Compilation of Cases Except No.19

ADMINISTRATIVE LAW CASE NO. 7 PERALTA vs.
CSC
SECOND DIVISION
G.R. No. L-64279 April 30, 1984
ANSELMO L. PESIGAN and MARCELINO L. PESIGAN, petitioners, vs.

JUDGE DOMINGO MEDINA ANGELES, Regional Trial Court, Caloocan City Branch 129, acting for REGIONAL TRIAL
COURT of Camarines Norte, now presided over by JUDGE NICANOR ORIÑO, Daet Branch 40; DRA. BELLA S.
MIRANDA, ARNULFO V. ZENAROSA, ET AL., respondents.
AQUINO, J.: ñé+ .£ª wph!1
At issue in this case is the enforceability, before publication in the Official Gazette of June 14, 1982, of Presidential Executive
Order No. 626-A dated October 25, 1980, providing for the confiscation and forfeiture by the government of carabaos
transported from one province to another.
Anselmo L. Pesigan and Marcelo L. Pesigan, carabao dealers, transported in an Isuzu ten-wheeler truck in the evening of April
2, 1982 twenty-six carabaos and a calf from Sipocot, Camarines Sur with Padre Garcia, Batangas, as the destination.
They were provided with (1) a health certificate from the provincial veterinarian of Camarines Sur, issued under the Revised
Administrative Code and Presidential Decree No. 533, the Anti-Cattle Rustling Law of 1974; (2) a permit to transport large
cattle issued under the authority of the provincial commander; and (3) three certificates of inspection, one from the
Constabulary command attesting that the carabaos were not included in the list of lost, stolen and questionable animals; one
from the Livestock inspector, Bureau of Animal Industry of Libmanan, Camarines Sur and one from the mayor of Sipocot.
In spite of the permit to transport and the said four certificates, the carabaos, while passing at Basud, Camarines Norte, were
confiscated by Lieutenant Arnulfo V. Zenarosa, the town's police station commander, and by Doctor Bella S. Miranda, provincial
veterinarian. The confiscation was basis on the aforementioned Executive Order No. 626-A which provides "that
henceforth, no carabao, regardless of age, sex, physical condition or purpose and no carabeef shall be transported
from one province to another. The carabaos or carabeef transported in violation of this Executive Order as amended shall
be subject to confiscation and forfeiture by the government to be distributed ... to deserving farmers through dispersal as the
Director of Animal Industry may see fit, in the case of carabaos" (78 OG 3144).
Doctor Miranda distributed the carabaos among twenty-five farmers of Basud, and to a farmer from the Vinzons municipal
nursery (Annex 1).
The Pesigans filed against Zenarosa and Doctor Miranda an action for replevin for the recovery of the carabaos allegedly
valued at P70,000 and damages of P92,000. The replevin order could not be executed by the sheriff. In his order of April 25,
1983 Judge Domingo Medina Angeles, who heard the case at Daet and who was later transferred to Caloocan City, dismissed
the case for lack of cause of action.
The Pesigans appealed to this Court under Rule 45 of the Rules of Court and section 25 of the Interim Rules and pursuant to
Republic Act No. 5440, a 1968 law which superseded Rule 42 of the Rules of Court.
We hold that the said executive order should not be enforced against the Pesigans on April 2, 1982 because, as
already noted, it is a penal regulation published more than two months later in the Official Gazette dated June 14,
1982. It became effective only fifteen days thereafter as provided in article 2 of the Civil Code and section 11 of the
Revised Administrative Code.
The word "laws" in article 2 (article 1 of the old Civil Code) includes circulars and regulations which prescribe penalties.
Publication is necessary to apprise the public of the contents of the regulations and make the said penalties binding on the
persons affected thereby. (People vs. Que Po Lay, 94 Phil. 640; Lim Hoa Ting vs. Central Bank of the Phils., 104 Phil. 573;
Balbuna vs. Secretary of Education, 110 Phil. 150.)
The Spanish Supreme Court ruled that "bajo la denominacion generica de leyes, se comprenden tambien los reglamentos,
Reales decretos, Instrucciones, Circulares y Reales ordenes dictadas de conformidad con las mismas por el Gobierno en uso
de su potestad (1 Manresa, Codigo Civil, 7th Ed., p. 146.)
Page 1 of 134
ADMINISTRATIVE LAW CASE NO. 7 PERALTA vs. CSC
Thus, in the Que Po Lay case, a person, convicted by the trial court of having violated Central Bank Circular No. 20 and
sentenced to six months' imprisonment and to pay a fine of P1,000, was acquitted by this Court because the circular was
published in the Official Gazette three months after his conviction. He was not bound by the circular.
That ruling applies to a violation of Executive Order No. 626-A because its confiscation and forfeiture provision or sanction
makes it a penal statute. Justice and fairness dictate that the public must be informed of that provision by means of publication
in the Gazette before violators of the executive order can be bound thereby.
The cases of Police Commission vs. Bello, L-29960, January 30, 1971, 37 SCRA 230 and Philippine Blooming Mills vs. Social
Security System, 124 Phil. 499, cited by the respondents, do not involve the enforcement of any penal regulation.
Commonwealth Act No. 638 requires that all Presidential executive orders having general applicability should be published in
the Official Gazette. It provides that "every order or document which shall prescribe a penalty shall be deemed to have general
applicability and legal effect."
Indeed, the practice has always been to publish executive orders in the Gazette. Section 551 of the Revised
Administrative Code provides that even bureau "regulations and orders shall become effective only when approved
by the Department Head and published in the Official Gazette or otherwise publicly promulgated". (See Commissioner
of Civil Service vs. Cruz, 122 Phil. 1015.)
In the instant case, the livestock inspector and the provincial veterinarian of Camarines Norte and the head of the Public Affairs
Office of the Ministry of Agriculture were unaware of Executive Order No. 626-A. The Pesigans could not have been expected
to be cognizant of such an executive order.
It results that they have a cause of action for the recovery of the carabaos. The summary confiscation was not in order. The
recipients of the carabaos should return them to the Pesigans. However, they cannot transport the carabaos to Batangas
because they are now bound by the said executive order. Neither can they recover damages. Doctor Miranda and Zenarosa
acted in good faith in ordering the forfeiture and dispersal of the carabaos.
WHEREFORE, the trial court's order of dismissal and the confiscation and dispersal of the carabaos are reversed and set
aside. Respondents Miranda and Zenarosa are ordered to restore the carabaos, with the requisite documents, to the
petitioners, who as owners are entitled to possess the same, with the right to dispose of them in Basud or Sipocot, Camarines
Sur. No costs.
SO ORDERED. 1äw phï1.ñët
SECOND DIVISION
G.R. No. 110571 March 10, 1994
FIRST LEPANTO CERAMICS, INC., petitioner, vs. THE COURT OF APPEALS and MARIWASA MANUFACTURING,
INC., respondents.
NOCON, J.:
Brought to fore in this petition for certiorari and prohibition with application for preliminary injunction is the novel question of
where and in what manner appeals from decisions of the Board of Investments (BOI) should be filed. A thorough scrutiny of
the conflicting provisions of Batas Pambansa Bilang 129, otherwise known as the "Judiciary Reorganization Act of 1980,"
Executive Order No. 226, also known as the Omnibus Investments Code of 1987 and Supreme Court Circular No. 1-91 is,
thus, called for.
Briefly, this question of law arose when BOI, in its decision dated December 10, 1992 in BOI Case No. 92-005 granted petitioner
First Lepanto Ceramics, Inc.'s application to amend its BOI certificate of registration by changing the scope of its registered
product from "glazed floor tiles" to "ceramic tiles." Eventually, oppositor Mariwasa filed a motion for reconsideration of the said
BOI decision while oppositor Fil-Hispano Ceramics, Inc. did not move to reconsider the same nor appeal therefrom. Soon
Page 2 of 134
rebuffed in its bid for reconsideration, Mariwasa filed a petition for review with respondent Court of Appeals pursuant to
Circular 1-91.
Acting on the petition, respondent court required the BOI and petitioner to comment on Mariwasa's petition and to show cause
why no injunction should issue. On February 17, 1993, respondent court temporarily restrained the BOI from implementing its
decision. This temporary restraining order lapsed by its own terms on March 9, 1993, twenty (20) days after its issuance,
without respondent court issuing any preliminary injunction.
On February 24, 1993, petitioner filed a "Motion to Dismiss Petition and to Lift Restraining Order" on the ground that
respondent court has no appellate jurisdiction over BOI Case No. 92-005, the same being exclusively vested with the
Supreme Court pursuant to Article 82 of the Omnibus Investments Code of 1987.
On May 25, 1993, respondent court denied petitioner's motion to dismiss, the dispositive portion of which reads as follows:
WHEREFORE, private respondent's motion to dismiss the petition is hereby DENIED, for lack of merit.
Private respondent is hereby given an inextendible period of ten (10) days from receipt hereof within which to file its
comment to the petition.1
Upon receipt of a copy of the above resolution on June 4, 1993, petitioner decided not to file any motion for reconsideration as
the question involved is essentially legal in nature and immediately filed a petition for certiorari and prohibition before this Court.
Petitioner posits the view that respondent court acted without or in excess of its jurisdiction in issuing the questioned resolution
of May 25, 1993, for the following reasons:
I. Respondent court has no jurisdiction to entertain Mariwasa's appeal from the BOI's decision in BOI Case No. 92-
005, which has become final.
II. The appellate jurisdiction conferred by statute upon this Honorable Court cannot be amended or superseded by
Circular No. 1-91.2
Petitioner then concludes that:
III. Mariwasa has lost it right to appeal . . . in this case.3
Petitioner argues that the Judiciary Reorganization Act of 1980 or Batas Pambansa Bilang 129 and Circular 1-91, "Prescribing
the Rules Governing Appeals to the Court of Appeals from a Final Order or Decision of the Court of Tax Appeals and Quasi-
Judicial Agencies" cannot be the basis of Mariwasa's appeal to respondent court because the procedure for appeal laid down
therein runs contrary to Article 82 of E.O. 226, which provides that appeals from decisions or orders of the BOI shall
be filed directly with this Court, to wit:
Judicial relief. — All orders or decisions of the Board (of Investments) in cases involving the provisions of this Code
shall immediately be executory. No appeal from the order or decision of the Board by the party adversely affected shall
stay such an order or decision; Provided, that all appeals shall be filed directly with the Supreme Court within thirty (30)
days from receipt of the order or decision.
On the other hand, Mariwasa maintains that whatever "obvious inconsistency" or "irreconcilable repugnancy" there
may have been between B.P. 129 and Article 82 of E.O. 226 on the question of venue for appeal has already been
resolved by Circular 1-91 of the Supreme Court, which was promulgated on February 27, 1991 or four (4) years after E.O.
226 was enacted.
Sections 1, 2 and 3 of Circular 1-91, is herein quoted below:
1. Scope. — These rules shall apply to appeals from final orders or decisions of the Court of Tax Appeals. They shall
also apply to appeals from final orders or decisions of any quasi-judicial agency from which an appeal is now allowed
by statute to the Court of Appeals or the Supreme Court. Among these agencies are the Securities and 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
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Telecommunications Commission, Secretary of Agrarian Reform and Special Agrarian Courts under RA 6657,
Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board,
Insurance Commission and Philippine Atomic Energy Commission.
2. Cases not covered. — These rules shall not apply to decisions and interlocutory orders of the National Labor
Relations Commission or the Secretary of Labor and Employment under the Labor Code of the Philippines, the Central
Board of Assessment Appeals, and other quasi-judicial agencies from which no appeal to the courts is prescribed or
allowed by statute.
3. Who may appeal and where to appeal. — The appeal of a party affected by a final order, decision, or judgment
of the Court of Tax Appeals or of a quasi-judicial agency shall be taken to the Court of Appeals within the period
and in the manner herein provided, whether the appeal involves questions of fact or of law or mixed questions of fact
and law. From final judgments or decisions of the Court of Appeals, the aggrieved party may appeal by certiorari to the
Supreme Court as provided in Rule 45 of the Rules of Court.
It may be called that Section 9(3) of B.P. 129 vests appellate jurisdiction over all final judgments, decisions, resolutions, orders
or awards of quasi-judicial agencies on the Court of Appeals, to wit:
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, awards of Regional Trial
Courts and
quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the appellate jurisdiction
of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive evidence and
perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate
jurisdiction, including the power to grant and conduct new trials or further proceedings.
These provisions shall not apply to decisions and interlocutory orders issued under the Labor Code of the Philippines
and by the Central Board of Assessment Appeals.
Clearly evident in the aforequoted provision of B.P. 129 is the laudable objective of providing a uniform procedure of appeal
from decisions of all quasi-judicial agencies for the benefit of the bench and the bar. Equally laudable is the twin objective of
B.P. 129 of unclogging the docket of this Court to enable it to attend to more important tasks, which in the words of Dean
Vicente G. Sinco, as quoted in our decision in Conde v. Intermediate Appellate Court4 is "less concerned with the decisions of
cases that begin and end with the transient rights and obligations of particular individuals but is more intertwined with the
direction of national policies, momentous economic and social problems, the delimitation of governmental authority and its
impact upon fundamental rights.
In Development Bank of the Philippines vs. Court of Appeals,5 this Court noted that B.P. 129 did not deal only with "changes
in the rules on procedures" and that not only was the Court of Appeals reorganized, but its jurisdiction and powers were also
broadened by Section 9 thereof. Explaining the changes, this Court said:
. . . Its original jurisdiction to issue writs of mandamus, prohibition, certiorari and habeas corpus, which theretofore
could be exercised only in aid of its appellate jurisdiction, was expanded by (1) extending it so as to include the writ
of quo warranto, and also (2) empowering it to issue all said extraordinary writs "whether or not in aid of its appellate
jurisdiction." Its appellate jurisdiction was also extended to cover not only final judgments of Regional Trial Courts, but
also "all final judgments, decisions, resolutions, orders or awards of . . . quasi-judicial agencies, instrumentalities,
boards or commissions, 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 and subparagraph (4) of the
fourth paragraph of Section 17 of the Judiciary Act of 1948," it being noteworthy in this connection that the text of the
law is broad and comprehensive, and the explicitly stated exceptions have no reference whatever to the Court of Tax
Appeals. Indeed, the intention to expand the original and appellate jurisdiction of the Court of Appeals over quasi-
judicial agencies, instrumentalities, boards, or commissions, is further stressed by the last paragraph of Section 9 which
excludes from its provisions, only the "decisions and interlocutory orders issued under the Labor Code of the Philippines
and by the Central Board of Assessment Appeals."6
However, it cannot be denied that the lawmaking system of the country is far from perfect. During the transitional period after
the country emerged from the Marcos regime, the lawmaking power was lodged on the Executive Department. The obvious
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lack of deliberation in the drafting of our laws could perhaps explain the deviation of some of our laws from the goal of uniform
procedure which B.P. 129 sought to promote.
In exempli gratia, Executive Order No. 226 or the Omnibus Investments Code of 1987 provides that all appeals shall
be filed directly with the Supreme Court within thirty (30) days from receipt of the order or decision.
Noteworthy is the fact that presently, the Supreme Court entertains ordinary appeals only from decisions of the Regional Trial
Courts in criminal cases where the penalty imposed is reclusion perpetua or higher. Judgments of regional trial courts may be
appealed to the Supreme Court only by petition for review on certiorari within fifteen (15) days from notice of judgment in
accordance with Rule 45 of the Rules of Court in relation to Section 17 of the Judiciary Act of 1948, as amended, this being
the clear intendment of the provision of the Interim Rules that "(a)ppeals to the Supreme Court shall be taken by petition
for certiorari which shall be governed by Rule 45 of the Rules of Court." Thus, the right of appeal provided in E.O. 226
within thirty (30) days from receipt of the order or decision is clearly not in consonance with the present procedure
before this Court. Only decisions, orders or rulings of a Constitutional Commission (Civil Service Commission, Commission
on Elections or Commission on Audit), may be brought to the Supreme Court on original petitions for certiorari under Rule 65
by the aggrieved party within thirty (30) days form receipt of a copy thereof.7
Under this contextual backdrop, this Court, pursuant to its Constitutional power under Section 5(5), Article VIII of the 1987
Constitution to promulgate rules concerning pleading, practice and procedure in all courts, and by way of implementation of
B.P. 129, issued Circular 1-91 prescribing the rules governing appeals to the Court of Appeals from final orders or decisions
of the Court of Tax Appeals and quasi-judicial agencies to eliminate unnecessary contradictions and confusing rules of
procedure.
Contrary to petitioner's contention, although a circular is not strictly a statute or law, it has, however, the force and effect
of law according to settled jurisprudence.8 In Inciong v. de Guia,9 a circular of this Court was treated as law. In adopting the
recommendation of the Investigating Judge to impose a sanction on a judge who violated Circular No. 7 of this Court dated
September 23, 1974, as amended by Circular No. 3 dated April 24, 1975 and Circular No. 20 dated October 4, 1979, requiring
raffling of cases, this Court quoted the ratiocination of the Investigating Judge, brushing aside the contention of respondent
judge that assigning cases instead of raffling is a common practice and holding that respondent could not go against the circular
of this Court until it is repealed or otherwise modified, as "(L)aws are repealed only by subsequent ones, and their violation
or non-observance shall not be excused by disuse, or customs or practice to the contrary."10
The argument that Article 82 of E.O. 226 cannot be validly repealed by Circular 1-91 because the former grants a
substantive right which, under the Constitution cannot be modified, diminished or increased by this Court in the
exercise of its rule-making powers is not entirely defensible as it seems. Respondent correctly argued that Article 82 of
E.O. 226 grants the right of appeal from decisions or final orders of the BOI and in granting such right, it also provided where
and in what manner such appeal can be brought. These latter portions simply deal with procedural aspects which this
Court has the power to regulate by virtue of its constitutional rule-making powers.
The case of Bustos v. Lucero11 distinguished between rights created by a substantive law and those arising from procedural
law:
Substantive law creates substantive rights . . . . Substantive rights is a term which includes those rights which one
enjoys under the legal system prior to the disturbance of normal relations (60 C.J., 980). Substantive law is that part of
the law which creates, defines and regulates rights, or which regulates rights and duties which give rise to a cause of
action, as oppossed to adjective or remedial law, which prescribes the method of enforcing rights or obtains a redress
for their invasion.12
Indeed, the question of where and in what manner appeals from decisions of the BOI should be brought pertains only
to procedure or the method of enforcing the substantive right to appeal granted by E.O. 226. In other words, the right to
appeal from decisions or final orders of the BOI under E.O. 226 remains and continues to be respected. Circular 1-91 simply
transferred the venue of appeals from decisions of this agency to respondent Court of Appeals and provided a
different period of appeal, i.e., fifteen (15) days from notice. It did not make an incursion into the substantive right to
appeal.
The fact that BOI is not expressly included in the list of quasi-judicial agencies found in the third sentence of Section 1 of
Circular 1-91 does not mean that said circular does not apply to appeals from final orders or decision of the BOI. The second
sentence of Section 1 thereof expressly states that "(T)hey shall also apply to appeals from final orders or decisions
of any quasi-judicial agency from which an appeal is now allowed by statute to the Court of Appeals or the Supreme
Court." E.O. 266 is one such statute. Besides, the enumeration is preceded by the words "(A)mong these agencies are . . . ,"
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strongly implying that there are other quasi-judicial agencies which are covered by the Circular but which have not been
expressly listed therein. More importantly, BOI does not fall within the purview of the exclusions listed in Section 2 of
the circular. Only the following final decisions and interlocutory orders are expressly excluded from the circular, namely, those
of: (1) the National Labor Relations Commission; (2) the Secretary of Labor and Employment; (3) the Central Board of
Assessment Appeals and (4) other quasi-judicial agencies from which no appeal to the courts is prescribed or allowed by
statute. Since in DBP v. CA13 we upheld the appellate jurisdiction of the Court of Appeals over the Court of Tax Appeals despite
the fact that the same is not among the agencies reorganized by B.P. 129, on the ground that B.P. 129 is broad and
comprehensive, there is no reason why BOI should be excluded from Circular 1-91, which is but implementary of said law.
Clearly, Circular 1-91 effectively repealed or superseded Article 82 of E.O. 226 insofar as the manner and method of
enforcing the right to appeal from decisions of the BOI are concerned. Appeals from decisions of the BOI, which by
statute was previously allowed to be filed directly with the Supreme Court, should now be brought to the Court of Appeals.
WHEREFORE, in view of the foregoing reasons, the instant petition for certiorari and prohibition with application for temporary
restraining order and preliminary injunction is hereby DISMISSED for lack of merit. The Temporary Restraining Order issued
on July 19, 1993 is hereby LIFTED.
SO ORDERED.
EN BANC
G.R. No. 88291 June 8, 1993
ERNESTO M. MACEDA, petitioner,

vs.
HON. CATALINO MACARAIG, JR., in his capacity as Executive Secretary, Office of the President, HON. VICENTE
JAYME, ETC., ET AL., respondents.
NOCON, J.:
Just like lightning which does strike the same place twice in some instances, this matter of indirect tax exemption of the private
respondent National Power Corporation (NPC) is brought to this Court a second time. Unfazed by the Decision We promulgated
on May 31, 19911 petitioner Ernesto Maceda asks this Court to reconsider said Decision. Lest We be criticized for denying due
process to the petitioner. We have decided to take a second look at the issues. In the process, a hearing was held on July 9,
1992 where all parties presented their respective arguments. Etched in this Court's mind are the paradoxical claims by both
petitioner and private respondents that their respective positions are for the benefit of the Filipino people.
A Chronological review of the relevant NPC laws, specially with respect to its tax exemption provisions, at the risk of being
repetitious is, therefore, in order.
On November 3, 1936, Commonwealth Act No. 120 was enacted creating the National Power Corporation, a public corporation,
mainly to develop hydraulic power from all water sources in the Philippines.2 The sum of P250,000.00 was appropriated out of
the funds in the Philippine Treasury for the purpose of organizing the NPC and conducting its preliminary work. 3 The main
source of funds for the NPC was the flotation of bonds in the capital markets4 and these bonds
. . . issued under the authority of this Act shall be exempt from the payment of all taxes by the Commonwealth of the
Philippines, or by any authority, branch, division or political subdivision thereof and subject to the provisions of the Act of
Congress, approved March 24, 1934, otherwise known as the Tydings McDuffle Law, which facts shall be stated upon the
face of said bonds. . . . .5
On June 24, 1938, C.A. No. 344 was enacted increasing to P550,000.00 the funds needed for the initial operations of the NPC
and reiterating the provision of the flotation of bonds as soon as the first construction of any hydraulic power project was to be
decided by the NPC Board.6 The provision on tax exemption in relation to the issuance of the NPC bonds was neither amended
nor deleted.
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On September 30, 1939, C.A. No. 495 was enacted removing the provision on the payment of the bond's principal and interest
in "gold coins" but adding that payment could be made in United States dollars.7 The provision on tax exemption in relation to
the issuance of the NPC bonds was neither amended nor deleted.
On June 4, 1949, Republic Act No. 357 was enacted authorizing the President of the Philippines to guarantee, absolutely and
unconditionally, as primary obligor, the payment of any and all NPC loans.8 He was also authorized to contract on behalf of the
NPC with the International Bank for Reconstruction and Development (IBRD) for NPC loans for the accomplishment of NPC's
corporate objectives9 and for the reconstruction and development of the economy of the country. 10 It was expressly stated that:
Any such loan or loans shall be exempt from taxes, duties, fees, imposts, charges, contributions and restrictions of the
Republic of the Philippines, its provinces, cities and municipalities. 11
On the same date, R.A. No. 358 was enacted expressly authorizing the NPC, for the first time, to incur other types of
indebtedness, aside from indebtedness incurred by flotation of bonds. 12 As to the pertinent tax exemption provision, the law
stated as follows:
To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from all taxes, duties, fees,
imposts, charges, and restrictions of the Republic of the Philippines, its provinces, cities and municipalities. 13
On July 10, 1952, R.A. No. 813 was enacted amending R.A. No. 357 in that, aside from the IBRD, the President of the
Philippines was authorized to negotiate, contract and guarantee loans with the Export-Import Bank of of Washigton, D.C.,
U.S.A., or any other international financial institution. 14 The tax provision for repayment of these loans, as stated in R.A. No.
357, was not amended.
On June 2, 1954, R.A. No. 987 was enacted specifically to withdraw NPC's tax exemption for real estate taxes. As enacted,
the law states as follows:
To facilitate payment of its indebtedness, the National Power Corporation shall be exempt from all taxes, except real
property tax, and from all duties, fees, imposts, charges, and restrictions of the Republic of the Philippines, its provinces,
cities, and municipalities.15
On September 8, 1955, R.A. No. 1397 was enacted directing that the NPC projects to be funded by the increased
indebtedness 16 should bear the National Economic Council's stamp of approval. The tax exemption provision related to the
payment of this total indebtedness was not amended nor deleted.
On June 13, 1958, R.A. No. 2055 was enacted increasing the total amount of foreign loans NPC was authorized to incur to
US$100,000,000.00 from the US$50,000,000.00 ceiling in R.A. No. 357. 17 The tax provision related to the repayment of these
loans was not amended nor deleted.
On June 13, 1958, R.A. No. 2058 was enacting fixing the corporate life of NPC to December 31, 2000. 18 All laws or provisions
of laws and executive orders contrary to said R.A. No. 2058 were expressly repealed. 19
On June 18, 1960, R.A. No 2641 was enacted converting the NPC from a public corporation into a stock corporation with an
authorized capital stock of P100,000,000.00 divided into 1,000.000 shares having a par value of P100.00 each, with said
capital stock wholly subscribed to by the Government. 20 No tax exemption was incorporated in said Act.
On June 17, 1961, R.A. No. 3043 was enacted increasing the above-mentioned authorized capital stock to P250,000,000.00
with the increase to be wholly subscribed by the Government. 21 No tax provision was incorporated in said Act.
On June 17, 1967, R.A. No 4897 was enacted. NPC's capital stock was increased again to P300,000,000.00, the increase to
be wholly subscribed by the Government. No tax provision was incorporated in said Act. 22
On September 10, 1971, R.A. No. 6395 was enacted revising the charter of the NPC, C.A. No. 120, as amended. Declared as
primary objectives of the nation were:
Declaration of Policy. — Congress hereby declares that (1) the comprehensive development, utilization and
conservation of Philippine water resources for all beneficial uses, including power generation, and (2) the total
electrification of the Philippines through the development of power from all sources to meet the needs of industrial
development and dispersal and the needs of rural electrification are primary objectives of the nation which shall be
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pursued coordinately and supported by all instrumentalities and agencies of the government, including the financial
institutions. 23
Section 4 of C.A. No. 120, was renumbered as Section 8, and divided into sections 8 (a) (Authority to incur Domestic
Indebtedness) and Section 8 (b) (Authority to Incur Foreign Loans).
As to the issuance of bonds by the NPC, Paragraph No. 3 of Section 8(a), states as follows:
The bonds issued under the authority of this subsection shall be exempt from the payment of all taxes by the Republic
of the Philippines, or by any authority, branch, division or political subdivision thereof which facts shall be stated upon
the face of said bonds. . . . 24
As to the foreign loans the NPC was authorized to contract, Paragraph No. 5, Section 8(b), states as follows:
The loans, credits and indebtedness contracted under this subsection and the payment of the principal, interest and
other charges thereon, as well as the importation of machinery, equipment, materials and supplies by the Corporation,
paid from the proceeds of any loan, credit or indebtedeness incurred under this Act, shall also be exempt from all taxes,
fees, imposts, other charges and restrictions, including import restrictions, by the Republic of the Philippines, or any of
its agencies and political subdivisions. 25
A new section was added to the charter, now known as Section 13, R.A. No. 6395, which declares the non-profit character and
tax exemptions of NPC as follows:
The Corporation shall be non-profit and shall devote all its returns from its capital investment, as well as excess
revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in
furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation is hereby
declared exempt:
(a) From the payment of all taxes, duties, fees, imposts, charges costs and service fees in any court or administrative
proceedings in which it may be a party, restrictions and duties to the Republic of the Philippines, its provinces, cities,
and municipalities and other government agencies and instrumentalities;
(b) From all income taxes, franchise taxes and realty taxes to be paid to the National Government, its provinces, cities,
municipalities and other government agencies and instrumentalities;
(c) From all import duties, compensating taxes and advanced sales tax, and wharfage fees on import of foreign goods
required for its operations and projects; and
(d) From all taxes, duties, fees, imposts and all other charges its provinces, cities, municipalities and other government
agencies and instrumentalities, on all petroleum products used by the Corporation in the generation, transmission,
utilization, and sale of electric power. 26
On November 7, 1972, Presidential Decree No. 40 was issued declaring that the electrification of the entire country
was one of the primary concerns of the country. And in connection with this, it was specifically stated that:
The setting up of transmission line grids and the construction of associated generation facilities in Luzon, Mindanao
and major islands of the country, including the Visayas, shall be the responsibility of the National Power Corporation
(NPC) as the authorized implementing agency of the State. 27
xxx xxx xxx
It is the ultimate objective of the State for the NPC to own and operate as a single integrated system all generating
facilities supplying electric power to the entire area embraced by any grid set up by the NPC. 28
On January 22, 1974, P.D. No. 380 was issued giving extra powers to the NPC to enable it to fulfill its role under aforesaid
P.D. No. 40. Its authorized capital stock was raised to P2,000,000,000.00, 29 its total domestic indebtedness was pegged at a
maximum of P3,000,000,000.00 at any one time, 30 and the NPC was authorized to borrow a total of US$1,000,000,000.00 31 in
foreign loans.
Page 8 of 134
The relevant tax exemption provision for these foreign loans states as follows:
other charges thereon, as well as the importation of machinery, equipment, materials, supplies and services, by the
Corporation, paid from the proceeds of any loan, credit or indebtedness incurred under this Act, shall also be exempt
from all direct and indirect taxes, fees, imposts, other charges and restrictions, including import restrictions previously
and presently imposed, and to be imposed by the Republic of the Philippines, or any of its agencies and political
subdivisions. 32(Emphasis supplied)
Section 13(a) and 13(d) of R.A. No 6395 were amended to read as follows:
(a) From the payment of all taxes, duties, fees, imposts, charges and restrictions to the Republic of the Philippines, its
provinces, cities, municipalities and other government agencies and instrumentalities including the taxes, duties, fees,
imposts and other charges provided for under the Tariff and Customs Code of the Philippines, Republic Act Numbered
Nineteen Hundred Thirty-Seven, as amended, and as further amended by Presidential Decree No. 34 dated October
27, 1972, and Presidential Decree No. 69, dated November 24, 1972, and costs and service fees in any court or
administrative proceedings in which it may be a party;
xxx xxx xxx
(d) From all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly by the Republic of the
Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum
products used by the Corporation in the generation, transmission, utilization and sale of electric power. 33 (Emphasis
supplied)
On February 26, 1970, P.D. No. 395 was issued removing certain restrictions in the NPC's sale of electricity to its different
customers. 34 No tax exemption provision was amended, deleted or added.
On July 31, 1975, P.D. No. 758 was issued directing that P200,000,000.00 would be appropriated annually to cover the unpaid
subscription of the Government in the NPC authorized capital stock, which amount would be taken from taxes accruing to the
General Funds of the Government, proceeds from loans, issuance of bonds, treasury bills or notes to be issued by the Secretary
of Finance for this particular purpose. 35
On May 27, 1976 P.D. No. 938 was issued
(I)n view of the accelerated expansion programs for generation and transmission facilities which includes nuclear power
generation, the present capitalization of National Power Corporation (NPC) and the ceilings for domestic and foreign
borrowings are deemed insufficient; 36
xxx xxx xxx
(I)n the application of the tax exemption provisions of the Revised Charter, the non-profit character of NPC has not
been fully utilized because of restrictive interpretation of the taxing agencies of the government on said provisions; 37
xxx xxx xxx
(I)n order to effect the accelerated expansion program and attain the declared objective of total electrification of the
country, further amendments of certain sections of Republic Act No. 6395, as amended by Presidential Decrees Nos.
380, 395 and 758, have become imperative; 38
Thus NPC's capital stock was raised to P8,000,000,000.00, 39 the total domestic indebtedness ceiling was increased to
P12,000,000,000.00, 40 the total foreign loan ceiling was raised to US$4,000,000,000.00 41 and Section 13 of R.A. No. 6395,
was amended to read as follows:
The Corporation shall be non-profit and shall devote all its returns from its capital investment as well as excess
revenues from its operation, for expansion. To enable the Corporation to pay to its indebtedness and obligations and
in furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation,
including its subsidiaries, is hereby declared exempt from the payment of all forms of taxes, duties, fees, imposts as
Page 9 of 134
well as costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative
proceedings. 42
II
On the other hand, the pertinent tax laws involved in this controversy are P.D. Nos. 882, 1177, 1931 and Executive Order No.
93 (S'86).
On January 30, 1976, P.D. No. 882 was issued withdrawing the tax exemption of NPC with regard to imports as follows:
WHEREAS, importations by certain government agencies, including government-owned or controlled corporation, are
exempt from the payment of customs duties and compensating tax; and
WHEREAS, in order to reduce foreign exchange spending and to protect domestic industries, it is necessary to restrict
and regulate such tax-free importations.
NOW THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me
by the Constitution, and do hereby decree and order the following:
Sec. 1. All importations of any government agency, including government-owned or controlled corporations which are
exempt from the payment of customs duties and internal revenue taxes, shall be subject to the prior approval of an
Inter-Agency Committee which shall insure compliance with the following conditions:
(a) That no such article of local manufacture are available in sufficient quantity and comparable quality at reasonable
prices;
(b) That the articles to be imported are directly and actually needed and will be used exclusively by the grantee of the
exemption for its operations and projects or in the conduct of its functions; and
(c) The shipping documents covering the importation are in the name of the grantee to whom the goods shall be
delivered directly by customs authorities.
xxx xxx xxx
Sec. 3. The Committee shall have the power to regulate and control the tax-free importation of government agencies
in accordance with the conditions set forth in Section 1 hereof and the regulations to be promulgated to implement the
provisions of this Decree. Provided, however, That any government agency or government-owned or controlled
corporation, or any local manufacturer or business firm adversely affected by any decision or ruling of the Inter-Agency
Committee may file an appeal with the Office of the President within ten days from the date of notice thereof. . . . .
xxx xxx xxx
Sec. 6. . . . . Section 13 of Republic Act No. 6395; . . .. and all similar provisions of all general and special laws and
decrees are hereby amended accordingly.
xxx xxx xxx
On July 30, 1977, P.D. 1177 was issued as it was
. . . declared the policy of the State to formulate and implement a National Budget that is an instrument of national
development, reflective of national objectives, strategies and plans. The budget shall be supportive of and consistent
with the socio-economic development plan and shall be oriented towards the achievement of explicit objectives and
expected results, to ensure that funds are utilized and operations are conducted effectively, economically and
efficiently. The national budget shall be formulated within a context of a regionalized government structure and of the
totality of revenues and other receipts, expenditures and borrowings of all levels of government-owned or controlled
corporations. The budget shall likewise be prepared within the context of the national long-term plan and of a long-term
budget program. 43
Page 10 of 134
In line with such policy, the law decreed that
All units of government, including government-owned or controlled corporations, shall pay income taxes, customs duties and
other taxes and fees are imposed under revenues laws: provided, that organizations otherwise exempted by law from the
payment of such taxes/duties may ask for a subsidy from the General Fund in the exact amount of taxes/duties due: provided,
further, that a procedure shall be established by the Secretary of Finance and the Commissioner of the Budget, whereby such
subsidies shall automatically be considered as both revenue and expenditure of the General Fund. 44
The law also declared that —
[A]ll laws, decrees, executive orders, rules and regulations or parts thereof which are inconsistent with the provisions
of the Decree are hereby repealed and/or modified accordingly. 45
On July 11, 1984, most likely due to the economic morass the Government found itself in after the Aquino assassination, P.D.
No. 1931 was issued to reiterate that:
WHEREAS, Presidential Decree No. 1177 has already expressly repealed the grant of tax privileges to any
government-owned or controlled corporation and all other units of government; 46
and since there was a
. . . need for government-owned or controlled corporations and all other units of government enjoying tax privileges to
share in the requirements of development, fiscal or otherwise, by paying the duties, taxes and other charges due from
them. 47
it was decreed that:
Sec. 1. The provisions of special on general law to the contrary notwithstanding, all exemptions from the payment of
duties, taxes, fees, imposts and other charges heretofore granted in favor of government-owned or controlled
corporations including their subsidiaries, are hereby withdrawn.
Sec. 2. The President of the Philippines and/or the Minister of Finance, upon the recommendation of the Fiscal
Incentives Review Board created under Presidential Decree No. 776, is hereby empowered to restore, partially or
totally, the exemptions withdrawn by Section 1 above, any applicable tax and duty, taking into account, among others,
any or all of the following:
1) The effect on the relative price levels;
2) The relative contribution of the corporation to the revenue generation effort;
3) The nature of the activity in which the corporation is engaged in; or
4) In general the greater national interest to be served.
xxx xxx xxx
Sec. 5. The provisions of Presidential Decree No. 1177 as well as all other laws, decrees, executive orders,
administrative orders, rules, regulations or parts thereof which are inconsistent with this Decree are hereby repealed,
amended or modified accordingly.
On December 17, 1986, E.O. No. 93 (S'86) was issued with a view to correct presidential restoration or grant of tax exemption
to other government and private entities without benefit of review by the Fiscal Incentives Review Board, to wit:
WHEREAS, Presidential Decree Nos. 1931 and 1955 issued on June 11, 1984 and October 14, 1984, respectively,
withdrew the tax and duty exemption privileges, including the preferential tax treatment, of government and private
entities with certain exceptions, in order that the requirements of national economic development, in terms of fiscals
and other resources, may be met more adequately;
Page 11 of 134
xxx xxx xxx
WHEREAS, in addition to those tax and duty exemption privileges were restored by the Fiscal Incentives Review Board
(FIRB), a number of affected entities, government and private, had their tax and duty exemption privileges restored or
granted by Presidential action without benefit or review by the Fiscal Incentives Review Board (FIRB);
xxx xxx xxx
Since it was decided that:
[A]ssistance to government and private entities may be better provided where necessary by explicit subsidy and
budgetary support rather than tax and duty exemption privileges if only to improve the fiscal monitoring aspects of
government operations.
It was thus ordered that:
Sec. 1. The Provisions of any general or special law to the contrary notwithstanding, all tax and duty incentives granted
to government and private entities are hereby withdrawn, except:
a) those covered by the non-impairment clause of the Constitution;
b) those conferred by effective internation agreement to which the Government of the Republic of the Philippines is a
signatory;
c) those enjoyed by enterprises registered with:
(i) the Board of Investment pursuant to Presidential Decree No. 1789, as amended;
(ii) the Export Processing Zone Authority, pursuant to Presidential Decree No. 66 as amended;
(iii) the Philippine Veterans Investment Development Corporation Industrial Authority pursuant to
Presidential Decree No. 538, was amended.
d) those enjoyed by the copper mining industry pursuant to the provisions of Letter of Instructions No. 1416;
e) those conferred under the four basic codes namely:
(i) the Tariff and Customs Code, as amended;
(ii) the National Internal Revenue Code, as amended;
(iii) the Local Tax Code, as amended;
(iv) the Real Property Tax Code, as amended;
f) those approved by the President upon the recommendation of the Fiscal Incentives Review Board.
Sec. 2. The Fiscal Incentives Review Board created under Presidential Decree No. 776, as amended, is hereby
authorized to:
a) restore tax and/or duty exemptions withdrawn hereunder in whole or in part;
b) revise the scope and coverage of tax and/or duty exemption that may be restored;
c) impose conditions for the restoration of tax and/or duty exemption;
d) prescribe the date of period of effectivity of the restoration of tax and/or duty exemption;
Page 12 of 134
e) formulate and submit to the President for approval, a complete system for the grant of subsidies to deserving
beneficiaries, in lieu of or in combination with the restoration of tax and duty exemptions or preferential treatment in
taxation, indicating the source of funding therefor, eligible beneficiaries and the terms and conditions for the grant
thereof taking into consideration the international commitment of the Philippines and the necessary precautions such
that the grant of subsidies does not become the basis for countervailing action.
Sec. 3. In the discharge of its authority hereunder, the Fiscal Incentives Review Board shall take into account any or
all of the following considerations:
a) the effect on relative price levels;
b) relative contribution of the beneficiary to the revenue generation effort;
c) nature of the activity the beneficiary is engaged; and
d) in general, the greater national interest to be served.
xxx xxx xxx
Sec. 5. All laws, orders, issuances, rules and regulations or parts thereof inconsistent with this Executive Order are
hereby repealed or modified accordingly.
E.O. No. 93 (S'86) was decreed to be effective 48 upon the promulgation of the rules and regulations, to be issued by the Ministry
of Finance. 49 Said rules and regulations were promulgated and published in the Official Gazette
on February 23, 1987. These became effective on the 15th day after promulgation 50 in the Official Gasetter, 51 which 15th day
was March 10, 1987.
III
Now to some definitions. We refer to the very simplistic approach that all would-be lawyers, learn in their TAXATION I
course, which fro convenient reference, is as follows:
Classifications or kinds of Taxes:
According to Persons who pay or who bear the burden:
a. Direct Tax — the where the person supposed to pay the tax really pays it. WITHOUT transferring the burden to
someone else.
Examples: Individual income tax, corporate income tax, transfer taxes (estate tax, donor's tax), residence tax,
immigration tax
b. Indirect Tax — that where the tax is imposed upon goods BEFORE reaching the consumer who ultimately pays for
it, not as a tax, but as a part of the purchase price.
Examples: the internal revenue indirect taxes (specific tax, percentage taxes, (VAT) and the tariff and customs indirect
taxes (import duties, special import tax and other dues) 52
IV
To simply matter, the issues raised by petitioner in his motion for reconsideration can be reduced to the following:
(1) What kind of tax exemption privileges did NPC have?
(2) For what periods in time were these privileges being enjoyed?
(3) If there are taxes to be paid, who shall pay for these taxes?
Page 13 of 134
V
Petitioner contends that P.D. No. 938 repealed the indirect tax exemption of NPC as the phrase "all forms of taxes etc.," in its
section 10, amending Section 13, R.A. No. 6395, as amended by P.D. No. 380, does not expressly include "indirect taxes."
His point is not well-taken.
A chronological review of the NPC laws will show that it has been the lawmaker's intention that the NPC was to be completely
tax exempt from all forms of taxes — direct and indirect.
NPC's tax exemptions at first applied to the bonds it was authorized to float to finance its operations upon its creation by virtue
of C.A. No. 120.
When the NPC was authorized to contract with the IBRD for foreign financing, any loans obtained were to be completely tax
exempt.
After the NPC was authorized to borrow from other sources of funds — aside issuance of bonds — it was again specifically
exempted from all types of taxes "to facilitate payment of its indebtedness." Even when the ceilings for domestic and foreign
borrowings were periodically increased, the tax exemption privileges of the NPC were maintained.
NPC's tax exemption from real estate taxes was, however, specifically withdrawn by Rep. Act No. 987, as above stated. The
exemption was, however, restored by R.A. No. 6395.
Section 13, R.A. No. 6395, was very comprehensive in its enumeration of the tax exemptions allowed NPC. Its section 13(d)
is the starting point of this bone of contention among the parties. For easy reference, it is reproduced as follows:
[T]he Corporation is hereby declared exempt:
xxx xxx xxx
(d) From all taxes, duties, fees, imposts and all other charges imposed by the Republic of the Philippines, its provinces,
cities, municipalities and other government agencies and instrumentalities, on all petroleum products used by the
Corporation in the generation, transmission, utilization, and sale of electric power.
P.D. No. 380 added phrase "directly or indirectly" to said Section 13(d), which now reads as follows:
xxx xxx xxx
(d) From all taxes, duties, fees, imposts, and all other charges imposed directly or indirectly by the Republic of the
Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum
products used by the Corporation in the generation, transmission, utilization and sale of electric power. (Emphasis
supplied)
Then came P.D. No. 938 which amended Sec. 13(a), (b), (c) and (d) into one very simple paragraph as follows:
The Corporation shall be non-profit and shall devote all its returns from its capital investment as well as excess
revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in
furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation, including
its subsidiaries, is hereby declared exempt from the payment of ALL FORMS OF taxes, duties, fees, imposts as well
as costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative
proceedings. (Emphasis supplied)
Petitioner reminds Us that:
[I]t must be borne in mind that Presidential Decree Nos. 380 and 938 were issued by one man, acting as such the
Executive and Legislative. 53
xxx xxx xxx

Page 14 of 134
[S]ince both presidential decrees were made by the same person, it would have been very easy for him to retain the
same or similar language used in P.D. No. 380 P.D. No. 938 if his intention were to preserve the indirect tax exemption
of NPC. 54
Actually, P.D. No. 938 attests to the ingenuousness of then President Marcos no matter what his fault were. It should be
noted that section 13, R.A. No. 6395, provided for tax exemptions for the following items:
13(a) : court or administrative proceedings;
13(b) : income, franchise, realty taxes;
13(c) : import of foreign goods required for its operations and projects;
13(d) : petroleum products used in generation of electric power.
P.D. No. 938 lumped up 13(b), 13(c), and 13(d) into the phrase "ALL FORMS OF TAXES, ETC.,", included 13(a) under the
"as well as" clause and added PNOC subsidiaries as qualified for tax exemptions.
This is the only conclusion one can arrive at if he has read all the NPC laws in the order of enactment or issuance as narrated
above in part I hereof. President Marcos must have considered all the NPC statutes from C.A. No. 120 up to its latest
amendments, P.D. No. 380, P.D. No. 395 and P.D. No. 759, AND came up 55 with a very simple Section 13, R.A. No. 6395, as
amended by P.D. No. 938.
One common theme in all these laws is that the NPC must be enable to pay its indebtedness 56 which, as of P.D. No. 938, was
P12 Billion in total domestic indebtedness, at any one time, and U$4 Billion in total foreign loans at any one time. The NPC
must be and has to be exempt from all forms of taxes if this goal is to be achieved.
By virtue of P.D. No. 938 NPC's capital stock was raised to P8 Billion. It must be remembered that to pay the government
share in its capital stock P.D. No. 758 was issued mandating that P200 Million would be appropriated annually to cover the
said unpaid subscription of the Government in NPC's authorized capital stock. And significantly one of the sources of this
annual appropriation of P200 million is TAX MONEY accruing to the General Fund of the Government. It does not stand to
reason then that former President Marcos would order P200 Million to be taken partially or totally from tax money to be used
to pay the Government subscription in the NPC, on one hand, and then order the NPC to pay all its indirect taxes, on the other.
The above conclusion that then President Marcos lumped up Sections 13 (b), 13 (c) and (d) into the phrase "All FORMS OF"
is supported by the fact that he did not do the same for the tax exemption provision for the foreign loans to be incurred.
The tax exemption on foreign loans found in Section 8(b), R.A. No. 6395, reads as follows:
other charges thereon, as well as the importation of machinery, equipment, materials and supplies by the Corporation,
paid from the proceeds of any loan, credit or indebtedness incurred under this Act, shall also be exempt from all taxes,
fees, imposts, other charges and restrictions, including import restrictions, by the Republic of the Philippines, or any of
its agencies and political subdivisions. 57
The same was amended by P.D. No. 380 as follows:
The loans, credits and indebtedness contracted this subsection and the payment of the principal, interest and other
charges thereon, as well as the importation of machinery, equipment, materials, supplies and services, by the
Corporation, paid from the proceeds of any loan, credit or indebtedness incurred under this Act, shall also be exempt
from all direct and indirect taxes, fees, imposts, other charges and restrictions, including import restrictions previously
and presently imposed, and to be imposed by the Republic of the Philippines, or any of its agencies and political
subdivisions. 58(Emphasis supplied)
P.D. No. 938 did not amend the same 59 and so the tax exemption provision in Section 8 (b), R.A. No. 6395, as amended by
P.D. No. 380, still stands. Since the subject matter of this particular Section 8 (b) had to do only with loans and machinery
imported, paid for from the proceeds of these foreign loans, THERE WAS NO OTHER SUBJECT MATTER TO LUMP IT UP
WITH, and so, the tax exemption stood as is — with the express mention of "direct
and indirect" tax exemptions. And this "direct and indirect" tax exemption privilege extended to "taxes, fees, imposts, other
Page 15 of 134
charges . . . to be imposed" in the future — surely, an indication that the lawmakers wanted the NPC to be exempt from ALL
FORMS of taxes — direct and indirect.
It is crystal clear, therefore, that NPC had been granted tax exemption privileges for both direct and indirect taxes under P.D.
No. 938.
VI
Five (5) years on into the now discredited New Society, the Government decided to rationalize government receipts and
expenditures by formulating and implementing a National Budget. 60 The NPC, being a government owned and controlled
corporation had to be shed off its tax exemption status privileges under P.D. No. 1177. It was, however, allowed to ask for a
subsidy from the General Fund in the exact amount of taxes/duties due.
Actually, much earlier, P.D. No. 882 had already repealed NPC's tax-free importation privileges. It allowed, however, NPC to
appeal said repeal with the Office of the President and to avail of tax-free importation privileges under its Section 1, subject to
the prior approval of an Inter-Agency Committed created by virtue of said P.D. No. 882. It is presumed that the NPC, being the
special creation of the State, was allowed to continue its tax-free importations.
This Court notes that petitioner brought to the attention of this Court, the matter of the abolition of NPC's tax exemption
privileges by P.D. No. 1177 61 only in his Common Reply/Comment to private Respondents' "Opposition" and "Comment" to
Motion for Reconsideration, four (4) months AFTER the motion for Reconsideration had been filed. During oral arguments
heard on July 9, 1992, he proceeded to discuss this tax exemption withdrawal as explained by then Secretary of Justice Vicente
Abad Santos in opinion No. 133 (S '77). 62 A careful perusal of petitioner's senate Blue Ribbon Committee Report No. 474, the
basis of the petition at bar, fails to yield any mention of said P.D. No. 1177's effect on NPC's tax exemption privileges. 63 Applying
by analogy Pulido vs. Pablo, 64 the court declares that the matter of P.D. No. 1177 abolishing NPC's tax exemption privileges
was not seasonably invoked 65 by the petitioner.
Be that as it may, the Court still has to discuss the effect of P.D. No. 1177 on the NPC tax exemption privileges as this statute
has been reiterated twice in P.D. No. 1931. The express repeal of tax privileges of any government-owned or controlled
corporation (GOCC). NPC included, was reiterated in the fourth whereas clause of P.D. No. 1931's preamble. The subsidy
provided for in Section 23, P.D. No. 1177, being inconsistent with Section 2, P.D. No. 1931, was deemed repealed as the
Fiscal Incentives Revenue Board was tasked with recommending the partial or total restoration of tax exemptions withdrawn
by Section 1, P.D. No. 1931.
The records before Us do not indicate whether or not NPC asked for the subsidy contemplated in Section 23, P.D. No. 1177.
Considering, however, that under Section 16 of P.D. No. 1177, NPC had to submit to the Office of the President its request for
the P200 million mandated by P.D. No. 758 to be appropriated annually by the Government to cover its unpaid subscription to
the NPC authorized capital stock and that under Section 22, of the same P.D. No. NPC had to likewise submit to the Office of
the President its internal operating budget for review due to capital inputs of the government (P.D. No. 758) and to the national
government's guarantee of the domestic and foreign indebtedness of the NPC, it is clear that NPC was covered by P.D. No.
1177.
There is reason to believe that NPC availed of subsidy granted to exempt GOCC's that suddenly found themselves having to
pay taxes. It will be noted that Section 23, P.D. No. 1177, mandated that the Secretary of Finance and the Commissioner of
the Budget had to establish the necessary procedure to accomplish the tax payment/tax subsidy scheme of the Government.
In effect, NPC, did not put any cash to pay any tax as it got from the General Fund the amounts necessary to pay different
revenue collectors for the taxes it had to pay.
In his memorandum filed July 16, 1992, petitioner submits:
[T]hat with the enactment of P.D. No. 1177 on July 30, 1977, the NPC lost all its duty and tax exemptions, whether
direct or indirect. And so there was nothing to be withdrawn or to be restored under P.D. No. 1931, issued on June 11,
1984. This is evident from sections 1 and 2 of said P.D. No. 1931, which reads:
"Section 1. The provisions of special or general law to the contrary notwithstanding, all exemptions from the
payment of duties, taxes, fees, imports and other charges heretofore granted in favor of government-owned or
controlled corporations including their subsidiaries are hereby withdrawn."
Page 16 of 134
Sec. 2. The President of the Philippines and/or the Minister of Finance, upon the recommendation of the Fiscal
Incentives Review Board created under P.D. No. 776, is hereby empowered to restore partially or totally, the
exemptions withdrawn by section 1 above. . . .
Hence, P.D. No. 1931 did not have any effect or did it change NPC's status. Since it had already lost all its tax
exemptions privilege with the issuance of P.D. No. 1177 seven (7) years earlier or on July 30, 1977, there were no tax
exemptions to be withdrawn by section 1 which could later be restored by the Minister of Finance upon the
recommendation of the FIRB under Section 2 of P.D. No. 1931. Consequently, FIRB resolutions No. 10-85, and 1-86,
were all illegally and validly issued since FIRB acted beyond their statutory authority by creating and not merely
restoring the tax exempt status of NPC. The same is true for FIRB Res. No. 17-87 which restored NPC's tax exemption
under E.O. No. 93 which likewise abolished all duties and tax exemptions but allowed the President upon
recommendation of the FIRB to restore those abolished.
The Court disagrees.
Applying by analogy the weight of authority that:
When a revised and consolidated act re-enacts in the same or substantially the same terms the provisions of the act
or acts so revised and consolidated, the revision and consolidation shall be taken to be a continuation of the former act
or acts, although the former act or acts may be expressly repealed by the revised and consolidated act; and all rights
and liabilities under the former act or acts are preserved and may be enforced. 66
the Court rules that when P.D. No. 1931 basically reenacted in its Section 1 the first half of Section 23, P.D. No. 1177, on
withdrawal of tax exemption privileges of all GOCC's said Section 1, P.D. No. 1931 was deemed to be a continuation of the
first half of Section 23, P.D. No. 1177, although the second half of Section 23, P.D. No. 177, on the subsidy scheme for former
tax exempt GOCCs had been expressly repealed by Section 2 with its institution of the FIRB recommendation of partial/total
restoration of tax exemption privileges.
The NPC tax privileges withdrawn by Section 1. P.D. No. 1931, were, therefore, the same NPC tax exemption privileges
withdrawn by Section 23, P.D. No. 1177. NPC could no longer obtain a subsidy for the taxes it had to pay. It could, however,
under P.D. No. 1931, ask for a total restoration of its tax exemption privileges, which, it did, and the same were granted under
FIRB Resolutions Nos. 10-85 67 and 1-86 68 as approved by the Minister of Finance.
Consequently, contrary to petitioner's submission, FIRB Resolutions Nos. 10-85 and 1-86 were both legally and validly issued
by the FIRB pursuant to P.D. No. 1931. FIRB did not created NPC's tax exemption status but merely restored it. 69
Some quarters have expressed the view that P.D. No. 1931 was illegally issued under the now rather infamous Amendment
No. 6 70 as there was no showing that President Marcos' encroachment on legislative prerogatives was justified under the then
prevailing condition that he could legislate "only if the Batasang Pambansa 'failed or was unable to act inadequately on any
matter that in his judgment required immediate action' to meet the 'exigency'. 71
Actually under said Amendment No. 6, then President Marcos could issue decrees not only when the Interim Batasang
Pambansa failed or was unable to act adequately on any matter for any reason that in his (Marcos') judgment required
immediate action, but also when there existed a grave emergency or a threat or thereof. It must be remembered that said
Presidential Decree was issued only around nine (9) months after the Philippines unilaterally declared a moratorium on its
foreign debt payments 72 as a result of the economic crisis triggered by loss of confidence in the government brought about by
the Aquino assassination. The Philippines was then trying to reschedule its debt payments. 73 One of the big borrowers was
the NPC 74 which had a US$ 2.1 billion white elephant of a Bataan Nuclear Power Plant on its back. 75 From all indications, it
must have been this grave emergency of a debt rescheduling which compelled Marcos to issue P.D. No. 1931, under his
Amendment 6 power. 76
The rule, therefore, that under the 1973 Constitution "no law granting a tax exemption shall be passed without the concurrence
of a majority of all the members of the Batasang Pambansa" 77 does not apply as said P.D. No. 1931 was not passed by the
Interim Batasang Pambansa but by then President Marcos under His Amendment No. 6 power.
P.D. No. 1931 was, therefore, validly issued by then President Marcos under his Amendment No. 6 authority.
Under E.O No. 93 (S'86) NPC's tax exemption privileges were again clipped by, this time, President Aquino. Its section 2
allowed the NPC to apply for the restoration of its tax exemption privileges. The same was granted under FIRB Resolution No.
Page 17 of 134
17-87 78 dated June 24, 1987 which restored NPC's tax exemption privileges effective, starting March 10, 1987, the date of
effectivity of E.O. No. 93 (S'86).
FIRB Resolution No. 17-87 was approved by the President on October 5, 1987. 79 There is no indication, however, from the
records of the case whether or not similar approvals were given by then President Marcos for FIRB Resolutions Nos. 10-85
and 1- 86. This has led some quarters to believe that a "travesty of justice" might have occurred when the Minister of Finance
approved his own recommendation as Chairman of the Fiscal Incentives Review Board as what happened in Zambales
Chromate vs. Court of Appeals 80 when the Secretary of Agriculture and Natural Resources approved a decision earlier
rendered by him when he was the Director of Mines, 81 and in Anzaldo vs. Clave 82 where Presidential Executive Assistant Clave
affirmed, on appeal to Malacañang, his own decision as Chairman of the Civil Service Commission. 83
Upon deeper analysis, the question arises as to whether one can talk about "due process" being violated when FIRB
Resolutions Nos. 10-85 and 1-86 were approved by the Minister of Finance when the same were recommended by him in his
capacity as Chairman of the Fiscal Incentives Review Board. 84
In Zambales Chromite and Anzaldo, two (2) different parties were involved: mining groups and scientist-doctors, respectively.
Thus, there was a need for procedural due process to be followed.
In the case of the tax exemption restoration of NPC, there is no other comparable entity — not even a single public or private
corporation — whose rights would be violated if NPC's tax exemption privileges were to be restored. While there might have
been a MERALCO before Martial Law, it is of public knowledge that the MERALCO generating plants were sold to the NPC in
line with the State policy that NPC was to be the State implementing arm for the electrification of the entire country. Besides,
MERALCO was limited to Manila and its environs. And as of 1984, there was no more MERALCO — as a producer of electricity
— which could have objected to the restoration of NPC's tax exemption privileges.
It should be noted that NPC was not asking to be granted tax exemption privileges for the first time. It was just asking that its
tax exemption privileges be restored. It is for these reasons that, at least in NPC's case, the recommendation and approval of
NPC's tax exemption privileges under FIRB Resolution Nos. 10-85 and 1-86, done by the same person acting in his dual
capacities as Chairman of the Fiscal Incentives Review Board and Minister of Finance, respectively, do not violate procedural
due process.
While as above-mentioned, FIRB Resolution No. 17-87 was approved by President Aquino on October 5, 1987, the view has
been expressed that President Aquino, at least with regard to E.O. 93 (S'86), had no authority to sub-delegate to the FIRB,
which was allegedly not a delegate of the legislature, the power delegated to her thereunder.
A misconception must be cleared up.
When E.O No. 93 (S'86) was issued, President Aquino was exercising both Executive and Legislative powers. Thus, there was
no power delegated to her, rather it was she who was delegating her power. She delegated it to the FIRB, which, for purposes
of E.O No. 93 (S'86), is a delegate of the legislature. Clearly, she was not sub-delegating her power.
And E.O. No. 93 (S'86), as a delegating law, was complete in itself — it set forth the policy to be carried out 85 and it fixed the
standard to which the delegate had to conform in the performance of his functions, 86 both qualities having been enunciated by
this Court in Pelaez vs. Auditor General. 87
Thus, after all has been said, it is clear that the NPC had its tax exemption privileges restored from June 11, 1984 up to the
present.
VII
The next question that projects itself is — who pays the tax?
The answer to the question could be gleamed from the manner by which the Commissaries of the Armed Forces of the
Philippines sell their goods.
By virtue of P.D. No. 83, 88 veterans, members of the Armed of the Philippines, and their defendants but groceries and other
goods free of all taxes and duties if bought from any AFP Commissaries.
Page 18 of 134
In practice, the AFP Commissary suppliers probably treat the unchargeable specific, ad valorem and other taxes on the goods
earmarked for AFP Commissaries as an added cost of operation and distribute it over the total units of goods sold as it would
any other cost. Thus, even the ordinary supermarket buyer probably pays for the specific, ad valorem and other taxes which
theses suppliers do not charge the AFP Commissaries. 89
IN MUCH THE SAME MANNER, it is clear that private respondents-oil companies have to absorb the taxes they add to the
bunker fuel oil they sell to NPC.
It should be stated at this juncture that, as early as May 14, 1954, the Secretary of Justice renders an opinion, 90wherein he
stated and We quote:
xxx xxx xxx
Republic Act No. 358 exempts the National Power Corporation from "all taxes, duties, fees, imposts, charges, and
restrictions of the Republic of the Philippines and its provinces, cities, and municipalities." This exemption is broad
enough to include all taxes, whether direct or indirect, which the National Power Corporation may be required to pay,
such as the specific tax on petroleum products. That it is indirect or is of no amount [should be of no moment], for it is
the corporation that ultimately pays it. The view which refuses to accord the exemption because the tax is first paid by
the seller disregards realities and gives more importance to form than to substance. Equity and law always exalt
substance over from.
xxx xxx xxx
Tax exemptions are undoubtedly to be construed strictly but not so grudgingly as knowledge that many impositions
taxpayers have to pay are in the nature of indirect taxes. To limit the exemption granted the National Power Corporation
to direct taxes notwithstanding the general and broad language of the statue will be to thwrat the legislative intention
in giving exemption from all forms of taxes and impositions without distinguishing between those that are direct and
those that are not. (Emphasis supplied)
In view of all the foregoing, the Court rules and declares that the oil companies which supply bunker fuel oil to NPC have to
pay the taxes imposed upon said bunker fuel oil sold to NPC. By the very nature of indirect taxation, the economic burden of
such taxation is expected to be passed on through the channels of commerce to the user or consumer of the goods sold.
Because, however, the NPC has been exempted from both direct and indirect taxation, the NPC must beheld exempted from
absorbing the economic burden of indirect taxation. This means, on the one hand, that the oil companies which wish to sell to
NPC absorb all or part of the economic burden of the taxes previously paid to BIR, which could they shift to NPC if NPC did
not enjoy exemption from indirect taxes. This means also, on the other hand, that the NPC may refuse to pay the part of the
"normal" purchase price of bunker fuel oil which represents all or part of the taxes previously paid by the oil companies to BIR.
If NPC nonetheless purchases such oil from the oil companies — because to do so may be more convenient and ultimately
less costly for NPC than NPC itself importing and hauling and storing the oil from overseas — NPC is entitled to be reimbursed
by the BIR for that part of the buying price of NPC which verifiably represents the tax already paid by the oil company-vendor
to the BIR.
It should be noted at this point in time that the whole issue of who WILL pay these indirect taxes HAS BEEN RENDERED moot
and academic by E.O. No. 195 issued on June 16, 1987 by virtue of which the ad valorem tax rate on bunker fuel oil was
reduced to ZERO (0%) PER CENTUM. Said E.O. no. 195 reads as follows:
EXECUTIVE ORDER NO. 195
AMENDING PARAGRAPH (b) OF SECTION 128 OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED BY REVISING THE EXCISE TAX RATES OF CERTAIN PETROLEUM PRODUCTS.
xxx xxx xxx
Sec. 1. Paragraph (b) of Section 128 of the National Internal Revenue Code, as amended, is hereby amended to read
as follows:
Par. (b) — For products subject to ad valorem tax only:
PRODUCT AD VALOREM TAX RATE

