G.R. No.

L-57883

March 12, 1982

GUALBERTO
J.
DE
LA
LLANA
Presiding Judge, Branch II of the
City Court of Olongapo, ESTANISLAO
L. CESA, JR., FIDELA Y. VARGAS,
BENJAMIN C. ESCOLANGO, JUANITO
C.
ATIENZA,
MANUEL
REYES
ROSAPAPAN,
JR.,
VIRGILIO
E.
ACIERTO, and PORFIRIO AGUILLON
AGUILA, petitioners,
vs.
MANUEL ALBA, Minister of Budget,
FRANCISCO TANTUICO, Chairman,
Commission on Audit, and RICARDO
PUNO,
Minister
of
Justice,
respondents.

DECISION
FERNANDO, C.J.:
This Court, pursuant to its grave
responsibility of passing upon the
validity of any executive or legislative
act in an appropriate cases, has to
resolve the crucial issue of the
constitutionality of Batas Pambansa Blg.
129, entitled An act reorganizing the
Judiciary, Appropriating Funds Therefor
and for Other Purposes. The task of
judicial review, aptly characterized as
exacting and delicate, is never more so
than when a conceded legislative power,
that of judicial reorganization, 1 may
possibly collide with the time-honored
principle of the independence of the
judiciary 2as protected and safeguarded
JRCMENDOZA LAW ARCHIVES

by this constitutional provision: The

Members of the Supreme Court and
judges of inferior courts shall hold office
during good behavior until they reach
the age of seventy years or become
incapacitated to discharge the duties of
their office. The Supreme Court shall
have the power to discipline judges of
inferior courts and, by a vote of at least
eight Members, order their dismissal. 3
For the assailed legislation mandates
that Justices and judges of inferior courts
from the Court of Appeals to municipal
circuit courts, except the occupants of
the Sandiganbayan and the Court of Tax
Appeals, unless appointed to the inferior
courts established by such Act, would be
considered separated from the judiciary.
It is the termination of their incumbency
that for petitioners justifies a suit of this
character, it being alleged that thereby
the security of tenure provision of the
Constitution has been ignored and
disregarded,
That is the fundamental issue raised in
this proceeding, erroneously entitled
Petition for Declaratory Relief and/or for
Prohibition 4 considered by this Court as
an action for prohibited petition, seeking
to enjoin respondent Minister of the
Budget, respondent Chairman of the
Commission on Audit, and respondent
Minister of Justice from taking any action
implementing Batas Pambansa Blg. 129.
Petitioners 5 sought to bolster their
claim by imputing lack of good faith in
its enactment and characterizing as an
undue delegation of legislative power to
the President his authority to fix the
compensation and allowances of the
Justices and judges thereafter appointed

and the determination of the date when

the reorganization shall be deemed
completed. In the very comprehensive
and scholarly Answer of Solicitor General
Estelito P. Mendoza, 6 it was pointed out
that there is no valid justification for the
attack on the constitutionality of this
statute, it being a legitimate exercise of
the power vested in the Batasang
Pambansa to reorganize the judiciary,
the allegations of absence of good faith
as well as the attack on the
independence of the judiciary being
unwarranted and devoid of any support
in law. A Supplemental Answer was
likewise filed on October 8, 1981,
followed by a Reply of petitioners on
October 13. After the hearing in the
morning and afternoon of October 15, in
which
not
only
petitioners
and
respondents were heard through counsel
but also the amici curiae, 7 and
thereafter submission of the minutes of
the proceeding on the debate on Batas
Pambansa Blg. 129, this petition was
deemed submitted for decision.
The importance of the crucial question
raised called for intensive and rigorous
study of all the legal aspects of the case.
After such exhaustive deliberation in
several sessions, the exchange of views
being supplemented by memoranda
from the members of the Court, it is our
opinion and so hold that Batas
Pambansa
Blg.
129
is
not
unconstitutional.
1. The argument as to the lack of
standing of petitioners is easily resolved.
As far as Judge de la Llana is concerned,
he certainly falls within the principle set

forth in Justice Laurels opinion in People

v. Vera. 8 Thus: The unchallenged rule
is that the person who impugns the
validity of a statute must have a
personal and substantial interest in the
case such that he has sustained, or will
sustain, direct injury as a result of its
enforcement. 9 The other petitioners as
members of the bar and officers of the
court cannot be considered as devoid of
any personal and substantial interest
on the matter. There is relevance to this
excerpt from a separate opinion in
Aquino, Jr. v. Commission on Elections:
10 Then there is the attack on the
standing of petitioners, as vindicating at
most what they consider a public right
and not protecting their rights as
individuals. This is to conjure the specter
of the public right dogma as an inhibition
to parties intent on keeping public
officials staying on the path of
constitutionalism. As was so well put by
Jaffe: The protection of private rights is
an essential constituent of public
interest and, conversely, without a wellordered state there could be no
enforcement of private rights. Private
and public interests are, both in
substantive and procedural sense,
aspects of the totality of the legal order.
Moreover, petitioners have convincingly
shown that in their capacity as
taxpayers, their standing to sue has
been amply demonstrated. There would
be a retreat from the liberal approach
followed in Pascual v. Secretary of Public
Works, foreshadowed by the very
decision of People v. Vera where the
doctrine was first fully discussed, if we
act differently now. I do not think we are
prepared to take that step. Respondents,
1

however, would hark back to the

American Supreme Court doctrine in
Mellon v. Frothingham with their claim
that what petitioners possess is an
interest which is shared in common by
other people and is comparatively so
minute and indeterminate as to afford
any basis and assurance that the judicial
process can act on it. That is to speak in
the language of a bygone era even in
the United States. For as Chief Justice
Warren clearly pointed out in the later
case of Flast v. Cohen, the barrier thus
set up if not breached has definitely
been lowered. 11
2. The imputation of arbitrariness to the
legislative body in the enactment of
Batas
Pambansa
Blg.
129
to
demonstrate lack of good faith does
manifest
violence
to
the
facts.
Petitioners
should
have
exercised
greater care in informing themselves as
to its antecedents. They had laid
themselves open to the accusation of
reckless disregard for the truth, On
August
7,
1980,
a
Presidential
Committee on Judicial Reorganization
was organized. 12This Executive Order
was later amended by Executive Order
No. 619-A., dated September 5 of that
year. It clearly specified the task
assigned to it: 1. The Committee shall
formulate plans on the reorganization of
the Judiciary which shall be submitted
within seventy (70) days from August 7,
1980 to provide the President sufficient
options for the reorganization of the
entire Judiciary which shall embrace all
lower courts, including the Court of
Appeals, the Courts of First Instance, the
City and Municipal Courts, and all
JRCMENDOZA LAW ARCHIVES

Special Courts, but excluding the

Sandigan Bayan. 13 On October 17,
1980, a Report was submitted by such
Committee on Judicial Reorganization. It
began with this paragraph: The
Committee on Judicial Reorganization
has the honor to submit the following
Report. It expresses at the outset its
appreciation
for
the
opportunity
accorded it to study ways and means for
what today is a basic and urgent need,
nothing less than the restructuring of the
judicial system. There are problems,
both grave and pressing, that call for
remedial measures. The felt necessities
of the time, to borrow a phrase from
Holmes, admit of no delay, for if no step
be taken and at the earliest opportunity,
it is not too much to say that the
peoples faith in the administration of
justice could be shaken. It is imperative
that there be a greater efficiency in the
disposition of cases and that litigants,
especially those of modest means
much more so, the poorest and the
humblest can vindicate their rights in
an expeditious and inexpensive manner.
The rectitude and the fairness in the way
the courts operate must be manifest to
all members of the community and
particularly to those whose interests are
affected by the exercise of their
functions. It is to that task that the
Committee addresses itself and hopes
that the plans submitted could be a
starting point for an institutional reform
in
the
Philippine
judiciary.
The
experience of the Supreme Court, which
since 1973 has been empowered to
supervise inferior courts, from the Court
of Appeals to the municipal courts, has
proven that reliance on improved court

management as well as training of

judges for more efficient administration
does not suffice. I hence, to repeat,
there is need for a major reform in the
judicial so stem it is worth noting that it
will be the first of its kind since the
Judiciary Act became effective on June
16, 1901. 14 I t went to say: I t does
not admit of doubt that the last two
decades of this century are likely to be
attended with problems of even greater
complexity and delicacy. New social
interests are pressing for recognition in
the courts. Groups long inarticulate,
primarily
those
economically
underprivileged,
have
found
legal
spokesmen and are asserting grievances
previously ignored. Fortunately, the
judicially has not proved inattentive. Its
task has thus become even more
formidable. For so much grist is added to
the mills of justice. Moreover, they are
likewise to be quite novel. The need for
an innovative approach is thus apparent.
The national leadership, as is wellknown, has been constantly on the
search for solutions that will prove to be
both acceptable and satisfactory. Only
thus may there be continued national
progress. 15 After which comes: To be
less
abstract,
the
thrust
is
on
development. That has been repeatedly
stressed and rightly so. All efforts are
geared to its realization. Nor, unlike in
the past, was it to b considered as
simply the movement towards economic
progress and growth measured in terms
of sustained increases in per capita
income and Gross National Product
(GNP). 16 For the New Society, its
implication goes further than economic
advance, extending to the sharing, or

more appropriately, the democratization

of social and economic opportunities, the
substantiation of the true meaning of
social justice. 17 This process of
modernization and change compels the
government to extend its field of activity
and its scope of operations. The efforts
towards reducing the gap between the
wealthy and the poor elements in the
nation
call
for
more
regulatory
legislation. That way the social justice
and protection to labor mandates of the
Constitution
could
be
effectively
implemented. 18 There is likelihood
then that some measures deemed
inimical by interests adversely affected
would be challenged in court on grounds
of validity. Even if the question does not
go that far, suits may be filed concerning
their interpretation and application.
There could be pleas for injunction or
restraining orders. Lack of success of
such moves would not, even so, result in
their prompt final disposition. Thus delay
in the execution of the policies embodied
in law could thus be reasonably
expected. That is not conducive to
progress in development. 19 For, as
mentioned in such Report, equally of
vital concern is the problem of clogged
dockets, which as is well known, is one
of the utmost gravity. Notwithstanding
the most determined efforts exerted by
the Supreme Court, through the
leadership of both retired Chief Justice
Querube Makalintal and the late Chief
Justice Fred Ruiz Castro, from the time
supervision of the courts was vested in it
under the 1973 Constitution, the trend
towards more and more cases has
continued. 20 It is understandable why.
With
the
accelerated
economic
2

development, the growth of population,

the increasing urbanization, and other
similar factors, the judiciary is called
upon
much
oftener
to
resolve
controversies. Thus confronted with
what appears to be a crisis situation that
calls for a remedy, the Batasang
Pambansa had no choice. It had to act,
before the ailment became even worse.
Time was of the essence, and yet it did
not hesitate to be duly mindful, as it
ought to be, of the extent of its coverage
before enacting Batas Pambansa Blg.
129.
3. There is no denying, therefore, the
need
for
institutional
reforms,
characterized in the Report as both
pressing and urgent. 21 It is worth
noting, likewise, as therein pointed out,
that a major reorganization of such
scope, if it were to take place, would be
the
most
thorough
after
four
generations. 22 The reference was to the
basic Judiciary Act generations . enacted
in June of 1901, 23 amended in a
significant way, only twice previous to
the Commonwealth. There was, of
course, the creation of the Court of
Appeals in 1935, originally composed of
a Presiding Judge and ten appellate
Judges, who shall be appointed by the
President of the Philippines, with the
consent
of
the
Commission
on
Appointments of the National Assembly,
24 It could sit en banc, but it may sit in
two divisions, one of six and another of
five Judges, to transact business, and
the two divisions may sit at the same
time.
25
Two
years
after
the
establishment of independence of the
Republic of the Philippines, the Judiciary
JRCMENDOZA LAW ARCHIVES

