I will have no hesitation in concurring with the majority opinion that
this is a case where exclusive jurisdiction over all incidents is vested in the Sandiganbayan.

Unfortunately, the issues are not that simplistic. The respondents as well as the so-called
"interjector" are not cronies.

What is the recourse of the poor victims whose properties were seized on charges so hastily
trumped up that not a semblance of due process appears in the records?

Not only were the export quotas and business licenses cancelled but millions of pesos worth of
machines and physical plant were unceremoniously confiscated. No compensation was given and
no rentals are now paid for the use of manufacturing facilities which are not owned by the two new
corporations, which have never appeared in their balance sheets as assets, and which the two new
corporations have clearly never claimed. Why should we not allow the owners to use summary
remedies for acquiring possession, assuming that the issue of ownership has to be resolved
somewhere else? I feel this issue is not exclusive for the Sandiganbayan.

There is nothing in the records to show that the members of the Nemesio Co group are tainted with
the slightest color of cronyism. They can only be victims of the illegal acquisition charged in CC No.
0002, PCGG-3 before the Sandiganbayan, not malefactors who spirited away public funds or
properties. They are not parties and have no standing in a recovery of illegal wealth case before the
Sandiganbayan.

If citizens similarly situated as the members of the Nemesio Co group are summarily shunted aside
and even maligned when they plead with the PCGG for the return of their properties, why should not
regular courts have jurisdiction over the issues they raise? How can private persons file an action
with the anti-graft court private parties who took away their quotas and factories? Why should the
PCGG be immune from suit where the complainants insist that it continues the illegal seizure
inflicted by the GTEB, the Marcos daughter and the Marcos crony?

If the PCGG keeps flip-flopping, promising to pay rent at one time, then reneging on the promise,
only to reiterate it again, to which court should the victims apply? If the owners sue the PCGG
officers-in-charge who mismanage their firms and lead them to destruction, why should the former
not seek redress before regular courts familiar with the handling of these types of grievances against
government action? Do the owners have to wait for years while the Sandiganbayan and the
Tanodbayan wade through all the illegal wealth cases before they can hope for redress for injustices
committed during a past regime.?

Under the sweeping declaration of the majority opinion, everything – including issues which have
nothing to do with cronyism or illegal acquisition of wealth but where alleged cronies or members of
the "family" are somehow involved – must go to the Sandiganbayan.

I have the highest respect for the Chief Justice and the other members of the Court but I regret most
sincerely that I cannot join them in such an artless and simplistic approach.

The private respondents in this petition are foreign nationals but they, too, have rights. As foreign
investors, they have cast their lot with us in our financial travails and our hopes for a better
tomorrow. They claim that owning only 33% of the two corporations on paper, in truth they solely and
exclusively financed the operations of the garment firms. They point out that De Soleil and American
Inter-Fashion do not own any assets except the export quotas. All machinery, equipment, and
leasehold rights are owned by Glorious Sun. Inspite of the injustices perpetrated by the previous
regime, the private respondent to the 3,000 employees, and tried their best not to allow any
disruptions and to keep the corporations alive. As far as I can gather from the records, the private
respondents have not been charged before the Sandiganbayan for anything. They have no standing
there.

The private respondents are only trying to protect their proprietary rights against what they perceive
are arbitrary PCGG incursions when they went to the civil courts. I must again stress that no illegal
wealth cases have been brought against them. The civil suit they filed with the Pasig Regional Trial
Court is simply to annul the joint venture agreement between local investors of American Inter-
Fashion and the private respondents on the ground of vitiated consent. It has nothing to do with
plundered wealth, organized pillage, or sequestration of ill-gotten wealth. Like the group of Nemesio
Co, the private respondents also profess to be victims. They charge the OIC appointed by the PCGG
with anomalies, including irresponsible, capricious, and arbitrary acts (See pp. 16-21 of the
respondents' April 3, 1987 Comments). Why do they have to be haled and dragged before the
Sandiganbayan when they are the complainants in an annulment of contract case and not the
defendants?

The PCGG may be a powerful agency of government but in cases not involving its basic functions, I
believe it is not above or beyond the jurisdiction of regular courts of justice. I continue to have great
faith in our Regional Trial Courts and in the Court of Appeals.

According to the majority opinion, the PCGG, in the exercise of quasi-judicial functions is co-equal
with regional trial courts. I am afraid that such an all-embracing dictum is fraught with dangerous
implications. In the two years we have reviewed PCGG actions, I have yet to see the PCGG
deliberately avoid questionable shortcuts or studiedly apply the fine points and the established
principles of investigative due process. For this reason, it is better reined in rather than emboldened
by a too expansive definition of its powers.

The PCGG is an investigator and prosecutor, not a judge. It is not a quasi-judicial tribunal. More
appropriate is the majority opinion in BASECO V. PCGG (supra) where the Court stated:

PCGG not a "Judge": General Functions

It should also by now be reasonably evident from what has thus far been said that
the PCGG is not, and was never intended to act as, a judge. Its general function is to
conduct investigations in order to collect evidence establishing instances of 'ill-gotten
wealth;' issue sequestration, and such orders as may be warranted by the evidence
thus collected and as may be necessary to preserve and conserve the assets of
which it takes custody and control and prevent their disappearance, loss or
dissipation; and eventually file and prosecute in the proper court of competent
jurisdiction all cases investigated by it as may be warranted by is findings. It does not
try and decide, or hear and determine, or adjudicate with any character of finality or
compulsion, cases involving the essential issue of whether or not property should be
forfeited and transferred to the State because 'ill-gotten' within the meaning of the
Constitution and the executive orders. This function is reserved to the designated
court, in this case, the Sandiganbayan. (Ex. Ord. No. 14). There can therefore be no
serious regard accorded to the accusation, leveled by BASECO, (Rollo, pp. 695-697)
that the PCGG plays the perfidious role of prosecutor and judge at the same time.
(Id. p. 218)

It is the Sandiganbayan and not the PCGG which should be equated with courts of justice.

I share with all right thinking Filipinos the hope that the PCGG succeeds in its vital but unenviably
difficult function of ferreting out and recovering ill-gotten wealth through courts of justice. Needles to
say, only legitimate and praiseworthy procedures, must, of course, be applied in this task. Perhaps
even more important than the recovery of much-needed money is our standing true by principles of
due process, fair play, and other aspects of civil liberties.

I am not privy to the methods used in the acquisition, or the motivations behind the surrender, of the
properties such as casino funds, surrendered lands, SBTC cash items, etc., mentioned in pages 28-
30 of the majority opinion. Since the PCGG accomplishments, according to the Court, are only the
tip of the iceberg and there must be much more to come, the report is indeed impressive. However, I
wonder if encomiums are appropriate in a court decision at this time. Granting that the PCGG has
done such a great job in the two years of its existence, I feel that the dispensing of commendations
should be left to the Press Secretary, independent media, or public opinion. The trial of the illegal
wealth cases has not even started. The Sandiganbayan decisions on these cases will undoubtedly
be elevated to us. I am sorry and I regret very much my inability to join the rest of the Court in
prematurely singing Hallelujahs for the Presidential Commission on Good Government.

I, therefore, register my dissent and vote to DISMISS the instant petition.