Page 19 of 134
1. . . .
2. . . .
3. . . .
4. Fuel oil, commercially known as bunker oil and on similar fuel oils having more or less the same generating power
0%
xxx xxx xxx
Sec. 3. This Executive Order shall take effect immediately.
Done in the city of Manila, this 17th day of June, in the year of Our Lord, nineteen hundred and eighty-seven. (Emphasis
supplied)
The oil companies can now deliver bunker fuel oil to NPC without having to worry about who is going to bear the economic
burden of the ad valorem taxes. What this Court will now dispose of are petitioner's complaints that some indirect tax money
has been illegally refunded by the Bureau of Internal Revenue to the NPC and that more claims for refunds by the NPC are
being processed for payment by the BIR.
A case in point is the Tax Credit Memo issued by the Bureau of Internal Revenue in favor of the NPC last July 7, 1986 for
P58.020.110.79 which were for "erroneously paid specific and ad valorem taxes during the period from October 31, 1984 to
April 27, 1985. 91 Petitioner asks Us to declare this Tax Credit Memo illegal as the PNC did not have indirect tax exemptions
with the enactment of P.D. No. 938. As We have already ruled otherwise, the only questions left are whether NPC Is entitled
to a tax refund for the tax component of the price of the bunker fuel oil purchased from Caltex (Phils.) Inc. and whether the
Bureau of Internal Revenue properly refunded the amount to NPC.
After P.D. No. 1931 was issued on June 11, 1984 withdrawing the tax exemptions of all GOCCs — NPC included, it was only
on May 8, 1985 when the BIR issues its letter authority to the NPC authorizing it to withdraw tax-free bunker fuel oil from the
oil companies pursuant to FIRB Resolution No. 10-85. 92 Since the tax exemption restoration was retroactive to June 11, 1984
there was a need. therefore, to recover said amount as Caltex (PhiIs.) Inc. had already paid the BIR the specific and ad
valorem taxes on the bunker oil it sold NPC during the period above indicated and had billed NPC correspondingly. 93 It should
be noted that the NPC, in its letter-claim dated September 11, 1985 to the Commissioner of the Bureau of Internal Revenue
DID NOT CATEGORICALLY AND UNEQUIVOCALLY STATE that itself paid the P58.020,110.79 as part of the bunker fuel oil
price it purchased from Caltex (Phils) Inc. 94
The law governing recovery of erroneously or illegally, collected taxes is section 230 of the National Internal Revenue Code of
1977, as amended which reads as follows:
Sec. 230. Recover of tax erroneously or illegally collected. — No suit or proceeding shall be maintained in any court
for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed
or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been
excessive or in any Manner wrongfully collected. until a claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid
under protest or duress.
In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of
the tax or penalty regardless of any supervening cause that may arise after payment; Provided, however, That the
Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon
which payment was made, such payment appears clearly, to have been erroneously paid.
xxx xxx xxx
Inasmuch as NPC filled its claim for P58.020,110.79 on September 11, 1985, 95
the Commissioner correctly issued the Tax
Credit Memo in view of NPC's indirect tax exemption.
Petitioner, however, asks Us to restrain the Commissioner from acting favorably on NPC's claim for P410.580,000.00 which
represents specific and ad valorem taxes paid by the oil companies to the BIR from June 11, 1984 to the early part of 1986. 96
Page 20 of 134
A careful examination of petitioner's pleadings and annexes attached thereto does not reveal when the alleged claim for a
P410,580,000.00 tax refund was filed. It is only stated In paragraph No. 2 of the Deed of Assignment 97executed by and between
NPC and Caltex (Phils.) Inc., as follows:
That the ASSIGNOR(NPC) has a pending tax credit claim with the Bureau of Internal Revenue amounting to
P442,887,716.16. P58.020,110.79 of which is due to Assignor's oil purchases from the Assignee (Caltex [Phils.] Inc.)
Actually, as the Court sees it, this is a clear case of a "Mexican standoff." We cannot restrain the BIR from refunding said
amount because of Our ruling that NPC has both direct and indirect tax exemption privileges. Neither can We order the BIR to
refund said amount to NPC as there is no pending petition for review on certiorari of a suit for its collection before Us. At any
rate, at this point in time, NPC can no longer file any suit to collect said amount EVEN IF lt has previously filed a claim with the
BIR because it is time-barred under Section 230 of the National Internal Revenue Code of 1977. as amended, which states:
In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of
the tax or penalty REGARDLESS of any supervening cause that may arise after payment. . . . (Emphasis supplied)
The date of the Deed of Assignment is June 6. 1986. Even if We were to assume that payment by NPC for the amount of
P410,580,000.00 had been made on said date. it is clear that more than two (2) years had already elapsed from said date. At
the same time, We should note that there is no legal obstacle to the BIR granting, even without a suit by NPC, the tax credit or
refund claimed by NPC, assuming that NPC's claim had been made seasonably, and assuming the amounts covered had
actually been paid previously by the oil companies to the BIR.
WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of petitioner is hereby DENIED for lack of merit and
the decision of this Court promulgated on May 31, 1991 is hereby AFFIRMED.
SO ORDERED.
SECOND DIVISION
G.R. No. L-32166 October 18, 1977
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,

vs.
HON. MAXIMO A. MACEREN CFI, Sta. Cruz, Laguna, JOSE BUENAVENTURA, GODOFREDO REYES, BENJAMIN
REYES, NAZARIO AQUINO and CARLO DEL ROSARIO, accused-appellees.
AQUINO, J.: têñ .£îhqwâ£
This is a case involving the validity of a 1967 regulation, penalizing electro fishing in fresh water fisheries, promulgated by the
Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries under the old Fisheries Law and the law
creating the Fisheries Commission.
On March 7, 1969 Jose Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario Aquino and Carlito del Rosario were
charged by a Constabulary investigator in the municipal court of Sta. Cruz, Laguna with having violated Fisheries
Administrative Order No. 84-1.
It was alleged in the complaint that the five accused in the morning of March 1, 1969 resorted to electro fishing in the waters
of Barrio San Pablo Norte, Sta. Cruz by "using their own motor banca, equipped with motor; with a generator colored green
with attached dynamo colored gray or somewhat white; and electrocuting device locally known as sensored with a somewhat
webbed copper wire on the tip or other end of a bamboo pole with electric wire attachment which was attached to the dynamo
direct and with the use of these devices or equipments catches fish thru electric current, which destroy any aquatic animals
within its cuffed reach, to the detriment and prejudice of the populace" (Criminal Case No. 5429).
Upon motion of the accused, the municipal court quashed the complaint. The prosecution appealed. The Court of First Instance
of Laguna affirmed the order of dismissal (Civil Case No. SC-36). The case is now before this Court on appeal by the
prosecution under Republic Act No. 5440.
Page 21 of 134
The lower court held that electro fishing cannot be penalize because electric current is not an obnoxious or poisonous
substance as contemplated in section I I of the Fisheries Law and that it is not a substance at all but a form of energy conducted
or transmitted by substances. The lower court further held that, since the law does not clearly prohibit electro fishing, the
executive and judicial departments cannot consider it unlawful.
As legal background, it should be stated that section 11 of the Fisheries Law prohibits "the use of any obnoxious or
poisonous substance" in fishing.
Section 76 of the same law punishes any person who uses an obnoxious or poisonous substance in fishing with a fine of not
more than five hundred pesos nor more than five thousand, and by imprisonment for not less than six months nor more than
five years.
It is noteworthy that the Fisheries Law does not expressly punish .electro fishing." Notwithstanding the silence of the law, the
Secretary of Agriculture and Natural Resources, upon the recommendation of the Commissioner of Fisheries,
promulgated Fisheries Administrative Order No. 84 (62 O.G. 1224), prohibiting electro fishing in all Philippine waters.
The order is quoted below: ñé+.£ªwph!1
SUBJECT: PROHIBITING ELECTRO FISHING IN ALL WATERS OF THE PHILIPPINES.
Pursuant to Section 4 of Act No. 4003, as amended, and Section 4 of R.A. No. 3512, the following rules and regulations
regarding the prohibition of electro fishing in all waters of the Philippines are promulgated for the information and guidance of
all concerned.ñé+.£ªw ph!1
SECTION 1. — Definition. — Words and terms used in this Order 11 construed as follows:
(a) Philippine waters or territorial waters of the Philippines' includes all waters of the Philippine Archipelago, as defined
in the t between the United States and Spain, dated respectively the tenth of December, eighteen hundred ninety eight
and the seventh of November, nineteen hundred. For the purpose of this order, rivers, lakes and other bodies of fresh
waters are included.
(b) Electro Fishing. — Electro fishing is the catching of fish with the use of electric current. The equipment used are of
many electrical devices which may be battery or generator-operated and from and available source of electric current.
(c) 'Persons' includes firm, corporation, association, agent or employee.
(d) 'Fish' includes other aquatic products.
SEC. 2. — Prohibition. — It shall be unlawful for any person to engage in electro fishing or to catch fish by the use of
electric current in any portion of the Philippine waters except for research, educational and scientific purposes which
must be covered by a permit issued by the Secretary of Agriculture and Natural Resources which shall be carried at all
times.
SEC. 3. — Penalty. — Any violation of the provisions of this Administrative Order shall subject the offender to a fine of
not exceeding five hundred pesos (P500.00) or imprisonment of not extending six (6) months or both at the discretion
of the Court.
SEC. 4. — Repealing Provisions. — All administrative orders or parts thereof inconsistent with the provisions of this
Administrative Order are hereby revoked.
SEC. 5. — Effectivity. — This Administrative Order shall take effect six (60) days after its publication in the Office
Gazette.
On June 28, 1967 the Secretary of Agriculture and Natural Resources, upon the recommendation of the Fisheries Commission,
issued Fisheries Administrative Order No. 84-1, amending section 2 of Administrative Order No. 84, by restricting the ban
against electro fishing to fresh water fisheries (63 O.G. 9963).
Page 22 of 134
Thus, the phrase "in any portion of the Philippine waters" found in section 2, was changed by the amendatory order to read as
follows: "in fresh water fisheries in the Philippines, such as rivers, lakes, swamps, dams, irrigation canals and other bodies of
fresh water."
The Court of First Instance and the prosecution (p. 11 of brief) assumed that electro fishing is punishable under section 83 of
the Fisheries Law (not under section 76 thereof), which provides that any other violation of that law "or of any rules and
regulations promulgated thereunder shall subject the offender to a fine of not more than two hundred pesos (P200), or in t for
not more than six months, or both, in the discretion of the court."
That assumption is incorrect because 3 of the aforequoted Administrative Order No. 84 imposes a fine of not exceeding P500
on a person engaged in electro fishing, which amount the 83. It seems that the Department of Fisheries prescribed their own
penalty for swift fishing which penalty is less than the severe penalty imposed in section 76 and which is not Identified to the
at penalty imposed in section 83.
Had Administrative Order No. 84 adopted the fighter penalty prescribed in on 83, then the crime of electro fishing would be
within the exclusive original jurisdiction of the inferior court (Sec. 44 [f], Judiciary Law; People vs. Ragasi, L-28663, September
22,
We have discussed this pre point, not raised in the briefs, because it is obvious that the crime of electro fishing which is
punishable with a sum up to P500, falls within the concurrent original jurisdiction of the inferior courts and the Court of First
instance (People vs. Nazareno, L-40037, April 30, 1976, 70 SCRA 531 and the cases cited therein).
And since the instant case was filed in the municipal court of Sta. Cruz, Laguna, a provincial capital, the order of d rendered
by that municipal court was directly appealable to the Court, not to the Court of First Instance of Laguna (Sec. 45 and last par.
of section 87 of the Judiciary Law; Esperat vs. Avila, L-25992, June 30, 1967, 20 SCRA 596).
It results that the Court of First Instance of Laguna had no appellate jurisdiction over the case. Its order affirming the municipal
court's order of dismissal is void for lack of motion. This appeal shall be treated as a direct appeal from the municipal court to
this Court. (See People vs. Del Rosario, 97 Phil. 67).
In this appeal, the prosecution argues that Administrative Orders Nos. 84 and 84-1 were not issued under section 11 of the
Fisheries Law which, as indicated above, punishes fishing by means of an obnoxious or poisonous substance. This contention
is not well-taken because, as already stated, the Penal provision of Administrative Order No. 84 implies that electro
fishing is penalized as a form of fishing by means of an obnoxious or poisonous substance under section 11.
The prosecution cites as the legal sanctions for the prohibition against electro fishing in fresh water fisheries (1) the rule-making
power of the Department Secretary under section 4 of the Fisheries Law; (2) the function of the Commissioner of Fisheries to
enforce the provisions of the Fisheries Law and the regulations Promulgated thereunder and to execute the rules and
regulations consistent with the purpose for the creation of the Fisheries Commission and for the development of fisheries (Sec.
4[c] and [h] Republic Act No. 3512; (3) the declared national policy to encourage, Promote and conserve our fishing resources
(Sec. 1, Republic Act No. 3512), and (4) section 83 of the Fisheries Law which provides that "any other violation of" the
Fisheries Law or of any rules and regulations promulgated thereunder "shall subject the offender to a fine of not more than two
hundred pesos, or imprisonment for not more than six months, or both, in the discretion of the court."
As already pointed out above, the prosecution's reference to section 83 is out of place because the penalty for electro fishing
under Administrative order No. 84 is not the same as the penalty fixed in section 83.
We are of the opinion that the Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries exceeded
their authority in issuing Fisheries Administrative Orders Nos. 84 and 84-1 and that those orders are not warranted under the
Fisheries Commission, Republic Act No. 3512.
The reason is that the Fisheries Law does not expressly prohibit electro fishing. As electro fishing is not banned under that
law, the Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries are powerless to penalize
it. In other words, Administrative Orders Nos. 84 and 84-1, in penalizing electro fishing, are devoid of any legal basis.
Had the lawmaking body intended to punish electro fishing, a penal provision to that effect could have been easily embodied
in the old Fisheries Law.
Page 23 of 134
That law punishes (1) the use of obnoxious or poisonous substance, or explosive in fishing; (2) unlawful fishing in deepsea
fisheries; (3) unlawful taking of marine molusca, (4) illegal taking of sponges; (5) failure of licensed fishermen to report the kind
and quantity of fish caught, and (6) other violations.
Nowhere in that law is electro fishing specifically punished. Administrative Order No. 84, in punishing electro fishing, does not
contemplate that such an offense fails within the category of "other violations" because, as already shown, the penalty for
electro fishing is the penalty next lower to the penalty for fishing with the use of obnoxious or poisonous substances, fixed in
section 76, and is not the same as the penalty for "other violations" of the law and regulations fixed in section 83 of the Fisheries
Law.
The lawmaking body cannot delegate to an executive official the power to declare what acts should constitute an
offense. It can authorize the issuance of regulations and the imposition of the penalty provided for in the law itself.
(People vs. Exconde 101 Phil. 11 25, citing 11 Am. Jur. 965 on p. 11 32).
Originally, Administrative Order No. 84 punished electro fishing in all waters. Later, the ban against electro fishing was confined
to fresh water fisheries. The amendment created the impression that electro fishing is not condemnable per se. It could be
tolerated in marine waters. That circumstances strengthens the view that the old law does not eschew all forms of electro
fishing.
However, at present, there is no more doubt that electro fishing is punishable under the Fisheries Law and that it cannot be
penalized merely by executive revolution because Presidential Decree No. 704, which is a revision and consolidation of all
laws and decrees affecting fishing and fisheries and which was promulgated on May 16, 1975 (71 O.G. 4269), expressly
punishes electro fishing in fresh water and salt water areas.
That decree provides: ñé+.£ªwph!1
SEC. 33. — Illegal fishing, dealing in illegally caught fish or fishery/aquatic products. — It shall he unlawful for any
person to catch, take or gather or cause to be caught, taken or gathered fish or fishery/aquatic products in Philippine
waters with the use of explosives, obnoxious or poisonous substance, or by the use of electricity as defined in
paragraphs (1), (m) and (d), respectively, of Section 3 hereof: ...
The decree Act No. 4003, as amended, Republic Acts Nos. 428, 3048, 3512 and 3586, Presidential Decrees Nos. 43, 534 and
553, and all , Acts, Executive Orders, rules and regulations or parts thereof inconsistent with it (Sec. 49, P. D. No. 704).
The inclusion in that decree of provisions defining and penalizing electro fishing is a clear recognition of the deficiency or
silence on that point of the old Fisheries Law. It is an admission that a mere executive regulation is not legally adequate to
penalize electro fishing.
Note that the definition of electro fishing, which is found in section 1 (c) of Fisheries Administrative Order No. 84 and which is
not provided for the old Fisheries Law, is now found in section 3(d) of the decree. Note further that the decree penalty electro
fishing by "imprisonment from two (2) to four (4) years", a punishment which is more severe than the penalty of a time of not
excluding P500 or imprisonment of not more than six months or both fixed in section 3 of Fisheries Administrative Order No.
84.
An examination of the rule-making power of executive officials and administrative agencies and, in particular, of the Secretary
of Agriculture and Natural Resources (now Secretary of Natural Resources) under the Fisheries Law sustains the view that he
ex his authority in penalizing electro fishing by means of an administrative order.
Administrative agents are clothed with rule-making powers because the lawmaking body finds it impracticable, if not
impossible, to anticipate and provide for the multifarious and complex situations that may be encountered in
enforcing the law. All that is required is that the regulation should be germane to the defects and purposes of the law
and that it should conform to the standards that the law prescribes (People vs. Exconde 101 Phil. 1125; Director of
Forestry vs. Muñ;oz, L-24796, June 28, 1968, 23 SCRA 1183, 1198; Geukeko vs. Araneta, 102 Phil. 706, 712).
The lawmaking body cannot possibly provide for all the details in the enforcement of a particular statute (U.S. vs.
Tupasi Molina, 29 Phil. 119, 125, citing U.S. vs. Grimaud 220 U.S. 506; Interprovincial Autobus Co., Inc. vs. Coll. of Internal
Revenue, 98 Phil. 290, 295-6).
Page 24 of 134
The grant of the rule-making power to administrative agencies is a relaxation of the principle of separation of powers
and is an exception to the non-delegation of legislative, powers. Administrative regulations or "subordinate legislation
calculated to promote the public interest are necessary because of "the growing complexity of modem life, the
multiplication of the subjects of governmental regulations, and the increased difficulty of administering the law"
Calalang vs. Williams, 70 Phil. 726; People vs. Rosenthal and Osmeñ;a, 68 Phil. 328).
Administrative regulations adopted under legislative authority by a particular department must be in harmony with
the provisions of the law, and should be for the sole purpose of carrying into effect its general provisions. By such
regulations, of course, the law itself cannot be extended. (U.S. vs. Tupasi Molina, supra). An administrative agency
cannot amend an act of Congress (Santos vs. Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of the d of Administrators,
L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660;
Deluao vs. Casteel, L-21906, August 29, 1969, 29 SCRA 350).
The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the law
as it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to
embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned. (University of Santo
Tomas vs. Board of Tax A 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see of Internal Revenue vs. Villaflor
69 Phil. 319, Wise & Co. vs. Meer, 78 Phil. 655, 676; Del March vs. Phil. Veterans Administrative, L-27299, June 27, 1973, 51
SCRA 340, 349).
There is no question that the Secretary of Agriculture and Natural Resources has rule-making powers. Section 4 of the Fisheries
law provides that the Secretary "shall from time to time issue instructions, orders, and regulations consistent" with that law, "as
may be and proper to carry into effect the provisions thereof." That power is now vested in the Secretary of Natural Resources
by on 7 of the Revised Fisheries law, Presidential December No. 704.
Section 4(h) of Republic Act No. 3512 empower the Code of Fisheries "to prepare and execute upon the approval of the
Secretary of Agriculture and Natural Resources, forms instructions, rules and regulations consistent with the purpose" of that
enactment "and for the development of fisheries."
Section 79(B) of the Revised Administrative Code provides that "the Department Head shall have the power to promulgate,
whenever he may see fit do so, all rules, regulates, orders, memorandums, and other instructions, not contrary to law, to
regulate the proper working and harmonious and efficient administration of each and all of the offices and dependencies of his
Department, and for the strict enforcement and proper execution of the laws relative to matters under the jurisdiction of said
Department; but none of said rules or orders shall prescribe penalties for the violation thereof, except as expressly authorized
by law."
Administrative regulations issued by a Department Head in conformity with law have the force of law (Valerie vs. Secretary of
culture and Natural Resources, 117 Phil. 729, 733; Antique Sawmills, Inc. vs. Zayco, L- 20051, May 30, 1966, 17 SCRA 316).
As he exercises the rule-making power by delegation of the lawmaking body, it is a requisite that he should not transcend the
bound demarcated by the statute for the exercise of that power; otherwise, he would be improperly exercising legislative power
in his own right and not as a surrogate of the lawmaking body.
Article 7 of the Civil Code embodies the basic principle that administrative or executive acts, orders and regulations shall be
valid only when they are not contrary to the laws or the Constitution."
As noted by Justice Fernando, "except for constitutional officials who can trace their competence to act to the fundamental law
itself, a public office must be in the statute relied upon a grant of power before he can exercise it." "department zeal may not
be permitted to outrun the authority conferred by statute." (Radio Communications of the Philippines, Inc. vs. Santiago, L-
29236, August 21, 1974, 58 SCRA 493, 496-8).
"Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon the
administrative agency by law, partake of the nature of a statute, and compliance therewith may be enforced by a penal
sanction provided in the law. This is so because statutes are usually couched in general terms, after expressing the
policy, purposes, objectives, remedies and sanctions intended by the legislature. The details and the manner of
carrying out the law are oftentimes left to the administrative agency entrusted with its enforcement. In this sense, it
has been said that rules and regulations are the product of a delegated power to create new or additional legal
provisions that have the effect of law." The rule or regulation should be within the scope of the statutory authority
granted by the legislature to the administrative agency. (Davis, Administrative Law, p. 194, 197, cited in Victories Milling
Co., Inc. vs. Social Security Commission, 114 Phil. 555, 558).
Page 25 of 134
In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law
prevails because said rule or regulation cannot go beyond the terms and provisions of the basic law (People vs. Lim,
108 Phil. 1091).
This Court in its decision in the Lim case, supra, promulgated on July 26, 1960, called the attention of technical men in the
executive departments, who draft rules and regulations, to the importance and necessity of closely following the legal provisions
which they intend to implement so as to avoid any possible misunderstanding or confusion.
The rule is that the violation of a regulation prescribed by an executive officer of the government in conformity with and based
upon a statute authorizing such regulation constitutes an offense and renders the offender liable to punishment in accordance
with the provisions of the law (U.S. vs. Tupasi Molina, 29 Phil. 119, 124).
In other words, a violation or infringement of a rule or regulation validly issued can constitute a crime punishable as provided
in the authorizing statute and by virtue of the latter (People vs. Exconde 101 Phil. 1125, 1132).
It has been held that "to declare what shall constitute a crime and how it shall be punished is a power vested exclusively in the
legislature, and it may not be delegated to any other body or agency" (1 Am. Jur. 2nd, sec. 127, p. 938; Texas Co. vs.
Montgomery, 73 F. Supp. 527).
In the instant case the regulation penalizing electro fishing is not strictly in accordance with the Fisheries Law, under
which the regulation was issued, because the law itself does not expressly punish electro fishing.
The instant case is similar to People vs. Santos, 63 Phil. 300. The Santos case involves section 28 of Fish and Game
Administrative Order No. 2 issued by the Secretary of Agriculture and Natural Resources pursuant to the aforementioned
section 4 of the Fisheries Law.
Section 28 contains the proviso that a fishing boat not licensed under the Fisheries Law and under the said administrative
order may fish within three kilometers of the shoreline of islands and reservations over which jurisdiction is exercised by naval
and military reservations authorities of the United States only upon receiving written permission therefor, which permission
may be granted by the Secretary upon recommendation of the military or naval authorities concerned. A violation of the proviso
may be proceeded against under section 45 of the Federal Penal Code.
Augusto A. Santos was prosecuted under that provision in the Court of First Instance of Cavite for having caused his two fishing
boats to fish, loiter and anchor without permission from the Secretary within three kilometers from the shoreline of Corrigidor
Island.
This Court held that the Fisheries Law does not prohibit boats not subject to license from fishing within three kilometers of the
shoreline of islands and reservations over which jurisdiction is exercised by naval and military authorities of the United States,
without permission from the Secretary of Agriculture and Natural Resources upon recommendation of the military and naval
authorities concerned.
As the said law does not penalize the act mentioned in section 28 of the administrative order, the promulgation of that provision
by the Secretary "is equivalent to legislating on the matter, a power which has not been and cannot be delegated to him, it
being expressly reserved" to the lawmaking body. "Such an act constitutes not only an excess of the regulatory power conferred
upon the Secretary but also an exercise of a legislative power which he does not have, and therefore" the said provision "is
null and void and without effect". Hence, the charge against Santos was dismiss.
A penal statute is strictly construed. While an administrative agency has the right to make ranks and regulations to carry into
effect a law already enacted, that power should not be confused with the power to enact a criminal statute. An administrative
agency can have only the administrative or policing powers expressly or by necessary implication conferred upon it. (Glustrom
vs. State, 206 Ga. 734, 58 Second 2d 534; See 2 Am. Jr. 2nd 129-130).
Where the legislature has delegated to executive or administrative officers and boards authority to promulgate rules to carry
out an express legislative purpose, the rules of administrative officers and boards, which have the effect of extending, or which
conflict with the authority granting statute, do not represent a valid precise of the rule-making power but constitute an attempt
by an administrative body to legislate (State vs. Miles, Wash. 2nd 322, 105 Pac. 2nd 51).
Page 26 of 134
In a prosecution for a violation of an administrative order, it must clearly appear that the order is one which falls within the
scope of the authority conferred upon the administrative body, and the order will be scrutinized with special care. (State vs.
Miles supra).
The Miles case involved a statute which authorized the State Game Commission "to adopt, promulgate, amend and/or repeal,
and enforce reasonable rules and regulations governing and/or prohibiting the taking of the various classes of game.
Under that statute, the Game Commission promulgated a rule that "it shall be unlawful to offer, pay or receive any reward,
prize or compensation for the hunting, pursuing, taking, killing or displaying of any game animal, game bird or game fish or any
part thereof."
Beryl S. Miles, the owner of a sporting goods store, regularly offered a ten-down cash prize to the person displaying the largest
deer in his store during the open for hunting such game animals. For that act, he was charged with a violation of the rule
Promulgated by the State Game Commission.
It was held that there was no statute penalizing the display of game. What the statute penalized was the taking of game. If the
lawmaking body desired to prohibit the display of game, it could have readily said so. It was not lawful for the administrative
board to extend or modify the statute. Hence, the indictment against Miles was quashed. The Miles case is similar to this case.
WHEREFORE, the lower court's decision of June 9, 1970 is set aside for lack of appellate jurisdiction and the order of dismissal
rendered by the municipal court of Sta. Cruz, Laguna in Criminal Case No. 5429 is affirmed. Costs de oficio.
SO ORDERED.
FIRST DIVISION
G.R. No. 151908 August 12, 2003
SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE CORPORATION (PILTEL), petitioners,
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent.
x---------------------------------------------------------x
G.R. No. 152063 August 12, 2003
GLOBE TELECOM, INC. (GLOBE) and ISLA COMMUNICATIONS CO., INC. (ISLACOM), petitioners,
vs.
COURT OF APPEALS (The Former 6th Division) and the NATIONAL TELECOMMUNICATIONS
COMMISSION, respondents.
YNARES-SANTIAGO, J.:
Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission (NTC) issued on June 16,
2000 Memorandum Circular No. 13-6-2000, promulgating rules and regulations on the billing of telecommunications services.
Among its pertinent provisions are the following:
(1) The billing statements shall be received by the subscriber of the telephone service not later than 30 days from the
end of each billing cycle. In case the statement is received beyond this period, the subscriber shall have a specified
grace period within which to pay the bill and the public telecommunications entity (PTEs) shall not be allowed to
disconnect the service within the grace period.
(2) There shall be no charge for calls that are diverted to a voice mailbox, voice prompt, recorded message or similar
facility excluding the customer's own equipment.
Page 27 of 134
(3) PTEs shall verify the identification and address of each purchaser of prepaid SIM cards. Prepaid call cards and SIM
cards shall be valid for at least 2 years from the date of first use. Holders of prepaid SIM cards shall be given 45 days
from the date the prepaid SIM card is fully consumed but not beyond 2 years and 45 days from date of first use to
replenish the SIM card, otherwise the SIM card shall be rendered invalid. The validity of an invalid SIM card, however,
shall be installed upon request of the customer at no additional charge except the presentation of a valid prepaid call
card.
(4) Subscribers shall be updated of the remaining value of their cards before the start of every call using the cards.
(5) The unit of billing for the cellular mobile telephone service whether postpaid or prepaid shall be reduced from 1
minute per pulse to 6 seconds per pulse. The authorized rates per minute shall thus be divided by 10.1
The Memorandum Circular provided that it shall take effect 15 days after its publication in a newspaper of general circulation
and three certified true copies thereof furnished the UP Law Center. It was published in the newspaper, The Philippine Star,
on June 22, 2000.2 Meanwhile, the provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and
the unit of billing for cellular mobile telephone service took effect 90 days from the effectivity of the Memorandum Circular.
On August 30, 2000, the NTC issued a Memorandum to all cellular mobile telephone service (CMTS) operators which contained
measures to minimize if not totally eliminate the incidence of stealing of cellular phone units. The Memorandum directed CMTS
operators to:
a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and verification of the identity and
addresses of prepaid SIM card customers;
b. require all your respective prepaid SIM cards dealers to comply with Section B(1) of MC 13-6-2000;
c. deny acceptance to your respective networks prepaid and/or postpaid customers using stolen cellphone units or
cellphone units registered to somebody other than the applicant when properly informed of all information relative to
the stolen cellphone units;
d. share all necessary information of stolen cellphone units to all other CMTS operators in order to prevent the use of
stolen cellphone units; and
e. require all your existing prepaid SIM card customers to register and present valid identification cards.3
This was followed by another Memorandum dated October 6, 2000 addressed to all public telecommunications entities, which
reads:
This is to remind you that the validity of all prepaid cards sold on 07 October 2000 and beyond shall be valid for at least
two (2) years from date of first use pursuant to MC 13-6-2000.
In addition, all CMTS operators are reminded that all SIM packs used by subscribers of prepaid cards sold on 07
October 2000 and beyond shall be valid for at least two (2) years from date of first use. Also, the billing unit shall be on
a six (6) seconds pulse effective 07 October 2000.
For strict compliance.4
On October 20, 2000, petitioners Isla Communications Co., Inc. and Pilipino Telephone Corporation filed against the National
Telecommunications Commission, Commissioner Joseph A. Santiago, Deputy Commissioner Aurelio M. Umali and Deputy
Commissioner Nestor C. Dacanay, an action for declaration of nullity of NTC Memorandum Circular No. 13-6-2000 (the Billing
Circular) and the NTC Memorandum dated October 6, 2000, with prayer for the issuance of a writ of preliminary injunction and
temporary restraining order. The complaint was docketed as Civil Case No. Q-00-42221 at the Regional Trial Court of Quezon
City, Branch 77.5
Petitioners Islacom and Piltel alleged, inter alia, that the NTC has no jurisdiction to regulate the sale of consumer goods such
as the prepaid call cards since such jurisdiction belongs to the Department of Trade and Industry under the Consumer Act of
the Philippines; that the Billing Circular is oppressive, confiscatory and violative of the constitutional prohibition against
deprivation of property without due process of law; that the Circular will result in the impairment of the viability of the prepaid
cellular service by unduly prolonging the validity and expiration of the prepaid SIM and call cards; and that the requirements of
Page 28 of 134
identification of prepaid card buyers and call balance announcement are unreasonable. Hence, they prayed that the Billing
Circular be declared null and void ab initio.
Soon thereafter, petitioners Globe Telecom, Inc and Smart Communications, Inc. filed a joint Motion for Leave to Intervene
and to Admit Complaint-in-Intervention.6 This was granted by the trial court.
On October 27, 2000, the trial court issued a temporary restraining order enjoining the NTC from implementing Memorandum
Circular No. 13-6-2000 and the Memorandum dated October 6, 2000.7
In the meantime, respondent NTC and its co-defendants filed a motion to dismiss the case on the ground of petitioners' failure
to exhaust administrative remedies.
Subsequently, after hearing petitioners' application for preliminary injunction as well as respondent's motion to dismiss, the trial
court issued on November 20, 2000 an Order, the dispositive portion of which reads:
WHEREFORE, premises considered, the defendants' motion to dismiss is hereby denied for lack of merit. The plaintiffs'
application for the issuance of a writ of preliminary injunction is hereby granted. Accordingly, the defendants are hereby
enjoined from implementing NTC Memorandum Circular 13-6-2000 and the NTC Memorandum, dated October 6, 2000,
pending the issuance and finality of the decision in this case. The plaintiffs and intervenors are, however, required to
file a bond in the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00), Philippine currency.
SO ORDERED.8
Defendants filed a motion for reconsideration, which was denied in an Order dated February 1, 2001.9
Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of Appeals, which was docketed
as CA-G.R. SP. No. 64274. On October 9, 2001, a decision was rendered, the decretal portion of which reads:
WHEREFORE, premises considered, the instant petition for certiorari and prohibition is GRANTED, in that, the order
of the court a quo denying the petitioner's motion to dismiss as well as the order of the court a quo granting the private
respondents' prayer for a writ of preliminary injunction, and the writ of preliminary injunction issued thereby, are hereby
ANNULLED and SET ASIDE. The private respondents' complaint and complaint-in-intervention below are hereby
DISMISSED, without prejudice to the referral of the private respondents' grievances and disputes on the assailed
issuances of the NTC with the said agency.
SO ORDERED.10
Petitioners' motions for reconsideration were denied in a Resolution dated January 10, 2002 for lack of merit.11
Hence, the instant petition for review filed by Smart and Piltel, which was docketed as G.R. No. 151908, anchored on the
following grounds:
A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE NATIONAL
TELECOMMUNICATIONS COMMISSION (NTC) AND NOT THE REGULAR COURTS HAS JURISDICTION OVER
THE CASE.
B.
THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING THAT THE PRIVATE
RESPONDENTS FAILED TO EXHAUST AN AVAILABLE ADMINISTRATIVE REMEDY.
C.
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BILLING CIRCULAR ISSUED BY
THE RESPONDENT NTC IS UNCONSTITUTIONAL AND CONTRARY TO LAW AND PUBLIC POLICY.
Page 29 of 134
D.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO
SHOW THEIR CLEAR POSITIVE RIGHT TO WARRANT THE ISSUANCE OF A WRIT OF PRELIMINARY
INJUNCTION.12
Likewise, Globe and Islacom filed a petition for review, docketed as G.R. No. 152063, assigning the following errors:
1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINES OF PRIMARY
JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE REMEDIES DO NOT APPLY SINCE THE INSTANT
CASE IS FOR LEGAL NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES AND VIOLATIONS OF LAW) OF A
PURELY ADMINISTRATIVE REGULATION PROMULGATED BY AN AGENCY IN THE EXERCISE OF ITS RULE
MAKING POWERS AND INVOLVES ONLY QUESTIONS OF LAW.
2. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE ON EXHAUSTION
OF ADMINISTRATIVE REMEDIES DOES NOT APPLY WHEN THE QUESTIONS RAISED ARE PURELY LEGAL
QUESTIONS.
3. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE OF EXHAUSTION
OF ADMINISTRATIVE REMEDIES DOES NOT APPLY WHERE THE ADMINISTRATIVE ACTION IS COMPLETE
AND EFFECTIVE, WHEN THERE IS NO OTHER REMEDY, AND THE PETITIONER STANDS TO SUFFER GRAVE
AND IRREPARABLE INJURY.
4. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE PETITIONERS IN FACT

EXHAUSTED ALL ADMINISTRATIVE REMEDIES AVAILABLE TO THEM.
5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING ITS QUESTIONED RULINGS IN
THIS CASE BECAUSE GLOBE AND ISLA HAVE A CLEAR RIGHT TO AN INJUNCTION.13
The two petitions were consolidated in a Resolution dated February 17, 2003.14
On March 24, 2003, the petitions were given due course and the parties were required to submit their respective memoranda.15
We find merit in the petitions.
Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or administrative adjudicatory
powers. Quasi-legislative or rule-making power is the power to make rules and regulations which results in delegated legislation
that is within the confines of the granting statute and the doctrine of non-delegability and separability of powers.16
The rules and regulations that administrative agencies promulgate, which are the product of a delegated legislative power to
create new and additional legal provisions that have the effect of law, should be within the scope of the statutory authority
granted by the legislature to the administrative agency. It is required that the regulation be germane to the objects and purposes
of the law, and be not in contradiction to, but in conformity with, the standards prescribed by law.17 They must conform to and
be consistent with the provisions of the enabling statute in order for such rule or regulation to be valid. Constitutional and
statutory provisions control with respect to what rules and regulations may be promulgated by an administrative body, as well
as with respect to what fields are subject to regulation by it. It may not make rules and regulations which are inconsistent with
the provisions of the Constitution or a statute, particularly the statute it is administering or which created it, or which are in
derogation of, or defeat, the purpose of a statute. In case of conflict between a statute and an administrative order, the former
must prevail.18
Not to be confused with the quasi-legislative or rule-making power of an administrative agency is its quasi-judicial or
administrative adjudicatory power. This is the power to hear and determine questions of fact to which the legislative policy is
to apply and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same
law. The administrative body exercises its quasi-judicial power when it performs in a judicial manner an act which is essentially
of an executive or administrative nature, where the power to act in such manner is incidental to or reasonably necessary for
the performance of the executive or administrative duty entrusted to it. In carrying out their quasi-judicial functions, the
administrative officers or bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh
evidence, and draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature.19
Page 30 of 134
In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party need not
exhaust administrative remedies before going to court. This principle applies only where the act of the administrative agency
concerned was performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its rule-making or
quasi-legislative power. In Association of Philippine Coconut Dessicators v. Philippine Coconut Authority,20 it was held:
The rule of requiring exhaustion of administrative remedies before a party may seek judicial review, so strenuously urged by
the Solicitor General on behalf of respondent, has obviously no application here. The resolution in question was issued by the
PCA in the exercise of its rule- making or legislative power. However, only judicial review of decisions of administrative agencies
made in the exercise of their quasi-judicial function is subject to the exhaustion doctrine.
Even assuming arguendo that the principle of exhaustion of administrative remedies apply in this case, the records reveal that
petitioners sufficiently complied with this requirement. Even during the drafting and deliberation stages leading to the issuance
of Memorandum Circular No. 13-6-2000, petitioners were able to register their protests to the proposed billing guidelines. They
submitted their respective position papers setting forth their objections and submitting proposed schemes for the billing
circular.21 After the same was issued, petitioners wrote successive letters dated July 3, 200022 and July 5, 2000,23 asking for
the suspension and reconsideration of the so-called Billing Circular. These letters were not acted upon until October 6, 2000,
when respondent NTC issued the second assailed Memorandum implementing certain provisions of the Billing Circular. This
was taken by petitioners as a clear denial of the requests contained in their previous letters, thus prompting them to seek
judicial relief.
In like manner, the doctrine of primary jurisdiction applies only where the administrative agency exercises its quasi-judicial or
adjudicatory function. Thus, in cases involving specialized disputes, the practice has been to refer the same to an administrative
agency of special competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a controversy
involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution 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 premises of the regulatory statute administered. The objective of the doctrine
of primary jurisdiction is to guide a court in determining whether it should refrain from exercising its jurisdiction until after an
administrative agency has determined some question or some aspect of some question arising in the proceeding before the
court. It applies where the claim is originally cognizable in the courts and comes into play whenever enforcement of the claim
requires the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an
administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative body
for its view.24
However, where what is assailed is the validity or constitutionality of a rule or regulation issued by the administrative agency
in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. The
determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the
constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the
power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or
regulation in the courts, including the regional trial courts.25 This is within the scope of judicial power, which includes the
authority of the courts to determine in an appropriate action the validity of the acts of the political departments.26 Judicial power
includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.27
In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and its Memorandum dated October 6,
2000 was pursuant to its quasi-legislative or rule-making power. As such, petitioners were justified in invoking the judicial power
of the Regional Trial Court to assail the constitutionality and validity of the said issuances. In Drilon v. Lim,28 it was held:
We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority
being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the
criterion of their conformity to the fundamental law. Specifically, B.P. 129 vests in the regional trial courts jurisdiction
over all civil cases in which the subject of the litigation is incapable of pecuniary estimation, even as the accused in a
criminal action has the right to question in his defense the constitutionality of a law he is charged with violating and of
the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2),
of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in
all cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential
decree, proclamation, order, instruction, ordinance, or regulation is in question.29
Page 31 of 134
In their complaint before the Regional Trial Court, petitioners averred that the Circular contravened Civil Code provisions on
sales and violated the constitutional prohibition against the deprivation of property without due process of law. These are within
the competence of the trial judge. Contrary to the finding of the Court of Appeals, the issues raised in the complaint do not
entail highly technical matters. Rather, what is required of the judge who will resolve this issue is a basic familiarity with the
workings of the cellular telephone service, including prepaid SIM and call cards – and this is judicially known to be within the
knowledge of a good percentage of our population – and expertise in fundamental principles of civil law and the Constitution.
Hence, the Regional Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221. The Court of Appeals erred in
setting aside the orders of the trial court and in dismissing the case.
WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The decision of the Court of Appeals in CA-
G.R. SP No. 64274 dated October 9, 2001 and its Resolution dated January 10, 2002 are REVERSED and SET ASIDE. The
Order dated November 20, 2000 of the Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221 is
REINSTATED. This case is REMANDED to the court a quo for continuation of the proceedings.
SO ORDERED.
EN BANC
G.R. No. L-26971 April 11, 1972
THE CENTRAL BANK OF THE PHILIPPINES, petitioner,