Act of 1948 26 was passed. It continued

the existing system of regular inferior
courts, namely, the Court of Appeals,
Courts of First Instance, 27 the Municipal
Courts, at present the City Courts, and
the Justice of the Peace Courts, now the
Municipal Circuit Courts and Municipal
Courts. The membership of the Court of
Appeals
has
been
continuously
increased. 28 Under a 1978 Presidential
Decree, there would be forty-five
members, a Presiding Justice and fortyfour Associate Justices, with fifteen
divisions. 29 Special courts were likewise
created. The first was the Court of Tax
Appeals in 1954, 30 next came the Court
of Agrarian Relations in 1955, 31 and
then in the same year a Court of the
Juvenile and Domestic Relations for
Manila in 1955, 32 subsequently
followed by the creation of two other
such courts for Iloilo and Quezon City in
1966. 33 In 1967, Circuit Criminal Courts
were established, with the Judges having
the
same
qualifications,
rank,
compensation, and privileges as judges
of Courts of First Instance. 34
4. After the submission of such Report,
Cabinet Bill No. 42, which later became
the basis of Batas Pambansa Blg. 129,
was introduced. After setting forth the
background as above narrated, its
Explanatory Note continues: Pursuant
to the Presidents instructions, this
proposed legislation has been drafted in
accordance with the guidelines of that
report with particular attention to certain
objectives of the reorganization, to wit,
the attainment of more efficiency in
disposal of cases, a reallocation of
jurisdiction, and a revision of procedures

which do not tend to the proper meeting

out of justice. In consultation with, and
upon a consensus of, the governmental
and parliamentary leadership, however,
it was felt that some options set forth in
the Report be not availed of. Instead of
the proposal to confine the jurisdiction of
the intermediate appellate court merely
to appellate adjudication, the preference
has been opted to increase rather than
diminish its jurisdiction in order to
enable it to effectively assist the
Supreme Court. This preference has
been translated into one of the
innovations in the proposed Bill. 35 In
accordance with the parliamentary
procedure, the Bill was sponsored by the
Chairman of the Committee on Justice,
Human Rights and Good Government to
which it was referred. Thereafter,
Committee
Report
No.
225
was
submitted by such Committee to the
Batasang Pambansa recommending the
approval with some amendments. In the
sponsorship speech of Minister Ricardo
C. Puno, there was reference to the
Presidential
Committee
on
Judicial
Reorganization. Thus: On October 17,
1980, the Presidential Committee on
Judicial Reorganization submitted its
report to the President which contained
the Proposed Guidelines for Judicial
Reorganization. Cabinet Bill No. 42 was
drafted substantially in accordance with
the
options
presented
by
these
guidelines. Some options set forth in the
aforesaid report were not availed of
upon consultation with and upon
consensus of the government and
parliamentary
leadership.
Moreover,
some amendments to the bill were
adopted by the Committee on Justice,

Human Rights and Good Government, to

which The bill was referred, following the
public hearings on the bill held in
December of 1980. The hearings
consisted
of
dialogues
with
the
distinguished members of the bench and
the bar who had submitted written
proposals, suggestions, and position
papers on the bill upon the invitation of
the Committee on Justice, Human Rights
and Good Government. 36 Stress was
laid by the sponsor that the enactment
of such Cabinet Bill would, firstly, result
in the attainment of more efficiency in
the disposal of cases. Secondly, the
improvement in the quality of justice
dispensed by the courts is expected as a
necessary consequence of the easing of
the
courts
dockets.
Thirdly,
the
structural changes introduced in the bill,
together with the reallocation of
jurisdiction and the revision of the rules
of procedure, are designated to suit the
court system to the exigencies of the
present day Philippine society, and
hopefully, of the foreseeable future. 37
it may be observed that the volume
containing
the
minutes
of
the
proceedings of the Batasang Pambansa
show that 590 pages were devoted to its
discussion. It is quite obvious that it took
considerable time and effort as well as
exhaustive study before the act was
signed by the President on August 14,
1981. With such a background, it
becomes quite manifest how lacking in
factual basis is the allegation that its
enactment is tainted by the vice of
arbitrariness. What appears undoubted
and undeniable is the good faith that
characterized its enactment from its
3

inception to the affixing

Presidential signature.

of

the

5. Nothing is better settled in our law

than that the abolition of an office within
the competence of a legitimate body if
done in good faith suffers from no
infirmity. The ponencia of Justice J.B.L.
Reyes in Cruz v. Primicias, Jr. 38
reiterated such a doctrine: We find this
point urged by respondents, to be
without merit. No removal or separation
of petitioners from the service is here
involved, but the validity of the abolition
of their offices. This is a legal issue that
is for the Courts to decide. It is wellknown rule also that valid abolition of
offices is neither removal nor separation
of the incumbents. And, of course, if
the abolition is void, the incumbent is
deemed never to have ceased to hold
office. The preliminary question laid at
rest, we pass to the merits of the case.
As well-settled as the rule that the
abolition of an office does not amount to
an illegal removal of its incumbent is the
principle that, in order to be valid, the
abolition must be made in good faith.
39 The above excerpt was quoted with
approval in Bendanillo, Sr. v. Provincial
Governor,
40
two
earlier
cases
enunciating a similar doctrine having
preceded it. 41 As with the offices in the
other branches of the government, so it
is with the judiciary. The test remains
whether the abolition is in good faith. As
that element is conspicuously present in
the enactment of Batas Pambansa Blg.
129, then the lack of merit of this
petition becomes even more apparent.
The concurring opinion of Justice Laurel
in Zandueta v. De la Costa 42 cannot be
JRCMENDOZA LAW ARCHIVES

any clearer. This is a quo warranto

proceeding filed by petitioner, claiming
that he, and not respondent, was
entitled to the office of judge of the Fifth
Branch of the Court of First Instance of
Manila.
There
was
a
Judicial
Reorganization Act in 1936, 43 a year
after
the
inauguration
of
the
Commonwealth,
amending
the
Administrative Code to organize courts
of original jurisdiction known as the
Courts of First Instance Prior to such
statute, petitioner was the incumbent of
such branch. Thereafter, he received an
ad interim appointment, this time to the
Fourth Judicial District, under the new
legislation. Unfortunately for him, the
Commission on Appointments of then
National Assembly disapproved the
same, with respondent being appointed
in his place. He contested the validity of
the Act insofar as it resulted in his being
forced to vacate his position This Court
did not rule squarely on the matter. His
petition was dismissed on the ground of
estoppel. Nonetheless, the separate
concurrence of Justice Laurel in the
result reached, to repeat, reaffirms in no
uncertain terms the standard of good
faith to preclude any doubt as to the
abolition of an inferior court, with due
recognition of the security of tenure
guarantee. Thus: I am of the opinion
that Commonwealth Act No. 145 in so far
as it reorganizes, among other judicial
districts, the Ninth Judicial District, and
establishes an entirely new district
comprising Manila and the provinces of
Rizal and Palawan, is valid and
constitutional. This conclusion flows from
the fundamental proposition that the
legislature may abolish courts inferior to

the Supreme Court and therefore may

reorganize them territorially or otherwise
thereby necessitating new appointments
and commissions. Section 2, Article VIII
of the Constitution vests in the National
Assembly the power to define, prescribe
and apportion the jurisdiction of the
various courts, subject to certain
limitations in the case of the Supreme
Court. It is admitted that section 9 of the
same article of the Constitution provides
for the security of tenure of all the
judges. The principles embodied in these
two sections of the same article of the
Constitution must be coordinated and
harmonized. A mere enunciation of a
principle will not decide actual cases and
controversies of every sort. (Justice
Holmes in Lochner vs. New York, 198
U.S., 45; 49 Law. ed; 937) 44 justice
Laurel continued: I am not insensible to
the
argument
that
the
National
Assembly may abuse its power and
move
deliberately
to
defeat
the
constitutional provision guaranteeing
security of tenure to all judges, But, is
this the case? One need not share the
view of Story, Miller and Tucker on the
one hand, or the opinion of Cooley,
Watson and Baldwin on the other, to
realize that the application of a legal or
constitutional principle is necessarily
factual and circumstantial and that fixity
of principle is the rigidity of the dead
and the unprogressive. I do say, and
emphatically, however, that cases may
arise where the violation of the
constitutional
provision
regarding
security of tenure is palpable and plain,
and
that
legislative
power
of
reorganization may be sought to cloak
an unconstitutional and evil purpose.

When a case of that kind arises, it will be

the time to make the hammer fall and
heavily. But not until then. I am satisfied
that, as to the particular point here
discussed,
the
purpose
was
the
fulfillment of what was considered a
great public need by the legislative
department and that Commonwealth Act
No. 145 was not enacted purposely to
affect adversely the tenure of judges or
of any particular judge. Under these
circumstances, I am for sustaining the
power of the legislative department
under the Constitution. To be sure, there
was greater necessity for reorganization
consequent upon the establishment of
the new government than at the time
Acts Nos. 2347 and 4007 were approved
by the defunct Philippine Legislature,
and although in the case of these two
Acts there was an express provision
providing for the vacation by the judges
of their offices whereas in the case of
Commonwealth Act No. 145 doubt is
engendered by its silence, this doubt
should be resolved in favor of the valid
exercise of the legislative power. 45
6. A few more words on the question of
abolition. In the above-cited opinion of
Justice Laurel in Zandueta, reference
was made to Act No. 2347 46 on the
reorganization of the Courts of First
Instance and to Act No. 4007 47 on the
reorganization of all branches of the
government, including the courts of first
instance. In both of them, the then
Courts of First Instance were replaced by
new courts with the same appellation. As
Justice Laurel pointed out, there was no
question as to the fact of abolition. He
was
equally
categorical
as
to
4

Commonwealth Act No. 145, where also

the system of the courts of first instance
was provided for expressly. It was
pointed out by Justice Laurel that the
mere creation of an entirely new district
of the same court is valid and
constitutional. such conclusion flowing
from the fundamental proposition that
the legislature may abolish courts
inferior to the Supreme Court and
therefore
may
reorganize
them
territorially
or
otherwise
thereby
necessitating new appointments and
commissions.
48
The
challenged
statute
creates
an
intermediate
appellate court, 49 regional trial courts,
50 metropolitan trial courts of the
national capital region, 51 and other
metropolitan trial courts,52 municipal
trial courts in cities, 53 as well as in
municipalities, 54 and municipal circuit
trial courts. 55 There is even less reason
then to doubt the fact that existing
inferior courts were abolished. For the
Batasang Pambansa, the establishment
of such new inferior courts was the
appropriate response to the grave and
urgent problems that pressed for
solution. Certainly, there could be
differences of opinion as to the
appropriate
remedy.
The
choice,
however, was for the Batasan to make,
not for this Court, which deals only with
the question of power. It bears
mentioning that in Brillo v. Eage 56 this
Court, in an unanimous opinion penned
by the late Justice Diokno, citing
Zandueta v. De la Costa, ruled: La
segunda question que el recurrrido
plantea es que la Carta de Tacloban ha
abolido el puesto. Si efectivamente ha
sido abolido el cargo, entonces ha
JRCMENDOZA LAW ARCHIVES

quedado extinguido el derecho de

recurente a ocuparlo y a cobrar el salario
correspodiente. Mc Culley vs. State, 46
LRA, 567. El derecho de un juez de
desempenarlo hasta los 70 aos de edad
o se incapacite no priva al Congreso de
su facultad de abolir, fusionar o
reorganizar
juzgados
no
constitucionales. 57 Nonetheless, such
well-established principle was not held
applicable to the situation there
obtaining, the Charter of Tacloban City
creating a city court in place of the
former justice of the peace court. Thus:
Pero en el caso de autos el Juzgado de
Tacloban no ha sido abolido. Solo se le
ha cambiado el nombre con el cambio
de forma del gobierno local. 58 The
present case is anything but that.
Petitioners did not and could not prove
that the challenged statute was not
within
the
bounds
of
legislative
authority.
7. This opinion then could very well stop
at this point. The implementation of
Batas Pambansa Blg. 129, concededly a
task incumbent on the Executive, may
give rise, however, to questions affecting
a judiciary that should be kept
independent. The all-embracing scope of
the assailed legislation as far as all
inferior courts from the Courts of
Appeals
to
municipal
courts
are
concerned, with the exception solely of
the Sandiganbayan and the Court of Tax
Appeals
59
gave
rise,
and
understandably so, to misgivings as to
its effect on such cherished Ideal. The
first paragraph of the section on the
transitory
provision
reads:
The
provisions
of
this
Act
shall
be