Footnotes

* Infra, at pages 5-6 hereof,


1 Title of Executive Order #2 issued on March 12, 1986.

2 Executive Order No. 14, sec, 2, issued on May 7, 1986.

3 P.D. No. 1606, sec. 7 provides that "decisions and final orders [of the
Sandiganbayan] shall be subject to review on certiorari by the Supreme Court in
accordance with Rule 45 of the Rules of Court. "

4 Executive Order No. 1, section 2(a).

5 Isagani A. Cruz, J. separate opinion in Baseco vs. PCGG, 150 SCRA 181, 258.

6 Idem, at page 243.

7 Executive Order No. 1 sec. 3.

8 See fn. 5, quoting Executive Order No. L- sec. 3 (e) to (h).

9 Proc. No. 3, March 25, 1986.

10 Idem, Art. II.

11 Art. XVIII, sec. 26.

12 National Electrification Administration vs. Mendoza, 138 SCRA 632.

12-a 19 SCRA 130.

13 Baseco vs. PCGG, writer's separate opinion, 150 SCRA at p. 249.

14 Executive Order No. 1, first whereas clause.

15 Pambujan Sur United Mine Workers v Samar Mining Co., Inc., 94 Phil. 932, 941
(1954).

16 113 SCRA 52, 56 (1982).

17 Art, XVIII, sec. 26, Constitution.

18 Rollo, pp. 257-281, emphasis supplied.

19 As per Supreme Court Resolution of August 20, 1984 reading in part thus: "G.R.
No. 67180 (Glorious Sun Fashion Garments Manufacture and Textile Export Board,
etc., et al.).— The withdrawal of the petition in this case filed by Attys. Barredo,
Reyno and Tomacruz, counsel for petitioner, is GRANTED, ..."

20 Rollo, pp. 274-275.

21 Chief Justice Taney, cited in Morfe v. Mutuc, 22 SCRA 424.


22 See Primicias v. Fugoso, 80 Phil. 71; Ignacio v. Elas, 55 O.G. 2162.

23 Churchill v. Raffery, 32 Phil. 580.

24 Bernas, Primer on the 1973 Constitution, p. 32, 1983 ed.

25 Churchill v. Raffery, supra.

26 AMJUR 2d, Constitutional Law, Secs. 420 and 370.

27 Rollo, p. 284, et seq.

Teehankee, C.J., concurring:

** In immediately executory decisions, no motion for extension of time to file a motion


for reconsideration shall be granted.

** For an analogous case, see Iligan vs. Enrile, 139 SCRA 349, 368.
13) Padua vs Ranada

THIRD DIVISION

[G.R. No. 141949. October 14, 2002]

CEFERINO PADUA, petitioner, vs. HON. SANTIAGO RANADA,


PRESIDING JUDGE OF MAKATI, RTC, BRANCH 137, PHILIPPINE
NATIONAL CONSTRUCTION CORP., TOLL REGULATORY
BOARD, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
and REPUBLIC OF THE PHILIPPINES, respondents.

[G.R. No. 151108. October 14, 2002]

EDUARDO C. ZIALCITA, petitioner, vs. TOLL REGULATORY BOARD


AND CITRA METRO MANILA TOLLWAYS
CORPORATION, respondents.

DECISION
SANDOVAL-GUTIERREZ, J.:

The focal point upon which these two consolidated cases converge is whether
Resolution No. 2001-89 issued by the Toll Regulatory Board (TRB) is valid.
A brief narration of the factual backdrop is imperative, thus:
On November 9, 2001, the TRB issued Resolution No. 2001-89 authorizing
provisional toll rate adjustments at the Metro Manila Skyway, effective January 1,
2002,[1] thus:

NOW THEREFORE, it is RESOLVED, as it is hereby RESOLVED:

1. That in view of urgent public interest, the Board hereby GRANTS to the Metro
Manila Skyway Project, Provisional Relief in accordance with Rule 10, Section 3 of
the Rules of Practice and Procedure Governing Hearing before the Toll Regulatory
Board which states, among others that the Board may grant (provisional relief)in its
own initiativewithout prejudice to the final decision after completion of the hearing;

2. That the Provisional Relief shall be in form of an interim toll rate adjustment in
accordance with Section 7.04(3) of the Supplemental Toll Operation Agreement,
dated November 27, 1995, referring to Interim Adjustments in Toll Rates upon the
occurrence of a significant currency devaluation:

Be APPROVED, as it is hereby APPROVED.

RESOLVED FURTHER, as it is hereby RESOLVED:

That the Provisional Toll Rates, which are not to exceed the following:

Unrounded Toll Toll Rates for Implementation


Section
Rates
CLASS 1 CLASS 2 CLASS 3

Elevated Portion 75.00 75.00 150.00 225.00

At-Grade
Portion
Magallanes to 19.35 19.50 38.50 58.00
Bicutan
Bicutan to Sucat 11.21 11.00 22.50 34.00

Sucat to Alabang 10.99 11.00 21.00 32.50

* includes C5 entry/exit and Merville exit.

For implementation starting January 1, 2002 after its publication once a week for three
(3) consecutive weeks in a newspaper of general circulation and that said Provisional
Toll Rate Increase shall remain in effect until such time that the TRB Board has
determined otherwise:

Be APPROVED as it is hereby APPROVED.

RESOLVED FURTHERMORE, as it is hereby RESOLVED that the Provisional


Toll Rates be implemented in two (2) stages in accordance with the following
schedule:

Toll Rates for Implementation For


Unrounded Toll
Class 1 as Reference
Rates as
Section Maximum for
One (1) Year
JANUARY 1, JULY 1,
2002 to JUNE 2002 to
30, 2002
DECEMBER
31, 2002

Elevated Portion 75.00 65.00 75.00

At-Grade Portion

Magallanes to 19.35 15.00 20.00


Bicutan
Bicutan to Sucat 11.21 9.00 11.00

Sucat to Alabang 10.99 9.00 11.00

PROVIDED that the recovery of the sum from the interim rate adjustment shall be
applied starting the year 2003.

APPROVED as it is hereby APPROVED.

On December 17, 24 and 31, 2001, the above Resolution approving provisional toll
rate adjustments was published in the newspapers of general circulation.[2]
Tracing back the events that led to the issuance of the said Resolution, it appears
that on February 27, 2001 the Citra Metro Manila Tollways Corporation (CITRA) filed
with the TRB an application for an interim adjustment of the toll rates at the Metro
Manila Skyway Project Stage 1.[3] CITRA moored its petition on the provisions of the
Supplemental Toll Operation Agreement (STOA),[4] authorizing it, as the investor, to
apply for and if warranted, to be granted an interim adjustment of toll rates in the event
of a significant currency devaluation. The relevant portions of the STOA read:
a. The Investor and/or the Operator shall be entitled to apply for and if warranted, to be
granted an interim adjustment of Toll Rates upon the occurrence of any of the
following events:

xxxxxx

(ii) a significant currency devaluation

xxxxxx

(i) A currency devaluation shall be deemed significant if it results in a depreciation of


the value of the Philippine peso relative to the US dollar by at least 10%. For
purposes hereof the exchange rate between the Philippine peso and the US dollar
which shall be applicable shall be the exchange rate between the above mentioned
currencies in effect as of the date of approval of the prevailing preceding Toll Rate.
(ii) The Investors right to apply for an interim Toll Rate adjustment under section 7.04
(3) (a) (ii) shall be effective only while any Financing is outstanding and have not yet
been paid in full.