vs.
HON. JUDGE GAUDENCIO CLORIBEL and BANCO FILIPINO, Savings and Mortgage Bank, respondents.
CONCEPCION, C.J.:p
The Central Bank of the Philippines seeks a writ of certiorari and prohibition to annul an order of Hon. Gaudencio Cloribel as Judge of the Court of First Instance of Manila,
dated November 23, 1966, authorizing the issuance of a writ of preliminary injunction to restrain the Petitioner and the Monetary Board, as well as its officials and agents, from
enforcing Central Bank Circulars Nos. 185 and 222, dated December 15, 1964, and June 14, 1966, and Monetary Board Resolutions Nos. 805 and 1566, dated May 20 and
September 20, 1966, respectively, insofar as they restrict the payment by Banco Filipino of "monthly" interest on savings deposits and "advance" interests on time deposits.
The main facts are not disputed. Respondent Banco Filipino is a savings and mortgage bank duly organized and existing
under the laws of the Philippines. It began its operations in July 1964. On December 15 of the same year, Petitioner issued,
pursuant to Resolution No. 1769 of the Monetary Board, dated December 11, 1964, Central Bank Circular No. 185, providing
that —
... the following regulations shall govern the interest rates on deposits of all banks, except rural banks: —
1. Demand deposits — No interest shall be paid on these deposits.
2. Savings deposits: —
a) Commercial banks. — The maximum rate of interest on savings deposits of commercial banks shall be
four per cent (4%) per annum, compounded quarterly.
b) Savings and mortgage banks, development banks (including the Development Bank of the
Philippines), cooperative banks and the NACIDA Bank. — The maximum rate of interest on savings deposits
of these banks shall be four and one-half per cent (4-1/2%) per annum, compounded quarterly.
3. Time deposits (Including IDC-ICA Special time deposits). —
a) Term. — No time deposits shall be accepted for a term of less than ninety (90) days.
b) Schedule of rates —
Page 32 of 134
1) Commerce banks. — A maximum rate of five per cent (5%) annual interest on time deposits shall be allowed, in
accordance with the following schedule:
(a) 90 days — 4-1/4%
(b) 180 days — 4-1/2%
(c) 270 days — 4-3/4%
2) Savings and mortgage banks, development banks (including the Developtment Bank of the Philippines),
cooperative banks, and the NACIDA Bank. — A maximum of five per cent (5%) annual interest on time deposits shall
be allowed, in accordance with the following schedule:
(a) 90 days but not exceeding 180 days — 4-3/4%
(b) Exceeding 180 days — 5%
(c) Withdrawal before maturity date. — Where a time deposit is permitted to be withdrawn before the maturity
date fixed in the certificate of time deposit, the amount withdrawn shall be deemed a savings deposit and
shall earn interest at the rate allowed savings deposit. "1
This circular was modified by Circular No. 222 — issued on June 14, 1966, in pursuance of Resolution No. 805 of the
Monetary Board, dated May 20, 1966 — as follows:
2. Savings deposits. —
Commercial banks, savings and mortgage banks, development banks (including the Developtment Bank of the
Philippines), cooperative banks, rural banks and the NACIDA Bank. — The maximum rate of interest on savings
deposits of these banks shall be five and three fourths per cent (5-3/4%) per annum, compounded quarterly.
3. Time deposits (including the IDC-ICA Special time deposits). —
xxx xxx xxx
b) Time of payment of interest and withdrawal of deposit before maturity date. — Interest on time deposits shall not
be paid in advance, but only at maturity, or upon withdrawal of the deposit. When withdrawn before maturity, a time
deposit shall be deemed a savings deposit, and the interest which may be paid thereon shall not exceed the interest
applicable to a savings deposit.
c) Schedule of interest rates. — Commercial banks, savings and mortgage banks, development banks (including the
Development Bank of the Philippines), cooperative bank, rural banks and the NACIDA Bank. — A maximum annual
interest rate of six and one-half per cent (6-1/2%) shall be allowed on time deposits in accordance with the following
schedule:
(a) 90 days — 5-3/4%
(b) 180 days — 6%
(c) 270 days — 6-1/4%
(d) 360 days — 6-1/2%
d) Treatment of matured time deposit. — A time deposit not withdrawn or renewed on its due date of withdrawal shall
be deemed a savings deposit and the interest which may be paid thereon from said due date of withdrawal to the
date of actual withdrawal or renewal shall not exceed the interest applicable to a savings deposit.
Page 33 of 134
4. No bank or banking institution shall disseminate, advertise or release any information that it is paying or will pay
interest at rates higher than those prescribed herein or indicate the effective rates resulting from a compounding of
the rates.
xxx xxx xxx
6. Any provision of existing regulations inconsistent here with is hereby superseded.2
It appears that when Banco Filipino started its operations in July 1964, savings deposits therein made were to earn
interest at the rate of four (4) per cent per annum, "compounded quarterly," and its savings passbooks and the rules
and regulations, printed on the specimen signature cards of said deposits, contained the following statements,
among others:
Your deposit of P10.00 or more shall earn interest at the rate of 4% per annum, compounded quarterly. Said interest
shall be computed once every month on the lowest monthly round peso balance of your deposit and credited to your
account every three months thereby entitling it to earn interest as a deposit. For purposes of interest computation, a
month shall start from a date coinciding with the day your account was opened to the same date of the following
month.
"Interest. — Unless otherwise agreed upon, the bank will allow on balances of P10.00 or more, interest at the rate of
4% per annum, compounded quarterly. Said interest shall be computed once a month on the lowest monthly round
peso balance standing to the depositor's credit. For purposes of interest computation, a month starts from a date
coinciding with the date the account was opened to the same date of the following month. Such interest shall be
credited to the depositor's account at the end of every three months thereby entitling it to earn interest as a
deposit. No interest shall be paid on accounts closed prior to the crediting of interest as hereinbefore mentioned. The
rate of interest on savings deposits is subject to change when conditions warrant."3
Subsequently, however, within the same year, Banco Filipino changed its policy by compounding and paying the interest on
its savings deposits, at the maximum rate fixed by the Monetary Board, from the quarterly to the monthlybasis, and by paying,
in advance, the maximum rates of interest on time deposits.
On September 20, 1966, the Monetary Board approved Resolution No. 1566, directing the Banco Filipino to comply strictly
with Central Bank Circular No. 222. Said Resolution was communicated to the Banco Filipino in a letter dated September 29,
1966. Soon later, or on October 14, 1966, Banco Filipino filed with the Court of First Instance of Manila a petition for prohibition
and preliminary injunction — which was docketed as Civil Case No. 67181 of said court — against Petitioner herein and the
Monetary Board, to annul Central Bank Circulars Nos. 185 and 222 and Monetary Board Resolutions Nos. 805 and 1566,
"insofar as they restrict the payment of monthly interests on savings deposits and advance interests on time deposits," and
praying that a writ of preliminary injunction be issued ex parte to restrain the Petitioner, its officials and/or agents from enforcing
the aforementioned circulars and resolutions to the extent that the same imposed said restrictions, or, should the court "require
that a hearing be conducted on the petition for a preliminary injunction, that a preliminary restraining order to the same effect
be issued pending such hearing."
Thereupon, or on October 15, 1966, Hon. Gaudencio Cloribel, as Judge of said court, issued ex parte the restraining order
prayed for and set the application for a writ of preliminary injunction for hearing on October 29, 1966. On October 26, the
respondents in said case filed their answer and the next day moved to dissolve the restraining order of October 15. After the
aforementioned hearing and the submission by the parties of their respective memoranda, Judge Cloribel granted said
application for a writ of preliminary injunction in an order dated November 23, 1966, copy of which was served on Petitioner
herein on December 6. Accordingly, the latter instituted the order of November 23 and to meanwhile restrain its enforcement,
upon the ground that, in issuing said order, Judge Cloribel had committed a grave abuse of discretion amounting to excess of
jurisdiction.
In its answer to the petition herein, Banco Filipino sets up, in effect, the following defenses, to wit: 1) that said petition should
be dismissed, because "petitioner has not exhausted all remedies in the Court of First Instance of Manila before coming to this
Honorable Court"; 2) that having heard the parties before issuing the contested order, respondent Judge had neither committed
a grave abuse of discretion, nor exceeded his jurisdiction, in acting as he did; and 3) that the contested resolutions and circulars
are null and void for (a) they were issued without previous notice and hearing, (b) they impair vested rights, and (c) the statutory
power of the Monetary Board to "fix the maximum rates of interest which banks may pay on deposits and any other obligations"
does "not include the regulation of the manner of computing and paying interest, since this function is not expressly granted
petitioner."
Page 34 of 134
It is true that Petitioner herein did not seek a reconsideration of the order complained of, and that, as a general rule, a petition
for certiorari will not be entertained unless the respondent has had, through a motion for reconsideration, a chance to correct
the error imputed to him. This rule is subject, however, to exceptions, among which are the following, namely: 1) where the
issue raised is one purely of law; 2) where public interest is involved; and 3) in case of urgency. 4 These circumstances are
present in the case at bar. Moreover, Petitioner herein had raised — in its answer in the main case and in the rejoinder to the
memorandom of the Banco Filipino in support of the latter's application for a writ of preliminary injunction — the very same
questions'raised in the Petition herein. In other words, Judge Cloribel has already had an opportunity to considered and pass
upon those questions, so that a motion for reconsideration of his contested order would have served no practical purpose. The
rule requiring exhaustion of remedies does not call for an exercise in futility.5
Although promulgated after due hearing and the submission of memoranda by both parties, it does not necessarily follow that
Judge Cloribel had not committed a grave abuse of discretion and exceeded his jurisdiction in issuing the order complained of
by Petitioner herein. The Rules of Court specify the conditions under which a writ of preliminary injunction may be issued. If
such conditions are not present, a writ of certiorari and prohibition may be proper. This particular question will be taken up
later.
Then, too, the Central Bank is supposed to gather relevant data and make the necessary study, but has no legal obligation to
notify and hear anybody, before exercising its power to fix the maximum rates of interest that banks may pay on deposits or
any other obligations. Previous notice and hearing, as elements of due process, are constitutionally required for the protection
of life or vested property rights, as well as of liberty, when its limitation or loss takes place in consequence of a judicial or quasi-
judicial proceeding, generally dependent upon a past act or event which has to be established or ascertained. It is not essential
to the validity of general rules or regulations promulgated to govern future conduct of a class of persons or enterprises, unless
the law provides otherwise, and there is no statutory requirement to this effect, insofar as the fixing of maximum states of
interest payable by banks is concerned.
It is also clear from the authorities that where the function of the administrative body is legislative, notice or hearing
is not required by due process of law. See Oppenheimer, Administrative Law, 2 Md. L.R. 185, 204, supra, where it is
said: "If the nature of the administrative agency is essentially legislative, the requirements of notice and hearing
are not necessary. The validity of a rule of futureaction which affects a group, if vested rights of liberty or property are
not involved, is not determined according to the same rules which apply in the case of the direct application of a policy
to a specificindividual. "... It is said in 73 C.J.S. Public Administrative Bodies and Procedure, sec. 130, pages 452 and
453: "Aside from statute, the necessity of notice and hearing in an administrative proceeding depends on the character
of the proceeding and the circumstances involved. In so far as generalization is possible in view of the great variety of
administrative proceedings, it may be stated as a general rule that notice and hearing are not essential to the validity
of administrative action where the administrative body acts in the exercise of executive, administrative,
or legislative functions: but where a public administrative body acts in a judicial or quasi-judicial matter, and its acts
are particular and immediaterather than general and prospective, the person whose rights or property may be affected
by the action is entitled to notice and hearing.6
[17] Procedural due process is not required, however, in the formulation and issuance of general rules and regulation as
distinguished from the rendering of determinations and decisions in adjudicatory proceedings. Nor is procedural due
process required where there is no interference with life, liberty, or a vested property right. ...
[18] "Rule-making" is legislation an the administrative level, i.e., legislation within the confines of the granting statute,
as required by the constitution and its doctrine of nondelegability and separability of powers. Willapoint Oysters Inc. v.
Ewing, 9 Cir. 174 F. 2d 676, certiorari denied, 338 U.S. 860, 70 S. Ct. 101. It is the function of laying down general
regulations as distinguished from orders that apply to named persons or to specific situations, the latter being
adjudicatory in nature. Administrative Rule-Making, Fuchs, 52 Harvard Law Review 263.
Admitting that problems are encountered in classifying some kinds of procedures as rule-making on the one hand, or
judicial or quasi-judicial on the other, no such difficulty is presented in this case. The rules and regulations which may
be prescribed under No. 178 are those which relate to classes of persons and situations, as distinguished
from specific persons and situations. They are, to use the language of the Administrative Procedure Act, 60 State 237,
sec. 2(c), 5 U.S.C.A. sec. 1001 (c), agency statements of "general or particular applicability and future effect designed
to implement, interpret, or prescribe law or policy ... "
The due process provisions do not require that there be notice and hearing before the promulgation of such rules and
regulations. Spokane Hotel Co. v. Younger, 113 Wash. 359, 194 P. 595; Bi-Metallic Investment Co. v. Colorado, 239
U.S. 441, 36 S. Ct. 141, 60 L. Ed. 372; Willapoint Oysters, Inc. v. Ewing, supra; Guiseppi v. Walling, 2 Cir. 144 F. 2d
608, 155 A.L.R. 761; H. F. Wilcox Oil & Gas Co. v. State, 162 Okl. 89, 19 P. 2d 347, 86 A.L.R. 421.7
Page 35 of 134
What is more, it is presumed that the Monetary Board has exercised its power to fix maximum rates of interest conformably to
law, and courts will not interfere with the policy of the Board thereon — unless it acted without or in excess of its jurisdiction or
in a manifestly arbitrary or unduly oppressive manner — upon the theory that the Board is, for obvious reasons, in a better
position to determine such question.
It is well settled ... that findings of fact of administrative bodies will not be interfered with by courts of justice in the
absence of a grave abuse of discretion on the part of said bodies or unless the aforementioned findings are not
supported by substantial evidence (La Mallorca and Pampanga Bus Co., Inc. vs. Mercado, G. R. No. L-19120,
November 29, 1965; Halili vs. Daplas, G.R. No. L-20282, May 19, 1965; West Leyte Trans. Co. vs. Salazar, G.R. No.
L-15418, September 30, 1963; Pangasinan Trans. Co. vs. Feliciano, G.R. No. L-14401, August 31, 1962; A.L. Ammen
Trans. Co. vs. Desuyo, G.R. No. L-10372, May 14, 1958; Guico vs. Buan, G.R. No. L-9769, August 30, 1957; Laguna
Tayabas Bus Co. vs. Begamore, G.R. No. L-9445, April 29, 1957; Pangasinan Trans. Co. vs. De la Cruz, 95 Phil. 278;
Manila Yellow Taxicab Co. vs. Danon, 58 Phil. 75). 8
In the case at bar, Banco Filipino does not impugn either the legality or the wisdom of the maximum rates of interest fixed in
the contested resolutions and circulars. It merely assails the authority of the Board to fix or regulate the "manner" of
compounding and paying said rates of interest, which is discussed in subsequent pages.
The theory to the effect that the contested resolutions and circulars impair vested rights is obviously unfounded, for the said
resolutions and circulars operate prospectively, and affect only deposits made and/or interests accruing subsequently to the
promulgation thereof. Indeed, consistently with the third paragraph of section 109 of the Central Bank Act9 reading:
Any modifications in the maximum interest rates permitted for the borrowing or lending operations of the banks shall
apply only to future operations and not to those made prior to the date on which the modification becomes effective.
Circular No. 185 issued on December 15, 1964, states: "This Circular shall take effect on January 1, 1965," whereas Circular
No. 222, dated June 14, 1966, specifies that it "shall take effect immediately," and, hence, beginning from June 14,
1966, not prior thereto.
Furthermore, all contracts are subject to the police power of the State. Being an inherent attribute of sovereignty, such power
is deemed incorporated into the laws of the land, which are part of all contracts, thereby qualifying the obligations arising
therefrom.10
Into all contracts, whether made between States and individuals, or between individuals only, there enter conditions
which arise, not out of the literal terms of the contract itself; they are superinduced by the preexisting and higher
authority of the laws of nature, or nations, or of the community to which the parties belong; they are always presumed,
and must be presumed, to be known and recognized by all, are binding upon all, and need never therefore be carried
into express stipulation for this could add nothing to their force. Every contract is made in subordination to them, and
must yield to their control, as conditions inherent and paramount, wherever a necessity for their execution shall occur. 11
Statutes in force at the time a contract is made by a municipality enter into and become part of the contract. Its
obligation is to be measured, and performance is to be regulated, by the terms and rules which they prescribe. 12
Conformably to the well-established rule that the laws which subsist at the time and place of making a contract enter
into, and form a part of, it as if they were expressly referred to, or incorporated in, its terms, the obligation of a contract
is measured by the standard of the laws in force at the time it was entered into, and its performance is to be regulated
by the terms and rules which they prescribe. 13
In short, all contractual obligations are subject — as an implied reservation therein — to the policy power of the state, of which
the regulatory authority of the Central Bank may be regarded as a mere extension. 14 Far from being an impairment of
contractual obligations, the exercise of that authority constitutes, therefore, a mere enforcement of one of the conditions
deemed imposed in all contracts.
The main issue raised in the case at bar and in Case No. 67181 of the Court of First Instance of Manila is whether or not the
authority of the Monetary Board to "fix the maximum rates of interest which banks may pay on deposits and on any other
obligations" includes the power to determine and fix the manner in which said interests may be compounded and paid. Banco
Filipino maintains the negative view, but it is clear to Us that the answer cannot be other than the affirmative. Pertinent parts
of Sections 14 and 109 of Republic Act No. 265, read:
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SEC. 14. Exercise of authority. — In order to exercise the authority granted to it under this Act, the Monetary Board
shall:
(a) Prepare and issue such rules and regulations as it considers necessary for the effective discharge of the
responsibilities and exercise of the powers assigned to the Monetary Board and to the Central Bank under this Act:
(b) Direct the management, operations and administration of the Central Bank and prepare such rules and regulations
as it may deem necessary or convenient for this purpose;
xxx xxx xxx
SEC. 109. Interest rates, commissions and charges. — The Monetary Board may fix the maximum rates of
interest which banks may pay on deposits and on any other obligations.
The Monetary Board may, within the limits prescribed in the Usury Law (Act No. 2655, as amended), fix the maximum
rates of interest which banks may charge for different types of loans and for any other credit operations, or may fix the
maximum differences which may exist between the interest or rediscount rates of the Central Bank, and the rates which
the banks may charge their customers if the respective credit documents are not to lose their eligibility for rediscount
or advances in the Central Bank.
xxx xxx xxx
In order to avoid possible evasion of maximum interest rates set by the Monetary Board, the Board may also fix the
maximum rates that banks may pay to or collect from their customers in the form of commissions, discounts, charges,
fee or payments of any sort. 15
It is significant that the law does not merely authorize the Board to "fix the maximum rates of interest which banks may pay on
deposits and on any other obligations." It, also, expressly empowers the Board — "(i)n order to avoid possible evasion of
maximum interest rates set by the ... Board" — to fix also "the maximum rates that banks may pay to or collect from their
customers in the form of ... payments of any sort." Indeed, the authority to establish maximum rates of interest carries with
it, necessarily, the power to determine the maximum rates payable as interest for given periods of time. In other words, it
connotes the right to specify the length of time for which the rates thus fixed shall be computed. Consequently, it cannot but
include the prerogative to regulate (a) the manner of computing said rates and (b) the manner or time of payment of interest,
insofar as these factors affect the amount of interest to be paid. In fact, the record shows that, since, at least, May 25, 1956,
when Central Bank Circular No. 67 (Annex H) was issued, the Monetary Board has consistently regulated the time or manner
of payment of interest on bank deposits. What is more, it would seem that the validity of such regulation had never before been
contested.
The justification for the inclusion, in the power to fix maximum rates of interest, of the authority to prescribe the time or manner
of payment thereof springs, (a) not only from the implied grant of all powers necessary to carry out those expressly
conferred, 16 and (b) from the explicit authority of the Monetary Board "to avoid possible evasion of maximum interest rates"
fixed by it, by, likewise, fixing maximum rates that banks may pay to their customers in any other "form," but, also, (c) from the
reasons underlying the grant of authority to fix said maximum rates of interest that banks may pay for deposits and on any
other obligations.
The banker has a number of methods by which he may seek to attract deposits. He may erect an imposing building
whose entrance is flanked by marble pillars, symbols of strength. Where legally permitted he may seek new customers
by establishing branches in newly developed shopping centers and in residential areas. He may expand the free
services and conveniences available to his customers. He may advertise, in a restrained and dignified manner, on
billboards and in newspapers. He may organize a "new business department" whose function is to make contracts with
new customers. He may persuade the stockholders to elect a prominent business executive to the board of directors,
in order that all or part of the deposits the executive's firm may be captured. Finally, he may compete with other bankers
for deposits in a more direct way by offering higher rates of interest on deposits. This last form of competition has been
especially important. A good many depositors are influenced by the interest payments and respond favorable to offers
of higher returns. Therefore, when one bank offers higher interest to depositors, other banks are forced to do likewise.
There always seems to be excess capacity in any given bank for absorbing and utilizing additional deposits. Therefore,
to some degree, banking is exposed to the danger of cutthroat competition. There exists a powerful temptation to try
to attract added deposits by offering higher interest rates. This practice tends to reduce banking profits and encourages
the banker to seek increased earnings by making less conservative and more remunerative loans and investments. If
Page 37 of 134
all bankers could be trusted to refuse to make unsafe loans under the stress of competition and profit seeking, unlimited
competition for deposits among bankers might have no dire results. What borrowers would pay for well-secured loans
and the banker's necessary profit margin would tend to fix the limit on interest payments to depositors.
In actual practice, however, not all bankers can be trusted to watch competition cut into profits without taking some
unwise action to prevent it. There seem always to be some potential borrowers who will promise to pay higher interest
on loan in order to finance untried and hazardous ventures. The bankers seeking greater earnings to compensate for
high interest paid on deposits, may turn to these more speculative loans and investments. But, because of
circumstances or short-sightednes he is unlikely to increase his earnings margin enough to compounded compensate
for the greater risks involved. The evil consequence of such action are concealed during periods of prosperity but
depression reveals them. Experience has repeatedly shown the fatal results of such competition. To guard against
excessive competition for deposits, clearinghouse associations have sponsored agreements among their members
regulating competitive practices. Particularly, they have attempted to control the charges made by banks for services
rendered to customers the payment of interest on deposits. The Banking Acts of 1933 and 1935 recognized the need
for regulation of competitive interest payments by prohibiting all insured banks from payment of interest on demand
deposits and by providing for the setting of maximum rates of interest paid on time deposits. 17
This legal prohibition of interest on demand deposits and regulation of interest on time and savings deposits are the
result of the competition for deposits in which banks engaged in the past. This competition was so fierce at times that
it led various clearing house associations to limit interest rates paid by members for the purpose of protecting the
members, long before the Federal legislation provided these restrictions. Inordinately high interest rates would tend to
lead to "overreaching" on yields and returns on loans and investments, leading to lower quality earning assets affording
the higher nominal yields but vulnerable to losses and depreciation. 18
Otherwise stated, the objective of the power to fix maximum rates of interest payable by banks is to establish a uniform
ceiling applicable to all banks, in order to avoid that a competition among the same, in the form of higher rates of interest
offered to depositors, may ensue and reach such a point that, to offset the resulting reduction in their profits, said institutions
might be impelled to increase their earnings, by resorting to risky ventures, or "less conservative and more remunerative loans
and investments," which could impair the stability of the banking system and jeopardize the financial condition of the nation.
The important thing is the amount paid or to be deposited by the latter and made available for the operations of the bank, within
the period for which the rate has been fixed. The manner of computing such rate and the time or manner of payment of interest
are merely incidental thereto. For this reason, Petitioner says, in its memorandum:
... . The Monetary Board does not prohibit Banco Filipino from compounding interest at other than quarterly
intervals provided that the aggregate amount of such interest so compounded does not exceed the aggregate amount
of interest fixed by the Monetary Board. Banco Filipino may compound daily or even weekly for monthly and the Central
Bank will not prevent it from doing so, provided that the maximum effective rate of interest by compounding other than
the quarterly method will not be in the aggregate amount exceeding the maximum effective rate of 5.875% per annum,
which is the maximum or ceiling effective rate set by the Monetary Board. 19
Thus, for instance, the maximum interest of 5-3/4% per annum, compounded quarterly, as fixed in Petitioner's Circular No.
222, for savings deposits, in fact represents 5.875%, at the end of the year. When compounded monthly, it is, however,
equivalent to 5.904% at the close of the year, and, accordingly, exceeds by 0.029% the maximum set in the aforementioned
circular.
Negligible as this 0.029% might be, it does not detract from the fact that it exceeds the maximum rate fixed by the Monetary
Board, such excess were sanctioned, so should 0.03% be. As a consequence, banks could avail of devises whereby, although
adhering ostensibly to the maximum rate of 5-3/4% interest per annum, they would, in effect, pay its savings depositors 0.031%,
then 0.032%, later 0.033%, etc., in excess of said maximum. In other words, we would thus open the door to the cut-throat
competition and other evils sought to be avoided by the maximum rates of interest fixed by the Monetary Board.
Then, too, the benefit that a savings deposit with respondent Bank would derive from the monthly compounding and payment
of the maximum rate of interest is either substantial or not. If it is not, then the aforementioned advertisement of respondent
Bank tends to give to the public a different impression and is, accordingly, of dubious ethical propriety; whereas, if the benefit
were substantial, the violation of the letter and spirit of the contested resolutions and circulars would be manifest.
It is argued: (1) that the Monetary Board has no authority to regulate the manner or time of collecting interest due to bank
depositors because, while expressly vested with the power to fix maximum rates of interest, the law is silent on the "manner or
time" of payment thereof, apart from the alleged circumstance that banks have never been restricted by Petitioner herein as to
the manner or time of collecting interest from their borrowers; (2) that Petitioner has adopted in this case a posture different
Page 38 of 134
from that which it had taken in the court of first instance; (3) that respondent bank merely pays interest monthly, which, contrary
to Petitioner's claim, is, allegedly, not compounded, but — if the depositor chooses not to withdraw it — is part of his capital and
earns interest as such capital, not as interest; and (4) that the contested circulars and resolutions are arbitrary and
discriminatory, as well as deny equal protection of the laws.
As above indicated, however, since, as early as May 25, 1956, or for over 15 years, Petitioner has prescribed the time or
manner of payment of the maximum rates of interest fixed by the Monetary Board. Furthermore, the power to fix maximum
rates of interest necessarily carries with it the authority to determine, prescribe and regulate the timeand manner of computing
such rates and collecting the same. Indeed, it would be ridiculous to fix the maximum rate of interest, at say 5%, without stating
how it shall be computed and paid, whether monthly, quarterly, annually or otherwise. Again, the purpose of said grant of power
is to see to it that banks do not pay its depositors more than what their financial stability and sound banking practices permit.
In other words, the time and manner of computation and payment of the maximum rates fixed are essential elements thereof,
as well as vital to the attainment of the purpose of the grant. The absence of a similar limitation to the rates of interest collectible
by banks will be discussed in connection with the fourth argument.
Petitioner herein has neither abandoned the posture it took in the lower court nor adopted a different one in this case. Private
respondent's argument to the contrary is based upon a passage in Petitioner's letter to Banco Filipino, dated June 17, 1965,
enjoining the latter "to stop immediately advertisements of the effective rates of interest on savings and time deposits in the
newspapers, bank premises or any media of information." Respondent Bank maintains that such position is different from that
taken by herein Petitioner in its memorandum before this Court, in which it states:
xxx xxx xxx
The Monetary Board does not prohibit Banco Filipino from compounding interest at other than quarterly
intervals provided that the aggregate amount of such interest so compounded does not exceed the aggregated amount
of interest fixed by the Monetary Board. 20
Taken out of its context, the above quotation from said letter of June 17, 1965 might give the impression that Petitioner had
prohibited the monthly payment of interest, whatever its rate may be. Such, however, is not the general import of said letter,
which reads:
June 17, 1965
Mr. Tomas B. Aguirre
President Banco Filipino, Savings and Mortgage Bank
Plaza Sta. Cruz, Manila
Dear Sir:
This has reference to your advertisements in different morning dailies, one of which is in the Manila Times dated
June 16, 1965 and in the bank premises regarding the interest rates on savings and time deposits of the Banco
Filipino, Savings and Mortgage Bank showing the following rates of interest:
1. On savings deposits, 4.5% p.a. = 4.58% p.a. up to 6.43% p.a., effective rates, interest paid monthly.
2. On time deposits, 5% p.a. = 5.26% p.a. up to 5.50% p.a. effective rates, interest paid in advance.
The above interest rates being advertised are not in accordance with Central Bank Circular No. 185, as amended,
the pertinent provisions of which read thus:
b) Savings and mortgage banks, ... — The maximum rate of interest on savings deposits of these banks shall be four
and one-half per cent (4-1/2%) per annum, compounded quarterly.
xxx xxx xxx
Page 39 of 134
"2) Savings and mortgage banks, ... — A maximum of five per cent (5%) annual interest on time deposits shall be
allowed, in accordance with the following schedule:
(a) 90 days but not exceeding 180 days — 4-3/4% .
(b) Exceeding 180 days — 5,%"
In view of the foregoing, you are hereby enjoined to stop immediately advertisements of the effective rates of interest
on savings and time deposits in the newspapers, bank premises or any media of information. The bank may
advertise only the rates of interest stated in Central Bank Circular No. 185, as amended, wherein the maximum
interest rate is 4-1/2% per annum, compounded quarterly for savings deposits and a maximum interest rate of 5%
per annum on time deposits in accordance with the following schedule:
(a) 90 days but not exceeding 180 days — 4-3/4%
(b) Exceeding 180 days — 5%
The bank shall not pay nor advertise that it pays interest on savings deposits monthly; likewise, it shall not pay nor
advertise that it pays interest on time deposits in advance.
Please acknowledge receipt hereof, and advise us within five (5) days of the action taken by the bank to comply
therewith.
Very truly yours,
JOSE IGNACIO
Superintendent of Banks 21
It should be noted that the prohibition made in this communication is preceded by the phrase "(i)n view of the foregoing,"
which is the advertisement of the Banco Filipino to the effect that savings and time deposits therein shall earn the following
rates of interest:
1. On savings deposits, 4.5% p.a. = 4.58% p.a. up to 6.43% p.a. effective rates, interest paid monthly.
2. On time deposits, 5% p.a. = 5.26% p.a. up to 5.50% p.a. effective rates, interest paid in advance.
The letter further points out that these rates "are not in accordance with Central Bank Circular No. 185, as amended." What is
more, it says that respondent Bank "may advertise only the rates of interest stated" in the aforementioned circular, as
amended. In other words, it can neither pay nor advertise that it shall pay, on savings deposits, 4.5% interest per annum,
compounded or paid monthly but, it can pay and advertise that it shall pay on said deposits any rate of interest, compounded
or paid yearly, quarterly, monthly, weekly or daily, provided that the aggregated amount of interest so paid shall not exceed
4.5% a year, compounded quarterly.
The third argument is but an exercise in semantics. It is urged that interest compounded monthly becomes part of
the capital and earns interest as such part of the capital not as interest, and that, in paying monthly interest at the rate of 4.5%
per annum, respondent Bank does not, consequently, compound interest monthly. This argument merit no serious
consideration. Suffice it to say that the compounding of interest implies precisely that the interest for a given period — one (1)
month in the case of respondent Bank — becomes, at the end of said period, part of the capital, and, hence, earns interest.
And this, indeed, is the reason why 5-3/4% interest per annum, paid or compounded monthly, exceeds by 0.029% yearly the
same rate of interest, when compounded quarterly, under which the interest does not become part of the capital, and,
accordingly, does not earn interest, as such part of the capital, until after three (3) months. The all-important thing is that by
paying or compounding interest monthly, instead of quarterly at the rate of
5-3/4% per annum, respondent Bank would pay yearly 0.029% higher than the maximum fixed in the contested circulars and
resolutions.
The alleged discrimination, arbitrariness and denial of equal protection is predicated upon the fact that the disputed restrictions
to banks as debtors are not applied to banks as creditors. This pretense is untenable, for settled is the rule that the equal
Page 40 of 134
protection clause does not imply the same treatment to all; that it applies merely to persons, things or transactions similarly or
identically situated; and that it, consequently, permits a classification of the object or subject of the law, provided that the
classification is reasonable or based upon real or substantial distinctions, germane to the statutory object or purpose. 22
As above indicated, the purpose of the resolutions and circulars fixing maximum rates of interest payable by banks on savings
deposits and prohibiting the payment in advance of interest on time deposits, is to protect the stability of banking institutions
— as vital factors in the national economy — from the danger that may result from cut-throat competition among said
institutions. No such danger would result either from the interest that banks may collect in advance from its borrowers or from
high rates of interest the former may charge from the latter, aside from the fact that such rates are subject to the limitations
imposed by the laws on usury.
Let us now consider the operation of the maximum rate of interest fixed for time deposits, and compare it with the effect of the
payment in advance of the interest thereon. As correctly set forth in the petition herein:
... For instance, when the Monetary Board fixes the maximum rate of interest on a one-year time deposit at 6-1/2%
(6.5%) per annum, and at the same time stipulates that "interest on time deposit shall not be paid in advance ...," the
Monetary Board is in truth fixing the maximum interest that a Bank may pay on time deposits, which means that a
deposit of say, P100,000.00 shall earn only P6,500.00 interest at the end of the year. However, if a bank pays interest
in advance on time deposits, it is actually paying interest much higher than the maximum rate allowed. To illustrate, if
a time deposit of P100,000.00 is paid interest of P6,500.00 in advance, the depositor, in effect, is allowing the bank the
use of only P93,500.00 (P100,000.00 less P6,500.00 interest paid in advance). But at the end of one year, the bank
will pay back to him the amount of P100,000.00. This means that his actual deposited of P93,500.00 (the amount, that
was left with the bank after P6,500.00 was returned to him as interest in advance) will earn interest of P6,500.00 after
one year. This interest of P6,500.00 on the amount of P93,500.00 means an effective rate of interest of 6.952% which
is 0.452% higher than the maximum rate of 6.5% allowed by the Monetary Board to be paid on time deposits. 23
It is apparent from the foregoing that — insofar as it compounds monthly the maximum rate of interest fixed for savings deposits
and pays in advance the maximum rate of interest prescribed for time deposits — Banco Filipino pays or undertakes to pay to
its depositors more than the amount equivalent to the maximum rates of interest fixed in the contested resolutions and circulars.
As a consequence, Petitioner herein is legally authorized to demand strict compliance therewith and to restrain and forbid the
Banco Filipino from compounding monthly said rate of interest on savings deposits and from paying advance interest on time
deposits.
We cannot accept the assertion that the maximum rate of interest set by the Petitioner on savings deposits may be considered
as a requirement on banks that the interest stipulated on savings deposits must be deemed due and paid, at least, quarterly.
The contested circulars and resolutions do not require the interest to become due and payable quarterly. Petitioner has merely
ordained that "the maximum rate of interest on savings deposits ... shall be four and one-half per cent (4-1/2%) ..., compounded
quarterly." This means that a bank may pay any rate of interest and compute or pay the same at such time and in such manner
as it may deem fit, provided that the total sum thus paid does not exceed the maximum rate fixed by the Monetary Board,
compounded quarterly.
It is true that, if the maximum rate of interest, as computed and paid by Banco Filipino, were withdrawn by its depositor at the
end of each month, the aggregate amount paid to him by said respondent at the end of a year would not exceed the maximum
rate of interest fixed by the Monetary Board, computed quarterly. It is no less true, however, that if said depositor withdrew the
same amount monthly, and the interest on his deposit were computed and paid quarterly, as ordained by said Board, he would
collect, within a year, less than the aggregate sum paid by respondent Bank by compounding or paying interest monthly, at
said maximum rate. Indeed, if this rate of interest were compounded quarterly, the aforementioned withdrawals of the
depositor, before the end of the quarter, would have to be taken, not from the interest — which would not be due as yet — but
from his capital or deposit. Whether the depositor makes or not said withdrawals, respondent Bank would pay him,
therefore, more than it would if it compounded quarterly the maximum rate of interest fixed by the Board. In short, in either case,
said rate would be violated by Banco Filipino.
Banco Filipino argues that Circular No. 149 did not specify that the maximum rates of interest therein fixed were to be
compounded quarterly and that, having failed to answer the letters of said respondent seeking a clarification of Circular No.
185 and a chance to be heard on Circular No. 222, Petitioner herein had impliedly consented to the aforementioned practice
of Banco Filipino, which is said to have been reflected in its reports to Petitioner herein. We find no merit in this pretense.
Pursuant to Circular No. 149, "(a)ll previously issued circulars ... which are inconsistent with the foregoing are hereby amended
or revoked." In other words, previous circulars were maintained insofar as not inconsistent with Circular No. 149. Said previous
circulars — namely, Circulars Nos. 67 (dated May 25, 1956), 71 (dated July 31, 1956), 74 (dated September 2, 1957), 78
Page 41 of 134
(dated October 25, 1957), 103 (dated March 21, 1960), and 112 (dated October 26, 1960) — uniformly provided that the
maximum rates of interest therein fixed shall be compounded "quarterly." This provision was not inconsistent with Circular No.
149, which was silent thereon. Consequently, the rates fixed in Circular No. 149 were deemed subject to said limitation.
At any rate, the maximum rates of interest fixed in Circulars Nos. 185 and 222, dated December 15, 1964, and June 14, 1966,
for savings deposits, are qualified therein by the phrase "compounded quarterly." Circular No. 222, moreover, provides that
"(i)nterest on time deposits shall not be paid in advance, but only at maturity, or upon withdrawal of the deposit." Thus, the
practice, adopted by Banco Filipino, of compounding monthly the maximum rates of interest fixed by the Monetary Board for
savings deposits, and of paying in advance the maximum rates of interest allowed for time deposits, runs counter to the clear
and explicit provisions of the aforementioned circulars.
It was, therefore, apparent from the pleadings and memoranda in Civil Case No. 67181 of the Court of First Instance of Manila
that Banco Filipino had no cause of action against Petitioner herein to restrain the same from demanding strict compliance with
said circulars. Pursuant to Section 3 of Rule 58 of the Rules of Court, "(a) preliminary injunction may be granted ... when it is
established" (1) that "the plaintiff is entitled to the relief demanded," which consists in restraining "the commission or
continuance of the acts complained of," and (2) that the commission or continuance thereof "would probably work injustice to
the plaintiff" or be "in violation of the plaintiff's rights" and tend "to render the judgment ineffectual." Since Banco Filipino was
clearly not entitled to the relief sought in said Civil Case No. 67181 and no "injustice" to said institution would, accordingly,
result from its compliance with the contested resolutions and circulars, it follows that Respondent Judge had committed a grave
abuse of discretion, amounting to excess of jurisdiction, in issuing its aforementioned order of November 23, 1966, in said
case. 24
WHEREFORE, said order and the writ of preliminary injunction issued in pursuance thereof are hereby declared null and void,
and the enforcement of both, accordingly, restrained permanently, with costs against respondent Banco Filipino. Writ granted.
It is so ordered.
EN BANC
G.R. No. 95832 August 10, 1992
MAYNARD R. PERALTA, petitioner, vs. CIVIL SERVICE COMMISSION, respondent.
PADILLA, J.:
Petitioner was appointed Trade-Specialist II on 25 September 1989 in the Department of Trade and Industry (DTI). His
appointment was classified as "Reinstatement/Permanent". Before said appointment, he was working at the Philippine Cotton
Corporation, a government-owned and controlled corporation under the Department of Agriculture.
On 8 December 1989, petitioner received his initial salary, covering the period from 25 September to 31 October 1989. Since
he had no accumulated leave credits, DTI deducted from his salary the amount corresponding to his absences during the
covered period, namely, 29 September 1989 and 20 October 1989, inclusive of Saturdays and Sundays. More specifically, the
dates of said absences for which salary deductions were made, are as follows:
1. 29 September 1989 — Friday 6. 22 October 1989 — Sunday
2. 30 September 1989 — Saturday
3. 01 October 1989 — Sunday
4. 20 October 1989 — Friday
5. 21 October 1989 — Saturday
Page 42 of 134
ADMINISTRATIVE LAW CASES
Petitioner sent a memorandum to Amando T. Alvis (Chief, General Administrative Service) on 15 December 1989 inquiring as
to the law on salary deductions, if the employee has no leave credits.
Amando T. Alvis answered petitioner's query in a memorandum dated 30 January 1990 citing Chapter 5.49 of the Handbook
of Information on the Philippine Civil Service which states that "when an employee is on leave without pay on a day before or
on a day immediately preceding a Saturday, Sunday or Holiday, such Saturday, Sunday, or Holiday shall also be without pay
(CSC, 2nd Ind., February 12, 1965)."
Petitioner then sent a latter dated 20 February 1990 addressed to Civil Service Commission (CSC) Chairman Patricia A. Sto.
Tomas raising the following question:
Is an employee who was on leave of absence without pay on a day before or on a day time immediately preceding a
Saturday, Sunday or Holiday, also considered on leave of absence without pay on such Saturday, Sunday or Holiday?1
Petitioner in his said letter to the CSC Chairman argued that a reading of the General Leave Law as contained in the Revised
Administrative Code, as well as the old Civil Service Law (Republic Act No. 2260), the Civil Service Decree (Presidential Decree
No. 807), and the Civil Service Rules and Regulation fails to disclose a specific provision which supports the CSC rule at issue.
That being the case, the petitioner contented that he cannot be deprived of his pay or salary corresponding to the intervening
Saturdays, Sundays or Holidays (in the factual situation posed), and that the withholding (or deduction) of the same is
tantamount to a deprivation of property without due process of law.
On 25 May 1990, respondent Commission promulgated Resolution No. 90-497, ruling that the action of the DTI in deducting
from the salary of petitioner, a part thereof corresponding to six (6) days (September 29, 30, October 1, 20, 21, 22, 1989) is in
order. 2 The CSC stated that:
In a 2nd Indorsement dated February 12, 1965 of this Commission, which embodies the policy on leave of absence
without pay incurred on a Friday and Monday, reads:
Mrs. Rosalinda Gonzales is not entitled to payment of salary corresponding to January 23 and 24, 1965,
Saturday and Sunday, respectively, it appearing that she was present on Friday, January 22, 1965 but was on
leave without pay beginning January 25, the succeeding Monday. It is the view of this Office that an employee
who has no more leave credit in his favor is not entitled to the payment of salary on Saturdays, Sundays or
holidays unless such non-working days occur within the period of service actually rendered. (Emphasis
supplied)
The rationale for the above ruling which applies only to those employees who are being paid on monthly basis, rests
on the assumption that having been absent on either Monday or Friday, one who has no leave credits, could not be
favorably credited with intervening days had the same been working days. Hence, the above policy that for an employee
on leave without pay to be entitled to salary on Saturdays, Sundays or holidays, the same must occur between the
dates where the said employee actually renders service. To rule otherwise would allow an employee who is on leave
of absent (sic) without pay for a long period of time to be entitled to payment of his salary corresponding to Saturdays,
Sundays or holidays. It also discourages the employees who have exhausted their leave credits from absenting
themselves on a Friday or Monday in order to have a prolonged weekend, resulting in the prejudice of the government
and the public in general. 3
Petitioner filed a motion for reconsideration and in Resolution No. 90-797, the respondent Commission denied said motion for
lack of merit. The respondent Commission in explaining its action held:
The Primer on the Civil Service dated February 21, 1978, embodies the Civil Service Commission rulings to be
observed whenever an employee of the government who has no more leave credits, is absent on a Friday and/or a
Monday is enough basis for the deduction of his salaries corresponding to the intervening Saturdays and Sundays.
What the Commission perceived to be without basis is the demand of Peralta for the payment of his salaries
corresponding to Saturdays and Sundays when he was in fact on leave of absence without pay on a Friday prior to the
said days. A reading of Republic Act No. 2260 (sic) does not show that a government employee who is on leave of
absence without pay on a day before or immediately preceding Saturdays, Sunday or legal holiday is entitled to
payment of his salary for said days. Further, a reading of Senate Journal No. 67 dated May 4, 1960 of House Bill No.
41 (Republic Act No. 2625) reveals that while the law excludes Saturdays, Sundays and holidays in the computation
of leave credits, it does not, however, include a case where the leave of absence is without pay. Hence, applying the
principle of inclusio unius est exclusio alterius, the claim of Peralta has no merit. Moreover, to take a different posture
Page 43 of 134
would be in effect giving more premium to employees who are frequently on leave of absence without pay, instead of
discouraging them from incurring further absence without pay. 4
Petitioner's motion for reconsideration having been denied, petitioner filed the present petition.
What is primarily questioned by the petitioner is the validity of the respondent Commission's policy mandating salary deductions
corresponding to the intervening Saturdays, Sundays or Holidays where an employee without leave credits was absent on the
immediately preceding working day.
During the pendency of this petition, the respondent Commission promulgated Resolution No. 91-540 dated 23 April 1991
amending the questioned policy, considering that employees paid on a monthly basis are not required to work on Saturdays,
Sunday or Holidays. In said amendatory Resolution, the respondent Commission resolved "to adopt the policy that when an
employee, regardless of whether he has leave credits or not, is absent without pay on day immediately preceding or succeeding
Saturday, Sunday or holiday, he shall not be considered absent on those days." Memorandum Circular No. 16 Series of 1991
dated 26 April 1991, was also issued by CSC Chairman Sto. Tomas adopting and promulgating the new policy and directing
the Heads of Departments, Bureaus and Agencies in the national and local governments, including government-owned or
controlled corporations with original charters, to oversee the strict implementation of the circular.
Because of these developments, it would seem at first blush that this petition has become moot and academic since the very
CSC policy being questioned has already been amended and, in effect, Resolutions No. 90-497 and 90-797, subject of this
petition for certiorari, have already been set aside and superseded. But the issue of whether or not the policy that had been
adopted and in force since 1965 is valid or not, remains unresolved. Thus, for reasons of public interest and public policy, it is
the duty of the Court to make a formal ruling on the validity or invalidity of such questioned policy.
The Civil Service Act of 1959 (R.A. No. 2260) conferred upon the Commissioner of Civil Service the following powers and
duties:
Sec. 16 (e) with the approval by the President to prescribe, amend and enforce suitable rules and regulations for
carrying into effect the provisions of this Civil Service Law, and the rules prescribed pursuant to the provisions of this
law shall become effective thirty days after publication in the Official Gazette;
xxx xxx xxx
(k) To perform other functions that properly belong to a central personnel agency. 5
Pursuant to the foregoing provisions, the Commission promulgated the herein challenged policy. Said policy was embodied in
a 2nd Indorsement dated 12 February 1965 of the respondent Commission involving the case of a Mrs. Rosalinda Gonzales.
The respondent Commission ruled that an employee who has no leave credits in his favor is not entitled to the payment of
salary on Saturdays, Sundays or Holidays unless such non-working days occur within the period of service actually rendered.
The same policy is reiterated in the Handbook of Information on the Philippine Civil Service. 6 Chapter Five on leave of absence
provides that:
5.51. When intervening Saturday, Sunday or holiday considered as leave without pay — when an employee is on leave
without pay on a day before or on a day immediately preceding a Saturday, Sunday or holiday, such Saturday, Sunday
or holiday shall also be without pay. (CSC, 2nd Ind., Feb. 12, 1965).
It is likewise illustrated in the Primer on the Civil Service 7 in the section referring to Questions and Answers on Leave of
Absences, which states the following:
27. How is leave of an employee who has no more leave credits computed if:
(1) he is absent on a Friday and the following Monday?
(2) if he is absent on Friday but reports to work the following Monday?
(3) if he is absent on a Monday but present the preceding Friday?
- (1) He is considered on leave without pay for 4 days covering Friday to Monday;
Page 44 of 134
- (2) He is considered on leave without pay for 3 days from Friday to Sunday;
- (3) He is considered on leave without pay for 3 days from Saturday to Monday.
When an administrative or executive agency renders an opinion or issues a statement of policy, it merely interprets a pre-
existing law; and the administrative interpretation of the law is at best advisory, for it is the courts that finally determine what
the law means. 8 It has also been held that interpretative regulations need not be published. 9
In promulgating as early as 12 February 1965 the questioned policy, the Civil Service Commission interpreted the provisions
of Republic Act No. 2625 (which took effect on 17 June 1960) amending the Revised Administrative Code, and which stated
as follows:
Sec. 1. Sections two hundred eighty-four and two hundred eighty-five-A of the Administrative Code, as amended, are
further amended to read as follows:
Sec. 284. After at least six months' continues (sic) faithful, and satisfactory service, the President or proper
head of department, or the chief of office in the case of municipal employees may, in his discretion, grant to an
employee or laborer, whether permanent or temporary, of the national government, the provincial government,
the government of a chartered city, of a municipality, of a municipal district or of government-owned or
controlled corporations other than those mentioned in Section two hundred sixty-eight, two hundred seventy-
one and two hundred seventy-four hereof, fifteen days vacation leave of absence with full pay, exclusive of
Saturdays, Sundays and holidays, for each calendar year of service.
Sec. 285-A. In addition to the vacation leave provided in the two preceding sections each employee or laborer,
whether permanent or temporary, of the national government, the provincial government, the government of a
chartered city, of a municipality or municipal district in any regularly and specially organized province, other
than those mentioned in Section two hundred sixty-eight, two hundred seventy-one and two hundred seventy-
four hereof, shall be entitled to fifteen days of sick leave for each year of service with full pay, exclusive of
Saturdays, Sundays and holidays: Provided, That such sick leave will be granted by the President, Head of
Department or independent office concerned, or the chief of office in case of municipal employees, only on
account of sickness on the part of the employee or laborer concerned or of any member of his immediate family.
The Civil Service Commission in its here questioned Resolution No. 90-797 construed R.A. 2625 as referring only to
government employees who have earned leave credits against which their absences may be charged with pay, as its letters
speak only of leaves of absence with full pay. The respondent Commission ruled that a reading of R.A. 2625 does not show
that a government employee who is on leave of absence without pay on a day before or immediately preceding a Saturday,
Sunday or legal holiday is entitled to payment of his salary for said days.
Administrative construction, if we may repeat, is not necessarily binding upon the courts. Action of an administrative agency
may be disturbed or set aside by the judicial department if there is an error of law, or abuse of power or lack of jurisdiction or
grave abuse of discretion clearly conflicting with either the letter or the spirit of a legislative enactment. 10
We find this petition to be impressed with merit.
As held in Hidalgo vs. Hidalgo: 11
. . . . where the true intent of the law is clear that calls for the application of the cardinal rule of statutory construction
that such intent or spirit must prevail over the letter thereof, for whatever is within the spirit of a statute is within the
statute, since adherence to the letter would result in absurdity, injustice and contradictions and would defeat the plain
and vital purpose of the statute.
The intention of the legislature in the enactment of R.A. 2625 may be gleaned from, among others, the sponsorship speech of
Senator Arturo M. Tolentino during the second reading of House Bill No. 41 (which became R.A. 2625). He said:
The law actually provides for sick leave and vacation leave of 15 days each year of service to be with full pay. But
under the present law, in computing these periods of leaves, Saturday, Sunday and holidays are included in the
computation so that if an employee should become sick and absent himself on a Friday and then he reports for work
on a Tuesday, in the computation of the leave the Saturday and Sunday will be included, so that he will be considered
as having had a leave of Friday, Saturday, Sunday and Monday, or four days.
Page 45 of 134
The purpose of the present bill is to exclude from the computation of the leave those days, Saturdays and Sundays,
as well as holidays, because actually the employee is entitled not to go to office during those days. And it is unfair and
unjust to him that those days should be counted in the computation of leaves. 12
With this in mind, the construction by the respondent Commission of R.A. 2625 is not in accordance with the legislative intent.
R.A. 2625 specifically provides that government employees are entitled to fifteen (15) days vacation leave of absence with full
pay and fifteen (15) days sick leave with full pay, exclusive of Saturdays, Sundays and Holidays in both cases. Thus, the law
speaks of the granting of a right and the law does not provide for a distinction between those who have accumulated leave
credits and those who have exhausted their leave credits in order to enjoy such right. Ubi lex non distinguit nec nos distinguere
debemus. The fact remains that government employees, whether or not they have accumulated leave credits, are not required
by law to work on Saturdays, Sundays and Holidays and thus they can not be declared absent on such non-working days.
They cannot be or are not considered absent on non-working days; they cannot and should not be deprived of their salary
corresponding to said non-working days just because they were absent without pay on the day immediately prior to, or after
said non-working days. A different rule would constitute a deprivation of property without due process.
Furthermore, before their amendment by R.A. 2625, Sections 284 and 285-A of the Revised Administrative Code applied to all
government employee without any distinction. It follows that the effect of the amendment similarly applies to all employees
enumerated in Sections 284 and 285-A, whether or not they have accumulated leave credits.
As the questioned CSC policy is here declared invalid, we are next confronted with the question of what effect such invalidity
will have. Will all government employees on a monthly salary basis, deprived of their salaries corresponding to Saturdays,
Sundays or legal holidays (as herein petitioner was so deprived) since 12 February 1965, be entitled to recover the amounts
corresponding to such non-working days?
The general rule vis-a-vis legislation is that an unconstitutional act is not a law; it confers no rights; it imposes no duties; it
affords no protection; it creates no office; it is in legal contemplation as inoperative as though it had never been passed. 13
But, as held in Chicot County Drainage District vs. Baxter State Bank:14
. . . . It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must
be taken with qualifications. The actual existence of a statute, prior to such determination is an operative fact and may
have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration.
The effect of the subsequent ruling as to invalidity may have to be considered in various aspects — with respect to
particular relations, individual and corporate; and particular conduct, private and official.
To allow all the affected government employees, similarly situated as petitioner herein, to claim their deducted salaries resulting
from the past enforcement of the herein invalidated CSC policy, would cause quite a heavy financial burden on the national
and local governments considering the length of time that such policy has been effective. Also, administrative and practical
considerations must be taken into account if this ruling will have a strict restrospective application. The Court, in this connection,
calls upon the respondent Commission and the Congress of the Philippines, if necessary, to handle this problem with justice
and equity to all affected government employees.
It must be pointed out, however, that after CSC Memorandum Circular No. 16 Series of 1991 — amending the herein invalidated
policy — was promulgated on 26 April 1991, deductions from salaries made after said date in contravention of the new CSC
policy must be restored to the government employees concerned.
WHEREFORE, the petition is GRANTED, CSC Resolutions No. 90-497 and 90-797 are declared NULL and VOID. The
respondent Commission is directed to take the appropriate action so that petitioner shall be paid the amounts previously but
unlawfully deducted from his monthly salary as above indicated. No costs.
SO ORDERED.
SECOND DIVISION
[G.R. No. L-76185. March 30, 1988.]
Page 46 of 134
WARREN MANUFACTURING WORKERS UNION (WMWU), Petitioner, v. THE BUREAU OF LABOR RELATIONS;
PHILIPPINE AGRICULTURAL, COMMERCIAL AND INDUSTRIAL WORKERS UNION (PACIWU); and SAMAHANG
MANGGAGAWA SA WARREN MANUFACTURING CORP.-ALLIANCE OF NATIONALIST AND GENUINE LABOR
ORGANIZATIONS (SMWMC-ANGLO), Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATIONS; LABOR LAW; CONSENT ELECTION; PURPOSE. — The records show that
petitioner admitted that what was held on August 25, 1985 at the Company’s premises and which became the root of this
controversy, was a consent election and not a certification election (underscoring supplied). The election held on August
25, 1985 was not for the purpose of determining which labor union should be the bargaining representative in the
negotiation for a collective contract, there being an existing collective bargaining agreement yet to expire on July 31,
1986; but only to determine which labor union shall administer the said existing contract.
2. ID.; ID.; CONSENT ELECTION DISTINGUISHED FROM CERTIFICATION ELECTION. — As correctly distinguished
by private respondent, a consent election is an agreed one, its purpose being merely to determine the issue of majority
representation of all the workers in the appropriate collective bargaining unit while a certification election is aimed at
determining the sole and exclusive bargaining agent of all the employees in an appropriate bargaining unit for the purpose
of collective bargaining. From the very nature of consent election, it is a separate and distinct process and has nothing
to do with the import and effect of a certification election. Neither does it shorten the terms of an existing CBA nor entitle
the participants thereof to immediately renegotiate an existing CBA although it does not preclude the workers from
exercising their right to choose their sole and exclusive bargaining representative after the expiration of the sixty (60) day
freedom period.
3. ADMINISTRATIVE LAW; INTERPRETATION OF REGULATIONS AND POLICIES BY ADMINISTRATIVE BODIES,

ENTITLED TO GREAT RESPECT. — It is an elementary rule in administrative law that administrative regulations and
policies enacted by administrative bodies to interpret the law which they are entrusted to enforce, have the force of law
and are entitled to great respect (Español v. Philippine Veterans Administration, 137 SCRA 314 [1985]).
4. LABOR AND SOCIAL LEGISLATION; LABOR RELATIONS; CERTIFICATION ELECTION; SUPPORT OF 30% OF
EMPLOYEES IN THE BARGAINING UNIT NECESSARY. — Article 258 of the Labor Code makes it mandatory for the
Bureau of Labor Relations to conduct a certification election (Samahang Manggagawa ng Pacific Mills, Inc. v. Noriel, Et
Al., 134 SCRA 152 [1985]). In the case of Federation of Free Workers (Bisig ng Manggagawa sa UTEX v. Noriel etc., Et
Al., 86 SCRA 132 [1978]), this Court was even more specific when it stated "No administrative agency can ignore the
imperative tone of the above article. The language used is one of command. Once it has been verified that the petition
for certification election has the support of at least 30% of the employees in the bargaining unit, it must be granted. The
specific word used can yield no other meaning. It becomes under the circumstances, ‘mandatory’ . . ."
DECISION
PARAS, J.:
This is a petition for review on certiorari with prayer for a preliminary injunction and/or the issuance of a restraining
order seeking to set aside: (1) Order of the Med-Arbiter dated August 18, 1986, the dispositive portion of which
reads:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, a certification election is hereby ordered conducted to determine the exclusive
bargaining representative of all the rank and file employees of Warren Manufacturing Corporation, within 20 days from
receipt of this Order, with the following choices:chanrob1es virtual 1aw library
1. Philippine Agricultural, Commercial and Industrial Workers Union (PACIWU);
Page 47 of 134
2. Warren Mfg. Workers Union;
3. Samahan ng Manggagawa sa Warren Mfg. Corporation-ANGLO; and
4. No Union.
"The representation Officer is hereby directed to call the parties to a pre-election conference to thresh out the
mechanics for the conduct of the actual election.
"SO ORDERED." (Rollo, p. 15).
and (2) the Resolution dated October 7, 1986 of the Officer-in-Charge of the Bureau of Labor dismissing the appeals of
Warren Manufacturing Corporation and herein petitioner (Annex "B", Rollo, pp. 16-18).
This certification case had its inception in an intra-union rivalry between the petitioner and the respondent Philippine
Agricultural, Commercial and Industrial Workers Union (PACIWU for short) since 1985.cralawnad
The undisputed facts of this case as found by the Med-Arbiter of the Bureau of Labor Relations are as
follows:jgc:chanrobles.com.ph
"On June 13, 1985, PACIWU filed a petition for certification election, alleging compliance with the jurisdictional
requirements.
"On July 7, 1985, respondent thru counsel filed a motion to dismiss the petition on the ground that there exists a C.B.A.
between the respondent and the Warren Mfg. Union which took effect upon its signing on July 16, 1985 and to expire
on July 31, 1986.
"While the petition was under hearing, PACIWU filed a Notice of Strike and on conciliation meeting, a Return-to-Work
Agreement was signed on July 25, 1985, stipulating, among others, as follows:chanrob1es virtual 1aw library
‘To resolve the issue of union representation at Warren Mfg. Corp. parties have agreed to the holding of a consent
election among the rank and file on August 25, 1985 at the premises of the company to be supervised by MOLE . . .
‘It is clearly understood that the certified union in the said projected election shall respect and administer the existing
CBA at the company until its expiry date on July 31, 1986.’
"On 12 August 1985, an Order was issued by this Office, directing that a consent election be held among the rank and
file workers of the company, with the following contending unions:chanrob1es virtual 1aw library
1. Philippine Agricultural, Commercial and Industrial Workers Union (PACIWU);
2. Warren Mfg. Workers Union;
3. No Union.
"On August 25, 1985, said consent election was held, and yielded the following results:chanrob1es virtual 1aw library
PACIWU 94
WMWU 193
"Feeling aggrieved, however, PACIWU filed an Election Protest.
"In December, 1985 a Notice of Strike was again filed by the union this time with the Valenzuela branch office of this
Ministry, and after conciliation, the parties finally agreed, among others, to wit:jgc:chanrobles.com.ph
"In consideration of this payment, . . . individual complaints and PACIWU hereby agree and covenant that the following
labor complaints/disputes are considered amicably settled and withdrawn/dismissed, to wit: . . .
Page 48 of 134
"On the basis of a Joint Motion to Dismiss filed by the parties, the Election Protest filed by the PACIWU was ordered
dismissed." (Rollo, pp. 12-13).
On June 5, 1986, the PACIWU filed a petition for certification election followed by the filing of a petition for the same
purposes by the Samahan ng Manggagawa sa Warren Manufacturing Corporation-Alliance of Nationalist and Genuine
Labor Organizations (Anglo for short) which petitions were both opposed by Warren Manufacturing Corporation on the
grounds that neither petition has 30% support; that both are barred by the one-year no certification election law and the
existence of a duly ratified CBA. The therein respondent, therefore, prayed that the petitions for certification election be
dismissed. (Rollo, pp. 11-12).
As above stated, the Med-Arbiter of the National Capital Region, Ministry of Labor and Employment, ordered on August
18, 1986 the holding of a certification election within twenty (20) days from receipt to determine the exclusive
bargaining representative of all the rank and file employees of the Warren Manufacturing Corporation, with the above-
mentioned choices.
Both Warren Manufacturing Corporation and petitioner herein filed separate motions, treated as appeals by the Bureau
of Labor Relations, which dismissed the same for lack of merit.chanrobles law library : red
Hence, this petition.
This petition was filed solely by the Warren Manufacturing Workers Union, with the company itself opting not to appeal.
The Second Division of this Court in the resolution of November 3, 1986 without giving due course to the petition,
required the respondents to comment and issued the temporary, restraining order prayed for (Rollo, pp. 18-20).
The comment of the respondent PACIWU was filed on November 27, 1986 (Ibid., pp. 29-32). The public respondent
through the Hon. Solicitor General filed its Comment to the petition on December 10, 1986 (Ibid., pp. 34-43) and private
respondent ANGLO, filed its comment on December 16, 1986 (Ibid., pp. 45-51). The petitioner with leave of court filed
its reply to comment entitled a rejoinder on January 6, 1987 (Ibid., pp. 52-62).
In the resolution of January 26, 1987, the petition was given due course and the parties were required to submit their
respective memoranda (Ibid., p. 76).
Memorandum for public respondent was filed on February 20, 1987 (Ibid., p. 82-88). Respondent PACIWU’s
memorandum was filed on March 18, 1987 (Ibid., pp. 95-99). SMWMC-ANGLO’S Memorandum was filed on March 23,
1987 (Ibid., pp. 100-109) and the petitioner’s memorandum was filed on March 31, 1987 (Ibid., pp. 110-
120).chanrobles.com:cralaw:red
In its memorandum, petitioner raised the following issues:chanrob1es virtual 1aw library
A. The holding of a certification election at the bargaining unit is patently premature and illegal.
B. The petitions filed by private respondents do not have the statutory 30% support requirement.
C. Petitioner was denied administrative due process when excluded from med-arbitration proceedings.
The petition is devoid of merit.
A.
Petitioner’s contention is anchored on the following grounds:chanrob1es virtual 1aw library
Section 3, Rule V of the Implementing Rules and Regulations of the Labor Code provides, among
others:jgc:chanrobles.com.ph
". . . however no certification election may be held within one (1) year from the date of the issuance of the declaration of
a final certification result."cralaw virtua1aw library
Page 49 of 134
and
Article 257, Title VII, Book V of the Labor Code provides:jgc:chanrobles.com.ph
"No certification election issue shall be entertained by the Bureau in any Collective Bargaining Agreement existing
between the employer and a legitimate labor organization."cralaw virtua1aw library
Otherwise stated, petitioner invoked the one-year no certification election rule and the principle of the Contract Bar
Rule.chanrobles lawlibrary : rednad
This contention is untenable.
The records show that petitioner admitted that what was held on August 25, 1985 at the Company’s premises and
which became the root of this controversy, was a consent election and not a certification election (Italics supplied). As
correctly distinguished by private respondent, a consent election is an agreed one, its purpose being merely to
determine the issue of majority representation of all the workers in the appropriate collective bargaining unit while a
certification election is aimed at determining the sole and exclusive bargaining agent of all the employees in an
appropriate bargaining unit for the purpose of collective bargaining. From the very nature of consent election, it is a
separate and distinct process and has nothing to do with the import and effect of a certification election. Neither does it
shorten the terms of an existing CBA nor entitle the participants thereof to immediately renegotiate an existing CBA
although it does not preclude the workers from exercising their right to choose their sole and exclusive bargaining
representative after the expiration of the sixty (60) day freedom period. In fact the Med-Arbiter in the Return to Work
Agreement signed by the parties emphasized the following:jgc:chanrobles.com.ph
"To resolve the issue of union representation at Warren Mfg. Corp., parties have agreed to the holding of a consent
election among the rank and file on August 25, 1985 at the premises of the company to be supervised by the Ministry of
Labor and Employment . . .
"It is clearly understood that the certified union in the said projected election shall respect and administer the existing
CBA at the company until its expiry date on July 31, 1986." (Rollo, pp. 46, 48-49).
It is, therefore, unmistakable that the election thus held on August 25, 1985 was not for the purpose of determining
which labor union should be the bargaining representative in the negotiation for a collective contract, there being an
existing collective bargaining agreement yet to expire on July 31, 1986; but only to determine which labor union shall
administer the said existing contract.chanrobles lawlibrary : rednad
Accordingly, the following provisions of the New Labor Code apply:jgc:chanrobles.com.ph
"ART. 254. Duty to bargain collectively when there exists a collective bargaining agreement. — When there is a
collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or
modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the
status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day
period and/or until a new agreement is reached by the parties."
"Corollary to the above, Article 257 of the New Labor Code expressly states that No certification election issue shall be
entertained if a collective agreement which has been submitted in accordance with Article 231 of this Code exists
between the employer and a legitimate labor organization except within sixty (60) days prior to the expiration of the life
of such certified collective bargaining agreement." (Rollo, pp. 83-84)
Thus, as stated by this Court in General Textiles Allied Workers Association v. the Director of the Bureau of Labor
Relations (84 SCRA 430 [1978]) "there should be no obstacle to the right of the employees to petition for a certification
election at the proper time, that is, within 60 days prior to the expiration of the three year period . . ."cralaw virtua1aw
library
Finally, such premature agreement entered into by the petitioner and the Company on June 2, 1986 does not adversely
affect the petition for certification election filed by respondent PACIWU (Rollo, p. 85).
Page 50 of 134
Section 4, Rule V, Book V of the Omnibus Rules Implementing the Labor Code clearly provides:jgc:chanrobles.com.ph
"Section 4. Effect of Early Agreement. — The representation case shall not, however, be adversely affected by a
collective agreement submitted before or during the last sixty days of a subsisting agreement or during the pendency of
the representation case."cralaw virtua1aw library
Apart from the fact that the above Rule is clear and explicit, leaving no room for construction or interpretation, it is an
elementary rule in administrative law that administrative regulations and policies enacted by administrative bodies to
interpret the law which they are entrusted to enforce, have the force of law and are entitled to great respect (Español v.
Philippine Veterans Administration, 137 SCRA 314 [1985]).
As aforestated, the existing collective bargaining agreement was due to expire on July 31, 1986. The Med-Arbiter found
that a sufficient number of employees signified their consent to the filing of the petition and 107 employees authorized
intervenor to file a motion for intervention. Otherwise stated, he found that the petition and intervention were supported
by more than 30% of the members of the bargaining unit. In the light of these facts, Article 258 of the Labor Code
makes it mandatory for the Bureau of Labor Relations to conduct a certification election (Samahang Manggagawa ng
Pacific Mills, Inc. v. Noriel, Et Al., 134 SCRA 152 [1985]). In the case of Federation of Free Workers (Bisig ng
Manggagawa sa UTEX v. Noriel etc., Et Al., 86 SCRA 132 [1978]), this Court was even more specific when it stated
"No administrative agency can ignore the imperative tone of the above article. The language used is one of command.
Once it has been verified that the petition for certification election has the support of at least 30% of the employees in
the bargaining unit, it must be granted. The specific word used can yield no other meaning. It becomes under the
circumstances, ‘mandatory’ . . ."cralaw virtua1aw library
The finality of the findings of fact of the Med-Arbiter that the petition and intervention filed in the case at bar were
supported by 30% of the members of the workers is clear and definite.
WHEREFORE, the instant Petition is DISMISSED.
SO ORDERED.
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
Page 51 of 134
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
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 the latter 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 before
the Supreme Court . . . docketed as G.R. No. 95590." 9 Both petitions in this Court were filed in behalf of the teacher
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 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 The Commission 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.
Page 52 of 134
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 Commission
shall proceed to hear and resolve the case on the merits with or without respondents counter affidavit." 18 It held that the
"striking teachers" "were denied 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
Page 53 of 134
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.
The proposition is made clear by the constitutional provisions specifying the powers of the Commission on Human Rights.
The Commission was created by the 1987 Constitution as an independent office. 23 Upon its constitution, it succeeded
and superseded the Presidential Committee on Human Rights existing at the time of the effectivity of the
Constitution. 24 Its powers and functions are the following:
(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.
Page 54 of 134
"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 into:
. . . to subject to an official probe . . .: to conduct an official inquiry." 27 The purpose of investigation, of course, is to
discover, to find out, to 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 the
merits of issues raised: . . . to pass judgment on: settle judicially: . . . act as judge." 30 And "adjudge" means "to decide
or rule upon as a judge or 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.
Indeed, the Secretary of Education has, as above narrated, already taken cognizance of the issues and resolved
them, 33 and it appears that appeals have been 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.
Page 55 of 134
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.
EN BANC
G.R. Nos. 92319-20 October 2, 1990
EDUARDO M. COJUANGCO, JR., petitioner,