immediately carried out in accordance

with an Executive Order to be issued by
the President. The Court of Appeals, the
Courts of First Instance, the Circuit
Criminal Courts, the Juvenile and
Domestic Relations Courts, the Courts of
Agrarian Relations, the City Courts, the
Municipal Courts, and the Municipal
Circuit Courts shall continue to function
as presently constituted and organized,
until
the
completion
of
the
reorganization provided in this Act as
declared by the President. Upon such
declaration, the said courts shall be
deemed automatically abolished and the
incumbents thereof shall cease to hold
the office. 60 There is all the more
reason then why this Court has no
choice but to inquire further into the
allegation by petitioners that the
security
of
tenure
provision,
an
assurance of a judiciary free from
extraneous
influences,
is
thereby
reduced to a barren form of words. The
amended Constitution adheres even
more clearly to the long-established
tradition of a strong executive that
antedated the 1935 Charter. As noted in
the work of former Vice-Governor
Hayden, a noted political scientist,
President Claro M. Recto of the 1934
Convention, in his closing address, in
stressing such a concept, categorically
spoke of providing an executive power
which, subject to the fiscalization of the
Assembly, and of public opinion, will not
only know how to govern, but will
actually govern, with a firm and steady
hand, unembarrassed by vexatious
interferences by other departments, or
by unholy alliances with this and that
social group. 61 The above excerpt was

cited with approval by Justice Laurel in

Planas v. Gil. 62Moreover, under the
1981 Amendments, it may be affirmed
that once again the principle of
separation of powers, to quote from the
same jurist as ponente in Angara v.
Electoral Commission, 63 obtains not
through express provision but by actual
division. 64 The president, under Article
VII, shall be the head of state and chief
executive of the Republic of the
Philippines. 65 Moreover, it is equally
therein expressly provided that all the
powers he possessed under the 1935
Constitution are once again vested in
him unless the Batasang Pambansa
provides otherwise. 66 Article VII of the
1935 Constitution speaks categorically:
The Executive power shall be vested in
a President of the Philippines. 67 As
originally framed, the 1973 Constitution
created the position of President as the
symbolic head of state. 68 In addition,
there was a provision for a Prime
Minister as the head of government
exercising the executive power with the
assistance of the Cabinet69 Clearly, a
modified parliamentary system was
established. In the light of the 1981
amendments though, this Court in Free
Telephone Workers Union v. Minister of
Labor 70 could state: The adoption of
certain aspects of a parliamentary
system in the amended Constitution
does not alter its essentially presidential
character. 71 The retention, however, of
the position of the Prime Minister with
the Cabinet, a majority of the members
of which shall come from the regional
representatives
of
the
Batasang
Pambansa and the creation of an
Executive Committee composed of the
5

Prime Minister as Chairman and not

more than fourteen other members at
least half of whom shall be members of
the Batasang Pambansa, clearly indicate
the evolving nature of the system of
government that is now operative. 72
What is equally apparent is that the
strongest ties bind the executive and
legislative departments. It is likewise
undeniable that the Batasang Pambansa
retains its full authority to enact
whatever legislation may be necessary
to carry out national policy as usually
formulated in a caucus of the majority
party. It is understandable then why in
Fortun v. Labang 73 it was stressed that
with the provision transferring to the
Supreme
Court
administrative
supervision over the Judiciary, there is a
greater need to preserve unimpaired
the independence of the judiciary,
especially so at present, where to all
intents and purposes, there is a fusion
between
the
executive
and
the
legislative branches. 74
8. To be more specific, petitioners
contend that the abolition of the existing
inferior courts collides with the security
of tenure enjoyed by incumbent Justices
and judges under Article X, Section 7 of
the Constitution. There was a similar
provision in the 1935 Constitution. It did
not, however, go as far as conferring on
this Tribunal the power to supervise
administratively inferior courts. 75
Moreover, this Court is empowered to
discipline judges of inferior courts and,
by a vote of at least eight members,
order their dismissal. 76 Thus it
possesses the competence to remove
judges. Under the Judiciary Act, it was
JRCMENDOZA LAW ARCHIVES

the President who was vested with such

power. 77 Removal is, of course, to be
distinguished from termination by virtue
of the abolition of the office. There can
be no tenure to a non-existent office.
After the abolition, there is in law no
occupant. In case of removal, there is an
office with an occupant who would
thereby lose his position. It is in that
sense that from the standpoint of strict
law, the question of any impairment of
security of tenure does not arise.
Nonetheless, for the incumbents of
inferior courts abolished, the effect is
one of separation. As to its effect, no
distinction exists between removal and
the abolition of the office. Realistically, it
is devoid of significance. He ceases to be
a member of the judiciary. In the
implementation
of
the
assailed
legislation, therefore, it would be in
accordance with accepted principles of
constitutional construction that as far as
incumbent justices and judges are
concerned, this Court be consulted and
that its view be accorded the fullest
consideration.
No
fear
need
be
entertained that there is a failure to
accord respect to the basic principle that
this Court does not render advisory
opinions. No question of law is involved.
If such were the case, certainly this
Court could not have its say prior to the
action taken by either of the two
departments. Even then, it could do so
but only by way of deciding a case
where the matter has been put in issue.
Neither is there any intrusion into who
shall be appointed to the vacant
positions created by the reorganization.
That remains in the hands of the
Executive to whom it properly belongs.

There is no departure therefore from the

tried and tested ways of judicial power,
Rather what is sought to be achieved by
this liberal interpretation is to preclude
any plausibility to the charge that in the
exercise of the conceded power of
reorganizing tulle inferior courts, the
power of removal of the present
incumbents vested in this Tribunal is
ignored or disregarded. The challenged
Act would thus be free from any
unconstitutional taint, even one not
readily discernible except to those
predisposed to view it with distrust.
Moreover, such a construction would be
in accordance with the basic principle
that in the choice of alternatives
between one which would save and
another which would invalidate a
statute, the former is to be preferred. 78
There is an obvious way to do so. The
principle that the Constitution enters
into and forms part of every act to avoid
any constitutional taint must be applied
Nuez
v.
Sandiganbayan,
79
promulgated last January, has this
relevant excerpt: It is true that other
Sections of the Decree could have been
so worded as to avoid any constitutional
objection. As of now, however, no ruling
is called for. The view is given expression
in the concurring and dissenting opinion
of Justice Makasiar that in such a case to
save the Decree from the direct fate of
invalidity, they must be construed in
such a way as to preclude any possible
erosion on the powers vested in this
Court by the Constitution. That is a
proposition too plain to be committed. It
commends itself for approval. 80 Nor
would such a step be unprecedented.
The Presidential Decree constituting

Municipal Courts into Municipal Circuit

Courts,
specifically
provides:
The
Supreme Court shall carry out the
provisions of this Decree through
implementing orders, on a province-toprovince basis. 81 It is true there is no
such provision in this Act, but the spirit
that informs it should not be ignored in
the Executive Order contemplated under
its Section 44. 82 Thus Batas Pambansa
Blg. 129 could stand the most rigorous
test of constitutionality. 83
9. Nor is there anything novel in the
concept that this Court is called upon to
reconcile or harmonize constitutional
provisions. To be specific, the Batasang
Pambansa is expressly vested with the
authority to reorganize inferior courts
and in the process to abolish existing
ones. As noted in the preceding
paragraph, the termination of office of
their
occupants,
as
a
necessary
consequence of such abolition, is hardly
distinguishable
from
the
practical
standpoint from removal, a power that is
now vested in this Tribunal. It is of the
essence of constitutionalism to assure
that neither agency is precluded from
acting within the boundaries of its
conceded competence. That is why it
has long been well-settled under the
constitutional system we have adopted
that this Court cannot, whenever
appropriate,
avoid
the
task
of
reconciliation. As Justice Laurel put it so
well in the previously cited Angara
decision, while in the main, the
Constitution has blocked out with deft
strokes and in bold lines, allotment of
power to the executive, the legislative
and the judicial departments of the
6

government,
the
overlapping
and
interlacing of functions and duties
between the several departments,
however, sometimes makes it hard to
say just where the one leaves off and
the other begins. 84 It is well to recall
another classic utterance from the same
jurist, even more emphatic in its
affirmation of such a view, moreover
buttressed by one of those insights for
which Holmes was so famous The
classical separation of government
powers, whether viewed in the light of
the political philosophy of Aristotle,
Locke, or Motesquieu or of the
postulations of Mabini, Madison, or
Jefferson, is a relative theory of
government. There is more truism and
actuality in interdependence than in
independence and separation of powers,
for as observed by Justice Holmes in a
case of Philippine origin, we cannot lay
down with mathematical precision and
divide the branches into water-tight
compartments not only because the
great ordinances of the Constitution do
not establish and divide fields of black
and white but also because even the
more specific of them are found to
terminate in a penumbra shading
gradually from one extreme to the
other.' 85 This too from Justice Tuazon,
likewise expressing with force and clarity
why the need for reconciliation or
balancing is well-nigh unavodiable under
the fundamental principle of separation
of powers: The constitutional structure
is
a
complicated
system,
and
overlappings of governmental functions
are
recognized,
unavoidable,
and
inherent necessities of governmental
coordination. 86 In the same way that
JRCMENDOZA LAW ARCHIVES

the academe has noted the existence in

constitutional litigation of right versus
right, there are instances, and this is one
of them, where, without this attempt at
harmonizing the provisions in question,
there could be a case of power against
power. That we should avoid.
10. There are other objections raised but
they pose no difficulty. Petitioners would
characterize as an undue delegation of
legislative power to the President the
grant
of
authority
to
fix
the
compensation and the allowances of the
Justices and judges thereafter appointed.
A more careful reading of the challenged
Batas Pambansa Blg. 129 ought to have
cautioned them against raising such an
issue. The language of the statute is
quite clear. The questioned provisions
reads as follows: Intermediate Appellate
Justices,
Regional
Trial
Judges,
Metropolitan Trial Judges, municipal Trial
Judges, and Municipal Circuit Trial Judges
shall
receive
such
receive
such
compensation and allowances as may be
authorized by the President along the
guidelines set forth in Letter of
Implementation No. 93 pursuant to
Presidential Decree No. 985, as amended
by Presidential Decree No. 1597. 87 The
existence of a standard is thus clear. The
basic postulate that underlies the
doctrine of non-delegation is that it is
the legislative body which is entrusted
with the competence to make laws and
to alter and repeal them, the test being
the completeness of the statue in all its
terms and provisions when enacted. As
pointed out in Edu v. Ericta: 88 To avoid
the taint of unlawful delegation, there
must be a standard, which implies at the

very least that the legislature itself

determines matters of principle and lays
down fundamental policy. Otherwise, the
charge of complete abdication may be
hard to repel. A standard thus defines
legislative policy, marks its limits, maps
out its boundaries and specifies the
public agency to apply it. It indicates the
circumstances
under
which
the
legislative command is to be effected. It
is the criterion by which legislative
purpose may be carried out. Thereafter,
the executive or administrative office
designated may in pursuance of the
above
guidelines
promulgate
supplemental rules and regulations. The
standard may be either express or
implied. If the former, the nondelegation objection is easily met. The
standard though does not have to be
spelled out specifically. It could be
implied from the policy and purpose of
the act considered as a whole. 89 The
undeniably strong links that bind the
executive and legislative departments
under the amended Constitution assure
that the framing of policies as well as
their
implementation
can
be
accomplished with unity, promptitude,
and efficiency. There is accuracy,
therefore, to this observation in the Free
Telephone Workers Union decision:
There is accordingly more receptivity to
laws leaving to administrative and
executive agencies the adoption of such
means as may be necessary to
effectuate a valid legislative purpose. It
is worth noting that a highly-respected
legal scholar, Professor Jaffe, as early as
1947, could speak of delegation as the
dynamo of modern government.' 90 He
warned against a restrictive approach