xxxxxx

(iv) An interim adjustment in Toll Rate shall be considered such amount as may be
required to provide interim relief to the Investor from a substantial increase in debt-
service burden resulting from the devaluation.[5]
Claiming that the peso exchange rate to a U.S. dollar had devaluated from
P26.1671 in 1995 to P48.00 in 2000, CITRA alleged that there was a compelling need
for the increase of the toll rates to meet the loan obligations of the Project and the
substantial increase in debt-service burden.
Due to heavy opposition, CITRAs petition remained unresolved. This prompted
CITRA to file on October 9, 2001 an Urgent Motion for Provisional Approval, [6] this time,
invoking Section 3, Rule 10 of the Rules of Practice and Procedure Governing Hearing
Before the Toll Regulatory Board (TRB Rules of Procedure) which provides:

SECTION 3. Provisional Relief. Upon the filing of an application or petition for the
approval of the initial toll rate or toll rate adjustment, or at any stage, thereafter, the
Board may grant on motion of the pleader or in its own initiative, the relief
prayed for without prejudice to a final decision after completion of the hearing
should the Board find that the pleading, together with the affidavits and supporting
documents attached thereto and such additional evidence as may have been requested
and presented, substantially support the provisional order; Provided: That the Board
may, motu proprio, continue to issue orders or grant relief in the exercise of its
powers of general supervision under existing laws. Provided: Finally, that pending
finality of the decision, the Board may require the Petitioner to deposit in whole or in
part in escrow the provisionally approved adjustment or initial toll rates. (Emphasis
supplied)

On October 30, 2001, CITRA moved to withdraw[7] its Urgent Motion for Provisional
Approval without prejudice to its right to seek or be granted provisional relief under the
above-quoted provisions of the TRB Rules of Procedure, obviously, referring to the
power of the Board to act on its own initiative.
On November 7, 2001, CITRA wrote a letter[8] to TRB expressing its concern over
the undue delay in the proceeding, stressing that any further setback would bring the
Projects financial condition, as well as the Philippine banking system, to a total
collapse.CITRA recounted that out of the US$354 million funding from creditors, two-
thirds (2/3) thereof came from the Philippine banks and financial institutions, such as the
Landbank of the Philippines and the Government Service Insurance Services. Thus,
CITRA requested TRB to find a timely solution to its predicament.
On November 9, 2001, TRB granted CITRAs motion to withdraw[9] the Urgent Motion
for Provisional Approval and, at the same time, issued Resolution No. 2001-89,[10] earlier
quoted.
Hence, petitioners Ceferino Padua and Eduardo Zialcita assail before this Court the
validity and legality of TRB Resolution No. 2001-89.
Petitioner Ceferino Padua, as a toll payer, filed an Urgent Motion for a Temporary
Restraining Order to Stop Arbitrary Toll Fee Increases[11] in G.R. No. 141949,[12] a petition
for mandamus earlier filed by him. In that petition, Padua seeks to compel respondent
Judge Santiago Ranada of the Regional Trial Court, Branch 137, Makati City, to issue a
writ of execution for the enforcement of the Court of Appeals Decision dated August 4,
1989 in CA-G.R. SP No. 13235. In its Decision, the Court of Appeals ordered the
exclusion of certain portions of the expressways (from Villamor Air Base to Alabang in
the South, and from Balintawak to Tabang in the North) from the franchise of the PNCC.
In his urgent motion, petitioner Padua claims that: (1) Resolution No. 2001-89 was
issued without the required publication and in violation of due process; (2) alone, TRB
Executive Director Jaime S. Dumlao, Jr., could not authorize the provisional toll rate
adjustments because the TRB is a collegial body; and (3) CITRA has no standing to
apply for a toll fee increase since it is an investor and not a franchisee-operator.
On January 4, 2002, petitioner Padua filed a Supplemental Urgent Motion for a TRO
against Toll Fee Increases,[13] arguing further that: (1) Resolution 2001-89 refers
exclusively to the Metro Manila Skyway Project, hence, there is no legal basis for the
imposition of the increased rate at the at-grade portions; (2) Resolution No. 2001-89
was issued without basis considering that while it was signed by three (3) of the five
members of the TRB, none of them actually attended the hearing; and 3) the
computation of the rate adjustment under the STOA is inconsistent with the rate
adjustment formula under Presidential Decree No. 1894.[14]
On January 10, 2002, the Office of the Solicitor General (OSG) filed, in behalf of
public respondent TRB, Philippine National Construction Corporation (PNCC),
Department of Public Works and Highways (DPWH) and Judge Ranada, a Consolidated
Comment[15]contending that: (1) the TRB has the exclusive jurisdiction over all matters
relating to toll rates; (2) Resolution No. 2001-89 covers both the Skyway and the at-
grade level of the South Luzon Expressway as provided under the STOA; (3) that while
Resolution No. 2001-89 does not mention any factual basis to justify its issuance,
however, it does not mean that TRB's finding of facts is not supported by evidence;
and (4) petitioner Padua cannot assail the validity of the STOA because he is not a
party thereto.
Upon the other hand, on January 9, 2002, petitioner Eduardo Zialcita, as a taxpayer
and as Congressman of Paraaque City, filed the present petition for prohibition [16] with
prayer for a temporary restraining order and/or writ of preliminary injunction against TRB
and CITRA, docketed as G.R. No. 151108, impugning the same Resolution No. 2001-
89.
Petitioner Zialcita asserts that the provisional toll rate adjustments are exorbitant
and that the TRB violated its own Charter, Presidential Decree No. 1112,[17] when it
promulgated Resolution No. 2001-89 without the benefit of any public hearing. He also
maintains that the TRB violated the Constitution when it did not express clearly and
distinctly the facts and the law on which Resolution No. 2001-89 was based. And lastly,
he claims that Section 3, Rule 10 of the TRB Rules of Procedure is not sanctioned by
P.D. No. 1112.
Private respondent CITRA, in its comment[18] on Congressman Zialcitas petition,
counters that: (1) the TRB has primary administrative jurisdiction over all matters
relating to toll rates; (2) prohibition is an inappropriate remedy because its function is to
restrain acts about to be done and not acts already accomplished; (3) Resolution No.
2001-89 was issued in accordance with law; (4) Section 3, Rule 10 of the TRB Rules is
constitutional; and (5) private respondent and the Republic of the Philippines would
suffer more irreparable damages than petitioner.
The TRB, through the OSG, filed a separate comment[19] reiterating the same
arguments raised by private respondent CITRA.
On January 11, 2002, this Court resolved to consolidate the instant petitions, G.R.
No. 141949 and G.R. No. 151108.[20]
We rule for the respondents.
In assailing Resolution No. 2001-89, petitioners came to us via two unconventional
remedies one is an urgent motion for a TRO to stop arbitrary toll fee increases; and the
other is a petition for prohibition. Unfortunately, both are procedurally impermissible.