vs.
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG) AND HON. FRANCISCO I. CHAVEZ in his
capacity as Solicitor General, and the HON. OMBUDSMAN, respondents, MARIA CLARA L. LOBREGAT and
JOSE R. ELEAZAR, JR., intervenors.
Estelito P. Mendoza and Villareal Law Offices for petitioner.
Angara, Abello, Concepcion, Regala & Cruz for intervenors.
GANCAYCO, J.:
In these petitions the issues raised are: (1) whether or not the Presidential Commission on Good Government (PCGG)
has the power to conduct a preliminary investigation of the anti-graft and corruption cases filed by the Solicitor General
against Eduardo Cojuangco, Jr. and other respondents for the alleged misuse of coconut levy funds; and (2) on the
assumption that it has jurisdiction to conduct such a preliminary investigation, whether or not its conduct constitutes a
violation of petitioner's rights to due process and equal protection of the law.
On November 28, 1989, President Corazon C. Aquino directed the Solicitor General to prosecute all persons involved
in the misuse of coconut levy funds. Pursuant to the above directive the Solicitor General created a task force to
conduct a thorough study of the possible involvement of all persons in the anomalous use of coconut levy funds.
On January 12, 1990, the Solicitor General filed two criminal complaints with respondent PCGG docketed under I.S.
Nos. 74 and 75. 1
The PCGG assigned both complaints to prosecutor Cesario del Rosario for preliminary investigation. The latter
scheduled both cases for hearing.
Del Rosario prepared a subpoena dated January 16, 1990 setting the preliminary investigation on January 29, 1990 at
2:00 o'clock in the afternoon as to respondents Maria Clara Lobregat, Jose Eleazar, Felix Duenas Jr., and Salvador
Escudero, III, and on January 31, 1990 at 2:00 o'clock in the afternoon as to petitioner Eduardo M. Cojuangco, Jr.,
Rolando de la Cuesta, and Hermenegildo Zayco.
At the scheduled preliminary investigation on January 31, 1990 petitioner appeared through counsel. Instead of filing a
counter-affidavit, as required in the subpoena, he filed two motions addressed to the PCGG, namely; (1) a motion to
Page 56 of 134
disqualify/inhibit PCGG; alternatively, a motion to dismiss; and (2) motion to have the PCGG itself hear or resolve
Cojuangco's motion to disqualify/inhibit PCGG alternatively, motion to dismiss.
Prosecutor del Rosario denied both motions and declared the proceedings closed and the cases submitted for
resolution. Thereafter, petitioner requested the PCGG to resolve directly his aforesaid motions.
On February 27, 1990, the PCGG issued an order denying petitioner's motions and required him, together with all the
respondents in I.S. Nos. 74 and 75 to submit counter-affidavits within five (5) days from receipt thereof. Petitioner did
not submit the required counter-affidavit.
Instead, he filed in this Court on March 12, 1990 the herein petitions for prohibition with prayer for a temporary
restraining order/writ of preliminary injunction.
He alleges that the PCGG may not conduct a preliminary investigation of the complaints filed by the Solicitor General
without violating petitioner's rights to due process and equal protection of the law, and that the PCGG has no right to
conduct such preliminary investigation. It is prayed that a temporary restraining order be issued enjoining the
respondents and any or all persons acting under their orders or in their behalf from continuing with the preliminary
investigation of I.S. Nos. 74 and 75 and enjoining as well the PCGG from taking any further action on said cases; and
after hearing on the merits, to issue a writ of preliminary injunction prohibiting respondent PCGG from conducting a
preliminary investigation of said criminal complaints and to order that the records of I.S. Nos. 74 and 75 be forwarded to
the Ombudsman for such action he may consider appropriate and to pay the costs of the suits.
In a resolution dated March 13, 1990, this Court, without giving due course to the petition, resolved to require
respondents to comment thereon within ten (10) days from notice.
On the same date, the PCGG issued an order that reads as follows:
Considering that none of the respondents have filed their counter-affidavits and supporting evidence,
except respondent Hermenegildo Zayco, the complaints filed against them may now be considered
submitted for resolution by this Commission.
Since the respondents, except Hermenegildo Zayco, have not submitted counter-affidavits and
controverting evidence, the evidence submitted by the complainants stands uncontradicted. And this
Commission finds the findings and conclusions of fact of the investigating prosecutor, that a prima
faciecase has been established against all the respondents, including Hermenegildo Zayco, to warrant
the filing of an information for a violation of Section 3(1) in relation to Section 3(i) thus making them
liable under Section 3(a) of RA 3019, to be well-founded.
2
Wherefore, let the corresponding information be filed.
On March 14, 1990, two informations 3 were filed by the PCGG with the Sandiganbayan against petitioner and all other
respondents named in I.S. Nos. 74 and 75 which were docketed as Criminal Cases No. 14398 and 14399.
Meanwhile, the Solicitor General filed with the PCGG several other complaints against petitioner and several others
bearing on the misuse of the coconut levy funds. Two of these complaints were docketed as I.S. Nos. 79 and 82. A
panel of prosecutors designated by the PCGG issued a subpoena to petitioner in order to compel him to appear in the
investigation of said cases.
On March 20, 1990, petitioner filed a supplemental petition informing the Court of the filing of said informations and the
additional complaints aforestated. He prays that a temporary restraining order be issued enjoining respondents and
other persons acting under their orders or in their behalf from continuing with the preliminary investigation of as well as
taking further action in I.S. Nos. 79 and 82 and similar cases filed with the PCGG. Petitioner also prays that, after
hearing, the PCGG be prohibited from continuing with the preliminary investigation of I.S. Nos. 79 and 82 and that it be
ordered to forward the records of the case to the Ombudsman for appropriate action, and to pay the costs of the suit.
On the same date, petitioner filed a motion reiterating the petition for the issuance of a temporary restraining order/writ
of preliminary injunction and alternatively seeking that the case be set for hearing.
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On March 22, 1990, the Court admitted the supplemental pleading of the petitioner; required respondents to comment
thereon within a non-extendible period of ten (10) days from notice; and issued a status quo order prevailing at the time
this petition was filed on March 12, 1990.
On April 2, 1990, a consolidated comment was submitted by the respondents attaching as annex thereto the letters of
the Executive Secretary dated February 9, 1990 and February 21, 1990, respectively, addressed to the Chairman,
PCGG, conveying the instructions of the President of the Philippines that the complaints involving coconut levy funds
be filed with the PCGG, to conduct the necessary investigation and if warranted to file and prosecute the cases before
the Sandiganbayan; and it confirmed the earlier instructions of the President dated November 28, 1989 to the same
effect. 4
On May 4, 1990 petitioner filed a reply to the consolidated comment as required by the Court. In a resolution dated
June 5, 1990, the Solicitor General was required to file a rejoinder. On May 31, 1990, a motion for hearing of said
cases was filed by petitioner and this was granted by the Court on June 21, 1990. It was directed that the Ombudsman
be impleaded as party-respondent. The Court required the Ombudsman to comment on the petition within ten (10) days
from notice. The case was set for hearing on Tuesday, July 17, 1990 at 10:00 in the morning.
The Ombudsman submitted his comment on July 3, 1990 and the Court required petitioner to file a reply to the same.
On July 6, 1990, Maria Clara Lobregat and Jose R. Eleazar, Jr. filed a Motion for Leave to Intervene and a Motion to
Admit Petition to Intervene wherein they ask that the PCGG desist from further proceeding with the preliminary
investigation of I.S. Nos. 74, 75, 77, 79, 80, 81, 82, 83, and 84 charging the intervenors and other respondents,
including petitioner, with violations of the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) in connection
with the, coconut levy funds. The intervenors question the authority of the PCGG to conduct a preliminary investigation
of the said cases. They maintain that even assuming that the PCGG has such authority, the same cannot be delegated
to a prosecutor or his assistants.
On July 10, 1990, the court granted the motion for leave to intervene and admitted the petition for intervention. The
PCGG was required to comment on said petition within ten (10) days from notice.
On July 13, 1990, respondents filed their rejoinder to the reply of petitioner to their consolidated comments. The
Ombudsman filed his comment to the petition for intervention, while petitioner filed his reply to the comment of the
Ombudsman on July 16, 1990.
The hearing was held as scheduled on July 17, 1990 where all the parties including the Ombudsman appeared and/or
were duly represented by counsels. After the hearing, the parties were required to submit their simultaneous
memoranda within fifteen (15) days from the date of the hearing.
On July 21, 1990, the Solicitor General asked for an extension of time within which to file his comment to the petition for
intervention. He filed said comment within the period of extension asked for on July 31, 1990.
The memoranda of all the parties having been submitted, the petitions were deemed submitted for resolution.
On the first issue wherein petitioner and intervenors question the authority of the PCGG to conduct a preliminary
investigation of the criminal complaints filed against them by the Solicitor General, the Court finds and so holds the
same to be devoid of merit.
Under Section 2, Rule 112 of the 1985 Rules of Criminal Procedure the officers authorized to conduct a preliminary
investigation are the following:
Sec. 2. Officers authorized to conduct preliminary investigation.—
The following may conduct a preliminary investigation:
(a) Provincial or city fiscals and their assistants;
(b) Judges of the Municipal Trial Courts and Municipal Circuit Trial Court;
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(c) National and Regional state prosecutors; and
(d) Such other officers as may be authorized by law.
Their authority to conduct preliminary investigation shall include all crimes cognizable by the proper
court in their respective territorial jurisdictions.
Under Section 2 likewise of Rule 112 of the Rules of Court before its present amendment, the officers authorized to
conduct preliminary investigation are as follows:
Sec. 2. Officers authorized to conduct preliminary examination: — Every justice of the peace, municipal
judge, city or provincial fiscal, shall have authority to conduct preliminary examination or investigation in
accordance with these rules of all offenses alleged to have been committed within his municipality, city
or province, cognizable by the Court of First Instance.
The justice of the peace of the provincial capital or of the municipality in which the provincial jail is
located when directed by an order of the Court of First Instance, shall have authority to conduct such
preliminary examination or investigation of any offense committed anywhere within his province at the
expense of the municipality wherein the same was committed.
Under Section 3 thereof in case of temporary absence of the justice of the peace or his auxiliary, the municipal mayor
may conduct the preliminary investigation. For complaints filed directly with the Court of First Instance, the judge of the
said court may refer the case to the justice of the peace or he may himself conduct both the preliminary examination
and investigation simultaneously, under Section 13 of the same rule.
Upon the enactment of the Anti-Graft and Corrupt Practices Act on August 17, 1960, 5 and Republic Act No. 1379
(covering unexplained wealth cases) on August 18, 1955, the preliminary investigation of cases involving the Anti-Graft
and Corrupt Practices Act and/or unexplained wealth cases was vested on the aforestated officers.
However, on July 17, 1979, Presidential Decree No. 1630 was promulgated whereby the Tanodbayan was vested with
the "exclusive authority to conduct preliminary investigation of all cases cognizable by the Sandiganbayan." 6Under
Presidential Decree No. 1486 which was approved on June 11, 1978, the Sandiganbayan was created and vested with
exclusive jurisdiction over all offenses committed by public officers enumerated therein. This was amended by
Presidential Decree No. 1606 dated December 10, 1978 and further amended by Presidential Decree No. 1861 issued
on March 23, 1983 wherein the jurisdiction of the Sandiganbayan was defined as follows:
Sec. 1. Section 4 of Presidential Decree No. 1606 is hereby amended to read as follows:
Sec. 4. Jurisdiction — The Sandiganbayan shall exercise:
(a) Exclusive original jurisdiction in all cases involving:
(1) Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt
Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII of the Revised Penal Code;
(2) Other offenses or felonies committed by public officers and employees in relation to their office,
including those employed in government-owned or controlled corporations, whether simple or
complexed with other crimes, where the penalty prescribed by law is higher than prision correccional or
imprisonment for six (6) years, or a fine of P6,000.00: PROVIDED, HOWEVER, that offenses or felonies
mentioned in this paragraph where the penalty prescribed by law does not exceed prision
correccional or imprisonment for six (6) years or a fine of P6,000.00 shall be tried by the proper Regional
Trial Court, Metropolitan Trial Court, Municipal Trial Court and Municipal Circuit Trial Court.
(b) Exclusive appellate jurisdiction:
(1) On appeal, from the final judgments, resolutions or orders of the Regional Trial Courts in cases
originally decided by them in their respective territorial jurisdiction.
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(2) By petition for review, from the final judgments, resolutions or orders of the Regional Trial Courts in
the exercise of their appellate jurisdiction over cases originally decided by the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction.
The procedure prescribed in Batas Pambansa Blg. 129, as well as the implementing rules the Supreme
Court has promulgated and may hereinafter promulgate, relative to appeals/petitions for review to the
Intermediate Appellate Court shall apply to appeals and petition for review filed with the Sandiganbayan.
In all cases elevated to the Sandiganbayan, the Office of the Tanodbayan shall represent the People of
the Philippines.
In case private individuals are charged as co-principals, accomplices or accessories with the public
officers or employees, including those employed in government-owned or controlled corporations, they
shall be tried jointly with said public officers and employees.
Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the
corresponding civil action for the recovery of civil liability arising from the offense charged shall at all
times be simultaneously instituted with and jointly determined in the same proceeding by the
Sandiganbayan or the appropriate courts, the filing of the criminal action being deemed to necessarily
carry with it the filing of the civil action, and no right to reserve the filing of such civil action separately
from the criminal action shall be recognized: PROVIDED, HOWEVER, that where the civil action had
heretofore been filed separately but judgment therein has not yet been rendered, and the criminal case
is hereafter filed with the Sandiganbayan or the appropriate court, said civil action shall be transferred to
the Sandiganbayan or the appropriate court, as the case maybe, for consolidation and joint
determination with the criminal action, otherwise the separate civil action shall be considered
abandoned.
Sec. 2. All cases pending in the Sandiganbayan or in the appropriate courts as of the date of the
effectivity of this Decree shall remain with and be disposed of by the courts where they are pending.
Sec. 3. The provisions of this Decree notwithstanding, the office of the Tanodbayan shall continue to
have the exclusive authority to conduct preliminary investigation, file the necessary information, and
direct and control the prosecution of all cases enumerated in Section 4 of Presidential Decree No.1606,
whether such cases be within the exclusive original/appellate jurisdiction of the Sandiganbayan or the
appropriate courts in accordance with the provisions of Presidential Decree No. 1630. (Emphasis
supplied.)
However, this exclusive jurisdiction of the Tanodbayan to conduct preliminary investigation of said cases was modified
by Executive Order No. 1 signed by President Corazon C. Aquino on February 28, 1986 creating the PCGG and
constituting its membership to assist the President in the recovery of ill gotten wealth accumulated by the former
President, his relatives and cronies. Therein it is provided, among others:
Sec. 2. — The Commission shall be charged with the task of assisting the President in regard to the
following matters:
(a) 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.
(b) The investigation of such cases of graft and corruption as the President may assign to the
Commission from time to time.
(c) The adoption of safeguards to ensure that the above practices shall not be repeated in any manner
under the new government, and the institution of adequate measures to prevent the occurrence of
corruption.
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Sec. 3. The Commission shall have the power and authority:
(a) To conduct investigations as may be necessary in order to accomplish and carry out the purposes of
this order. (Emphasis supplied.)
Under Executive Order No. 14 signed by President Aquino on May 7, 1986, it is also provided:
Sec. 1. Any provision of the law to the contrary notwithstanding, the Presidential Commission on Good
Government with the assistance of the Office of the Solicitor General and other government agencies, is
hereby empowered to file and prosecute all cases investigated by it under Executive Order No. 1, dated
February 28, 1986 and Executive Order No. 2, dated March 12, 1986, as may be warranted by its
findings.
Sec. 2. 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 .
Sec. 3. Civil suits for restitution, reparation of damages, or indemnification for consequential damages,
forfeiture proceedings provided for under Republic Act No. 1379, or any other civil actions under the Civil
Code or other existing laws, in connection with Executive Order No.1 dated February 28, 1986 and
Executive Order No. 2 dated March 12, 1986, may be filed separately from and proceed independently
of any criminal proceedings and may be proved by preponderance of evidence. (Emphasis supplied.)
From the foregoing provisions of law, particularly Sections 2(b) and 3(a) of Executive Order No. 1 and Sections 1 and 2
of Executive Order No. 14, it is clear that the PCGG has the power to investigate and prosecute such ill-gotten wealth
cases of the former President, his relatives and associates, and graft and corrupt practices cases that may be assigned
by the President to the PCGG to be filed with the Sandiganbayan. No doubt, the authority to investigate extended to the
PCGG includes the authority to conduct a preliminary investigation. 7
Thus, the Tanodbayan lost the exclusive authority to conduct the preliminary investigation of these types of cases by
the promulgation of the said Executive Order Nos. 1 and 14 whereby the PCGG was vested concurrent jurisdiction with
the Tanodbayan to conduct such preliminary investigation and to prosecute said cases before the
Sandiganbayan. 8 The power of the PCGG to conduct a preliminary investigation of the aforementioned types of cases
has been recognized by this Court in Bataan Shipyard and Engineering Co. Inc. (BASECO) vs. PCGG. 9
Upon the adoption of the 1987 Constitution, the Office of the Ombudsman was created under Article XI, as follows:
Sec. 13. The Office of the Ombudsman shall have the following powers, functions, and duties:
(1) Investigate on its own, or on complaint by any person, any act or omission of any public official,
employee, office or agency, when such act or omission appears to be illegal, unjust, improper, or
inefficient.
(2) Direct, upon complaint or at its own instance, any public official or employee of the Government, or
any subdivision, agency or instrumentality thereof, as well as of any government-owned or controlled
corporation with original charter, to perform and expedite any act or duty required by law, or to stop,
prevent, and correct any abuse or impropriety in the performance of duties.
(3) Direct the officer concerned to take appropriate action against a public official or employee at fault,
and recommend his removal, suspension, demotion, fine, censure, or prosecution, and ensure
compliance therewith.
(4) Direct the officer concerned, in any appropriate case and subject to such limitations as may be
provided by law, to furnish it with copies of documents relating to contracts or transactions entered into
by his office involving the disbursement or use of public funds or properties, and report any irregularity to
the Commission on Audit for appropriate action.
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(5) Request any government agency for assistance and information necessary in the discharge of its
responsibilities, and to examine, if necessary, pertinent records and documents.
(6) Publicize matters covered by its investigation when circumstances so warrant and with due
prudence.
(7) Determine the causes of inefficiency, red tape, mismanagement, fraud, and corruption in the
Government and make recommendations for their elimination and the observance of high standards of
ethics and efficiency.
(8) Promulgate its rules of procedure and exercise such other powers or perform such functions or
duties as may be provided by law. (Emphasis supplied)
This Court, in Zaldivar, 10 interpreting the aforesaid provision of the Constitution, particularly Section 13(1) thereof
vesting on the Ombudsman the right and the power to investigate on its own or on complaint, any act or omission of
any public official, employee, office or agency which appears "to be illegal, unjust, improper, or inefficient", held that the
general power of investigation covers the lesser power to conduct a preliminary investigation. Thus, as the power of
investigation vested on the Ombudsman under the Constitution includes the power to conduct a preliminary
investigation, then the special prosecutor (former Tanodbayan) may no longer conduct such a preliminary investigation
unless duly authorized by the Ombudsman. 11
A reading of the foregoing provision of the Constitution does not show that the power of investigation including
preliminary investigation vested on the Ombudsman is exclusive. Hence, the said provision of the Constitution did not
repeal or remove the power to conduct an investigation, including the authority to conduct a preliminary investigation,
vested on the PCGG by Executive Orders Nos. 1 and 14.
Although under Section 26 of Article XVIII of the Constitution the authority of the PCGG to issue sequestration or freeze
orders was maintained for not more than eighteen months after the ratification of the Constitution, it cannot be
construed thereby that its power of investigation had thereby been revoked by the failure to reiterate said power in the
Constitution.
Indeed, upon the passage of Republic Act No. 6770, otherwise known as the "Ombudsman Act of 1989," it is therein
specifically provided in Section 15 as follows:
Sec. 15. Powers, Functions and Duties. — The Office of the Ombudsman shall have the following
powers, functions and duties:
(1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any
public officer or employee, office or agency, when such act or omission appears to be illegal, unjust,
improper or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in
the exercise of this primary jurisdiction, it may take over, at any stage, from any investigatory agency of
Government, the investigation of such cases;
xxx xxx xxx
(11) Investigate and initiate the proper action for the recovery of ill-gotten and/or unexplained wealth
amassed after February 25, 1986 and the prosecution of the parties involved therein.
The Ombudsman shall give priority to complaints filed against high ranking government officials and/or
those occupying supervisory positions, complaints involving grave offenses as well as complaints
involving large sums of money and/or properties.
Under Section 15(l) of Republic Act No. 6770 aforecited, the Ombudsman has primary jurisdiction over cases
cognizable by the Sandiganbayan so that it may take over at any stage from any investigatory agency of the
government, the investigation of such cases. The authority of the Ombudsman to investigate offenses involving public
officers or employees is not exclusive but is concurrent with other similarly authorized agencies of the government.
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Such investigatory agencies referred to include the PCGG and the provincial and city prosecutors and their assistants,
the state prosecutors and the judges of the municipal trial courts and municipal circuit trial courts.12
In other words, the aforestated provision of the law has opened up the authority to conduct preliminary investigation of
offenses cognizable by the Sandiganbayan to all investigatory agencies of the government duly authorized to conduct a
preliminary investigation under Section 2, Rule 112 of the 1985 Rules of Criminal Procedure with the only qualification
that the Ombudsman may take over at any stage of such investigation in the exercise of his primary jurisdiction.
It is also noted that under Section 15(11) of the aforestated Republic Act No. 6770, among the powers vested on the
Ombudsman is to investigate and to initiate the proper action for recovery of ill-gotten wealth and/or unexplained wealth
amassed after February 25, 1986 and the prosecution of the parties involved therein. The Court agrees with the
contention of the public respondent PCGG that this provision is a tacit recognition that the authority of the PCGG to
conduct preliminary investigation of ill-gotten wealth and/or unexplained wealth amassed before February 25, 1986 is
maintained.
However, the Court finds and so holds that the aforesaid provision of the law cannot in any manner dilute or diminish
the primary jurisdiction of the Ombudsman over all such types of cases committed by public officers or employees as
provided in Section 13, Article XI of the Constitution. Thus, notwithstanding the provision of Section 15(11) of Republic
Act No. 6770, the primary jurisdiction of the Ombudsman to investigate covers ill-gotten wealth and/or unexplained
wealth cases that occurred even before February 25, 1986.
The second issue raised that the preliminary investigation by the PCGG of the aforestated complaints violates the right
of petitioner to due process and to equal protection of law is impressed with merit.
Under Section 1, Rule 112 of the 1985 Rules on Criminal Procedure, preliminary investigation is defined as "an inquiry
or proceeding for the purpose of determining whether there is sufficient ground to engender a well-founded belief that a
crime cognizable by the Regional Trial Court has been committed and that the respondent is probably guilty thereof,
and should be held for trial."
The purpose of a preliminary investigation is to secure the innocent against hasty, malicious and oppressive
prosecution, and to protect him from an open and public accusation of a crime, from the trouble, expense, anxiety of a
public trial, and also to protect the state from useless and expensive trials. 13
The conduct of a preliminary investigation is the initial step towards the criminal prosecution of a person. After such
preliminary investigation, if the investigating officer finds that there is sufficient ground to engender a well-founded
belief that a crime has been committed and that the respondent is probably guilty thereof and should be held for trial,
then the corresponding complaint or information shall be filed in the competent court. It is the filing of said complaint or
information that initiates the criminal prosecution of the accused when he is brought to court for trial.
Such a preliminary investigation is required for offenses cognizable by the Regional Trial Court and the
Sandiganbayan. 14 It must be undertaken in accordance with the procedure provided in Section 3, Rule 112 of the 1985
Rules of Criminal Procedure. This procedure is to be observed in order to assure that a person undergoing such
preliminary investigation will be afforded due process.
As correctly pointed out by petitioner, an indispensable requisite of due process is that the person who presides and
decides over a proceeding, including a preliminary investigation, must possess the cold neutrality of an impartial
judge.15
Although such a preliminary investigation is not a trial and is not intended to usurp the function of the trial court, it is not
a casual affair. The officer conducting the same investigates or inquires into the facts concerning the commission of the
crime with the end in view of determining whether or not an information may be prepared against the accused. Indeed,
a preliminary investigation is in effect a realistic judicial appraisal of the merits of the case. Sufficient proof of the guilt of
the accused must be adduced so that when the case is tried, the trial court may not be bound as a matter of law to
order an acquittal. A preliminary investigation has then been called a judicial inquiry. It is a judicial proceeding. An act
becomes judicial when there is opportunity to be heard and for, the production and weighing of evidence, and a
decision is rendered thereon.
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The authority of a prosecutor or investigating officer duly empowered to preside or to conduct a preliminary
investigation is no less than that of a municipal judge or even a regional trial court judge. 16 While the investigating
officer, strictly speaking is not a "judge," by the nature of his functions he is and must be considered to be a quasi
judicial officer.
Soon after the creation of the PCGG under Executive Order No. 1, the PCGG sequestered and froze all the properties
of petitioner Cojuangco in accordance with the powers vested in it by law.
On July 31, 1987, said petitioner was sued by the PCGG before the Sandiganbayan by way of a complaint entitled
"Republic of the Philippines vs. Eduardo M. Cojuangco, Jr.," et al. docketed as Civil Case No. 0033. Among the
allegations of the complaint are as follows:
This is a civil action against Defendants Eduardo Cojuangco, Jr., Ferdinand E. Marcos, Imelda R.
Marcos and the rest of the Defendants in the above-entitled case to recover from them ill-gotten wealth
consisting of funds and other property which they, in unlawful concert with one another, had acquired
and accumulated in flagrant breach of trust and of their fiduciary obligations as public officers with, grave
abuse of right and power and in brazen violation of the Constitution and laws of the Republic of the
Philippines, thus resulting in their unjust enrichment during Defendant Ferdinand E. Marcos' 20 years of
rule from December 30, 1965 to February 25, 1986, first as President of the Philippines under the 1935
Constitution and, thereafter, as one man ruler under martial law and Dictator under the 1973 Marcos-
promulgated Constitution.
2. The wrongs committed by Defendant acting singly or collectively and in unlawful concert with one
another, include the misappropriation and theft of public funds, plunder of the nation's wealth, extortion,
blackmail, bribery, embezzlement and other acts of corruption, betrayal of public trust and brazen abuse
or power as more fully described below, all at the expense and to the grave and irreparable damage of
Plaintiff and the Filipino people. (Emphasis supplied.) 17
The complaint was filed by the PCGG through its Chairman, Ramon A. Diaz, who verified the complaint, and Solicitor
General Francisco I. Chavez and Assistant Solicitor General Ramon S. Desuasido.
Petitioner in turn filed a counterclaim against the PCGG for the sequestration of his properties and the institution of the
suit. He also questioned the acts of the PCGG in several special civil actions before the court. 18
On November 27, 1989, the first working day after petitioner Cojuangco returned to the Philippines, the PCGG filed with
the Sandiganbayan an information against said petitioner for violation of Republic Act No. 3019 entitled "People of the
Philippines vs. Eduardo M. Cojuangco, Jr." docketed as Criminal Case No. 14161. However, the Sandiganbayan found
no probable cause for the issuance of a warrant of arrest so a petition for certiorari was filed by the Solicitor General in
this Court docketed as G.R. No. 91741. On March 29, 1990 this Court denied the petition.
On November 28, 1989, President Aquino directed the Solicitor General to prosecute all persons involved in the misuse
of the coconut levy funds. The Solicitor General created a task force for the purpose.
On January 12, 1990, the Solicitor General filed with the PCGG the first two criminal complaints for violation of the Anti-
Graft and Corrupt Practices Act, bearing on the anomalous use and/or misuse of the coconut levy funds docketed as
I.S. Nos. 74 and 75. Among the respondents were the petitioner and intervenors Lobregat and Eleazar. The PCGG
assigned assistant prosecutor Cesario del Rosario to conduct the preliminary investigation.
As hereinabove related, a subpoena was issued by the said prosecutor for the preliminary investigation on January 29,
1989 insofar as intervenors are concerned while that of petitioner, de la Cuesta and Herminigildo Zayco was scheduled
on January 31, 1990. In the same subpoena, respondents were required to submit their counter-affidavits and other
supporting documents to controvert the complaint within ten (10) days from notice.
On the scheduled investigation dated January 29, 1990, intervenors appeared through counsel and moved to dismiss
the complaints for lack of jurisdiction of the PCGG to conduct the preliminary investigation but this was denied by said
prosecutor. They were asked by the prosecutor if they will submit their counter-affidavits but intervenors' counsel
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replied that they were not yet ready to file the same because of their pending motion. Thus, the cases were considered
closed insofar as they are concerned.
The intervenors contested the prosecutor's action before the Sandiganbayan through a petition for certiorari and
prohibition docketed as Criminal Case No. 0093. On March 13, 1990, the Sandiganbayan promulgated its decision
wherein it declared the preliminary investigation conducted by del Rosario null and void, enjoined the PCGG from filing
an information on the basis thereof and directed the PCGG to conduct another preliminary investigation of I.S. Nos. 74
and 75 as to the intervenors and to assign another investigating prosecutor.
Earlier however, that is, on February 27, 1990, the PCGG, overruling prosecutor del Rosario's order, gave the
intervenors in I.S. Nos. 74 and 75 another period of five (5) days from notice within which to submit their counter-
affidavits and supporting evidence. Based on this action the PCGG filed a motion for reconsideration of the aforesaid
decision of the Sandiganbayan which had not been resolved.
As to petitioner, on the day of the preliminary investigation dated January 31, 1990, his counsel filed a motion to
disqualify or inhibit the PCGG, an alternative motion to dismiss, and a motion to have the PCGG itself hear and/or
resolve the motion to disqualify or inhibit itself alternatively a motion to dismiss. The preliminary investigation presided
by prosecutor del Rosario started at 2:00 o'clock P.M. with eight other respondents duly represented by their counsel.
The said motion was denied and the preliminary investigation was adjourned.
Immediately thereafter petitioner brought the matter to Chairman Mateo A.T. Caparas of the PCGG and in several
communications sought resolution of the motion by the PCGG. On February 27, 1990, the PCGG issued an order
denying petitioner's motion to dismiss for lack of jurisdiction but did not resolve the motion to disqualify. Therein, the
PCGG directed petitioner to submit his counter-affidavits within five (5) days from receipt of notice.
On March 12, 1990, the same day this petition was filed in this Court, the petitioner, instead of filing the counter-
affidavit, filed with the PCGG an urgent motion to defer proceedings in I.S. Nos. 74 and 75 for at least until March 22,
1990 within which to seek judicial relief from the order of February 27, 1990. Upon the filing of this petition, petitioner
filed a supplemental urgent motion to defer proceedings with the PCGG informing it of the filing of this petition.
Nevertheless, on March 14, 1990, the PCGG filed two informations corresponding to the complaints in I.S. Nos. 74 and
75 which are docketed as Criminal Cases Nos. 14398 and 14399, respectively, at the Sandiganbayan. The PCGG
recommended bail as P100,000.00 for each case.
Meanwhile, the Solicitor General filed two other complaints against the petitioner with the PCGG accusing the petitioner
of violation of Republic Act No. 3019 and other penal laws in connection with the coconut levy funds, namely, I.S. No.
79 which concerns an alleged arbitration award in favor of Agricultural Investors Inc., and I.S. No. 82 which concerns
the acquisition of coconut oil mills.
Several other complaints were filed by the Solicitor General with the PCGG against petitioner for preliminary
investigation petition, to wit:
(a) I.S. No. 80 which concerns the acquisition of the First United Bank, now United Coconut Planters' Bank; (b) I.S. No.
81 concerning shares of the United Coconut Oil Mills Inc.; (c) I.S. No. 83 regarding the acquisition of coconut oil mills
and certain indebtedness thereof; and (d) I.S. No. 84 regarding settlement of an Anti-Graft suit in the United States. All
of these complaints were for alleged violation of Republic Act No. 3019.
The question that arises, therefore, is whether under the circumstances of this case, it would be fair and just for the
PCGG to conduct the preliminary investigation of the said complaint instead of the Ombudsman or any other duly
authorized investigating agency.
Upon the creation of the PCGG under Executive Order No. 1 issued by President Aquino, the PCGG was charged with
the task of assisting the President not only in the recovery of ill-gotten wealth or unexplained wealth accumulated by
the former President, his immediate family, relatives, subordinates and close associates but also in the investigation of
such cases of graft and corruption as the President may assign to the Commission from time and to prevent a repetition
of the same in the future.
Page 65 of 134
Section 3 of Executive Order No. 1 provides as follows:
Sec. 3. — The Commission shall have the power and authority:
(a) To conduct investigation as may be necesssary in order to accomplish and carry out the purposes of
this order.
(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 take over in the public interest or to prevent its disposal or dissipation, 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 tasks under this order.
(e) To administer oaths, and issue subpoenas requiring the attendance and testimony of witnesses
and/or the production of such books, papers, contracts, records, statement of accounts and other
documents as may be material to the investigation conducted by the Commission.
(f) To hold any person in direct or indirect contempt and impose the appropriate penalties, following the
same procedures and penalties provided in the Rules of Court.
(g) To seek and secure the assistance of any office, agency or instrumentality of the government.
(h) To promulgate such rules and regulations as may be necessary to carry out the purposes of this
order.
From the foregoing provisions of law, it is clear that the PCGG has the following powers and authority:
1. To conduct an investigation including the preliminary investigation and prosecution of the ill-gotten wealth cases of
former President Marcos, relatives and associates, and graft and corruption cases assigned by the President to it;
2. Issue sequestration orders in relation to property claimed to be ill-gotten;
3. Issue "freeze orders" prohibiting persons in possession of property alleged to be ill-gotten from transferring or
otherwise disposing of the same;
4. Issue provisional takeover orders of the said property;
5. Administer oaths and issue subpoenas in the conduct of its investigation;
6. Hold any person in direct or indirect contempt and impose the appropriate penalties as provided by the rules.
Considering that the PCGG, like the courts, is vested with the authority to grant provisional remedies of (1)
sequestration, (2) freezing assets, and (3) provisional takeover, it is indispensable that, as in the case of attachment
and receivership, there exists a prima facie factual foundation, at least, for the sequestration order, freeze order or
takeover order, an adequate and fair opportunity to contest it and endeavor to cause its negation or nullification. Both
are assured under the foregoing executive orders and the rules and regulations promulgated by the PCGG. 19
Thus, in Baseco, this Court held, as follows:
Page 66 of 134
Executive Order No. 14 enjoins that there be "due regard to the requirements of fairness and due
process." Executive Order No. 2 declares that with respect to claims on allegedly "ill-gotten" assets and
properties, "it is the position of the new democratic government that President Marcos . . . (and other
parties affected) be afforded fair opportunity to contest these claims before appropriate Philippine
authorities." Section 7 of the Commission's Rules and Regulations provides that sequestration or freeze
(and takeover) orders issue upon the authority of at least two commissioners, based on the affirmation
or complaint of an interested party, or motu propio when the Commission has reasonable grounds to
believe that the issuance thereof is warranted. A similar requirement is now found in Section 26, Art.
XVIII of the 1987 Constitution, which requires that "sequestration or freeze order shall be issued only
upon showing of a prima facie case." 20
Insofar as the general power of investigation vested in the PCGG is concerned, it may be divided into two stages. The
first stage of investigation which is called the criminal investigation stage is the fact-finding inquiring which is usually
conducted by the law enforcement agents whereby they gather evidence and interview witnesses after which they
assess the evidence and if they find sufficient basis, file the complaint for the purpose of preliminary investigation. The
second stage is the preliminary investigation stage of the said complaint. It is at this stage, as above discussed, where
it is ascertained if there is sufficient evidence to bring a person to trial.
In the petition before this Court, it is not denied that the PCGG conducted the appropriate criminal investigation of
petitioner and intervenors as a law enforcer. In the process it sequestered all the properties of the petitioner after
a prima facie finding that the same amount to ill-gotten wealth and/or were acquired in relation to allegedly anomalous
disposition or misuse of the coconut levy funds.
The PCGG then filed on July 31, 1987 a complaint docketed as Civil Case No. 0033 against petitioner and intervenors
not only for alleged ill-gotten wealth as associates of former President Marcos but for the unlawful concert with the
former President and his wife to unjustly enrich themselves at the expense of the Filipino people through the alleged
misuse, misappropriation and dissipation of the coconut levy funds, as enumerated in the complaint. This complaint
was verified and filed by the then Chairman of the PCGG and also signed by the Solicitor General and the Assistant
Solicitor General.
Among the allegations in the civil complaint, are the very transactions now subject of the criminal complaints filed by
the Solicitor General against petitioner to wit:
13. Defendant Eduardo Cojuangco, Jr., taking undue advantage of his association, influence and
connection, acting in unlawful concert with Defendants Ferdinand E. Marcos and Imelda R. Marcos,
embarked upon devices, schemes and stratagems to unjustly enrich themselves at the expense of
Plaintiff and the Filipino people, such as, when he —
13(a) manipulated, beginning the year 1975, with the active collaboration of Defendants Juan Ponce
Enrile, Maria Clara Lobregat Danilo Ursua, Jose R. Eleazar, Jr. and Herminigildo C. Zayco, the purchase
by Philippine Coconut Authority (PCA) of 72.2% of the outstanding capital stock of the First (sic)
(FUB)which was subsequently converted into a universal bank named United Coconut Planters Bank
(UCPB) through the use of the Coconut Consumers Stabilization-Fund (CCSF) levy initially in the
amount of P85,773,100.00 in a manner contrary to law and to the specific purposes for which said
coconut levy funds were imposed and collected under P.D. 276, and under anomalous and sinister
designs and circumstances, to wit:
xxx xxx xxx
At pp. 22 to 22-A, Expanded Complaint, Civil Case No.0033)
[I.S. No. 080]
(c) misappropriated, misused and dissipated P840 million of the Coconut Industry Development Fund
(CIDF) levy funds deposited with the National Investment Development Corporation (NIDC) as
administrator-trustee of said funds and later with UCPB, of which Defendant Eduardo Cojuangco, Jr.
was the Chief Executive Officer in connection with the (i) development, improvement, operation and
Page 67 of 134
maintenance of the Bugsuk Island Seed Garden ("BUGSUK") by Agricultural Investors, Inc. ("AII") as
developer (both Bugsuk and AII are beneficially held and controlled by Defendant Eduardo Cojuangco,
Jr.) pursuant to a highly oppressive, anomalous and one-sided memorandum agreement, dated
November 20, 1974, (ii) sale by AII to PCA of the seed nuts produced at Bugsuk Seed Garden at
exorbitant prices pursuant to a very onerous, oppressive and disadvantageous agreement, dated August
2, 1985 and (iii) payment of liquidated damages in the amount of P640,856,879.67 and arbitration fee of
P150,000.00 pursuant to a decision rendered by a Board of Arbitrators against UCPB for alleged breach
of contract.;
xxx xxx xxx
(At pp. 26-27)
[I.S. No. 079]
(d) established and caused to be funded with coconut levy funds, with the active collaboration of
Defendant Ferdinand E. Marcos through the issuance of LOI 926, and of defendants, Juan Ponce Enrile,
Jose R. Eleazar, Jr., Maria Clara Lobregat, Jose C. Concepcion, Inaki Mendezona, Douglas Lu Ym,
Teodoro D. Regala, Emmanuel Almeda, Eduardo Escueta, Leo Palma, and Rolando de la Cuesta, the
United Coconut Oil Mills, Inc. (UNICOM) a corporation beneficially held and controlled by Defendant
Eduardo Cojuangco, Jr. and bought sixteen (16) competing and/or non-operating oil mills at exorbitant
prices in the total amount of P184,935 million, then mothballed them in order to control the prices of
copra and other coconut products, and assumed and paid the outstanding loan obligations of seven (7)
of those purchased oil mills in the total amount of P805,984 million with the express consent and
approval of Defendant Ferdinand E. Marcos, thereby establishing a coconut monopoly for their own
benefit and unjust enrichment and to the grave damage of Plaintiff and the Filipino people;
(e) manipulated with the active collaboration of Defendants Mohammad Ali Dimaporo and Teodoro D.
Regala, the sale of the Mindanao Coconut Oil Mills (MINCOCO) to UNICOM through the issuance of LOI
926 by Defendant Ferdinand E. Marcos, in violation of the Guaranty Agreement dated July 23, 1976,
which prohibited the sale, among others, of the MINCOCO assets/properties without the prior written
consent of NIDC, under terms and conditions grossly disadvantageous to Plaintiff and the Filipino
people;
(f) drew up a scheme of payment to settle the accounts of MINCOCO and other UNICOM-acquired mills
with their respective creditors: namely the National Investment Development Corporation (NIDC),
Deveploment Bank of the Philippines (DBP), Philippine Veterans Bank (PVB), under terms grossly
disadvantageous to Plaintiff;
xxx xxx xxx
(At pp. 27-28)
[I.S. Nos. 81, 82 and 83]
(g) misappropriated and dissipated the coconut levy funds by withdrawing therefrom tens of millions of
pesos in order to pay damages adjudged against UNICOM, headed and controlled by Defendant
Eduardo Cojuangco, Jr., in an anti-trust suit in California, U.S.A.;
xxx xxx xxx
(At p. 29)
[I.S. No. 84]
(h) misused, dissipated and unlawfully disbursed coconut levy funds with the active collaboration and
participation of defendants Maria Clara Lobregat, Juan Ponce Enrile, Jose Eleazar, Jr., Rolando de la
Page 68 of 134
Cuesta and Herminigildo Zayco as members of the PCA governing board for projects and purposes
completely alien to those for which the fund was collected and donations made by PCA such as . . . P6
million to COCOFED; and other similar unlawful disbursements, which all remain unaccounted for to
date;
xxx xxx xxx
(At pp 28 to 28-A Emphasis supplied)
[I.S. No. 74 and 75]
Thereafter, as aforestated, the Solicitor General filed the first two complaints against petitioner and intervenors among
others, under I.S. Nos. 74 and 75 for alleged violation of the Anti Graft and Corrupt Practices Act for donations
allegedly made out of coconut levy funds to the Philippine Coconut Producers Federation (COCOFED).
Petitioner and intervenors questioned not only the authority of the PCGG to conduct the preliminary investigation but
asserted a denial of due process and equal protection of the law. There is cogent basis for their plea.
The PCGG, as a law enforcer, gathered evidence as to the alleged ill-gotten wealth of petitioner and intervenors and,
after satisfying itself that there is a prima facie case, sequestered and issued a freeze order for all the properties of
petitioner. Based also on the said finding of a prima facie case, the PCGG filed a civil complaint docketed as Civil Case
No. 0033 against petitioner and intervenors for alleged ill-gotten wealth including the alleged misuse, misappropriation,
and diversion of coconut levy funds.
As hereinabove discussed the criminal complaints under I.S. Nos. 74, 79, 80, 81, 82, 83 and 84 filed by the Solicitor
General all for alleged violation of Republic Act No. 3019, are covered and alleged in the aforesaid civil complaint
docketed as Civil Case No. 0033.
The PCGG conducted the preliminary investigation of I.S. Nos. 74 and 75 and is poised to conduct the preliminary
investigation of the other aforementioned complaints for the same alleged violations of law subject of the civil
complaint.
The Court cannot close its eyes to the glaring fact that in earlier instances, the PCGG had already found a prima
facie case against the petitioner and intervenors when, acting like a judge, it caused the sequestration of the properties
and the issuance of the freeze order of the properties of petitioner. Thereafter, acting as a law enforcer, in collaboration
with the Solicitor General, the PCGG gathered the evidence and upon finding cogent basis therefor filed the aforestated
civil complaint. Consequently the Solicitor General filed a series of criminal complaints.
It is difficult to imagine how in the conduct of such preliminary investigation the PCGG could even make a turn about
and take a position contradictory to its earlier findings of a prima facie case against petitioner and intervenors. This was
demonstrated in the undue haste with which I.S. Nos. 74 and 75 was investigated and the informations were filed in
court even as the petitioner and intervenors questioned its authority, invoked the denial of due process and promptly
informed the PCGG of the filing of this petition.
In our criminal justice system, the law enforcer who conducted the criminal investigation, gathered the evidence and
thereafter filed the complaint for the purpose of preliminary investigation cannot be allowed to conduct the preliminary
investigation of his own complaint. It is to say the least arbitrary and unjust.
It is in such instances that We say one cannot be "a prosecutor and judge at the same time." Having gathered the
evidence and filed the complaint as a law enforcer, he cannot be expected to handle with impartiality the preliminary
investigation of his own complaint, this time as a public prosecutor.
The circumstances of the instant petition are even worse. To repeat, the PCGG and the Solicitor General finding
aprima facie basis filed a civil complaint against petitioner and intervenors alleging substantially the same illegal or
criminal acts subject of the subsequent criminal complaints the Solicitor General filed with the PCGG for preliminary
investigation. While ostensibly, it is only the Solicitor General who is the complainant in the criminal cases filed with the
PCGG, in reality the PCGG is an unidentified co-complainant.
Page 69 of 134
Moreover, when the PCGG issued the sequestration and freeze orders against petitioner's properties, it was on the
basis of a prima facie finding that the same were ill-gotten and/or were acquired in relation to the illegal disposition of
coconut levy funds. Thus, the Court finds that the PCGG cannot possibly conduct the preliminary investigation of said
criminal complaints with the "cold neutrality of an impartial judge," as it has prejudged the matter. Add to this the fact
that there are many suits filed by petitioner and the intervenors against the PCGG and vice versa.
For lesser grounds this Court had disqualified a fiscal or a judge from handling a case.
A fiscal was disqualified from conducting a preliminary investigation because he had appeared for the prosecution
when said case was pending in the municipal court. 21 In a case filed before the Commission on Elections this Court
held Commissioner Opinion should not have participated in the case since he was the former lawyer of Arturo
Pacificador. 22 A judge was required to inhibit himself in a case where he was a witness for the complainant. 23 A judge
before whom the extrajudicial statement of one of the accused was subscribed was disqualified from hearing the
case. 24 A judge who told the complainant is case was weak and it would be to his advantage to settle the case was
disqualified. 25 A judge against whom an administrative complaint was filed by one of the parties was also
disqualified. 26 In a case where the motion for inhibition was found to be groundless, this Court held that the judge
should inhibit himself considering the seriousness of the charges. 27 A judge was asked to inhibit himself from trying a
malversation case against the accused since he previously convicted the latter of arson. 28 In another case, the judge
was ordered to inhibit himself because of strained relationship with the defendant. 29
There are numerous other cases wherein the judges and fiscals were disqualified on similar grounds as those
aforementioned. 30
Where the circumstances do not inspire confidence in the objectivity and impartiality of the judge, such judge should
inhibit voluntarily or if he refuses, he should be prohibited from handling the case. Judge must not only be impartial but
must also appear impartial as an assurance to the parties that his decision will be just. 31 His actuation must inspire that
belief. This is an instance when appearance is as important as reality. 32
The same rule of thumb should apply to an investigating officer conducting a preliminary investigation. This is the
reason why under Section 1679 of the former Revised Administrative Code, the Secretary of Justice, who has
supervision over the prosecution arm of the government, is given ample power to designate another prosecutor to
handle the investigation and prosecution of a case when the prosecutor handling the same is otherwise disqualified by
personal interest, or is unable or fails to perform his duty.
The Court finds that under the circumstances of the case, the PCGG cannot inspire belief that it could be impartial in
the conduct of the preliminary investigation of the aforesaid complaints against petitioner and intervenors. It cannot
possibly preside in the said preliminary investigation with an even hand.
The Court holds that a just and fair administration of justice can be promoted if the PCGG would be prohibited from
conducting the preliminary investigation of the complaints subject of this petition and the petition for intervention and
that the records of the same should be forwarded to the Ombudsman, who as an independent constitutional officer has
primary jurisdiction over cases of this nature, to conduct such preliminary investigation and take appropriate action.
All violators of the law must be brought before the bar of justice. However, they must be afforded due process and
equal protection of the law, whoever they may be.
WHEREFORE, the petitions of Eduardo M. Cojuangco, Jr. and intervenors Maria Clara Lobregat, and Jose Eleazar, Jr.
are hereby GRANTED. The PCGG is directed to transmit the complaints and records thereof under I.S. Nos. 74, 75,
79, 80, 81, 82, 83 and 84 to the Ombudsman for appropriate action. All proceedings of the preliminary investigation
conducted by the PCGG of said complaints are hereby declared null and void including the informations which it filed in
the Sandiganbayan against petitioner and intervenors docketed as Criminal Cases Nos. 14398 and 14399. The status
quo order which this Court issued on March 12, 1990 is hereby made permanent and the PCGG is permanently
prohibited from further conducting the preliminary investigation of the aforestated complaints. The Court makes no
pronouncement as to costs.
SO ORDERED.
Page 70 of 134
FIRST DIVISION
G.R. No. 77372 April 29, 1988
LUPO L. LUPANGCO, RAYMOND S. MANGKAL, NORMAN A. MESINA, ALEXANDER R. REGUYAL, JOCELYN P.

