Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

84818 December 18, 1989 PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION, petitioner, vs. JOSE LUIS A. ALCUAZ, as NTC Commissioner, and NATIONAL TELECOMMUNICATIONS COMMISSION,respondents. Rilloraza, Africa, De Ocampo & Africa for petitioner. Victor de la Serna for respondent Alcuaz.

as needed to deliver telecommunications services from the communications satellite system and ground terminal or terminals."

Pursuant to said franchise, petitioner puts on record that it undertook the following activities and established the following installations: 1. In 1967, PHILCOMSAT established its provisional earth station in Pinugay, Rizal. 2. In 1968, earth station standard "A" antenna (Pinugay I) was established. Pinugay I provided direct satellite communication links with the Pacific Ocean Region (the United States, Australia, Canada, Hawaii, Guam, Korea, Thailand, China [PROC], New Zealand and Brunei) thru the Pacific Ocean INTELSAT satellite. 3. In 1971, a second earth station standard "A" antenna(Pinugay III) was established. Pinugay II provided links with the Indian Ocean Region (major cities in Europe, Middle East, Africa, and other Asia Pacific countries operating within the region) thru the Indian Ocean INTELSAT satellite. 4. In 1983, a third earth station standard "B" antenna (Pinugay III) was established to temporarily assume the functions of Pinugay I and then Pinugay II while they were being refurbished. Pinugay III now serves as spare or reserved antenna for possible contingencies. 5. In 1983, PHILCOMSAT constructed and installed a standard "B" antenna at Clark Air Field, Pampanga as a television receive-only earth station which provides the U.S. Military bases with a 24-hour television service. 6. In 1989, petitioner completed the installation of a third standard "A" earth station (Pinugay IV) to take over the links in Pinugay I due to obsolescence. 3 By designation of the Republic of the Philippines, the petitioner is also the sole signatory for the Philippines in the Agreement and the Operating Agreement relating to the International Telecommunications Satellite Organization (INTELSAT) of 115 member nations, as well as in the Convention and the Operating Agreement of the International Maritime

REGALADO, J.: This case is posed as one of first impression in the sense that it involves the public utility services of the petitioner Philippine Communications Satellite Corporation (PHILCOMSAT, for short) which is the only one rendering such services in the Philippines. The petition before us seeks to annul and set aside an Order 1 issued by
respondent Commissioner Jose Luis Alcuaz of the National Telecommunications Commission (hereafter, NTC), dated September 2, 1988, which directs the provisional reduction of the rates which may be charged by petitioner for certain specified lines of its services by fifteen percent (15%) with the reservation to make further reductions later, for being violative of the constitutional prohibition against undue delegation of legislative power and a denial of procedural, as well as substantive, due process of law.

The antecedental facts as summarized by petitioner 2 are not in dispute. By

virtue of Republic Act No. 5514, PHILCOMSAT was granted "a franchise to establish, construct, maintain and operate in the Philippines, at such places as the grantee may select, station or stations and associated equipment and facilities for international satellitecommunications." Under this franchise, it was likewise granted the authority to "construct and operate such ground facilities

Satellite Organization (INMARSAT) of 53 member nations, which two global commercial telecommunications satellite corporations were collectively established by various states in line with the principles set forth in Resolution 1721 (XVI) of the General Assembly of the United Nations. Since 1968, the petitioner has been leasing its satellite circuits to: 1. Philippine Long Distance Telephone Company; 2. Philippine Global Communications, Inc.; 3. Eastern Telecommunications Phils., Inc.; 4. Globe Mackay Cable and Radio Corp. ITT; and 5. Capitol Wireless, Inc. or their predecessors-in-interest. The satellite services thus provided by petitioner enable said international carriers to serve the public with indispensable communication services, such as overseas telephone, telex, facsimile, telegrams, high speed data, live television in full color, and television standard conversion from European to American or vice versa. Under Section 5 of Republic Act No. 5514, petitioner was exempt from the jurisdiction of the then Public Service Commission, now respondent NTC. However, pursuant to Executive Order No. 196 issued on June 17, 1987, petitioner was placed under the jurisdiction, control and regulation of respondent NTC, including all its facilities and services and the fixing of rates. Implementing said Executive Order No. 196, respondents required petitioner to apply for the requisite certificate of public convenience and necessity covering its facilities and the services it renders, as well as the corresponding authority to charge rates therefor. Consequently, under date of September 9, 1987, petitioner filed with respondent NTC an application 4 for authority to continue operating and
maintaining the same facilities it has been continuously operating and maintaining since 1967, to continue providing the international satellite communications services it has likewise been providing since 1967, and to charge the current rates applied for in rendering such services. Pending hearing, it also applied for a provisional authority so that it can continue to operate and maintain the above mentioned facilities, provide the services and charge therefor the aforesaid rates therein applied for.

On September 16, 1987, petitioner was granted a provisional authority to continue operating its existing facilities, to render the services it was then offering, and to charge the rates it was then charging. This authority was valid for six (6) months from the date of said order. 5 When said provisional
authority expired on March 17, 1988, it was extended for another six (6) months, or up to September 16, 1988.

The NTC order now in controversy had further extended the provisional authority of the petitioner for another six (6) months, counted from September 16, 1988, but it directed the petitioner to charge modified reduced rates through a reduction of fifteen percent (15%) on the present authorized rates. Respondent Commissioner ordered said reduction on the following ground: The Commission in its on-going review of present service rates takes note that after an initial evaluation by the Rates Regulation Division of the Common Carriers Authorization Department of the financial statements of applicant, there is merit in a REDUCTION in some of applicant's rates, subject to further reductions, should the Commission finds (sic) in its further evaluation that more reduction should be effected either on the basis of a provisional authorization or in the final consideration of the case. 6 PHILCOMSAT assails the above-quoted order for the following reasons: 1. The enabling act (Executive Order No. 546) of respondent NTC empowering it to fix rates for public service communications does not provide the necessary standards constitutionally required, hence there is an undue delegation of legislative power, particularly the adjudicatory powers of NTC; 2. Assuming arguendo that the rate-fixing power was properly and constitutionally conferred, the same was exercised in an unconstitutional manner, hence it is ultra vires, in that (a) the questioned order violates procedural due process for having been issued without prior notice and hearing; and (b) the rate reduction it imposes is unjust, unreasonable and confiscatory, thus constitutive of a violation of substantive due process. I. Petitioner asseverates that nowhere in the provisions of Executive Order No. 546, providing for the creation of respondent NTC and granting its ratefixing powers, nor of Executive Order No. 196, placing petitioner under the jurisdiction of respondent NTC, can it be inferred that respondent NTC is

guided by any standard in the exercise of its rate-fixing and adjudicatory powers. While petitioner in its petition-in-chief raised the issue of undue delegation of legislative power, it subsequently clarified its said submission to mean that the order mandating a reduction of certain rates is undue delegation not of legislative but of quasi-judicial power to respondent NTC, the exercise of which allegedly requires an express conferment by the legislative body. Whichever way it is presented, petitioner is in effect questioning the constitutionality of Executive Orders Nos. 546 and 196 on the ground that the same do not fix a standard for the exercise of the power therein conferred. We hold otherwise. Fundamental is the rule that delegation of legislative power may be sustained only upon the ground that some standard for its exercise is provided and that the legislature in making the delegation has prescribed the manner of the exercise of the delegated power. Therefore, when the administrative agency concerned, respondent NTC in this case, establishes a rate, its act must both be non- confiscatory and must have been established in the manner prescribed by the legislature; otherwise, in the absence of a fixed standard, the delegation of power becomes unconstitutional. In case of a delegation of rate-fixing power, the only standard which the legislature is required to prescribe for the guidance of the administrative authority is that the rate be reasonable and just. However, it has been held that even in the absence of an express requirement as to reasonableness, this standard may be implied. 7 It becomes important then to ascertain the nature of the power delegated to respondent NTC and the manner required by the statute for the lawful exercise thereof. Pursuant to Executive Orders Nos. 546 and 196, respondent NTC is empowered, among others, to determine and prescribe rates pertinent to the operation of public service communications which necessarily include the power to promulgate rules and regulations in connection therewith. And, under Section 15(g) of Executive Order No. 546, respondent NTC should be guided by the requirements of public safety, public interest and reasonable feasibility of maintaining effective competition of private entities in communications and broadcasting facilities. Likewise, in Section 6(d) thereof, which provides for the creation of the Ministry of Transportation and Communications with control and supervision over respondent NTC, it

is specifically provided that the national economic viability of the entire network or components of the communications systems contemplated therein should be maintained at reasonable rates. We need not go into an in-depth analysis of the pertinent provisions of the law in order to conclude that respondent NTC, in the exercise of its rate-fixing power, is limited by the requirements of public safety, public interest, reasonable feasibility and reasonable rates, which conjointly more than satisfy the requirements of a valid delegation of legislative power. II. On another tack, petitioner submits that the questioned order violates procedural due process because it was issued motu proprio, without notice to petitioner and without the benefit of a hearing. Petitioner laments that said order was based merely on an "initial evaluation," which is a unilateral evaluation, but had petitioner been given an opportunity to present its side before the order in question was issued, the confiscatory nature of the rate reduction and the consequent deterioration of the public service could have been shown and demonstrated to respondents. Petitioner argues that the function involved in the rate fixing-power of NTC is adjudicatory and hence quasi-judicial, not quasi- legislative; thus, notice and hearing are necessary and the absence thereof results in a violation of due process. Respondents admit that the application of a policy like the fixing of rates as exercised by administrative bodies is quasi-judicial rather than quasilegislative: that where the function of the administrative agency is legislative, notice and hearing are not required, but where an order applies to a named person, as in the instant case, the function involved is adjudicatory. 8 Nonetheless, they insist that under the facts obtaining the order
in question need not be preceded by a hearing, not because it was issued pursuant to respondent NTC's legislative function but because the assailed order is merely interlocutory, it being an incident in the ongoing proceedings on petitioner's application for a certificate of public convenience; and that petitioner is not the only primary source of data or information since respondent is currently engaged in a continuing review of the rates charged.

We find merit in petitioner's contention. In Vigan Electric Light Co., Inc. vs. Public Service Commission, 9 we made a
categorical classification as to when the rate-filing power of administrative bodies is quasi-judicial and when it is legislative, thus:

Moreover, although the rule-making power and even the power to fix rates- when such rules and/or rates are meant to apply to all enterprises of a given kind throughout the Philippines-may partake of a legislative character, such is

not the nature of the order complained of. Indeed, the same applies exclusively to petitioner herein. What is more, it is predicated upon the finding of fact-based upon a report submitted by the General Auditing Office-that petitioner is making a profit of more than 12% of its invested capital, which is denied by petitioner. Obviously, the latter is entitled to cross-examine the maker of said report, and to introduce evidence to disprove the contents thereof and/or explain or complement the same, as well as to refute the conclusion drawn therefrom by the respondent. In other words, in making said finding of fact, respondent performed a function partaking of a quasi-judicial character, the valid exercise of which demands previous notice and hearing. This rule was further explained in the subsequent case of The Central Bank of the Philippines vs. Cloribel, et al. 10to wit: It is also clear from the authorities that where the function of the administrative body is legislative, notice of 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 future action 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 specific individual) ... 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 quasijudicial matter, and its acts are particular and immediate rather than general and prospective, the person whose rights or property may be affected by the action is entitled to notice and hearing. 11

The order in question which was issued by respondent Alcuaz no doubt contains all the attributes of a quasi-judicial adjudication. Foremost is the fact that said order pertains exclusively to petitioner and to no other. Further, it is premised on a finding of fact, although patently superficial, that there is merit in a reduction of some of the rates charged- based on an initial evaluation of petitioner's financial statements-without affording petitioner the benefit of an explanation as to what particular aspect or aspects of the financial statements warranted a corresponding rate reduction. No rationalization was offered nor were the attending contingencies, if any, discussed, which prompted respondents to impose as much as a fifteen percent (15%) rate reduction. It is not far-fetched to assume that petitioner could be in a better position to rationalize its rates vis-a-vis the viability of its business requirements. The rates it charges result from an exhaustive and detailed study it conducts of the multi-faceted intricacies attendant to a public service undertaking of such nature and magnitude. We are, therefore, inclined to lend greater credence to petitioner's ratiocination that an immediate reduction in its rates would adversely affect its operations and the quality of its service to the public considering the maintenance requirements, the projects it still has to undertake and the financial outlay involved. Notably, petitioner was not even afforded the opportunity to cross-examine the inspector who issued the report on which respondent NTC based its questioned order. At any rate, there remains the categorical admission made by respondent NTC that the questioned order was issued pursuant to its quasi-judicial functions. It, however, insists that notice and hearing are not necessary since the assailed order is merely incidental to the entire proceedings and, therefore, temporary in nature. This postulate is bereft of merit. While respondents may fix a temporary rate pending final determination of the application of petitioner, such rate-fixing order, temporary though it may be, is not exempt from the statutory procedural requirements of notice and hearing, as well as the requirement of reasonableness. Assuming that such power is vested in NTC, it may not exercise the same in an arbitrary and confiscatory manner. Categorizing such an order as temporary in nature does not perforce entail the applicability of a different rule of statutory procedure than would otherwise be applied to any other order on the same matter unless otherwise provided by the applicable law. In the case at bar, the applicable statutory provision is Section 16(c) of the Public Service Act which provides: Section 16. Proceedings of the Commission, upon notice and hearing the Commission shall have power, upon proper notice and hearing in accordance with the rules and

provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary: xxx xxx xxx (c) To fix and determine individual or joint rates, ... which shall be imposed, observed and followed thereafter by any public service; ... There is no reason to assume that the aforesaid provision does not apply to respondent NTC, there being no limiting, excepting, or saving provisions to the contrary in Executive Orders Nos. 546 and 196. It is thus clear that with regard to rate-fixing, respondent has no authority to make such order without first giving petitioner a hearing, whether the order be temporary or permanent, and it is immaterial whether the same is made upon a complaint, a summary investigation, or upon the commission's own motion as in the present case. That such a hearing is required is evident in respondents' order of September 16, 1987 in NTC Case No. 87-94 which granted PHILCOMSAT a provisional authority "to continue operating its existing facilities, to render the services it presently offers, and to charge the rates as reduced by them "under the condition that "(s)ubject to hearing and the final consideration of the merit of this application, the Commission may modify, revise or amend the rates ..." 12 While it may be true that for purposes of rate-fixing respondents may have other sources of information or data, still, since a hearing is essential, respondent NTC should act solely on the basis of the evidence before it and not on knowledge or information otherwise acquired by it but which is not offered in evidence or, even if so adduced, petitioner was given no opportunity to controvert. Again, the order requires the new reduced rates to be made effective on a specified date. It becomes a final legislative act as to the period during which it has to remain in force pending the final determination of the case. 13An order of respondent NTC prescribing reduced rates, even for a
temporary period, could be unjust, unreasonable or even confiscatory, especially if the rates are unreasonably low, since the utility permanently loses its just revenue during the prescribed period. In fact, such order is in effect final insofar as the revenue during the period covered by the order is concerned. Upon a showing, therefore, that the order requiring a reduced rate is confiscatory, and will unduly deprive petitioner of a reasonable return upon its property, a declaration of its nullity becomes inductible, which brings us to the issue on substantive due process.

III. Petitioner contends that the rate reduction is confiscatory in that its implementation would virtually result in a cessation of its operations and eventual closure of business. On the other hand, respondents assert that since petitioner is operating its communications satellite facilities through a legislative franchise, as such grantee it has no vested right therein. What it has is merely a privilege or license which may be revoked at will by the State at any time without necessarily violating any vested property right of herein petitioner. While petitioner concedes this thesis of respondent, it counters that the withdrawal of such privilege should nevertheless be neither whimsical nor arbitrary, but it must be fair and reasonable. There is no question that petitioner is a mere grantee of a legislative franchise which is subject to amendment, alteration, or repeal by Congress when the common good so requires. 14 Apparently, therefore, such grant
cannot be unilaterally revoked absent a showing that the termination of the operation of said utility is required by the common good.

The rule is that the power of the State to regulate the conduct and business of public utilities is limited by the consideration that it is not the owner of the property of the utility, or clothed with the general power of management incident to ownership, since the private right of ownership to such property remains and is not to be destroyed by the regulatory power. The power to regulate is not the power to destroy useful and harmless enterprises, but is the power to protect, foster, promote, preserve, and control with due regard for the interest, first and foremost, of the public, then of the utility and of its patrons. Any regulation, therefore, which operates as an effective confiscation of private property or constitutes an arbitrary or unreasonable infringement of property rights is void, because it is repugnant to the constitutional guaranties of due process and equal protection of the laws. 15 Hence, the inherent power and authority of the State, or its authorized agent, to regulate the rates charged by public utilities should be subject always to the requirement that the rates so fixed shall be reasonable and just. A commission has no power to fix rates which are unreasonable or to regulate them arbitrarily. This basic requirement of reasonableness comprehends such rates which must not be so low as to be confiscatory, or too high as to be oppressive. 16 What is a just and reasonable rate is not a question of formula but of sound business judgment based upon the evidence 17 it is a question of fact calling
for the exercise of discretion, good sense, and a fair, enlightened and independent judgment. 18 In determining whether a rate is confiscatory, it is essential also to consider the given situation, requirements and opportunities of the utility. A method often employed in determining reasonableness is the fair

return upon the value of the property to the public utility. Competition is also a very important factor in determining the reasonableness of rates since a carrier is allowed to make such rates as are necessary to meet competition. 19

A cursory perusal of the assailed order reveals that the rate reduction is solely and primarily based on the initial evaluation made on the financial statements of petitioner, contrary to respondent NTC's allegation that it has several other sources of information without, however, divulging such sources. Furthermore, it did not as much as make an attempt to elaborate on how it arrived at the prescribed rates. It just perfunctorily declared that based on the financial statements, there is merit for a rate reduction without any elucidation on what implications and conclusions were necessarily inferred by it from said statements. Nor did it deign to explain how the data reflected in the financial statements influenced its decision to impose a rate reduction. On the other hand, petitioner may likely suffer a severe drawback, with the consequent detriment to the public service, should the order of respondent NTC turn out to be unreasonable and improvident. The business in which petitioner is engaged is unique in that its machinery and equipment have always to be taken in relation to the equipment on the other end of the transmission arrangement. Any lack, aging, acquisition, rehabilitation, or refurbishment of machinery and equipment necessarily entails a major adjustment or innovation on the business of petitioner. As pointed out by petitioner, any change in the sending end abroad has to be matched with the corresponding change in the receiving end in the Philippines. Conversely, any in the receiving end abroad has to be matched with the corresponding change in the sending end in the Philippines. An inability on the part of petitioner to meet the variegations demanded be technology could result in a deterioration or total failure of the service of satellite communications. At present, petitioner is engaged in several projects aimed at refurbishing, rehabilitating, and renewing its machinery and equipment in order to keep up with the continuing charges of the times and to maintain its facilities at a competitive level with the technological advances abroad. There projected undertakings were formulated on the premise that rates are maintained at their present or at reasonable levels. Hence, an undue reduction thereof may practically lead to a cessation of its business. While we concede the primacy of the public interest in an adequate and efficient service, the same is not necessarily to be equated with reduced rates. Reasonableness in the rates assumes that the same is fair to both the public utility and the consumer.