which could be a deterrent factor to

much-needed legislation.91 Further on
this point from the same opinion The
spectre of the non-delegation concept
need not haunt, therefore, party
caucuses, cabinet sessions or legislative
chambers. 92 Another objection based
on the absence in the statue of what
petitioners refer to as a definite time
frame limitation is equally bereft of
merit. They ignore the categorical
language
of
this
provision:
The
Supreme Court shall submit to the
President, within thirty (30) days from
the date of the effectivity of this act, a
staffing pattern for all courts constituted
pursuant to this Act which shall be the
basis of the implementing order to be
issued by the President in accordance
with
the
immediately
succeeding
section. 93 The first sentence of the
next section is even more categorical:
The provisions of this Act shall be
immediately carried out in accordance
with an Executive Order to be issued by
the President. 94 Certainly petitioners
cannot be heard to argue that the
President
is
insensible
to
his
constitutional duty to take care that the
laws be faithfully executed. 95 In the
meanwhile, the existing inferior courts
affected continue functioning as before,
until
the
completion
of
the
reorganization provided in this Act as
declared by the President. Upon such
declaration, the said courts shall be
deemed automatically abolished and the
incumbents thereof shall cease to hold
office. 96 There is no ambiguity. The
incumbents
of
the
courts
thus
automatically abolished shall cease to
hold office. No fear need be entertained
7

by incumbents whose length of service,

quality of performance, and clean record
justify their being named anew, 97 in
legal
contemplation
without
any
interruption in the continuity of their
service. 98 It is equally reasonable to
assume that from the ranks of lawyers,
either in the government service, private
practice, or law professors will come the
new appointees. In the event that in
certain cases a little more time is
necessary in the appraisal of whether or
not
certain
incumbents
deserve
reappointment, it is not from their
standpoint undesirable. Rather, it would
be a reaffirmation of the good faith that
will characterize its implementation by
the Executive. There is pertinence to this
observation of Justice Holmes that even
acceptance of the generalization that
courts ordinarily should not supply
omissions in a law, a generalization
qualified as earlier shown by the
principle that to save a statute that
could be done, there is no canon
against
using
common
sense
in
construing laws as saying what they
obviously mean. 99 Where then is the
unconstitutional flaw
11. On the morning of the hearing of this
petition
on
September
8,
1981,
petitioners sought to have the writer of
this opinion and Justices Ramon C.
Aquino and Ameurfina Melencio-Herrera
disqualified because the first-named was
the chairman and the other two,
members of the Committee on Judicial
Reorganization. At the hearing, the
motion was denied. It was made clear
then and there that not one of the three
members of the Court had any hand in
JRCMENDOZA LAW ARCHIVES

the framing or in the discussion of Batas

Pambansa Blg. 129. They were not
consulted. They did not testify. The
challenged legislation is entirely the
product of the efforts of the legislative
body. 100 Their work was limited, as set
forth in the Executive Order, to
submitting
alternative
plan
for
reorganization. That is more in the
nature of scholarly studies. That the
undertook. There could be no possible
objection to such activity. Ever since
1973,
this
Tribunal
has
had
administrative supervision over interior
courts. It has had the opportunity to
inform itself as to the way judicial
business is conducted and how it may be
improved. Even prior to the 1973
Constitution, it is the recollection of the
writer of this opinion that either the then
Chairman or members of the Committee
on Justice of the then Senate of the
Philippines 101 consulted members of
the Court in drafting proposed legislation
affecting the judiciary. It is not
inappropriate to cite this excerpt from an
article in the 1975 Supreme Court
Review: In the twentieth century the
Chief Justice of the United States has
played a leading part in judicial reform.
A variety of conditions have been
responsible for the development of this
role, and foremost among them has
been the creation of explicit institutional
structures designed to facilitate reform.
102 Also: Thus the Chief Justice cannot
avoid
exposure
to
and
direct
involvement in judicial reform at the
federal level and, to the extent issues of
judicial federalism arise, at the state
level as well. 103

12. It is a cardinal article of faith of our

constitutional regime that it is the
people who are endowed with rights, to
secure which a government is instituted.
Acting as it does through public officials,
it has to grant them either expressly or
impliedly certain powers. Those they
exercise not for their own benefit but for
the body politic. The Constitution does
not speak in the language of ambiguity:
A public office is a public trust. 104
That is more than a moral adjuration It is
a legal imperative. The law may vest in a
public official certain rights. It does so to
enable them to perform his functions
and fulfill his responsibilities more
efficiently. It is from that standpoint that
the security of tenure provision to assure
judicial independence is to be viewed. It
is an added guarantee that justices and
judges can administer justice undeterred
by any fear of reprisal or untoward
consequence. Their judgments then are
even more likely to be inspired solely by
their knowledge of the law and the
dictates of their conscience, free from
the corrupting influence of base or
unworthy motives. The independence of
which they are assured is impressed with
a significance transcending that of a
purely personal right. As thus viewed, it
is not solely for their welfare. The
challenged legislation thus subject to
the most rigorous scrutiny by this
Tribunal, lest by lack of due care and
circumspection, it allow the erosion of
that Ideal so firmly embedded in the
national consciousness. There is this
farther
thought
to
consider.
Independence in thought and action
necessarily is rooted in ones mind and
heart. As emphasized by former Chief

Justice Paras in Ocampo v. Secretary of

Justice, 105 there is no surer guarantee
of judicial independence than the Godgiven character and fitness of those
appointed to the Bench. The judges may
be guaranteed a fixed tenure of office
during good behavior, but if they are of
such stuff as allows them to be
subservient to one administration after
another, or to cater to the wishes of one
litigant after another, the independence
of the judiciary will be nothing more than
a myth or an empty Ideal. Our judges,
we are confident, can be of the type of
Lord Coke, regardless or in spite of the
power of Congress we do not say
unlimited but as herein exercised to
reorganize inferior courts. 106 That is to
recall one of the greatest Common Law
jurists, who at the cost of his office made
clear that he would not just blindly obey
the Kings order but will do what
becomes [him] as a judge. So it was
pointed out in the first leading case
stressing the independence of the
judiciary, Borromeo v. Mariano, 107 The
ponencia of Justice Malcolm Identified
good judges with men who have a
mastery of the principles of law, who
discharge their duties in accordance with
law, who are permitted to perform the
duties of the office undeterred by
outside
influence,
and
who
are
independent and self-respecting human
units in a judicial system equal and
coordinate to the other two departments
of government. 108 There is no reason
to assume that the failure of this suit to
annul Batas Pambansa Blg. 129 would
be
attended
with
deleterious
consequences to the administration of
justice. It does not follow that the
8

abolition in good faith of the existing

inferior
courts
except
the
Sandiganbayan and the Court of Tax
Appeals and the creation of new ones
will result in a judiciary unable or
unwilling
to
discharge
with
independence its solemn duty or one
recreant to the trust reposed in it. Nor
should there be any fear that less than
good faith will attend the exercise be of
the appointing power vested in the
Executive. It cannot be denied that an
independent and efficient judiciary is
something to the credit of any
administration. Well and truly has it been
said that the fundamental principle of
separation of powers assumes, and
justifiably so, that the three departments
are as one in their determination to
pursue the Ideals and aspirations and to
fulfilling the hopes of the sovereign
people as expressed in the Constitution.
There is wisdom as well as validity to
this pronouncement of Justice Malcolm in
Manila
Electric
Co.
v.
Pasay
Transportation Company, 109 a decision
promulgated almost half a century ago:
Just as the Supreme Court, as the
guardian of constitutional rights, should
not sanction usurpations by any other
department or the government, so
should it as strictly confine its own
sphere of influence to the powers
expressly or by implication conferred on
it by the Organic Act. 110 To that basic
postulate underlying our constitutional
system, this Court remains committed.
WHEREFORE, the unconstitutionality of
Batas Pambansa Blg. 129 not having
been shown, this petition is DISMISSED.
No costs.
JRCMENDOZA LAW ARCHIVES

respectively, of the Court of Appeals

(CA) in CA-G.R. CV. No. 49300.
The antecedents are as follows:
Respondent Fernando C. Caballero
(Fernando) was the registered owner of a
residential lot designated as Lot No.
3355, Ts-268, covered by TCT No. T16035 of the Register of Deeds of
Cotabato, containing an area of 800
square meters and situated at Rizal
Street, Mlang, Cotabato. On the said lot,
respondent
built
a
residential/commercial
building
consisting of two (2) stories.

GSIS v. Heirs of Caballero

DECISION
PERALTA, J.:
Before this Court is a petition for review
on certiorari under Rule 45 of the Rules
of Court seeking to set aside the
Decision[1] and the Resolution,[2] dated
December 17, 2002 and April 29, 2003,

On March 7, 1968, Fernando and his

wife, Sylvia Caballero, secured a loan
from petitioner Government Service
Insurance System (GSIS) in the amount
of P20,000.00, as evidenced by a
promissory note. Fernando and his wife
likewise executed a real estate mortgage
on the same date, mortgaging the aforestated property as security.
Fernando defaulted on the payment of
his loan with the GSIS. Hence, on
January 20, 1973, the mortgage covering
the subject property was foreclosed, and
on March 26, 1973, the same was sold at
a public auction where the petitioner
was the only bidder in the amount of
P36,283.00. For failure of Fernando to
redeem the said property within the
designated period, petitioner executed
an
Affidavit
of
Consolidation
of
Ownership on September 5, 1975.
Consequently, TCT No. T-16035 was
cancelled and TCT No. T-45874 was
issued in the name of petitioner.

On November 26, 1975, petitioner wrote

a letter to Fernando, informing him of
the consolidation of title in its favor, and
requesting payment of monthly rental in
view of Fernando's continued occupancy
of the subject property. In reply,
Fernando requested that he be allowed
to repurchase the same through partial
payments. Negotiation as to the
repurchase by Fernando of the subject
property went on for several years, but
no agreement was reached between the
parties.
On
January
16,
1989,
petitioner
scheduled the subject property for public
bidding. On the scheduled date of
bidding, Fernando's daughter, Jocelyn
Caballero, submitted a bid in the amount
of
P350,000.00,
while
Carmelita
Mercantile Trading Corporation (CMTC)
submitted a bid in the amount of
P450,000.00. Since CMTC was the
highest bidder, it was awarded the
subject property. On May 16, 1989, the
Board of Trustees of the GSIS issued
Resolution No. 199 confirming the award
of the subject property to CMTC for a
total consideration of P450,000.00.
Thereafter, a Deed of Absolute Sale was
executed between petitioner and CMTC
on July 27, 1989, transferring the subject
property to CMTC. Consequently, TCT No.
T-45874 in the name of GSIS was
cancelled, and TCT No. T-76183 was
issued in the name of CMTC.
Due
to
the
foregoing,
Fernando,
represented by his daughter and
attorney-in-fact, Jocelyn Caballero, filed
with the Regional Trial Court (RTC) of
Kabacan, Cotabato a Complaint[3]
9