CATAPANG, ENRICO V. REGALADO, JEROME O. ARCEGA, ERNESTOC. BLAS, JR., ELPEDIO M. ALMAZAN, KARL
CAESAR R. RIMANDO, petitioner,
vs.
COURT OF APPEALS and PROFESSIONAL REGULATION COMMISSION, respondent.
Balgos & Perez Law Offices for petitioners.
The Solicitor General for respondents.
GANCAYCO, J.:
Is the Regional Trial Court of the same category as the Professional Regulation Commission so that it cannot pass upon the
validity of the administrative acts of the latter? Can this Commission lawfully prohibit the examiness from attending review
classes, receiving handout materials, tips, or the like three (3) days before the date of the examination? Theses are the
issues presented to the court by this petition for certiorari to review the decision of the Court of Appeals promulagated on
January 13, 1987, in CA-G.R. SP No. 10598, * declaring null and void the other dated Ocober 21, 1986 issued by the
Regional Trial Court of Manila, Branch 32 in Civil Case No. 86-37950 entitled " Lupo L. Lupangco, et al. vs. Professional
Regulation Commission."
The records shows the following undisputed facts:
On or about October 6, 1986, herein respondent Professional Regulation Commission (PRC) issued Resolution No. 105 as
parts of its "Additional Instructions to Examiness," to all those applying for admission to take the licensure examinations in
accountancy. The resolution embodied the following pertinent provisions:
No examinee shall attend any review class, briefing, conference or the like conducted by, or shall receive any
hand-out, review material, or any tip from any school, college or university, or any review center or the like or
any reviewer, lecturer, instructor official or employee of any of the aforementioned or similars institutions
during the three days immediately proceeding every examination day including examination day.
Any examinee violating this instruction shall be subject to the sanctions prescribed by Sec. 8, Art. III of the
Rules and Regulations of the Commission. 1
On October 16, 1986, herein petitioners, all reviewees preparing to take the licensure examinations in accountancy schedule
on October 25 and November 2 of the same year, filed on their own behalf of all others similarly situated like them, with the
Regional Trial Court of Manila, Branch XXXII, a complaint for injuction with a prayer with the issuance of a writ of a
preliminary injunction against respondent PRC to restrain the latter from enforcing the above-mentioned resolution and to
declare the same unconstitution.
Respondent PRC filed a motion to dismiss on October 21, 1987 on the ground that the lower court had no jurisdiction to
review and to enjoin the enforcement of its resolution. In an Order of October 21, 1987, the lower court declared that it had
jurisdiction to try the case and enjoined the respondent commission from enforcing and giving effect to Resolution No. 105
which it found to be unconstitutional.
Not satisfied therewith, respondent PRC, on November 10, 1986, filed with the Court of Appeals a petition for the nullification
of the above Order of the lower court. Said petiton was granted in the Decision of the Court of Appeals promulagated on
January 13, 1987, to wit:
WHEREFORE, finding the petition meritorious the same is hereby GRANTED and the other dated October
21, 1986 issued by respondent court is declared null and void. The respondent court is further directed to
Page 71 of 134
dismiss with prejudice Civil Case No. 86-37950 for want of jurisdiction over the subject matter thereof. No
cost in this instance.
SO ORDERED. 2
Hence, this petition.
The Court of Appeals, in deciding that the Regional Trial Court of Manila had no jurisdiction to entertain the case and to
enjoin the enforcement of the Resolution No. 105, stated as its basis its conclusion that the Professional Regulation
Commission and the Regional Trial Court are co-equal bodies. Thus it held —
That the petitioner Professional Regulatory Commission is at least a co-equal body with the Regional Trial
Court is beyond question, and co-equal bodies have no power to control each other or interfere with each
other's acts. 3
To strenghten its position, the Court of Appeals relied heavily on National Electrification Administration vs. Mendoza, 4 which
cites Pineda vs. Lantin 5 and Philippine Pacific Fishing, Inc. vs. Luna, 6 where this Court held that a Court of First Instance
cannot interfere with the orders of the Securities and Exchange Commission, the two being co-equal bodies.
After a close scrutiny of the facts and the record of this case,
We rule in favor of the petitioner.
The cases cited by respondent court are not in point. It is glaringly apparent that the reason why this Court ruled that the
Court of First Instance could not interfere with the orders of the Securities and Exchange Commission was that this was so
provided for by the law. In Pineda vs. Lantin, We explained that whenever a party is aggrieved by or disagree with an order
or ruling of the Securities and Exchange Commission, he cannot seek relief from courts of general jurisdiction since under
the Rules of Court and Commonwealth Act No. 83, as amended by Republic Act No. 635, creating and setting forth the
powers and functions of the old Securities and Exchange Commission, his remedy is to go the Supreme Court on a petition
for review. Likewise, in Philippine Pacific Fishing Co., Inc. vs. Luna,it was stressed that if an order of the Securities and
Exchange Commission is erroneous, the appropriate remedy take is first, within the Commission itself, then, to the Supreme
Court as mandated in Presidential Decree No. 902-A, the law creating the new Securities and Exchange Commission.
Nowhere in the said cases was it held that a Court of First Instance has no jurisdiction over all other government agencies.
On the contrary, the ruling was specifically limited to the Securities and Exchange Commission.
The respondent court erred when it place the Securities and Exchange Commission and the Professional Regulation
Commsision in the same category. As alraedy mentioned, with respect to the Securities and Exchange Commission, the laws
cited explicitly provide with the procedure that need be taken when one is aggrieved by its order or ruling. Upon the other
hand, there is no law providing for the next course of action for a party who wants to question a ruling or order of the
Professional Regulation Commission. Unlike Commonwealth Act No. 83 and Presidential Decree No. 902-A, there is no
provision in Presidential Decree No. 223, creating the Professional Regulation Commission, that orders or resolutions of the
Commission are appealable either to the Court of Appeals or to theSupreme Court. Consequently, Civil Case No. 86-37950,
which was filed in order to enjoin the enforcement of a resolution of the respondent Professional Regulation Commission
alleged to be unconstitutional, should fall within the general jurisdiction of the Court of First Instance, now the Regional Trial
Court. 7
What is clear from Presidential Decree No. 223 is that the Professional Regulation Commission is attached to the Office of
the President for general direction and coordination. 8 Well settled in our jurisprudence is the view that even acts of the Office
of the President may be reviewed by the Court of First Instance (now the Regional Trial Court). In Medalla vs. Sayo, 9 this
rule was thoroughly propounded on, to wit:
In so far as jurisdiction of the Court below to review by certiorari decisions and/or resolutions of the Civil
Service Commission and of the residential Executive Asssistant is concerned, there should be no question
but that the power of judicial review should be upheld. The following rulings buttress this conclusion:
The objection to a judicial review of a Presidential act arises from a failure to recognize the
most important principle in our system of government, i.e., the separation of powers into three
co-equal departments, the executives, the legislative and the judicial, each supreme within its
own assigned powers and duties. When a presidential act is challenged before the courts of
Page 72 of 134
justice, it is not to be implied therefrom that the Executive is being made subject and
subordinate to the courts. The legality of his acts are under judicial review, not because the
Executive is inferior to the courts, but because the law is above the Chief Executive himself,
and the courts seek only to interpret, apply or implement it (the law). A judicial review of the
President's decision on a case of an employee decided by the Civil Service Board of Appeals
should be viewed in this light and the bringing of the case to the Courts should be governed
by the same principles as govern the jucucial review of all administrative acts of all
administrative officers. 10
Republic vs. Presiding Judge, CFI of Lanao del Norte, Br. II, 11 is another case in point. Here, "the Executive Office"' of the
Department of Education and Culture issued Memorandum Order No. 93 under the authority of then Secretary of Education
Juan Manuel. As in this case, a complaint for injunction was filed with the Court of First Instance of Lanao del Norte because,
allegedly, the enforcement of the circular would impair some contracts already entered into by public school teachers. It was
the contention of petitioner therein that "the Court of First Instance is not empowered to amend, reverse and modify what is
otherwise the clear and explicit provision of the memorandum circular issued by the Executive Office which has the force and
effect of law." In resolving the issue, We held:
... We definitely state that respondent Court lawfully acquired jurisdiction in Civil Case No. II-240 (8) because
the plaintiff therein asked the lower court for relief, in the form of injunction, in defense of a legal right
(freedom to enter into contracts) . . . . .
Hence there is a clear infringement of private respondent's constitutional right to enter into agreements not
contrary to law, which might run the risk of being violated by the threatened implementation of Executive
Office Memorandum Circular No. 93, dated February 5, 1968, which prohibits, with certain exceptions,
cashiers and disbursing officers from honoring special powers of attorney executed by the payee
employees. The respondent Court is not only right but duty bound to take cognizance of cases of this nature
wherein a constitutional and statutory right is allegedly infringed by the administrative action of a government
office. Courts of first Instance have original jurisdiction over all civil actions in which the subject of the
litigation is not capable of pecuniary estimation (Sec. 44, Republic Act 296, as amended). 12 (Emphasis
supplied.)
In San Miguel Corporation vs. Avelino, 13 We ruled that a judge of the Court of First Instance has the authority to decide on
the validity of a city tax ordinance even after its validity had been contested before the Secretary of Justice and an opinion
thereon had been rendered.
In view of the foregoing, We find no cogent reason why Resolution No. 105, issued by the respondent Professional
Regulation Commission, should be exempted from the general jurisdiction of the Regional Trial Court.
Respondent PRC, on the other hand, contends that under Section 9, paragraph 3 of B.P. Blg. 129, it is the Court of Appeals
which has jurisdiction over the case. The said law provides:
SEC. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:
xxx xxx xxx
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of
Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except those
falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.
The contention is devoid of merit.
In order to invoke the exclusive appellate jurisdiction of the Court of Appeals as provided for in Section 9, paragraph 3 of B.P.
Blg. 129, there has to be a final order or ruling which resulted from proceedings wherein the administrative body involved
exercised its quasi-judicial functions. In Black's Law Dictionary, quasi-judicial is defined as a term applied to the action,
discretion, etc., of public administrative officers or bodies required to investigate facts, or ascertain the existence of facts,
hold hearings, and draw conclusions from them, as a basis for their official action, and to exercise discretion of a judicial
nature. To expound thereon, quasi-judicial adjudication would mean a determination of rights, privileges and duties resulting
Page 73 of 134
in a decision or order which applies to a specific situation . 14This does not cover rules and regulations of general applicability
issued by the administrative body to implement its purely administrative policies and functions like Resolution No. 105 which
was adopted by the respondent PRC as a measure to preserve the integrity of licensure examinations.
The above rule was adhered to in Filipinas Engineering and Machine Shop vs. Ferrer. 15 In this case, the issue presented
was whether or not the Court of First Instance had jurisdiction over a case involving an order of the Commission on Elections
awarding a contract to a private party which originated from an invitation to bid. The said issue came about because under
the laws then in force, final awards, judgments, decisions or orders of the Commission on Elections fall within the exclusive
jurisdiction of the Supreme Court by way of certiorari. Hence, it has been consistently held that "it is the Supreme Court, not
the Court of First Instance, which has exclusive jurisdiction to review on certiorari final decisions, orders, or rulings of the
Commission on Elections relative to the conduct of elections and the enforcement of election laws." 16
As to whether or not the Court of First Instance had jurisdiction in saidcase, We said:
We are however, far from convinced that an order of the COMELEC awarding a contract to a private party, as
a result of its choice among various proposals submitted in response to its invitation to bid comes within the
purview of a "final order" which is exclusively and directly appealable to this court on certiorari. What is
contemplated by the term "final orders, rulings and decisions, of the COMELEC reviewable by certiorari by
the Supreme Court as provided by law are those rendered in actions or proceedings before the COMELEC
and taken cognizance of by the said body in the exercise of its adjudicatory or quasi-judicial powers.
(Emphasis supplied.)
xxx xxx xxx
We agree with petitioner's contention that the order of the Commission granting the award to a bidder is not
an order rendered in a legal controversy before it wherein the parties filed their respective pleadings and
presented evidence after which the questioned order was issued; and that this order of the commission was
issued pursuant to its authority to enter into contracts in relation to election purposes. In short, the COMELEC
resolution awarding the contract in favor of Acme was not issued pursuant to its quasi-judicial functions but
merely as an incident of its inherent administrative functions over the conduct of elections, and hence, the
said resolution may not be deemed as a "final order reviewable by certiorari by the Supreme Court. Being
non-judicial in character, no contempt order may be imposed by the COMELEC from said order, and no direct
and exclusive appeal by certiorari to this Tribunal lie from such order. Any question arising from said order
may be well taken in an ordinary civil action before the trial courts. (Emphasis supplied.) 17
One other case that should be mentioned in this regard is Salud vs. Central Bank of the Philippines. 18 Here, petitioner
Central Bank, like respondent in this case, argued that under Section 9, paragraph 3 of B.P. Blg. 129, orders of the Monetary
Board are appealable only to the Intermediate Appellate Court. Thus:
The Central Bank and its Liquidator also postulate, for the very first time, that the Monetary Board is among
the "quasi-judicial ... boards" whose judgments are within the exclusive appellate jurisdiction of the IAC;
hence, it is only said Court, "to the exclusion of the Regional Trial Courts," that may review the Monetary
Board's resolutions. 19
Anent the posture of the Central Bank, We made the following pronouncement:
The contention is utterly devoid of merit. The IAC has no appellate jurisdiction over resolution or orders of the
Monetary Board. No law prescribes any mode of appeal from the Monetary Board to the IAC. 20
In view of the foregoing, We hold that the Regional Trial Court has jurisdiction to entertain Civil Case No. 86-37950 and
enjoin the respondent PRC from enforcing its resolution.
Although We have finally settled the issue of jurisdiction, We find it imperative to decide once and for all the validity of
Resolution No. 105 so as to provide the much awaited relief to those who are and will be affected by it.
Of course, We realize that the questioned resolution was adopted for a commendable purpose which is "to preserve the
integrity and purity of the licensure examinations." However, its good aim cannot be a cloak to conceal its constitutional
infirmities. On its face, it can be readily seen that it is unreasonable in that an examinee cannot even attend any review class,
briefing, conference or the like, or receive any hand-out, review material, or any tip from any school, collge or university, or
Page 74 of 134
any review center or the like or any reviewer, lecturer, instructor, official or employee of any of the aforementioned or similar
institutions . ... 21
The unreasonableness is more obvious in that one who is caught committing the prohibited acts even without any ill motives
will be barred from taking future examinations conducted by the respondent PRC. Furthermore, it is inconceivable how the
Commission can manage to have a watchful eye on each and every examinee during the three days before the examination
period.
It is an aixiom in administrative law that administrative authorities should not act arbitrarily and capriciously in the issuance of
rules and regulations. To be valid, such rules and regulations must be reasonable and fairly adapted to the end in view. If
shown to bear no reasonable relation to the purposes for which they are authorized to be issued, then they must be held to
be invalid. 22
Resolution No. 105 is not only unreasonable and arbitrary, it also infringes on the examinees' right to liberty guaranteed by
the Constitution. Respondent PRC has no authority to dictate on the reviewees as to how they should prepare themselves for
the licensure examinations. They cannot be restrained from taking all the lawful steps needed to assure the fulfillment of their
ambition to become public accountants. They have every right to make use of their faculties in attaining success in their
endeavors. They should be allowed to enjoy their freedom to acquire useful knowledge that will promote their personal
growth. As defined in a decision of the United States Supreme Court:
The term "liberty" means more than mere freedom from physical restraint or the bounds of a prison. It means
freedom to go where one may choose and to act in such a manner not inconsistent with the equal rights of
others, as his judgment may dictate for the promotion of his happiness, to pursue such callings and vocations
as may be most suitable to develop his capacities, and giv to them their highest enjoyment. 23
Another evident objection to Resolution No. 105 is that it violates the academic freedom of the schools concerned.
Respondent PRC cannot interfere with the conduct of review that review schools and centers believe would best enable their
enrolees to meet the standards required before becoming a full fledged public accountant. Unless the means or methods of
instruction are clearly found to be inefficient, impractical, or riddled with corruption, review schools and centers may not be
stopped from helping out their students. At this juncture, We call attention to Our pronouncement in Garcia vs. The Faculty
Admission Committee, Loyola School of Theology, 24 regarding academic freedom to wit:
... It would follow then that the school or college itself is possessed of such a right. It decides for itself its aims
and objectives and how best to attain them. It is free from outside coercion or interference save possibly
when the overriding public welfare calls for some restraint. It has a wide sphere of autonomy certainly
extending to the choice of students. This constitutional provision is not to be construed in a niggardly manner
or in a grudging fashion.
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the licensure
examinations will be eradicated or at least minimized. Making the examinees suffer by depriving them of legitimate means of
review or preparation on those last three precious days-when they should be refreshing themselves with all that they have
learned in the review classes and preparing their mental and psychological make-up for the examination day itself-would be
like uprooting the tree to get ride of a rotten branch. What is needed to be done by the respondent is to find out the source of
such leakages and stop it right there. If corrupt officials or personnel should be terminated from their loss, then so be it.
Fixers or swindlers should be flushed out. Strict guidelines to be observed by examiners should be set up and if violations
are committed, then licenses should be suspended or revoked. These are all within the powers of the respondent
commission as provided for in Presidential Decree No. 223. But by all means the right and freedom of the examinees to avail
of all legitimate means to prepare for the examinations should not be curtailed.
In the light of the above, We hereby REVERSE and SET ASIDE, the decision of the Court of Appeals in CA-G.R. SP No.
10591 and another judgment is hereby rendered declaring Resolution No. 105 null and void and of no force and effect for
being unconstitutional. This decision is immediately executory. No costs.
SO ORDERED.
Page 75 of 134
THIRD DIVISION
G.R. No. L-62082 February 26, 1992
PHILIPPINE NATIONAL BANK, petitioner,

vs.
THE HON. TEODORO N. FLORENDO, Judge of the Court of Agrarian Relations, 12th Regional Disctrict, Branch
IV, Dumaguete City, VIVIENNE B. VILORIA, SOCORRO MISA, GERMELIN ESTORCO, PABLO BENDOLO,
REWEL CABUAL, BONIFACIO VALEROSO, ET. AL., respondents.
Juan J. Diaz, Benjamin C. Del Rosarion and Pedro L. Lazo for petitioner.
Maria Corazon C. Locsin and Edwin E. Torres for private respondents.
BIDIN, J.:
This is a petition for certiorari with preliminary injunction seeking to annul and set aside the: (a) order of the respondent
judge dated May 21, 1982 admitting private respondents' "First Amended Complaint" in CAR Case No. 532 entitled
"Vivienne B. Viloria, et al. vs. Philippine National Bank, et al." for declaration of nullity of the foreclosure proceedings in
violation of P.D. Nos. 27 and 946; (b) order dated June 3, 1982 denying PNB's opposition to the first amended
complaint; and (c) order dated June 28, 1982 denying PNB's motion for reconsideration.
The undisputed facts are as follows:
Plaintiffs are tenants of four (4) parcels of land located in the municipality of Mabinay, Negros Oriental, whose previous
owner Ricardo Valeroso, mortgaged the same to the Philippine National Bank (PNB, for short). In 1971, said parcels of
land were bought by spouses Agripino and Soledad Viloria who assumed the mortgage with PNB (Rollo, Comment, p.
90).
In 1974, defendant PNB requested defendant Provincial Sheriff of Negros Oriental to foreclose the mortgage on the
aforesaid parcels of land after the failure of the owners thereof to pay certain amortization and the same was sold at
public auction to the defendant bank as the highest bidder (Rollo, Brief for Private Respondents, p. 147; Annex "2", p.
3). Notwithstanding the fact that said lands were already brought under the Land Reform Program of the government,
the PNB caused the titles to said parcels of land transferred in its name to the prejudice of plaintiffs (Rollo, Ibid.).
On September 8, 1981, plaintiffs Vivienne B. Viloria, et al. filed a complaint for "Declaration of Nullity of the Foreclosure
Proceedings in Violation of P.D. Nos. 27 and 946" against the defendants PNB, et al. in the Court of Agrarian
Relations, 12th Judicial District, Branch IV, Dumaguete City.
On October 7, 1981, defendant PNB answered the complaint with counterclaim for damages. Plaintiffs, in turn, filed
their reply to the counterclaim dated October 10, 1981. Defendant PNB then moved for leave of court to file third party
complaint dated October 20, 1981 against the registered owners-mortgagors of the subject parcels of land.
Plaintiffs Vivienne Viloria, et al. moved for the amendment of their complaint to implead the heirs of the deceased
plaintiff-Agripino Viloria which respondent Judge admitted in an order dated February 26, 1982.
On May 28, 1982, private respondents Vivienne Viloria, et al. moved to further amend their amended complaint.
Notable amendment introduced in the First Amended Complaint is the inclusion of another parcel of land as subject
matter thereof, described as follows:
E — Transfer Certificate of Title No. 42836, a parcel of land (Lot 787-B-2-A of the subdivision plan, Psd-
54375, being a portion of Lot 7887-B-2 described on plan Psd-956, L.R.C. Record No. 9465), with all
improvements thereon situated at Cebu City. Bounded on NE., along line 1-2 by lot 785, Cebu Cadastre;
on the SE., along line 2-3, by lot 787-A, Cebu Cadastre; on the SW., along line 3-4, by Lot 787-B-2-B of
the subdivision plan; and on the NW., along line 4-1 by lots 788-A-1 and 788-A-2 of plan Psd-17436.
Containing an area of TWO HUNDRED NINETY-FOUR square meters (294) more or less.
Page 76 of 134
Said property belongs to the spouses Agripino and Soledad Viloria and mortgaged also with PNB. It is further alleged
that:
While letter "E" is the property located in Cebu City and mortgaged with defendant Bank should be
considered as one and indivisible with the mortgage executed upon the four (4) parcels of land situated
at Mabinay (Negros Oriental) and were put under Land Reform by virtue of the real estate mortgage
executed and signed by the spouses land owner Agripino and Soledad Viloria which portion of the Real
Estate Mortgage document specifically paragraph No. 2 which states "That for and in consideration of
certain loans, overdrafts and other credit accommodations obtained from the mortgage, which is hereby
fixed at P115,449.61 Philippine Currency, and to secure the payment of the same and those others that
the mortgage may extend to the mortgagor including interest and expenses and other obligations owing
by the mortgagor to the mortgagee whether direct or indirect or secondary. . . (Rollo, Petition, p. 5).
PNB opposed the admission of the aforesaid private respondent's First Amended Complaint on the grounds that there
was no proper notice of hearing as required by the Uniform CAR Rules of procedure, the impropriety of including TCT
No. 42836 — a residential land situated in Cebu City as subject matter of the complaint, and the failure of private
respondents to attach a copy of the real estate mortgage contract upon which the action was based (Rollo, Annex "I",
pp. 37-38).
In an order dated May 31, 1982, respondent Judge Florendo granted private respondents' Viloria, et al. motion and
thus, admitted the First Amended Complaint. Said order states among others:
Acting on the "Motion to Amend Amended Complaint" dated May 28, 1982, filed by Ma. Corazon C.
Locsin, counsel for plaintiffs, wherein the First Amended Complaint (pp. 285 to 290 inclusive) of the
records, was attached thereto, and it appearing that Atty. Norberto Denura, counsel for the defendant
PNB, has received a copy of aforestated motion and also a copy of the First Amended Complaint thereto
attached, the "Motion To Amend Amended Complaint" is hereby GRANTED and the First Amended
Complaint is likewise hereby ADMITTED.
Petitioner PNB's motion for reconsideration of the above order was denied by respondent Judge Florendo in an order
dated June 28, 1981.
Hence, the petition.
As prayed for in the petition, a temporary restraining order was issued by this Court pursuant to its resolution dated
October 25, 1982 enjoining the respondent Judge from proceeding with the hearing of the case.
The First Division of this Court resolved to give due course to the petition in the resolution of March 16, 1983.
The principal issue in the instant case is whether or not the respondent Judge exceeded his jurisdiction in admitting the
First Amended Complaint which adds another parcel of land not within the coverage of Operation Land Transfer
pursuant to P.D. 27.
The petition is impressed with merit.
Upon the abolition of the Court of Agrarian Relations by BP 129 enacted on August 10, 1981 and fully implemented on
February 14, 1983, jurisdiction over agrarian disputes is now vested in the appropriate Regional Trial Court pursuant to
the provisions of Sec. 19(7) of the said law (Locsin v. Valenzuela, 173 SCRA 454 [1989]; Enrique v. Fortuna
Mariculture Corporation, 158 SCRA 651 [1988]);
In view of such supervening event, it is now the appropriate Branch of the Regional Trial Court of Negros Oriental that
has jurisdiction over the case. Be that as it may, the same law provides that whenever a Regional Trial Court takes
cognizance of agrarian cases, the special rules of procedures applicable under the present laws to such cases shall
continue to be applied, unless amended by law or by rules of court promulgated by the Supreme Court (Sec. 24, BP
129).
Page 77 of 134
Coming back to the case at bar, petitioner contends that Lot No. 787-B-2-A (formerly covered by TCT No. 42836, now
TCT No. 75805-PNB) being a residential/commercial and non-agricultural land situated at Cebu City is not within the
coverage of the Operation Land Transfer, thus not within the jurisdiction of the Court of Agrarian Relations.
Jurisdiction, in general, is either one over the nature of the action, over the subject matter, over the person of the
defendants or over the issue framed in the pleadings (Balais v. Balais, 159 SCRA 37 [1988]). Jurisdiction over the
subject matter, on the other hand, is conferred by law and does not depend on the consent or objection or the acts or
omissions of the parties or any one of them (Republic v. Sangalang, 159 SCRA 515 [1988]). The law which conferred
jurisdiction on the Court of Agrarian Relations, now transferred to the appropriate Branch of the Regional Trial Court,
concerning agricultural lands, is P.D. 946 which provides, among others:
Sec. 12. Jurisdiction Over Subject Matter — The Court of Agrarian Relations shall have original and
exclusive jurisdiction over:
a) Cases involving the rights and obligations of persons in the cultivation and use
of agricultural land . . .;
b) Questions involving rights granted and obligations imposed by laws, presidential

decrees, Orders, Instructions, Rules and Regulations issued and promulgated in relation
to the agrarian reform program;
xxx xxx xxx
e) Cases involving the sale, alienation, mortgage, foreclosure, pre-emption and

redemption of tenanted agricultural land; . . . (emphasis supplied)
xxx xxx xxx
Accordingly, the Court of Agrarian Relations (now RTC sitting as an agrarian court) could only entertain disputes over
lands that are the subject of agrarian cases. Corollarily, lands that are not the subject of agrarian disputes should not
be brought before it as an agrarian court. It has been the legislative policy to confine to the CAR exclusive jurisdiction
over agrarian cases as well as their incidents (Depositario v. Hervias, 121 SCRA 756 [1983]).
The following factors indisputably established questioned land is beyond CAR's jurisdiction:
First, private respondents Viloria, et al. admission in their Comment dated November 19, 1982 (Rollo, pp. 90-97) that
Lot No. 787-B-2-A is a residential lot located at Cebu City.
Second, the certification by the Agrarian Reform Team No. 215 to the effect that subject lot is not within the coverage of
the Operation Land Transfer pursuant to P.D. 27 (Annex Rollo, p. 54). Such ''official certification can be considered as
correct, if only because of the presumption of regularity that is stamped on it as an official document" (San Mauricio
Mining Co. v. Ancheta, 105 SCRA 371 [1981]).
Indeed, amendments to pleadings are generally favored and should be liberally construed (PNB v. CA, 159 SCRA 433
[1988]), however, where the court has no jurisdiction over the subject matter of the case (Lot 387-B-2-A being a
residential lot not covered by Operation Land Transfer under PD 27), it is evident that the amendment of the complaint
could not be allowed so as to confer jurisdiction upon the court over said property.
It being apparent that the Court of Agrarian Relations has no jurisdiction over Lot No. 787-B-2-A aside from the fact that
said court has already been abolished by BP 129, the issue as to its territorial jurisdiction has become moot and
academic.
The propriety of the petition for certiorari is beyond question.
The order of the respondent Judge admitting the First Amended Complaint including therein said questioned Lot 787-B-
2-A which is a residential lot not falling within the ambit of PD 27, hence, beyond CAR's jurisdiction, was issued in
excess of jurisdiction. The term excess of jurisdiction signifies that the court, board or officer has jurisdiction over a
Page 78 of 134
case but oversteps such jurisdiction while acting thereon (Alhambra Cigar and Cigarette Manufacturing Co., Inc. v.
Caleda., et al., 122 Phil. 355 [1965]). Verily, the writ of certiorari is granted "to keep an inferior court within the bounds
of its jurisdiction . . ." (Aguilar v. Tan, 31 SCRA 205.[1970]. It is the proper remedy "where it clearly appears that the
trial court is proceeding in excess or outside of its jurisdiction . . ." (Baloria v. Abalos, 32 SCRA 368 [1970]; Time, Inc. v.
Reyes, 39 SCRA 303 [1971]; Ablan, Sr. v. Madarang, 41 SCRA 213 [1971]). Since the "office of the writ
of certiorari has been reduced to the correction of defects of jurisdiction solely and cannot be legally used for any other
purpose" (Albert v. CFI of Manila, Br. VI, 23 SCRA 948 [1968]), said remedy is available in the instant case to keep the
trial court from proceeding in the case in excess of its jurisdiction.
The private respondents Viloria, et al.'s contention that the petition for certiorari is premature since the order of the
respondent judge could have simply been assigned as an error in the appeal by the petitioner in case of adverse
judgment is not persuasive. Even when appeal is available and is the proper remedy, this court has allowed a writ
of certiorari when the orders of the lower court were issued either in excess of or without jurisdiction (Aguilar v.
Tan, supra).
WHEREFORE, the petition for certiorari is GRANTED and the orders dated May 31, June 3, and June 28, 1982 are
hereby ANNULLED and SET ASIDE. The trial of CAR Case No. 532 on the merits is hereby ordered to be conducted in
the appropriate Branch of the Regional Trial Court of Negros Oriental in view of the abolition of the Court of Agrarian
Relations by BP 129 and the temporary restraining order issued by this Court dated October 25, 1982 enjoining the
hearing of CAR Case No. 532 with respect to Lot No. 787-B-2-A (formerly covered by T.C.T. No. 43836 covering a
parcel of land situated in Cebu City ) is made PERMANENT.
SO ORDERED.
EN BANC
G.R. Nos. L-24012 and L-24040 August 9, 1965
ANTONIO J. VILLEGAS, in his official capacity as Mayor of the City of Manila, petitioner,
vs.
ABELARDO SUBIDO, in his official capacity as Commissioner of Civil Service;
HERMINIO A. ASTORGA, in his official capacity as Vice-Mayor and Presiding Officer of the Municipal Board,
City of Manila, et al., respondents.
Antonio J. Villegas for and in his own behalf as petitioner.

Artemio V. Panganiban, Jr. and Renito A. U. Saguisag for respondent Vice-Mayor Herminio A. Astorga.
Mariano M. Magsalin for respondent Municipal Board.
Office of the Solicitor General and R. R. Villones for respondent Commissioner Abelardo Subido.
BENGZON, J.P., J.:
The Commissioner of Civil Service issued on January 4, 1965 Memorandum Circular No. 1, series of 1965, stating that
Republic Act 2260 (Civil Service Act of 1959) impliedly repealed Republic Act 557 providing for the procedure of
removal and suspension of policemen. All provincial boards, city and municipal councils were ordered (1) to cease from
investigating administrative charges against provincial guards, city and municipal policemen; (2) to submit in 30 days to
the Commissioner of Civil Service a list of police cases pending; and (3) to thereafter investigate police cases only in
accordance with Republic Act 2260.
On January 13, 1965 the Commissioner of Civil Service issued Memorandum Circular No. 3, series of 1965, stating
that Republic Act 2260 repealed by implication Section 22 of Republic Act 409 (Revised Charter of the City of Manila)
on suspension and removal of appointive city officers or employees not appointed by the President of the Philippines.
The City Mayor of Manila was ordered (1) to cease from deciding administrative cases of officers and employees in
Page 79 of 134
Manila in the competitive service; (2) to submit to the Commissioner of Civil Service in 30 days a list of pending
disciplinary cases against said officers and employees; (3) to thereafter proceed to investigate said officers and
employees in accordance with Republic Act 2260.
Since the Vice-Mayor of Manila, as Presiding officer of the Municipal Board of Manila, would comply with the
aforestated Memorandum Circulars, the City Mayor of Manila filed with this Court two separate actions for prohibition
and injunction with preliminary injunction: L-24012 filed on January 7, 1965, relating to cases involving policemen under
Republic Act 557; L-24040 filed on January 15, 1965, with reference to cases of competitive employees in the City of
Manila under Section 22 of Republic Act 409.
Preliminary injunction was issued by this Court in both cases on January 18, 1965.
Said cases were jointly heard and submitted on March 12, 1965. Hence, a single decision is herein rendered on them.
The sole issue presented is: Did Republic Act 2260 impliedly repeal Republic Act 557 and Section 22 of Republic Act
409 so as to vest in the Commissioner of Civil Service exclusive and original jurisdiction to remove, suspend and
separate policemen and employees of the City of Manila in the competitive service?
Republic Act 409, effective June 18, 1949, provides in Section 22:
... Appointive City officers or employees not appointed by the President of the Philippines shall be suspended
and removed by the Mayor, subject to appeal to the (Secretary of Interior) Office of the President, whose
decision shall be final.
Republic Act 557, effective June 17, 1950, provides: (1) that charges against policemen shall be preferred by the Mayor
and investigated by the city on municipal council and "the investigating body shall decide the case within 15 days from
the time the case is submitted for decision." (Sec. 1) It also provides that "in all these cases, the decision of the ... city
or municipal council shall be appealable to the Commissioner of Civil Service." (Sec. 2)
Republic Act 2260, effective June 19, 1959, provides in Section 16 (i) that the Commissioner has among other powers
the following:
Except as otherwise provided by law, to have final authority to pass upon the removal, separation and
suspension of all permanent officers and employees in the competitive or classified service and upon all matters
relating to the conduct, discipline, and efficiency of such officers and employees; and to prescribe standards,
guidelines and regulations governing the administration of discipline;
Parenthetically, Republic Act 557 has since enactment been time and again severely criticized as an unwise legislation
that rendered our policemen captives of politics or politicians. It is, therefore, not surprising but quite understandable
that respondent Commissioner sought to curtail the evils of the present system under Republic Act 557. Still, it must be
conceded, even as it is regretted, that Republic Act 557 has not been expressly repealed.
Repeal by implication is not favored and if two laws can be reasonably reconciled the construction will be against such
repeal (Valera vs. Tuason, 90 Phil. 823, 827).
Republic Act 2260, particularly Section 16(i) thereof, is not inconsistent with the power of the City Council under
Republic Act 557 to decide cases against policemen and with the power of the City Mayor of Manila under Section 22
of Republic Act 409 to remove city employees in the classified service.
Section 16(i) of Republic Act 2260 leaves no doubt that the removal, suspension or separation effected by said City
Council or City Mayor, can be passed upon or reviewed by the Commissioner of Civil Service. Nonetheless, the
Commissioner's "final authority to pass upon the removal, separation and suspension" of classified service
employees presupposes, rather than negates, the power vested in another official to originally or initially decide the
removal, separation or suspension which the Commissioner is thereunder empowered to pass upon.
Such power, furthermore, is subject to an express limitation contained in Section 16 (i) namely, the saving clause
"Except as otherwise provided by law". Accordingly, it does not obtain at all in those instances where the power of
Page 80 of 134
removal is by law conferred an another body alone, with no appeal therefrom, as in the case provided for in Section 14
of Republic Act 296.
Respondents rely on the case of Ang-angco vs. Castillo, L-17169, November 30, 1963, allegedly ruling that under
Section 16(i) of Republic Act 2260 the Commissioner has original and exclusive jurisdiction to remove, suspend or
separate. A close reading of the decision, however, will show that said statement was qualified by considering the
saving clause: "Except as otherwise provided by law" contained in Section 16 (i). It was asked therein if in that case
there was a special law empowering the President to remove officers and employees in the classified civil service, and
it was found that there was none. In the present case there is no question that the power of the City Council or the City
Mayor to remove and suspend is clearly granted by special laws. *
It follows, therefore, that the special laws covering specific situations of policemen and employees of the City of Manila,
Republic Acts 557 and 409, subsist side-by-side with Republic Act 2260, and are not impliedly repealed by the latter
which is a general law.
Since Section 16(i) of Republic Act 2260 confers reviewing or appellate powers on the Commissioner of Civil Service,
its effect on Section 22 of Republic Act 409 is only to bring the appeal from the decisions of the City Mayor to the
Commissioner of Civil Service, instead of to the Office of the President (successor of Department of Interior). Republic
Act 557, as stated, expressly provides for appeal from the decision of the City Council to the Commissioner of Civil
Service (Section 2).
As this Court in Castillo vs. Bayona L-14375, January 30, 1960, stated, Section 16(i) of Republic Act 2260 means that
officials vested by law with power to remove employees can still exercise said power, "subject to the final authority of
the Commissioner of Civil Service on appeal to him by the aggrieved party."
And in Pangilinan vs. RCA, L-22010, February 27, 1965, We ruled that appeal to the Civil Service Commissioner under
Section 16(i) aforementioned is an administrative remedy to be exhausted before suing in court against disciplinary
action taken by an administrative body or official.
It is well to note, however, that the present system of securing disciplinary action against policemen from the city or
municipal council suffers from so many unnecessary delays put in the way of terminating the investigation. Republic Act
557 leaves no doubt that Congress intended prompt and speedy disposition of the cases thereunder.
Section 1 expressly provides: "The trial of the case shall be finished within a reasonable time, and the investigating
body shall decide the case within fifteen days from the time the case is submitted for decision." Furthermore, Section 3
ordains reinstatement if after sixty days of preventive suspension the case against a policeman shall not have been
finally decided. Accordingly, a remedy against refusal or failure of the investigating body to perform its task within the
reasonable time allowed, may lie in a proper case. For Congress in requiring speedy action by the investigating body
has clearly shown its intention to insure an expeditious manner of purging undesirables in our police forces. .
WHEREFORE, the petitions for prohibition in L-24012 and L-24040 are hereby granted and the preliminary injunction
heretofore issued in both cases are hereby made permanent. No costs. It is so ordered.
G.R. No. L-48907 & 49035 December 19, 1981
SEVERINO TAJONERA and/or RINO's SUPER CLUB AND RESTAURANT, Petitioners, vs. FERNANDO
LAMAROZA, INOCENCIO CABALES, FEDERICO SANDOVAL, JOSE TUANO, LOLITO ESPINOSA, RUDY
CANTOJAS, DOMINGO SAGARIO, SIMPLICIO CORNEL, PONCIANO SABIO, et al., Respondents.
DE CASTRO, J.:
These two (2) petitions for certiorari with writ of preliminary injunction are taken up jointly as they involve the same parties
and arise from the same causes.
Page 81 of 134
There were six (6) cases instituted before Regional Office No. IV of the Department (now Ministry) of Labor, five (5) of
which were filed separately by private respondent workers against petitioners for "unfair labor practice, illegal dismissal,
illegal deduction, underpayment, overtime pay for holiday and rest day, violation of P.D. 525, breakage deduction in
salary, recovery of cash deposit and separation pay," and the other one was filed by petitioners for authority to shut down
their business. These cases were consolidated on August 2, 1976 and were set for hearing on August 3, 1976. Both
parties and their respective counsel were present thereat, and they agreed to reset the hearing on August 12, 1976, that
private respondents wig submit their position paper on or before August 9, and that counsel for petitioners will submit his
answer/position paper on the date of the hearing. 1 Private respondents submitted an affidavit' they executed jointly with
twelve other waiters 2 employees of Rino's Super Club, and which states, among other things, the following:
We, the undersigned waiters/employees of Rino's Super Club and Restaurant, all Filipinos, of legal ages with our
Residence Certificates and other personal circumstances stated below, after being duly sworn to according to law hereby
depose and say:
1. That all of us were dismissed by the respondents from our employment without any notice to us nor clearance from
the Department of Labor without 'just cause' in violation of P.D. 442 or the New Labor Code.
2. That we do not know of any reason except that we were in the process of forming a UNION to be able to have a good
bargaining power with the Management in order to remedy the Unfair Labor Practices which we have been suffering from
the management, such as, Collection of Cash Deposits from employees, Delayed and Unpaid wages, Collection of
Breakage, Collection of customer's unpaid bills from wages of the employees, by making us construction laborers, non-
payment of overtime, underpayment, holiday pay, and Non-payment of Allowance under P.D. 525 to those who are
entitled and other violations.
3. That we tried to get the explanation of the management on our dismissal but the management instead tried to coerce
our representative into testifying in their favor in case we file a case against them, and that the management will charge
us of abandonment if we persist on prosecuting our claims against them.
4. That on the same day of our dismissal we were immediately replaced by a new group of personnel which they have
hired through another firm also owned by the respondents in order to escape from their liability under the law.
5. That the amount representing our cash bonds/deposits were actually deducted from our wages as such and only the
receipts were given to us instead of our salaries by the respondents and it is not true that they have no knowledge about
such deposits.
6. That we are even told that any case we filed with the Department of Labor will not prosper as the respondents have
ways and means and connections with High Government officials including the Department of Labor to delay our case
and obtain dismissal because most of these officials are their customers.
As per agreement, the cases were again called for hearing on August 12, 1976, but neither petitioners nor counsel
appeared, nor did they submit any answer or position paper.
On October 4, 1976, Officer-in-Charge Vicente Leogardo, Jr. of Regional Office No. 4 issued his Order holding that the
respondents were dismissed by reason of their union activities and without prior clearance having been issued by the
Labor Department. The petitioners were ordered to reinstate private respondents to their former positions with full
backwages from the date of termination up to their actual reinstatement. The issue of illegal deductions, etc. were referred
to the Labor Regulation Section of the Department (now Ministry) of Labor for determination.
Petitioners appealed the said order of October 4, 1976 to the Secretary (Now Minister) of Labor and stated in their
memorandum of appeal that private respondents staged an illegal walk-out against management which in effect is an
abandonment of their respective jobs; that they told the respondents to return to work otherwise a damage suit will be
filed against them, but the respondents arrogantly took upon themselves to file several complaints against the
management; and that management never filed any clearance to terminate the respondents because management then
still clung to the belief and hope that these employees might have just been misled and find out later on that what they
have done was wrong.
Page 82 of 134
Petitioners likewise emphasized that they never received any position paper from complainants, so they never bothered
to submit any pleading or position paper: that they were deprived of due process for they were never required to submit
memorandum, and that there was no judge. no witness, no transcript of records to talk about or to be made the basis of
the Order of Mr. Leogardo, Jr.
On March 31, 1977, finding the appeal to be frivolous and dilatory, then Acting Secretary Inciong denied the same and
ordered the immediate issuance of a writ of execution. On July 5, 1977, when the writ of execution was being served
upon petitioners, they executed a compromise agreement 3 admitting their pecuniary liability to respondents in the
amounts of P37,620.00.
Instead of complying with the compromise agreement, petitioners appealed to the Office of the President and maintained
their stand that they were denied due process, and that the writ of execution was based on an incomplete judgment which
cannot be carried out or executed. Hon. Ronaldo Zamora, in his capacity as Presidential Assistant for Legal Affairs,
ordered the stay of execution pending appeal. Petitioners, on the other hand, filed an appeal bond in the amount of
P40,000.00. On January 20, 1978, the Office of the President, through respondent Zamora affirmed in toto the order of
the then Acting Secretary Inciong, with the finding that the compromise agreement governed the liabilities of petitioners,
but the latter failed to abide with the terms and conditions set forth therein and that petitioners, in appealing the order
subject of that agreement, revived the executory character of the order appealed from pursuant to the said agreement
thus rendering the appeal moot and academic.
Petitioners moved for a reconsideration of the Order of respondent Zamora and reiterated their defense of their having
been denied due process and claimed that respondents injected fear and duress upon the person of Severino Tajonera
in forcing him the sign the agreement.
On August 10, 1978, respondent Jacobo Clave, then Presidential Executive Assistant, denied the reconsideration prayed
for and held that the issues raised in the motion were merely reiterative of the issues already passed upon and resolved
by the Office of the President.
In the meantime, pending the resolution of the appeal from the order of reinstatement, the matter of money claims was
set for conciliation and conference on December 21, 1976. Neither petitioner nor counsel appeared. The conference was
reset to January 13, 1977 and this time, petitioners came late; but they agreed to have an ocular inspection, by some
Labor officials, of the premises with assurance that the employees' service records will be made available. However, for
some unknown reasons, petitioners failed to produce the records of the employees as promised.
Private respondents submitted their memorandum of claim 4 with computations, in addition to the receipts and payroll
summaries. Petitioners did not submit any evidence relative to the monetary claims.
On October 25, 1977, Regional Director Francisco Estrella awarded the money claims to private respondents in various
amounts based on the evidence presented. The corresponding writ of execution was issued on February 20, 1978 bearing
the amount of P47,027.00 representing the total amount of the claim to be paid to private respondents. Petitioners filed
a memorandum of appeal with urgent petition to lift the writ of execution on the ground of justice and equity, claiming that
they were never given the chance to rebut or present evidence contrary to private respondents' position; that they were
never furnished the order of October 25, 1977; that as borne out by the records in the Department of Labor, the one who
received the order by the name of Nelin Esquerdo" was not known to both petitioners and counsel.
Petitioners were required to file an appellants' bond in the amount of P47,027.00. Acting on the appeal, respondent
Inciong decided to give petitioners a chance to be heard and summoned them by telegram for a conference on July 11,
1978 but still they failed to appear. It was on July 18, 1978 when counsel for petitioners came and it was agreed that the
former will submit his position paper and evidence not later than July 24, 1978. But contrary to the agreement, said
counsel submitted a supplemental position paper praying that the case be placed under arbitration. Counsel for private
respondents was forced to manifest and move that the case be submitted for resolution in view of the dilatory tactics
employed by petitioners. On July 28, 1978, Deputy Minister Inciong dismissed the appeal and directed the immediate
execution of the order of October 25, 1977.
An alias writ of execution was issued on September 25, 1978 for failure of petitioners to comply with the directives
contained therein.
Page 83 of 134
The first petition for certiorari, G.R. No. L-48907, was filed prior to the resolution of the appeal from the order dated
October 25, 1977 of Director Estrella while the second petition, G.R. No. L-49035, was filed after the dismissal of the
appeal and after the issuance of the alias writ of execution.
The first petition alleged that respondent Vicente Leogardo, Jr. went beyond his authority when he took cognizance of
the consolidated cases of unfair labor practice and money claims since the only persons authorized by the code to hear
cases of that nature are the Labor Arbiters and members of the National labor Relations Commission; that assuming he
has the authority to do so, his questioned order of October 4, 1976, thereby segregating the issues of reinstatement and
backwages from the other issues of overtime pay, underpayment, etc., denotes no other than an incomplete judgment in
contravention of governing jurisprudence in this matter; that when a judgment is conditional or incomplete, it is not final
and cannot be executed; that respondent Leogardo Jr. expressly spelled out the amount to be paid as backwages to the
employees, when none of these amounts and specifications were made in his order of October 4, 1976.
The second petition also alleged lack of jurisdiction on the part of Regional Director Estrella when he ruled on the money
claims which authority exclusively belong to the National Labor Relations Commission; that petitioners were never notified
or at least ginen a hint of the so-called conference and the investigation to be conducted; that the specific and concrete
computation of claims for each individual person made respondent Estrella, denotes a glaring example of a patent
violation of due process wherein petitioners would be deprived of property without an opportunity to be heard; and that
the Deputy Minister of Labor's statement that petitioners failed to appear at the scheduled hearing is not true since no
hearing was actually conducted but only a conference and/or ocular inspection, a conciliation and investigation; and the
case was not tried on the merits.
The rule is that jurisdiction is conferred by law and the objection to the authority of the tribunal to take cognizance of a
case may be raised at any stage of the proceedings. However, considering the attendant circumstances in the cases at
bar, petitioners are now barred from claiming lack of jurisdiction at this stage with their active participation. They never
questioned the authority of respondents Leogardo, Jr. and Estrella throughout the duration of the proceedings when they
have the chance to do so. They never mentioned lack of jurisdiction in their memorandum of appeal, in their motion for
reconsideration or in their position paper. They are now estopped from raising such objection. It has been held that a
party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and after failing to obtain
such relief, repudiate or question that same
jurisdiction. 5 The Court frowns upon and does not tolerate the undesirable practice of some litigants who submit
voluntarily a cause and then accepting the judgment when favorable to them and attacking it for lack of jurisdiction when
adverse.
As to the alleged deprivation of petitioners of the procedural due process, We find no merit in this contention. They had
ample opportunity to present their evidence not only during the conciliation stage but also before then Deputy Minister
Inciong who called for conference to give petitioners another fair chance to ventilate their grievances and to submit their
defenses, if there are any. Although there was no actual hearing conducted, petitioners were afforded time to explain
their side. There were no reputations made nor was there any hint on the record that they can present any meritorious
defense which would warrant a reversal of the questioned orders.
What the law prohibits is not the absence of previous noticed but the absolute absence thereof and lack of opportunity
to be heard. Petitioners have no reason to impute lack of due process because they were "heard" on their memorandum
of appeal and motion for reconsideration. They, therefore, had sufficient opportunity for them to inform the tribunal
concerned of their side of the controversy. What due process contemplates is freedom from arbitrariness, and what it
requires is fairness or justice, the substance rather than the form being paramount. 6 The circumstances tend to show
that the petitions were dilatory in character. And from what has been stated, the liability of petitioners appears clear, much
more so with the stern but salutary requirement in the Constitution as to the promotion of social justice and protection to
labor.
The Labor Code provides that proceedings before the adjudicatory bodies of the Ministry of Labor are not governed by
the technical rules of evidence prevailing in courts of law or equity and are summary in nature. While a day in court is a
matter of right in judicial proceedings, it is otherwise in administrative proceedings since they are based on different
principles.
Page 84 of 134
There is nothing irregular or anomalous when the writ of execution contained the specific amounts of money to be paid
by petitioners to private respondents. The said amounts were based on the record submitted by the employees which
were not disputed by petitioners since they failed to present their timely objection to the submission of the same.
Petitioners' assertion that the order of October 4, 1976 is a nullity for being an incomplete judgment, is not tenable. They
apparently are confused as to the connotation of incomplete judgment. The said order is not an incomplete judgment but
a partial judgment which is allowed under the Rules of Court. If there are several claims, a partial decision regarding one
may be rendered, and decision regarding the others may be deferred. The order of October 4, 1976 totally resolves all
the issues regarding the unfair labor practice charge but defers action on the respondents' monetary claim, which is an
entirely distinct matter. The said order terminates the action so resolved, and relative thereto, execution may lie.
In brief, petitioners failed to disclose what evidence they have to rebut the claim of private respondents. There was no
showing how they will disprove the charge of private respondents that they were unceremoniously dismissed for their
attempt to form a union. They did not state the nature of their evidence to controvert the monetary claims of private
respondents, and lastly, they failed to establish by preponderance of evidence that private respondents are not entitled
to the relief prayed for. In view thereof, the Court is of the opinion that petitioners are guilty as charged and private
respondents should be given what is due them.
It appearing that the Super Club and Restaurant has closed and ceased operation and reinstatement is no longer
possible, the dismissed employees shall be entitled to separation pay equivalent at least to one month salary or to one
month salary to every year of service, whichever is higher, a fraction of at least six months being considered as one
whole year. The dispositive portion of the assailed order of October 4, 1976 should be modified by directing the employer
Super Club and Restaurant to grant separation pay to private respondents instead of reinstating them with full backwages.
The appellants' bond in the amount of P40,000.00 filed by petitioner on August 2, 1978 shall be applied to the payment
of separation pay, and the money claims awarded in the assailed order of October 25, 1977 shall likewise be charged
against the bond in the amount of P47,027.00 filed by petitioner on April 17, 1978.
WHEREFORE, the petitioner Super Club and Restaurant is hereby ordered to grant separation pay to private
respondents and to award the money claims adjudged in their favor in the order of October 25, 1977 in conformity with
the aforestated directive. The temporary restraining orders issued in both cases are hereby lifted. No costs.
SO ORDERED.
EN BANC
G.R. No. 139465 January 18, 2000
SECRETARY OF JUSTICE, petitioner,

vs.
HON. RALPH C. LANTION, Presiding Judge, Regional Trial Court of Manila, Branch 25, and MARK B.
JIMENEZ, respondents.
MELO, J.:
The individual citizen is but a speck of particle or molecule vis-à-vis the vast and overwhelming powers of government.
His only guarantee against oppression and tyranny are his fundamental liberties under the Bill of Rights which shield
him in times of need. The Court is now called to decide whether to uphold a citizen's basic due process rights, or the
government's ironclad duties under a treaty. The bugle sounds and this Court must once again act as the faithful
guardian of the fundamental writ.
The petition at our doorstep is cast against the following factual backdrop:
On January 13, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1069 "Prescribing the
Procedure for the Extradition of Persons Who Have Committed Crimes in a Foreign Country". The Decree is founded
on: the doctrine of incorporation under the Constitution; the mutual concern for the suppression of crime both in the
Page 85 of 134
state where it was committed and the state where the criminal may have escaped; the extradition treaty with the
Republic of Indonesia and the intention of the Philippines to enter into similar treaties with other interested countries;
and the need for rules to guide the executive department and the courts in the proper implementation of said treaties.
On November 13, 1994, then Secretary of Justice Franklin M. Drilon, representing the Government of the Republic of
the Philippines, signed in Manila the "Extradition Treaty Between the Government of the Republic of the Philippines
and the Government of the United States of America" (hereinafter referred to as the RP-US Extradition Treaty). The
Senate, by way of Resolution No. 11, expressed its concurrence in the ratification of said treaty. It also expressed its
concurrence in the Diplomatic Notes correcting Paragraph (5)(a), Article 7 thereof (on the admissibility of the
documents accompanying an extradition request upon certification by the principal diplomatic or consular officer of the
requested state resident in the Requesting State).
On June 18, 1999, the Department of Justice received from the Department of Foreign Affairs U.S. Note Verbale No.
0522 containing a request for the extradition of private respondent Mark Jimenez to the United States. Attached to the
Note Verbale were the Grand Jury Indictment, the warrant of arrest issued by the U.S. District Court, Southern District
of Florida, and other supporting documents for said extradition. Based on the papers submitted, private respondent
appears to be charged in the United States with violation of the following provisions of the United States Code (USC):
A) 18 USC 371 (Conspiracy to commit offense or to defraud the United States; two [2] counts; Maximum
Penalty — 5 years on each count);
B) 26 USC 7201 (Attempt to evade or defeat tax; four [4] counts; Maximum Penalty — 5 years on each count);
C) 18 USC 1343 (Fraud by wire, radio, or television; two [2] counts; Maximum Penalty — 5 years on each
count);
D) 18 USC 1001 (False statement or entries; six [6] counts; Maximum Penalty — 5 years on each count);
E) 2 USC 441f (Election contributions in name of another; thirty-three [33] counts; Maximum Penalty — less
than one year).
(p. 14, Rollo.)
On the same day, petitioner issued Department Order No. 249 designating and authorizing a panel of attorneys to take
charge of and to handle the case pursuant to Section 5(1) of Presidential Decree No. 1069. Accordingly, the panel
began with the "technical evaluation and assessment" of the extradition request and the documents in support thereof.
The panel found that the "official English translation of some documents in Spanish were not attached to the request
and that there are some other matters that needed to be addressed" (p. 15, Rollo).
Pending evaluation of the aforestated extradition documents, private respondent, through counsel, wrote a letter dated
July 1, 1999 addressed to petitioner requesting copies of the official extradition request from the U.S. Government, as
well as all documents and papers submitted therewith; and that he be given ample time to comment on the request
after he shall have received copies of the requested papers. Private respondent also requested that the proceedings on
the matter be held in abeyance in the meantime.
Later, private respondent requested that preliminary, he be given at least a copy of, or access to, the request of the
United States Government, and after receiving a copy of the Diplomatic Note, a period of time to amplify on his request.
In response to private respondent's July 1, 1999 letter, petitioner, in a reply-letter dated July 13, 1999 (but received by
private respondent only on August 4, 1999), denied the foregoing requests for the following reasons:
1. We find it premature to furnish you with copies of the extradition request and supporting documents from the
United States Government, pending evaluation by this Department of the sufficiency of the extradition
documents submitted in accordance with the provisions of the extradition treaty and our extradition law. Article 7
of the Extradition Treaty between the Philippines and the United States enumerates the documentary
requirements and establishes the procedures under which the documents submitted shall be received and
Page 86 of 134
admitted as evidence. Evidentiary requirements under our domestic law are also set forth in Section 4 of P.D.
No. 1069.
Evaluation by this Department of the aforementioned documents is not a preliminary investigation nor akin to
preliminary investigation of criminal cases. We merely determine whether the procedures and requirements
under the relevant law and treaty have been complied with by the Requesting Government. The constitutionally
guaranteed rights of the accused in all criminal prosecutions are therefore not available.
It is only after the filing of the petition for extradition when the person sought to be extradited will be furnished by
the court with copies of the petition, request and extradition documents and this Department will not pose any
objection to a request for ample time to evaluate said documents.
2. The formal request for extradition of the United States contains grand jury information and documents
obtained through grand jury process covered by strict secrecy rules under United States law. The United States
had to secure orders from the concerned District Courts authorizing the United States to disclose certain grand
jury information to Philippine government and law enforcement personnel for the purpose of extradition of Mr.
Jimenez. Any further disclosure of the said information is not authorized by the United States District Courts. In
this particular extradition request the United States Government requested the Philippine Government to
prevent unauthorized disclosure of the subject information. This Department's denial of your request is
consistent with Article 7 of the RP-US Extradition Treaty which provides that the Philippine Government must
represent the interests of the United States in any proceedings arising out of a request for extradition. The
Department of Justice under P.D. No. 1069 is the counsel of the foreign governments in all extradition requests.
3. This Department is not in a position to hold in abeyance proceedings in connection with an extradition
request. Article 26 of the Vienna Convention on the Law of Treaties, to which we are a party provides that
"[E]very treaty in force is binding upon the parties to it and must be performed by them in good faith". Extradition
is a tool of criminal law enforcement and to be effective, requests for extradition or surrender of accused or
convicted persons must be processed expeditiously.
(pp. 77-78, Rollo.)
Such was the state of affairs when, on August 6, 1999, private respondent filed with the Regional Trial Court of the
National Capital Judicial Region a petition against the Secretary of Justice, the Secretary of Foreign Affairs, and the
Director of the National Bureau of Investigation, for mandamus (to compel herein petitioner to furnish private
respondent the extradition documents, to give him access thereto, and to afford him an opportunity to comment on, or
oppose, the extradition request, and thereafter to evaluate the request impartially, fairly and objectively); certiorari(to
set aside herein petitioner's letter dated July 13, 1999); and prohibition (to restrain petitioner from considering the
extradition request and from filing an extradition petition in court; and to enjoin the Secretary of Foreign Affairs and the
Director of the NBI from performing any act directed to the extradition of private respondent to the United States), with
an application for the issuance of a temporary restraining order and a writ of preliminary injunction (pp. 104-105, Rollo).
The aforementioned petition was docketed as Civil Case No. 99-94684 and thereafter raffled to Branch 25 of said
regional trial court stationed in Manila which is presided over by the Honorable Ralph C. Lantion.
After due notice to the parties, the case was heard on August 9, 1999. Petitioner, who appeared in his own behalf,
moved that he be given ample time to file a memorandum, but the same was denied.
On August 10, 1999, respondent judge issued an order dated the previous day, disposing:
WHEREFORE, this Court hereby Orders the respondents, namely: the Secretary of Justice, the Secretary of
Foreign Affairs and the Director of the National Bureau of Investigation, their agents and/or representatives to
maintain the status quo by refraining from committing the acts complained of; from conducting further
proceedings in connection with the request of the United States Government for the extradition of the petitioner;
from filing the corresponding Petition with a Regional Trial court; and from performing any act directed to the
extradition of the petitioner to the United States, for a period of twenty (20) days from service on respondents of
this Order, pursuant to Section 5, Rule 58 of the 1997 Rules of Court.
Page 87 of 134
The hearing as to whether or not this Court shall issue the preliminary injunction, as agreed upon by the
counsels for the parties herein, is set on August 17, 1999 at 9:00 o'clock in the morning. The respondents are,
likewise, ordered to file their written comment and/or opposition to the issuance of a Preliminary Injunction on or
before said date.
SO ORDERED.
(pp. 110-111, Rollo.)
Forthwith, petitioner initiated the instant proceedings, arguing that:
PUBLIC RESPONDENT ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING THE TEMPORARY
RESTRAINING ORDER BECAUSE:
I.
BY ORDERING HEREIN PETITIONER TO REFRAIN FROM COMMITTING THE ACTS COMPLAINED