Petitioner Paduas motion is a leap to a legal contest of different dimension. As


previously stated, G.R. No. 141949 is a petition for mandamus seeking to compel
respondent Judge Ranada to issue a writ of execution for the enforcement of the Court
of Appeals Decision dated August 4, 1989 in CA-G.R. SP No. 13235. The issue therein
is whether the application for a writ of execution should be by a mere motion or by an
action for revival of judgment. Thus, for petitioner Padua to suddenly interject in the
same petition the issue of whether Resolution No. 2001-89 is valid is to drag this Court
to his web of legal convolution. Courts cannot, as a case progresses, resolve the
intrinsic merit of every issue that comes along its way, particularly those which bear no
relevance to the resolution of the case.
Certainly, petitioner Paduas recourse in challenging the validity of TRB Resolution
No. 2001-89 should have been to institute an action, separate and independent from
G.R. No. 141949.

II
The remedy of prohibition initiated by petitioner Zialcita in G.R. No. 151108 also
suffers several infirmities. Initially, it violates the twin doctrine of primary administrative
jurisdiction and non-exhaustion of administrative remedies.
P.D. No. 1112 explicitly provides that the decisions of the TRB on petitions for the
increase of toll rate shall be appealable to the Office of the President within ten (10)
days from the promulgation thereof.[21] P.D. No. 1894 reiterates this instruction and
further provides:

SECTION 9. The GRANTEE shall have the right and authority to adjust any existing
toll being charged the users of the Expressways under the following guidelines:

xxxxxx

c) Any interested Expressways user shall have the right to file, within a period of
ninety (90) days after the date of publication of the adjusted toll rate (s), a petition
with the Toll Regulatory Board for a review of the adjusted toll rate
(s); provided, however, that notwithstanding the filing of such petition and the
pendency of the resolution thereof, the adjusted toll shall be enforceable and
collectible by the GRANTEE effective on the first day of January in accordance with
the immediately preceding paragraph.

xxxxxx

e) Decisions of the Toll Regulatory Board on petitions for review of adjusted toll shall
be appealable to the Office of the President within ten (10) days from the
promulgation thereof.

These same provisions are incorporated in the TRB Rules of Procedure, particularly
in Section 6, Rule 5 and Section 1, Rule 12 thereof.[22]
Obviously, the laws and the TRB Rules of Procedure have provided the remedies of
an interested Expressways user.[23] The initial proper recourse is to file a petition for
review of the adjusted toll rates with the TRB. The need for a prior resort to this body is
with reason. The TRB, as the agency assigned to supervise the collection of toll fees
and the operation of toll facilities, has the necessary expertise, training and skills to
judiciously decide matters of this kind. As may be gleaned from the petition, the main
thrust of petitioner Zialcitas argument is that the provisional toll rate adjustments are
exorbitant, oppressive, onerous and unconscionable. This is obviously a
question of fact requiring knowledge of the formula used and the factors
considered in determining the assailed rates. Definitely, this task is within the
province of the TRB.
We take cognizance of the wealth of jurisprudence on the doctrine of primary
administrative jurisdiction and exhaustion of administrative remedies. In this era of
clogged court dockets, the need for specialized administrative boards or commissions
with the special knowledge, experience and capability to hear and determine promptly
disputes on technical matters or intricate questions of facts, subject to judicial review in
case of grave abuse of discretion, is indispensable. Between the power lodged in an
administrative body and a court, the unmistakable trend is to refer it to the
former."[24] In Industrial Enterprises, Inc. vs. Court of Appeals,[25] we ruled:

x x x, if the case is such that its determination requires the expertise, specialized skills
and knowledge of the proper administrative bodies because technical matters or
intricate questions of facts are involved, then relief must first be obtained in an
administrative proceeding before a remedy will be supplied by the courts even though
the matter is within the proper jurisdiction of a court.

Moreover, petitioner Zialcitas resort to prohibition is intrinsically inappropriate. It


bears stressing that the office of this remedy is not to correct errors of judgment but to
prevent or restrain usurpation of jurisdiction or authority by inferior tribunals and to
compel them to observe the limitation of their jurisdictions. G.R. No. 151108, while
designated as a petition for prohibition, has for its object the setting aside of
Resolution No. 2001-89 on the ground that it was issued without prior notice,
hearing and publication and that the provisional toll rate adjustments are
exorbitant. This is not the proper subject of prohibition because as long as the inferior
court, tribunal or board has jurisdiction over the person and subject matter of the
controversy, the writ will not lie to correct errors and irregularities in procedure, or
to prevent an erroneous decision or an enforcement of an erroneous judgment. And
even in cases of encroachment, usurpation, and improper assumption of jurisdiction, the
writ will not issue where an adequate and applicable remedy by appeal, writ or
error, certiorari, or other prescribed methods of review are available.[26] In this case,
petitioner Zialcita should have sought a review of the assailed Resolution before the
TRB.

III

Even granting that petitioners recourse to the instant remedies is in order, still, we
cannot rule in their favor.
For one, it is not true that the provisional toll rate adjustments were not published
prior to its implementation on January 1, 2002. Records show that they were published
on December 17, 24 and 31, 2001[27] in three newspapers of general circulation,
particularly the Philippine Star, Philippine Daily Inquirer and The Manila Bulletin. Surely,
such publications sufficiently complied with Section 5 of P.D. No. 1112 which mandates
that no new rates shall be collected unless published in a newspaper of general
publication at least once a week for three consecutive weeks. At any rate, it must
be pointed out that under Letter of Instruction No. 1334-A,[28] the TRB may grant and
issue ex-parte to any petitioner, without need of notice, publication or
hearing, provisional authority to collect, pending hearing and decision on the merits of
the petition, the increase in rates prayed for or such lesser amount as the TRB may in
its discretion provisionally grant. That LOI No. 1334-A has the force and effect of law
finds support in a catena of cases decreeing that all proclamations, orders,
decrees, instructions, and acts promulgated, issued, or done by the former President
(Ferdinand E. Marcos) are part of the law of the land, and shall remain valid, legal,
binding, and effective, unless modified, revoked or superseded by subsequent
proclamations, orders, decrees, instructions, or other acts of the
President.[29] In Association of Small Landowners in the Philippines, Inc. vs. Secretary of
Agrarian Reform,[30] this Court held:

The Court wryly observes that during the past dictatorship, every presidential
issuance, by whatever name it was called, had the force and effect of law because it
came from President Marcos. Such are the ways of despots. Hence, it is futile to
argue, as the petitioners do in G.R. No. 79744, that LOI 474 could not have repealed
P.D. No. 27 because the former was only a letter of instruction. The important thing
is that it was issued by President Marcos, whose word was law during that time.
(Emphasis supplied)

For another, it is not true that it was TRB Executive Director Dumlao, Jr. alone who
issued Resolution No. 2001-89. The Resolution itself contains the signature of the four
TRB Directors, namely, Simeon A. Datumanong, Emmanuel P. Bonoan, Ruben S.
Reinoso, Jr. and Mario K. Espinosa.[31] Petitioner Padua would argue that while these
Directors signed the Resolution, none of them personally attended the hearing. This
argument is misplaced. Under our jurisprudence, an administrative agency may employ
other persons, such as a hearing officer, examiner or investigator, to receive evidence,
conduct hearing and make reports, on the basis of which the agency shall render its
decision. Such a procedure is a practical necessity.[32] Thus, in Mollaneda vs.
Umacob,[33] we ruled:

x x x At any rate, it cannot be gainsaid that the term administrative body or


agency includes the subordinate officials upon whose hand the body or agency
delegates a portion of its authority. Included therein are the hearing officers
through whose eyes and ears the administrative body or agency observes the
demeanor, conduct and attitude of the witnesses and listens to their testimonies.