against CMTC, the GSIS and its

responsible officers, and the Register of
Deeds
of
Kidapawan,
Cotabato.
Fernando prayed, among others, that
judgment be rendered: declaring GSIS
Board of Trustees Resolution No. 199,
dated May 16, 1989, null and void;
declaring the Deed of Absolute Sale
between petitioner and CMTC null and
void ab initio; declaring TCT No. 76183 of
the Register of Deeds of Kidapawan,
Cotabato, likewise, null and void ab
initio; declaring the bid made by
Fernando in the amount of P350,000.00
for the repurchase of his property as the
winning bid; and ordering petitioner to
execute the corresponding Deed of Sale
of the subject property in favor of
Fernando. He also prayed for payment of
moral damages, exemplary damages,
attorney's fees and litigation expenses.
In his complaint, Fernando alleged that
there were irregularities in the conduct
of the bidding. CMTC misrepresented
itself to be wholly owned by Filipino
citizens. It misrepresented its working
capital. Its representative Carmelita Ang
Hao had no prior authority from its board
of directors in an appropriate board
resolution to participate in the bidding.
The corporation is not authorized to
acquire real estate or invest its funds for
purposes other than its primary purpose.
Fernando further alleged that the GSIS
allowed CMTC to bid despite knowledge
that said corporation has no authority to
do so. The GSIS also disregarded
Fernando's prior right to buy back his
family home and lot in violation of the
laws. The Register of Deeds of Cotabato
acted with abuse of power and authority
JRCMENDOZA LAW ARCHIVES

when it issued the TCT in favor of CMTC

without requiring the CMTC to submit its
supporting papers as required by the
law.
Petitioner and its officers filed their
Answer with Affirmative Defenses and
Counterclaim.[4] The GSIS alleged that
Fernando lost his right of redemption. He
was given the chance to repurchase the
property; however, he did not avail of
such option compelling the GSIS to
dispose of the property by public bidding
as mandated by law. There is also no
prior right to buy back that can be
exercised by Fernando. Further, it
averred that the articles of incorporation
and other papers of CMTC were all in
order. In its counterclaim, petitioner
alleged that Fernando owed petitioner
the sum of P130,365.81, representing
back
rentals,
including
additional
interests from January 1973 to February
1987, and the additional amount of
P249,800.00,
excluding
applicable
interests, representing rentals Fernando
unlawfully collected from Carmelita Ang
Hao from January 1973 to February
1988.
After trial, the RTC, in its Decision[5]
dated September 27, 1994, ruled in
favor of petitioner and dismissed the
complaint. In the same decision, the trial
court granted petitioner's counterclaim
and directed Fernando to pay petitioner
the rentals paid by CMTC in the amount
of P249,800.00. The foregoing amount
was collected by Fernando from the
CMTC and represents payment which
was not turned over to petitioner, which
was entitled to receive the rent from the

date of the consolidation of

ownership over the subject property.

its

Fernando
filed
a
motion
for
reconsideration, which was denied by
the RTC in an Order dated March 27,
1995.
Aggrieved by the Decision, respondent
filed a Notice of Appeal.[6] The CA, in its
Decision dated December 17, 2002,
affirmed the decision of the RTC with the
modification that the portion of the
judgment ordering Fernando to pay
rentals in the amount of P249,800.00, in
favor of petitioner, be deleted. Petitioner
filed a motion for reconsideration, which
the CA denied in a Resolution dated April
29, 2003. Hence, the instant petition.
An Ex Parte Motion for Substitution of
Party,[7] dated July 18, 2003, was filed
by the surviving heirs of Fernando, who
died on February 12, 2002. They prayed
that they be allowed to be substituted
for the deceased, as respondents in this
case.
Petitioner enumerated the following
grounds in support of its petition:
I
THE HONORABLE COURT OF APPEALS
COMMITTED AN ERROR OF LAW IN
HOLDING THAT GSIS' COUNTERCLAIM,
AMONG
OTHERS,
OF
P249,800.00
REPRESENTING RENTALS COLLECTED BY
PRIVATE RESPONDENT FROM CARMELITA
MERCANTILE TRADING CORPORATION IS
IN THE NATURE OF A PERMISSIVE
COUNTERCLAIM WHICH REQUIRED THE
PAYMENT BY GSIS OF DOCKET FEES

BEFORE THE TRIAL COURT CAN ACQUIRE

JURISDICTION
OVER
SAID
COUNTERCLAIM.

II
THE HONORABLE COURT OF APPEALS
COMMITTED AN ERROR OF LAW IN
HOLDING THAT GSIS' DOCUMENTARY
EVIDENCE SUPPORTING ITS CLAIM OF
P249,800.00
LACKS
PROPER
IDENTIFICATION.[8]
The petition of the GSIS seeks the review
of the CA's Decision insofar as it deleted
the trial court's award of P249,800.00 in
its favor representing rentals collected
by Fernando from the CMTC.
In their Memorandum, respondents claim
that CMTC cannot purchase real estate
or invest its funds in any purpose other
than its primary purpose for which it was
organized in the absence of a corporate
board resolution; the bid award, deed of
absolute sale and TCT No. T-76183,
issued in favor of the CMTC, should be
nullified; the trial court erred in
concluding that GSIS personnel have
regularly performed their official duty
when they conducted the public bidding;
Fernando, as former owner of the subject
property and former member of the
GSIS, has the preemptive right to
repurchase the foreclosed property.
These additional averments cannot be
taken cognizance by the Court, because
they were substantially respondents
arguments in their petition for review on
10

certiorari earlier filed before Us and

docketed as G.R. No. 156609. Records
show that said petition was denied by
the Court in a Resolution[9] dated April
23, 2003, for petitioners (respondents
herein) failure to sufficiently show that
the Court of Appeals committed any
reversible error in the challenged
decision as to warrant the exercise by
this Court of its discretionary appellate
jurisdiction.[10] Said resolution became
final and executory on June 9, 2003.[11]
Respondents attempt to re-litigate
claims already passed upon and
resolved with finality by the Court in G.R.
No. 156609 cannot be allowed.

logical relation between the claim and

the counterclaim? A positive answer to
all four questions would indicate that the
counterclaim is compulsory.[12]

Going now to the first assigned error,

petitioner submits that its counterclaim
for the rentals collected by Fernando
from the CMTC is in the nature of a
compulsory counterclaim in the original
action of Fernando against petitioner for
annulment of bid award, deed of
absolute sale and TCT No. 76183.
Respondents, on the other hand, alleged
that
petitioner's
counterclaim
is
permissive and its failure to pay the
prescribed docket fees results into the
dismissal of its claim.
To determine whether a counterclaim is
compulsory or not, the Court has
devised the following tests: (a) Are the
issues of fact and law raised by the
claim and by the counterclaim largely
the same? (b) Would res judicata bar a
subsequent suit on defendants claims,
absent the compulsory counterclaim
rule? (c) Will substantially the same
evidence support or refute plaintiffs
claim as well as the defendants
counterclaim? and (d) Is there any

The issue in the main action, i.e., the

nullity or validity of the bid award, deed
of absolute sale and TCT in favor of
CMTC, is entirely different from the issue
in the counterclaim, i.e., whether
petitioner is entitled to receive the
CMTC's rent payments over the subject
property when petitioner became the
owner of the subject property by virtue
of the consolidation of ownership of the
property in its favor.

JRCMENDOZA LAW ARCHIVES

Tested against the above-mentioned

criteria, this Court agrees with the CA's
view that petitioner's counterclaim for
the recovery of the amount representing
rentals collected by Fernando from the
CMTC is permissive. The evidence
needed by Fernando to cause the
annulment of the bid award, deed of
absolute sale and TCT is different from
that required to establish petitioner's
claim for the recovery of rentals.

The rule in permissive counterclaims is

that for the trial court to acquire
jurisdiction, the counterclaimant is
bound to pay the prescribed docket fees.
[13] This, petitioner did not do, because
it asserted that its claim for the
collection of rental payments was a
compulsory
counterclaim.
Since
petitioner failed to pay the docket fees,
the RTC did not acquire jurisdiction over
its
permissive
counterclaim.
The
judgment rendered by the RTC, insofar
as it ordered Fernando to pay petitioner

the rentals which he collected from

CMTC, is considered null and void. Any
decision rendered without jurisdiction is
a total nullity and may be struck down at
any time, even on appeal before this
Court.[14]
Petitioner further argues that assuming
that its counterclaim is permissive, the
trial court has jurisdiction to try and
decide
the
same,
considering
petitioner's exemption from all kinds of
fees.
In In Re: Petition for Recognition of the
Exemption of the Government Service
Insurance System from Payment of Legal
Fees,[15] the Court ruled that the
provision in the Charter of the GSIS, i.e.,
Section 39 of Republic Act No. 8291,
which exempts it from all taxes,
assessments, fees, charges or duties of
all kinds, cannot operate to exempt it
from the payment of legal fees. This was
because, unlike the 1935 and 1973
Constitutions,
which
empowered
Congress to repeal, alter or supplement
the rules of the Supreme Court
concerning
pleading,
practice
and
procedure,
the
1987
Constitution
removed this power from Congress.
Hence, the Supreme Court now has the
sole authority to promulgate rules
concerning
pleading,
practice
and
procedure in all courts.
In said case, the Court ruled that:
The separation of powers among the
three
co-equal
branches
of
our
government has erected an impregnable

wall that keeps the power to promulgate

rules of pleading, practice and procedure
within the sole province of this Court.
The other branches trespass upon this
prerogative if they enact laws or issue
orders that effectively repeal, alter or
modify any of the procedural rules
promulgated by this Court. Viewed from
this perspective, the claim of a
legislative grant of exemption from the
payment of legal fees under Section 39
of RA 8291 necessarily fails.
Congress could not have carved out an
exemption for the GSIS from the
payment
of
legal
fees
without
transgressing another equally important
institutional safeguard of the Court's
independence fiscal autonomy. Fiscal
autonomy recognizes the power and
authority of the Court to levy, assess and
collect fees, including legal fees.
Moreover, legal fees under Rule 141
have two basic components, the
Judiciary Development Fund (JDF) and
the Special Allowance for the Judiciary
Fund (SAJF). The laws which established
the JDF and the SAJF expressly declare
the identical purpose of these funds to
"guarantee the independence of the
Judiciary
as
mandated
by
the
Constitution and public policy." Legal
fees therefore do not only constitute a
vital source of the Court's financial
resources but also comprise an essential
element
of
the
Court's
fiscal
independence. Any exemption from the
payment of legal fees granted by
Congress to government-owned or
controlled
corporations
and
local
government units will necessarily reduce
the JDF and the SAJF. Undoubtedly, such
11

situation is constitutionally infirm for it

impairs the Court's guaranteed fiscal
autonomy and erodes its independence.
Petitioner also invoked our ruling in Sun
Insurance Office, Ltd. v. Judge Asuncion,
[16] where the Court held that:
xxxx
3. Where the trial court acquires
jurisdiction over a claim by the filing of
the appropriate pleading and payment of
the
prescribed
filing
fee
but,
subsequently, the judgment awards a
claim not specified in the pleading, or if
specified the same has been left for
determination
by
the
court,
the
additional filing fee therefor shall
constitute a lien on the judgment. It
shall be the responsibility of the Clerk of
Court or his duly authorized deputy to
enforce said lien and assess and collect
the additional fee.
In Ayala Corporation v. Madayag,[17] the
Court, in interpreting the third rule laid
down in Sun Insurance Office, Ltd. v.
Judge Asuncion regarding awards of
claims not specified in the pleading, held
that the same refers only to damages
arising after the filing of the complaint or
similar pleading as to which the
additional filing fee therefor shall
constitute a lien on the judgment.
The amount of any claim for damages,
therefore, arising on or before the filing
of the complaint or any pleading should
be specified. While it is true that the
determination of certain damages as
exemplary or corrective damages is left
to the sound discretion of the court, it is
JRCMENDOZA LAW ARCHIVES

the duty of the parties claiming such

damages to specify the amount sought
on the basis of which the court may
make a proper determination, and for
the
proper
assessment
of
the
appropriate docket fees. The exception
contemplated as to claims not specified
or to claims although specified are left
for determination of the court is limited
only to any damages that may arise
after the filing of the complaint or similar
pleading for then it will not be possible
for the claimant to specify nor speculate
as to the amount thereof. (Emphasis
supplied.)
Petitioner's claim for payment of rentals
collected by Fernando from the CMTC did
not arise after the filing of the complaint;
hence, the rule laid down in Sun
Insurance finds no application in the
present case.
Due to the non-payment of docket fees
on petitioner's counterclaim, the trial
court never acquired jurisdiction over it
and, thus, there is no need to discuss
the second issue raised by petitioner.
WHEREFORE, the petition is DENIED. The
Decision and the Resolution, dated
December 17, 2002 and April 29, 2003,
respectively, of the Court of Appeals in
CA-G.R. CV. No. 49300, are AFFIRMED.
SO ORDERED.

this Court issued a decision, ordering the

BOI as follows:
G.R. No. 92024 November 9, 1990
CONGRESSMAN ENRIQUE T. GARCIA
(Second
District
of
Bataan),
petitioner,
vs.
THE BOARD OF INVESTMENTS, THE
DEPARTMENT
OF
TRADE
AND
INDUSTRY, LUZON PETROCHEMICAL
CORPORATION,
and
PILIPINAS
SHELL CORPORATION, respondents.
Abraham C. La Vina for petitioner.
Sycip, Salazar, Hernandez & Gatmaitan
for Luzon Petrochemical Corporation.
Romulo, Mabanta, Buenaventura, Sayoc
& De los Angeles for Pilipinas Shell
Petroleum Corporation.