OF, I.E., TO DESIST FROM REFUSING PRIVATE RESPONDENT ACCESS TO THE OFFICIAL
EXTRADITION REQUEST AND DOCUMENTS AND FROM DENYING PRIVATE RESPONDENT AN
OPPORTUNITY TO FILE A COMMENT ON, OR OPPOSITION TO, THE REQUEST, THE MAIN PRAYER FOR
A WRIT OF MANDAMUS IN THE PETITION FOR MANDAMUS, CERTIORARI AND PROHIBITION WAS, IN
EFFECT, GRANTED SO AS TO CONSTITUTE AN ADJUDICATION ON THE MERITS OF
THE MANDAMUS ISSUES;
II.
PETITIONER WAS UNQUALIFIEDLY PREVENTED FROM PERFORMING LEGAL DUTIES UNDER THE
EXTRADITION TREATY AND THE PHILIPPINE EXTRADITION LAW;
III.
THE PETITION FOR (MANDAMUS), CERTIORARI AND PROHIBITION IS, ON ITS FACE, FORMALLY AND
SUBSTANTIALLY DEFICIENT; AND
IV.
PRIVATE RESPONDENT HAS NO RIGHT IN ESSE THAT NEEDS PROTECTION AND ENFORCEMENT,
AND WILL NOT SUFFER ANY IRREPARABLE INJURY.
(pp. 19-20, Rollo.)
On August 17, 1999, the Court required private respondent to file his comment. Also issued, as prayed for, was a
temporary restraining order (TRO) providing:
NOW, THEREFORE, effective immediately and continuing until further orders from this Court, You, Respondent
Judge Ralph C. Lantion, your agents, representatives or any person or persons acting in your place or stead are
hereby ORDERED to CEASE and DESIST from enforcing the assailed order dated August 9, 1999 issued by
public respondent in Civil Case No. 99-94684.
GIVEN by the Honorable HILARIO G. DAVIDE, JR., Chief Justice, Supreme Court of the Philippines, this 17th
day of August 1999.
(pp. 120-121, Rollo.)
Page 88 of 134
The case was heard on oral argument on August 31, 1999, after which the parties, as directed, filed their respective
memoranda.
From the pleadings of the opposing parties, both procedural and substantive issues are patent. However, a review of
these issues as well as the extensive arguments of both parties, compel us to delineate the focal point raised by the
pleadings: During the evaluation stage of the extradition proceedings, is private respondent entitled to the two basic
due process rights of notice and hearing? An affirmative answer would necessarily render the proceedings at the trial
court, moot and academic (the issues of which are substantially the same as those before us now), while a negative
resolution would call for the immediate lifting of the TRO issued by this Court dated August 24, 1999, thus allowing
petitioner to fast-track the process leading to the filing of the extradition petition with the proper regional trial court.
Corollarily, in the event that private respondent is adjudged entitled to basic due process rights at the evaluation stage
of the extradition proceedings, would this entitlement constitute a breach of the legal commitments and obligations of
the Philippine Government under the RP-US Extradition Treaty? And assuming that the result would indeed be a
breach, is there any conflict between private respondent's basic due process rights and the provisions of the RP-US
Extradition Treaty?
The issues having transcendental importance, the Court has elected to go directly into the substantive merits of the
case, brushing aside peripheral procedural matters which concern the proceedings in Civil Case No. 99-94684,
particularly the propriety of the filing of the petition therein, and of the issuance of the TRO of August 17, 1999 by the
trial court.
To be sure, the issues call for a review of the extradition procedure. The RP-US Extradition Treaty which was executed
only on November 13, 1994, ushered into force the implementing provisions of Presidential Decree No. 1069, also
called as the Philippine Extradition Law. Section 2(a) thereof defines extradition as "the removal of an accused from the
Philippines with the object of placing him at the disposal of foreign authorities to enable the requesting state or
government to hold him in connection with any criminal investigation directed against him or the execution of a penalty
imposed on him under the penal or criminal law of the requesting state or government." The portions of the Decree
relevant to the instant case which involves a charged and not convicted individual, are abstracted as follows:
The Extradition Request
The request is made by the Foreign Diplomat of the Requesting State, addressed to the Secretary of Foreign Affairs,
and shall be accompanied by:
1. The original or an authentic copy of the criminal charge and the warrant of arrest issued by the authority of
the Requesting State having jurisdiction over the matter, or some other instruments having equivalent legal
force;
2. A recital of the acts for which extradition is requested, with the fullest particulars as to the name and identity
of the accused, his whereabouts in the Philippines, if known, the acts or omissions complained of, and the time
and place of the commission of these acts;
3. The text of the applicable law or a statement of the contents of said law, and the designation or description of
the offense by the law, sufficient for evaluation of the request; and
4. Such other documents or information in support of the request.
(Sec. 4. Presidential Decree No. 1069.)
Sec. 5 of the Presidential Decree, which sets forth the duty of the Secretary of Foreign Affairs, pertinently provides
. . . (1) Unless it appears to the Secretary of Foreign Affairs that the request fails to meet the requirements of
this law and the relevant treaty or convention, he shall forward the request together with the related documents
to the Secretary of Justice, who shall immediately designate and authorize an attorney in his office to take
charge of the case.
Page 89 of 134
The above provision shows only too clearly that the executive authority given the task of evaluating the sufficiency of
the request and the supporting documents is the Secretary of Foreign Affairs. What then is the coverage of this task?
In accordance with Paragraphs 2 and 3, Article 7 of the RP-US Extradition Treaty, the executive authority must
ascertain whether or not the request is supported by:
1. Documents, statements, or other types of information which describe the identity and probable location of the
person sought;
2. A statement of the facts of the offense and the procedural history of the case;
3. A statement of the provisions of the law describing the essential elements of the offense for which extradition
is requested;
4. A statement of the provisions of law describing the punishment for the offense;
5. A statement of the provisions of the law describing any time limit on the prosecution or the execution of
punishment for the offense;
6. Documents, statements, or other types of information specified in paragraph 3 or paragraph 4 of said Article,
as applicable.
(Paragraph 2, Article 7, Presidential Decree No. 1069.)
7. Such evidence as, according to the law of the Requested State, would provide probable cause for his arrest
and committal for trial if the offense had been committed there;
8. A copy of the warrant or order of arrest issued by a judge or other competent authority; and
9. A copy of the charging document.
(Paragraph 3, ibid.)
The executive authority (Secretary of Foreign Affairs) must also see to it that the accompanying documents received in
support of the request had been certified by the principal diplomatic or consular officer of the Requested State resident
in the Requesting State (Embassy Note No. 052 from U. S. Embassy; Embassy Note No. 951309 from the Department
of Foreign Affairs).
In this light, Paragraph 3, Article 3 of the Treaty provides that "[e]xtradition shall not be granted if the executive
authority of the Requested State determines that the request is politically motivated, or that the offense is a military
offense which is not punishable under non-military penal legislation."
The Extradition Petition
Upon a finding made by the Secretary of Foreign Affairs that the extradition request and its supporting documents are
sufficient and complete in form and substance, he shall deliver the same to the Secretary of Justice, who shall
immediately designate and authorize an attorney in his office to take charge of the case (Paragraph [1], Section 5, P.D.
No. 1069). The lawyer designated shall then file a written petition with the proper regional trial court of the province or
city, with a prayer that the court take the extradition request under consideration (Paragraph [2], ibid.).
The presiding judge of the regional trial court, upon receipt of the petition for extradition, shall, as soon as practicable,
issue an order summoning the prospective extraditee to appear and to answer the petition on the day and hour fixed in
the order. The judge may issue a warrant of arrest if it appears that the immediate arrest and temporary detention of
the accused will best serve the ends of justice (Paragraph [1], Section 6, ibid.), particularly to prevent the flight of the
prospective extraditee.
Page 90 of 134
The Extradition Hearing
The Extradition Law does not specifically indicate whether the extradition proceeding is criminal, civil, or a special
proceeding. Nevertheless, Paragraph [1], Section 9 thereof provides that in the hearing of the extradition petition, the
provisions of the Rules of Court, insofar as practicable and not inconsistent with the summary nature of the
proceedings, shall apply. During the hearing, Section 8 of the Decree provides that the attorney having charge of the
case may, upon application by the Requesting State, represent the latter throughout the proceedings.
Upon conclusion of the hearing, the court shall render a decision granting the extradition and giving the reasons
therefor upon a showing of the existence of a prima facie case, or dismiss the petition (Section 10, ibid.). Said decision
is appealable to the Court of Appeals, whose decision shall be final and immediately executory (Section 12, ibid.). The
provisions of the Rules of Court governing appeal in criminal cases in the Court of Appeals shall apply in the
aforementioned appeal, except for the required 15-day period to file brief (Section 13, ibid.).
The trial court determines whether or not the offense mentioned in the petition is extraditable based on the application
of the dual criminality rule and other conditions mentioned in Article 2 of the RP-US Extradition Treaty. The trial court
also determines whether or not the offense for which extradition is requested is a political one (Paragraph [1], Article 3,
RP-US Extradition Treaty).1âwphi1.nêt
With the foregoing abstract of the extradition proceedings as backdrop, the following query presents itself: What is the
nature of the role of the Department of Justice at the evaluation stage of the extradition proceedings?
A strict observance of the Extradition Law indicates that the only duty of the Secretary of Justice is to file the extradition
petition after the request and all the supporting papers are forwarded to him by the Secretary of Foreign Affairs. It is the
latter official who is authorized to evaluate the extradition papers, to assure their sufficiency, and under Paragraph [3],
Article 3 of the Treaty, to determine whether or not the request is politically motivated, or that the offense is a military
offense which is not punishable under non-military penal legislation. Ipso facto, as expressly provided in Paragraph [1],
Section 5 of the Extradition Law, the Secretary of Justice has the ministerial duty of filing the extradition papers.
However, looking at the factual milieu of the case before us, it would appear that there was failure to abide by the
provisions of Presidential Decree No. 1069. For while it is true that the extradition request was delivered to the
Department of Foreign Affairs on June 17, 1999, the following day or less than 24 hours later, the Department of
Justice received the request, apparently without the Department of Foreign Affairs discharging its duty of thoroughly
evaluating the same and its accompanying documents. The statement of an assistant secretary at the Department of
Foreign Affairs that his Department, in this regard, is merely acting as a post office, for which reason he simply
forwarded the request to the Department of Justice, indicates the magnitude of the error of the Department of Foreign
Affairs in taking lightly its responsibilities. Thereafter, the Department of Justice took it upon itself to determine the
completeness of the documents and to evaluate the same to find out whether they comply with the requirements laid
down in the Extradition Law and the RP-US Extradition Treaty. Petitioner ratiocinates in this connection that although
the Department of Justice had no obligation to evaluate the extradition documents, the Department also had to go over
them so as to be able to prepare an extradition petition (tsn, August 31, 1999, pp. 24-25). Notably, it was also at this
stage where private respondent insisted on the following; (1) the right to be furnished the request and the supporting
papers; (2) the right to be heard which consists in having a reasonable period of time to oppose the request, and to
present evidence in support of the opposition; and (3) that the evaluation proceedings be held in abeyance pending the
filing of private respondent's opposition to the request.
The two Departments seem to have misread the scope of their duties and authority, one abdicating its powers and the
other enlarging its commission. The Department of Foreign Affairs, moreover, has, through the Solicitor General, filed a
manifestation that it is adopting the instant petition as its own, indirectly conveying the message that if it were to
evaluate the extradition request, it would not allow private respondent to participate in the process of evaluation.
Plainly then, the record cannot support the presumption of regularity that the Department of Foreign Affairs thoroughly
reviewed the extradition request and supporting documents and that it arrived at a well-founded judgment that the
request and its annexed documents satisfy the requirements of law. The Secretary of Justice, eminent as he is in the
field of law, could not privately review the papers all by himself. He had to officially constitute a panel of attorneys. How
then could the DFA Secretary or his undersecretary, in less than one day, make the more authoritative determination?
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The evaluation process, just like the extradition proceedings proper, belongs to a class by itself. It is sui generis. It is
not a criminal investigation, but it is also erroneous to say that it is purely an exercise of ministerial functions. At such
stage, the executive authority has the power: (a) to make a technical assessment of the completeness and sufficiency
of the extradition papers; (b) to outrightly deny the request if on its face and on the face of the supporting documents
the crimes indicated are not extraditable; and (c) to make a determination whether or not the request is politically
motivated, or that the offense is a military one which is not punishable under non-military penal legislation (tsn, August
31, 1999, pp. 28-29; Article 2 & and Paragraph [3], Article 3, RP-US Extradition Treaty). Hence, said process may be
characterized as an investigative or inquisitorial process in contrast to a proceeding conducted in the exercise of an
administrative body's quasi-judicial power.
In administrative law, a quasi-judicial proceeding involves: (a) taking and evaluation of evidence; (b) determining facts
based upon the evidence presented; and (c) rendering an order or decision supported by the facts proved (De Leon,
Administrative Law: Text and Cases, 1993 ed., p. 198, citing Morgan vs. United States, 304 U.S. 1). Inquisitorial power,
which is also known as examining or investigatory power, is one or the determinative powers of an administrative body
which better enables it to exercise its quasi-judicial authority (Cruz, Phil. Administrative Law, 1996 ed., p. 26). This
power allows the administrative body to inspect the records and premises, and investigate the activities, of persons or
entities coming under its jurisdiction (Ibid., p. 27), or to require disclosure of information by means or accounts, records,
reports, testimony of witnesses, production of documents, or otherwise (De Leon, op. cit., p. 64).
The power of investigation consists in gathering, organizing, and analyzing evidence, which is a useful aid or tool in an
administrative agency's performance of its rule-making or quasi-judicial functions. Notably, investigation is
indispensable to prosecution.
In Ruperto v. Torres (100 Phil. 1098 [1957], unreported), the Court had occasion to rule on the functions of an
investigatory body with the sole power of investigation. It does not exercise judicial functions and its power is limited to
investigating the facts and making findings in respect thereto. The Court laid down the test of determining whether an
administrative body is exercising judicial functions or merely investigatory functions: Adjudication signifies the exercise
of power and authority to adjudicate upon the rights and obligations of the parties before it. Hence, if the only purpose
for investigation is to evaluate evidence submitted before it based on the facts and circumstances presented to it, and if
the agency is not authorized to make a final pronouncement affecting the parties, then there is an absence of judicial
discretion and judgment.
The above description in Ruperto applies to an administrative body authorized to evaluate extradition documents. The
body has no power to adjudicate in regard to the rights and obligations of both the Requesting State and the
prospective extraditee. Its only power is to determine whether the papers comply with the requirements of the law and
the treaty and, therefore, sufficient to be the basis of an extradition petition. Such finding is thus merely initial and not
final. The body has no power to determine whether or not the extradition should be effected. That is the role of the
court. The body's power is limited to an initial finding of whether or not the extradition petition can be filed in court.
It is to be noted, however, that in contrast to ordinary investigations, the evaluation procedure is characterized by
certain peculiarities. Primarily, it sets into motion the wheels of the extradition process. Ultimately, it may result in the
deprivation of liberty of the prospective extraditee. This deprivation can be effected at two stages: First, the provisional
arrest of the prospective extraditee pending the submission of the request. This is so because the Treaty provides that
in case of urgency, a contracting party may request the provisional arrest of the person sought pending presentation of
the request (Paragraph [1], Article 9, RP-US Extradition Treaty), but he shall be automatically discharged after 60 days
if no request is submitted (Paragraph 4). Presidential Decree No. 1069 provides for a shorter period of 20 days after
which the arrested person could be discharged (Section 20[d]). Logically, although the Extradition Law is silent on this
respect, the provisions only mean that once a request is forwarded to the Requested State, the prospective extraditee
may be continuously detained, or if not, subsequently rearrested (Paragraph [5], Article 9, RP-US Extradition Treaty),
for he will only be discharged if no request is submitted. Practically, the purpose of this detention is to prevent his
possible flight from the Requested State. Second, the temporary arrest of the prospective extraditee during the
pendency of the extradition petition in court (Section 6, Presidential Decree No. 1069).
Clearly, there is an impending threat to a prospective extraditee's liberty as early as during the evaluation stage. It is
not only an imagined threat to his liberty, but a very imminent one.
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Because of these possible consequences, we conclude that the evaluation process is akin to an administrative agency
conducting an investigative proceeding, the consequences of which are essentially criminal since such technical
assessment sets off or commences the procedure for, and ultimately, the deprivation of liberty of a prospective
extraditee. As described by petitioner himself, this is a "tool" for criminal law enforcement (p. 78, Rollo). In essence,
therefore, the evaluation process partakes of the nature of a criminal investigation. In a number of cases, we had
occasion to make available to a respondent in an administrative case or investigation certain constitutional rights that
are ordinarily available only in criminal prosecutions. Further, as pointed out by Mr. Justice Mendoza during the oral
arguments, there are rights formerly available only at the trial stage that had been advanced to an earlier stage in the
proceedings, such as the right to counsel and the right against self-incrimination (tsn, August 31, 1999, p. 135;
Escobedo vs. Illinois, 378 U.S. 478; Gideon vs. Wainwright, 372 U.S. 335; Miranda vs. Arizona, 384 U.S. 436).
In Pascual v. Board of Medical Examiners (28 SCRA 344 [1969]), we held that the right against self-incrimination under
Section 17, Article III of the 1987 Constitution which is ordinarily available only in criminal prosecutions, extends to
administrative proceedings which possess a criminal or penal aspect, such as an administrative investigation of a
licensed physician who is charged with immorality, which could result in his loss of the privilege to practice medicine if
found guilty. The Court, citing the earlier case of Cabal vs. Kapunan (6 SCRA 1059 [1962]), pointed out that the
revocation of one's license as a medical practitioner, is an even greater deprivation than forfeiture of property.
Cabal vs. Kapunan (supra) involved an administrative charge of unexplained wealth against a respondent which was
filed under Republic Act No. 1379, or the Anti-Graft Law. Again, we therein ruled that since the investigation may result
in forfeiture of property, the administrative proceedings are deemed criminal or penal, and such forfeiture partakes the
nature of a penalty. There is also the earlier case of Almeda, Sr. vs. Perez (5 SCRA 970 [1962]), where the Court,
citing American jurisprudence, laid down the test to determine whether a proceeding is civil or criminal: If the
proceeding is under a statute such that if an indictment is presented the forfeiture can be included in the criminal case,
such proceeding is criminal in nature, although it may be civil in form; and where it must be gathered from the statute
that the action is meant to be criminal in its nature, it cannot be considered as civil. If, however, the proceeding does
not involve the conviction of the wrongdoer for the offense charged, the proceeding is civil in nature.
The cases mentioned above refer to an impending threat of deprivation of one's property or property right. No less is
this true, but even more so in the case before us, involving as it does the possible deprivation of liberty, which, based
on the hierarchy of constitutionally protected rights, is placed second only to life itself and enjoys precedence over
property, for while forfeited property can be returned or replaced, the time spent in incarceration is irretrievable and
beyond recompense.
By comparison, a favorable action in an extradition request exposes a person to eventual extradition to a foreign
country, thus saliently exhibiting the criminal or penal aspect of the process. In this sense, the evaluation procedure is
akin to a preliminary investigation since both procedures may have the same result — the arrest and imprisonment of
the respondent or the person charged. Similar to the evaluation stage of extradition proceedings, a preliminary
investigation, which may result in the filing of an information against the respondent, can possibly lead to his arrest, and
to the deprivation of his liberty.
Petitioner's reliance on Wright vs. Court of Appeals (235 SCRA 241 [1992]) (p. 8, petitioner's Memorandum) that the
extradition treaty is neither a piece of criminal legislation nor a criminal procedural statute is not well-taken. Wright is
not authority for petitioner's conclusion that his preliminary processing is not akin to a preliminary investigation. The
characterization of a treaty in Wright was in reference to the applicability of the prohibition against an ex post factolaw.
It had nothing to do with the denial of the right to notice, information, and hearing.
As early as 1884, the United States Supreme Court ruled that "any legal proceeding enforced by public authority,
whether sanctioned by age or custom, or newly devised in the discretion of the legislative power, in furtherance of the
general public good, which regards and preserved these principles of liberty and justice, must be held to be due
process of law" (Hurtado vs. California, 110 U.S. 516). Compliance with due process requirements cannot be deemed
non-compliance with treaty commitments.
The United States and the Philippines share a mutual concern about the suppression and punishment of crime in their
respective jurisdictions. At the same time, both States accord common due process protection to their respective
citizens.
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The due process clauses in the American and Philippine Constitutions are not only worded in exactly identical language
and terminology, but more importantly, they are alike in what their respective Supreme Courts have expounded as the
spirit with which the provisions are informed and impressed, the elasticity in their interpretation, their dynamic and
resilient character which make them capable of meeting every modern problem, and their having been designed from
earliest time to the present to meet the exigencies of an undefined and expanding future. The requirements of due
process are interpreted in both the United States and the Philippines as not denying to the law the capacity for progress
and improvement. Toward this effect and in order to avoid the confines of a legal straitjacket, the courts instead prefer
to have the meaning of the due process clause "gradually ascertained by the process of inclusion and exclusion in the
course of the decisions of cases as they arise" (Twining vs. New Jersey, 211 U.S. 78). Capsulized, it refers to "the
embodiment of the sporting idea of fair play" (Ermita-Malate Hotel and Motel Owner's Association vs. City Mayor of
Manila, 20 SCRA 849 [1967]). It relates to certain immutable principles of justice which inhere in the very idea of free
government (Holden vs. Hardy, 169 U.S. 366).
Due process is comprised of two components — substantive due process which requires the intrinsic validity of the law
in interfering with the rights of the person to his life, liberty, or property, and procedural due process which consists of
the two basic rights of notice and hearing, as well as the guarantee of being heard by an impartial and competent
tribunal (Cruz, Constitutional Law, 1993 Ed., pp. 102-106).
True to the mandate of the due process clause, the basic rights of notice and hearing pervade not only in criminal and
civil proceedings, but in administrative proceedings as well. Non-observance of these rights will invalidate the
proceedings. Individuals are entitled to be notified of any pending case affecting their interests, and upon notice, they
may claim the right to appear therein and present their side and to refute the position of the opposing parties (Cruz,
Phil. Administrative Law, 1996 ed., p. 64).
In a preliminary investigation which is an administrative investigatory proceeding, Section 3, Rule 112 of the Rules of
Court guarantees the respondent's basic due process rights, granting him the right to be furnished a copy of the
complaint, the affidavits, and other supporting documents, and the right to submit counter-affidavits and other
supporting documents within ten days from receipt thereof. Moreover, the respondent shall have the right to examine all
other evidence submitted by the complainant.
These twin rights may, however, be considered dispensable in certain instances, such as:
1. In proceeding where there is an urgent need for immediate action, like the summary abatement of a
nuisance per se (Article 704, Civil Code), the preventive suspension of a public servant facing administrative
charges (Section 63, Local Government Code, B.P. Blg. 337), the padlocking of filthy restaurants or theaters
showing obscene movies or like establishments which are immediate threats to public health and decency, and
the cancellation of a passport of a person sought for criminal prosecution;
2. Where there is tentativeness of administrative action, that is, where the respondent is not precluded from
enjoying the right to notice and hearing at a later time without prejudice to the person affected, such as the
summary distraint and levy of the property of a delinquent taxpayer, and the replacement of a temporary
appointee; and
3. Where the twin rights have previously been offered but the right to exercise them had not been claimed.
Applying the above principles to the case at bar, the query may be asked: Does the evaluation stage of the extradition
proceedings fall under any of the described situations mentioned above?
Let us take a brief look at the nature of American extradition proceedings which are quite noteworthy considering that
the subject treaty involves the U.S. Government.
American jurisprudence distinguishes between interstate rendition or extradition which is based on the Extradition
Clause in the U.S. Constitution (Art. IV, §2 cl 2), and international extradition proceedings. In interstate rendition or
extradition, the governor of the asylum state has the duty to deliver the fugitive to the demanding state. The Extradition
Clause and the implementing statute are given a liberal construction to carry out their manifest purpose, which is to
effect the return as swiftly as possible of persons for trial to the state in which they have been charged with crime
(31A Am Jur 2d 754-755). In order to achieve extradition of an alleged fugitive, the requisition papers or the demand
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must be in proper form, and all the elements or jurisdictional facts essential to the extradition must appear on the face
of the papers, such as the allegation that the person demanded was in the demanding state at the time the offense
charged was committed, and that the person demanded is charged with the commission of the crime or that
prosecution has been begun in the demanding state before some court or magistrate (35 C.J.S. 406-407). The
extradition documents are then filed with the governor of the asylum state, and must contain such papers and
documents prescribed by statute, which essentially include a copy of the instrument charging the person demanded
with a crime, such as an indictment or an affidavit made before a magistrate. Statutory requirements with respect to
said charging instrument or papers are mandatory since said papers are necessary in order to confer jurisdiction on the
government of the asylum state to effect extradition (35 C.J.S. 408-410). A statutory provision requiring duplicate
copies of the indictment, information, affidavit, or judgment of conviction or sentence and other instruments
accompanying the demand or requisitions be furnished and delivered to the fugitive or his attorney is
directory. However, the right being such a basic one has been held to be a right mandatory on demand (Ibid., p. 410,
citing Ex parte Moore, 256 S.W. 2d 103, 158 Tex. Cr. 407 and Ex parte Tucker, Cr., 324, S.W.2d 853).
In international proceedings, extradition treaties generally provide for the presentation to the executive authority of the
Requested State of a requisition or demand for the return of the alleged offender, and the designation of the particular
officer having authority to act in behalf of the demanding nation (31A Am Jur 2d 815).
In petitioner's memorandum filed on September 15, 1999, he attached thereto a letter dated September 13, 1999 from
the Criminal Division of the U.S. Department of Justice, summarizing the U.S. extradition procedures and principles,
which are basically governed by a combination of treaties (with special reference to the RP-US Extradition Treaty),
federal statutes, and judicial decisions, to wit:
1. All requests for extradition are transmitted through the diplomatic channel. In urgent cases, requests for the
provincial arrest of an individual may be made directly by the Philippine Department of Justice to the U.S.
Department of Justice, and vice-versa. In the event of a provisional arrest, a formal request for extradition is
transmitted subsequently through the diplomatic channel.
2. The Department of State forwards the incoming Philippine extradition request to the Department of Justice.
Before doing so, the Department of State prepares a declaration confirming that a formal request has been
made, that the treaty is in full force and effect, that under Article 17 thereof the parties provide reciprocal legal
representation in extradition proceedings, that the offenses are covered as extraditable offenses under Article 2
thereof, and that the documents have been authenticated in accordance with the federal statute that ensures
admissibility at any subsequent extradition hearing.
3. A judge or magistrate judge is authorized to issue a warrant for the arrest of the prospective extraditee (18
U.S.C. §3184). Said judge or magistrate is authorized to hold a hearing to consider the evidence offered in
support of the extradition request (Ibid.)
4. At the hearing, the court must determine whether the person arrested is extraditable to the foreign country.
The court must also determine that (a) it has jurisdiction over the defendant and jurisdiction to conduct the
hearing; (b) the defendant is being sought for offenses for which the applicable treaty permits extradition; and
(c) there is probable cause to believe that the defendant is the person sought and that he committed the
offenses charged (Ibid.)
5. The judge or magistrate judge is vested with jurisdiction to certify extraditability after having received a
"complaint made under oath, charging any person found within his jurisdiction" with having committed any of the
crimes provided for by the governing treaty in the country requesting extradition (Ibid.) [In this regard, it is noted
that a long line of American decisions pronounce that international extradition proceedings partake of the
character of a preliminary examination before a committing magistrate, rather than a trial of the guilt or
innocence of the alleged fugitive (31A Am Jur 2d 826).]
6. If the court decides that the elements necessary for extradition are present, it incorporates its determinations
in factual findings and conclusions of law and certifies the person's extraditability. The court then forwards this
certification of extraditability to the Department of State for disposition by the Secretary of State. The ultimate
decision whether to surrender an individual rests with the Secretary of State (18 U.S.C. §3186).
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7. The subject of an extradition request may not litigate questions concerning the motives of the requesting
government in seeking his extradition. However, a person facing extradition may present whatever information
he deems relevant to the Secretary of State, who makes the final determination whether to surrender an
individual to the foreign government concerned.
From the foregoing, it may be observed that in the United States, extradition begins and ends with one entity — the
Department of State — which has the power to evaluate the request and the extradition documents in the beginning,
and, in the person of the Secretary of State, the power to act or not to act on the court's determination of extraditability.
In the Philippine setting, it is the Department of Foreign Affairs which should make the initial evaluation of the request,
and having satisfied itself on the points earlier mentioned (see pp. 10-12), then forwards the request to the Department
of Justice for the preparation and filing of the petition for extradition. Sadly, however, the Department of Foreign Affairs,
in the instant case, perfunctorily turned over the request to the Department of Justice which has taken over the task of
evaluating the request as well as thereafter, if so warranted, preparing, filing, and prosecuting the petition for
extradition.
Private respondent asks what prejudice will be caused to the U.S. Government should the person sought to be
extradited be given due process rights by the Philippines in the evaluation stage. He emphasizes that petitioner's
primary concern is the possible delay in the evaluation process.
We agree with private respondent's citation of an American Supreme Court ruling:
The establishment of prompt efficacious procedures to achieve legitimate state ends is a proper state interest
worthy of cognizance in constitutional adjudication. But the Constitution recognizes higher values than speed
and efficiency. Indeed, one might fairly say of the Bill of Rights in general, and the Due Process Clause, in
particular, that they were designed to protect the fragile values of a vulnerable citizenry from the overbearing
concern for efficiency and efficacy that may characterize praiseworthy government officials no less, and
perhaps more, than mediocre ones.
(Stanley vs. Illinois, 404 U.S. 645, 656)
The United States, no doubt, shares the same interest as the Philippine Government that no right — that of liberty —
secured not only by the Bills of Rights of the Philippines Constitution but of the United States as well, is sacrificed at the
altar of expediency.
(pp. 40-41, Private Respondent's Memorandum.)
In the Philippine context, this Court's ruling is invoked:
One of the basic principles of the democratic system is that where the rights of the individual are concerned, the
end does not justify the means. It is not enough that there be a valid objective; it is also necessary that the
means employed to pursue it be in keeping with the Constitution. Mere expediency will not excuse constitutional
shortcuts. There is no question that not even the strongest moral conviction or the most urgent public need,
subject only to a few notable exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration
to say that a person invoking a right guaranteed under Article III of the Constitution is a majority of one even as
against the rest of the nation who would deny him that right (Association of Small Landowners in the
Philippines, Inc. vs. Secretary of Agrarian Reform, 175 SCRA 343, 375-376 [1989]).
There can be no dispute over petitioner's argument that extradition is a tool of criminal law enforcement. To be
effective, requests for extradition or the surrender of accused or convicted persons must be processed expeditiously.
Nevertheless, accelerated or fast-tracked proceedings and adherence to fair procedures are, however, not always
incompatible. They do not always clash in discord. Summary does not mean precipitous haste. It does not carry a
disregard of the basic principles inherent in "ordered liberty."
Is there really an urgent need for immediate action at the evaluation stage? At that point, there is no extraditee yet in
the strict sense of the word. Extradition may or may not occur. In interstate extradition, the governor of the asylum state
may not, in the absence of mandatory statute, be compelled to act favorably (37 C.J.S. 387) since after a close
evaluation of the extradition papers, he may hold that federal and statutory requirements, which are significantly
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jurisdictional, have not been met (31 Am Jur 2d 819). Similarly, under an extradition treaty, the executive authority of
the requested state has the power to deny the behest from the requesting state. Accordingly, if after a careful
examination of the extradition documents the Secretary of Foreign Affairs finds that the request fails to meet the
requirements of the law and the treaty, he shall not forward the request to the Department of Justice for the filing of the
extradition petition since non-compliance with the aforesaid requirements will not vest our government with jurisdiction
to effect the extradition.
In this light, it should be observed that the Department of Justice exerted notable efforts in assuring compliance with
the requirements of the law and the treaty since it even informed the U.S. Government of certain problems in the
extradition papers (such as those that are in Spanish and without the official English translation, and those that are not
properly authenticated). In fact, petitioner even admits that consultation meetings are still supposed to take place
between the lawyers in his Department and those from the U.S. Justice Department. With the meticulous nature of the
evaluation, which cannot just be completed in an abbreviated period of time due to its intricacies, how then can we say
that it is a proceeding that urgently necessitates immediate and prompt action where notice and hearing can be
dispensed with?
Worthy of inquiry is the issue of whether or not there is tentativeness of administrative action. Is private respondent
precluded from enjoying the right to notice and hearing at a later time without prejudice to him? Here lies the peculiarity
and deviant characteristic of the evaluation procedure. On one hand there is yet no extraditee, but ironically on the
other, it results in an administrative if adverse to the person involved, may cause his immediate incarceration. The grant
of the request shall lead to the filing of the extradition petition in court. The "accused" (as Section 2[c] of Presidential
Decree No. 1069 calls him), faces the threat of arrest, not only after the extradition petition is filed in court, but even
during the evaluation proceeding itself by virtue of the provisional arrest allowed under the treaty and the implementing
law. The prejudice to the "accused" is thus blatant and manifest.
Plainly, the notice and hearing requirements of administrative due process cannot be dispensed with and shelved
aside.
Apart from the due process clause of the Constitution, private respondent likewise invokes Section 7 of Article III which
reads:
Sec. 7. The right of the people to information on matters of public concern shall be recognized. Access to official
records, and to documents and papers pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law.
The above provision guarantees political rights which are available to citizens of the Philippines, namely: (1) the right to
information on matters of public concern, and (2) the corollary right of access to official records documents. The
general right guaranteed by said provision is the right to information on matters of public concern. In its implementation,
the right of access to official records is likewise conferred. These cognate or related rights are "subject to limitations as
may be provided by law" (Bernas, The 1987 Phil. Constitution A Reviewer-Primer, 1997 ed., p. 104) and rely on the
premise that ultimately it is an informed and critical public opinion which alone can protect the values of democratic
government (Ibid.).
Petitioner argues that the matters covered by private respondent's letter-request dated July 1, 1999 do not fall under
the guarantee of the foregoing provision since the matters contained in the documents requested are not of public
concern. On the other hand, private respondent argues that the distinction between matters vested with public interest
and matters which are of purely private interest only becomes material when a third person, who is not directly affected
by the matters requested, invokes the right to information. However, if the person invoking the right is the one directly
affected thereby, his right to information becomes absolute.
The concept of matters of public concerns escapes exact definition. Strictly speaking, every act of a public officer in the
conduct of the governmental process is a matter of public concern (Bernas, The 1987 Constitution of the Republic of
the Philippines, 1996 ed., p. 336). This concept embraces a broad spectrum of subjects which the public may want to
know, either because these directly affect their lives or simply because such matters arouse the interest of an ordinary
citizen (Legaspi v. Civil Service Commission, 150 SCRA 530 [1987]). Hence, the real party in interest is the people and
any citizen has "standing".
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When the individual himself is involved in official government action because said action has a direct bearing on his life,
and may either cause him some kind of deprivation or injury, he actually invokes the basic right to be notified under
Section 1 of the Bill of Rights and not exactly the right to information on matters of public concern. As to an accused in
a criminal proceeding, he invokes Section 14, particularly the right to be informed of the nature and cause of the
accusation against him.
The right to information is implemented by the right of access to information within the control of the government
(Bernas, The 1987 Constitution of the Republic of the Philippines, 1996 ed., p. 337). Such information may be
contained in official records, and in documents and papers pertaining to official acts, transactions, or decisions.
In the case at bar, the papers requested by private respondent pertain to official government action from the U.S.
Government. No official action from our country has yet been taken. Moreover, the papers have some relation to
matters of foreign relations with the U.S. Government. Consequently, if a third party invokes this constitutional
provision, stating that the extradition papers are matters of public concern since they may result in the extradition of a
Filipino, we are afraid that the balance must be tilted, at such particular time, in favor of the interests necessary for the
proper functioning of the government. During the evaluation procedure, no official governmental action of our own
government has as yet been done; hence the invocation of the right is premature. Later, and in contrast, records of the
extradition hearing would already fall under matters of public concern, because our government by then shall have
already made an official decision to grant the extradition request. The extradition of a fellow Filipino would be
forthcoming.
We now pass upon the final issue pertinent to the subject matter of the instant controversy: Would private respondent's
entitlement to notice and hearing during the evaluation stage of the proceedings constitute a breach of the legal duties
of the Philippine Government under the RP-Extradition Treaty? Assuming the answer is in the affirmative, is there really
a conflict between the treaty and the due process clause in the Constitution?
First and foremost, let us categorically say that this is not the proper time to pass upon the constitutionality of the
provisions of the RP-US Extradition Treaty nor the Extradition Law implementing the same. We limit ourselves only to
the effect of the grant of the basic rights of notice and hearing to private respondent on foreign relations.
The rule of pacta sunt servanda, one of the oldest and most fundamental maxims of international law, requires the
parties to a treaty to keep their agreement therein in good faith. The observance of our country's legal duties under a
treaty is also compelled by Section 2, Article II of the Constitution which provides that "[t]he Philippines renounces war
as an instrument of national policy, adopts the generally accepted principles of international law as part of the law of the
land, and adheres to the policy of peace, equality, justice, freedom, cooperation and amity with nations." Under the
doctrine of incorporation, rules of international law form part of the law of the and land no further legislative action is
needed to make such rules applicable in the domestic sphere (Salonga & Yap, Public International Law, 1992 ed., p.
12).
The doctrine of incorporation is applied whenever municipal tribunals (or local courts) are confronted with situations in
which there appears to be a conflict between a rule of international law and the provisions of the constitution or statute
of the local state. Efforts should first be exerted to harmonize them, so as to give effect to both since it is to be
presumed that municipal law was enacted with proper regard for the generally accepted principles of international law
in observance of the observance of the Incorporation Clause in the above-cited constitutional provision (Cruz,
Philippine Political Law, 1996 ed., p. 55). In a situation, however, where the conflict is irreconcilable and a choice has to
be made between a rule of international law and municipal law, jurisprudence dictates that municipal law should be
upheld by the municipal courts (Ichong vs. Hernandez, 101 Phil. 1155 [1957]; Gonzales vs. Hechanova, 9 SCRA 230
[1963]; In re: Garcia, 2 SCRA 984 [1961]) for the reason that such courts are organs of municipal law and are
accordingly bound by it in all circumstances (Salonga & Yap, op. cit., p. 13). The fact that international law has been
made part of the law of the land does not pertain to or imply the primacy of international law over national or municipal
law in the municipal sphere. The doctrine of incorporation, as applied in most countries, decrees that rules of
international law are given equal standing with, but are not superior to, national legislative enactments. Accordingly, the
principle lex posterior derogat priori takes effect — a treaty may repeal a statute and a statute may repeal a treaty. In
states where the constitution is the highest law of the land, such as the Republic of the Philippines, both statutes and
treaties may be invalidated if they are in conflict with the constitution (Ibid.).
Page 98 of 134
In the case at bar, is there really a conflict between international law and municipal or national law? En contrario, these
two components of the law of the land are not pined against each other. There is no occasion to choose which of the
two should be upheld. Instead, we see a void in the provisions of the RP-US Extradition Treaty, as implemented by
Presidential Decree No. 1069, as regards the basic due process rights of a prospective extraditee at the evaluation
stage of extradition proceedings. From the procedures earlier abstracted, after the filing of the extradition petition and
during the judicial determination of the propriety of extradition, the rights of notice and hearing are clearly granted to the
prospective extraditee. However, prior thereto, the law is silent as to these rights. Reference to the U.S. extradition
procedures also manifests this silence.
Petitioner interprets this silence as unavailability of these rights. Consequently, he describes the evaluation procedure
as an "ex parte technical assessment" of the sufficiency of the extradition request and the supporting documents.
We disagree.
In the absence of a law or principle of law, we must apply the rules of fair play. An application of the basic twin due
process rights of notice and hearing will not go against the treaty or the implementing law. Neither the Treaty nor the
Extradition Law precludes these rights from a prospective extraditee. Similarly, American jurisprudence and procedures
on extradition pose no proscription. In fact, in interstate extradition proceedings as explained above, the prospective
extraditee may even request for copies of the extradition documents from the governor of the asylum state, and if he
does, his right to be supplied the same becomes a demandable right (35 C.J.S. 410).
Petitioner contends that the United States requested the Philippine Government to prevent unauthorized disclosure of
confidential information. Hence, the secrecy surrounding the action of the Department of Justice Panel of Attorneys.
The confidentiality argument is, however, overturned by petitioner's revelation that everything it refuses to make
available at this stage would be obtainable during trial. The Department of Justice states that the U.S. District Court
concerned has authorized the disclosure of certain grand jury information. If the information is truly confidential, the veil
of secrecy cannot be lifted at any stage of the extradition proceedings. Not even during trial.
A libertarian approach is thus called for under the premises.
One will search in vain the RP-US Extradition Treaty, the Extradition Law, as well as American jurisprudence and
procedures on extradition, for any prohibition against the conferment of the two basic due process rights of notice and
hearing during the evaluation stage of the extradition proceedings. We have to consider similar situations in
jurisprudence for an application by analogy.
Earlier, we stated that there are similarities between the evaluation process and a preliminary investigation since both
procedures may result in the arrest of the respondent or the prospective extraditee. In the evaluation process, a
provisional arrest is even allowed by the Treaty and the Extradition Law (Article 9, RP-US Extradition Treaty; Sec. 20,
Presidential Decree No. 1069). Following petitioner's theory, because there is no provision of its availability, does this
imply that for a period of time, the privilege of the writ of habeas corpus is suspended, despite Section 15, Article III of
the Constitution which states that "[t]he privilege of the writ or habeas corpus shall not be suspended except in cases of
invasion or rebellion when the public safety requires it"? Petitioner's theory would also infer that bail is not available
during the arrest of the prospective extraditee when the extradition petition has already been filed in court since
Presidential Decree No. 1069 does not provide therefor, notwithstanding Section 13, Article III of the Constitution which
provides that "[a]ll persons, except those charged with offenses punishable by reclusion perpetua when evidence of
guilt is strong, shall, before conviction, be bailable by sufficient sureties, or be released on recognizance as may be
provided by law. The right to bail shall not be impaired even when the privilege of the writ of habeas corpus is
suspended. . ." Can petitioner validly argue that since these contraventions are by virtue of a treaty and hence affecting
foreign relations, the aforestated guarantees in the Bill of Rights could thus be subservient thereto?
The basic principles of administrative law instruct us that "the essence of due process in administrative proceeding is
an opportunity to explain one's side or an opportunity to seek reconsideration of the actions or ruling complained of
(Mirano vs. NLRC, 270 SCRA 96 [1997]; Padilla vs. NLRC, 273 SCRA 457 [1997]; PLDT vs. NLRC, 276 SCRA 1
[1997]; Helpmate, Inc. vs. NLRC, 276 SCRA 315 [1997]; Aquinas School vs. Magnaye, 278 SCRA 602 [1997]; Jamer
vs. NLRC, 278 SCRA 632 [1997]). In essence, procedural due process refers to the method or manner by which the
law is enforced (Corona vs. United Harbor Pilots Association of the Phils., 283 SCRA 31 [1997]). This Court will not
tolerate the least disregard of constitutional guarantees in the enforcement of a law or treaty. Petitioner's fears that the
Page 99 of 134
Requesting State may have valid objections to the Requested State's non-performance of its commitments under the
Extradition Treaty are insubstantial and should not be given paramount consideration.
How then do we implement the RP-US Extradition Treaty? Do we limit ourselves to the four corners of Presidential
Decree No. 1069?
Of analogous application are the rulings in Government Service Insurance System vs. Court of Appeals (201 SCRA
661 [1991]) and Go vs. National Police Commission (271 SCRA 447 [1997]) where we ruled that in summary
proceedings under Presidential Decree No. 807 (Providing for the Organization of the Civil Service Commission in
Accordance with Provisions of the Constitution, Prescribing its Powers and Functions and for Other Purposes), and
Presidential Decree No. 971 (Providing Legal Assistance for Members of the Integrated National Police who may be
charged for Service-Connected Offenses and Improving the Disciplinary System in the Integrated National Police,
Appropriating Funds Therefor and for other purposes), as amended by Presidential Decree No. 1707, although
summary dismissals may be effected without the necessity of a formal investigation, the minimum requirements of due
process still operate. As held in GSIS vs. Court of Appeals:
. . . [I]t is clear to us that what the opening sentence of Section 40 is saying is that an employee may be
removed or dismissed even without formal investigation, in certain instances. It is equally clear to us that an
employee must be informed of the charges preferred against him, and that the normal way by which the
employee is so informed is by furnishing him with a copy of the charges against him. This is a basic procedural
requirement that a statute cannot dispense with and still remain consistent with the constitutional provision on
due process. The second minimum requirement is that the employee charged with some misfeasance or
malfeasance must have a reasonable opportunity to present his side of the matter, that is to say, his defenses
against the charges levelled against him and to present evidence in support of his defenses. . . .
(at p. 671)
Said summary dismissal proceedings are also non-litigious in nature, yet we upheld the due process rights of the
respondent.
In the case at bar, private respondent does not only face a clear and present danger of loss of property or employment,
but of liberty itself, which may eventually lead to his forcible banishment to a foreign land. The convergence of
petitioner's favorable action on the extradition request and the deprivation of private respondent's liberty is easily
comprehensible.
We have ruled time and again that this Court's equity jurisdiction, which is aptly described as "justice outside legality,"
may be availed of only in the absence of, and never against, statutory law or judicial pronouncements (Smith Bell &
Co., Inc. vs. Court of Appeals, 267 SCRA 530 [1997]; David-Chan vs. Court of Appeals, 268 SCRA 677 [1997]). The
constitutional issue in the case at bar does not even call for "justice outside legality," since private respondent's due
process rights, although not guaranteed by statute or by treaty, are protected by constitutional guarantees. We would
not be true to the organic law of the land if we choose strict construction over guarantees against the deprivation of
liberty. That would not be in keeping with the principles of democracy on which our Constitution is premised.
Verily, as one traverses treacherous waters of conflicting and opposing currents of liberty and government authority, he
must ever hold the oar of freedom in the stronger arm, lest an errant and wayward course be laid.
WHEREFORE, in view of the foregoing premises, the instant petition is hereby DISMISSED for lack of merit. Petitioner
is ordered to furnish private respondent copies of the extradition request and its supporting papers, and to grant him a
reasonable period within which to file his comment with supporting evidence. The incidents in Civil Case No. 99-94684
having been rendered moot and academic by this decision, the same is hereby ordered dismissed.
SO ORDERED.
Page 100 of 134

THIRD DIVISION
[G.R. No. 57475. September 14, 1992.]
REPUBLIC OF THE PHILIPPINES represented by the DIRECTOR OF LANDS, Petitioner, v. RUFO NERI, JUSTO
CHARMEN, AGAPITO GORNOT, PATERNO MADANLO, ADRIAN ARCHIE and GUILLERMINA VDA. DE
MITRE, Respondents.
The Solicitor General for Petitioner.
Victor A. Clapano for respondent’s Neri, Et. Al.
Jose P. Arro and Antonio P. Fortuno for respondent G. Mitre.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; DOCTRINE OF RES JUDICATA; APPLIED TO DECISIONS AND ORDERS OF
ADMINISTRATIVE AGENCIES; RULE THEREON. — The Court held in Ysmael, Jr. & Co., Inc. v. Deputy Executive
Secretary: "It is an established doctrine in this jurisdiction that the decisions and orders of administrative agencies have upon
their finality, the force and binding effect of a final judgment within the purview of the doctrine of res judicata. These decisions
and orders are as conclusive upon the rights of the affected parties as though the same had been rendered by a court of
general jurisdiction. The rule of res judicata thus forbids the reopening of a matter once determined by competent authority
acting within their exclusive jurisdiction."cralaw virtua1aw library
2. ID.; ID.; ID.; CANNOT BE ASSERTED FOR THE FIRST TIME ON APPEAL; CASE AT BAR. — While the Solicitor
General raised the issue of res judicata in the Court of Appeals also with regard to the said administrative decisions, the fact
that he raised it only on appeal remains. This fact militates against the case of the petitioner because if the doctrine of res
judicata is not set up seasonably as a defense or ground of objection, it is deemed waived; it cannot be asserted for the first
time on appeal. Perhaps, this is the reason why the petitioner, through the Solicitor General, does not directly invoke the said
doctrine in the instant petition for review on certiorari. Instead, the Solicitor General euphemistically questions the authority of
the cadastral court to "review" the final and executory decisions of the administrative officials concerned.
4. ID.; ID.; ID.; JURISDICTION OVER THE SUBJECT MATTER AS A REQUISITE THEREOF; NOT PRESENT IN CASE AT
BAR. — Res judicata also may not apply with respect to the decision of the Office of the President finding that the transaction
between Lamorena and Caburian was an equitable mortgage, but for another reason. The decision was solely based on the
appeal of Lamorena but unfortunately, the issue raised therein, i.e., the nature of the contract between Caburian and the
Lamorenas, was a judicial one, over which the Executive Branch has no jurisdiction [Republic v. Alagad, G.R. No. 66807,
January 26, 1989, 169 SCRA 455.] The instant cadastral proceeding, therefore, cannot be barred by the final and executory
decision of the Office of the President in the absence of a requisite in the applicability of the doctrine of res judicata: the
Office of the President had no jurisdiction over the subject matter of the appeal. [The requisites of res judicata are the
following: (a) the presence of a final former judgment; (b) the former judgment was rendered by a court having jurisdiction
over the subject matter and the parties; (c) the former judgment is a judgment on the merits; and (d) there is between the first
and the second actions, identity of parties, of subject matter, and of cause of action (Heirs of the late Santiago Maningo v.
Intermediate Appellate Court, G.R. Nos. 73559-62, March 26, 1990, 183 SCRA 691).
4. ID.; REGIONAL TRIAL COURT; SCOPE OF POWER OVER LAND REGISTRATION CASE. — P.D. No. 1529, the
Property Registration Decree, has eliminated the distinction between the general jurisdiction vested in the regional trial court
and the limited jurisdiction formerly conferred upon it when acting merely as a cadastral court. Thus, the court may resolve
issues other than those strictly pertaining to land registration in cases (1) where the parties mutually agreed or have
acquiesced in submitting controversial issues for determination; (2) where they have been given full opportunity to present
their evidence; and (3) where the court has considered the evidence the evidence already of record and is convinced that the
same is sufficient for rendering a decision upon such controversial issues. Consequently, under the third circumstance, the
court below could have properly determined the nature of the document executed by Caburian and the Lamorenas if only to
avoid multiplicity of suits.
5. ADMINISTRATIVE LAW; PRESIDENT; POWER TO DISPOSE LAND OF PUBLIC DOMAIN; RULE. — To enable it to
obtain legal authority on its continued use of the two-hectare land as a school site, the Municipality of Mati should take the
necessary steps outlined by law. Under Sec. 69 of the Public Land Act, the President of the Philippines may execute
contracts in favor of any province, municipality of branch or subdivision of the government needing any portion of the land of
Page 101 of 134
the public domain open to concession for educational, charitable or other similar purposes in the form of donation, sale,
lease, exchange or any other form. Hence, the municipal government of Mati would do well to take the necessary appropriate
action towards legally retaining the two-hectare area as a school site.
DECISION
ROMERO, J.:
This is a petition for review on certiorari 1 which seeks to annul and set aside the June 30, 1980 decision of the Court of
Appeals 2 affirming the August 19, 1974 decision of then Court of First Instance of Davao 3 adjudicating to private
respondents the portions of the land in controversy for which they had laid claims, and ordering the survey of said portions
and thereafter, the issuance of original certificates of title in their names on the basis of said survey.chanrobles law library :
red
The land in question is located in Mati, Davao and has a total area of 815,320 square meters. It was allegedly bought by
Encarnacion Lamorena between 1920 and 1921 from Bonifacio Baldomera (or Palmera) and Lucas Lamonte. In 1938,
Lamorena filed in the Court of First Instance of Davao "Expediente No. 291, G.L.R.O. No. 53114," a petition for registration of
the said 81-hectare land which had been surveyed under Psu-46022, subdivided and designated as Lots Nos. 1772-A, 1772-
B, 1772-C, 1768, 2816, 1775, 1770-A, 1770-B and 2680, Cad. 286.
On October 20, 1938, Lamorena and one Mariano Lamorena, who appears to be the former’s brother, executed a "deed of
sale with right to repurchase" the same tract of land within one year from November 8, 1938 in consideration of the amount
of P4,112.00 in favor of Baldomera G. Caburian. 4 The parties stipulated in the contract that if the vendors should fail to
exercise the right to repurchase, such right would be forfeited and the contract, without executing another document
therefore, would be considered as an absolute sale and the vendor would abandon and vacate the premises. The parties
also agreed that the vendor would pay the vendee an "annual rental" of P150.00 "payable on or before November, 8,
1939."cralaw virtua1aw library
On February 19, 1940, Lamorena filed in "Expediente No. 291" a petition praying for the dismissal of her application for
registration and for a declaration that the land subject of the petition or application for registration is part of the public domain.
Consequently, on March 8, 1940, the court rendered a decision declaring the area applied for as public land; recognized
Lamorena as the owner and possessor of all the improvements thereon, and recommended that she be given preference by
the Director of Lands in the acquisition of the said land in accordance with law ("see recomiendo al Director de Terrenos que
conceda preferencia a dicha solicitante en la acquisicion de dicho terreno, de acuerdo con las disposiciones de las ley [sic]
vigente sobre el particular"). 5
Sometime in 1946, Caburian, exercising her alleged acquired right of ownership over the land, demanded from Neri and the
others working on the land, the share of the Lamorenas in its produce. Some complied with the demand but the rest who
refused to do so, were ordered by Caburian to vacate the premises. Hence, on August 25, 1947, Justo Charmen, Adriano
Archi (Archie or Arche). Paterno Madanlo, Fernando Mansilagan, Gervacio Valenteros, Agapito Gurnot (Gornot), Federico
Vargas, Heirs of Francisco Magundag and Gabriel Palmera, represented by Leopoldo Lopez, petitioned the President to
intervene in their behalf in the controversy. The Bureau of Lands thereafter investigated the matter. It was found out that the
said alleged tenants desired to acquire the land through homestead applications, Caburian by sales application and the
Lamorenas by free patent applications. The Lamorenas had included two sisters, Carmen and Gloria, as claimant-applicants
just so they could comply with the law limiting each free patent applicant to a maximum of 24 hectares.chanrobles law library
In the decisions all dated October 23, 1951, then Director of Lands Jose P. Dans dismissed the claim of the homestead
applicants on the basis of his finding that they were either tenants of the Lamorenas or mere intruders. 6 On the other hand,
in B.L. Conflict No. 58 (N), the Director of Lands considered the homestead application of Rufo Neri and rejected the free
patent applications of the Lamorenas on the ground that "Baldomera Caburian has been subrogated to the ownership of the
improvements existing on the land described in Psu-46022 and to whatever rights the respondents Lamorenas have
acquired to the land in question." 7 The dispositive portion of the decision of the Director of Lands, also dated October 23,
1951, states:jgc:chanrobles.com.ph
"IN THE LIGHT OF ALL THE FOREGOING, this Office is of the opinion, and so decides, that the claims of Rufo Neri to the
portion which is outside of his Homestead Application No. 183913 (E-99319) should be, as hereby it is dismissed. The Free
Patent Applications (all new) of Encarnacion, Mariano, Carmen and Gloria all surnamed Lamorena, are hereby rejected.
Page 102 of 134