Consequently, we hold that the challenged order, particularly on the issue of rates provided therein, being violative of the due process clause is void and should be nullified. Respondents should now proceed, as they should heretofore have done, with the hearing and determination of petitioner's pending application for a certificate of public convenience and necessity and in which proceeding the subject of rates involved in the present controversy, as well as other matter involved in said application, be duly adjudicated with reasonable dispatch and with due observance of our pronouncements herein. WHEREFORE, the writ prayed for is GRANTED and the order of respondents, dated September 2, 1988, in NTC Case No. 87-94 is hereby SET ASIDE. The temporary restraining order issued under our resolution of September 13, 1988, as specifically directed against the aforesaid order of respondents on the matter of existing rates on petitioner's present authorized services, is hereby made permanent. SO ORDERED. Fernan, (C.J.), Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes, Grio-Aquino and Medialdea, JJ., concur. Padilla, J., took no part.

Separate Opinions

GUTIERREZ, JR., J., concurring: I concur in the ponencia of Justice Regalado and join him in the erudite and thorough discussion of the respondent's authority. However, I have reservations about our continuing to abide by the dictum that in the exercise of quasi-legislative power, notice and hearing are not required. I believe that this doctrine is ripe for re- examination.

Senators and Congressmen are directly elected by the people. Administrative officials are not. If the members of an administrative body are, as is so often the case, appointed not on the basis of competence and qualifications but out of political or personal considerations, it is not only the sense of personal responsibility to the electorate affected by legislation which is missing. The expertise and experience needed for the issuance of sound rules and regulations would also be sorely lacking. Congress never passes truly important legislation without holding public hearings. Yet, administrative officials who are not directly attuned to the public pulse see no need for hearings. They issue rules and circulars with far reaching effects on our economy and our nation's future on the assumption that the head of an agency knows best what is good for the people. I believe that in the exercise of quasi-legislative powers, administrative agencies, much, much more than Congress, should hold hearings and should be given guidelines as to when notices and hearings are essential even in quasi-legislation.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 133842 January 26, 2000

FEDERICO S. SANDOVAL, petitioner, vs. COMMISSION ON ELECTIONS and CANUTO SENEN A. ORETA, respondents. PUNO, J.: The petition at bar assails the order of the Commission on Elections (COMELEC) en banc dated June 2, 1998 nullifying and setting aside the proclamation of petitioner Federico S. Sandoval as congressman-elect for the Malabon-Navotas legislative district. The facts are as follows: Petitioner Federico S. Sandoval and private respondent Canuto Senen Oreta, together with Pedro Domingo, Mariano Santiago, Symaco Benito and Warren Serna, vied for the congressional seat for the MalabonNavotas legistative district during the election held on May 11, 1998. On election day, after the votes have been cast and counted in the various precincts in the two municipalities, their respective board of canvassers convened to canvass the election returns forwarded by the board of election inspectors. In Malabon, a reception group and several canvassing committees were formed to expedite the canvass. The reception group received, examined and recorded the sealed envelopes containing the election returns, as well as the ballot boxes coming from the precincts. The reception group then distributed the election returns among the canvassing committees. The committees simultaneously canvassed the election returns assigned to them in the presence of the lawyers and watchers of the candidates. On May 16, 1998, counsels for private respondent made a written request upon Malabon Election Officer Armando Mallorca to furnish them with a

complete list of the statement of votes so that they could verify whether all statements of votes have been tabulated.1 They likewise requested for a complete list of precincts in the municipality together with the number of canvassed votes for petitioner and private respondent as of May 16, 1998. They also sought permission to conduct an audit of the tabulation reports made by the municipal board of canvassers.2 These requests, however, were denied by the municipal board of canvassers on the following grounds: (1) that any counsel for a candidate has neither personality nor right to conduct an audit of the tabulation report as the proceedings of the board are presumed to be regular, and (2) that the granting of the requests would delay the proceedings of the board to the prejudice of the will of the people of Malabon.3 On May 17, 1998, the Malabon municipal board of canvassers concluded its proceedings. The board issued a certificate of canvass of votes stating that it canvassed 804 out of 805 precincts in the municipality. The certificate of canvass showed that private respondent obtained the highest number of votes in Malabon with 57,760 votes, with petitioner coming in second with 42,892 votes.4 On the same day, after obtaining copies of the statements of votes, Ma. Rosario O. Lapuz, authorized representative of private respondent wrote then COMELEC Chairman Bernardo Pardo5 and informed him that several election returns were not included in the canvass conducted by the Malabon municipal board of canvassers. She moved that the certificate of canvass issued by said board be declared "not final."6 On May 19, 1998, Ms. Lapuz again wrote Chairman Pardo. The letter reiterated the allegations in her letter dated May 17, 1998 and requested that the Malabon municipal board of canvassers be ordered to canvass the election returns which it allegedly failed to include in its canvass.7 On May 23, 1998, private respondent filed with the COMELEC an Urgent Petition entitled "In re: Petition to Correct Manifest Error in Tabulation of Election Returns by the Municipal Board of Canvassers of Malabon, NCR. Canuto Tito Oreta vs. Municipal Board of Canvassers of Malabon." The petition was docketed as SPC No. 98-143. It alleged that while the certificate of canvass showed that 804 election returns were canvassed and tabulated, only 790 election returns were actually canvassed. Private respondent contended that there was a manifest error in the non-recording or copying of the results in 14 election returns from 14 precincts into the statement of votes. It prayed: (1) that the municipal board of canvassers of Malabon be reconvened to correct said manifest error by entering the results of the elections in the 14 election returns into the statement of votes

and that the certificate of canvass be corrected to reflect the complete results in 804 precincts; and (2) that the canvass of the results for the congressional election by the district board of canvassers for Malabon and Navotas be suspended until the alleged manifest error is corrected.8 Meanwhile, the proceedings of the municipal board of canvassers of Navotas were disrupted by the riotous exchange of accusations by the supporters of the opposing mayoralty candidates. The COMELEC had to move the venue to the Philippine International Convention Center in Manila to finish the canvass. On May 27, 1998, Chairman Pardo issued a memorandum to Atty. Ma. Anne V.G. Lacuesta, Chairman, District Board of Canvassers for Malabon-Navotas, authorizing her to immediately reconvene the district board of canvassers, complete the canvassing of the municipal certificate of canvass and supporting statement of votes per municipality, and proclaim the winning candidate for the congressional seat of the Malabon-Navotas legislative district.9 On May 28, 1998, private respondent filed with the COMELEC an Urgent Manifestation/Motion in connection with SPC No. 98-143. It prayed that the canvass of the results of the congressional election by the district board of canvassers be suspended until the alleged manifest error in SPC No. 98143 is corrected.10 At 4:15 in the afternoon on May 28, 1998, the district board of canvassers convened at the Philippine International Convention Center. It took up private respondent's petition to correct the manifest error arising from the non-inclusion of 19 election returns in the canvass. After examining the statement of votes by precinct and the certificate of canvass signed and thumbmarked by three watchers from different parties, the district board of canvassers found that a total of 804 election returns were canvassed by the Malabon municipal board of canvassers.11 The district board of canvassers then proceeded to canvass the certificates of canvass from the two municipalities. Counsel for private respondent requested that the canvassing be suspended until the Commission has resolved their petition for correction of manifest error in the certificate of canvass of Malabon. The district board of canvasser, however, denied the request for the following reasons: 1. absence of restraining order from the Commission;

2. order of the Chairman dated May 27, 1998 directing the district board to proceed with the canvass and proclamation of winning candidates for the district of Malabon-Navotas; 3. there is no irregularity in the submitted certificate of canvass from both municipalities and there were no objections raised for both certificates of canvass of the counsels present; 4. no report coming from the municipal board of canvassers from Malabon that there were uncanvassed election return except for one; 5. the municipal board of canvassers of Malabon submitted to the district board of canvassers certificate of canvass which indicated that the number of canvassed returns for District I is 397 and 407 for District II for a total of 804 out of 805 election returns; 6. the board has only the ministerial duty to tally the votes as reflected on the certificate of canvass supplemented by the statement of votes and has no authority to verify allegations of irregularities in the preparation thereof; and 7. there is no pre-proclamation contest for the position of congressman.12 Private respondent's counsel sought reconsideration of the decision of the district board of canvassers but it was likewise denied by the board. After canvassing the municipal certificates of canvass, the district board of canvassers proclaimed petitioner the duly elected congressman of the legislative district of Malabon-Navotas. The board declared that petitioner obtained a total vote of 82,339 over private respondent's 80,319 votes.13 Petitioner took his oath of office on the same day.14 The following day, on May 29, 1998, private respondent filed with the COMELEC in connection with SPC No. 98-143 an "Urgent Appeal from the Decision of the Legislative District Board of Canvassers for Malabon and Navotas with Prayer for the Nullification of the Proclamation of Federico S. Sandoval as Congressman." It alleged that there was a verbal order from the COMELEC Chairman to suspend the canvass and proclamation of the winning candidate for congressman of the Malabon-Navotas legislative district; that the district board of canvassers proceeded with the canvass and proclamation despite the verbal order; and that the non-inclusion of the

19 election returns in the canvass would result in an incomplete canvass of the election returns. It prayed that the decision of the district board of canvassers be reversed and that the municipal board of canvassers of Malabon be reconvened to complete its canvass. It also prayed that the proclamation of petitioner as congressman be annulled.15 On May 30, 1998, private respondent filed with the COMELEC an Urgent Petition docketed as SPC No. 98-206. The petition sought the annulment of petitioner's proclamation as congressman. It alleged that at about 4:00 in the afternoon on May 28, 1998, the COMELEC Chairman directed the district board of canvassers to suspend the canvass and proclamation pending the resolution of the petition for correction of manifest error in the municipal certificate of canvass of Malabon; that the district board of canvassers still proceeded with the canvass in spite of the order; that the proclamation was made despite the non-inclusion of election returns from 19 precincts in Malabon; and that the non-inclusion of these election returns will materially affect the result of the election. Private respondent prayed that the proclamation of petitioner as congressman be annulled and that the municipal board of canvassers of Malabon be ordered to reconvene to include the 19 election returns in the canvass.16 On June 2, 1998, the COMELEC en banc issued an order setting aside the proclamation of petitioner. The COMELEC ruled that the proclamation by the district board of canvassers was void because: (1) it was made in defiance of the verbal order by the COMELEC Chairman relayed through Executive Director Resurrection Z. Borra to suspend the proclamation of the winner in the congressional election until the Commission has resolved private respondent's petition for correction of manifest error in the certificate of canvass; and (2) it was based on an incomplete canvass. The dispositive portion of the order reads: WHEREFORE, the proclamation made by the District Board of Canvassers of Malabon and Navotas for the position of Congressman being void ab initio is no proclamation at all. Meantime, it is hereby set aside. Atty. Ma. Anne Lacuesta is hereby relieved as Chairman, District Board of Canvassers of Malabon-Navotas, and Atty. Consuelo B. Diola is named Chairman of said Board. Atty. Diola is directed to maintain the status quo prior to the Board's unauthorized proclamation, until further orders.

Meantime, let these cases be set for hearing en banc on 09 June 1998 at 10:00 in the morning. SO ORDERED.17 On June 8, 1998, petitioner filed this petition for certiorari seeking the annulment and reversal of said order. Petitioner contended: 1. Respondent COMELEC's annulment of petitioner Sandoval's proclamation as winner in the election for congressman of Malabon-Navotas, without the benefit of prior hearing, is grossly indecent and violates his right to due process of law. 2. Respondent COMELEC's action on respondent Oreta's petitions violates Republic Act 7166 which bars pre-proclamation cases in the elections of members of the House of Representative. 3. Respondent Oreta's remedy for seeking correction of alleged manifest errors in the certificate of canvass for members of Congress does not lie with respondent COMELEC but, initially with the municipal board of canvassers. 4. At any rate, respondent Oreta's right to raise questions concerning alleged manifest errors in the Malabon certificate of canvass is barred by his failure to raise such questions before petitioner Sandoval's proclamation. 5. Respondent Oreta's recourse lies with the House of Representatives Electoral Tribunal which is not precluded from passing upon the allegedly uncanvassed election returns in Malabon.18 On June 9, 1998, we required the respondents to comment on the petition. We also issued a temporary restraining order mandating the COMELEC to cease and desist from implementing and enforcing the questioned order.19 The COMELEC nonetheless conducted a hearing on June 9, 1998 concerning SPC No. 98-143 and SPC No. 98-206. Private respondent filed his comment20 on June 22, 1998. He argued:

1. Respondent COMELEC committed no jurisdictional error in declaring void ab initio the proclamation of petitioner Sandoval as Congressman-elect for the Malabon-Navotas legislative district. a. The premature and hasty proclamation of respondent Sandoval made by the District Board on the basis of an incomplete canvass is illegal, hence, null and void. b. Respondent COMELEC substantially complied with the requirements of due process in declaring the proclamation of respondent Sandoval an absolute nullity. 2. Respondent COMELEC properly took cognizance of respondent Oreta's petition to correct manifest error in the certificate of canvass issued by the Malabon board. a. While technically a pre-proclamation case, correction of manifest errors for purposes of the congressional elections is within the power and authority of the COMELEC to order, in the exercise of its appellate and original jurisdiction over such subject matter. b. The failure of the Malabon board to tabulate the results of seventeen (17) election returns and to record the votes supporting the certificate of canvass resulted in a manifest error in the certificate of canvass which should be summarily corrected by ordering the Malabon board to reconvene, canvass the 17 election returns, record the votes in the statement of votes and prepare a new certificate of canvass. On June 29, 1998, then Solicitor General Silvestre Bello III filed a Manifestation and Motion in Lieu of Comment.21He found the assailed order of the COMELEC null and void for the following reasons: 1. Respondent COMELEC's motu propio and ex parte annulment of petitioner's proclamation as winner in the election for congressman of Malabon-Navotas is tainted with grave abuse of discretion amounting to lack or excess of jurisdiction and violated petitioner's right to due process; and

2. Respondent COMELEC had no jurisdiction over the petitions filed by respondent Oreta, hence its order dated June 2, 1998 annulling petitioner's proclamation is null and void. In view of the Solicitor General's manifestation and motion, we required the COMELEC to file its own comment. The COMELEC filed its comment on August 11, 1998. It invoked its power of direct control and supervision over the board of canvassers, allowing it to review, revise and reverse the board's actions. It said that it rendered the questioned order upon finding that petitioner's proclamation was illegal and therefore void ab initio. It cited two reasons to support its findings: first, it was made in disregard of the Chairman's verbal order to suspend the canvass and proclamation, and second, it was based on an incomplete canvass.22 On August 27, 1998, the new Solicitor General, Ricardo P. Galvez, filed a Manifestation and Motion withdrawing the Manifestation and Motion filed by former Solicitor General Bello. The Solicitor General, this time, upheld the validity of the assailed order. In essence, he argued that the Malabon municipal board of canvassers failed to include 17 election returns in its canvass; that such omission constitutes manifest error in the certificate of canvass which must be corrected by the district board of canvassers; and that the proclamation of petitioner was void ab initio because it was based on an incomplete canvass.23 Petitioner and private respondent subsequently filed their respective reply, rejoinder and sur-rejoinder. Considering the arguments raised by the parties, the issues that need to be resolved in this case are: 1. whether the COMELEC has the power to take cognizance of SPC No. 98-143 and SPC No. 98-206, both alleging the existence of manifest error in the certificate of canvass issued by the Malabon municipal board of canvassers and seeking to reconvene said board of canvassers to allow it to correct the alleged error; and 2. whether the COMELEC's order to set aside petitioner's proclamation was valid. On the first issue, we uphold the jurisdiction of the COMELEC over the petitions filed by private respondent. As ageneral rule, candidates and

registered political parties involved in an election are allowed to file preproclamation cases before the COMELEC. Pre-proclamation cases refer to any question pertaining to or affecting the proceedings of the board of canvassers which may be raised by any candidate or by any registered political party or coalition of political parties before the board or directly with the Commission, or any matter raised under Sections 233, 234, 235 and 236 in relation to the preparation, transmission, receipt, custody and appreciation of election returns.24 The COMELEC has exclusive jurisdiction over all preproclamation controversies.25 As an exception, however, to the general rule, Section 15 of Republic Act (RA) 716626 prohibits candidates in the presidential, vice-presidential, senatorial and congressional elections from filing pre-proclamation cases.27 It states: Sec. 15. Pre-proclamation Cases Not Allowed in Elections for President, Vice-President, Senator, and Members of the House of Representatives. For purposes of the elections for President, Vice-President, Senator and Member of the House Representatives, no pre-proclamation cases shall be allowed on matters relating to the preparation, transmission, receipt, custody and appreciation of election returns or the certificates of canvass, as the case may be. However, this does not preclude the authority of the appropriate canvassing body motu propio or upon written complaint of an interested person to correct manifest errors in the certificate of canvass or election returns before it. The prohibition aims to avoid delay in the proclamation of the winner in the election, which delay might result in a vacuum in these sensitive posts.28 The law, nonetheless, provides an exception to the exception. The second sentence of Section 15 allows the filing of petitions for correction of manifest errors in the certificate of canvass or election returns even in elections for president, vice-president and members of the House of Representatives for the simple reason that the correction of manifest error will not prolong the process of canvassing nor delay the proclamation of the winner in the election. This rule is consistent with and complements the authority of the COMELEC under the Constitution to "enforce and administer all laws and regulations relative to the conduct of an election, plebiscite, initiative, referendum and recall"29 and its power to "decide, except those involving the right to vote, all questions affecting elections."30 Applying the foregoing rule, we hold that the Commission has jurisdiction over SPC No. 98-143 and SPC No. 98-206, both filed by private respondent seeking to correct the alleged manifest error in the certificate of canvass issued by the Malabon municipal board of canvassers. These