GUTIERREZ, JR., J.:

This is a petition to annul and set aside
the decision of the Board of Investments
(BOI)/Department of Trade and Industry
(DTI) approving the transfer of the site of
the proposed petrochemical plant from
Bataan to Batangas and the shift of
feedstock for that plant from naphtha
only to naphtha and/or liquefied
petroleum gas (LPG).
This petition is a sequel to the petition in
G.R. No. 88637 entitled "Congressman
Enrique T. Garcia v. the Board of
Investments", September 7, 1989, where

WHEREFORE, the petition for certiorari is

granted. The Board of Investments is
ordered: (1) to publish the amended
application for registration of the Bataan
Petrochemical Corporation, (2) to allow
the petitioner to have access to its
records on the original and amended
applications for registration, as a
petrochemical manufacturer, of the
respondent
Bataan
Petrochemical
Corporation,
excluding,
however,
privileged papers containing its trade
secrets and other business and financial
information, and (3) to set for hearing
the petitioner's opposition to the
amended application in order that he
may present at such hearing all the
evidence in his possession in support of
his opposition to the transfer of the site
of the BPC petrochemical plant to
Batangas province. The hearing shall not
exceed a period of ten (10) days from
the date fixed by the BOI, notice of
which should be served by personal
service to the petitioner through
counsel, at least three (3) days in
advance. The hearings may be held from
day to day for a period of ten (10) days
without postponements. The petition for
a writ of prohibition or preliminary
injunction is denied. No costs. (Rollo,
pages 450-451)
However, acting on the petitioner's
motion for partial reconsideration asking
that we rule on the import of P.D. Nos.
949 and 1803 and on the foreign
investor's claim of right of final choice of
plant site, in the light of the provisions of
12

the Constitution and the Omnibus

Investments Code of 1987, this Court on
October 24, 1989, made the observation
that P.D. Nos. 949 and 1803 "do not
provide that the Limay site should be the
only petrochemical zone in the country,
nor prohibit the establishment of a
petrochemical plant elsewhere in the
country, that the establishment of a
petrochemical plant in Batangas does
not violate P.D. No. 949 and P.D. No.
1803.
Our resolution skirted the issue of
whether the investor given the initial
inducements and other circumstances
surrounding its first choice of plant site
may change it simply because it has the
final choice on the matter. The Court
merely ruled that the petitioner appears
to have lost interest in the case by his
failure to appear at the hearing that was
set by the BOI after receipt of the
decision, so he may be deemed to have
waived the fruit of the judgment. On this
ground,
the
motion
for
partial
reconsideration was denied.
A motion for reconsideration of said
resolution was filed by the petitioner
asking that we resolve the basic issue of
whether or not the foreign investor has
the right of final choice of plant site; that
the non-attendance of the petitioner at
the hearing was because the decision
was not yet final and executory; and that
the petitioner had not therefor waived
the right to a hearing before the BOI.
In the Court's resolution dated January
17, 1990, we stated:
JRCMENDOZA LAW ARCHIVES

Does the investor have a "right of final

choice" of plant site? Neither under the
1987 Constitution nor in the Omnibus
Investments Code is there such a 'right
of final choice.' In the first place, the
investor's choice is subject to processing
and approval or disapproval by the BOI
(Art. 7, Chapter II, Omnibus Investments
Code). By submitting its application and
amended application to the BOI for
approval, the investor recognizes the
sovereign
prerogative
of
our
Government, through the BOI, to
approve or disapprove the same after
determining
whether
its
proposed
project will be feasible, desirable and
beneficial to our country. By asking that
his opposition to the LPC's amended
application be heard by the BOI, the
petitioner likewise acknowledges that
the BOI, not the investor, has the last
word or the "final choice" on the matter.
Secondly, as this case has shown, even
a choice that had been approved by the
BOI may not be 'final', for supervening
circumstances and changes in the
conditions of a place may dictate a
corresponding change in the choice of
plant site in order that the project will
not fail. After all, our country will benefit
only when a project succeeds, not when
it fails. (Rollo, pp. 538-539)
Nevertheless,
the
motion
for
reconsideration of the petitioner was
denied.
A minority composed of Justices
Melencio-Herrera, Gancayco, Sarmiento
and this ponente voted to grant the
motion for reconsideration stating that

the hearing set by the BOI was

premature as the decision of the Court
was not yet final and executory; that as
contended by the petitioner the Court
must first rule on whether or not the
investor has the right of final choice of
plant site for if the ruling is in the
affirmative, the hearing would be a
useless exercise; that in the October 19,
1989 resolution, the Court while
upholding validity of the transfer of the
plant site did not rule on the issue of
who has the final choice; that they agree
with the observation of the majority that
"the investor has no final choice either
under the 1987 Constitution or in the
Omnibus Investments Code and that it is
the
BOI
who
decides
for
the
government" and that the plea of the
petitioner should be granted to give him
the chance to show the justness of his
claim and to enable the BOI to give a
second hard look at the matter.
Thus, the herein petition which relies on
the ruling of the Court in the resolution
of January 17, 1990 in G.R. No. 88637
that the investor has no right of final
choice under the 1987 Constitution and
the Omnibus Investments Code.
Under P.D. No. 1803 dated January 16,
1981, 576 hectares of the public domain
located in Lamao, Limay, Bataan were
reserved for the Petrochemical Industrial
Zone
under
the
administration,
management, and ownership of the
Philippine National Oil Company (PNOC).
The Bataan Refining Corporation (BRC) is
a wholly government owned corporation,

located at Bataan. It produces 60% of

the national output of naphtha.
Taiwanese investors in a petrochemical
project formed the Bataan Petrochemical
Corporation (BPC) and applied with BOI
for registration as a new domestic
producer
of
petrochemicals.
Its
application specified Bataan as the plant
site. One of the terms and conditions for
registration of the project was the use of
"naphtha cracker" and "naphtha" as
feedstock or fuel for its petrochemical
plant. The petrochemical plant was to be
a joint venture with PNOC. BPC was
issued a certificate of registration on
February 24, 1988 by BOI.
BPC was given pioneer status and
accorded fiscal and other incentives by
BOI, like: (1) exemption from taxes on
raw materials, (2) repatriation of the
entire
proceeds
of
liquidation
investments in currency originally made
and at the exchange rate obtaining at
the time of repatriation; and (3)
remittance of earnings on investments.
As additional incentive, the House of
Representatives
approved
a
bill
introduced by the petitioner eliminating
the 48% ad valorem tax on naphtha if
and when it is used as raw materials in
the petrochemical plant. (G.R. No.
88637, September 7, 1989, pp. 2-3.
Rollo, pp. 441-442)
However, in February, 1989, A.T. Chong,
chairman of USI Far East Corporation,
the major investor in BPC, personally
delivered to Trade Secretary Jose
Concepcion a letter dated January 25,
1989 advising him of BPC's desire to
13

amend
the
original
registration
certification of its project by changing
the job site from Limay, Bataan, to
Batangas. The reason adduced for the
transfer was the insurgency and
unstable labor situation, and the
presence in Batangas of a huge liquefied
petroleum gas (LPG) depot owned by the
Philippine Shell Corporation.
The petitioner vigorously opposed the
proposal and no less than President
Aquino expressed her preference that
the plant be established in Bataan in a
conference with the Taiwanese investors,
the Secretary of National Defense and
The Chief of Staff of the Armed Forces.
Despite speeches in the Senate and
House opposing the Transfer of the
project to Batangas, BPC filed on April
11, 1989 its request for approval of the
amendments. Its application is as
follows: "(l) increasing the investment
amount from US $220 million to US $320
million; (2) increasing the production
capacity
of
its
naphtha
cracker,
polythylene plant and polypropylene
plant; (3) changing the feedstock from
naphtha only to "naphtha and/or
liquefied petroleum gas;" and (4)
transferring the job site from Limay,
Bataan, to Batangas. (Annex B to
Petition; Rollo, p. 25)
Notwithstanding opposition from any
quarters and the request of the
petitioner
addressed
to
Secretary
Concepcion to be furnished a copy of the
proposed
amendment
with
its
attachments which was denied by the
BOI on May 25, 1989, BOI approved the
JRCMENDOZA LAW ARCHIVES

revision of the registration of BPC's

petrochemical project. (Petition, Annex
F; Rollo, p. 32; See pp. 4 to 6, Decision in
G.R. No. 88637; supra.)
BOI Vice-Chairman Tomas I. Alcantara
testifying before the Committee on Ways
and Means of the Senate asserted that:
The BOI has taken a public position
preferring Bataan over Batangas as the
site of the petrochemical complex, as
this would provide a better distribution
of industries around the Metro Manila
area. ... In advocating the choice of
Bataan as the project site for the
petrochemical
complex,
the
BOI,
however, made it clear, and I would like
to repeat this that the BOI made it clear
in its view that the BOI or the
government for that matter could only
recomend as to where the project should
be located. The BOI recognizes and
respect the principle that the final
chouce is still with the proponent who
would in the final analysis provide the
funding or risk capital for the project.
(Petition, P. 13; Annex D to the petition)
This position has not been denied by BOI
in its pleadings in G.R. No. 88637 and in
the present petition.
Section 1, Article VIII
Constitution provides:

of

the

1987

SECTION 1. The judicial power shall be

vested in one Supreme Court and in
such lower courts as may be established
by law.

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.
There is before us an actual controversy
whether the petrochemical plant should
remain in Bataan or should be
transferred to Batangas, and whether its
feedstock originally of naphtha only
should be changed to naphtha and/or
liquefied petroleum gas as the approved
amended application of the BPC, now
Luzon Petrochemical Corporation (LPC),
shows. And in the light of the categorical
admission of the BOI that it is the
investor who has the final choice of the
site and the decision on the feedstock,
whether or not it constitutes a grave
abuse of discretion for the BOI to yield to
the wishes of the investor, national
interest notwithstanding.

estate for the site unlike in the proposed

transfer to Batangas. The site is the
result of careful study long before any
covetous interests intruded into the
choice. The site is ideal. It is not unduly
constricted and allows for expansion.
The respondents have not shown nor
reiterated that the alleged peace and
order situation in Bataan or unstable
labor situation warrant a transfer of the
plant site to Batangas. Certainly, these
were taken into account when the firm
named itself Bataan Petrochemical
Corporation. Moreover, the evidence
proves the contrary.

We rule that the Court has a

constitutional duty to step into this
controversy
and
determine
the
paramount issue. We grant the petition.

Second, the BRC, a government owned

Filipino corporation, located in Bataan
produces 60% of the national output of
naphtha which can be used as feedstock
for the plant in Bataan. It can provide
the feedstock requirement of the plant.
On the other hand, the country is short
of LPG and there is need to import the
same for use of the plant in Batangas.
The local production thereof by Shell can
hardly supply the needs of the
consumers for cooking purposes. Scarce
dollars will be diverted, unnecessarily,
from vitally essential projects in order to
feed the furnaces of the transferred
petrochemical plant.