It appearing that Lot No. 1773 of 0.602 hectares is part of the Municipal Road and Lot No. 1770-B of 4.000 hectares is
needed for a school site, those lots shall be excluded from the land in dispute.
There being no sales application of Baldomera G. Caburian in the records of this office, she shall file within sixty (60) days
from the date hereof, another sales application to cover Lots Nos. 1768, 1770-A. 1772-A, 1772-B. 1772-C, 2680, and 2816,
Mati Cadastre No. 286, in accordance with the sketch reproduced at the back hereof, and the application shall be given due
course.
SO ORDERED."cralaw virtua1aw library
The homestead applicants and the Lamorenas appealed to the Secretary of Agriculture and Natural Resources. On July 23,
1952 then Secretary Fernando Lopez dismissed the appeal of the homestead applicants in view of their failure to file
memorandum in support of their appeal. 8 It was on May 3, 1954 that the appeals of Rufo Neri and the Lamorenas were
resolved by then Undersecretary of Agriculture and Natural Resources Jaime Ferrer. 9 The decision emphasized the fact that
since Caburian did not question the decision of the Director of Lands excluding from her sales application the municipal road
and the school, said portion of the decision had become final and executory.
The same decision, quoting the pertinent terms and conditions of the contract between Encarnacion and Mariano Lamorena
and Caburian and noting the facts that the Lamorenas "failed to redeem the land in question as well as the improvements
thereon in accordance with the terms of the contract" and that the land had been declared part of the public domain in the
1940 decision in G.L.R.O. No. 53114, ruled that the conveyance made by the Lamorenas in favor of Caburian "should be
considered as a transfer only of their possessory right and the improvements thereon." The decision also held that the
contract between the Lamorenas and Caburian was one of sale with right to repurchase and not an equitable mortgage.
Accordingly, the appeals were dismissed.chanrobles.com:cralaw:red
The Lamorenas elevated the case to the Office of the President on the sole issue of whether the contract between then and
Caburian was a deed of sale with right to repurchase or an equitable mortgage. In his decision of January 10, 1958, then
Executive Secretary Juan A. Pajo, acting on the strength of the opinion of the Secretary of Justice, deemed the contract as
one of equitable mortgage and therefore reversed the decision appealed from. 10 He directed that "the application of the
appellants should be given due course and free patents granted then if they qualify therefore" but "without prejudice to
whatever action may be instituted in court by the appellee against the appellants with regard to their contract."cralaw
virtua1aw library
The decision of the Office of the President having become final and executory, on June 10, 1959, Director of Lands Zoilo
Castrillo ordered its execution. He specifically directed the District Land Officer of Davao City "to repair to the premises and
enforce the aforementioned decision of the President, by ordering Baldomera G. Caburian, her tenants, relatives and all
those acting in her behalf to vacate the land in question and placing Encarnacion, Mariano, Carmen and Gloria, all surnamed
Lamorena in possession of their respective portions." 11
It turned out, however, that Caburian had filed a notion for the reconsideration of the decision of the Office of the President
but in its "decision" of May 31, 1961, said Office denied it. The records likewise show that earlier, or on August 5, 1959,
Caburian had filed in the Court of First Instance of Manila a petition for certiorari seeking the "review" of the decision of the
Office of the President. 12 She obtained a writ of preliminary injunction enjoining the execution of said decision but upon
Lamorena’s filing a bond, the injunction was dissolved. On May 4, 1961, the court dismissed the petition. Notwithstanding the
finality of said decision, Caburian remained in possession of the land. Hence, on July 31, 1961, Acting Director of Lands
Nicanor G. Jorge issued an order of execution reiterating the earlier order of execution of Director of Lands Castrillo.
Undaunted, Caburian (now represented by her heir and special administratrix Guillermina Garcia Vda. de Mitre) elevated the
case to the Court of Appeals. 13 In the decision of January 12, 1973, 14 said appellate court resolved the issue of whether or
not the Office of the President abused its discretion in requesting the Secretary of Justice for an opinion on the nature of the
contract between Caburian and the Lamorenas when, according to Caburian, said Office "should have based its decision
upon deceit, misrepresentations and bad faith committed by" the Lamorenas "who allegedly misrepresented the true facts of
the case." Finding Mrs. Mitre’s allegation as baseless, the Court of Appeals affirmed the judgment appealed from.
Meanwhile, in 1954, the Director of Lands, in behalf of the Republic of the Philippines, filed in the Municipal Court of Mati a
petition for registration of a tract of land covering 12,485.8245 hectares designated as Mati Cadastre No. 286. Docketed as
Cadastral Case No. N-16, the petition was pursuant to Sec. 1855 of the Revised Administrative Code in relation to Sec. 53 of
the Public Land Act (Commonwealth Act No. 141). The petition alleged that "no voluntary applications for the registration of
the said parcels of land have been filed under the provisions of Chapter VIII of Commonwealth Act No. 141, nor under the
provisions of the Land Registration Law, and that the title thereto is uncertain and open to question." 15 From 1959 to 1960,
the following claimants filed their cadastral answers: Baldomera Caburian (3 answers), Gloria Lamorena (3 answers),
Page 103 of 134
Paterno Madanlo (3 answers), Justo Charmen, Rufo Neri, Adriano Arche, Agapito Gornot, the Municipal Government of Mati
and Encarnacion Lamorena (3 answers).chanrobles law library : red
On March 1, 1963, the Solicitor General, appearing for the Director of Lands filed a manifestation 16 stating that by virtue of
the decision of March 8, 1940 of the Court of First Instance of Davao declaring 81 hectares of the land in question as part of
the public domain, the case had become res judicata; that Civil Case No. 630 for recovery of possession of the same tract of
land which was filed by Caburian against Rufo Neri, Et. Al. in the Municipal Court of Mati had been dismissed on the ground
that the subject matter of the action is public land; that, having filed public land applications and protests against the
applications of others, the claimants were "now estopped from claiming the land as their private properties because by their
acts, they have recognized the land in question as public agricultural land" ; that the "findings of facts of the Land Department
under the principle of separation of powers shall not be disturbed by courts of law where there is no showing that there was
grave abuse in the exercise of discretion" and therefore the administrative finding that Rufo Neri, Et. Al. are tenants should
not be disturbed, and that the Office of the President having resolved the legal issue of the nature of the contract between
the Lamorenas and Caburian, the latter had lost all rights to and claims of private ownership over the land in question. The
Solicitor General prayed for the dismissal of the claims of Baldomera G. Caburian, Rufo Neri, Justo Charmen, Adriano Arche,
Paterno Madanlo, Francisco Magundag or his heirs, Federico Vargas, Gabriel Palmera of his heirs, Pedro Racoma,
Fernando Mansilagan and Agapito Gornot, as well as the claims of Encarnacion Lamorena "insofar as their claims to the
land are private ownership."cralaw virtua1aw library
In their answer to said manifestation, claimants Rufo Neri Justo Charmen, Agapito Gurnot, Paterno Madanlo and Adriano
Arche disputed the Solicitor General’s contention that res judicata was applicable in their case in view of the fact that they
were not parties to the case decided in 1940. Asserting that they were allegedly forced to enter into a contract of tenancy by
Mariano Lamorena, a Philippine Constabulary Lieutenant, they denied that they were ever tenants as some of them had
been occupying the land as early as 1915 and planting it to coconuts and root crops without sharing the harvests with
anyone. They prayed that the court should "maintained jurisdiction in the judicial confirmation of (their) imperfect titled." 17
On May 10, 1963, the court dismissed the claims of Baldomera Caburian, Rufo Neri, Justo Charmen, Adriano Arche, Paterno
Madanlo, Francisco Magundag or his heirs, Federico Vargas, Gabriel Palmera or his heirs, Pedro Racoma, Fernando
Mansilagan and Agapito Gurnot as well as that of Encarnacion Lamorena as prayed for by the Solicitor General in his
manifestation. the court held that if none of the claimants in a cadastral proceeding can prove that he is entitled to his claim,
and the land had been declared public land, the judgment of the Court declaring the land public constitutes res judicata. 18
Claimants Rufo Neri, Justo Charmen, Adriano Arche, Paterno Madanlo and Agapito Gurnot moved for the reconsideration of
said order but upon the opposition of the Lamorenas, the court struck out the motion from the records.
On January 28, 1964, the Solicitor General filed a motion for the issuance of a writ of possession. Said motion was objected
to by Rufo Neri, Et. Al. on the grounds that the March 8, 1940 decision was rendered without any trial on the merits and that
under Sec. 6 of the Public Land Act, only the President, upon the recommendation of the Secretary of Agriculture and
Natural Resources, can classify lands of the public domain and declare them as open for disposition. Asserting that they had
been in open and continuous possession of the land since 1923, Rufo Neri, Et. Al. argued that they were qualified to acquire
public lands suitable for agricultural purposes through homestead, sale, lease or confirmation of an imperfect titled.
Moreover, the same claimants contended that under Evangelista v. Director of Lands, 19 the declaration in a cadastral case
that certain lands are public is not a final decree of confirmation and registration within the meaning of Sec. 38 of the Land
Registration Act and that a writ of possession may only be granted after the finality of a decree of registration adjudicating
title to a successful applicant. 20
Rufo Neri, Et. Al. also filed a motion to set aside the order dismissing their claims. Reiterating that only the President and not
the courts may declare any portion of land as part of the public domain, they asserted that the March 8, 1940 decision was
null and void for lack of jurisdiction. 21
Finding the motion to set aside the order dismissing the claims of Rufo Neri, Et. Al. to be wanting in merit, on February 17,
1964, the court issued the writ of possession prayed for by the Solicitor General. 22 Upon the latter’s motion, the court
modified the order of February 17, 1964 by specifying in the order of April 13, 1964 that the District Land Officer should take
possession of Lot Nos. 713, 1772-A, 1772-B, 1772-C, 1768, 1775, 1770-A, 1770-B, 2816, and 2685 of Cad. 286, Mati,
Davao. 23
Alleging that she had not been notified of the orders of May 10, 1963 and April 13, 1964, Guillermina Garcia Vda. de Mitre,
representing the deceased Baldomera Caburian, 24 filed a motion for the reconsideration said orders. She averred that since
the said orders were merely based on the manifestation and motion of the Solicitor General, the court treated the said
pleading as a motion to dismiss. However, she added that a motion to dismiss is not applicable in cadastral and registration
proceedings which demand that all the parties thereto should be properly notified and heard. She asserted that since she
Page 104 of 134
was not a party in the case which led to the decision of march 8, 1940, she cannot be bound thereby. She contended that
given the chance, she could prove her claim over the land under Republic Act Nos. 1942 and 931 as amended by Republic
Act No. 2061.25cralaw:red
In answer to Mrs. Mitre’s motion for reconsideration, the Solicitor General contended that the records contain proofs that she
had been notified of the proceedings which led to the issuance of the writ of possession; that his manifestation, to which were
attached several public documents, should not be considered as a mere motion to dismiss but as a "continuation of the
hearing of the case, particularly with respect to the issue (of) whether or not the land in question, in a previous proceedings
(sic), had already been declared a public land" ; that Caburian has no right or interest in the land because by filing Sales
Application No. V-6937, she was estopped from claiming that she had been in possession thereof for more the thirty years;
that the decision of March 8, 1940, a land registration proceeding which is a proceeding in rem, is binding upon the whole
world including Caburian, who, as vendee of the land, is estopped from claiming any right other than that which came from
the vendor; that the issuance of the writ of possession was in order since the Government of the Philippines, through the
Director of Lands, is the owner of all lands of the public domain in the absence of proof that the land in question is of private
ownership, and the motion for reconsideration of Mitre should be treated as a petition for relief from judgment under Rule 38.
26
Mrs. Mitre filed a reply to said answer of the Solicitor General reiterating her claim that she had not been given her day in
court in regard to the issuance of the writ of possession. Thereafter, she filed a motion to recall or set aside the orders of
February 17, 1964 and April 13, 1964. Mrs. Mitre alleged that said orders had been brought before the Court of Appeals
under CA-G.R. No. 34100-R on a petition for certiorari and that on August 8, 1964 said appellate court set aside said orders
and directed the lower court to proceed with the hearing of the cadastral case. 27 Inspite of said decision, the Sheriff of
Davao allegedly kept on "molesting" Mrs. Mitre and her overseer by trying to take possession of the premises and taking the
harvests therefrom.
On May 17, 1965, the court issued an order reconsidering its "order of dismissal of February 8, 1965" (sic) and set the case
for hearing. 28
Meanwhile, it appears that Rufo Neri, Justo Charmen, Adriano Arche, Agapito Gurnot and Paterno Madanlo filed with the
Court of Appeals a petition to prohibit Judge Manases Reyes from recognizing the representation of Lamorena, Caburian
and the Municipality of Mati during the trial on the merits of Cadastral Case No. 16. On December 31, 1965, the Court of
Appeals rendered a decision dismissing the petition for prohibition on the strength of two reasons. 29 First, the same court’s
decision in CA-G.R. No. 34100-R "completely wiped out and rendered inexistent the order annex B (issued on May 10, 1964
declaring the lots as public land and dismissing the claims of Rufo Neri, Et Al., Caburian and Lamorena), and in fact directed
the lower court to hear the cadastral case after the requirements therefore had been complied with." Second, the
respondents (meaning, Lamorena, Caburian and the Municipality of Mati) are "real parties in interest in the cadastral case
and their participation therein is necessary for the complete determination or settlement of the case once and for all."cralaw
virtua1aw library
In due course, the court below issued a decree dated August 19, 1974. 30 Placing more probative weight on the evidence
presented by herein private respondents, the court found that the tenancy relationship alleged by both Lamorena and
Caburian was never enforced; that Lamorena possessed no more than eight hectares of the land in question 31 and said
area is not even being claimed by the alleged tenants; that Neri, Et Al., have been in continuous, open, adverse and
notorious possession of the areas they are claiming except in 1947 when Caburian’s encargado tried to collect shares from
the, and that because Lamorena failed to repurchase the land she sold to Caburian, the latter became its owner but only with
respect to what Lamorena could sell to her. The dispositive portion of the decree reads:jgc:chanrobles.com.ph
"IN VIEW OF THE FOREGOING, judgment is hereby rendered:chanrob1es virtual 1aw library
1. Adjudicating to the following actual occupants the portions with the areas subject of their respective claims as established
by the proofs of record, to wit:chanrob1es virtual 1aw library
(a) To Juliana Gornot her occupation of three (3) hectares;
(b) To Rufo Neri, his occupation of twenty-four (24) hectares;
(c) To Paterno Madanlo the area occupied by him consisting of three contiguous lots with an area of nineteen and one-half
hectares (19 1/2);
(d) To Justo Charmen, his occupation with an area of fifteen (15) hectares;
Page 105 of 134

(e) To Adriano Arche his occupation of ten (10) hectares;
(f) To Guillermina Vda. de Mitre the area of eight (8) hectares; and
(g) To the Municipality of Mati, Davao Oriental, the area of two (2) hectares actually utilized as school site and the cadastral
road —
2. Ordering the survey of the different portions above adjudicated and awarded, the expenses of the survey to be borne by
them pro rata; and
3. Ordering the issuance of original certificates of title in their respective favor on the basis of the survey directed in the next
preceding paragraph."cralaw virtua1aw library
From that decision, Encarnacion Lamorena and the Republic of the Philippines represented by the Director of Lands
appealed to the Court of Appeals. On June 30, 1981, said appellate court affirmed the decision of the lower court. Hence, the
Director of Lands interposed the instant petition for review on certiorariquestioning the power and authority of the cadastral
court to: (a) review and pass upon the administrative decisions rendered by the Director of Lands which, as affirmed by the
Secretary of Agriculture and Natural Resources, had long become final and executory; (b) review the decision of the Office of
the President finding the transaction between Lamorena and Caburian to be an equitable mortgage; (c) adjudicate portions of
the land in favor of the respondents inasmuch as they had been found by the Director of Lands to be mere tenants of either
Lamorena or Caburian, and (d) adjudicate portions of the land to the Municipality of mati as prescription over public land
used for public purpose does not rung against the State and public lands used or devoted to public use cannot be registered
under the Cadastral Act nor under the Public Land Act except by executive proclamation.chanrobles.com : virtual law library
The first three question raised by the petitioner boil down to the basic issue of the applicability of the doctrine of res judicata
in this case. There is not doubt as to the finality of the decisions of the Director of Lands as affirmed by the Secretary of
Natural Resources by the dismissal of the appeal of the herein private respondents (except Guillermina Vda. de Mitre)
because only the Lamorenas elevated the case to the Office of the President. Undoubtedly, too, the said administrative
officers had jurisdiction over the subject matter and the parties and that the decisions on private respondents’ free patent and
homestead applications were on the merit. With regard, therefore, to said private respondents, they appear to be bound by
the decisions of said administrative officers for, as the Court held in Ysmael, Jr. & Co., Inc. v. Deputy Executive Secretary:
32
"It is an established doctrine in this jurisdiction that the decisions and orders of administrative agencies have upon their
finality, the force and binding effect of a final judgment within the purview of the doctrine of res judicata. These decisions and
orders are as conclusive upon the rights of the affected parties as though the same had been rendered by a court of general
jurisdiction. The rule of res judicata thus forbids the reopening of a matter once determined by competent authority acting
within their exclusive jurisdiction."cralaw virtua1aw library
However, in the instant petition, the Solicitor General invokes res judicata with respect to the final and executory
administrative decisions of the Executive branch. The Solicitor General is not putting in issue the applicability of said principle
with respect to the March 8, 1940 decision of the Court of First Instance of Davao which he did in the cadastral proceeding
below through his manifestation of March 1, 1963. While the Solicitor General raised the issue of res judicata in the Court of
Appeals also with regard to the said administrative decisions, 33 the fact that he raised it only on appeal remains. This fact
militates against the case of the petitioner because if the doctrine of res judicata is not set up seasonably as a defense or
ground of objection, it is deemed waived; it cannot be asserted for the first time on appeal. 34 Perhaps, this is the reason
why the petitioner, through the Solicitor General, does not directly invoke the said doctrine in the instant petition for review
on certiorari. Instead, the Solicitor General euphemistically questions the authority of the cadastral court to "review" the final
and executory decisions of the administrative officials concerned.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
Res judicata also may not apply with respect to the decision of the Office of the President finding that the transaction
between Lamorena and Caburian was an equitable mortgage, but for another reason. The decision was solely based on the
appeal of Lamorena but unfortunately, the issue raised therein, i.e., the nature of the contract between Caburian and the
Lamorenas, was a judicial one, over which the Executive Branch has no jurisdiction. 35 The instant cadastral proceeding,
therefore, cannot be barred by the final and executory decision of the Office of the President in the absence of a requisite in
the applicability of the doctrine of res judicata: the Office of the President had no jurisdiction over the subject matter of the
appeal. 36 Thus, the court below could have confronted directly the issue of whether or not the contract between the
Lamorenas and Caburian was one of pacto de retro sale or an equitable mortgage, for it is within a cadastral court’s power to
determine the nature of said document to avoid multiplicity of suits. Instead of doing so, however, the court skirted the issue
and focused on the facts that Lamorena actually occupied and could have sold only eight hectares of the land and that
Page 106 of 134
Lamorena cleverly filed the 1940 land registration proceeding only to have it dismissed later upon her own manifestation that
the land is public so that she could file a free patent application therefor.
The inapplicability of the doctrine of res judicata in effect allowed the courts below the discretion to pass upon the issue of
whether or not the private respondents herein, including Mrs. Mitre and her predecessor-in-interest, are bona fide possessors
of the portions of land they are claiming. Although the power and authority of a cadastral court are circumscribed by law, it
correctly passed upon said issue.
Parenthetically, P.D. No. 1529, the Property Registration Decree, has eliminated the distinction between the general
jurisdiction vested in the regional trial court and the limited jurisdiction formerly conferred upon it when acting merely as a
cadastral court. Thus, the court may resolve issues other than those strictly pertaining to land registration in cases (1) where
the parties mutually agreed or have acquiesced in submitting controversial issues for determination; (2) where they have
been given full opportunity to present their evidence; and (3) where the court has considered the evidence the evidence
already of record and is convinced that the same is sufficient for rendering a decision upon such controversial issues. 37
Consequently, under the third circumstance, the court below could have properly determined the nature of the document
executed by Caburian and the Lamorenas if only to avoid multiplicity of suits.
In any case, the lower court correctly adjudicated to the private respondents the portions of the land subject of their claims.
With regard to Mrs. Mitre, the lower court did not err in adjudicating to her only eight hectares, the actual area possessed and
occupied by the Lamorenas through a tenant and, which is the area over which the latter could legally transfer their rights.
Inasmuch as Baldomera Caburian believed that she was buying eighty-one hectares from the Lamorenas, her effort, as well
as that of her successor-in-interest, in exhausting all remedies, judicial and administrative, is understandable. Sadly for her, a
sizeable portion of the subject of the sale did not belong to the vendors.chanroblesvirtualawlibrary
The petitioner correctly objected to the legality of the adjudication of two hectares of the land in favor of the Municipality of
Mati. The finding of cadastral court that Paterno Madanlo "conceded" or "donated" 38 the two hectares to the municipality
does not justify its adjudication to the latter. Madanlo could not have legally donated a portion of the land the ownership of
which was not yet vested in him. 39 Apparently, such adjudication was based on the municipality’s long, continuous and
adverse possession of the area which it used as a school site. Under Art. 1108 of the Civil Code, however, prescription, both
acquisitive and extinctive, does not run against the State and its subdivisions.
To enable it to obtain legal authority on its continued use of the two-hectare land as a school site, the Municipality of Mati
should take the necessary steps outlined by law. Under Sec. 69 of the Public Land Act, the President of the Philippines may
execute contracts in favor of any province, municipality of branch or subdivision of the government needing any portion of the
land of the public domain open to concession for educational, charitable or other similar purposes in the form of donation,
sale, lease, exchange or any other form. 40 Hence, the municipal government of Mati would do well to take the necessary
appropriate action towards legally retaining the two-hectare area as a school site.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED subject to the modification that the adjudication of the two-
hectare land in favor of the Municipality of Mati be nullified. Instead, said municipality should be directed to take the
necessary steps to attain legal title over the said area for educational purposes. No costs.chanrobles.com.ph : virtual law
library
SO ORDERED.
FIRST DIVISION
G.R. No. 112050 June 15, 1994
QUINTIN F. FELIZARDO, petitioner,

vs.
COURT OF APPEALS & NEMESIO B. JOSE, respondents.
Lorenzon O. Navario for petitioner.
Ernesto Gonzales, Jr. for private respondent.
CRUZ, J.:
Page 107 of 134

Private respondent Nemesio B. Jose, as owner-lessor of a house and lot located at No. 63-20th St., East Bajac-Bajac,
Olongapo City, filed on February 24, 1992, an action for ejectment with an application for the issuance of a writ of preliminary
mandatory injunction against petitioner Quintin Felizardo. 1 This was docketed as Civil Case No. 3163 in the Municipal Trial
Court of Olongapo City.
On February 27, 1992, summons was issued directing the petitioner to file an answer and informing him that the Rule on
Summary Procedure would be applied.2
In his answer, the petitioner averred inter alia that the private respondent's allegations to support his prayer for a preliminary
injunction were utterly false and intended only to evade the requirements of P.D. 1508 3 for prior barangay conciliation. 4
At the preliminary conference and in his position paper, the petitioner questioned the jurisdiction of the court and the
sufficiency of the private respondent's cause of action for non-compliance with the said decree.
On September 1, 1992, judgment was rendered against the petitioner. 5 On September 17, 1992, upon motion of the private
respondent, the court issued an order for the execution of its decision. 6
On that same date, the petitioner filed with the Regional Trial Court of Olongapo City a petition for certiorari with an
application for the issuance of a temporary restraining order and/or a writ of preliminary injunction. 7
On October 7, 1992, that court issued a temporary restraining order against the enforcement of the writ of execution. 8 Later,
however, on October 23, 1992, it dismissed the petition on the ground that certiorari with injunction was not the proper
remedy of the petitioner, appeal being then still available to him. 9
The dismissal was sustained by the respondent Court of Appeals. 10 His motion for a reconsideration having been
denied, 11 Felizardo is now before us in this petition for review on certiorari.
The core issue is the propriety of the special civil action for certiorari instituted by the petitioner before the Regional Trial
Court of Olongapo City to challenge the judgment rendered by the court a quo.
The petition has no merit.
It is settled that the writ of certiorari is available only where the tribunal, board or officer exercising judicial functions has
acted without or in excess of its or his jurisdiction, or with grave abuse of discretion, and there is no appeal, or any plain,
speedy and adequate remedy in the ordinary course of law. 12 It is also the rule that this special civil action should not be
allowed as a substitute for an ordinary appeal or where there are other remedies available. 13
There is no doubt that the Municipal Trial Court of Olongapo City had jurisdiction over the subject-matter of the case lodged
by the private respondent and over the person of the petitioner, who had filed his answer to the complaint. The only question
is whether that court, in continuing to act on the case despite the lack of prior barangay conciliation as required by the
Revised Katarungang Pambarangay Law, committed a mere error or judgment that could be reversed in an ordinary appeal
or an error of jurisdiction correctible by certiorari.
Section 412 of the Revised Katarungang Pambarangay Law provides:
Sec. 412. Conciliation. — (a) Pre-condition to filing of complaint in court. — No complaint, petition, action, or
proceeding involving any matter within the authority of the Lupon shall be filed or instituted directly in court or
any other government office for adjudication unless there has been a confrontation between the parties
before the lupon chairman or the pangkat, and that no conciliation or settlement has been reached as
certified by the lupon secretary or the pangkat secretary, attested to by the lupon chairman or pangkat
chairman or unless the settlement has been repudiated by the parties thereto.
(b) Where the parties may go directly to court. — The parties may go directly to court in the following
instances:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of personal liberty calling for habeas corpus proceedings;
Page 108 of 134

(3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment, delivery
of personal property and support pendente lite; and
(4) Where the action may otherwise be barred by the statute of limitations.
xxx xxx xxx
In the case at bar, the complaint for ejectment filed by the private respondent contained an application for the issuance of a
writ of preliminary mandatory injunction, as allowed under Section 33 of BP 129. The suit would, therefore, ostensibly fall
under the exception mentioned in Section 412 (b) of the Katarungang Pambarangay Law. A different conclusion must be
reached, however, after a closer look at the attendant circumstances in light of the following allegations made by the private
respondent in his complaint:
xxx xxx xxx
9. Such act of subdividing and subleasing said property by the defendant to other persons has resulted in
great irreparable loss and great injustice to the plaintiff and as a result thereof plaintiff incurred actual
damages to be proven during the proceedings.
10. Plaintiff is entitled to the relief demanded which consists of immediately restraining the further subdivision
or alteration and subleasing of the property and enjoining the defendant from proceeding with any alteration,
subdivision or subleasing of the properties subject of the controversy.
11. Defendant is doing, or about to do, is procuring or suffering to be done, the act herein complained of, in
violation of plaintiff’s right and tending the judgment of the case ineffectual.
As correctly pointed out by the petitioner, the issue of the subdividing and subleasing of the property may no longer be raised
again in this case because it had already been adjudicated in the antecedent case between the petitioner and the private
respondent. This was Civil Case No. 3031, where it was held:
On the matter of subleasing the property, plaintiff underscored the contention of the defendant that since part
of the provisions in the contract between them is to the effect that he may use the premises in question for
business purposes, this is controverted by the specific provision thereat that the same should not be
subleased to other persons. While the terms appear to be so broad as to be susceptible of different
interpretations and while the court likewise does not countenance that a specific provision controls a general
provision in a contract, however, it is to be noticed that the intent of the parties to a contract should also be
given credence. It likewise cannot be countenanced by this court that the plaintiff has no knowledge about
this alleged violation affecting the subleasing, in a way that when the rooms were constructed, it was with the
knowledge of the plaintiff as contained in the affidavits submitted by the defendant forming part of his position
paper to this effect. Therefore there appears to be an implied consent upon the plaintiff as it is quite
impossible that the plaintiff would not notice that a construction was going on the leased premises. The
plaintiff therefore is estopped from claiming otherwise. (Cited in the CA decision, p. 7.)
The above finding is now final and conclusive in view of the private respondent's withdrawal of his appeal therefrom. As the
Regional Trial Court of Olongapo City observed:
The court notes plaintiff had virtually withdrawn his own appeal concerning the finding of the lower court that
the construction of additional rooms and the consequent subleasing of the properties to third persons were
with the consent of the plaintiff and which therefore cannot be treated as additional ground to eject the
defendant. . . . (Cited in CA decision, p. 9.)
That withdrawal deprived the private respondent's prayer for a preliminary mandatory injunction of all legal basis and
removed his complaint from the operation of Sec. 412 (b) of the Katarungang Pambarangay Law.
It is also worth noting that during the preliminary conference and in his position paper, Jose had conveyed the impression
that he was no longer interested in pursuing his application for such provisional remedy and was limiting his cause of action
to the recovery of the unpaid rentals. 14 This strengthens all the more the petitioner's contention that the prayer was merely a
pretense designed to avoid the requirements of the said law.
Page 109 of 134

Whether or not the court acted correctly in proceeding with the case even without the prior barangay proceeding is a
procedural question that could not be reviewed in a special civil action for certiorari but only in an ordinary appeal. A similar
observation is made on its declaration that it was incumbent upon the petitioner to prove that the private respondent's
allegations in support of the prayer for preliminary injunction was false and that compensation or set-off was not a proper
defense. These conclusions would at most constitute errors of judgment reviewable only on appeal and not errors of
jurisdiction reviewable by certiorari.
An additional consideration against the petitioner is his contention that appeal, although available, was not a plain, speedy
and adequate remedy in the ordinary course of law. He errs again.
The judgment in forcible entry and unlawful detainer cases, if in favor of the plaintiff, must be executed immediately to
prevent further damage to him arising from loss of possession. Nevertheless, the defendant is not entirely without recourse.
Under the Rules of Court, he may stay such immediate execution by a) perfecting an appeal; b) filing a supersedeas bond;
and
c) periodically depositing with the appellate court the rentals falling due during the pendency of the appeal.
These remedies are expressly provided for in Rule 70, Section 8, of the Rules of Court, reading in part as follows:
Sec. 8. Immediate execution of judgment. How to stay

same. — If judgment is rendered against the defendant, execution shall issue immediately, unless an appeal
has been perfected and the defendant to stay execution files a sufficient bond, approved by the municipal or
city court and executed to the plaintiff to enter the action in the Court of First Instance and to pay the rents,
damages, and costs accruing down to the time of the judgment appealed from, and unless, during the
pendency of the appeal, he deposits with the appellate court the amount of rent due from time to time under
the contract, if any, as found by the judgment of the municipal or city court to exist. . . .
Although an order for the execution of the judgment in favor of the private respondent had already been issued and
Felizardo's ejectment from the leased property was imminent, he could still prevent the implementation of the said order by
availing himself of the above remedies. But he did not.
His reason was that "there is no way that Mr. Jose can lose in Olongapo City and there is nothing to prevent him from
securing a writ of execution notwithstanding the filing of a supersedeas bond. This had happened before in the very same
MTCC and in the very same RTC in the first case between him and herein petitioner."
It appears, though, that the petitioner's apprehensions are unfounded. The record shows that in the earlier case between him
and the private respondent, he was in fact able to obtain the suspension of the adverse judgment against him during the
pendency of his appeal with the Regional Trial Court by filing a supersedeas bond. 15
The petitioner invokes the ruling in the case of Echaus vs. Court of Appeals 16 which reaffirmed Valencia vs. Court of
Appeals, 17 thus:
. . ., that certiorari lies against an order granting execution pending appeal where the same is not founded
upon good reasons. Also, the fact that the losing party had appealed from the judgment does not bar
the certiorari action filed in respondent court as the appeal could not be an adequate remedy from such
premature execution.
That petitioner could have resorted to a supersedeas bond to prevent execution pending appeal, as
suggested by the two lower courts, is not to be held against him. The filing of such bond does not entitle him
to the suspension of execution as a matter of right. It cannot, therefore, be categorically considered as a
plain, speedy and adequate remedy. Hence, no rule requires a losing party so circumstanced to adopt such
remedy in lieu or before availment of other remedial options at hand.
Furthermore, a rational interpretation of Section 3, Rule 39 should be that the requirement for a supersedeas
bond presupposed that the case presents presumptively valid occasion for discretionary execution.
Otherwise, even if no good reason exists to warrant advance execution, the prevailing party would unjustly
compel the losing party to post a supersedeas bond through the simple expedient of filing a motion for, and
the trial court improvidently granting, a writ of execution pending appeal although the situation is violative of
Section 2, Rule 39. . . .
Page 110 of 134

The above observations are not squarely applicable to the case at bar because what were sought to be reviewed in
the certiorari proceedings instituted by the petitioner in those cases were the orders of execution pending appeal, which were
interlocutory and unappealable. Moreover, the orders of execution in those cases were for the collection of damages and
attorney's fees and were issued pursuant to Section 2, Rule 39, of the Rules of Court. This section requires good reasons to
support the issuance of the writ. Certiorari was available to challenge the orders, which were annulled because there was no
showing of such good reasons to sustain to sustain the execution pending appeal.
By contrast, what was challenged in the special civil action for certiorari filed by the herein petitioner with the Regional Trial
Court was not merely the order of execution but the judgment of the court a quo on the merits of the case. This was final and
appealable. Besides, the writ in this case was issued under Section 8, Rule 70, of the Rules of Court, under which it is not
necessary to show good reasons for the immediate execution of the judgment against the defendant. This is an ejectment
case. As the Rules of Court require the judgment in such cases to be executed immediately, the writ of execution can be
stayed only upon compliance with the requirements of the said action.
It is understood that the trial court retains its discretion to issue an order of execution pending appeal even when the
defendant posts a supersedeas bond. Of course, this discretion is not absolute. The court can still disregard the supersedeas
bond but only when there are special and compelling reasons justifying immediate execution. 18 If that discretion is exercised
arbitrarily, the aggrieved party has the right to question such act in a petition for certiorari.
To recapitulate, when the Municipal Trial Court ruled that it could act on the complaint for ejectment filed by the private
respondent even without prior barangay conciliation proceedings, it committed a mere error of judgment and not of
jurisdiction. We have held in many cases that while the referral of a case to the Lupon Tagapayapa is a condition precedent
for the filing of a complaint in court, non-compliance therewith cannot affect the jurisdiction which the court has already
required over the subject matter and over the person of the defendant. 19 Hence, the remedy available to the petitioner was to
question the ruling of the court a quo in an ordinary appeal and not, as he mistakenly did, in a special action for certiorari.
At any rate, even assuming that the petition for certiorari filed by the petitioner was the proper remedy, the same cannot be
granted as it cannot be said that the court a quo committed grave abuse of discretion in finding the allegations for the
issuance of preliminary injunction to be sufficient compliance with the Katarungang Pambarangay Law. We agree with the
Regional Trial Court that:
Thus, when the lower court allegedly disregarded the counterclaims of petitioner, when it refused to rule on
"compensation off-setting" and ruled that the application for a provisional remedy in the complaint for
ejectment was not sham or that it was not proved as such, and also when said court failed to dismiss the
case for lack of compliance with the requirement of PD 1508 — there was no grave abuse of discretion on the
part of the lower court . . . It cannot be said that respondent judge acted in a capricious, whimsical, arbitrary
or despotic manner to be said to be equivalent to lack of jurisdiction.
Besides, as already pointed out, the petitioner had other plain, speedy and adequate remedies available to him under Rule
70, Section 8, of the Rules of Court.
WHEREFORE, the petition is DENIED and the appealed judgment is AFFIRMED, with costs against the petitioner.
FIRST DIVISION
G.R. No. 89554 July 10, 1992
JUANITO A. ROSARIO, petitioners,

vs.
THE HON. COURT OF APPEALS, and ALEJANDRO CRUZ, respondents.
GRIÑO-AQUINO, J.:
This is a petition for review of the decision of the Court of Appeals affirming the order dated December 13, 1988 of the
Regional Trial Court of Manila, Branch 27, in Civil Case No. 8214645 "Juanita Rosario vs. Alejandro Cruz and the City of
Manila" dismissing his action to annul and set aside the City Tenants' Security Commission's Resolution No. 018-78,
revoking the award to him of Lot 3-A (with an area of 56.6 square meters), being a portion of Lot 3, Block 3 of the former
Teresa Estate II in Sampaloc, Manila, and awarding it to the protestant, private respondent Alejandro Cruz.
Page 111 of 134

Pursuant to its "Land for the Landless Program," the City of Manila, through its City Tenants' Security Commission,
undertook to subdivide and award parcels of land of the former Teresa Estate II, in Sampaloc, Manila, to the occupants
thereof. Lot 3, Block 3 was subdivided into three lots, designated as Lots 3-A, 3-B and 3-C with areas of 56.5 square meters
each.
In 1958, private respondent Alejandro Cruz, who was the original lessee of the area, subsequently designated as Lots 3-A
and 3-C, constructed a residential house thereon. In the same year, he sublet his house on Lot 3-A to the petitioner at a
nominal monthly rental of P20, which was later increased to P50 per month. Cruz moved to 1774 Mindanao Avenue,
Sampaloc, Manila.
Availing of the City's "Land for the Landless Program," both parties filed with the City Tenants' Security Commission, their
applications to purchase Lots 3-A and 3-C. On June 24, 1977, Lot 3-A was awarded to Rosario while Lot 3-C was awarded to
Cruz.
Not satisfied with just Lot 3-C, Cruz opposed the award of Lot 3-A to Rosario on the ground that, as a mere lessee of Cruz's
house, and not a houseowner-applicant; he could not qualify as a "bona fide occupant" because his possession as a
sublessee was in effect his lessor's (Cruz's) possession. Cruz alleged that, at most, Rosario may only enjoy second priority
to purchase Lot
3-A in accordance with the guidelines of the Committee. The petitioner, on the other hand, claimed a preferential right to
purchase Lot 3-A based on social justice and his uninterrupted possession of said lot for thirty-two (32) years, or since 1958.
After conducting an investigation, the City Tenants' Security Commission issued a Resolution No. 018-78 dated December 8,
1978 revoking the award of Lot 3-A to Rosario and awarding it to Cruz (Annex A, p. 20, Rollo).
In 1982, or four (4) years later, petitioner filed an "action to quiet title" in the Court of First Instance of Manila, Branch 27,
praying for the annulment of Resolution No. 018-78 of the City Tenants' Security Commission.
In an order dated August 22, 1988 (Annex D, p. 23, Rollo), the Regional Trial Court dismissed the complaint on the ground
that plaintiff had not been denied procedural due process, and that he failed to exhaust administrative remedies for he should
have appealed the resolution of the City Tenants' Security Commission to the Office of the President before seeking a
judicial review thereof. As no appeal had been taken in due time, the resolution became final and executory.
The petitioner received the decision of the Regional Trial Court on September 1, 1988. On September 15, 1988, the
petitioner filed in the Supreme Court a motion for extension of time to file a petition for review. Apparently changing his mind,
instead of filing a petition for review in the Supreme Court, he filed a motion for reconsideration of the aforesaid judgment on
October 14, 1988. Respondent Judge, in an order dated November 15, 1988, denied the motion for reconsideration for
having been filed late, the decision having already attained finality (Annex O, Petition; p. 58, Rec.).
On December 8, 1988, petitioner filed a notice of appeal, which the trial court dismissed on December 13, 1988 for tardiness.
Petitioner thereafter filed a petition for certiorari and mandamus in the Court of Appeals (CA-G.R. No. 16755-SP). It was
likewise denied by the Court of Appeals on July 25, 1989 on the grounds that:
(1) the appealed judgment had attained finality; and
(2) ordinary appeal, not certiorari, was the proper remedy as petitioner failed to allege grave abuse of discretion on the part
of the trial court.
Hence, this petition for review under Rule 45.
The main issue raised by the petitioner is whether or not being the sublessee and "actual occupant" of Lot 3-A, he has the
preferential right to buy said lot.
Unfortunately, both the trial court and the Court of Appeals skirted that legal issue and simply dismissed Rosario's petition for
review of the Resolution of the City Tenants' Security Commission on the grounds of non-exhaustion of administrative
remedies and tardiness.
Failure to exhaust administrative remedies is not, however, necessarily fatal to an action. Thus did we rule in Soto vs.
Jareno, 144 SCRA 116:
Page 112 of 134
Failure to observe the doctrine of exhaustion of administrative remedies does not affect the jurisdiction of the
court. We have repeatedly stressed this in a long line of decisions. The only effect of non-compliance with this
rule is that it will deprive the complainant of a cause of action, which is a ground for a motion to dismiss. If not
invoked at the proper time, this ground is deemed waived and the court can then take cognizance of the case
and try it.
It does not appear in this case that a motion to dismiss based on non-exhaustion of administrative remedies had been filed.
We therefore feel, as we did in a number of cases before this, that "where the equities warrant such extraordinary recourse,"
the petition may be given due course (Marahay vs. Melicor, et al., 181 SCRA 811 citing Perlas vs. Concepcion, 34 Phil. 559;
Alfonso vs. Yatco, 80 Phil. 407).
But while it is evident that there was error in the remedy resorted to, this Court in the broader interests of
justice has in a number of cases given due course to a petition for certiorari, although the proper remedy is
appeal especially where the equities warrant such recourse and considering that dismissals on technicalities
are viewed with disapproval. (Tesorero vs. Mathay, 185 SCRA 124, 125.)
Interpreting Section 1 of Commonwealth Act No. 539 (after which the City Tenants' Security Commission was modelled) this
Court in Santiago, et al. vs. Cruz, et al. (98 Phil. 168, 169) stressed that "the intendment of the law is to award the lots to
those who may apply in the order mentioned" that is, the "first choice is given to the bona fide'tenants,' the second to the
'occupants' and the last to 'private individuals.'"
Later, this Court clarified, in the case of Gutierrez vs. Santos, et al. (107 Phil. 419), that "the bona fide tenant" loses his right
of first preference to the actual occupant when he "has already in his name other lots more than what he needs for his family,
for certainly to give him preference would work injustice to the occupants."
The records show that respondent Cruz and his family are residing at 1774 Mindanao Avenue. Having no need for his house
on Lot 3, he sublet it to others, namely, petitioner Juanito Rosario and one Genaro Angud. "Justice and equity command that
petitioner [in this case, Rosario] be given the preferential right to purchase the lot he occupies in order to carry out the
avowed policy of the law to give land to the landless" (Gongon vs. Court of Appeals, 32 SCRA 412, 418).
In Manila Pencil Company vs. Trazo (77 SCRA 181), this Court similarly stated:
. . . petitioner herein . . . can in no sense be considered as the occupant contemplated in the statute. It is
clear to Us that notwithstanding that private respondents have been occupying the buildings constructed by
petitioner lessees of portions of said buildings, the legislative intent was to benefit not the owner of said
building but the actual occupants thereof. We cannot see how the commendable and benevolent objective of
the statute to solve "the social problems that the present condition of the occupants of the property in
question may give rise to" can be pursued by recognizing petitioner as having a better right than private
respondents under the law. The Act is indubitably a social legislation. From that perspective, a choice
between the respective situations of the petitioners, on the one hand, and the private respondents, on the
other, cannot but favor the latter.
In the same vein, we held in Tañag vs. Executive Secretary (37 SCRA 806, 807):
. . . If the claim of a sublessee actually in possession would be ignored or disregarded, the result would be to
heighten social tension and aggravate further the unrest that has its roots in so many of our countrymen
being denied the opportunity of owning even a small piece of land on which their houses are built and
wherein they reside. It has been the constant policy of this Court, in the construction of laws that find its origin
in the social justice mandate of the Constitution, to assure that its beneficient effects be enjoyed by those
"who have less in life."
Clearly, to dismiss petitioner's appeal on a procedural ground would not serve the ends of justice.
However, it would be inequitable to allow the petitioner, as new owner of Lot 3-A, to occupy that part of private respondent's
house built thereon without reimbursing the latter for one-half of its value as provided in Article 1678 of the Civil Code.
Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the
lease is intended, without altering the form or substance of the property leased, the lessor upon the
termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should
Page 113 of 134
the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the
principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the
property leased than is necessary.
With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may
remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not
choose to retain them by paying their value at the time the lease is extinquished.
WHEREFORE, the decision of respondent court in CA-G.R. SP No. 16755 is hereby REVERSED and SET ASIDE. The
award of Lot No. 3-A, Block 3, of the former Teresa Estate II (now known as 1909-C Mindanao Avenue, Sampaloc, Manila)
to the private respondent, Alejandro Cruz, by the City Tenants' Security Commission under its Resolution No. 018-78 dated
December 8, 1978, is annulled and set aside. Petitioner Juanito A. Rosario is declared to have a preferential right to
purchase Lot No. 3-A, and the City Tenants' Security Commission is ordered to award the sale thereof to him. Petitioner
Rosario may either reimburse respondent for one-half of the value of the part of Cruz's house situated on Lot 3-A and
occupied by petitioner, or allow Cruz to remove his house at his own expense. If petitioner exercises the first option, the
value of the improvement shall be determined by a committee composed of the parties or their authorized representatives,
and a representative of the trial court. Costs against the private respondent.
SO ORDERED.
.R. No. 138381 November 10, 2004
GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,

vs.
COMMISSION ON AUDIT, respondent.
G.R. No. 141625 November 10, 2004
GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,

vs.
ALFREDO D. PINEDA, DANIEL GO, FELINO BULANDUS, FELICIMO J. FERRARIS, JR., BEN HUR PORLUCAS, LUIS
HIPONIA, MARIA LUISA A. FERNANDEZ, VICTORINA JOVEN, CORAZON S. ALIWANAG, SILVER L. MARTINES, SR.,
RENATO PEREZ, LOLITA CAYLAN, DOUGLAS VALLEJO and LETICIA ALMAZAN, on their own behalf and on behalf
of all GSIS retirees with all of whom they share a common and general interest, respondents.
RESOLUTION
YNARES-SANTIAGO, J.:
On April 16, 2002, the Court promulgated a decision on these two consolidated cases partially granting the petition in G.R.
No. 138381 ("first petition") thereby reversing the Commission on Audit’s (COA) disallowance of certain fringe benefits
granted to GSIS employees. As a result, the Court ordered the refund of amounts representing fringe benefits corresponding
to those allowed in the first petition in favor of the respondents in G.R. No. 141625 ("second petition").
The benefits which the Court ordered to be refunded included increases in longevity pay, children’s allowance and
management contribution to the Provident Fund as well as premiums for group personal accident insurance. On the other
hand, the Court affirmed the COA disallowance of loyalty and service cash award as well as housing allowance in excess of
that approved by the COA. Amounts corresponding to these benefits were previously deducted by GSIS from respondents’
Page 114 of 134
retirement benefits in view of the COA disallowance in the first petition. COA did not seek reconsideration of the judgment
ordering said refund, which thus became final and executory.
On August 7, 2002, the respondents in the second petition, all GSIS retirees, filed a motion for amendatory and clarificatory
judgment ("amendatory motion").1 They averred that we did not categorically resolve the issue raised in the second petition,
namely: whether or not the GSIS may lawfully deduct any amount from their retirement benefits in light of Section 39 of
Republic Act No. 8291.
According to respondents, said provision of law clearly states that no amount whatsoever could be legally deducted from
retirement benefits, even those amounts representing COA disallowances. They posit that we should have ordered refund
not only of benefits allowed in the first petition, but all amounts claimed, regardless of whether or not these were allowed by
the COA. These include items which were correctly disallowed by the COA in the first petition, as well as disallowed benefits
under the second petition. The latter consists of initial payment of productivity bonus, accelerated implementation of the new
salary schedule effective August 1, 1995, 1995 mid-year financial assistance and increase in clothing, rice and meal
allowances. Respondents further insist that we should have awarded damages in their favor, citing the GSIS’ alleged bad
faith in making the deductions.
GSIS filed a comment2 to respondents’ amendatory motion, as directed by the Court in a resolution dated September 3, 2002.
GSIS posited that the other benefits not passed upon in the main judgment should be understood by respondents as having
been impliedly denied by this Court. It also sought clarification of our decision insofar as it declared that there was no identity
of subject matter between the COA proceedings, from which the first petition stemmed, and respondents’ claim under the
second petition, which emanated from an order of the GSIS Board of Trustees ("Board"). As for the damages claimed by
respondents, GSIS insists that it made the deductions in good faith for these were done in accordance with COA directives.
Respondents filed a reply3 to the comment of GSIS on September 9, 2002.
Meanwhile, respondents filed a second motion, this time for leave to file a motion for discretionary and partial
execution4 ("motion for execution"). They prayed that GSIS be ordered to effect the refund, as finally adjudged in our decision,
pending resolution of their amendatory motion as to the other deducted amounts. We granted the motion for execution on
September 3, 2002.
Subsequently, on December 26, 2002, counsel for respondents, Atty. Agustin Sundiam, filed a motion for entry and
enforcement of attorney’s lien5 ("motion for charging lien") and a supplement6 to this motion on January 10, 2003. He sought
entry of a charging lien in the records of this case pursuant to Section 37 of Rule 138. He prayed for an order directing the
GSIS to deduct, as his professional fees, 15% from respondents’ refund vouchers since the GSIS was already in the process
of releasing his clients’ checks in compliance with our judgment in the first petition. The payment scheme was allegedly
authorized by the Board of Directors of his clients, the GSIS Retirees Association, Inc. (GRIA), through a board
resolution7 that he has attached to the motion.
Atty. Sundiam’s motion for charging lien was opposed by petitioner GSIS on the ground that it was through its efforts, and not
Atty. Sundiam’s, that the retirees were able to obtain a refund.8 Meanwhile, the GRIA confirmed the payment scheme it
adopted with Atty. Sundiam and prayed for its approval.9
Thereafter, on January 10, 2003, respondents filed another manifestation and motion as well as supplement thereto, claiming
that GSIS was deducting new and unspecified sums from the amount it was refunding to respondents. These new
deductions purportedly pertain to another set of COA disallowances.10
On January 21, 2003, respondents again filed a motion11 praying for the inclusion in the refundable amount of dividends on
the management contribution to the Provident Fund ("motion for payment of dividends"). Respondents claimed that the
contribution, which amounted to Fifty Million Pesos (P50M), was retained by GSIS for more than five years and thus earned
a considerable sum of income while under its control. GSIS declared and paid dividends on said contribution to incumbent
officials and employees, but refused to extend the same benefits to respondents/retirees.
On March 6, 2003, GSIS filed a joint comment12 to respondents’ two foregoing motions contending that the new deductions
are legitimate. The deductions pertain to car loan arrearages, disallowed employees’ compensation claims and the like. As
for the dividends on the Provident Fund contributions, respondents are not entitled to the same because while the first
petition was pending, the contributions were not actually remitted to the fund but were withheld by COA pursuant to its earlier
disallowance.
Page 115 of 134

On October 2, 2003, respondents filed another motion13 for an order to compel the GSIS to pay dividends on the Provident
Fund contributions pending resolution of their other motions. They also sought refund of Permanent Partial Disability (PPD)
benefits that GSIS supposedly paid to some of the respondents, but once again arbitrarily deducted from the amount which
the Court ordered to be refunded.
In a minute resolution14 dated November 11, 2003, we denied the last motion for lack of merit. We likewise denied with finality
respondents’ motion for reconsideration from the denial of said motion.15
We now resolve the matters raised by the parties.
On the amendatory motion, it must be clarified that the question raised before this Court in the second petition was the issue
of the Board’s jurisdiction to resolve respondents’ claim for refund of amounts representing deductions from their retirement
benefits. What was assailed in the second petition was the appellate court’s ruling that the Board had jurisdiction over
respondents’ claim since there was no identity of subject matter between the proceedings then pending before the COA and
the petition brought by respondents before the Board. The Court of Appeals did not rule on the main controversy of whether
COA disallowances could be deducted from retirement benefits because the Board ordered the dismissal of respondents’
claim for alleged lack of jurisdiction, before it could even decide on the principal issue.
Consequently, the only matter that was properly elevated to this Court was the issue of whether or not the Board had
jurisdiction over respondents’ demands. We did not resolve the issue of whether or not the deductions were valid under
Section 39 of RA 8291, for the simple reason that the Board, as well as the appellate court, did not tackle the issue. The
doctrine of primary jurisdiction16 would ordinarily preclude us from resolving the matter, which calls for a ruling to be first made
by the Board. It is the latter that is vested by law with exclusive and original jurisdiction to settle any dispute arising under RA
8291, as well as other matters related thereto.17
However, both the GSIS and respondents have extensively discussed the merits of the case in their respective pleadings
and did not confine their arguments to the issue of jurisdiction. Respondents, in fact, submit that we should resolve the main
issue on the ground that it is a purely legal question. Respondents further state that a remand of the case to the Board would
merely result in unnecessary delay and needless expense for the parties. They thus urge the Court to decide the main
question in order to finally put an end to the controversy.
Indeed, the principal issue pending before the Board does not involve any factual question, as it concerns only the correct
application of the last paragraph of Section 39, RA 8291. The parties agreed that the lone issue is whether COA
disallowances could be legally deducted from retirement benefits on the ground that these were respondents’ monetary
liabilities to the GSIS under the said provision. There is no dispute that the amounts deducted by GSIS represented COA
disallowances. Thus, the only question left for the Board to decide is whether the deductions are allowed under RA 8291.
Under certain exceptional circumstances, we have taken cognizance of questions of law even in the absence of an initial
determination by a lower court or administrative body. In China Banking Corporation v. Court of Appeals,18 the Court held:
At the outset, the Court’s attention is drawn to the fact that since the filing of this suit before the trial court, none of the
substantial issues have been resolved. To avoid and gloss over the issues raised by the parties, as what the trial
court and respondent Court of Appeals did, would unduly prolong this litigation involving a rather simple case of
foreclosure of mortgage. Undoubtedly, this will run counter to the avowed purpose of the rules, i.e., to assist the
parties in obtaining just, speedy and inexpensive determination of every action or proceeding. The Court, therefore,
feels that the central issues of the case, albeit unresolved by the courts below, should now be settled specially as
they involved pure questions of law. Furthermore, the pleadings of the respective parties on file have amply
ventilated their various positions and arguments on the matter necessitating prompt adjudication.
In Roman Catholic Archbishop of Manila v. Court of Appeals,19 the Court likewise held that the remand of a case is not
necessary where the court is in a position to resolve the dispute based on the records before it. The Court will decide actions
on the merits in order to expedite the settlement of a controversy and if the ends of justice would not be subserved by a
remand of the case.
Here, the primary issue calls for an application of a specific provision of RA 8291 as well as relevant jurisprudence on the
matter. No useful purpose will indeed be served if we remand the matter to the Board, only for its decision to be elevated
again to the Court of Appeals and subsequently to this Court. Hence, we deem it sound to rule on the merits of the
controversy rather than to remand the case for further proceedings.
Page 116 of 134

The last paragraph of Section 39, RA 8291 specifically provides:
SEC. 39. Exemption from Tax, Legal Process and Lien.-
xxxxxxxxx
The funds and/or the properties referred to herein as well as the benefits, sums or monies corresponding to the
benefits under this Act shall be exempt from attachment, garnishment, execution, levy or other processes issued by
the courts, quasi-judicial agencies or administrative bodies including Commission on Audit (COA) disallowances and
from all financial obligations of the members, including his pecuniary accountability arising from or caused or
occasioned by his exercise or performance of his official functions or duties, or incurred relative to or in connection
with his position or work except when his monetary liability, contractual or otherwise, is in favor of the GSIS.
It is clear from the above provision that COA disallowances cannot be deducted from benefits under RA 8291, as the same
are explicitly made exempt by law from such deductions. Retirement benefits cannot be diminished by COA disallowances in
view of the clear mandate of the foregoing provision. It is a basic rule in statutory construction that if a statute is clear, plain
and free from ambiguity, it must be given its literal meaning and applied without interpretation. This is what is known as plain-
meaning rule or verba legis.20
Accordingly, the GSIS’ interpretation of Section 39 that COA disallowances have become monetary liabilities of respondents
to the GSIS and therefore fall under the exception stated in the law is wrong. No interpretation of the said provision is
necessary given the clear language of the statute. A meaning that does not appear nor is intended or reflected in the very
language of the statute cannot be placed therein by construction.21
Moreover, if we are to accept the GSIS’ interpretation, then it would be unnecessary to single out COA disallowances as
among those from which benefits under RA 8291 are exempt. In such a case, the inclusion of COA disallowances in the
enumeration of exemptions would be a mere surplusage since the GSIS could simply consider COA disallowances as
monetary liabilities in its favor. Such a construction would empower the GSIS to withdraw, at its option, an exemption
expressly granted by law. This could not have been the intention of the statute.
That retirement pay accruing to a public officer may not be withheld and applied to his indebtedness to the government has
been settled in several cases. In Cruz v. Tantuico, Jr.,22 the Court, citing Hunt v. Hernandez,23explained the reason for such
policy thus:
x x x we are of the opinion that the exemption should be liberally construed in favor of the pensioner. Pension in this
case is a bounty flowing from the graciousness of the Government intended to reward past services and, at the same
time, to provide the pensioner with the means with which to support himself and his family. Unless otherwise clearly
provided, the pension should inure wholly to the benefit of the pensioner. It is true that the withholding and application
of the amount involved was had under section 624 of the Administrative Code and not by any judicial process, but if
the gratuity could not be attached or levied upon execution in view of the prohibition of section 3 of Act No. 4051, the
appropriation thereof by administrative action, if allowed, would lead to the same prohibited result and enable the
respondents to do indirectly what they can not do directly under section 3 of Act No. 4051. Act No. 4051 is a later
statute having been approved on February 21, 1933, whereas the Administrative Code of 1917 which embodies
section 624 relied upon by the respondents was approved on March 10 of that year. Considering section 3 of Act No.
4051 as an exception to the general authority granted in section 624 of the Administrative Code, antagonism
between the two provisions is avoided. (Underscoring supplied)
The above ruling was reiterated in Tantuico, Jr. v. Domingo,24 where the Court similarly declared that benefits under
retirement laws cannot be withheld regardless of the petitioner’s monetary liability to the government.
The policy of exempting retirement benefits from attachment, levy and execution, as well as unwarranted deductions, has
been embodied in a long line of retirement statutes. Act No. 4051,25 which provides for the payment of gratuity to officers and
employees of the Insular Government upon retirement due to reorganization, expressly provides in its Section 3 that "(t)he
gratuity provided for in this Act shall not be attached or levied upon execution."
The law which established the GSIS, Commonwealth Act No. 186 ("CA No. 186"),26 went further by providing as follows:
SEC. 23. Exemptions from legal process and liens. – No policy of life insurance issued under this Act, or the
proceeds thereof, except those corresponding to the annual premium thereon in excess of five hundred pesos per
Page 117 of 134
annum, when paid to any member thereunder, shall be liable to attachment, garnishment, or other process, or to be
seized, taken, appropriated, or applied by any legal or equitable process or operation of law to pay any debt or
liability of such member, or his beneficiary, or any other person who may have a right thereunder, either before or
after payment; nor shall the proceeds thereof, when not made payable to a named beneficiary, constitute a part of
the estate of the member for payment of his debt.
Presidential Decree No. 1146,27 which amended CA No. 186, likewise contained a provision exempting benefits from
attachment, garnishment, levy or other processes. However, the exemption was expressly made inapplicable to "obligations
of the member to the System, or to the employer, or when the benefits granted are assigned by the member with the
authority of the System."28
The latest GSIS enactment, RA 8291,29 provides for a more detailed and wider range of exemptions under Section 39. Aside
from exempting benefits from judicial processes, it likewise unconditionally exempts benefits from quasi-judicial and
administrative processes, including COA disallowances, as well as all financial obligations of the member. The latter includes
any pecuniary accountability of the member which arose out of the exercise or performance of his official functions or duties
or incurred relative to his position or work. The only exception to such pecuniary accountability is when the same is in favor
of the GSIS.
Thus, "monetary liability in favor of GSIS" refers to indebtedness of the member to the System other than those which fall
under the categories of pecuniary accountabilities exempted under the law. Such liability may include unpaid social
insurance premiums and balances on loans obtained by the retiree from the System, which do not arise in the performance
of his duties and are not incurred relative to his work. The general policy, as reflected in our retirement laws and
jurisprudence, is to exempt benefits from all legal processes or liens, but not from outstanding obligations of the member to
the System. This is to ensure maintenance of the GSIS’ fund reserves in order to guarantee fulfillment of all its obligations
under RA 8291.
Notwithstanding the foregoing, however, we find it necessary to nonetheless differentiate between those benefits which were
properly disallowed by the COA and those which were not.
Anent the benefits which were improperly disallowed, the same rightfully belong to respondents without qualification. As for
benefits which were justifiably disallowed by the COA, the same were erroneously granted to and received by respondents
who now have the obligation to return the same to the System.
It cannot be denied that respondents were recipients of benefits that were properly disallowed by the COA. These COA
disallowances would otherwise have been deducted from their salaries, were it not for the fact that respondents retired
before such deductions could be effected. The GSIS can no longer recover these amounts by any administrative means due
to the specific exemption of retirement benefits from COA disallowances. Respondents resultantly retained benefits to which
they were not legally entitled which, in turn, gave rise to an obligation on their part to return the amounts under the principle
of solutio indebiti.
Under Article 2154 of the Civil Code,30 if something is received and unduly delivered through mistake when there is no right to
demand it, the obligation to return the thing arises. Payment by reason of mistake in the construction or application of a
doubtful or difficult question of law also comes within the scope of solutio indebiti.31
In the instant case, the confusion about the increase and payment of benefits to GSIS employees and executives, as well as
its subsequent disallowance by the COA, arose on account of the application of RA 6758 or the Salary Standardization Law
and its implementing rules, CCC No. 10. The complexity in the application of these laws is manifested by the several cases
that have reached the Court since its passage in 1989.32 The application of RA 6758 was made even more difficult when its
implementing rules were nullified for non-publication.33 Consequently, the delivery of benefits to respondents under an
erroneous interpretation of RA 6758 gave rise to an actionable obligation for them to return the same.
While the GSIS cannot directly proceed against respondents’ retirement benefits, it can nonetheless seek restoration of the
amounts by means of a proper court action for its recovery. Respondents themselves submit that this should be the
case,34 although any judgment rendered therein cannot be enforced against retirement benefits due to the exemption
provided in Section 39 of RA 8291. However, there is no prohibition against enforcing a final monetary judgment against
respondents’ other assets and properties. This is only fair and consistent with basic principles of due process.
As such, a proper accounting of the amounts due and refundable is in order. In rendering such accounting, the parties must
observe the following guidelines:
Page 118 of 134