petitions essentially allege that there exists a manifest error in said certificate of canvass as the board failed to include several election returns in the canvassing. Private respondent prays that the board be reconvened to correct said error. Section 15 of RA 7166 vests the COMELEC with jurisdiction over cases of this nature. We reiterate the long-standing rule that jurisdiction is conferred by law and is determined by the allegations in the petition regardless of whether or not the petitioner is entitled to the relief sought.31 The authority to rule on petitions for correction of manifest error is vested in the COMELEC en banc. Section 7 of Rule 27 of the 1993 COMELEC Rules of Procedure32 provides that if the error is discovered before proclamation, the board of canvassers may motu proprio, or upon verified petition by any candidate, political party, organization or coalition of political parties, after due notice and hearing, correct the errors committed. The aggrieved party may appeal the decision of the board to the Commission and said appeal shall be heard and decided by the Commission en banc. Section 5, however, of the same rule states that a petition for correction of manifest error may be filed directly with the Commission en banc provided that such errors could not have been discovered during the canvassing despite the exercise of due diligence and proclamation of the winning candidate had already been made. Thus, we held in Ramirez vs. COMELEC:33 Although in Ong, Jr. v. COMELEC it was said that "By now it is settled that election cases which include pre-proclamation controversies must first be heard and decided by a division of the Commission" and a petition for correction of manifest error in the Statement of Votes, like SPC 95-198 is a pre-proclamation controversyin none of the cases cited to support this proposition was the issue the correction of a manifest error in the Statement of Votes under Sec. 231 of the Omnibus Election Code (B.P. Blg. 881) or Sec. 15 of R.A. No. 7166. On the other hand, Rule 27, Sec. 5 of the 1993 Rules of the COMELEC expressly provides that proclamation controversies involving, inter alia, manifest errors in the tabulation or tallying of the results may be filed directly with the COMELEC en banc . . . .34 Petitioner nonetheless contends that SPC No. 98-143 and SPC No. 98-206 must be dismissed because private respondent failed to raise the issue of manifest error before the appropriate board of canvassers in accordance with the second sentence of Section 15 of RA 7166. We disagree.

The issue of manifest error in the certificate of canvass for Malabon has been raised before the district board of canvassers before petitioner could be proclaimed and said board has in fact ruled on the issue.35 We find this as sufficient compliance with the law. The facts show that it was impossible for private respondent to raise the issue before the Malabon municipal board of canvassers as it still did not have a copy of the statement of votes and the precinct list at the time of the canvassing in the municipal level. At that time, private respondent still had no knowledge of the alleged manifest error. He, however, lost no time in notifying the COMELEC Chairman and the district board of the alleged error upon discovery thereof. We find petitioner's argument, therefore, to be devoid of merit. We now go to the second issue. Although the COMELEC is clothed with jurisdiction over the subject matter and issue of SPC No. 98-143 and SPC No. 98-206, we find the exercise of its jurisdiction tainted with illegality. We hold that its order to set aside the proclamation of petitioner is invalid for having been rendered without due process of law. Procedural due process demands prior notice and hearing. Then after the hearing, it is also necessary that the tribunal show substantial evidence to support its ruling.36 In other words, due process requires that a party be given an opportunity to adduce his evidence to support his side of the case and that the evidence should be considered in the adjudication of the case.37 The facts show that COMELEC set aside the proclamation of petitioner without the benefit of prior notice and hearing and it rendered the questioned order based solely on private respondent's allegations. We held in Bince, Jr. vs. COMELEC:38 Petitioner cannot be deprived of his office without due process of law. Although public office is not property under Section 1 of the Bill of Rights of the Constitution, and one cannot acquire a vested right to public office, it is, nevertheless, a protected right. Due process in proceedings before the COMELEC, exercising its quasi-judicial functions, requires due notice and hearing, among others. Thus, although the COMELEC possesses, in appropriate cases, the power to annul or suspend the proclamation of any candidate, We had ruled in Farinas vs. Commission on Elections, Reyes vs. Commission on Elections and Gallardo vs.Commission on Elections that the COMELEC is without power to partially or totally annul a proclamation or suspend the effects of a proclamation without notice and hearing.39 Citing Section 242 of the Omnibus Election Code, private respondent argues that the COMELEC is authorized to annul an illegal proclamation even without notice and hearing because the law states that it may motu

proprioorder a partial or total suspension of the proclamation of any candidate-elect or annul partially or totally any proclamation, if one has been made. We reject the argument. Section 242 of the Omnibus Election Code reads as: Sec. 242. Commission's exclusive jurisdiction of all preproclamation controversies. The Commission shall have exclusive jurisdiction of all pre-proclamation controversies. It may motu proprio or upon written petition, and after due notice and hearing, order the partial or total suspension of the proclamation of any candidate-elect or annul partially or totally any proclamation, if one has been made, as the evidence shall warrant in accordance with the succeeding sections. The phrase "motu proprio" does not refer to the annulment of proclamation but to the manner of initiating the proceedings to annul a proclamation made by the board of canvassers. The law provides two ways by which annulment proceedings may be initiated. It may be at the own initiative of the COMELEC (motu proprio) or by written petition. In either case; notice and hearing is required. This is clear from the language of the law. We likewise reject private respondent's assertion that the hearing held on June 9, 1998 substantially satisfies the due process requirement. The law requires that the hearing be held before the COMELEC rules on the petition. Here, the public respondent first issued an order annulling the proclamation of petitioner and then set the date of the hearing. We explained in Farinas vs. COMELEC 40 the pernicious effect of such procedure: As aptly pointed out by the Solicitor General, "to sanction the immediate annulment or even the suspension of the effects of a proclamation before the petition seeking such annulment or suspension of its effects shall have been heard would open the floodgates of unsubstantiated petitions after the results are known, considering the propensity of the losing candidates to put up all sorts of obstacles in an open display of unwillingness to accept defeat, or would encourage the filing of baseless petitions not only to the damage and prejudice of winning candidates but also to the frustration of the sovereign will of the electorate." (citations omitted) Public respondent submits that procedural due process need not be observed in this case because it was merely exercising its administrative power to review, revise and reverse the actions of the board of canvassers.

It set aside the proclamation made by the district board of canvassers for the position of congressman upon finding that it was tainted with illegality. We cannot accept public respondent's argument. Taking cognizance of private respondent's petitions for annulment of petitioner's proclamation; COMELEC was not merely performing an administrative function. The administrative powers of the COMELEC include the power to determine the number and location of polling places, appoint election officials and inspectors, conduct registration of voters, deputize law enforcement agencies and government instrumentalities to ensure free, orderly, honest, peaceful and credible elections, register political parties, organizations or coalitions, accredit citizens' arms of the Commission, prosecute election offenses, and recommend to the President the removal of or imposition of any other disciplinary action upon any officer or employee it has deputized for violation or disregard of its directive, order or decision. In addition, the Commission also has direct control and supervision over all personnel involved in the conduct of election. However, the resolution of the adverse claims of private respondent and petitioner as regards the existence of a manifest error in the questioned certificate of canvass requires the COMELEC to act as an arbiter. It behooves the Commission to hear both parties to determine the veracity of their allegations and to decide whether the alleged error is a manifest error. Hence, the resolution of this issue calls for the exercise by the COMELEC of its quasi-judicial power. It has been said that where a power rests in judgment or discretion, so that it is of judicial nature or character, but does not involve the exercise of functions of a judge, or is conferred upon an officer other than a judicial officer, it is deemed quasijudicial.41 The COMELEC therefore, acting as quasi-judicial tribunal, cannot ignore the requirements of procedural due process in resolving the petitions filed by private respondent. IN VIEW WHEREOF, the COMELEC order dated June 2, 1998 in SPC No. 98-143 and SPC No. 98-206 is ANNULLED. This case is REMANDED to the COMELEC and the Commission is hereby ordered to hold a hearing on the issues presented in SPC No. 98-143 and SPC No. 98-206, and thereafter render a decision based on the evidence adduced and the applicable laws. The incident of whether or not petitioner may continue discharging the functions of the office of the congressman pending resolution of the case on its merit shall be addressed by the COMELEC in the exercise of its reasonable discretion. SO ORDERED.
1w phi 1.nt

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. NO. 144322 February 6, 2007

National Wages and Productivity Commission (NWPC) through the RTWPB within 10 calendar days from the publication of the Wage Order. In a letter-inquiry to the NWPC dated May 7, 1996, the Bankers' Council for Personnel Management (BCPM), on behalf of its member-banks, requested for a ruling on the eligibility of establishments with head offices outside Region II to seek exemption from the coverage of the Wage Order since its member-banks are already paying more than the prevailing minimum wage rate in the National Capital Region (NCR), which is their principal place of business.8 In a letter-reply dated July 16, 1996, the NWPC stated that the memberbanks of BCPM are covered by the Wage Order and do not fall under the exemptible categories listed under the Wage Order.9 In a letter-inquiry to the NWPC dated July 23, 1996, petitioner sought for interpretation of the applicability of said Wage Order.10 The NWPC referred petitioner's inquiry to the RTWPB. In a letter-reply dated August 12, 1996, the RTWPB clarified that the Wage Order covers all private establishments situated in Region II, regardless of the voluntary adoption by said establishments of the wage orders established in Metro Manila and irrespective of the amounts already paid by the petitioner.11 On October 15, 1996, the petitioner filed a Petition for Certiorari and Prohibition with the CA seeking nullification of the Wage Order on grounds that the RTWPB acted without authority when it issued the questioned Wage Order; that even assuming that the RTWPB was vested with the authority to prescribe an increase, it exceeded its authority when it did so without any ceiling or qualification; that the implementation of the Wage Order will cause the petitioner, and other similarly situated employers, to incur huge financial losses and suffer labor unrest.12 On March 24, 1997, the Office of the Solicitor General (OSG) filed a Manifestation and Motion in lieu of Comment affirming the petitioner's claim that the RTWPB acted beyond its authority in issuing the Wage Order prescribing an across-the-board increase to all workers and employees in Region II, effectively granting additional or other benefits not contemplated by R.A. No. 6727.13 In view of the OSG's manifestation, the CA directed respondents NWPC and RTWPB to file their comment.14

METROPOLITAN BANK and TRUST COMPANY, INC., Petitioner, vs. NATIONAL WAGES AND PRODUCTIVITY COMMISSION and REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD REGION II, Respondents. DECISION AUSTRIA-MARTINEZ, J.: Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court seeking the reversal of the Decision1 of the Court of Appeals (CA) dated July 19, 2000 in CA-G.R. SP No. 42240 which denied the petition for certiorari and prohibition of Metropolitan Bank and Trust Company, Inc. (petitioner). The procedural antecedents and factual background of the case are as follows: On October 17, 1995, the Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwise known as the Wage Rationalization Act,2issued Wage Order No. R02-03 (Wage Order), as follows: Section 1. Upon effectivity of this Wage Order, all employees/workers in the private sector throughout Region II, regardless of the status of employment are granted an across-the-board increase of P15.00 daily.3 The Wage Order was published in a newspaper of general circulation on December 2, 19954 and took effect on January 1, 1996.5 Its Implementing Rules6 were approved on February 14, 1996.7 Per Section 13 of the Wage Order, any party aggrieved by the Wage Order may file an appeal with the

On September 22, 1997, respondents filed their Comment praying that the petition should be dismissed outright for petitioner's procedural lapses; that certiorari and prohibition are unavailing since petitioner failed to avail of the remedy of appeal prescribed by the Wage Order; that the Wage Order has long been in effect; and that the issuance of the Wage Order was performed in the exercise of a purely administrative function.15 On July 19, 2000, the CA rendered its Decision denying the petition. The appellate court held that a writ of prohibition can no longer be issued since implementation of the Wage Order had long become fait accompli, the Wage Order having taken effect on January 1, 1996 and its implementing rules approved on February 14, 1996; that a writ of certiorari is improper since the Wage Order was issued in the exercise of a purely administrative function, not judicial or quasi-judicial; that the letter-query did not present justiciable controversies ripe for consideration by the respondents in the exercise of their wage-fixing function, since no appeal from the Wage Order was filed; that petitioner never brought before the said bodies any formal and definite challenge to the Wage Order and it cannot pass off the letterqueries as actual applications for relief; that even if petitioner's procedural lapse is disregarded, a regional wage order prescribing a wage increase across-the-board applies to banks adopting a unified wage system and a disparity in wages between employees holding similar positions in different regions is not wage distortion.16 Hence, the present petition anchored on the following grounds: 4.1 THE COURT OF APPEALS ERRED IN REFUSING TO DECLARE WAGE ORDER NO. R02-03 NULL AND VOID AND OF NO LEGAL EFFECT. 4.1.1 THE BOARD, IN ISSUING WAGE ORDER NO. R0203, EXCEEDED THE AUTHORITY DELEGATED TO IT BY CONGRESS. 4.1.2 WAGE ORDER NO. R02-03 IS AN UNREASONABLE INTRUSION INTO THE PROPERTY RIGHTS OF PETITIONER. 4.1.3 WAGE ORDER NO. R02-03 UNDERMINES THE VERY ESSENCE OF COLLECTIVE BARGAINING.

4.1.4 WAGE ORDER NO. R02-03 FAILS TO TAKE INTO ACCOUNT THE VERY RATIONALE FOR A UNIFIED WAGE STRUCTURE. 4.2 PETITIONER'S RECOURSE TO A WRIT OF CERTIORARI AND PROHIBITION WAS PROPER.17 Following the submission of the Comment18 and Reply19 thereto, the Court gave due course to the petition and required both parties to submit their respective memoranda.20 In compliance therewith, petitioner and respondents submitted their respective memoranda.21 Petitioner poses two issues for resolution, to wit: (1) whether Wage Order No. R02-03 is void and of no legal effect; and (2) whether petitioner's recourse to a petition for certiorari and prohibition with the CA was proper. Anent the first issue, petitioner maintains that the RTWPB, in issuing said Wage Order, exceeded the authority delegated to it under R.A. No. 6727, which is limited to determining and fixing the minimum wage rate within their respective territorial jurisdiction and with respect only to employees who do not earn the prescribed minimum wage rate; that the RTWPB is not authorized to grant a general across-the-board wage increase for nonminimum wage earners; that Employers Confederation of the Philippines v. National Wages and Productivity Commission22(hereafter referred to as "ECOP") is not authority to rule that respondents have been empowered to fix wages other than the minimum wage since said case dealt with an across-the-board increase with a salary ceiling, where the wage adjustment is applied to employees receiving a certain denominated salary ceiling; that the Wage Order is an unreasonable intrusion into its property rights; that the Wage Order undermines the essence of collective bargaining; that the Wage Order fails to take into account the rationale for a unified wage structure. As to the second issue, petitioner submits that ultra vires acts of administrative agencies are correctible by way of a writ of certiorari and prohibition; that even assuming that it did not observe the proper remedial procedure in challenging the Wage Order, the remedy of certiorari and prohibition remains available to it by way of an exception, on grounds of justice and equity; that its failure to observe procedural rules could not have validated the manner by which the disputed Wage Order was issued. Respondents counter that the present petition is fatally defective from inception since no appeal from the Wage Order was filed by petitioner; that

the letter-query to the NWPC did not constitute the appeal contemplated by law; that the validity of the Wage Order was never raised before the respondents; that the implementation of the Wage Order had long become fait accompli for prohibition to prosper. Respondents insist that, even if petitioner's procedural lapses are disregarded, the Wage Order was issued pursuant to the mandate of R.A. No. 6727 and in accordance with the Court's pronouncements in the ECOP case;23 that the Wage Order is not an intrusion on property rights since it was issued after the required public hearings; that the Wage Order does not undermine but in fact recognizes the right to collective bargaining; that the Wage Order did not result in wage distortion. The Court shall first dispose of the procedural matter relating to the propriety of petitioner's recourse to the CA before proceeding with the substantive issue involving the validity of the Wage Order. Certiorari as a special civil action is available only if the following essential requisites concur: (1) it must be directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (2) the tribunal, board, or officer must have acted without or in excess of jurisdiction or with grave abuse of discretion amounting lack or excess of jurisdiction; and (3) there is no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law.24 On the other hand, prohibition as a special civil action is available only if the following essential requisites concur: (1) it must be directed against a tribunal, corporation, board, officer, or person exercising functions, judicial, quasi-judicial, or ministerial; (2) the tribunal, corporation, board or person has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting lack or excess of jurisdiction; and (3) there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law.25 A respondent is said to be exercising judicial function where he has the power to determine what the law is and what the legal rights of the parties are, and then undertakes to determine these questions and adjudicate upon the rights of the parties.26 Quasi-judicial function is a term which applies to the action, discretion, etc., of public administrative officers or bodies, who are 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.27 Ministerial function is one which an officer or tribunal performs in the context of a given set of facts, in a prescribed manner and without regard to the

exercise of his own judgment upon the propriety or impropriety of the act done.28 In the issuance of the assailed Wage Order, respondent RTWPB did not act in any judicial, quasi-judicial capacity, or ministerial capacity. It was in the nature of subordinate legislation, promulgated by it in the exercise of delegated power under R.A. No. 6727. It was issued in the exercise of quasi-legislative power. Quasi-legislative or rule-making power is exercised by administrative agencies through the promulgation of rules and regulations within the confines of the granting statute and the doctrine of non-delegation of certain powers flowing from the separation of the great branches of the government.29 Moreover, the rule on the special civil actions of certiorari and prohibition equally mandate that these extra-ordinary remedies are available only when "there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law." A remedy is considered plain, speedy and adequate if it will promptly relieve the petitioner from the injurious effects of the judgment or rule, order or resolution of the lower court or agency.30 Section 13 of the assailed Wage Order explicitly provides that any party aggrieved by the Wage Order may file an appeal with the NWPC through the RTWPB within 10 days from the publication of the wage order.31 The Wage Order was published in a newspaper of general circulation on December 2, 1995.32 In this case, petitioner did not avail of the remedy provided by law. No appeal to the NWPC was filed by the petitioner within 10 calendar days from publication of the Wage Order on December 2, 1995. Petitioner was silent until seven months later, when it filed a letter-inquiry on July 24, 1996 with the NWPC seeking a clarification on the application of the Wage Order. Evidently, the letter-inquiry is not an appeal. It must also be noted that the NWPC only referred petitioner's letter-inquiry to the RTWPB. Petitioner did not appeal the letter-reply dated August 12, 1996 of the RTWPB to the NWPC. No direct action was taken by the NWPC on the issuance or implementation of the Wage Order. Petitioner failed to invoke the power of the NWPC to review regional wage levels set by the RTWPB to determine if these are in accordance with prescribed guidelines. Thus, not only was it improper to implead the NWPC as partyrespondent in the petition before the CA and this Court, but also petitioner failed to avail of the primary jurisdiction of the NWPC under Article 121 of the Labor Code, to wit:

ART. 121. Powers and Functions of the Commission. - The Commission shall have the following powers and functions: xxxx (d) To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans; xxxx (f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans; (g) To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards; xxxx (Emphasis supplied) Under the doctrine of primary jurisdiction, courts cannot and will not resolve a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially 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.33 Nevertheless, the Court will proceed to resolve the substantial issues in the present petition pursuant to the well-accepted principle that acceptance of a petition for certiorari or prohibition as well as the grant of due course thereto is addressed to the sound discretion of the court.34 It is a wellentrenched principle that rules of procedure are not inflexible tools designed to hinder or delay, but to facilitate and promote the administration of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate, rather than promote substantial justice, must always be eschewed.35 As to respondents' submission that the implementation of the Wage Order can no longer be restrained since it has become fait accompli, the Wage Order having taken effect on January 1, 1996 and its implementing rules

approved on February 14, 1996, suffice it to state that courts will decide a question otherwise moot if it is capable of repetition yet evading review.36 Besides, a case becomes moot and academic only when there is no more actual controversy between the parties or no useful purpose can be served in passing upon the merits. Such circumstances do not obtain in the present case. The implementation of the Wage Order does not in any way render the case moot and academic, since the issue of the validity of the wage order subsists even after its implementation and which has to be determined and passed upon to resolve petitioner's rights and consequent obligations therein. It is worthy to quote the Court's pronouncements in Tan v. Commission on Elections,37 thus: For this Honorable Court to yield to the respondents' urging that, as there has been fait accompli, then this Honorable Court should passively accept and accede to the prevailing situation is an unacceptable suggestion. Dismissal of the instant petition, as respondents so propose is a proposition fraught with mischief. Respondents' submission will create a dangerous precedent. Should this Honorable Court decline now to perform its duty of interpreting and indicating what the law is and should be, this might tempt again those who strut about in the corridors of power to recklessly and with ulterior motives commit illegal acts, either brazenly or stealthily, confident that this Honorable Court will abstain from entertaining future challenges to their acts if they manage to bring about a fait accompli.38 Having disposed of this procedural issue, the Court now comes to the substance of the petition. R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment generation in the countryside through industrial dispersal; and to allow business and industry reasonable returns on investment, expansion and growth.39 In line with its declared policy, R.A. No. 672740 created the NWPC,41 vested with the power to prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial or industry levels;42 and authorized the RTWPB to determine and fix the minimum wage rates applicable in their respective regions, provinces, or industries therein and issue the corresponding wage orders,

subject to the guidelines issued by the NWPC.43 Pursuant to its wage fixing authority, the RTWPB may issue wage orders which set the daily minimum wage rates,44 based on the standards or criteria set by Article 12445 of the Labor Code. In ECOP,46 the Court declared that there are two ways of fixing the minimum wage: the "floor-wage" method and the "salary-ceiling" method. The "floor-wage" method involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On the other hand, in the "salary-ceiling" method, the wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage increase.47 To illustrate: under the "floor wage method", it would have been sufficient if the Wage Order simply set P15.00 as the amount to be added to the prevailing statutory minimum wage rates, while in the "salary-ceiling method", it would have been sufficient if the Wage Order states a specific salary, such as P250.00, and only those earning below it shall be entitled to the salary increase. In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-wage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-the-board wage increase of P15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage Order to wage earners receiving more than the prevailing minimum wage rate, without a denominated salary ceiling. As correctly pointed out by the OSG, the Wage Order granted additional benefits not contemplated by R.A. No. 6727. In no uncertain terms must it be stressed that the function of promulgating rules and regulations may be legitimately exercised only for the purpose of carrying out the provisions of a law. The power of administrative agencies is confined to implementing the law or putting it into effect. Corollary to this guideline is that administrative regulation cannot extend the law and amend a legislative enactment.48 It is axiomatic that the clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its implementation.49 Indeed, administrative or executive acts, orders, and regulations shall be valid only when they are not contrary to the laws or the Constitution.50

Where the legislature has delegated to an 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 exercise of the rule-making power but constitute an attempt by an administrative body to legislate.51 It has been said that when the application of an administrative issuance modifies existing laws or exceeds the intended scope, as in this case, the issuance becomes void, not only for being ultra vires, but also for being unreasonable.52 Thus, the Court finds that Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase to employees earning more than the minimum wage rate; and pursuant to the separability clause53 of the Wage Order, Section 1 is declared valid with respect to employees earning the prevailing minimum wage rate.
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Prior to the passage of the Wage Order, the daily minimum wage rates in Region II was set at P104.00 for the Province of Isabela, P103.00 for the Province of Cagayan, P101.00 for the Province of Nueva Vizcaya, andP100.00 for the Provinces of Quirino and Batanes.54 Only employees earning the above-stated minimum wage rates are entitled to the P15.00 mandated increase under the Wage Order. Although the concomitant effect of the nullity of the Wage Order to those employees who have received the mandated increase was not put in issue, this Court shall make a definite pronouncement thereon to finally put this case to rest. As ruled by the Court in Latchme Motoomull v. Dela Paz,55 "the Court will always strive to settle the entire controversy in a single proceeding leaving no root or branch to bear the seeds of future litigation."56 Applying by analogy, the Court's recent pronouncement in Philippine Ports Authority v. Commission on Audit,57thus: In regard to the refund of the disallowed benefits, this Court holds that petitioners need not refund the benefits received by them based on our rulings in Blaquera v. Alcala, De Jesus v. Commission on Audit and Kapisanan ng mga Manggagawa sa Government Service Insurance System (KMG) v. Commission on Audit.

In Blaquera, the petitioners, who were officials and employees of several government departments and agencies, were paid incentive benefits pursuant to EO No. 292 and the Omnibus Rules Implementing Book V of EO No. 292. On January 3, 1993, then President Fidel V. Ramos issued Administrative Order (AO) No. 29 authorizing the grant of productivity incentive benefits for the year 1992 in the maximum amount of P1,000. Section 4 of AO No. 29 directed all departments, offices and agencies which authorized payment of CY 1992 Productivity Incentive Bonus in excess of P1,000 to immediately cause the refund of the excess. Respondent heads of the departments or agencies of the government concerned caused the deduction from petitioners' salaries or allowances of the amounts needed to cover the overpayments. Petitioners therein filed a petition for certiorari and prohibition before this Court to prevent respondents therein from making further deductions from their salaries or allowances. The Court ruled against the refund, thus: Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of subject incentive benefits for the year 1992, which amounts the petitioners have already received. Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they richly deserve such benefits. The said ruling in Blaquera was applied in De Jesus. In De Jesus, COA disallowed the payment of allowances and bonuses consisting of representation and transportation allowance, rice allowance, productivity incentive bonus, anniversary bonus, year-end bonus and cash gifts to members of the interim Board of Directors of the Catbalogan Water District. This Court affirmed the disallowance because petitioners therein were not entitled to other compensation except for payment of per diemunder PD No. 198. However, the Court ruled against the refund of the allowances and bonuses received by petitioners, thus: This ruling in Blaquera applies to the instant case. Petitioners here received the additional allowances and bonuses in good faith under the honest belief that LWUA Board Resolution No. 313 authorized such payment. At the time petitioners received the additional allowances and bonuses, the Court had not yet decided Baybay Water District. Petitioners had no knowledge that such payment was without legal basis. Thus, being in good faith, petitioners need not refund the allowances and bonuses they received but disallowed by the COA.

Further, in KMG, this Court applied the ruling in Blaquera and De Jesus in holding that the Social Insurance Group (SIG) personnel of the Government Service Insurance System need not refund the hazard pay received by them although said benefit was correctly disallowed by COA. The Court ruled: The Court however finds that the DOH and GSIS officials concerned who granted hazard pay under R.A. No. 7305 to the SIG personnel acted in good faith, in the honest belief that there was legal basis for such grant. The SIG personnel in turn accepted the hazard pay benefits likewise believing that they were entitled to such benefit. At that time, neither the concerned DOH and GSIS officials nor the SIG personnel knew that the grant of hazard pay to the latter is not sanctioned by law. Thus, following the rulings of the Court in De Jesus v. Commission on Audit, and Blaquera v. Alcala, the SIG personnel who previously received hazard pay under R.A. No. 7305 need not refund such benefits. In the same vein, the rulings in Blaquera, De Jesus and KMG apply to this case. Petitioners received the hazard duty pay and birthday cash gift in good faith since the benefits were authorized by PPA Special Order No. 407-97 issued pursuant to PPA Memorandum Circular No. 34-95 implementing DBM National Compensation Circular No. 76, series of 1995, and PPA Memorandum Circular No. 22-97, respectively. Petitioners at that time had no knowledge that the payment of said benefits lacked legal basis. Being in good faith, petitioners need not refund the benefits they received.58 (Emphasis supplied) employees, other than minimum wage earners, who received the wage increase mandated by the Wage Order need not refund the wage increase received by them since they received the wage increase in good faith, in the honest belief that they are entitled to such wage increase and without any knowledge that there was no legal basis for the same. Considering the foregoing, the Court need not delve on the other arguments raised by the parties. WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of the Court of Appeals dated July 19, 2000 in CA-G.R. SP No. 42240 is MODIFIED. Section 1 of Wage Order No. R02-03 issued on October 17, 1995 by the Regional Tripartite Wages and Productivity Board for Region II, Tuguegarao, Cagayan is declared VALID insofar as the mandated increase applies to employees earning the prevailing minimum wage rate at the time

of the passage of the Wage Order and VOID with respect to its application to employees receiving more than the prevailing minimum wage rate at the time of the passage of the Wage Order. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

"conveniently omitted by petitioner," seeking the setting aside of the decision of the arbitrator and giving it an opportunity to be heard in the reinvestigation that should be conducted "in a proper, fair and regular manner." 1 There was no denial that no mention was made of such urgent
petition in the reply of petitioner, but only that it could not be considered an appeal from the decision which therefore attained the stage of finality. Respondent Inciong was also asked to comment, and in such pleading, likewise considered as answer, submitted by Assistant Solicitor General Renato S. Puno, 2 it was contended that the decision of the arbitrator was not final when the challenged order was issued and that moreover, the plain, speedy and adequate remedy in the ordinary course of law is to appeal such actuation to the Secretary of Labor and thereafter to the President of the Philippines. Both parties where required to submit memoranda. In the light of the pleadings of record, it cannot be concluded that petitioner has made out a case for certiorari and prohibition. We dismiss.

G.R. No. L-38868 December 29, 1975 HARRY STUART SCOTT, petitioner, vs. HONORABLE AMADO G. INCIONG, CHAIRMAN, NATIONAL LABOR RELATIONS COMMISSION and WHITE EAGLE OVERSEAS OIL CO., INC., respondents. Mendez, Mendez and Associates for petitioner. Assistant Solicitor General Reynato S. Puno and Solicitor Romeo de la Cruz for respondent Hon. Amado G. Inciong, etc. Ortigas and Ortigas for private respondent.

Petitioner Harry Stuart Scott filed a complaint against private respondent. White Eagle Overseas Oil Co., Inc., with the National Labor Relations Commission Unit, Regional Office No. IV, Manila, for the recovery of separation, termination and overtime pay. 3 The case was assigned to
Attorney Jose Placido, who after an unsuccessful effort at mediation, acted as arbitrator, with both parties given the opportunity to submit memoranda, private respondent being unable to present its memorandum after its motion for extension allegedly filed late was denied. 4 On March 28, 1974, a decision was handed down by the arbitrator awarding petitioner P462,241.96. 5 A copy thereof was received by private respondentWhite Eagle Overseas Oil Co., Inc. on April 3, 1974. 6 There it was alleged that on April 23, 1974, it filed what it termed a "Very Urgent Motion" to enjoin or restrain the execution of the decision and that the Commission should hear it on the merits. 7 It was then that respondent Amado G. Inciong, as Chairman, ordered a preliminary hearing on such motion with a certain Attorney Roy Seares to conduct it. 8 Having previously moved for execution, petitioner objected. 9 On June 17, respondent Inciong,
"without waiting [for] for the result of the preliminary hearing being conducted by Hearing Officer Seares made the following order (handwritten): Atty. Seares: Conduct a hearing on the merit[s] of the case. 10 Finish hearing and prepare decision within 20 days from today. Sgd. Amado Inciong." " It was then

FERNANDO, J.: To lend plausibility to this certiorari and prohibition suit, which challenges an order of Amado G. Inciong, Chairman of the National Labor Relations Commission, requiring a hearing officer of the former National Labor Relations Commission to conduct a hearing on the merits of a case and to prepare a decision within twenty days, it was alleged that it came too late, as there was a valid previous award or decision which had long since become final. It is in that sense then that there was an arbitrary exercise of power fitly characterized as capricious or whimsical and thus constituting a denial of due process. If such indeed were the case, as alleged by petitioner Harry Stuart Scott, who was awarded the separation, termination and overtime pay sought from private respondent White Eagle Overseas Oil Co., Inc., then a fatal flaw is easily discernible. In the comment of private respondent, later considered as answer, it was pointed out that within the reglementary period, two days after receiving the decision, there was an urgent petition filed by it with the office of Chairman Inciong, one

contended that such order in effect declaring null and void the decision of the arbitrator which had become final and executory, amounted to a grave abuse of discretion for being a capricious or whimsical exercise of judgment. 11

As previously noted in the comment of respondent White Eagle Overseas Oil Co., Inc., later on considered as answer, the allegation that the order had become final was vigorously disputed. As therein pointed out: "The decision and/or award of March 28, 1974, Jose C. Tal Placido, ... was timely appealed to respondent Commission and hence did not become final as petitioner would like this Honorable Tribunal to believe. Petitioner

maliciously omitted mentioning the filing of herein respondent's Urgent Petition, ... On April 5, 1974 before respondent Commission and conveniently limited himself to the subsequent Very Urgent Motion filed by herein respondent on April 23, 1974, ... Obviously, the said ommission is a a deliberate attempt to mislead this Honorable Tribunal into believing that the award, ... notwithstanding its alleged receipt by herein respondents on April 3, 1974, was filed before the respondent Commission only on April 23, 1974, ... This Honorable Tribunal's attention is respectfully invited to the first allegation of respondent's Very Urgent Motion, ... which reads: "That on April 5, 1974, herein respondent filed an Urgent Petition for Injunction and/or Restraining Order to enjoin Jose C. Tal Placido, arbitrator in the instant controversy: a. To desist form further proceeding in this case and to declare all proceedings had before him nugatory; b. To set aside any decision or award, should any be rendered by said arbitrator pending resolution of this petition, on the ground that the proceeding was conducted in a highly irregular manner." For all intents and purposes, respondent's Urgent Petition filed with the respondent Commission on April 5, 1974 may be considered as an appeal pursuant to Presidential Decree No. 21 because the grounds on which said petition is based are the very grounds provided for in said Presidential Decree No. 21." 12 It likewise stressed that
this petition was equally devoid of merit in view of its being premature, the administrative remedies not having been exhausted. That point was discussed in the comment of respondent Inciong in terms of there being a plain, speedy and adequate remedy in the course of law. Thus: "One of the requisites for the issuance of the writs of certiorari and prohibition is that there should be no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law, available to the petitioner (Section 1 and 2 , Rule 65, Rules of Court). In the instant case, the act complained of may be brought to the Secretary of Labor for review within five (5) days from receipt of the NLRC's decisions (Sections 1 and 6, NLRC Supplementary Rules and Regulations). The Secretary of Labor is required to decide the case within five (5) days from submission for decision (Section 6, Ibid). The decision of the Secretary of Labor may in turn be appealed to the President of the Philippines (Section 22, NLRC Rules and Regulations). Without resorting to the above remedies which are undoubtedly speedy and adequate, petitioner filed the instant petition." 13

the National Labor Relations Commission, the Department of Labor, and the Office of the President of the Philippines." 14 Such a contention ignores
the corrective power of this Tribunal by a writ of certiorari. While an appeal does not lie, it is available whenever a jurisdictional issue is raised or one of grave abuse of discretion amounting to a lack of excess thereof. More specifically with reference to the National Labor Relations Commission, that has been the prevailing doctrine since Confederation of Citizens Labor Unions (CCLU) v. National Labor Relations Commission.15 This excerpt, from the opinion of Justice Aquino in San Miguel Corporation v. Secretary of Labor, 16 is in point: "Yanglay raised a jurisdictional question which was not brought up by respondent public officials. He contends that this Court has no jurisdiction to review the decisions of the NLRC and the Secretary of Labor "under the principle of separation of powers" and that judicial review is not provided for in Presidential Decree No. 21. That contention is a flagrant error. "It is generally understood that as to administrative agencies exercising quasi-judicial or legislative power there is an underlying power in the courts to scrutinize the facts of such agencies on questions of law and jurisdiction even though no right of review is given by statute" ... "The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect substantial rights of parties affected by its decisions" ... . It is part of the system of checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications. Judicial review is proper in case of lack of jurisdiction, grave abuse of discretion, error of law, fraud or collusion. " 17

2. Now as to the merits. It is the impress of finality sought to be affixed in the decision of the arbitrator that could conceivably give rise to a due process question. For if it were true that it has reached the executory stage, what was done by respondent Inciong would be tainted by arbitrariness and caprice. Such is not, however, the case. As alleged in the petition itself, the decision was received by private respondent White Eagle Overseas Oil Co., Inc. on April 3, 1974. As pointed out in its comment, when it filed an urgent petition 18 duly verified on April 5, 1974, "a period of
barely twenty-four (24) hours had elapsed although under section 2 of said Regulations No. 1, "an appeal may be brought to the Commission within ten days upon receipt of the award by the aggrieved party." " 19 How can it be alleged then that it could in law be considered as final and executory?