First, Bataan was the original choice as

the plant site of the BOI to which the
BPC agreed. That is why it organized
itself into a corporation bearing the
name Bataan. There is available 576
hectares of public land precisely
reserved as the petrochemical zone in
Limay, Bataan under P.D. No. 1803.
There is no need to buy expensive real

Third, naphtha as feedstock has been

exempted by law from the ad valorem
tax by the approval of Republic Act No.
6767 by President Aquino but excluding
LPG from exemption from ad valorem
tax. The law was enacted specifically for
the petrochemical industry. The policy
determination by both Congress and the
President is clear. Neither BOI nor a
14

foreign investor should disregard or

contravene expressed policy by shifting
the feedstock from naphtha to LPG.
Fourth, under Section 10, Article XII of
the 1987 Constitution, it is the duty of
the State to "regulate and exercise
authority over foreign investments
within its national jurisdiction and in
accordance with its national goals and
priorities." The development of a selfreliant
and
independent
national
economy
effectively
controlled
by
Filipinos is mandated in Section 19,
Article II of the Constitution.
In Article 2 of the Omnibus Investments
Code of 1987 "the sound development of
the national economy in consonance
with the principles and objectives of
economic nationalism" is the set goal of
government.
Fifth, with the admitted fact that the
investor is raising the greater portion of
the capital for the project from local
sources by way of loan which led to the
so-called "petroscam scandal", the
capital requirements would be greatly
minimized if LPC does not have to buy
the land for the project and its feedstock
shall be limited to naphtha which is
certainly more economical, more readily
available than LPG, and does not have to
be imported.
Sixth, if the plant site is maintained in
Bataan, the PNOC shall be a partner in
the venture to the great benefit and
advantage of the government which
shall have a participation in the
management of the project instead of a
JRCMENDOZA LAW ARCHIVES

firm which is
corporation.

huge

multinational

In the light of all the clear advantages

manifest in the plant's remaining in
Bataan, practically nothing is shown to
justify the transfer to Batangas except a
near-absolute discretion given by BOI to
investors not only to freely choose the
site but to transfer it from their own first
choice for reasons which remain murky
to say the least.
And this brings us to a prime
consideration which the Court cannot
rightly ignore.
Section 1, Article XII of the Constitution
provides that:
xxx xxx xxx
The State shall promote industrialization
and full employment based on sound
agricultural development and agrarian
reform, through industries that make full
and efficient use of human and natural
resources, and which are competitive in
both domestic and foreign markets.
However, the State shall protect Filipino
enterprises
against
unfair
foreign
competition and trade practices.
xxx xxx xxx
Every provision of the Constitution on
the national economy and patrimony is
infused with the spirit of national
interest. The non-alienation of natural
resources, the State's full control over
the development and utilization of our
scarce resources, agreements with

foreigners
being
based
on
real
contributions to the economic growth
and general welfare of the country and
the regulation of foreign investments in
accordance with national goals and
priorities are too explicit not to be
noticed and understood.
A petrochemical industry is not an
ordinary investment opportunity. It
should not be treated like a garment or
embroidery firm, a shoe-making venture,
or even an assembler of cars or
manufacturer of computer chips, where
the BOI reasoning may be accorded
fuller faith and credit. The petrochemical
industry is essential to the national
interest. In other ASEAN countries like
Indonesia and Malaysia, the government
superintends the industry by controlling
the upstream or cracker facility.
In this particular BPC venture, not only
has
the
Government
given
unprecedented favors, among them:
(1) For an initial authorized capital of
only P20 million, the Central Bank gave
an eligible relending credit or relending
facility worth US $50 million and a debt
to swap arrangement for US $30 million
or a total accommodation of US $80
million which at current exchange rates
is around P2080 million.
(2) A major part of the company's
capitalization shall not come from
foreign sources but from loans, initially a
Pl Billion syndicated loan, to be given by
both
government
banks
and
a
consortium of Philippine private banks or

in common parlance, a case

'guiniguisa sa sariling manteca.'

of

(3) Tax exemptions and privileges were

given as part of its 'preferred pioneer
status.'
(4) Loan applications of other Philippine
firms will be crowded out of the Asian
Development Bank portfolio because of
the petrochemical firm's massive loan
request. (Taken from the proceedings
before
the
Senate
Blue
Ribbon
Committee).
but through its regulatory agency, the
BOI, it surrenders even the power to
make a company abide by its initial
choice, a choice free from any suspicion
of unscrupulous machinations and a
choice which is undoubtedly in the best
interests of the Filipino people.
The Court, therefore, holds and finds
that the BOI committed a grave abuse of
discretion in approving the transfer of
the petrochemical plant from Bataan to
Batangas and authorizing the change of
feedstock from naphtha only to naphtha
and/or LPG for the main reason that the
final say is in the investor all other
circumstances
to
the
contrary
notwithstanding. No cogent advantage
to the government has been shown by
this transfer. This is a repudiation of the
independent policy of the government
expressed in numerous laws and the
Constitution to run its own affairs the
way it deems best for the national
interest.

15

One can but remember the words of a

great Filipino leader who in part said he
would not mind having a government
run like hell by Filipinos than one
subservient to foreign dictation. In this
case, it is not even a foreign government
but an ordinary investor whom the BOI
allows to dictate what we shall do with
our heritage.
WHEREFORE, the petition is hereby
granted. The decision of the respondent
Board of Investments approving the
amendment
of
the
certificate
of
registration of the Luzon Petrochemical
Corporation on May 23, 1989 under its
Resolution No. 193, Series of 1989,
(Annex F to the Petition) is SET ASIDE as
NULL and VOID. The original certificate
of registration of BPC' (now LPC) of
February 24, 1988 with Bataan as the
plant site and naphtha as the feedstock
is, therefore, ordered maintained.
SO ORDERED.

GEORGE YAO, petitioner, vs. HON.

COURT OF APPEALS, and THE
PEOPLE
OF
THE
PHILIPPINES,
respondents.
DECISION
DAVIDE, JR., C.J.:
In this petition for review on certiorari,
George Yao (hereafter YAO) assails the
JRCMENDOZA LAW ARCHIVES

25 April 1995 Resolution of the Court of

Appeals in CA-G.R. No. 16893 which
dismissed his appeal and ordered the
remand of the records of the case to the
Metropolitan Trial Court, Branch 52,
Caloocan* City (hereafter MeTC) for
execution. YAO was convicted by said
MeTC for unfair competition.
YAOs legal dilemma commenced in June
1990 when the Philippine Electrical
Manufacturing
Company
(hereafter
PEMCO) noticed the proliferation locally
of General Electric (GE) lamp starters. As
the only local subsidiary of GE-USA,
PEMCO knew that it was a highly unlikely
market situation considering that no GE
starter was locally manufactured or
imported
since
1983.
PEMCO
commissioned Gardsmarks, Inc. to
conduct a market survey. Gardsmarks,
Inc., thru its trademark specialist, Martin
Remandaman, discovered that thirty
(30) commercial establishments sold GE
starters.
All
these
establishments
pointed
to
Tradeway
Commercial
Corporation (hereafter TCC) as their
source. Remandaman was able to
purchase from TCC fifty (50) pieces of
fluorescent lamp starters with the GE
logo and design. Assessing that these
products
were
counterfeit,
PEMCO
applied for the issuance of a search
warrant. This was issued by the MeTC,
Branch 49, Caloocan City. Eight boxes,
each containing 15,630 starters, were
thereafter
seized
from
the
TCC
warehouse in Caloocan City.
Indicted before the MeTC, Branch 52,
Caloocan City for unfair competition
under Article 189 of the Revised Penal

Code were YAO, who was TCCs President

and General Manager, and Alfredo
Roxas, a member of TCCs Board of
Directors. The indictment[1] charged
YAO and Roxas of having mutually and in
conspiracy sold fluorescent lamp starters
which have the General Electric (GE)
logo, design and containers, making
them appear as genuine GE fluorescent
lamp starters; and inducing the public to
believe them as such, when they were in
fact counterfeit. The case was docketed
as Criminal Case No. C-155713.
Both accused pleaded not guilty. At the
trial, the prosecution presented evidence
tending to establish the foregoing
narration of facts. Further, the State
presented witnesses Atty. Hofilena of the
Castillo Laman Tan and Pantaleon Law
Offices who underwent a familiarization
seminar from PEMCO in 1990 on how to
distinguish a genuine GE starter from a
counterfeit, and Allan de la Cruz,
PEMCOs marketing manager.
Both
described a genuine GE starter as
having a stenciled silk-screen printing
which includes the GE logo... back to
back around the starter, a drumlike
glowbulb and a condenser/capacitor
shaped like an M&M candy with the
numbers .006." They then compared and
examined random samples of the seized
starters with the genuine GE products.
They concluded that the seized starters
did not possess the full design
complement of a GE original. They also
observed that some of the seized
starters did not have capacitors or if
they possessed capacitors, these were
not shaped like M&M. Still others merely
had sticker jackets with prints of the GE

logo. Mr. de la Cruz added that only

Hankuk Stars of Korea manufactured GE
starters and if these were imported by
PEMCO, they would cost P7.00 each
locally. As TCCs starters cost P1.60 each,
the witnesses agreed that the glaring
differences in the packaging, design and
costs indisputably proved that TCCs GE
starters were counterfeit.
The defense presented YAO as its lone
witness. YAO admitted that as general
manager, he has overall supervision of
the daily operation of the company. As
such, he has the final word on the
particular brands of products that TCC
would purchase and in turn sold. He also
admitted that TCC is not an accredited
distributor of GE starters. However, he
disclaimed liability for the crime charged
since (1) he had no knowledge or
information that the GE starters supplied
to TCC were fake; (2) he had not
attended any seminar that helped him
determine which TCC products were
counterfeit; (3) he had no participation
in the manufacture, branding, stenciling
of the GE names or logo in the starters;
(4) TCCs suppliers of the starters
delivered the same already branded and
boxed; and (5) he only discussed with
the suppliers matters regarding pricing
and peak-volume items.
In its 13-page 20 October 1993 decision,
[2] the MeTC acquitted Roxas but
convicted YAO. In acquitting Roxas, the
trial court declared that the prosecution
failed to prove that he was still one of
the Board of Directors at the time the
goods were seized. It anchored its
conviction of YAO on the following: (1)
16

YAOs admission that he knew that the

starters were not part of GEs line
products when he applied with PEMCO
for TCCs accreditation as distributor; (2)
the prosecutions evidence (Exhibit G-7),
a delivery receipt dated 25 May 1989
issued by Country Supplier Center, on
which a TCC personnel noted that the
2000 starters delivered were GE starters
despite the statement therein that they
were China starters; this fact gave rise
to a presumption that the TCC personnel
knew of the anomaly and that YAO as
general manager and overall supervisor
knew and perpetrated the deception of
the public; (3) the fact that no genuine
GE starter could be sold from 1986
whether
locally
manufactured
or
imported or at the very least in such
large commercial quantity as those
seized from TCC; and (4) presence of the
elements of unfair competition.
The dispositive portion of the decision
reads as follows:
For the failure of the prosecution to
prove the guilt of the accused, Alfredo
Roxas, of Unfair Competition under
Article 189 (1) of the Revised Penal Code
... i.e., to prove that he was Chairman of
the Board of the Tradeway Commercial
Corporation on October 10, 1990, as well
as to have him identified in open court
during the trial, he is acquitted of the
same.
But because the prosecution proved the
guilt of the other accused, George Yao,
beyond reasonable doubt as principal
under the said Article 189 (1) for Unfair
Competition, he is convicted of the
JRCMENDOZA LAW ARCHIVES

same. In the absence of any aggravating

or
mitigating
circumstances
alleged/proven, and considering the
provisions
of
the
Indeterminate
Sentence Law, he is sentenced to a
minimum of four (4) months and twentyone (21) days of arresto mayor to a
maximum of one (1) year and five (5)
months of prision correccional.
This case was prosecuted by the law
offices of Castillo Laman Tan and
Pantaleon for ... PEMCO ... Considering
that no document was submitted by the
private complainant to show how the
claim of P300,000 for consequential
damages was reached and/or computed,
the court is not in a position to make a
pronouncement on the whole amount.
However, the offender, George Yao, is
directed to pay PEMCO the amount of
P20,000 by way of consequential
damages under Article 2202 of the New
Civil Code, and to pay the law offices of
Castillo, Laman Tan and Pantaleon the
amount of another P20,000.00 as
PEMCOs attorneys fees under Article
2208 (11) of the same.
This
decision
should
have
been
promulgated in open court on July 28,
1993 but the promulgation was reset for
August 31, 1993 in view of the absence
of parties; it was again re-set for today.
Promulgated this 20th day of October,
1993 in Kalookan City, Philippines.[3]
YAO filed a motion for reconsideration,
which the MeTC denied in its order[4] of
7 March 1994.