It must be emphasized that the appointment of competent officers to hear and receive
evidence is commonly resorted to by administrative bodies or agencies in the interest
of an orderly and efficient disposition of administrative cases. x x x

x x x Corollarily, in a catena of cases, this Court laid down the cardinal requirements
of due process in administrative proceedings, one of which is that the tribunal or body
or any of its judges must act on its or his own independent consideration of the law
and facts of the controversy, and not simply accept the views of a subordinate. Thus,
it is logical to say that this mandate was rendered precisely to ensure that in
cases where the hearing or reception of evidence is assigned to a subordinate, the
body or agency shall not merely rely on his recommendation but instead shall
personally weigh and assess the evidence which the said subordinate has
gathered.

Be that as it may, we must stress that the TRBs authority to grant provisional toll
rate adjustments does not require the conduct of a hearing. Pertinent laws and
jurisprudence support this conclusion.
It may be recalled that Former President Ferdinand E. Marcos promulgated P.D.
No. 1112 creating the TRB on March 31, 1977. The end in view was to authorize the
collection of toll fees for the use of certain public improvements in order to attract private
sector investment in the government infrastructure projects. The TRB was tasked to
supervise the collection of toll fees and the operation of toll facilities. One of its powers
is to issue, modify and promulgate from time to time the rates of toll that will be
charged the direct users of toll facilities and upon notice and hearing, to approve
or disapprove petitions for the increase thereof.[34]
To clarify the intent of P.D. No. 1112 as to the extent of the TRBs power, [35] Former
President Marcos further issued LOI No. 1334-A expressly allowing the TRB to
grant ex-parte provisional or temporary increase in toll rates, thus:

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the


Philippines, by virtue of the powers vested in me by the Constitution, do hereby
direct, order and instruct the Toll Regulatory Board to grant and issue ex-
parte to any petitioner, without need of notice, publication or hearing,
provisional authority to collect, pending hearing of and decision on the merits of
such petition, the increase in rates prayed for or such lesser amount as the Board
may in its discretion provisionally grant, upon (a) a finding that the said petition is
sufficient in form and substance, (b) the submission of an affidavit by the petitioner
showing that the increase in rates substantially conforms to the formula, if any
stipulated in the franchise or toll operation agreement/certificate of the petitioner and
that failure to immediately impose and collect the increase in rates would result in
outright delay or stoppage of urgently needed improvements, expansion or repairs of
toll facilities and/or in great irreparable injury to the petitioner, and (c) the submission
by the petitioner to the Board of a bond, in such amount and from such surety or
sureties and under such terms and conditions as the Board shall fix, to guarantee the
refund of the increase in rates to the affected toll payers in case it is finally
determined, after notice and hearing, that the petitioner is not entitled, in whole or in
part, to the same. Any provisional toll rate increases shall be effective immediately
upon approval without need of publication.

Thereafter, the TRB promulgated as part of its Rules of Procedure, the following
provision:
RULE 5

PROCEDURE FOR APPROVAL OF TOLL RATE

Section 2. Provisional Relief Upon initial findings of the Board that the Petition for
the approval of initial toll rate or the petition for toll rate adjustment is in accordance
with Sections 1 and 2 of Rule 2, Section 2 of Rule 3 and Section 1 of Rule 4 hereof,
the Board within a reasonable time after the filing of the Petition, may in an en banc
decision provisionally approve the initial toll rate or toll rate adjustment, without
the necessity of any notice and hearing.

From the foregoing, it is clear that a hearing is not necessary for the grant of
provisional toll rate adjustment. The language of LOI No. 1334-A is not susceptible of
equivocation. It directs, orders and instructs the TRB to issue provisional toll rates
adjustment ex-parte without the need of notice, hearing and publication. All that is
necessary is that it be issued upon (1) a finding that the main petition is sufficient in
form and substance; (2) the submission of an affidavit showing that the increase in rates
substantially conforms to the formula, if any is stipulated in the franchise or toll
operation agreement, and that failure to immediately impose and collect the increase
in rates would result in great irreparable injury to the petitioner; and (3) the submission
of a bond. Again, whether or not CITRA complied with these requirements is an
issue that must be addressed to the TRB.
The practice is not something peculiar. We have ruled in a number of cases that an
administrative agency may be empowered to approve provisionally, when demanded by
urgent public need, rates of public utilities without a hearing. The reason is easily
discerned from the fact that provisional rates are by their nature temporary and
subject to adjustment in conformity with the definitive rates approved after final
hearing.[36] In Maceda vs. Energy Regulatory Board,[37] we ruled that while the ERB is not
precluded from conducting a hearing on the grant of provisional authority which is of
course, the better procedure however, it can not be stigmatized if it failed to conduct
one. Citing Citizens Alliance for Consumer Protection vs. Energy Regulatory
Board,[38] this Court held:

In the light of Section 8 quoted above, public respondent Board need not even have
conducted formal hearings in these cases prior to issuance of its Order of 14 August
1987 granting a provisional increase of prices. The Board, upon its own discretion
and on the basis of documents and evidence submitted by private respondents,
could have issued an order granting provisional relief immediately upon filing by
private respondents of their respective applications. In this respect, the Court
considers the evidence presented by private respondents in support of their
applications -.i.e., evidence showing that importation costs of petroleum products had
gone up; that the peso had depreciated in value; and that the Oil Price Stabilization
Fund (OPSF) had been depleted as substantial and hence constitutive of at least prima
facie basis for issuance by the Board of a provisional relief order granting an increase
in the prices of petroleum products.

Anent petitioner Paduas contention that CITRA has no standing to apply for a toll
fee increase, suffice it to say that CITRAs right stems from the STOA which was
entered into by no less than the Republic of the Philippines and by the PNCC. Section
7.04 of the STOA provides that the Investor, CITRA, and/or the Operator, PNCC, shall
be entitled to apply for and if warranted, to be granted an interim adjustment of toll
rates in case of force majeure and a significant currency valuation.[39] Now, unless set
aside through proper action, the STOA has the force and effect of law between the
contracting parties, and is entitled to recognition by this Court. [40] On the same breath,
we cannot sustain Paduas contention that the term Metro Manila Skyway Project
excludes the at-grade portions of the South Luzon Expressway considering that under
the same STOA the Metro Manila Skyway includes: (a) the South Metro Manila Skyway,
coupled with the rehabilitated at-grade portion of the South Luzon Expressway, from
Alabang to Quirino Avenue; (b) the Central Metro Manila Skyway, from Quirino Avenue
to A. Bonifacio Avenue; x x x.[41]
Petitioner Zialcita faults the TRB for not stating the facts and the law on which
Resolution No. 2001-89 is based. Petitioner is wrong. Suffice it to state that while
Section 14, Article VIII of the 1987 Constitution provides that no decision shall be
rendered by any court without expressing therein clearly and distinctly the facts and the
law on which it is based, this rule applies only to a decision of a court of justice, not
TRB.[42]
At this point, let it be stressed that we are not passing upon the
reasonableness of the provisional toll rate adjustments. As we have earlier
mentioned, this matter is best addressed to the TRB.