It is thus readily apparent why, as already indicated, this petition lacks merit. 1. There is a threshold procedural question. It raises no difficulty. Private respondent, White Eagle Overseas Oil Co., Inc., would dispute our jurisdiction under the untenable assumption that the only remedy for a party aggrieved by a decision of an arbitrator in a labor dispute "is confined within the realm of the executive department of the government, namely,

As a matter of fact, from the due process angle, it is private respondent White Eagle Overseas Oil Co., Inc. that could conceivably complain. So it was made apparent in its urgent petition in these words: "There is no better illustration of a deprivation of due process than what transpired in this proceeding. Thus, on March 21, 1974, respondent received a subpoena from arbitrator Jose C. Tal Placido advising of a hearing scheduled for March 23, 1974, at 4:00 p.m., or barely two days from said receipt. A day before the hearing, or on March 22, 1974, undersigned filed [for the very

first time] an Urgent Motion requesting for cancellation of the hearing for March 23, 1974, as undersigned will attend a grade school graduation of his son at the De la Salle College. Prior to the preparation of said motion, however, undersigned contacted by telephone the complainant himself requesting for the latter's conformity to the cancellation of the hearing and complainant graciously acceded to the request. Upon the filing of said Urgent Motion on March 22, 1974, Arbitrator Jose C. Tal Placido advised undersigned's representative who filed the motion that the hearing is thus reset to March 29, 1974, at 4:00 p.m., notwithstanding that undersigned's representative called the attention of said arbitrator that undersigned is scheduled to appear in the Court of First Instance of Balayan, Batangas for a hearing previously scheduled and hence, his calendar for said date would be tight. At any rate, said arbitrator insisted for said date stating that he will issue the corresponding subpoena to the parties concerned. In the morning of March 29, 1974, undersigned instructed his representative to verify from the arbitrator whether the scheduled hearing set for March 29, 1974, at 4:00 p.m. would proceed as no subpoena was received by respondent, as earlier stated by the arbitrator. Surprisingly, it was discovered only then that a hearing was supposedly conducted on March 23, 1974, at 4:10 p.m. whereat complainant testified and presented ... documentary evidence. We dare say that gross irregularity characterized by fraud was committed in this proceeding because: (a) Respondent was misled to believe by the arbitrator that the hearing of March 23, 1974 is to be reset to March 29, 1974, at 4:00 p.m. while on the part of complainant himself, he manifested his conformity to the postponement and that a formal Urgent Motion was filed a day before the hearing, or on March 22, 1974, for the reason mentioned therein; (b) Moreover, the date chosen by the arbitrator when the supposed hearing was had on March 23, 1974 at 4:10 p.m., is a [Saturday] contrary to Gen. Order No. 40 prescribing a Monday to Thursday work. Notice may be taken of the fact that it was only on April 1st, 1974 when the President announced the resumption of the five-days-aweek work. On top of this, the National Labor Relations Commission released NLRC Memorandum-Circular No. II requiring all compulsory arbitrators to conduct hearings only during office hours, unless the parties themselves agree in writing to hearings outside office hours which agreement shall form part of the records of the case. No such written agreement was in fact entered into by the parties in this case." 20 There was no denial of the above recital on the part of petitioner in his
reply to the aforesaid comment of private respondent White Eagle Overseas Oil Co., Inc. All that it stressed was that it could not rightfully be considered an appeal and that it was filed with the Office of the Secretary of Labor. At the most, such an approach is purely technical. The due process guarantee of justice and fairness is not to be whittled down or emasculated. It was a fitting response to its mandate when respondent Inciong issued the challenged order requiring an inquiry into the merits of the controversy. Such an actuation of a

public official certainly cannot be stigmatized as the product of arbitrariness or caprice. Precisely, to paraphrase Daniel Webster, no man is to suffer the loss of liberty and property except in accordance with a law that provides for a hearing before condemnation, a regular process for ascertaining the facts of the dispute, prior to a decision or award being rendered. 21

3. There is merit likewise to the contention of respondent Inciong reinforcing an argument raised by private respondent White Eagle Overseas Oil Co., Inc. that the writs of certiorari and prohibition cannot be granted as there is a plain, speedy and adequate remedy in the ordinary course of law. That remedy is administrative in character, the challenged order of respondent Inciong being susceptible to correction by the Secretary of Labor and, in the final analysis, by the President himself. In the recent case of Nation Multi Service Labor Union v. Agcaoili, 22 where an
order of the Secretary of Labor affirming a decision of the National Labor Relations Commission created by Presidential Decree No. 21 was challenged, this Court held: "It is also a matter of significance that there was an appeal to the President. So it is explicitly provided by the Decree. That was a remedy both adequate and appropriate. It was in line with the executive determination, after the proclamation of martial law, to leave the solution of labor disputes as much as possible to administrative agencies and correspondingly to limit judicial participation. That was to reflect a trend both here and abroad to expedite the disposition of such cases. Unfortunately, private respondents were of different persuasion. They were not above the employment of a strategem the effect of which would be to countenance evasion. The judiciary must be alert to such tactics. In the more traditional language of the law, there should be an insistence on the exhaustion of administrative remedies. Lastly, from the procedural standpoint, it bears repeating that prohibition is available only if there is no remedy by appeal. Such is not the case here. " 23 So should it be in this litigation.

4. In the comment of private respondent White Eagle Overseas Oil Co., Inc., it was alleged that petitioner "maliciously omitted mentioning the filing of herein respondent's Urgent Petition, ... ." 24 Such omission was further
characterized as "a deliberate attempt to mislead this Honorable Tribunal into believing that the award, ... was filed before the respondent Commission only on April 23, 1974, ..." 25. There is no proof that there was such a condemnable effort on the part of petitioner to misrepresent the facts. At the most, that is an error of Judgment by his counsel. It was his view that such urgent petition did not have the effect of preventing the award from reaching the stage of finality. As pointed out previously, that was an erroneous assumption. So the stricture against such failure may be undeserved. Nonetheless, it would be advisable for counsel in petitions of this character to set forth all the pleadings filed with either the lower court or an administrative agency. That way, this Tribunal would be in a better position to appraise its merit or deficiency. While the

discretion of counsel in the presentation of what he deems relevant documents should not be unduly curtailed, it is still in the best interest of his client and in compliance with a duty owed a court of justice that nothing of consequence be left out. In case of doubt, it should be resolved against non-inclusion. In the final analysis, it is the appraisal of the judiciary, not the conclusion of counsel as to the significance of any pleading, that is decisive.

WHEREFORE, the petition for certiorari and prohibition is dismissed. Costs against petitioner. Barredo, Antonio, Aquino and Concepcion, Jr., JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 83616 January 20, 1989 INDUSTRIAL TIMBER CORPORATION and LORENZO TANGSOC, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, CONCORDIA DOS PUEBLOS and LOLITA SANCHEZ,respondents. Puruganan, Chato, Chato & Tan for petitioners. Estanislao G. Ebarle, Jr. for private respondents.

On April 20, 1986, the workers and employees of ITC staged a strike. The strike was amicably settled on April 26, 1986 by virtue of a Memorandum of Agreement entered into between Lorenzo Tangsoc, as owner and operator of petitioner ITC and of both Stanply Plant and the Butuan Logs, Inc. Plant, and the striking workers/employees of Stanply and Butuan Logs, Inc., wherein the private respondents were among those employed by Stanply. The pertinent provision of the Memorandum of Agreement reads in part: To resolve the issues of the strike the parties have agreed as follows: 1. All employees in Butuan Logs and Stanply shall be absorbed and considered as employees of the administration. No contractual work shall be allowed or instituted in all aspects of production. 2. The Industrial Timber Corporation reserves the right to hire its employees in STANPLY and BUTUAN LOGS. However, in the matter of hiring, top priority and preference shall be given to the striking employees whose names appear in the list appended hereto. Management shall not engage or hire the services of other employees unless the aforementioned list has been exhausted. Security of tenure shall be respected. xxx xxx xxx 4. All workers hired by management shall undertake a probationary period of two months from their hiring. Thereafter, all said workers shall be considered and treated as regular employees. 3 Pursuant to the aforementioned Memorandum of Agreement, petitioners admitted almost all of the striking workers, back to work, except private respondents. Hence, private respondents were forced to plead for their reinstatement. However, the same proved futile even after the lapse of seven (7) months of waiting and incessant follow-ups. On November 10, 1986, private respondents filed with the Arbitration Branch of the National Labor RelationsCommission (NLRC) a complaint for illegal dismiss and reinstatement with backwages against petitioner ITC. The case was heard on compulsory arbitration by Hearing Officer-

GANCAYCO, J.: The issue presented in this petition is whether or not the National Labor Relations Commission committed a grave abuse of discretion in ruling that private respondents were employees of petitioners and as such were illegally dismissed. The background facts of the case as narrated in public respondent's decision are not in dispute. Thus, sucinctly stated, the pertinent facts of this case are as follows: A written contract was entered into by and between petitioner Industrial Timber Corporation (ITC) and Engineer Azarias D. Dosdos who represented ADD Technical and Labor Service Consultancy. 1 In said
agreement, ADD Technical and Labor Service Consultancy, which was engaged in technical as well as labor services, assented to run and man the plywood plant of petitioner ITC in Agusan Pequeno, Butuan City for a period of one year, from July 31, 1985.

Sometime in August, 1985, private respondent Concordia Dos Pueblos and Lolita Sanchez were employed as Accounting/ Payroll Clerk and SSS/Medicare Clerk-Cashier, respectively, by petitioner. 2

Designate Atty. Nolasco D. Discipulo of the Agusan del Norte/Sur Provincial Office of the Ministry of Labor and Employment, Butuan City. Discipulo's report eventually became the basis of the decision rendered by Labor Arbiter Amado M. Solamo. Records show that the case was scheduled for conciliation conference/investigation on November 17, 1986. The parties agreed to reset the same for possible amicable settlement on November 24, 1986. Petitioners, however, failed to appear at the scheduled conference. Due to said non-appearance by petitioners, private respondents amended their complaint to include a prayer for damages. The hearing officer issued an order instructing private respondents to submit a position paper within ten (10) days from receipt of said order. Likewise, petitioners were ordered to submit their position paper within ten (10) days from receipt of the position paper of private respondents. On December 11, 1986, private respondents filed their position paper by registered mail. The same was received by the office of the hearing officer on December 15, 1986. Petitioners, however, failed to file their position paper despite their receipt of the position paper of private respondents. Thus, the hearing officer made the following observations: 4 Due to the preceding events, private respondents filed on January 8, 1987 a motion and manifestation stating among other things that since the receipt by petitioner of the copy of private respondents position paper up to the date of said motion, a period of twenty- six (26) regular days, or thirteen (13) working days had elapsed thus necessitating the promulgation of a decision favoring private respondents. 5 Acting on the manifestation of private respondents, the hearing officer reported that reinstatement with full backwages, as claimed, was but the natural consequence of the act of illegal dismissal committed by petitioners, to be reckoned from April 30, 1986 until actual reinstatement of private respondents. It was also reported that since the claims for damages were presumably based on legal and factual foundations, the said claims should likewise be given due course. 6 Labor Arbiter Amado M. Solamo found the report of Hearing OfficerDesignate Atty. Nolasco D. Discipulo to be in order and supported by substantial evidence. Thus, the same was adopted in the decision of the labor arbiter except for the award of damages which was modified,

Accordingly, it was ordered that: private respondents be reinstated to their former positions without loss of seniority rights and privileges and that private respondents were to be paid their backwages, ECOLA, 13th month pay, holiday pay, vacation and sick leave pay in the amounts of TWENTYFOUR THOUSAND THREE HUNDRED PESOS (P24,300.00) each, as well as TEN THOUSAND PESOS (P10,000.00) each as moral and exemplary damages, and ten percent of the total awards as attorney's fees. Petitioners elevated the decision of the labor arbiter to the NLRC. In a resolution promulgated on January 22, 1988, the NLRC sustained the decision of the labor arbiter on the ground that there was no reason to alter or modify, much less reverse the said decision. Said Commission found petitioner company guilty of illegal dismissal since it violated Sections 1 and 2 of the Memorandum of Agreement. Hence, the present petition. On June 27, 1988, this Court issued a temporary restraining order enjoining the execution of the resolution of the NLRC upon a bond in the amount of P30,000.00 to be filed by petitioner. In the resolution of this case, this Court must determine whether or not private respondents were employees of the petitioners. This main issue has been approached by the parties from almost diametrical points, thereby bringing into focus the sub-issue of whether or not a previous quitclaim agreed upon between the parties is valid. We will now discuss seriatim the questions just adverted to. It is the petitioners contention that private respondents had no employment relationship since the latter were hired and paid by ADD Technical and Labor Service Consultancy, and thus, the right to dismiss them belonged to the said employer, but not to the petitioners. If ever petitioners terminated private respondents' employment, such termination was done according to law. In maintaining their position, petitioners posit the theory that the Memorandum of Agreement entered into by petitioners and the striking workers on April 26, 1986 shows that petitioners never agreed to absorb and consider the private respondents as their employees. Petitioners averred that it was the clear intent of the striking employees and petitioners to treat the employees in Butuan Logs and Stanply differently from that of the contract workers provided by Engineer Dosdos in that the employees in Butuan Logs and Stanply were to be absorbed and considered as employees of petitioners while private respondents as contract workers,

were still to be hired giving them top priority and preference since their names appeared in the list appended to the agreement. On the other hand, it is private respondents' trenchant claim that they are employees of petitioner ITC and that the present issue involves questions of fact which have been ruled upon by Arbiter Solamo and the NLRC. The NLRC ruled that private respondents were employees of ITC and that the former's findings are supported by substantial evidence. Private respondents also submit that the findings of fact made by Arbiter Solamo must be appreciated with greater weight since he had the opportunity to observe the demeanor of the witnesses. A judicious review of the records of this case convinces this Court that there is no merit in the arguments of petitioners. No cogent reason exists why the findings of fact made by the labor arbiter to the effect that an employer-employee relationship existed between the parties should be reversed. The findings of fact of quasi-judicial bodies are generally binding on the courts. 7 The question of whether or not an employer-employee
relationship existed between the parties is a question of fact.
8

Granting, arguendo, that private respondents were employed by Engineer Dosdos, petitioners would still be liable to private respondents since the indices of a "labor only" contracting situation will apply to the present case. "Labor-only" contracting is defined in Section 9, Rule VIII, Book III of the Omnibus Rules. Implementing the Labor Code in the following terms: Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed. (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the worker in the same manner and extent as if the latter were directly employed by him. x x x x x x x x x. (Emphasis supplied.) The legal effect of a finding that a contractor is not a true independent contractor or "job contractor" but merely a "labor-only" contractor was expounded upon in Philippine Bank of Communications vs. NLRC 10 to wit: ... The labor-only' contractor i.e., 'the person or intermediary is considered 'merely as an agent of the employer.' The employer is made by the statute responsible to the employees of the labor-only' contractor as if such employees had been directly employed by the employer. Thus, where 'labor-only' contracting exists in a given case, the statute itself implies or establishes an employer-employee relationship between the employer (the owner of the project) and the employees of the 'labor-only' contractor, this time for a comprehensive purpose:

However, this Court has never hesitated to exercise its corrective powers and to reverse administrative decisions in the following cases: (1) the conclusion is a finding grounded on speculations, surmises and conjectures; (2) the inferences made are manifestly mistaken, absurd, or impossible; (3) there is a grave abuse of discretion; (4) there is a misapprehension of facts; (5) the court in arriving at its findings went beyond the issues of the case and the same are contrary to the admissions of the parties or the evidence presented; (6) where respondent commission has sustained irregular procedures and through the invocation of summary methods, including rules on appeal, has affirmed an order which tolerates a violation of due process and (7) where the rights of a party were prejudiced because the administrative findings, conclusions or decision were in violation of constitutional provisions, in excess of statutory authority, or jurisdiction, made upon irregular procedure, vitiated by fraud, imposition or mistake, not supported by substantial evidence adduced at the hearing or contained in the records or disclosed to the parties, or arbitrary, or capricious. 9 None of the abovementioned grounds are present which would warrant a reversal of the findings made by respondent Commission that an employeremployee relationship existed between the parties concerned.

'employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.' The law in effect holds both the employer and the 'labor-only' contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights under the Labor Code.' Hence, a finding that a contractor is a "labor-only" contractor is equivalent to a finding that there exists an employer-employee relationship between the owner of the project and the employees of the 'labor only contractor since that relationship is defined and prescribed by the law itself. Prescinding from the foregoing, the ineluctable conclusion is that an employer-employee relationship existed between petitioner and private respondents. Engineer Dosdos had no substantial capital investment in the form of tools, equipment, machineries, work premises and other materials since the plywood plant and panels were all supplied by petitioner. Likewise, the activities undertaken by the contractor were petitioners' business. Coming now to the second sub-issue, petitioners allege that they did file a position paper albeit late in this case refuting therein the claims of the private respondents. However, petitioners filed the said position paper on January 13, 1987 with the District Labor Office at Butuan City and not in the office of the labor arbiter in Cagayan de Oro City which was then handling the cases. The said position paper also contained a quitclaim wherein private respondents allegedly admitted that they were workers/employees of ADD Technical and Labor Services and that for a consideration, the employees signed on May 17, 1986, quitclaims forever discharging and releasing petitioners from any and all claims arising from any source, particularly from their employment. Petitioners state that even if they filed their position paper belatedly, proceedings before the respondent Commission are not governed by the technical rules on evidence applied in courts of law. Furthermore, private respondents supposedly benefited from the quitclaim and received their separation pay as such, they cannot be allowed to repudiate the authenticity of the quitclaim deed after benefiting from it. On the other hand, respondents state that this petition should not be given due course since petitioners failed to seasonably file their position paper with the District Labor Office. Furthermore, they state that the signatures appearing on the quitclaim deed are dubious in character and that the said

signatures are either forged or signed under certain anomalous circumstances. At the onset, this Court was predisposed to dismiss the petition since ITC's position paper containing the quitclaim was filed much too late. However, there appears to be a waiver. It is noted that the NLRC resolution stated that the record also shows that complainants (herein private respondents) signed quitclaim deeds and received their separation pay. 11 The private
respondents even filed a rejoinder traversing petitioners' late position paper with respect to the issue on the quitclaim.

The determination of the validity of the quitclaim is essential towards a just determination of this case. The Labor Arbiter should have conducted a hearing to determine the veracity of the denials of the private respondents rather than resolve these intricate issues based wholly on the position paper of private respondents. The appraisal of the situation by the NLRC and the Labor Arbiter lacks precision, giving rise to an ambiguity that lends plausibility to the present proceeding. As there are matters regarding the quitclaim that still need to be clarified, equity calls for a remand of the instant case to the NLRC for an ascertainment in greater detail of the circumstances surrounding the execution of the quitclaim. Certiorari to that extent lies. So this Court rules. There will be an element of unfairness at this stage if this Court will disregard the quitclaim and thus enable private respondents to unjustly benefit if indeed they signed the quitclaim. What is vital and indispensable then is a determination of the validity of the quitclaim. WHEREFORE, the assailed resolution of the respondent National Labor Relations Commission is AFFIRMED only as to the finding that petitioner is the employer of private respondents. The case is REMANDED to the National Labor Relation Commission for an inquiry with deliberate dispatch on the validity of the quitclaim. The restraining order issued by the Court is made permanent. No pronouncement as to costs.

Republic of the Philippines SUPREME COURT Manila 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.

(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 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 quogranting 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. 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 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 quasijudicial 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 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-0042221 is REINSTATED. This case is REMANDED to the court a quo for continuation of the proceedings. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 111107 January 10, 1997 LOEONARDO A. PAAT, in his capacity as Officer-in-Charge (OIC), Regional Executive Director (RED), Region 2 and JOVITO LAYUGAN, JR., in his capacity as Community Environment and Natural Resources Officer (CENRO), both of the Department of Environment and Natural Resources (DENR), petitioners, vs. COURT OF APPEALS, HON. RICARDO A. BACULI in his capacity as Presiding Judge of Branch 2, Regional Trial Court at Tuguegarao, Cagayan, and SPOUSES BIENVENIDO and VICTORIA DE GUZMAN, respondents.

Environment and Natural Resources (DENR, for brevity) personnel in Aritao, Nueva Vizcaya because the driver could not produce the required documents for the forest products found concealed in the truck. Petitioner Jovito Layugan, the Community Environment and Natural Resources Officer (CENRO) in Aritao, Cagayan, issued on May 23, 1989 an order of confiscation of the truck and gave the owner thereof fifteen (15) days within which to submit an explanation why the truck should not be forfeited. Private respondents, however, failed to submit the required explanation. On June 22, 1989, 1 Regional Executive Director Rogelio Baggayan of DENR
sustained petitioner Layugan's action of confiscation and ordered the forfeiture of the truck invoking Section 68-A of Presidential Decree No. 705 as amended by Executive Order No. 277. Private respondents filed a letter of reconsideration dated June 28, 1989 of the June 22, 1989 order of Executive Director Baggayan, which was, however, denied in a subsequent order of July 12, 1989. 2Subsequently, the case was brought by the petitioners to the Secretary of DENR pursuant to private respondents' statement in their letter dated June 28, 1989 that in case their letter for reconsideration would be denied then "this letter should be considered as an appeal to the Secretary." 3 Pending resolution however of the appeal, a suit for replevin, docketed as Civil Case 4031, was filed by the private respondents against petitioner Layugan and Executive Director Baggayan 4 with the Regional Trial Court, Branch 2 of Cagayan, 5 which issued a writ ordering the return of the truck to private respondents. 6Petitioner Layugan and Executive Director Baggayan filed a motion to dismiss with the trial court contending, inter alia, that private respondents had no cause of action for their failure to exhaust administrative remedies. The trial court denied the motion to dismiss in an order dated December 28, 1989. 7 Their motion for reconsideration having been likewise denied, a petition for certiorari was filed by the petitioners with the respondent Court of Appeals which sustained the trial court's order ruling that the question involved is purely a legal question. 8 Hence, this present petition, 9 with prayer for temporary restraining order and/or preliminary injunction, seeking to reverse the decision of the respondent Court of Appeals was filed by the petitioners on September 9, 1993. By virtue of the Resolution dated September 27, 1993, 10 the prayer for the issuance of temporary restraining order of petitioners was granted by this Court.

TORRES, JR., J.: Without violating the principle of exhaustion of administrative remedies, may an action for replevin prosper to recover a movable property which is the subject matter of an administrative forfeiture proceeding in theDepartment of Environment and Natural Resources pursuant to Section 68-A of P.D. 705, as amended, entitled The Revised Forestry Code of the Philippines? Are the Secretary of DENR and his representatives empowered to confiscate and forfeit conveyances used in transporting illegal forest products in favor of the government? These are two fundamental questions presented before us for our resolution. The controversy on hand had its incipiency on May 19, 1989 when the truck of private respondent Victoria de Guzman while on its way to Bulacan from San Jose, Baggao, Cagayan, was seized by the Department of

Invoking the doctrine of exhaustion of administrative remedies, petitioners aver that the trial court could not legally entertain the suit for replevin because the truck was under administrative seizure proceedings pursuant to Section 68-A of P.D. 705, as amended by E.O. 277. Private respondents, on the other hand, would seek to avoid the operation of this principle asserting that the instant case falls within the exception of the doctrine upon the justification that (1) due process was violated because they were not given the chance to be heard, and (2) the seizure and forfeiture was unlawful on the grounds: (a) that the Secretary of DENR and

his representatives have no authority to confiscate and forfeit conveyances utilized in transporting illegal forest products, and (b) that the truck as admitted by petitioners was not used in the commission of the crime. Upon a thorough and delicate scrutiny of the records and relevant jurisprudence on the matter, we are of the opinion that the plea of petitioners for reversal is in order. This Court in a long line of cases has consistently held that before a party is allowed to seek the intervention of the court, it is a pre-condition that he should have availed of all the means of administrative processes afforded him. Hence, if a remedy within the administrative machinery can still be resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes within his jurisdiction then such remedy should be exhausted first before court's judicial power can be sought, The premature invocation of court's intervention is fatal to one's cause of action. 11 Accordingly, absent any finding of waiver or estoppel the case is
susceptible of dismissal for lack of cause of action. 12 This doctrine of exhaustion of administrative remedies was not without its practical and legal reasons, for one thing, availment of administrative remedy entails lesser expenses and provides for a speedier disposition of controversies. It is no less true to state that the courts of justice for reasons of comity and convenience will shy away from a dispute until the system of administrative redress has been completed and complied with so as to give the administrative agency concerned every opportunity to correct its error and to dispose of the case. However, we are not amiss to reiterate that the principle of exhaustion of administrative remedies as tested by a battery of cases is not an ironclad rule. This doctrine is a relative one and its flexibility is called upon by the peculiarity and uniqueness of the factual and circumstantial settings of a case. Hence, it is disregarded (1) when there is a violation of due process, 13 (2) when the issue involved is purely a legal question, 14 (3) when the administrative action is patently illegal amounting to lack or excess of jurisdiction, 15 (4) when there is estoppel on the part of the administrative agency concerned, 16 (5) when there is irreparable injury, 17 (6) when the respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of the latter, 18(7) when to require exhaustion of administrative remedies would be unreasonable, 19 (8) when it would amount to a nullification of a claim, 20 (9) when the subject matter is a private land in land case proceedings, 21 (10) when the rule does not provide a plain, speedy and adequate remedy, and (11) when there are circumstances indicating the urgency of judicial intervention. 22

respondents through the order of July 12, 1989. In their letter of reconsideration dated June 28, 1989, 23 private respondents clearly recognize
the presence of an administrative forum to which they seek to avail, as they did avail, in the resolution of their case. The letter, reads, thus:

xxx xxx xxx If this motion for reconsideration does not merit your favorable action, then this letter should be considered as an appeal to the Secretary. 24 It was easy to perceive then that the private respondents looked up to the Secretary for the review and disposition of their case. By appealing to him, they acknowledged the existence of an adequate and plain remedy still available and open to them in the ordinary course of the law. Thus, they cannot now, without violating the principle of exhaustion of administrative remedies, seek court's intervention by filing an action for replevin for the grant of their relief during the pendency of an administrative proceedings. Moreover, it is important to point out that the enforcement of forestry laws, rules and regulations and the protection, development and management of forest lands fall within the primary and special responsibilities of the Department of Environment and Natural Resources. By the very nature of its function, the DENR should be given a free hand unperturbed by judicial intrusion to determine a controversy which is well within its jurisdiction. The assumption by the trial court, therefore, of the replevin suit filed by private respondents constitutes an unjustified encroachment into the domain of the administrative agency's prerogative. The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence. 25 In Felipe Ismael, Jr. and
Co. vs. Deputy Executive Secretary, 26 which was reiterated in the recent case of Concerned Officials of MWSS vs. Vasquez, 27 this Court held:

In the case at bar, there is no question that the controversy was pending before the Secretary of DENR when it was forwarded to him following the denial by the petitioners of the motion for reconsideration of private

Thus, while the administration grapples with the complex and multifarious problems caused by unbriddled exploitation of these resources, the judiciary will stand clear. A long line of cases establish the basic rule that the courts will not interfere in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities coming under the special technical knowledge and training of such agencies.

To sustain the claim of private respondents would in effect bring the instant controversy beyond the pale of the principle of exhaustion of administrative remedies and fall within the ambit of excepted cases heretofore stated. However, considering the circumstances prevailing in this case, we can not but rule out these assertions of private respondents to be without merit. First, they argued that there was violation of due process because they did not receive the May 23, 1989 order of confiscation of petitioner Layugan. This contention has no leg to stand on. Due process does not necessarily mean or require a hearing, but simply an opportunity or right to be heard. 28 One may be heard, not solely by verbal presentation but also, and
perhaps many times more creditably and practicable than oral argument, through pleadings. 29 In administrative proceedings moreover, technical rules of procedure and evidence are not strictly applied; administrative process cannot be fully equated with due process in its strict judicial sense. 30 Indeed, deprivation of due process cannot be successfully invoked where a party was given the chance to be heard on his motion for reconsideration, 31 as in the instant case, when private respondents were undisputedly given the opportunity to present their side when they filed a letter of reconsideration dated June 28, 1989 which was, however, denied in an order of July 12, 1989 of Executive Director Baggayan, In Navarro III vs. Damasco, 32 we ruled that :

The court shall further order the confiscation in favor of the government of the timber or any forest products cut, gathered, collected, removed, or possessed, as well as the machinery, equipments,implements and tools illegaly [sic] used in the area where the timber or forest products are found. (Emphasis ours) A reading, however, of the law persuades us not to go along with private respondents' thinking not only because the aforequoted provision apparently does not mention nor include "conveyances" that can be the subject of confiscation by the courts, but to a large extent, due to the fact that private respondents' interpretation of the subject provision unduly restricts the clear intention of the law and inevitably reduces the other provision of Section 68-A, which is quoted herein below: Sec. 68-A. Administrative Authority of the Department or His Duly Authorized Representative To Order Confiscation. In all cases of violation of this Code or other forest laws, rules and regulations, the Department Head or his duly authorized representative, may order the confiscation of any forest products illegally cut, gathered, removed, or possessed or abandoned, and all conveyances used either by land, water or air in the commission of the offense and to dispose of the same in accordance with pertinent laws, regulations and policies on the matter. (Emphasis ours) It is, thus, clear from the foregoing provision that the Secretary and his duly authorized representatives are given the authority to confiscate and forfeit any conveyances utilized in violating the Code or other forest laws, rules and regulations. The phrase "to dispose of the same" is broad enough to cover the act of forfeiting conveyances in favor of the government. The only limitation is that it should be made "in accordance with pertinent laws, regulations or policies on the matter." In the construction of statutes, it must be read in such a way as to give effect to the purpose projected in the statute. 33 Statutes should be construed in the light of the object to be achieved
and the evil or mischief to be suppressed, and they should be given such construction as will advance the object, suppress the mischief, and secure the benefits intended. 34 In this wise, the observation of the Solicitor General is significant, thus:

The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of the action or ruling complained of. A formal or trial type hearing is not at all times and in all instances essential. The requirements are satisfied when the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand. What is frowned upon is the absolute lack of notice or hearing. Second, private respondents imputed the patent illegality of seizure and forfeiture of the truck because the administrative officers of the DENR allegedly have no power to perform these acts under the law. They insisted that only the court is authorized to confiscate and forfeit conveyances used in transporting illegal forest products as can be gleaned from the second paragraph of Section 68 of P.D. 705, as amended by E.O. 277. The pertinent provision reads as follows: Sec. 68. . . . xxx xxx xxx

But precisely because of the need to make forestry laws "more responsive to present situations and realities" and in view of the "urgency to conserve the remaining resources of the country," that the government opted to add Section 68-

A. This amendatory provision is an administrative remedy totally separate and distinct from criminal proceedings. More than anything else, it is intended to supplant the inadequacies that characterize enforcement of forestry laws through criminal actions. The preamble of EO 277-the law that added Section 68-A to PD 705-is most revealing: "WHEREAS, there is an urgency to conserve the remaining forest resources of the country for the benefit and welfare of the present and future generations of Filipinos; WHEREAS, our forest resources may be effectively conserved and protected through the vigilant enforcement and implementation of our forestry laws, rules and regulations; WHEREAS, the implementation of our forestry laws suffers from technical difficulties, due to certain inadequacies in the penal provisions of the Revised Forestry Code of the Philippines; and WHEREAS, to overcome this difficulties, there is a need to penalize certain acts more responsive to present situations and realities;" It is interesting to note that Section 68-A is a new provision authorizing the DENR to confiscate, not only "conveyances," but forest products as well. On the other hand, confiscation of forest products by the "court" in a criminal action has long been provided for in Section 68. If as private respondents insist, the power on confiscation cannot be exercised except only through the court under Section 68, then Section 68-A would have no Purpose at all. Simply put, Section 68-A would not have provided any solution to the problem perceived in EO 277, supra. 35 Private respondents, likewise, contend that the seizure was illegal because the petitioners themselves admitted in the Order dated July 12, 1989 of Executive Director Baggayan that the truck of private respondents was not

used in the commission of the crime. This order, a copy of which was given to and received by the counsel of private respondents, reads in part, viz.: . . . while it is true that the truck of your client was not used by her in the commission of the crime, we uphold your claim that the truck owner is not liable for the crime and in no case could a criminal case be filed against her as provided under Article 309 and 310 of the Revised Penal Code. . . 36 We observed that private respondents misread the content of the aforestated order and obviously misinterpreted the intention of petitioners. What is contemplated by the petitioners when they stated that the truck "was not used in the commission of the crime" is that it was not used in the commission of the crime of theft, hence, in no case can a criminal action be filed against the owner thereof for violation of Article 309 and 310 of the Revised Penal Code. Petitioners did not eliminate the possibility that the truck was being used in the commission of another crime, that is, the breach of Section 68 of P.D. 705 as amended by E.O. 277. In the same order of July 12, 1989, petitioners pointed out: . . . However, under Section 68 of P.D. 705 as amended and further amended by Executive Order No. 277 specifically provides for the confiscation of the conveyance used in the transport of forest products not covered by the required legal documents. She may not have been involved in the cutting and gathering of the product in question but the fact that she accepted the goods for a fee or fare the same is therefor liable. . . 37 Private respondents, however, contended that there is no crime defined and punishable under Section 68 other than qualified theft, so that, when petitioners admitted in the July 12, 1989 order that private respondents could not be charged for theft as provided for under Articles 309 and 310 of the Revised Penal Code, then necessarily private respondents could not have committed an act constituting a crime under Section 68. We disagree. For clarity, the provision of Section 68 of P.D. 705 before its amendment by E.O. 277 and the provision of Section 1 of E.O. No. 277 amending the aforementioned Section 68 are reproduced herein, thus: Sec. 68. Cutting, gathering and/or collecting timber or other products without license. Any person who shall cut, gather, collect, or remove timber or other forest products from any forest land, or timber from alienable and

disposable public lands, or from private lands, without any authority under a license agreement, lease, license or permit, shall be guilty of qualified theft as defined and punished under Articles 309 and 310 of the Revised Penal Code . . . (Emphasis ours; Section 68, P.D. 705 before its amendment by E.O. 277) Sec. 1. Section 68 of Presidential Decree No. 705, as amended, is hereby amended to read as follows: Sec. 68. Cutting, gathering and/or collecting timber or other forest products without license. Any person who shall cut, gather, collect, remove timber or other forest products from any forest land, or timber from alienable or disposable public land, or from private land, without any authority, or possess timber or other forest products without the legal documents as required under existing forest laws and regulations, shall bepunished with the penalties imposed under Articles 309 and 310 of the Revised Penal Code . . . (Emphasis ours; Section 1, E.O. No. 277 amending Section 68, P.D. 705 as amended) With the introduction of Executive Order No. 277 amending Section 68 of P.D. 705, the act of cutting, gathering, collecting, removing, or possessing forest products without authority constitutes a distinct offense independent now from the crime of theft under Articles 309 and 310 of the Revised Penal Code, but the penalty to be imposed is that provided for under Article 309 and 310 of the Revised Penal Code. This is clear from the language of Executive Order No. 277 when it eliminated the phrase "shall be guilty of qualified theft as defined and punished under Articles 309 and 310 of the Revised Penal Code" and inserted the words "shall be punished with the penalties imposed under Article 309 and 310 of the Revised Penal Code". When the statute is clear and explicit, there is hardly room for any extended court ratiocination or rationalization of the law. 38 From the foregoing disquisition, it is clear that a suit for replevin can not be sustained against the petitioners for the subject truck taken and retained by them for administrative forfeiture proceedings in pursuant to Section 68-A of the P.D. 705, as amended. Dismissal of the replevin suit for lack of

cause of action in view of the private respondents' failure to exhaust administrative remedies should have been the proper course of action by the lower court instead of assuming jurisdiction over the case and consequently issuing the writ ordering the return of the truck. Exhaustion of the remedies in the administrative forum, being a condition precedent prior to one's recourse to the courts and more importantly, being an element of private respondents' right of action, is too significant to be waylaid by the lower court. It is worth stressing at this point, that a suit for replevin is founded solely on the claim that the defendant wrongfully withholds the property sought to be recovered. It lies to recover possession of personal chattels that are unlawfully detained. 39 "To detain" is defined as to mean "to hold or keep in
custody," 40 and it has been held that there is tortious taking whenever there is an unlawful meddling with the property, or an exercise or claim of dominion over it, without any pretense of authority or right; this, without manual seizing of the property is sufficient. 41 Under the Rules of Court, it is indispensable in replevin proceeding that the plaintiff must show by his own affidavit that he is entitled to the possession of property, that the property is wrongfully detained by the defendant, alleging the cause of detention, that the same has not been taken for tax assessment, or seized under execution, or attachment, or if so seized, that it is exempt from such seizure, and the actual value of the property. 42 Private respondents miserably failed to convince this Court that a wrongful detention of the subject truck obtains in the instant case. It should be noted that the truck was seized by the petitioners because it was transporting forest products without the required permit of the DENR in manifest contravention of Section 68 of P.D. 705 as amended by E.O 277. Section 68-A of P.D. 705, as amended, unquestionably warrants the confiscation as well as the disposition by the Secretary of DENR or his duly authorized representatives of the conveyances used in violating the provision of forestry laws. Evidently, the continued possession or detention of the truck by the petitioners for administrative forfeiture proceeding is legally permissible, hence, no wrongful detention exists in the case at bar.