(1) All deductions from respondents’ retirement benefits should be refunded except those amounts which may
properly be defined as "monetary liability to the GSIS";
(2) Any other amount to be deducted from retirement benefits must be agreed upon by and between the parties; and
(3) Refusal on the part of respondents to return disallowed benefits shall give rise to a right of action in favor of GSIS
before the courts of law.
Conformably, any fees due to Atty. Sundiam for his professional services may be charged against respondents’ retirement
benefits. The arrangement, however, must be covered by a proper agreement between him and his clients under (2) above.
As to whether respondents are entitled to dividends on the provident fund contributions, the same is not within the issues
raised before the Court. The second petition refers only to the legality of the deductions made by GSIS from respondents’
retirement benefits. There are factual matters that need to be threshed out in determining respondents’ right to the payment
of dividends, in view of the GSIS’ assertion that the management contributions were not actually remitted to the fund. Thus,
the payment of dividends should be the subject of a separate claim where the parties can present evidence to prove their
respective assertions. The Court is in no position to resolve the matter since the material facts that would prove or disprove
the claim are not on record.
In the interest of clarity, we reiterate herein our ruling that there is no identity of subject matter between the COA
proceedings, from which the first petition stemmed, and respondents’ claim of refund before the Board. While the first petition
referred to the propriety of the COA disallowances per se, respondents’ claim before the Board pertained to the legality of
deducting the COA disallowances from retirement benefits under Section 39 of RA 8291.
Finally, on respondents claim that the GSIS acted in bad faith when it deducted the COA disallowances from their retirement
benefits, except for bare allegations, there is no proof or evidence of the alleged bad faith and partiality of the GSIS.
Moreover, the latter cannot be faulted for taking measures to ensure recovery of the COA disallowances since respondents
have already retired and would be beyond its administrative reach. The GSIS merely acted upon its best judgment and chose
to err in the side of prudence rather than suffer the consequence of not being able to account for the COA disallowances. It
concededly erred in taking this recourse but it can hardly be accused of malice or bad faith in doing so.
WHEREFORE, in view of the foregoing, the April 16, 2002 Decision in G.R. Nos. 138381 and 141625 is AMENDED. In
addition to the refund of amounts corresponding to benefits allowed in G.R. No. 138381, the GSIS is ordered to REFUND all
deductions from retirement benefits EXCEPT amounts representing monetary liability of the respondents to the GSIS as well
as all other amounts mutually agreed upon by the parties.
SO ORDERED.
Davide, Jr., C.J., Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio-Morales, Azcuna, Chico-
Nazario, and Garcia, JJ., concur.
Puno, J. on official leave.
Corona and Tinga, JJ., on leave.
Callejo, Sr., J., no part, Ponente in CA Decision.
Footnotes
G.R. No. 176707 February 17, 2010
ARLIN B. OBIASCA, 1 Petitioner,

vs.
JEANE O. BASALLOTE, Respondent.
DECISION
CORONA, J.:
When the law is clear, there is no other recourse but to apply it regardless of its perceived harshness. Dura lex sed lex.
Nonetheless, the law should never be applied or interpreted to oppress one in order to favor another. As a court of law and of
Page 119 of 134

justice, this Court has the duty to adjudicate conflicting claims based not only on the cold provision of the law but also
according to the higher principles of right and justice.
The facts of this case are undisputed.
On May 26, 2003, City Schools Division Superintendent Nelly B. Beloso appointed respondent Jeane O. Basallote to the
position of Administrative Officer II, Item No. OSEC-DECSB-ADO2-390030-1998, of the Department of Education (DepEd),
Tabaco National High School in Albay.2
Subsequently, in a letter dated June 4, 2003,3 the new City Schools Division Superintendent, Ma. Amy O. Oyardo, advised
School Principal Dr. Leticia B. Gonzales that the papers of the applicants for the position of Administrative Officer II of the
school, including those of respondent, were being returned and that a school ranking should be
accomplished and submitted to her office for review. In addition, Gonzales was advised that only qualified applicants should
be endorsed.
Respondent assumed the office of Administrative Officer II on June 19, 2003. Thereafter, however, she received a letter from
Ma. Teresa U. Diaz, Human Resource Management Officer I of the City Schools Division of Tabaco City, Albay, informing
her that her appointment could not be forwarded to the Civil Service Commission (CSC) because of her failure to submit the
position description form (PDF) duly signed by Gonzales.
Respondent tried to obtain Gozales’ signature but the latter refused despite repeated requests. When respondent informed
Oyardo of the situation, she was instead advised to return to her former teaching position of Teacher I. Respondent followed
the advice.
Meanwhile, on August 25, 2003, Oyardo appointed petitioner Arlin B. Obiasca to the same position of Administrative Officer
II. The appointment was sent to and was properly attested by the CSC.4 Upon learning this, respondent filed a complaint with
the Office of the Deputy Ombudsman for Luzon against Oyardo, Gonzales and Diaz.
In its decision, the Ombudsman found Oyardo and Gonzales administratively liable for withholding information from
respondent on the status of her appointment, and suspended them from the service for three months. Diaz was absolved of
any wrongdoing.5
Respondent also filed a protest with CSC Regional Office V. But the protest was dismissed on the ground that it should first
be submitted to the Grievance Committee of the DepEd for appropriate action.6
On motion for reconsideration, the protest was reinstated but was eventually dismissed for lack of merit.7Respondent
appealed the dismissal of her protest to the CSC Regional Office which, however, dismissed the appeal for failure to show
that her appointment had been received and attested by the CSC.8
Respondent elevated the matter to the CSC. In its November 29, 2005 resolution, the CSC granted the appeal, approved
respondent’s appointment and recalled the approval of petitioner’s appointment.9
Aggrieved, petitioner filed a petition for certiorari in the Court of Appeals (CA) claiming that the CSC acted without factual and
legal bases in recalling his appointment. He also prayed for the issuance of a temporary restraining order and a writ of
preliminary injunction.
In its September 26, 2006 decision,10 the CA denied the petition and upheld respondent’s appointment which was deemed
effective immediately upon its issuance by the appointing authority on May 26, 2003. This was because respondent had
accepted the appointment upon her assumption of the duties and responsibilities of the position.
The CA found that respondent possessed all the qualifications and none of the disqualifications for the position of
Administrative Officer II; that due to the respondent’s valid appointment, no other appointment to the same position could be
made without the position being first vacated; that the petitioner’s appointment to the position was thus void; and that,
contrary to the argument of petitioner that he had been deprived of his right to due process when he was not allowed to
participate in the proceedings in the CSC, it was petitioner who failed to exercise his right by failing to submit a single
pleading despite being furnished with copies of the pleadings in the proceedings in the CSC.
Page 120 of 134

The CA opined that Diaz unreasonably refused to affix her signature on respondent’s PDF and to submit respondent’s
appointment to the CSC on the ground of non-submission of respondent’s PDF. The CA ruled that the PDF was not even
required to be submitted and forwarded to the CSC.
Petitioner filed a motion for reconsideration but his motion was denied on February 8, 2007.11
Hence, this petition.12
Petitioner maintains that respondent was not validly appointed to the position of Administrative Officer II because her
appointment was never attested by the CSC. According to petitioner, without the CSC attestation, respondent’s appointment
as Administrative Officer II was never completed and never vested her a permanent title. As such, respondent’s appointment
could still be recalled or withdrawn by the appointing authority. Petitioner further argues that, under the Omnibus Rules
Implementing Book V of Executive Order (EO) No. 292,13 every appointment is required to be submitted to the CSC within 30
days from the date of issuance; otherwise, the appointment becomes ineffective.14 Thus, respondent’s appointment issued
on May 23, 2003 should have been transmitted to the CSC not later than June 22, 2003 for proper attestation. However,
because respondent’s appointment was not sent to the CSC within the proper period, her appointment ceased to be effective
and the position of Administrative Officer II was already vacant when petitioner was appointed to it.
In her comment,15 respondent points out that her appointment was wrongfully not submitted by the proper persons to the
CSC for attestation. The reason given by Oyardo for the non-submission of respondent’s appointment papers to the CSC —
the alleged failure of respondent to have her PDF duly signed by Gonzales — was not a valid reason because the PDF was
not even required for the attestation of respondent’s appointment by the CSC.
After due consideration of the respective arguments of the parties, we deny the petition.
The law on the matter is clear. The problem is petitioner’s insistence that the law be applied in a manner that is unjust and
unreasonable.
Petitioner relies on an overly restrictive reading of Section 9(h) of PD 80716 which states, in part, that an appointment must be
submitted by the appointing authority to the CSC within 30 days from issuance, otherwise, the appointment becomes
ineffective:
Sec. 9. Powers and Functions of the Commission. — The [CSC] shall administer the Civil Service and shall have the
following powers and functions:
xxx xxx xxx
(h) Approve all appointments, whether original or promotional, to positions in the civil service, except those of presidential
appointees, members of the Armed Forces of the Philippines, police forces, firemen and jailguards, and disapprove those
where the appointees do not possess the appropriate eligibility or required qualifications. An appointment shall take effect
immediately upon issue by the appointing authority if the appointee assumes his duties immediately and shall remain
effective until it is disapproved by the [CSC], if this should take place, without prejudice to the liability of the appointing
authority for appointments issued in violation of existing laws or rules: Provided, finally, That the [CSC] shall keep a record of
appointments of all officers and employees in the civil service. All appointments requiring the approval of the [CSC] as
herein provided, shall be submitted to it by the appointing authority within thirty days from issuance, otherwise the
appointment becomes ineffective thirty days thereafter. (Emphasis supplied)
This provision is implemented in Section 11, Rule V of the Omnibus Rules Implementing Book V of EO 292 (Omnibus Rules):
Section 11. An appointment not submitted to the [CSC] within thirty (30) days from the date of issuance which shall be the
date appearing on the fact of the appointment, shall be ineffective. xxx
Based on the foregoing provisions, petitioner argues that respondent’s appointment became effective on the day of her
appointment but it subsequently ceased to be so when the appointing authority did not submit her appointment to the CSC
for attestation within 30 days.
Petitioner is wrong.
Page 121 of 134

The real issue in this case is whether the deliberate failure of the appointing authority (or other responsible officials) to submit
respondent’s appointment paper to the CSC within 30 days from its issuance made her appointment ineffective and
incomplete. Substantial reasons dictate that it did not.
Before discussing this issue, however, it must be brought to mind that CSC resolution dated November 29, 2005 recalling
petitioner’s appointment and approving that of respondent has long become final and executory.
Remedy to Assail CSC Decision or Resolution
Sections 16 and 18, Rule VI of the Omnibus Rules provide the proper remedy to assail a CSC decision or resolution:
Section 16. An employee who is still not satisfied with the decision of the [Merit System Protection Board] may appeal to the
[CSC] within fifteen days from receipt of the decision.
The decision of the [CSC] is final and executory if no petition for reconsideration is filed within fifteen days from
receipt thereof.
xxx xxx xxx
Section 18. Failure to file a protest, appeal, petition for reconsideration or petition for review within the prescribed
period shall be deemed a waiver of such right and shall render the subject action/decision final and executory.
(Emphasis supplied)
In this case, petitioner did not file a petition for reconsideration of the CSC resolution dated November 29, 2005 before filing
a petition for review in the CA. Such fatal procedural lapse on petitioner’s part allowed the CSC resolution dated November
29, 2005 to become final and executory.17 Hence, for all intents and purposes, the CSC resolution dated November 29, 2005
has become immutable and can no longer be amended or modified.18 A final and definitive judgment can no longer be
changed, revised, amended or reversed.19 Thus, in praying for the reversal of the assailed Court of Appeals decision
which affirmed the final and executory CSC resolution dated November 29, 2005, petitioner would want the Court to reverse
a final and executory judgment and disregard the doctrine of immutability of final judgments.
True, a dissatisfied employee of the civil service is not preempted from availing of remedies other than those provided in
Section 18 of the Omnibus Rules. This is precisely the purpose of Rule 43 of the Rules of Court, which provides for the filing
of a petition for review as a remedy to challenge the decisions of the CSC.
While Section 18 of the Omnibus Rules does not supplant the mode of appeal under Rule 43, we cannot disregard Section
16 of the Omnibus Rules, which requires that a petition for reconsideration should be filed, otherwise, the CSC decision will
become final and executory, viz.:
The decision of the [CSC] is final and executory if no petition for reconsideration is filed within fifteen days from
receipt thereof. 1avv phi 1
Note that the foregoing provision is a specific remedy as against CSC decisions involving its administrativefunction, that is,
on matters involving "appointments, whether original or promotional, to positions in the civil service,"20 as opposed to its
quasi-judicial function where it adjudicates the rights of persons before it, in accordance with the standards laid down by the
law.21
The doctrine of exhaustion of administrative remedies requires that, for reasons of law, comity and convenience, where the
enabling statute indicates a procedure for administrative review and provides a system of administrative appeal or
reconsideration, the courts will not entertain a case unless the available administrative remedies have been resorted to and
the appropriate authorities have been given an opportunity to act and correct the errors committed in the administrative
forum.22 In Orosa v. Roa,23 the Court ruled that if an appeal or remedy obtains or is available within the administrative
machinery, this should be resorted to before resort can be made to the courts.24While the doctrine of exhaustion of
administrative remedies is subject to certain exceptions,25 these are not present in this case.
Thus, absent any definitive ruling that the second paragraph of Section 16 is not mandatory and the filing of a petition for
reconsideration may be dispensed with, then the Court must adhere to the dictates of Section 16 of the Omnibus Rules.
Moreover, even in its substantive aspect, the petition is bereft of merit.

Page 122 of 134
Section 9(h) of PD 807 Already Amended by Section 12 Book V of EO 292
It is incorrect to interpret Section 9(h) of Presidential Decree (PD) 807 as requiring that an appointment must be submitted by
the appointing authority to the CSC within 30 days from issuance, otherwise, the appointment would become ineffective.
Such interpretation fails to appreciate the relevant part of Section 9(h) which states that "an appointment shall take effect
immediately upon issue by the appointing authority if the appointee assumes his duties immediately and shall
remain effective until it is disapproved by the [CSC]." This provision is reinforced by Section 1, Rule IV of the Revised
Omnibus Rules on Appointments and Other Personnel Actions, which reads:
Section 1. An appointment issued in accordance with pertinent laws and rules shall take effect immediately upon its
issuance by the appointing authority, and if the appointee has assumed the duties of the position, he shall be entitled to
receive his salary at once without awaiting the approval of his appointment by the Commission. The appointment shall
remain effective until disapproved by the Commission. x x x (Emphasis supplied)
More importantly, Section 12, Book V of EO 292 amended Section 9(h) of PD 807 by deleting the requirement that all
appointments subject to CSC approval be submitted to it within 30 days. Section 12 of EO 292 provides:
Sec. 12. Powers and Functions. - The Commission shall have the following powers and functions:
xxx xxx xxx
(14) Take appropriate action on all appointments and other personnel matters in the Civil Service, including extension of
Service beyond retirement age;
(15) Inspect and audit the personnel actions and programs of the departments, agencies, bureaus, offices, local government
units and other instrumentalities of the government including government -owned or controlled corporations; conduct periodic
review of the decisions and actions of offices or officials to whom authority has been delegated by the Commission as well as
the conduct of the officials and the employees in these offices and apply appropriate sanctions whenever necessary.
As a rule, an amendment by the deletion of certain words or phrases indicates an intention to change its meaning.26It is
presumed that the deletion would not have been made had there been no intention to effect a change in the meaning of the
law or rule.27 The word, phrase or sentence excised should accordingly be considered inoperative.28
The dissent refuses to recognize the amendment of Section 9(h) of PD 807 by EO 292 but rather finds the requirement of
submission of appointments within 30 days not inconsistent with the authority of the CSC to take appropriate action on all
appointments and other personnel matters. However, the intention to amend by deletion is unmistakable not only in the
operational meaning of EO 292 but in its legislative history as well.
PD 807 and EO 292 are not inconsistent insofar as they require CSC action on appointments to the civil service. This is
evident from the recognition accorded by EO 292, specifically under Section 12 (14) and (15) thereof, to the involvement of
the CSC in all personnel actions and programs of the government. However, while a restrictive period of 30 days within
which appointments must be submitted to the CSC is imposed under the last sentence of Section 9(h) of PD 807, none was
adopted by Section 12 (14) and (15) of EO 292. Rather, provisions subsequent to Section 12 merely state that the CSC (and
its liaison staff in various departments and agencies) shall periodically monitor, inspect and audit personnel
actions.29 Moreover, under Section 9(h) of PD 807, appointments not submitted within 30 days to the CSC become
ineffective, no such specific adverse effect is contemplated under Section 12 (14) and (15) of EO 292. Certainly, the two
provisions are materially inconsistent with each other. And to insist on reconciling them by restoring the restrictive period and
punitive effect of Section 9(h) of PD 807, which EO 292 deliberately discarded, would be to rewrite the law by mere judicial
interpretation.30
Not even the historical development of civil service laws can justify the retention of such restrictive provisions. Public Law No.
5,31 the law formally establishing a civil service system, merely directed that all heads of offices notify the Philippine Civil
Service Board "in writing without delay of all appointments x x x made in the classified service."32The Revised Administrative
Code of 1917 was even less stringent as approval by the Director of the Civil Service of appointments of temporary and
emergency employees was required only when practicable. Finally, Republic Act (RA) 226033 imposed no period within which
appointments were attested to by local government treasurers to whom the CSC delegated its authority to act on personnel
actions but provided that if within 180 days after receipt of said appointments, the CSC shall not have made any correction or
revision, then such appointments shall be deemed to have been properly made. Consequently, it was only under PD 807 that
Page 123 of 134

submission of appointments for approval by the CSC was subjected to a 30-day period. That, however, has been lifted and
abandoned by EO 292.
There being no requirement in EO 292 that appointments should be submitted to the CSC for attestation within 30 days from
issuance, it is doubtful by what authority the CSC imposed such condition under Section 11, Rule V of the Omnibus Rules. It
certainly cannot restore what EO 292 itself already and deliberately removed. At the very least, that requirement cannot be
used as basis to unjustly prejudice respondent.
Under the facts obtaining in this case, respondent promptly assumed her duties as Administrative Officer II when her
appointment was issued by the appointing authority. Thus, her appointment took effect immediately and remained effective
until disapproved by the CSC.34 Respondent’s appointment was never disapproved by the CSC. In fact, the CSC was
deprived of the opportunity to act promptly as it was wrongly prevented from doing so. More importantly, the CSC
subsequently approved respondent’s appointment and recalled that of petitioner, which recall has already become final
and immutable.
Second, it is undisputed that respondent’s appointment was not submitted to the CSC, not through her own fault but because
of Human Resource Management Officer I Ma. Teresa U. Diaz’s unjustified refusal to sign it on the feigned and fallacious
ground that respondent’s position description form had not been duly signed by School Principal Dr. Leticia B.
Gonzales.35 Indeed, the CSC even sanctioned Diaz for her failure to act in the required manner.36Similarly, the Ombudsman
found both City Schools Division Superintendent Ma. Amy O. Oyardo and Gonzales administratively liable and suspended
them for three months for willfully withholding information from respondent on the status of her appointment.
xxx xxx xxx
All along, [respondent] was made to believe that her appointment was in order. During the same period, respondent
Gonzales, with respondent Oyardo’s knowledge, indifferently allowed [respondent] to plea for the signing of her [position
description form], when they could have easily apprised [respondent] about the revocation/withdrawal of her appointment.
Worse, when [respondent] informed Oyardo on 25 June 2003 about her assumption of office as [Administrative Officer II], the
latter directed [respondent] to go back to her post as Teacher I on the ground that [respondent] had not been issued an
attested appointment as [Administrative Officer II], even when [Oyardo] knew very well that [respondent’s] appointment could
not be processed with the CSC because of her order to re-evaluate the applicants. This act by [Oyardo] is a mockery of the
trust reposed upon her by [respondent], who, then in the state of quandary, specifically sought [Oyardo’s] advice on what to
do with her appointment, in the belief that her superior could enlighten her on the matter.
It was only on 02 July 2003 when [Gonzales], in her letter, first made reference to a re-ranking of the applicants when
[respondent] learned about the recall by [Oyardo] of her appointment. At that time, the thirty-day period within which to
submit her appointment to the CSC has lapsed. [Oyardo’s] and Gonzales’ act of withholding information about the real status
of [respondent’s] appointment unjustly deprived her of pursuing whatever legal remedies available to her at that time to
protect her interest.37
Considering these willful and deliberate acts of the co-conspirators Diaz, Oyardo and Gonzales that caused undue prejudice
to respondent, the Court cannot look the other way and make respondent suffer the malicious consequences of Gonzales’s
and Oyardo’s malfeasance. Otherwise, the Court would be recognizing a result that is unconscionable and unjust by
effectively validating the following inequities: respondent, who was vigilantly following up her appointment paper, was left to
hang and dry; to add insult to injury, not long after Oyardo advised her to return to her teaching position, she (Oyardo)
appointed petitioner in respondent’s stead.
The obvious misgiving that comes to mind is why Gonzales and Oyardo were able to promptly process petitioner’s
appointment and transmit the same to the CSC for attestation when they could not do so for respondent. There is no doubt
that office politics was moving behind the scenes.
In effect, Gonzales’ and Oyardo’s scheming and plotting unduly deprived respondent of the professional advancement she
deserved. While public office is not property to which one may acquire a vested right, it is nevertheless a protected right.38
It cannot be overemphasized that respondent’s appointment became effective upon its issuance by the appointing authority
and it remained effective until disapproved by the CSC (if at all it ever was). Disregarding this rule and putting undue
importance on the provision requiring the submission of the appointment to the CSC within 30 days will reward wrongdoing in
the appointment process of public officials and employees. It will open the door for scheming officials to block the completion
and implementation of an appointment and render it ineffective by the simple expedient of not submitting the appointment
Page 124 of 134

paper to the CSC. As indubitably shown in this case, even respondent’s vigilance could not guard against the malice and
grave abuse of discretion of her superiors.
There is no dispute that the approval of the CSC is a legal requirement to complete the appointment. Under settled
jurisprudence, the appointee acquires a vested legal right to the position or office pursuant to this completed
appointment.39 Respondent’s appointment was in fact already approved by the CSC with finality.
The purpose of the requirement to submit the appointment to the CSC is for the latter to approve or disapprove such
appointment depending on whether the appointee possesses the appropriate eligibility or required qualifications and whether
the laws and rules pertinent to the process of appointment have been followed.40 With this in mind, respondent’s appointment
should all the more be deemed valid.
Respondent’s papers were in order. What was sought from her (the position description form duly signed by Gonzales) was
not even a prerequisite before her appointment papers could be forwarded to the CSC. More significantly, respondent was
qualified for the position. Thus, as stated by the CA:
The evidence also reveals compliance with the procedures that should be observed in the selection process for the vacant
position of Administrative Officer II and the issuance of the appointment to the respondent: the vacancy for the said position
was published on February 28, 2003; the Personnel Selection Board of Dep-Ed Division of Tabaco City conducted a
screening of the applicants, which included the respondent and the petitioner; the respondent’s qualifications met the
minimum qualifications for the position of Administrative Officer II provided by the CSC. She therefore qualified for permanent
appointment.41
There is no doubt that, had the appointing authority only submitted respondent’s appointment to the CSC within the said 30
days from its issuance, the CSC would (and could ) have approved it. In fact, when the CSC was later apprised of
respondent’s prior appointment when she protested petitioner’s subsequent appointment, it was respondent’s appointment
which the CSC approved. Petitioner’s appointment was recalled. These points were never rebutted as petitioner gave undue
emphasis to the non-attestation by the CSC of respondent’s appointment, without any regard for the fact that the CSC
actually approved respondent’s appointment.
Third, the Court is urged to overlook the injustice done to respondent by citing Favis v. Rupisan42 and Tomali v. Civil Service
Commission.43
However, reliance on Favis is misplaced. In Favis, the issue pertains to the necessity of the CSC approval, not the
submission of the appointment to the CSC within 30 days from issuance. Moreover, unlike Favis where there was an
apparent lack of effort to procure the approval of the CSC, respondent in this case was resolute in following up her
appointment papers. Thus, despite Favis’ having assumed the responsibilities of PVTA Assistant General Manager for
almost two years, the Court affirmed her removal, ruling that:
The tolerance, acquiescence or mistake of the proper officials, resulting in the non-observance of the pertinent rules on the
matter does not render the legal requirement, on the necessity of approval by the Commissioner of Civil Service of
appointments, ineffective and unenforceable.44 (Emphasis supplied)
Taken in its entirety, this case shows that the lack of CSC approval was not due to any negligence on respondent’s
part. Neither was it due to the "tolerance, acquiescence or mistake of the proper officials." Rather, the underhanded
machinations of Gonzales and Oyardo, as well as the gullibility of Diaz, were the major reasons why respondent’s
appointment was not even forwarded to the CSC.
Tomali, likewise, is not applicable. The facts are completely different. In Tomali, petitioner Tomali’s appointment was not
approved by the CSC due to the belated transmittal thereof to the latter. The Court, citing Favis, ruled that the appointee’s
failure to secure the CSC’s approval within the 30-day period rendered her appointment ineffective. It quoted the Merit
Systems Protection Board’s finding that "there is no showing that the non-submission was motivated by bad faith, spite,
malice or at least attributed to the fault of the newly installed [Office of Muslim Affairs] Executive Director." The Court
observed:
Petitioner herself would not appear to be all that blameless. She assumed the position four months after her appointment
was issued or months after that appointment had already lapsed or had become ineffective by operation of law. Petitioner's
appointment was issued on 01 July 1990, but it was only on 31 May 1991 that it was submitted to the CSC, a fact which she
Page 125 of 134

knew, should have known or should have at least verified considering the relatively long interval of time between the date of
her appointment and the date of her assumption to office.45
The Court also found that "[t]here (was) nothing on record to convince us that the new OMA Director (had) unjustly favored
private respondent nor (had) exercised his power of appointment in an arbitrary, whimsical or despotic manner."46
The peculiar circumstances in Tomali are definitely not present here. As a matter of fact, the situation was exactly the
opposite. As we have repeatedly stressed, respondent was not remiss in zealously following up the status of her
appointment. It cannot be reasonably claimed that the failure to submit respondent’s appointment to the CSC was due to her
own fault. The culpability lay in the manner the appointing officials exercised their power with arbitrariness, whim and
despotism. The whole scheme was intended to favor another applicant.
Therefore, the lack of CSC approval in Favis and Tomali should be taken only in that light and not overly stretched to cover
any and all similar cases involving the 30-day rule. Certainly, the CSC approval cannot be done away with. However, an
innocent appointee like the respondent should not be penalized if her papers (which were in the custody and control of others
who, it turned out, were all scheming against her) did not reach the CSC on time. After all, her appointment was
subsequently approved by the CSC anyway.
Under Article 1186 of the Civil Code, "[t]he condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment." Applying this to the appointment process in the civil service, unless the appointee himself is negligent in following
up the submission of his appointment to the CSC for approval, he should not be prejudiced by any willful act done in bad faith
by the appointing authority to prevent the timely submission of his appointment to the CSC. While it may be argued that the
submission of respondent’s appointment to the CSC within 30 days was one of the conditions for the approval of
respondent’s appointment, however, deliberately and with bad faith, the officials responsible for the submission of
respondent’s appointment to the CSC prevented the fulfillment of the said condition. Thus, the said condition should be
deemed fulfilled.
The Court has already had the occasion to rule that an appointment remains valid in certain instances despite non-
compliance of the proper officials with the pertinent CSC rules. In Civil Service Commission v. Joson, Jr.,47 the CSC
challenged the validity of the appointment of Ong on the ground that, among others, it was not reported in the July 1995
Report of Personnel Action (ROPA), thus making such appointment ineffective. The subject rule provided that an
"appointment issued within the month but not listed in the ROPA for the said month shall become ineffective thirty days from
issuance." Rejecting the CSC’s contention, the Court held that there was a legitimate justification for such delayed
observance of the rule:
We find the respondent's justification for the failure of the POEA to include Ong's appointment in its ROPA for July 1995 as
required by CSC Memorandum Circular No. 27, Series of 1994 to be in order. The records show that the [Philippine
Overseas Employment Administration (POEA)] did not include the contractual appointment of Ong in its July ROPA because
its request for exemption from the educational requisite for confidential staff members provided in [Memorandum Circular]
No. 38 had yet been resolved by the CSC. The resolution of the petitioner granting such request was received only in
November, 1995. The POEA, thereafter, reported the appointment in its November, 1995 ROPA.48
The Court reached the same conclusion in the recent case of Chavez v. Ronidel49 where there was a similar inaction from
the responsible officials which resulted in non-compliance with the requirement:
Lastly, we agree with the appellate court that respondent's appointment could not be invalidated solely because of
[Presidential Commission for the Urban Poor’s (PCUP’s)] failure to submit two copies of the ROPA as required by CSC
Resolution No. 97368. xxxx
xxx xxx xxx
We quote with approval the appellate court's ratiocination in this wise:
To our minds, however, the invalidation of the [respondent's] appointment based on this sole technical ground is
unwarranted, if not harsh and arbitrary, considering the factual milieu of this case. For one, it is not the
[respondent's] duty to comply with the requirement of the submission of the ROPA and the certified true copies of her
appointment to [the Civil Service Commission Field Office or] CSCFO within the period stated in the aforequoted CSC
Resolution. The said resolution categorically provides that it is the PCUP, and not the appointee as in the case of the
[respondent] here, which is required to comply with the said reportorial requirements.
Page 126 of 134

Moreover, it bears pointing out that only a few days after the [petitioner] assumed his new post as PCUP Chairman, he
directed the PCUP to hold the processing of [respondent's] appointment papers in abeyance, until such time that an
assessment thereto is officially released from his office. Unfortunately, up to this very day, the [respondent] is still defending
her right to enjoy her promotional appointment as DMO V. Naturally, her appointment failed to comply with the PCUP's
reportorial requirements under CSC Resolution No. 97-3685 precisely because of the [petitioner's] inaction to the
same.
We believe that the factual circumstances of this case calls for the application of equity. To our minds, the invalidation of
the [respondent's] appointment due to a procedural lapse which is undoubtedly beyond her control, and certainly
not of her own making but that of the [petitioner], justifies the relaxation of the provisions of CSC Board Resolution
No. 97-3685, pars. 6,7 and 8. Hence, her appointment must be upheld based on equitable considerations, and that the non-
submission of the ROPA and the certified true copies of her appointment to the CSCFO within the period stated in the
aforequoted CSC Resolution should not work to her damage and prejudice. Besides, the [respondent] could not at all be
faulted for negligence as she exerted all the necessary vigilance and efforts to reap the blessings of a work promotion.
Thus, We cannot simply ignore her plight. She has fought hard enough to claim what is rightfully hers and, as a matter of
simple justice, good conscience, and equity, We should not allow Ourselves to prolong her agony.
All told, We hold that the [respondent's] appointment is valid, notwithstanding the aforecited procedural lapse on the part of
PCUP which obviously was the own making of herein [petitioner]. (Emphasis supplied)
Respondent deserves the same sympathy from the Court because there was also a telling reason behind the non-
submission of her appointment paper within the 30-day period.
The relevance of Joson and Chavez to this case cannot be simply glossed over. While the agencies concerned in those
cases were accredited agencies of the CSC which could take final action on the appointments, that is not the case here.
Thus, any such differentiation is unnecessary. It did not even factor in the Court’s disposition of the issue
in Joson and Chavez. What is crucial is that, in those cases, the Court upheld the appointment despite the non-compliance
with a CSC rule because (1) there were valid justifications for the lapse; (2) the non-compliance was beyond the control of
the appointee and (3) the appointee was not negligent. All these reasons are present in this case, thus, there is no basis in
saying that the afore-cited cases are not applicable here. Similar things merit similar treatment. 1av vphi1
Fourth, in appointing petitioner, the appointing authority effectively revoked the previous appointment of respondent and
usurped the power of the CSC to withdraw or revoke an appointment that had already been accepted by the appointee. It is
the CSC, not the appointing authority, which has this power.50 This is clearly provided in Section 9, Rule V of the Omnibus
Rules:
Section 9. An appointment accepted by the appointee cannot be withdrawn or revoked by the appointing authority
and shall remain in force and effect until disapproved by the [CSC]. xxxx (Emphasis supplied)
Thus, the Court ruled in De Rama v. Court of Appeals51 that it is the CSC which is authorized to recall an appointment initially
approved when such appointment and approval are proven to be in disregard of applicable provisions of the civil service law
and regulations.
Petitioner seeks to inflexibly impose the condition of submission of the appointment to the CSC by the appointing authority
within 30 days from issuance, that is, regardless of the negligence/diligence of the appointee and the bad faith/good faith of
the appointing authority to ensure compliance with the condition. However, such stance would place the appointee at the
mercy and whim of the appointing authority even after a valid appointment has been made. For although the
appointing authority may not recall an appointment accepted by the appointee, he or she can still achieve the same result
through underhanded machinations that impedes or prevents the transmittal of the appointment to the CSC. In other words,
the insistence on a strict application of the condition regarding the submission of the appointment to the CSC within 30 days,
would give the appointing authority the power to do indirectly what he or she cannot do directly. An administrative rule that is
of doubtful basis will not only produce unjust consequences but also corrupt the appointment process. Obviously, such
undesirable end result could not have been the intention of the law.
The power to revoke an earlier appointment through the appointment of another may not be conceded to the appointing
authority. Such position is not only contrary to Section 9, Rule V and Section 1, Rule IV of the Omnibus Rules. It is also a
dangerous reading of the law because it unduly expands the discretion given to the appointing authority and removes the
checks and balances that will rein in any abuse that may take place. The Court cannot countenance such erroneous and
perilous interpretation of the law.
Page 127 of 134

Accordingly, petitioner’s subsequent appointment was void. There can be no appointment to a non-vacant position. The
incumbent must first be legally removed, or her appointment validly terminated, before another can be appointed to succeed
her.52
In sum, the appointment of petitioner was inconsistent with the law and well-established jurisprudence. It not only
disregarded the doctrine of immutability of final judgments but also unduly concentrated on a narrow portion of the provision
of law, overlooking the greater part of the provision and other related rules and using a legal doctrine rigidly and out of
context. Its effect was to perpetuate an injustice.
WHEREFORE, the petition is hereby DENIED.
G.R. No. 158253 March 2, 2007
REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
COMMISSION ON AUDIT and THE NATIONAL TREASURER, Petitioner,
vs.
CARLITO LACAP, doing business under the name and style CARWIN CONSTRUCTION AND CONSTRUCTION
SUPPLY, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court assailing the
Decision1 dated April 28, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 56345 which affirmed with modification the
Decision2 of the Regional Trial Court, Branch 41, San Fernando, Pampanga (RTC) in Civil Case No. 10538, granting the
complaint for Specific Performance and Damages filed by Carlito Lacap (respondent) against the Republic of the Philippines
(petitioner).
The factual background of the case is as follows:
The District Engineer of Pampanga issued and duly published an "Invitation To Bid" dated January 27, 1992. Respondent,
doing business under the name and style Carwin Construction and Construction Supply (Carwin Construction), was pre-
qualified together with two other contractors. Since respondent submitted the lowest bid, he was awarded the contract for the
concreting of Sitio 5 Bahay Pare.3 On November 4, 1992, a Contract Agreement was executed by respondent and
petitioner.4 On September 25, 1992, District Engineer Rafael S. Ponio issued a Notice to Proceed with the concreting
of Sitio 5 Bahay Pare.5 Accordingly, respondent undertook the works, made advances for the purchase of the materials and
payment for labor costs.6
On October 29, 1992, personnel of the Office of the District Engineer of San Fernando, Pampanga conducted a final
inspection of the project and found it 100% completed in accordance with the approved plans and specifications.
Accordingly, the Office of the District Engineer issued Certificates of Final Inspection and Final Acceptance.7
Thereafter, respondent sought to collect payment for the completed project.8 The DPWH prepared the Disbursement
Voucher in favor of petitioner.9 However, the DPWH withheld payment from respondent after the District Auditor of the
Commission on Audit (COA) disapproved the final release of funds on the ground that the contractor’s license of respondent
had expired at the time of the execution of the contract. The District Engineer sought the opinion of the DPWH Legal
Department on whether the contracts of Carwin Construction for various Mount Pinatubo rehabilitation projects were valid
and effective although its contractor’s license had already expired when the projects were contracted.10
In a Letter-Reply dated September 1, 1993, Cesar D. Mejia, Director III of the DPWH Legal Department opined that since
Republic Act No. 4566 (R.A. No. 4566), otherwise known as the Contractor’s License Law, does not provide that a contract
entered into after the license has expired is void and there is no law which expressly prohibits or declares void such contract,
the contract is enforceable and payment may be paid, without prejudice to any appropriate administrative liability action that
may be imposed on the contractor and the government officials or employees concerned.11
In a Letter dated July 4, 1994, the District Engineer requested clarification from the DPWH Legal Department on whether
Carwin Construction should be paid for works accomplished despite an expired contractor’s license at the time the contracts
were executed.12
Page 128 of 134
In a First Indorsement dated July 20, 1994, Cesar D. Mejia, Director III of the Legal Department, recommended that payment
should be made to Carwin Construction, reiterating his earlier legal opinion.13 Despite such recommendation for payment, no
payment was made to respondent.
Thus, on July 3, 1995, respondent filed the complaint for Specific Performance and Damages against petitioner before the
RTC.14
On September 14, 1995, petitioner, through the Office of the Solicitor General (OSG), filed a Motion to Dismiss the complaint
on the grounds that the complaint states no cause of action and that the RTC had no jurisdiction over the nature of the action
since respondent did not appeal to the COA the decision of the District Auditor to disapprove the claim.15
Following the submission of respondent’s Opposition to Motion to Dismiss,16 the RTC issued an Order dated March 11, 1996
denying the Motion to Dismiss.17 The OSG filed a Motion for Reconsideration18 but it was likewise denied by the RTC in its
Order dated May 23, 1996.19
On August 5, 1996, the OSG filed its Answer invoking the defenses of non-exhaustion of administrative remedies and the
doctrine of non-suability of the State.20
Following trial, the RTC rendered on February 19, 1997 its Decision, the dispositive portion of which reads as follows:
WHEREFORE, in view of all the foregoing consideration, judgment is hereby rendered in favor of the plaintiff and against the
defendant, ordering the latter, thru its District Engineer at Sindalan, San Fernando, Pampanga, to pay the following:
a) ₱457,000.00 – representing the contract for the concreting project of Sitio 5 road, Bahay Pare, Candaba, Pampanga plus
interest at 12% from demand until fully paid; and
b) The costs of suit.
SO ORDERED.21
The RTC held that petitioner must be required to pay the contract price since it has accepted the completed project and
enjoyed the benefits thereof; to hold otherwise would be to overrun the long standing and consistent pronouncement against
enriching oneself at the expense of another.22
Dissatisfied, petitioner filed an appeal with the CA.23 On April 28, 2003, the CA rendered its Decision sustaining the Decision
of the RTC. It held that since the case involves the application of the principle of estoppel against the government which is a
purely legal question, then the principle of exhaustion of administrative remedies does not apply; that by its actions the
government is estopped from questioning the validity and binding effect of the Contract Agreement with the respondent; that
denial of payment to respondent on purely technical grounds after successful completion of the project is not countenanced
either by justice or equity.
The CA rendered herein the assailed Decision dated April 28, 2003, the dispositive portion of which reads:
WHEREFORE, the decision of the lower court is hereby AFFIRMED with modification in that the interest shall be six percent
(6%) per annum computed from June 21, 1995.
SO ORDERED.24
Hence, the present petition on the following ground:
THE COURT OF APPEALS ERRED IN NOT FINDING THAT RESPONDENT HAS NO CAUSE OF ACTION AGAINST
PETITIONER, CONSIDERING THAT:
(a) RESPONDENT FAILED TO EXHAUST ADMINISTRATIVE REMEDIES; AND
(b) IT IS THE COMMISSION ON AUDIT WHICH HAS THE PRIMARY JURISDICTION TO RESOLVE RESPONDENT’S
MONEY CLAIM AGAINST THE GOVERNMENT.25
Page 129 of 134

Petitioner contends that respondent’s recourse to judicial action was premature since the proper remedy was to appeal the
District Auditor’s disapproval of payment to the COA, pursuant to Section 48, Presidential Decree No. 1445 (P.D. No. 1445),
otherwise known as the Government Auditing Code of the Philippines; that the COA has primary jurisdiction to resolve
respondent’s money claim against the government under Section 2(1),26 Article IX of the 1987 Constitution and Section
2627 of P.D. No. 1445; that non-observance of the doctrine of exhaustion of administrative remedies and the principle of
primary jurisdiction results in a lack of cause of action.
Respondent, on the other hand, in his Memorandum28 limited his discussion to Civil Code provisions relating to human
relations. He submits that equity demands that he be paid for the work performed; otherwise, the mandate of the Civil Code
provisions relating to human relations would be rendered nugatory if the State itself is allowed to ignore and circumvent the
standard of behavior it sets for its inhabitants.
The present petition is bereft of merit.
The general rule is that before a party may seek the intervention of the court, he should first avail of all the means afforded
him by administrative processes.29 The issues which administrative agencies are authorized to decide should not be
summarily taken from them and submitted to a court without first giving such administrative agency the opportunity to
dispose of the same after due deliberation.30
Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of primary jurisdiction; that is, courts cannot
or will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to
the resolution 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.31
Nonetheless, the doctrine of exhaustion of administrative remedies and the corollary doctrine of primary jurisdiction, which
are based on sound public policy and practical considerations, are not inflexible rules. There are many accepted exceptions,
such as: (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act
is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will
irretrievably prejudice the complainant; (d) where the amount involved is relatively small so as to make the rule impractical
and oppressive; (e) where the question involved is purely legal and will ultimately have to be decided by the courts of
justice;32 (f) where judicial intervention is urgent; (g) when its application may cause great and irreparable damage; (h) where
the controverted acts violate due process; (i) when the issue of non-exhaustion of administrative remedies has been
rendered moot;33 (j) when there is no other plain, speedy and adequate remedy; (k) when strong public interest is involved;
and, (l) in quo warranto proceedings.34Exceptions (c) and (e) are applicable to the present case.
Notwithstanding the legal opinions of the DPWH Legal Department rendered in 1993 and 1994 that payment to a contractor
with an expired contractor’s license is proper, respondent remained unpaid for the completed work despite repeated
demands. Clearly, there was unreasonable delay and official inaction to the great prejudice of respondent.
Furthermore, whether a contractor with an expired license at the time of the execution of its contract is entitled to be paid for
completed projects, clearly is a pure question of law. It does not involve an examination of the probative value of the
evidence presented by the parties. There is a question of law when the doubt or difference arises as to what the law is on a
certain state of facts, and not as to the truth or the falsehood of alleged facts.35 Said question at best could be resolved
only tentatively by the administrative authorities. The final decision on the matter rests not with them but with the courts of
justice. Exhaustion of administrative remedies does not apply, because nothing of an administrative nature is to be or can be
done.36 The issue does not require technical knowledge and experience but one that would involve the interpretation and
application of law.
Thus, while it is undisputed that the District Auditor of the COA disapproved respondent’s claim against the Government,
and, under Section 4837 of P.D. No. 1445, the administrative remedy available to respondent is an appeal of the denial of his
claim by the District Auditor to the COA itself, the Court holds that, in view of exceptions (c) and (e) narrated above, the
complaint for specific performance and damages was not prematurely filed and within the jurisdiction of the RTC to resolve,
despite the failure to exhaust administrative remedies. As the Court aptly stated in Rocamora v. RTC-Cebu (Branch VIII):38
The plaintiffs were not supposed to hold their breath and wait until the Commission on Audit and the Ministry of Public
Highways had acted on the claims for compensation for the lands appropriated by the government. The road had been
completed; the Pope had come and gone; but the plaintiffs had yet to be paid for the properties taken from them. Given this
official indifference, which apparently would continue indefinitely, the private respondents had to act to assert and protect
their interests.39
Page 130 of 134
On the question of whether a contractor with an expired license is entitled to be paid for completed projects, Section 35 of
R.A. No. 4566 explicitly provides:
SEC. 35. Penalties. Any contractor who, for a price, commission, fee or wage, submits or attempts to submit a bid to
construct, or contracts to or undertakes to construct, or assumes charge in a supervisory capacity of a construction work
within the purview of this Act, without first securing a license to engage in the business of contracting in this country; or who
shall present or file the license certificate of another, give false evidence of any kind to the Board, or any member thereof in
obtaining a certificate or license, impersonate another, or use an expired or revoked certificate or license, shall be deemed
guilty of misdemeanor, and shall, upon conviction, be sentenced to pay a fine of not less than five hundred pesos but not
more than five thousand pesos. (Emphasis supplied)
The "plain meaning rule" or verba legis in statutory construction is that if the statute is clear, plain and free from ambiguity, it
must be given its literal meaning and applied without interpretation.40 This rule derived from the maxim Index animi sermo
est (speech is the index of intention) rests on the valid presumption that the words employed by the legislature in a statute
correctly express its intention or will and preclude the court from construing it differently. The legislature is presumed to know
the meaning of the words, to have used words advisedly, and to have expressed its intent by use of such words as are found
in the statute.41 Verba legis non est recedendum, or from the words of a statute there should be no departure.42
The wordings of R.A. No. 4566 are clear. It does not declare, expressly or impliedly, as void contracts entered into by a
contractor whose license had already expired. Nonetheless, such contractor is liable for payment of the fine prescribed
therein. Thus, respondent should be paid for the projects he completed. Such payment, however, is without prejudice to the
payment of the fine prescribed under the law.
Besides, Article 22 of the Civil Code which embodies the maxim Nemo ex alterius incommode debet lecupletari (no man
ought to be made rich out of another’s injury) states:
Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession
of something at the expense of the latter without just or legal ground, shall return the same to him.
This article is part of the chapter of the Civil Code on Human Relations, the provisions of which were formulated as "basic
principles to be observed for the rightful relationship between human beings and for the stability of the social order, x x x
designed to indicate certain norms that spring from the fountain of good conscience, x x x guides human conduct [that]
should run as golden threads through society to the end that law may approach its supreme ideal which is the sway and
dominance of justice."43 The rules thereon apply equally well to the Government.44 Since respondent had rendered services
to the full satisfaction and acceptance by petitioner, then the former should be compensated for them. To allow petitioner to
acquire the finished project at no cost would undoubtedly constitute unjust enrichment for the petitioner to the prejudice of
respondent. Such unjust enrichment is not allowed by law.
WHEREFORE, the present petition is DENIED for lack of merit. The assailed Decision of the Court of Appeals dated April 28,
2003 in CA-G.R. CV No. 56345 is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 180388 January 18, 2011
GREGORIO R. VIGILAR, SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH), DPWH
UNDERSECRETARIES TEODORO E. ENCARNACION AND EDMUNDO E. ENCARNACION AND EDMUNDO V. MIR,
DPWH ASSISTANT SECRETARY JOEL L. ALTEA, DPWH REGIONAL DIRECTOR VICENTE B. LOPEZ, DPWH
DISTRICT ENGINEER ANGELITO M. TWAÑO, FELIX A. DESIERTO OF THE TECHNICAL WORKING GROUP
VALIDATION AND AUDITING TEAM, AND LEONARDO ALVARO, ROMEO N. SUPAN, VICTORINO C. SANTOS OF THE
DPWH PAMPANGA 2ND ENGINEERING DISTRICT, Petitioners,
vs.
ARNULFO D. AQUINO, Respondent.
DECISION
SERENO, J.:
Page 131 of 134

Before the Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, assailing the Decision2of the
Court of Appeals in C.A.-G.R. CV No. 82268, dated 25 September 2006.
The antecedent facts are as follows:
On 19 June 1992, petitioner Angelito M. Twaño, then Officer-in-Charge (OIC)-District Engineer of the Department of Public
Works and Highways (DPWH) 2nd Engineering District of Pampanga sent an Invitation to Bid to respondent Arnulfo D.
Aquino, the owner of A.D. Aquino Construction and Supplies. The bidding was for the construction of a dike by bulldozing a
part of the Porac River at Barangay Ascomo-Pulungmasle, Guagua, Pampanga.
Subsequently, on 7 July 1992, the project was awarded to respondent, and a "Contract of Agreement" was thereafter
executed between him and concerned petitioners for the amount of PhP1,873,790.69, to cover the project cost.
By 9 July 1992, the project was duly completed by respondent, who was then issued a Certificate of Project Completion
dated 16 July 1992. The certificate was signed by Romeo M. Yumul, the Project Engineer; as well as petitioner Romeo N.
Supan, Chief of the Construction Section, and by petitioner Twaño.
Respondent Aquino, however, claimed that PhP1,262,696.20 was still due him, but petitioners refused to pay the amount. He
thus filed a Complaint3 for the collection of sum of money with damages before the Regional Trial Court of Guagua,
Pampanga. The complaint was docketed as Civil Case No. 3137.
Petitioners, for their part, set up the defense4 that the Complaint was a suit against the state; that respondent failed to
exhaust administrative remedies; and that the "Contract of Agreement" covering the project was void for violating Presidential
Decree No. 1445, absent the proper appropriation and the Certificate of Availability of Funds.5
On 28 November 2003, the lower court ruled in favor of respondent, to wit:
WHEREFORE, premises considered, defendant Department of Public Works and Highways is hereby ordered to pay the
plaintiff Arnulfo D. Aquino the following:
1. PhP1,873,790.69, Philippine Currency, representing actual amount for the completion of the project done by the
plaintiff;
2. PhP50,000.00 as attorney’s fee and
3. Cost of this suit.
SO ORDERED. 6
It is to be noted that respondent was only asking for PhP1,262,696.20; the award in paragraph 1 above, however, conforms
to the entire contract amount.
On appeal, the Court of Appeals reversed and set aside the Decision of the lower court and disposed as follows:
WHEREFORE, premises considered, the appeal is GRANTED. The "CONTRACT AGREEMENT" entered into between the
plaintiff-appellee’s construction company, which he represented, and the government, through the Department of Public
Works and Highway (DPWH) – Pampanga 2nd Engineering District, is declared null and void ab initio.
The assailed decision of the court a quo is hereby REVERSED AND SET ASIDE.
In line with the pronouncement in Department of Health vs. C.V. Canchela & Associates, Architects,7 the Commission on
Audit (COA) is hereby ordered to determine and ascertain with dispatch, on a quantum meruit basis, the total obligation due
to the plaintiff-appellee for his undertaking in implementing the subject contract of public works, and to allow payment
thereof, subject to COA Rules and Regulations, upon the completion of the said determination.
No pronouncement as to costs.
SO ORDERED.8
Page 132 of 134
Dissatisfied with the Decision of the Court of Appeals, petitioners are now before this Court, seeking a reversal of the
appellate court’s Decision and a dismissal of the Complaint in Civil Case No. G-3137. The Petition raises the following
issues:
1. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE DOCTRINE OF NON-SUABILITY OF
THE STATE HAS NO APPLICATION IN THIS CASE.
2. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT DISMISSING THE COMPLAINT FOR FAILURE OF
RESPONDENT TO EXHAUST ALL ADMINISTRATIVE REMEDIES.
3. WHETHER OR NOT THE COURT OF APPEALS ERRED IN ORDERING THE COA TO ALLOW PAYMENT TO
RESPONDENT ON A QUANTUM MERUIT BASIS DESPITE THE LATTER’S FAILURE TO COMPLY WITH THE
REQUIREMENTS OF PRESIDENTIAL DECREE NO. 1445.
After a judicious review of the case, the Court finds the Petition to be without merit.
Firstly, petitioners claim that the Complaint filed by respondent before the Regional Trial Court was done without exhausting
administrative remedies. Petitioners aver that respondent should have first filed a claim before the Commission on Audit
(COA) before going to the courts. However, it has been established that the doctrine of exhaustion of administrative
remedies and the doctrine of primary jurisdiction are not ironclad rules. In Republic of the Philippines v. Lacap,9 this Court
enumerated the numerous exceptions to these rules, namely: (a) where there is estoppel on the part of the party invoking the
doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is
unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) where the amount involved is
relatively so small as to make the rule impractical and oppressive; (e) where the question involved is purely legal and will
ultimately have to be decided by the courts of justice; (f) where judicial intervention is urgent; (g) where the application of the
doctrine may cause great and irreparable damage; (h) where the controverted acts violate due process; (i) where the issue of
non-exhaustion of administrative remedies has been rendered moot; (j) where there is no other plain, speedy and adequate
remedy; (k) where strong public interest is involved; and (l) in quo warranto proceedings. In the present case, conditions (c)
and (e) are present.
The government project contracted out to respondent was completed almost two decades ago. To delay the proceedings by
remanding the case to the relevant government office or agency will definitely prejudice respondent. More importantly, the
issues in the present case involve the validity and the enforceability of the "Contract of Agreement" entered into by the
parties. These are questions purely of law and clearly beyond the expertise of the Commission on Audit or the DPWH. In
Lacap, this Court said:
... It does not involve an examination of the probative value of the evidence presented by the parties. There is a question of
law when the doubt or difference arises as to what the law is on a certain state of facts, and not as to the truth or the
falsehood of alleged facts. Said question at best could be resolved only tentatively by the administrative authorities. The final
decision on the matter rests not with them but with the courts of justice. Exhaustion of administrative remedies does not
apply, because nothing of an administrative nature is to be or can be done. The issue does not require technical knowledge
and experience but one that would involve the interpretation and application of law. (Emphasis supplied.)
Secondly, in ordering the payment of the obligation due respondent on a quantum meruit basis, the Court of Appeals
correctly relied on Royal Trust Corporation v. COA,10 Eslao v. COA,11 Melchor v. COA,12 EPG Construction Company v.
Vigilar,13 and Department of Health v. C.V. Canchela & Associates, Architects.14 All these cases involved government
projects undertaken in violation of the relevant laws, rules and regulations covering public bidding, budget appropriations,
and release of funds for the projects. Consistently in these cases, this Court has held that the contracts were void for failing
to meet the requirements mandated by law; public interest and equity, however, dictate that the contractor should be
compensated for services rendered and work done.
Specifically, C.V. Canchela & Associates is similar to the case at bar, in that the contracts involved in both cases failed to
comply with the relevant provisions of Presidential Decree No. 1445 and the Revised Administrative Code of 1987.
Nevertheless, "(t)he illegality of the subject Agreements proceeds, it bears emphasis, from an express declaration or
prohibition by law, not from any intrinsic illegality. As such, the Agreements are not illegal per se, and the party claiming
thereunder may recover what had been paid or delivered."15
Page 133 of 134

The government project involved in this case, the construction of a dike, was completed way back on 9 July 1992. For almost
two decades, the public and the government benefitted from the work done by respondent. Thus, the Court of Appeals was
correct in applying Eslao to the present case. In Eslao, this Court stated:
...the Court finds that the contractor should be duly compensated for services rendered, which were for the benefit of the
general public. To deny the payment to the contractor of the two buildings which are almost fully completed and presently
occupied by the university would be to allow the government to unjustly enrich itself at the expense of another. Justice and
equity demand compensation on the basis of quantum meruit. (Emphasis supplied.)
Neither can petitioners escape the obligation to compensate respondent for services rendered and work done by invoking the
state’s immunity from suit. This Court has long established in Ministerio v. CFI of Cebu,16 and recently reiterated in Heirs of
Pidacan v. ATO,17 that the doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an
injustice to a citizen. As this Court enunciated in EPG Construction:18 1avvphi 1
To our mind, it would be the apex of injustice and highly inequitable to defeat respondent’s right to be duly
compensated for actual work performed and services rendered, where both the government and the public have for
years received and accepted benefits from the project and reaped the fruits of respondent’s honest toil and labor.
xxx xxx xxx
Under these circumstances, respondent may not validly invoke the Royal Prerogative of Dishonesty and conveniently hide
under the State's cloak of invincibility against suit, considering that this principle yields to certain settled exceptions. True
enough, the rule, in any case, is not absolute for it does not say that the state may not be sued under any
circumstance.
xxx xxx xxx
Although the Amigable and Ministerio cases generously tackled the issue of the State's immunity from suit vis a vis the
payment of just compensation for expropriated property, this Court nonetheless finds the doctrine enunciated in the
aforementioned cases applicable to the instant controversy, considering that the ends of justice would be subverted if
we were to uphold, in this particular instance, the State's immunity from suit.
To be sure, this Court — as the staunch guardian of the citizens' rights and welfare — cannot sanction an injustice
so patent on its face, and allow itself to be an instrument in the perpetration thereof. Justice and equity sternly
demand that the State's cloak of invincibility against suit be shred in this particular instance, and that petitioners-
contractors be duly compensated — on the basis of quantum meruit — for construction done on the public works
housing project. (Emphasis supplied.)
WHEREFORE, in view of the foregoing, the Petition is DENIED for lack of merit. The assailed Decision of the Court of
Appeals in CA-G.R. No. 82268 dated 25 September 2006 is AFFIRMED.
SO ORDERED.
Page 134 of 134

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ADMINISTRATIVE LAW CASE NO. 7 PERALTA vs.

G.R. No. L-64279 April 30, 1984

ANSELMO L. PESIGAN and MARCELINO L. PESIGAN, petitioners, vs.

AQUINO, J.: ñé+ .£ª wph!1

SO ORDERED. 1äw phï1.ñët

G.R. No. 110571 March 10, 1994

Petitioner then concludes that:

III. Mariwasa has lost it right to appeal . . . in this case.3

Sections 1, 2 and 3 of Circular 1-91, is herein quoted below:

G.R. No. 88291 June 8, 1993

ERNESTO M. MACEDA, petitioner,

xxx xxx xxx

xxx xxx xxx

On May 27, 1976 P.D. No. 938 was issued

xxx xxx xxx

xxx xxx xxx

xxx xxx xxx

xxx xxx xxx

xxx xxx xxx

On July 30, 1977, P.D. 1177 was issued as it was

The law also declared that —

and since there was a

it was decreed that:

1) The effect on the relative price levels;

2) The relative contribution of the corporation to the revenue generation effort;

3) The nature of the activity in which the corporation is engaged in; or

4) In general the greater national interest to be served.

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Since it was decided that:

It was thus ordered that:

a) those covered by the non-impairment clause of the Constitution;

c) those enjoyed by enterprises registered with:

e) those conferred under the four basic codes namely:

(i) the Tariff and Customs Code, as amended;

(ii) the National Internal Revenue Code, as amended;

(iii) the Local Tax Code, as amended;

(iv) the Real Property Tax Code, as amended;

a) restore tax and/or duty exemptions withdrawn hereunder in whole or in part;

c) impose conditions for the restoration of tax and/or duty exemption;

a) the effect on relative price levels;

b) relative contribution of the beneficiary to the revenue generation effort;

c) nature of the activity the beneficiary is engaged; and

d) in general, the greater national interest to be served.

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Classifications or kinds of Taxes:

According to Persons who pay or who bear the burden:

(1) What kind of tax exemption privileges did NPC have?

His point is not well-taken.

[T]he Corporation is hereby declared exempt:

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Petitioner reminds Us that:

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13(a) : court or administrative proceedings;

13(b) : income, franchise, realty taxes;

13(d) : petroleum products used in generation of electric power.

The same was amended by P.D. No. 380 as follows:

In his memorandum filed July 16, 1992, petitioner submits:

The Court disagrees.

Applying by analogy the weight of authority that:

A misconception must be cleared up.

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