IV

In fine, as what we intimated in Philippine National Construction Corp. vs. Court of


Appeals,[43] we commend petitioners for devoting their time and effort on a matter so
imbued with public interest as in this case. But we can do no better than to brush aside
their chief objections to the provisional toll rate adjustments, for a different approach
would lead this Court astray into the field of factual conflict where its pronouncements
would not rest on solid grounds. Time and again, we have impressed that this Court is
not a trier of facts, more so, in the consideration of an extraordinary remedy of
prohibition where only questions of lack or excess of jurisdiction or grave abuse of
discretion is to be entertained.
And to accord the main petition for mandamus in G.R. No. 141949 the full
deliberation it deserves, we deem it appropriate to discuss its merit on another
occasion. Anyway, G.R. No. 141949 was consolidated with G.R. No. 151108 only by
reason of petitioner Paduas deviant motion assailing Resolution 2001-89. As we have
previously said, the main petition in G.R. No. 141949 presents an entirely different issue
and is set on a different factual landscape.
WHEREFORE, petitioner Paduas Urgent Motion for Temporary Restraining Order
to Stop Arbitrary Toll Fee Increases is DENIED and petitioner Zialcitas Petition for
Prohibition is DISMISSED.
SO ORDERED.
Puno, (Chairman), Corona, and Carpio-Morales, JJ., concur.
Panganiban, J., please see separate opinion.

[1]
Rollo of G.R. No. 141949, pp. 576 578.
[2]
Rollo of G.R. No. 151108, pp. 22-24. See also Rollo of G.R. No. 141949, p. 589.
[3]
On December 12, 2000, CITRA filed a Petition praying that the proposed toll rates adjustment be
approved. In an Order dated February 23, 2001, CITRA was directed to amend the Petition in
order to enable the public and/or the Oppositors to file their comment/ opposition. On February
29, 2001, CITRA filed an Amended Petition. Rollo of G.R. No. 151108, pp. 93-100.
[4]
Entered into on November 27, 1995 by and among the Republic of the Philippines, as grantor, the
Philippine National Construction Corporation (PNCC), as operator, and the CITRA, as investor,
wherein CITRA was vested the primary and exclusive privilege, responsibility and obligation to
design, construct and finance the South Metro Manila Skyway Project and PNCC was vested the
primary and exclusive privilege, responsibility and obligation to operate and finance the said
Project. Rollo of G.R. No.141949, pp.237-505.
[5]
Ibid., pp. 280-281
[6]
Rollo of G.R. No. 151108, pp. 118-124.
[7]
Ibid., p. 125.
[8]
Rollo of G.R. No. 141949, pp. 627-628.
[9]
Ibid., p. 570.
[10]
Supra.
[11]
Dated December 27, 2001, Rollo of G.R. No. 141949, pp. 557-567.
[12]
Dated March 20, 2001, ibid., pp. 8-32.
[13]
Ibid., pp. 571-575.
[14]
AMENDING THE FRANCHISE OF THE PHILIPPINE NATIONAL CONSTRUCTION CORPORATION
TO CONSTRUCT, MAINTAIN AND OPERATE TOLL FACILITIES IN THE NORTH LUZON AND
SOUTH LUZON EXPRESSWAYS TO INCLUDE THE METRO MANILA EXPRESSWAY TO
SERVE AS AN ADDITIONAL ARTERY IN THE TRANSPORTATION OF TRADE AND
COMMERCE IN THE METRO MANILA AREA.
[15]
Rollo of G.R. No. 141949, pp. 584-595.
[16]
Rollo of G.R. No. 151108, pp. 3-13.
[17]
Otherwise known as the Toll Operation Decree, O.G., Vol. 73, No. 24, pp. 5123, 5125.
[18]
Rollo of G.R. No. 151108, pp. 61-81.
[19]
Ibid., pp. 251-263.
[20]
Ibid., pp. 28-29.
[21]
Section 3 of P.D. No. 1112.
[22]
Section 6. Opposition Any interested Expressways user shall have the right to file within a period of
ninety (90) days after the date of publication of the initial or adjusted toll rate(s), a petition with the
Toll Regulatory Board for a review of the adjusted toll rate(s); provided, however, that,
notwithstanding the filing of such petition and the pendency of the resolution thereof, the adjusted
toll shall be enforceable and collectible on the date specified in Section 5 above on the
provisional approval unless otherwise provided by the Board. (Rule 5)
Section 1. Mode and Period A party adversely affected by any decision, order, ruling or resolution of the
Board may, within a period of ten (10) days from notice thereof or within ten (10) days following
the denial of a motion for reconsideration filed within the period to appeal, petition the Office of
the President to review said decision, order, ruling or resolution under Rule 44 of the Rules of
Court. In proper cases, the aggrieved party may avail himself of the petition for certiorari under
Rule 65 of the Rules of Court. (Rule 12)
[23]
To inform the public of the appropriate recourse, the published notice of the provisional toll rates
adjustment carries with it a note stating that the Expressways users has the right to file a petition
for review with the TRB within 90 days after the date of publication. Rollo of G.R. No. 151108,
pp. 22-24.
[24]
Abejo vs. De la Cruz, 149 SCRA 654 (1987).
[25]
184 SCRA 426 (1990)
[26]
Herrera, Remedial Law, 1996 Edition, p. 173; Vergara vs. Rogue, 78 SCRA 312 (1977).
[27]
Supra.
[28]
Issued by Former President Ferdinand E. Marcos on June 21, 1983.
[29]
People vs. Gacott, Jr., 242 SCRA 514 (1995); Legaspi vs. Minister of Finance, 115 SCRA 418
(1982); Aquino vs. Comelec, 62 SCRA 275 (1975).
[30]
175 SCRA 343 (1989).
[31]
Rollo of G.R. No. 141949, p. 578.
[32]
Lupo vs. Administrative Action Board, 190 SCRA 69 (1990).
[33]
G.R. No. 140128, June 6, 2001; See also 67 SCRA 287 (1975); Skyworld Condominium Owners
Association, Inc. vs. Securities and Exchange Commission, 211 SCRA 565 (1992); National
Union of Printing Workers vs. Asia Printing, et al., 99 Phil 589 (1956); Cebu Transit Co. vs.
Jereza, 58 Phil 760 (1933).
[34]
Section 3 of P.D. No. 1112.
[35]
The Whereas Clause of LOI No. 1334-A reads:
"WHEREAS, the Toll Regulatory Board was established pursuant to Presidential Decree No. 1112 to
closely supervise and regulate the operation of toll facilities by the private sector and the
collection of toll fees;
WHEREAS, the Toll Regulatory Board is empowered, among others, to issue, modify and promulgate
from time to time the rates of toll that will be charged the direct users of toll facilities and upon
notice and hearing to approve or disapprove petitions for the increase thereof;
WHEREAS, there is an urgent need to clarify the intent of Presidential Decree No. 1112 since it does not
expressly grant the Toll Regulatory Board authority to grant ex-parte provisional or temporary
increases in toll rates pending notice and hearing of the petition filed with it for increases in toll
rates;
WHEREAS, it is the intent of Presidential Decree No. 1112 that the Toll Regulatory Board shall have the
power and authority to grant ex-parte provisional toll rate increases, pending hearing of and
decision on the merits of the petition for toll rate increases, and that said provisional toll rate
increases shall be effective immediately;
WHEREAS, consistent with the aforesaid intent of Presidential Decree No. 1112, it is in the interest of
motorists in particular and the public in general to provide for a plain, speedy and adequate legal
remedy in cases where, in order to prevent delay or stoppage of urgent improvements or
expansion of toll facilities or to expedite necessary repairs of toll facilities, reasonable
adjustments in existing toll rates need to be immediately implemented."
[36]
Radio Communications of the Philippines vs. National Telecommunications Commission, 184 SCRA
517 (1990)
[37]
192 SCRA 363 (1990).
[38]
162 SCRA 521 (1988)
[39]
STOA, p p. 38-39, Rollo of G.R. No. 141949, pp. 280-281.
[40]
Article 1159 of the Civil Code; Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p.
536.
[41]
STOA, Section 1 (24), p. 7, Rollo of G.R. No. 141949, p. 249.
[42]
Cruz, Philippine Political Law, 1996 Edition, pp. 269, 273; See also Buscayno vs. Enrile, 102 SCRA 7
(1981); Mangca vs. Commission on Elections, 112 SCRA 273; and Dadubo vs. Civil Service
Commission, 223 SCRA 747 (1993).
[43]
228 SCRA 565 (1993)
14) Montemayor vs Bundalian