Moreover, the suit for replevin is never intended as a procedural tool to question the orders of confiscation and forfeiture issued by the DENR in pursuance to the authority given under P.D. 705, as amended. Section 8 of the said law is explicit that actions taken by the Director of the Bureau of Forest Development concerning the enforcement of the provisions of the said law are subject to review by the Secretary of DENR and that courts may not review the decisions of the Secretary except through a special civil action for certiorari or prohibition. It reads: Sec. 8. REVIEW All actions and decisions of the Director are subject to review, motu propio or upon appeal of any

person aggrieved thereby, by the Department Head whose decision shall be final and executory after the lapse of thirty (30) days from the receipt of the aggrieved party of said decision, unless appealed to the President in accordance with Executive Order No. 19, Series of 1966. The Decision of the Department Head may not be reviewed by the courts except through a special civil action for certiorari or prohibition. WHEREFORE, the Petition is GRANTED; the Decision of the respondent Court of Appeals dated October 16, 1991 and its Resolution dated July 14, 1992 are hereby SET ASIDE AND REVERSED; the Restraining Order promulgated on September 27, 1993 is hereby made permanent; and the Secretary of DENR is directed to resolve the controversy with utmost dispatch. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 156109 November 18, 2004

The second challenged Order denied petitioner's Motion for Reconsideration. The Facts Petitioner Khristine Rea M. Regino was a first year computer science student at Respondent Pangasinan Colleges of Science and Technology (PCST). Reared in a poor family, Regino went to college mainly through the financial support of her relatives. During the second semester of school year 2001-2002, she enrolled in logic and statistics subjects under Respondents Rachelle A. Gamurot and Elissa Baladad, respectively, as teachers. In February 2002, PCST held a fund raising campaign dubbed the "Rave Party and Dance Revolution," the proceeds of which were to go to the construction of the school's tennis and volleyball courts. Each student was required to pay for two tickets at the price of P100 each. The project was allegedly implemented by recompensing students who purchased tickets with additional points in their test scores; those who refused to pay were denied the opportunity to take the final examinations. Financially strapped and prohibited by her religion from attending dance parties and celebrations, Regino refused to pay for the tickets. On March 14 and March 15, 2002, the scheduled dates of the final examinations in logic and statistics, her teachers -- Respondents Rachelle A. Gamurot and Elissa Baladad -- allegedly disallowed her from taking the tests. According to petitioner, Gamurot made her sit out her logic class while her classmates were taking their examinations. The next day, Baladad, after announcing to the entire class that she was not permitting petitioner and another student to take their statistics examinations for failing to pay for their tickets, allegedly ejected them from the classroom. Petitioner's pleas ostensibly went unheeded by Gamurot and Baladad, who unrelentingly defended their positions as compliance with PCST's policy. On April 25, 2002, petitioner filed, as a pauper litigant, a Complaint5 for damages against PCST, Gamurot and Baladad. In her Complaint, she prayed for P500,000 as nominal damages; P500,000 as moral damages; at least P1,000,000 as exemplary damages; P250,000 as actual damages; plus the costs of litigation and attorney's fees. On May 30, 2002, respondents filed a Motion to Dismiss6 on the ground of petitioner's failure to exhaust administrative remedies. According to respondents, the question raised involved the determination of the wisdom

KHRISTINE REA M. REGINO, Assisted and Represented by ARMANDO REGINO, petitioner, vs. PANGASINAN COLLEGES OF SCIENCE AND TECHNOLOGY, RACHELLE A. GAMUROT and ELISSA BALADAD, respondents.

DECISION

PANGANIBAN, J.: Upon enrolment, students and their school enter upon a reciprocal contract. The students agree to abide by the standards of academic performance and codes of conduct, issued usually in the form of manuals that are distributed to the enrollees at the start of the school term. Further, the school informs them of the itemized fees they are expected to pay. Consequently, it cannot, after the enrolment of a student, vary the terms of the contract. It cannot require fees other than those it specified upon enrolment. The Case Before the Court is a Petition for Review under Rule 45,1 seeking to nullify the July 12, 20022 and the November 22, 20023 Orders of the Regional Trial Court (RTC) of Urdaneta City, Pangasinan (Branch 48) in Civil Case No. U-7541. The decretal portion of the first assailed Order reads: "WHEREFORE, the Court GRANTS the instant motion to dismiss for lack of cause of action."4

of an administrative policy of the PCST; hence, the case should have been initiated before the proper administrative body, the Commission of Higher Education (CHED). In her Comment to respondents' Motion, petitioner argued that prior exhaustion of administrative remedies was unnecessary, because her action was not administrative in nature, but one purely for damages arising from respondents' breach of the laws on human relations. As such, jurisdiction lay with the courts. On July 12, 2002, the RTC dismissed the Complaint for lack of cause of action. Ruling of the Regional Trial Court In granting respondents' Motion to Dismiss, the trial court noted that the instant controversy involved a higher institution of learning, two of its faculty members and one of its students. It added that Section 54 of the Education Act of 1982 vested in the Commission on Higher Education (CHED) the supervision and regulation of tertiary schools. Thus, it ruled that the CHED, not the courts, had jurisdiction over the controversy.7 In its dispositive portion, the assailed Order dismissed the Complaint for "lack of cause of action" without, however, explaining this ground. Aggrieved, petitioner filed the present Petition on pure questions of law.8 Issues In her Memorandum, petitioner raises the following issues for our consideration: "Whether or not the principle of exhaustion of administrative remedies applies in a civil action exclusively for damages based on violation of the human relation provisions of the Civil Code, filed by a student against her former school. "Whether or not there is a need for prior declaration of invalidity of a certain school administrative policy by the Commission on Higher Education (CHED) before a former student can successfully maintain an action exclusively for damages in regular courts.

"Whether or not the Commission on Higher Education (CHED) has exclusive original jurisdiction over actions for damages based upon violation of the Civil Code provisions on human relations filed by a student against the school."9 All of the foregoing point to one issue -- whether the doctrine of exhaustion of administrative remedies is applicable. The Court, however, sees a second issue which, though not expressly raised by petitioner, was impliedly contained in her Petition: whether the Complaint stated sufficient cause(s) of action. The Court's Ruling The Petition is meritorious. First Issue: Exhaustion of Administrative Remedies Respondents anchored their Motion to Dismiss on petitioner's alleged failure to exhaust administrative remedies before resorting to the RTC. According to them, the determination of the controversy hinge on the validity, the wisdom and the propriety of PCST's academic policy. Thus, the Complaint should have been lodged in the CHED, the administrative body tasked under Republic Act No. 7722 to implement the state policy to "protect, foster and promote the right of all citizens to affordable quality education at all levels and to take appropriate steps to ensure that education is accessible to all."10 Petitioner counters that the doctrine finds no relevance to the present case since she is praying for damages, a remedy beyond the domain of the CHED and well within the jurisdiction of the courts.11 Petitioner is correct. First, the doctrine of exhaustion of administrative remedies has no bearing on the present case. In Factoran Jr. v. CA,12 the Court had occasion to elucidate on the rationale behind this doctrine: "The doctrine of exhaustion of administrative remedies is basic. Courts, for reasons of law, comity, and convenience, should not entertain suits unless the available administrative remedies have first been resorted to and the proper authorities have been given the appropriate opportunity to act and correct their alleged errors, if any, committed in the administrative forum. x x x.13"

Petitioner is not asking for the reversal of the policies of PCST. Neither is she demanding it to allow her to take her final examinations; she was already enrolled in another educational institution. A reversal of the acts complained of would not adequately redress her grievances; under the circumstances, the consequences of respondents' acts could no longer be undone or rectified. Second, exhaustion of administrative remedies is applicable when there is competence on the part of the administrative body to act upon the matter complained of.14 Administrative agencies are not courts; they are neither part of the judicial system, nor are they deemed judicial tribunals.15 Specifically, the CHED does not have the power to award damages.16 Hence, petitioner could not have commenced her case before the Commission. Third, the exhaustion doctrine admits of exceptions, one of which arises when the issue is purely legal and well within the jurisdiction of the trial court.17 Petitioner's action for damages inevitably calls for the application and the interpretation of the Civil Code, a function that falls within the jurisdiction of the courts.18 Second Issue: Cause of Action Sufficient Causes of Action Stated in the Allegations in the Complaint As a rule, every complaint must sufficiently allege a cause of action; failure to do so warrants its dismissal.19 A complaint is said to assert a sufficient cause of action if, admitting what appears solely on its face to be correct, the plaintiff would be entitled to the relief prayed for. Assuming the facts that are alleged to be true, the court should be able to render a valid judgment in accordance with the prayer in the complaint.20 A motion to dismiss based on lack of cause of action hypothetically admits the truth of the alleged facts. In their Motion to Dismiss, respondents did not dispute any of petitioner's allegations, and they admitted that "x x x the crux of plaintiff's cause of action is the determination of whether or not the assessment of P100 per ticket is excessive or oppressive."21 They thereby premised their prayer for dismissal on the Complaint's alleged failure to state a cause of action. Thus, a reexamination of the Complaint is in order. The Complaint contains the following factual allegations:

"10. In the second week of February 2002, defendant Rachelle A. Gamurot, in connivance with PCST, forced plaintiff and her classmates to buy or take two tickets each, x x x; "11. Plaintiff and many of her classmates objected to the forced distribution and selling of tickets to them but the said defendant warned them that if they refused [to] take or pay the price of the two tickets they would not be allowed at all to take the final examinations; "12. As if to add insult to injury, defendant Rachelle A. Gamurot bribed students with additional fifty points or so in their test score in her subject just to unjustly influence and compel them into taking the tickets; "13. Despite the students' refusal, they were forced to take the tickets because [of] defendant Rachelle A. Gamurot's coercion and act of intimidation, but still many of them including the plaintiff did not attend the dance party imposed upon them by defendants PCST and Rachelle A. Gamurot; "14. Plaintiff was not able to pay the price of her own two tickets because aside form the fact that she could not afford to pay them it is also against her religious practice as a member of a certain religious congregation to be attending dance parties and celebrations; "15. On March 14, 2002, before defendant Rachelle A. Gamurot gave her class its final examination in the subject 'Logic' she warned that students who had not paid the tickets would not be allowed to participate in the examination, for which threat and intimidation many students were eventually forced to make payments: "16. Because plaintiff could not afford to pay, defendant Rachelle A. Gamurot inhumanly made plaintiff sit out the class but the defendant did not allow her to take her final examination in 'Logic;' "17. On March 15, 2002 just before the giving of the final examination in the subject 'Statistics,' defendant Elissa Baladad, in connivance with defendants Rachelle A. Gamurot and PCST, announced in the classroom that she was not allowing plaintiff and another student to take the examination for their failure and refusal

to pay the price of the tickets, and thenceforth she ejected plaintiff and the other student from the classroom; "18. Plaintiff pleaded for a chance to take the examination but all defendants could say was that the prohibition to give the examinations to non-paying students was an administrative decision; "19. Plaintiff has already paid her tuition fees and other obligations in the school; "20. That the above-cited incident was not a first since PCST also did another forced distribution of tickets to its students in the first semester of school year 2001-2002; x x x " 22 The foregoing allegations show two causes of action; first, breach of contract; and second, liability for tort. Reciprocity of the School-Student Contract In Alcuaz v. PSBA,23 the Court characterized the relationship between the school and the student as a contract, in which "a student, once admitted by the school is considered enrolled for one semester."24 Two years later, in Non v. Dames II,25 the Court modified the "termination of contract theory" in Alcuaz by holding that the contractual relationship between the school and the student is not only semestral in duration, but for the entire period the latter are expected to complete it."26 Except for the variance in the period during which the contractual relationship is considered to subsist, both Alcuaz and Non were unanimous in characterizing the school-student relationship as contractual in nature. The school-student relationship is also reciprocal. Thus, it has consequences appurtenant to and inherent in all contracts of such kind -- it gives rise to bilateral or reciprocal rights and obligations. The school undertakes to provide students with education sufficient to enable them to pursue higher education or a profession. On the other hand, the students agree to abide by the academic requirements of the school and to observe its rules and regulations.27 The terms of the school-student contract are defined at the moment of its inception -- upon enrolment of the student. Standards of academic performance and the code of behavior and discipline are usually set forth in

manuals distributed to new students at the start of every school year. Further, schools inform prospective enrollees the amount of fees and the terms of payment. In practice, students are normally required to make a down payment upon enrollment, with the balance to be paid before every preliminary, midterm and final examination. Their failure to pay their financial obligation is regarded as a valid ground for the school to deny them the opportunity to take these examinations. The foregoing practice does not merely ensure compliance with financial obligations; it also underlines the importance of major examinations. Failure to take a major examination is usually fatal to the students' promotion to the next grade or to graduation. Examination results form a significant basis for their final grades. These tests are usually a primary and an indispensable requisite to their elevation to the next educational level and, ultimately, to their completion of a course. Education is not a measurable commodity. It is not possible to determine who is "better educated" than another. Nevertheless, a student's grades are an accepted approximation of what would otherwise be an intangible product of countless hours of study. The importance of grades cannot be discounted in a setting where education is generally the gate pass to employment opportunities and better life; such grades are often the means by which a prospective employer measures whether a job applicant has acquired the necessary tools or skills for a particular profession or trade. Thus, students expect that upon their payment of tuition fees, satisfaction of the set academic standards, completion of academic requirements and observance of school rules and regulations, the school would reward them by recognizing their "completion" of the course enrolled in. The obligation on the part of the school has been established in Magtibay v. Garcia,28 Licup v. University of San Carlos29 and Ateneo de Manila University v. Garcia,30 in which the Court held that, barring any violation of the rules on the part of the students, an institution of higher learning has a contractual obligation to afford its students a fair opportunity to complete the course they seek to pursue. We recognize the need of a school to fund its facilities and to meet astronomical operating costs; this is a reality in running it. Crystal v. Cebu International School31 upheld the imposition by respondent school of a "land purchase deposit" in the amount of P50,000 per student to be used

for the "purchase of a piece of land and for the construction of new buildings and other facilities x x x which the school would transfer [to] and occupy after the expiration of its lease contract over its present site." The amount was refundable after the student graduated or left the school. After noting that the imposition of the fee was made only after prior consultation and approval by the parents of the students, the Court held that the school committed no actionable wrong in refusing to admit the children of the petitioners therein for their failure to pay the "land purchase deposit" and the 2.5 percent monthly surcharge thereon. In the present case, PCST imposed the assailed revenue-raising measure belatedly, in the middle of the semester. It exacted the dance party fee as a condition for the students' taking the final examinations, and ultimately for its recognition of their ability to finish a course. The fee, however, was not part of the school-student contract entered into at the start of the school year. Hence, it could not be unilaterally imposed to the prejudice of the enrollees. Such contract is by no means an ordinary one. In Non, we stressed that the school-student contract "is imbued with public interest, considering the high priority given by the Constitution to education and the grant to the State of supervisory and regulatory powers over all educational institutions."32 Sections 5 (1) and (3) of Article XIV of the 1987 Constitution provide: "The State shall protect and promote the right of all citizens to quality education at all levels and shall take appropriate steps to make such declaration accessible to all. "Every student has a right to select a profession or course of study, subject to fair, reasonable and equitable admission and academic requirements." The same state policy resonates in Section 9(2) of BP 232, otherwise known as the Education Act of 1982: "Section 9. Rights of Students in School. In addition to other rights, and subject to the limitations prescribed by law and regulations, students and pupils in all schools shall enjoy the following rights: xxx xxx xxx

(2) The right to freely choose their field of study subject to existing curricula and to continue their course therein up to graduation, except in cases of academic deficiency, or violation of disciplinary regulations." Liability for Tort In her Complaint, petitioner also charged that private respondents "inhumanly punish students x x x by reason only of their poverty, religious practice or lowly station in life, which inculcated upon [petitioner] the feelings of guilt, disgrace and unworthiness;"33 as a result of such punishment, she was allegedly unable to finish any of her subjects for the second semester of that school year and had to lag behind in her studies by a full year. The acts of respondents supposedly caused her extreme humiliation, mental agony and "demoralization of unimaginable proportions" in violation of Articles 19, 21 and 26 of the Civil Code. These provisions of the law state thus: "Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith." "Article 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage." "Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief: (1) Prying into the privacy of another's residence; (2) Meddling with or disturbing the private life or family relations of another; (3) Intriguing to cause another to be alienated from his friends; (4) Vexing or humiliating another on account of his beliefs, lowly station in life, place of birth, physical defect, or other personal condition."