THIRD DIVISION

[G.R. No. 149335. July 1, 2003]

EDILLO C. MONTEMAYOR, petitioner, vs. LUIS BUNDALIAN,


RONALDO B. ZAMORA, Executive Secretary, Office of the
President, AND GREGORIO R. VIGILAR, Secretary, Department
of Public Works and Highways (DPWH), respondents.

DECISION
PUNO, J.:

In this petition for review on certiorari, petitioner EDILLO C.


MONTEMAYOR assails the Decision of the Court of Appeals, dated April 18,
2001, affirming the decision of the Office of the President in Administrative
Order No. 12 ordering petitioners dismissal as Regional Director of the
Department of Public Works and Highways (DPWH) for unexplained wealth.
Petitioners dismissal originated from an unverified letter-complaint, dated
July 15, 1995, addressed by private respondent LUIS BUNDALIAN to the
Philippine Consulate General in San Francisco, California, U.S.A. Private
respondent accused petitioner, then OIC-Regional Director, Region III, of the
DPWH, of accumulating unexplained wealth, in violation of Section 8 of
Republic Act No. 3019. Private respondent charged that in 1993, petitioner
and his wife purchased a house and lot at 907 North Bel Aire Drive, Burbank,
Los Angeles, California, making a down payment of US$100,000.00. He
further alleged that petitioners in-laws who were living in California had a poor
credit standing due to a number of debts and they could not have purchased
such an expensive property for petitioner and his wife. Private respondent
accused petitioner of amassing wealth from lahar funds and other public
works projects.
Private respondent attached to his letter-complaint the following
documents:
a) a copy of a Grant Deed, dated May 27, 1993, where spouses David and Judith
Tedesco granted the subject property to petitioner and his wife;
b) a copy of the Special Power of Attorney (SPA) executed by petitioner and his wife in
California appointing petitioners sister-in-law Estela D. Fajardo as their attorney-in-
fact, to negotiate and execute all documents and requirements to complete the
purchase of the subject property; and,
c) an excerpt from the newspaper column of Lito A. Catapusan in the Manila Bulletin,
entitled Beatwatch, where it was reported that a low-ranking, multimillionaire DPWH
employee, traveled to Europe and the U.S. with his family, purchased an expensive
house in California, appointed a woman through an SPA to manage the subject
property and had hidden and unexplained wealth in the Philippines and in the U.S.

Accordingly, the letter-complaint and its attached documents were


indorsed by the Philippine Consulate General of San Francisco, California, to
the Philippine Commission Against Graft and Corruption (PCAGC) for [1]

investigation. Petitioner, represented by counsel, submitted his counter-


affidavit before the PCAGC alleging that the real owner of the subject property
was his sister-in-law Estela Fajardo. Petitioner explained that in view of the
unstable condition of government service in 1991, his wife inquired from her
family in the U.S. about their possible emigration to the States. They were
advised by an immigration lawyer that it would be an advantage if they had
real property in the U.S. Fajardo intimated to them that she was interested in
buying a house and lot in Burbank, California, but could not do so at that time
as there was a provision in her mortgage contract prohibiting her to purchase
another property pending full payment of a real estate she earlier acquired in
Palmdale, Los Angeles. Fajardo offered to buy the Burbank property and put
the title in the names of petitioner and his wife to support their emigration
plans and to enable her at the same time to circumvent the prohibition in her
mortgage contract.
Petitioner likewise pointed out that the charge against him was the subject
of similar cases filed before the Ombudsman. He attached to his counter-
[2]

affidavit the Consolidated Investigation Report of the Ombudsman dismissing


[3]

similar charges for insufficiency of evidence.


From May 29, 1996 until March 13, 1997, the PCAGC conducted its own
investigation of the complaint. While petitioner participated in the proceedings
and submitted various pleadings and documents through his counsel, private
respondent-complainant could not be located as his Philippine address could
not be ascertained. In the course of the investigation, the PCAGC repeatedly
required petitioner to submit his Statement of Assets, Liabilities and Net Worth
(SALN), Income Tax Returns (ITRs) and Personal Data Sheet.Petitioner
ignored these directives and submitted only his Service Record. He likewise
adduced in evidence the checks allegedly issued by his sister-in-law to pay for
the house and lot in Burbank, California. When the PCAGC requested the
Deputy Ombudsman for Luzon to furnish it with copies of petitioners SALN
from 1992-1994, it was informed that petitioner failed to file his SALN for those
years.
After the investigation, the PCAGC, in its Report to the Office of the
President, made the following findings: Petitioner purchased a house and lot
in Burbank, California, for US$195,000.00 (or P3.9M at the exchange rate
prevailing in 1993). The sale was evidenced by a Grant Deed. The PCAGC
concluded that the petitioner could not have been able to afford to buy the
property on his annual income of P168,648.00 in 1993 as appearing on his
Service Record. It likewise found petitioners explanation as unusual, largely
unsubstantiated, unbelievable and self-serving. The PCAGC noted that
instead of adducing evidence, petitioners counsel exerted more effort in filing
pleadings and motion to dismiss on the ground of forum shopping. It also took
against petitioner his refusal to submit his SALN and ITR despite the
undertaking made by his counsel which raised the presumption that evidence
willfully suppressed would be adverse if produced. The PCAGC concluded
that as petitioners acquisition of the subject property was manifestly out of
proportion to his salary, it has been unlawfully acquired. Thus, it
recommended petitioners dismissal from service pursuant to Section 8 of R.A.
No. 3019.
On August 24, 1998, the Office of the President, concurring with the
findings and adopting the recommendation of the PCAGC, issued
Administrative Order No. 12, ordering petitioners dismissal from service with
[4]

forfeiture of all government benefits.