Generally, liability for tort arises only between parties not otherwise bound by a contract. An academic institution, however, may be held liable for tort even if it has an existing contract with its students, since the act that violated the contract may also be a tort. We ruled thus in PSBA vs. CA,34 from which we quote: "x x x A perusal of Article 2176 [of the Civil Code] shows that obligations arising from quasi-delicts or tort, also known as extracontractual obligations, arise only between parties not otherwise bound by contract, whether express or implied. However, this impression has not prevented this Court from determining the existence of a tort even when there obtains a contract. In Air France v. Carrascoso (124 Phil. 722), the private respondent was awarded damages for his unwarranted expulsion from a first-class seat aboard the petitioner airline. It is noted, however, that the Court referred to the petitioner-airline's liability as one arising from tort, not one arising form a contract of carriage. In effect, Air France is authority for the view that liability from tort may exist even if there is a contract, for the act that breaks the contract may be also a tort. x x x This view was not all that revolutionary, for even as early as 1918, this Court was already of a similar mind. In Cangco v. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus: 'x x x. When such a contractual relation exists the obligor may break the contract under such conditions that the same act which constitutes a breach of the contract would have constituted the source of an extra-contractual obligation had no contract existed between the parties.' "Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly Article 21 x x x."35 Academic Freedom In their Memorandum, respondents harp on their right to "academic freedom." We are not impressed. According to present jurisprudence, academic freedom encompasses the independence of an academic institution to determine for itself (1) who may teach, (2) what may be taught, (3) how it shall teach, and (4) who may be admitted to study.36 In Garcia v. the Faculty Admission Committee, Loyola School of Theology,37 the Court upheld the respondent therein when it denied a female student's admission to theological studies in a seminary for prospective priests. The Court defined the freedom of an academic institution thus: "to decide for itself aims and objectives and how best to attain them x x x free from outside

coercion or interference save possibly when overriding public welfare calls for some restraint."38 In Tangonan v. Pao,39 the Court upheld, in the name of academic freedom, the right of the school to refuse readmission of a nursing student who had been enrolled on probation, and who had failed her nursing subjects. These instances notwithstanding, the Court has emphasized that once a school has, in the name of academic freedom, set its standards, these should be meticulously observed and should not be used to discriminate against certain students.40 After accepting them upon enrollment, the school cannot renege on its contractual obligation on grounds other than those made known to, and accepted by, students at the start of the school year. In sum, the Court holds that the Complaint alleges sufficient causes of action against respondents, and that it should not have been summarily dismissed. Needless to say, the Court is not holding respondents liable for the acts complained of. That will have to be ruled upon in due course by the court a quo. WHEREFORE, the Petition is hereby GRANTED, and the assailed Orders REVERSED. The trial court is DIRECTED to reinstate the Complaint and, with all deliberate speed, to continue the proceedings in Civil Case No. U7541. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 122855 March 31, 2005

adopt laws and regulations governing the drilling, maintenance and operation of wells within its boundaries for purposes other than single family domestic use on overlying land, with then provision that any well operated in violation of such regulations shall be deemed an interference with the waters of the district; 5. That by virtue of said authorization, the Board of Directors for the petitioner promulgated its "Rules Governing Ground Water Pumping and spring Development Within the Territorial Jurisdiction of the Metro Iloilo Water District," Section 3 of which provides as follows: "Ground Water Pumping and Spring Development. Except when the use of water is for singlefamily domestic use, no person, natural or juridical shall abstract or withdraw ground water and appropriate the waters from springs within the jurisdiction of the District without first securing a water permit from the Council and no person shall engage in the business of drilling wells either as test wells or production wells for the purpose of abstracting or withdrawing ground water without first registering as well as driller with the Council; Provided, that the person drilling his own well or through the services of a qualified well driller shall comply with the standards and requirements established herein in addition to those established by the Council for the exploitation of ground water resources." 6. That the respondent has abstracted or withdrawn ground water within the territorial jurisdiction of the petitioner at _________________________ Iloilo City, without first securing a Water Permit from the National Water Resources Council nor had its well driller registered as such with said council, and sold said water so extracted to commercial and other consumers in Iloilo City, within petitioners service area; 7. That the unauthorized extraction or withdrawal of ground water by the respondent without the necessary permit therefore is in violation of the rules and regulations prescribed by the Board of Directors of the petitioner as above-mentioned duly approved by the National Water Resources Council and constitutes interference with or deterioration of water quality or the natural flow of surface or ground water supply which maybe used or useful for any purpose of the petitioner for which the petitioner as a Water District may

METRO ILOILO WATER DISTRICT, Petitioner, vs. HON. COURT OF APPEALS, Former SECOND DIVISION, Manila, HON. SEVERINO C. AGUILAR, Presiding Judge, Branch 35, RTC, Iloilo, EMMA NAVA, RUFINO SITACA, JR., REXES URSUA, CARMEN PANGANTIHON, BENITO GO, REBECCA BERLIN, and / or CHIT BERLIN, LUIS CARREON, CHARLES KANA-AN and GERRY LUZURIAGA, Respondents. DECISION TINGA, J.: Before this Court is a Petition1 dated November 9, 1995 filed by the Metro Iloilo Water District assailing theDecision2 of the Court of appeals dated June 19, 1995 which affirmed the trial courts Order3 dismissing the petitions for injunction filed by petitioner against private respondents. Petitioner is a water district organized under the provisions of Presidential Decree No. 198 (P.D. 198), as amended. It was granted by the Local Water Utilities Administration Conditional Certificate of Conformance No. 714on January 12, 1979. Its service areas encompass the entire territorial areas of Iloilo City and the Municipalities of Ma-asin, Cabanatuan, Santa Barbara and Pavia. Sometime between April and May of 1993, petitioner filed nine (9) individual yet identical petitions for injunction with prayer for preliminary injunction and / or temporary restraining order5 against herein private respondents the pertinent portions of which read: 4. That pursuant to the provisions of section 31 (a) of P.D. 198, as amended, the petitioner as a Water District was authorized to

commence, maintain, intervene in, defend and compromise actions or proceedings under Section 31 (a) of P.D. 198, as amended; 8. That the act of the respondent in continuing to extract or withdraw ground water without a Water Permit therefor, is in violation of Art. XIII of P.D. 1067 of the Water Code of the Philippines, and unless such act is restrained, will definitely cause great loss upon the petitioner as a Water District.6 In their respective answers, private respondents uniformly invoked the lack of jurisdiction of the trial court, contending that the cases were within the original and exclusive jurisdiction of the National Water Resources Council (Water Council) under Presidential Decree No. 1067, otherwise known as the Water Code of the Philippines (Water Code). In addition, private respondents Emma Nava7 and Rebecca Berlin8 denied having extracted or withdrawn water from the ground, much less sold the same.9 Private respondent Carmen Pangantihon likewise denied having constructed any waterworks system in her area but admitted that she had constructed her own deep well, unaware that she needed to get a permit to do the same.10 Private respondent Rufino Sitaca maintained the petitioners source of water are reservoirs from rivers and are thus not affected by his well. Moreover, he claimed that his water permit application was deemed approved, and thus he is entitled to use the water from his well.11 Private respondent Benito Go admitted that he extracted water from the ground, which he claimed to be his private property, and used the water for his lumberyard and domestic purposes.12 Additionally, he alleged the petitioners rules and regulations were not published in the Official Gazette and hence petitioner had no cause of action.13Private respondent Charles Kana-an asserted that he had complied with the requirements for the approval of his water permit application. He claimed that he was extracting and selling water with petitioners knowledge, and without damage and injury to the latter.14 Meanwhile, private respondent Gerry Luzuriaga claimed that he was not the real party in interest, but Shoemart, Inc. which has the control and possession of the property where the alleged withdrawal of ground water was taking place.15 The trial court dismissed the petitions in its Order16 dated March 17, 1994, ruling that the controversy was within the original jurisdiction of the Water Council, involving, as it did, the appropriation, exploitation, and utilization of water, and factual issues which were within the Water Councils competence. In addition, the trial court held that petitioner failed to exhaust administrative remedies under the doctrine of "primary administrative

jurisdiction." Petitioners Motion for Reconsideration17 was thereafter denied on April 29, 1994.18 A petition19 dated May 27, 1994 seeking a review of the trial courts order of dismissal was filed before this Court but the same was referred to the Court of Appeals for consideration and adjudication on the merits in theResolution20 dated July 11, 1994. Petitioner sought the review of the order of the trial court dismissing the petitions and denying its motion for reconsideration, on the ground that the trial court failed to adhere to this Courts rulings in Amistoso v. Ong21 andSantos v. Court of Appeals,22 which upheld the regular courts jurisdiction over disputes which involve not the settlement of water rights but the enjoyment of the right to water use for which a permit had already been granted. The Court of Appeals denied the petition, holding that the trial court did not err in dismissing the case for want of jurisdiction as it was the Water Council which had jurisdiction over the case. The appellate court ratiocinated: The controversy in this case arose from the fact that the petitioner Iloilo Water District was granted water rights in Iloilo City and the respondents also extracted or withdrew ground water within the same jurisdiction. While at first impression this case involves a violation of the petitioners enjoyment of a right to water use, the fact is that it actually involves also a dispute over the appropriation, utilization, exploitation development, control, conversation and protection of waters because the respondents have allegedly engaged in the extraction or withdrawal of ground water without a permit from the NWRC within the territorial jurisdiction of the petitioner. Therefore, Art. 88 of P.D. No. 1067 giving the NWRC original jurisdiction over the cases is applicable. The NWRC has jurisdiction to hear and decide disputes relating to appropriation, utilization and control of water while the Regional Trial Court only has appellate jurisdiction over the case. This was the ruling of the Supreme Court in Abe-abe vs. Manta, 90 SCRA 524 which was reiterated in Tanjay Water District vs. Gabanton, 172 SCRA 253.

 The cases of Santos v. Court of Appeals, 214 SCRA 170 and Amistoso vs. Ong, 130 SCRA 288 are not applicable to the case at bar for here, what is involved is not only the alleged violation of the grantees right but a question of whether or not the respondents have equal right to the appropriation, utilization and exploitation of water rights."23 The Court of Appeals denied petitioners Motion for Reconsideration24 dated July 11, 1995 in its Resolution of September 29, 1995.25 Petitioner now contends that the extraction or withdrawal of ground water as well as the sale thereof within its territorial jurisdiction is a violation of its rights as a water district.26 Being a violation thereof, the regular courts have jurisdiction over the dispute. On the other hand, private respondents unanimously maintain that it is the Water Council which has jurisdiction over the subject matter of this case. Thus, the sole issue in this petition, as presented by petitioner, is: DID THE REGIONAL TRIAL COURT OF ILOILO HAVE JURISDICTION OVER THE SUBJECT MATTER OF THE PETITIONS?27 Petitioner anchors its claim on Section 31 (now 32) of PD 198, as amended, which reads: Sec. 32. Protection of waters and Facilities of District. A district shall have the right to : (a) Commence, maintain, intervene in, defend and compromise actions or proceedings to prevent interference with or deterioration of water quality or the natural flow of any surface, stream or ground water supply which may be used or useful for any purpose of the district or be a common benefit to the lands or its inhabitants. The ground water within a district is necessary to the performance of the districts powers and such districts hereby authorized to adopt rules and regulations subject to the approval of the National Water Resources Council governing the drilling, maintenance and operation of wells within its boundaries for purposes other than a singled family domestic use on overlying

land. Any well operated on violation of such regulations shall be deemed in interference with the waters of the district. (c) Prohibit any person, firm or corporation from vending, selling, or otherwise disposing of water for public purposes within the service area of the district where district facilities are available to provide such service, or fix terms and conditions by permit for such sale or disposition of water. By virtue of the above provisions, petitioner states that as a water district, it has the right to prevent interference with the water of the district; and to enforce such right, it is given remedies of commencing, maintaining, or intervening in, defending or entering into appropriate actions or proceedings. In asserting the jurisdiction of the regular courts over its petitions and the propriety of its filing of the petitions before the trial court, petitioner invokes the ruling of the Court in Amistoso v. Ong,28 as reiterated in Santos v. Court of Appeals,29 that where the issue involved is not the settlement of a water rights dispute, but the enjoyment of a right to water use for which a permit was already granted, the regular court has jurisdiction and not the Water Council. Petitioner insists that there is no occasion to invoke the original jurisdiction of the Water Council in this case since there is no question of appropriation, exploitation, utilization, development, control, conservation, and protection of water. The only dispute, according to petitioner, pertains to the act of private respondents in extracting ground water from the territory of petitioner as a water district and selling the same within its service area, or more succinctly, private respondents interference with the granted right of petitioner over ground water within its territorial jurisdiction.30 Private respondents, for their part, staunchly invoke Article 88 of the Water Code, which grants original jurisdiction over all disputes relating to the appropriation, utilization, exploitation, development, control, conservation and protection of waters to the Water Council.31 Relying on the cases of Abe-abe v. Manta32 and Tanjay Water District v. Gabaton,33 private respondents maintain that the Water Council is exclusively vested with original jurisdiction to settle water disputes under

the Water Code. They claim that the Amistoso and Santos cases do not apply to the instant case since in Amistoso, the issue was the prevention of the flow of water through an irrigation canal, and in Santos, the issue referred to the prevention of the enjoyment of a water right. In contrast, the issue in the instant case is the right to appropriate water which petitioner and some of the private respondents profess to have. We find merit in the petition. The petitions file before the trial court were for the issuance of an injunction order for respondents to cease and desist from extracting or withdrawing water from petitioners well and from selling the same within its service areas.34 The petitions contained factual allegations in support of the prayer for injunction, to wit: 1. the grant to petitioner of a Conditional Certificate of Conformance by the Local Water Utilities Administration over areas from which water was allegedly extracted or withdrawn by private respondents, by virtue of which its Board of Directors promulgated rules governing ground water pumping within its service areas; 2. abstraction or withdrawal of water within the territorial jurisdiction of petitioner by private respondents without first securing a permit from the Water Council, or registering their well drillers, and sale of said water so extracted to commercial and other consumers within petitioners service areas; 3. that the unauthorized extraction or withdrawal of ground water by private respondents without the necessary permit was in violation of petitioners prescribed rules, and constitutes interference for which petitioner may commence, maintain, intervene in, defend and compromise actions or proceedings under Sec. 31 of P.D. No. 198; 4. that the extraction or withdrawal of ground water without the corresponding permit was a violation of Art. 13 of the Water Code; and 5. that great damage and prejudice will be suffered by petitioner if private respondents extraction and withdrawal of ground water, as well as the selling thereof be allowed to continue. In essence, the petitions focus on the violations incurred by private respondents by virtue of their alleged unauthorized extraction and

withdrawal of ground water within petitioners service area, visa-avis petitioners vested rights as a water district. At issue is whether or not private respondents extraction and sale of ground water within petitioners service area violated petitioners rights as a water district. It is at once obvious that the petitions raise a judicial question. A judicial question is raised when the determination of the questions involves the exercise of a judicial function,i.e., the question involves the determination of what the law is and what the legal rights of the parties are with respect to the matter in controversy. As opposed to a moot question or one properly decided by the executive or legislative branch, a judicial question is properly addressed to the courts.35 The instant case certainly calls for the application and interpretation of pertinent laws and jurisprudence in order to determine whether private respondents actions violate petitioners rights as a water district and justify an injunction. This issue does not so much provide occasion to invoke the special knowledge and expertise of the Water Council as it necessitates judicial intervention. While initially it may appear that there is a dimension to the petitions which pertains to the sphere of the Water Council, i.e., the appropriation of water which the Water Code defines as "the acquisition of rights over the use of waters or the taking or diverting of waters from a natural source in the manner and for any purpose allowed by law," in reality the matter is at most merely collateral to the main thrust of the petitions. The petitions having raised a judicial question, it follows that the doctrine of exhaustion of administrative remedies, on the basis of which the petitions were dismissed by the trial court and the Court of Appeals, does not even come to play.36 Notably too, private respondents themselves do not dispute petitioners rights as a water district. The cases ofAbe-Abe v. Manta37 and Tanjay Water District v. Gabaton38 invoked by private respondents are thus inapplicable. In Abe-Abe v. Manta, both petitioners and respondent had no established right emanating from any grant by any governmental agency to the use, appropriation and exploitation of water, while in Tanjay Water District v. Gabaton, petitioner Tanjay sought to enjoin the Municipality of Pamplona and its officials from interfering in the management of the Tanjay Waterworks System. On the other hand, in the analogous case of Amistoso v. Ong39, petitioner had an approved Water Rights Grant from the Department of Public Works, Transportation and Communications. The trial court was not asked to grant

petitioner the right to use but to compel private respondents to recognize that right. Thus, we declared that the trial courts jurisdiction must be upheld where the issue involved is not the settlement of a water rights dispute, but the enjoyment of a right to water use for which a permit was already granted.40 In like manner, the present petition calls for the issuance of an injunction order to prevent private respondents from extracting and selling ground water within petitioners service area in violation of the latters water permit. There is no dispute regarding petitioners right to ground water within its service area. It is petitioners enjoyment of its rights as a water district which it seeks to assert against private respondents. WHEREFORE, the Decision of the Court of Appeals dated June 19, 1995 is SET ASIDE and the case is ordered REMANDED to the trial court for further proceedings, with costs against respondents. SO ORDERED.