Petitioners Motion for Reconsideration was denied. His appeal to the
Court of Appeals was likewise dismissed. [5]

Hence, this petition for review where petitioner raises the following issues
for resolution: first, whether he was denied due process in the investigation
before the PCAGC; second, whether his guilt was proved
by substantial evidence; and, third, whether the earlier dismissal of similar
cases before the Ombudsman rendered the administrative case before the
PCAGC moot and academic.
On the issue of due process, petitioner submits that the PCAGC
committed infractions of the cardinal rules of administrative due process when
it relied on Bundalians unverified letter-complaint. He gripes that his counter-
affidavit should have been given more weight as the unverified complaint
constitutes hearsay evidence. Moreover, petitioner insists that in ruling against
him, the PCAGC failed to respect his right to confront and cross-examine the
complainant as the latter never appeared in any of the hearings before the
PCAGC nor did he send a representative therein.
We find no merit in his contentions. The essence of due process in
administrative proceedings is the opportunity to explain ones side or seek a
reconsideration of the action or ruling complained of. As long as the parties
are given the opportunity to be heard before judgment is rendered, the
demands of due process are sufficiently met. In the case at bar, the PCAGC
[6]

exerted efforts to notify the complainant of the proceedings but his Philippine
residence could not be located. Be that as it may, petitioner cannot argue
[7]

that he was deprived of due process because he failed to confront and cross-
examine the complainant. Petitioner voluntarily submitted to the jurisdiction of
the PCAGC by participating in the proceedings before it. He was duly
represented by counsel. He filed his counter-affidavit, submitted documentary
evidence, attended the hearings, moved for a reconsideration of
Administrative Order No. 12 issued by the President and eventually filed his
appeal before the Court of Appeals. His active participation in every step of
the investigation effectively removed any badge of procedural deficiency, if
there was any, and satisfied the due process requirement. He cannot now be
allowed to challenge the procedure adopted by the PCAGC in the
investigation.
[8]

Neither can we sustain petitioners contention that the charge against him
was unsupported by substantial evidence as it was contained in an unverified
complaint. The lack of verification of the administrative complaint and the non-
appearance of the complainant at the investigation did not divest the PCAGC
of its authority to investigate the charge of unexplained wealth. Under Section
3 of Executive Order No. 151 creating the PCAGC, complaints involving graft
and corruption may be filed before it in any form or manner against
presidential appointees in the executive department. Indeed, it is not totally
uncommon that a government agency is given a wide latitude in the scope
and exercise of its investigative powers. The Ombudsman, under the
Constitution, is directed to act on any complaint likewise filed in any form and
manner concerning official acts or omissions. The Court Administrator of this
Court investigates and takes cognizance of, not only unverified, but even
anonymous complaints filed against court employees or officials for violation
of the Code of Ethical Conduct. This policy has been adopted in line with the
serious effort of the government to minimize, if not eradicate, graft and
corruption in the service.
It is well to remember that in administrative proceedings, technical rules of
procedure and evidence are not strictly applied. Administrative due process
cannot be fully equated with due process in its strict judicial sense for it is
enough that the party is given the chance to be heard before the case against
him is decided. This was afforded to the petitioner in the case at bar.
[9]
On the second issue, there is a need to lay down the basic principles in
administrative investigations. First, the burden is on the complainant to prove
by substantial evidence the allegations in his complaint. Substantial [10]

evidence is more than a mere scintilla of evidence. It means such relevant


evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds equally reasonable might conceivably opine
otherwise. Second, in reviewing administrative decisions of the executive
[11]

branch of the government, the findings of facts made therein are to be


respected so long as they are supported by substantial evidence. Hence, it is
not for the reviewing court to weigh the conflicting evidence, determine the
credibility of witnesses, or otherwise substitute its judgment for that of the
administrative agency with respect to the sufficiency of evidence. Third,
administrative decisions in matters within the executive jurisdiction can only
be set aside on proof of gross abuse of discretion, fraud, or error of
law. These principles negate the power of the reviewing court to re-examine
the sufficiency of the evidence in an administrative case as if originally
instituted therein, and do not authorize the court to receive additional evidence
that was not submitted to the administrative agency concerned. [12]

In the case at bar, petitioner admitted that the subject property was in his
name. However, he insisted that it was his sister-in-law Estela Fajardo who
paid for the property in installments. He submitted as proof thereof the checks
issued by Fajardo as payment for the amortizations of the property. His
evidence, however, likewise fail to convince us. First, the record is bereft of
evidence to prove the alleged internal arrangement petitioner entered into with
Fajardo. He did not submit her affidavit to the investigating body nor did she
testify before it regarding her ownership of the Burbank property. Second, the
checks allegedly issued by Fajardo to pay for the monthly amortizations on
the property have no evidentiary weight as Fajardos mere issuance thereof
cannot prove petitioners non-ownership of the property. Fajardo would
naturally issue the checks as she was appointed by petitioner as attorney-in-
fact and the latter would naturally course through her the payments for the
Burbank property. Third, petitioners own evidence contradict his position.We
cannot reconcile petitioners denial of ownership of the property with the loan
statement he adduced showing that he obtained a loan from the World
[13]

Savings and Loan Association for $195,000.00 on June 23, 1993 to finance
the acquisition of the property.Then, three (3) years later, on May 30, 1996,
petitioner and his wife executed a Quitclaim Deed donating the Burbank
[14]

property to his sisters-in-law Estela and Rose Fajardo allegedly to prove his
non-ownership of the property. It is obvious that the Quitclaim Deed is a mere
afterthought, having been executed only after a complaint for unexplained
wealth was lodged against petitioner. Why the Quitclaim Deed included Rose
Fajardo when it was only Estela Fajardo who allegedly owned the property
was not explained on the record. Petitioners evidence failed to clarify the
issue as it produced, rather than settled, more questions.
Petitioner admitted that the Grant Deed over the property was in his
name. He never denied the existence and due execution of the Grant Deed
and the Special Power of Attorney he conferred to Estela Fajardo with respect
to the acquisition of the Burbank property. With these admissions, the burden
of proof was shifted to petitioner to prove non-ownership of the property. He
cannot now ask this Court to remand the case to the PCAGC for reception of
additional evidence as, in the absence of any errors of law, it is not within the
Courts power to do so. He had every opportunity to adduce his evidence
before the PCAGC.
Lastly, we cannot sustain petitioners stance that the dismissal of similar
charges against him before the Ombudsman rendered the administrative case
against him before the PCAGC moot and academic. To be sure, the decision
of the Ombudsman does not operate as res judicata in the PCAGC case
subject of this review. The doctrine of res judicata applies only to judicial or
quasi-judicial proceedings, not to the exercise of administrative
powers. Petitioner was investigated by the Ombudsman for his possible
[15]

criminal liability for the acquisition of the Burbank property in violation of the
Anti-Graft and Corrupt Practices Act and the Revised Penal Code. For the
same alleged misconduct, petitioner, as a presidential appointee, was
investigated by the PCAGC by virtue of the administrative power and control
of the President over him. As the PCAGCs investigation of petitioner was
administrative in nature, the doctrine of res judicata finds no application in the
case at bar.
Thus, we find that the Court of Appeals correctly sustained petitioners
dismissal from service as the complaint and its supporting documents
established that he acquired a property whose value is disproportionate to his
income in the government service, unless he has other sources of income
which he failed to reveal. His liability was proved by substantial evidence.
IN VIEW WHEREOF, the petition is DISMISSED. No costs.
SO ORDERED.
Panganiban, Sandoval-Gutierrez, Corona, and Carpio Morales,
JJ., concur.
15) Federacion vs Quisumbing
16)