YAO appealed to the Regional Trial Court

of Caloocan City (RTC). The appeal was
docketed as Criminal Case No. C47255(94) and was assigned to Branch
121 of the court.
On 24 May 1994, Presiding Judge
Adoracion G. Angeles of Branch 121
issued an order[5] directing the parties
to file their respective memoranda.
On 4 July 1994 YAO filed his Appeal
Memorandum.[6]
Without waiting for the Memorandum on
Appeal of the prosecution, which was
filed only on 20 August 1994,[7] Judge
Adoracion Angeles rendered on 27 July
1994 a one-page Decision[8] which
affirmed in toto the MeTC decision. In so
doing, she merely quoted the dispositive
portion of the MeTC and stated that
[a]after going over the evidence on
record, the Court finds no cogent reason
to
disturb
the
findings
of
the
Metropolitan Trial Court.
YAO filed a motion for reconsideration[9]
and assailed the decision as violative of
Section 2, Rule 20 of the Rules of Court.
[10] In its order[11] of 28 September
1994, the RTC denied the motion for
reconsideration as devoid of merit and
reiterated that the findings of the trial
court are entitled to great weight on
appeal and should not be disturbed on
appeal unless for strong and cogent
reasons.
On 4 October 1994, YAO appealed to the
Court of Appeals by filing a notice of
appeal.[12]

The appealed case was docketed as CAG.R. CR No. 16893. In its Resolution[13]
of 28 February 1995, the Court of
Appeals granted YAO an extension of
twenty (20) days from 10 February or
until 12 March 1995 within which to file
the Appellants Brief. However, on 25
April 1995 the Court of Appeals
promulgated a Resolution[14] declaring
that [t]he decision rendered on July 27,
1994 by the Regional Trial Court, Branch
121, has long become final and
executory and ordering the records of
the case remanded to said court for the
proper execution of judgment. The
pertinent portion of the Resolution reads:
In Our resolution, dated February 28,
1995, accused-appellant was granted an
extension of twenty (20) days from
February 10, 1995, or until March 12,
1995 within which to file appellants brief.
To date, no appellants brief has been
filed.
From the Manifestation, filed on March
24, 1995, by City Prosecutor Gabriel N.
dela Cruz, Kalookan City, it would appear
that:
xxx
2. George Yao received a copy of the
RTCs decision on August 16, 1994, and
filed a motion for reconsideration on
August 30, 1994. On October 3, 1994,
George Yao received a copy of the RTCs
order, dated September 28, 1994,
denying his motion for reconsideration.
17

3. On October 4, 1994, George Yao filed

a notice of appeal by registered mail.
We
will
assume
from
the
said
Manifestation that the decision of the
RTC and the order denying YAOs motion
for reconsideration were sent to and
received by YAOs counsel.
Proceeding from said assumption, Yao
had fifteen (15) days from August 16,
1994 to elevate his case to this Court.
On August 30, 1994, or fourteen (14)
days thereafter, Yao filed a motion for
reconsideration. When he received the
Order denying his aforesaid motion on
October 3, 1994, he had one more day
left to elevate his case to this Court by
the proper mode of appeal, which is by
petition for review. Yao, however, on
October 4, 1994, filed a notice of appeal
by registered mail informing the RTC that
he is appealing his conviction to the
Court of Appeals. By then, the fifteen
(15) day period had already elapsed.
That notwithstanding, the Branch Clerk
of Court, RTC, Branch 121, transmitted
to this Court the entire records of the
case, thru a transmittal letter, dated
October 13, 1994, and received by the
Criminal Section of this Court on October
28, 1994. YAOs counsel, on February 20,
1995, filed with this Court, a motion for
extension of period to file brief for
accused-appellant which was granted in
Our resolution mentioned in the opening
paragraph of this resolution.
Petitions for review shall be filed within
the period to appeal. This period has
already elapsed even when Yao filed a
JRCMENDOZA LAW ARCHIVES

notice of appeal by registered mail, with

the RTC of Kalookan City. Worse, the
notice of appeal is procedurally infirm.
YAO filed an Urgent Motion to Set Aside
Entry of Judgment contending that the
25 April 1995 resolution did not
specifically dismiss the appeal, for which
reason, there was no judgment on which
an entry of judgment could be issued.
He also argued that the attendant
procedural infirmities in the appeal, if
any, were cured with the issuance of the
28 February 1995 resolution granting
him twenty (20) days from 10 February
1995 or until 12 March 1995 within
which to file an appellants brief and in
compliance thereto, consequently filed
his appellants brief on 2 March 1995.[15]
In its Resolution[16] of 26 January 1998,
the Court of Appeals denied the Urgent
Motion to Set Aside the Entry of
Judgment for lack of merit. It considered
the 25 April 1995 resolution as having in
effect dismissed the appeal, [hence] the
Entry of Judgment issued on May 26,
1995... was proper.
In this petition for review on certiorari,
YAO reiterates the arguments he raised
in his Urgent Motion to Set Aside the
Entry of Judgment of the Court of
Appeals, thus: (1) that the entry of
judgment was improvidently issued in
the absence of a final resolution
specifically dismissing the appeal; (2)
the procedural infirmity in the appeal, if
any, has been cured; and (3) the Court
of Appeals committed grave abuse of
discretion
amounting
to
lack
of

jurisdiction in denying him (YAO) due

process of law.
In support of his first argument, YAO
cites Section 1, Rule 11 of the Revised
Internal Rules of the Court of Appeals,
thus:
SEC. 1. Entry of Judgment. -- Unless a
motion for reconsideration is filed or an
appeal is taken to the Supreme Court,
judgments and final resolutions of the
Court of Appeals shall be entered upon
the expiration of fifteen (15) days after
notice to parties.
YAO claims that the 25 April 1995
resolution of the Court of Appeals was
not a judgment on his appeal nor was it
a final resolution contemplated in the
Internal Rules since it did not specifically
dismiss his appeal. A fortiori, the entry of
judgment was improvidently issued for
lack of legal basis.
YAO also repeats his argument that any
procedural infirmity in the appeal was
cured when the RTC gave due course to
the appeal, elevated the records to the
Court of Appeals which in turn issued on
13 December 1994 a notice to file his
Appellants Brief and granted him until
12 March 1995 within which to file the
appellants brief.
Finally, YAO asserts that he was denied
due process considering that (1) none of
the elements of unfair competition are
present in this case; (2) he filed his
appeal to the Court of Appeals within the
reglementary
period;
and
(3)
notwithstanding his filing of a notice of

appeal (instead of a petition for review),

it was a mere procedural lapse, a
technicality which should not bar the
determination of the case based on
intrinsic merits. YAO then invokes the
plethora of jurisprudence wherein the
Supreme Court in the exercise of equity
jurisdiction
decided
to
disregard
technicalities; decided [the case] on
merits and not on technicalities; found
manifest
in
the
petition
strong
considerations of substantial justice
necessitating the relaxing of the
stringent application of technical rules,
or heeded petitioners cry for justice
because the basic merits of the case
warrant so, as where the petition
embodies
justifying
circumstances;
discerned not to sacrifice justice to
technicality;
discovered
that
the
application of res judicata and estoppel
by judgment amount to a denial of
justice and or a bar to a vindication of a
legitimate grievance.[17]
In its Comment, the Office of the
Solicitor General prays that the petition
should be dismissed for lack of merit. It
maintains that although the 25 April
1995 resolution did not specifically state
that the appeal was being dismissed, the
intent and import are clear and
unequivocable. It asserts that the appeal
was obviously dismissed because the
RTC decision has long become final and
executory. YAO failed to challenge the
RTC decision, within the reglementary
period, by filing a petition for review of
the same with the Court of appeals
pursuant to Section 1 of Rule 42 of the
Rules of Court. Instead, he filed an
ordinary appeal by way of a notice of
18

appeal. Hence, the period to file the

correct procedural remedy had lapsed.
There is no dispute that YAO availed of
the wrong procedural remedy in
assailing the RTC decision. It is clear
from the records that YAO received a
copy of the adverse RTC judgment on 16
August 1994. He has fifteen (15) days or
until 31 August 1994 within which to file
either a motion for reconsideration or a
petition for review with the Court of
Appeals. Fourteen (14) days thereafter
or on 30 August 1994, YAO opted to file
a motion for reconsideration the
pendency of which tolled the running of
the period. He received a copy of the
RTCs order denying the motion for
reconsideration on 3 October 1994. He
had therefore, only one day left, 4
October 1994 as the last day, within
which to file with the Court of Appeals a
petition for review.[18] However, on said
date, YAO filed a notice of appeal. He
palpably availed of the wrong mode of
appeal. And since he never instituted the
correct one, he lost it.
The
right
to
appeal
is
not
a
constitutional, natural or inherent right.
It is a statutory privilege of statutory
origin and, therefore, available only if
granted or provided by statute.[19]
Since the right to appeal is not a natural
right nor a part of due process, it may be
exercised only in the manner and in
accordance with the provisions of law.
[20] Corollarily, its requirements must be
strictly complied with.
That an appeal must be perfected in the
manner and within the period fixed by
JRCMENDOZA LAW ARCHIVES

law is not only mandatory but

jurisdictional.[21] Non-compliance with
such legal requirements is fatal,[22] for
it renders the decision sought to be
appealed final and executory,[23] with
the end result that no court can exercise
appellate jurisdiction to review the
decision.[24]
In the light of these procedural precepts,
YAOs petition appears to be patently
without merit and does not deserve a
second look. Hence, the reasons he
enumerated to persuade this Court to
grant his petition and reinstate his
appeal are obviously frivolous if not
downright trivial. They need not even be
discussed here.
In the normal and natural course of
events, we should dismiss the petition
outright, if not for an important detail
which augurs well for YAO and would
grant him a reprieve in his legal battle.
The decision of the RTC affirming the
conviction of YAO palpably transgressed
Section
14,
Article
VIII
of
the
Constitution, which states:
Sec. 14. No decision shall be rendered
by any court without expressing therein
clearly and distinctly the facts and the
law on which it is based.
xxx
Let us quote in full the RTC judgment:
This is an appeal from the decision of the
Metropolitan Trial Court, Branch 52,
Kalookan City, in Crim. Case No. C-

155713, the dispositive portion of which

reads as follows:
xxx
But because the prosecution proved the
guilt of the other accused, George Yao;
beyond reasonable doubt as principal
under the said Article 189 (1) for Unfair
Competition, he is convicted of the
same. In the absence of any aggravating
or
mitigating
circumstances
alleged/proven, and considering the
provisions
of
the
Indeterminate
Sentence Law, he is sentenced to a
minimum of four (4) months and twentyone (21) days of arresto mayor to a
maximum of one (1) year and five (5)
months of prision correccional.
xxx
After going over the evidence on record,
the Court finds no cogent reason to
disturb the findings of the Metropolitan
Trial Court.
WHEREFORE, this Court affirms in toto
the decision of the Metropolitan Trial
Court dated October 20, 1993.
SO ORDERED.
That is all there is to it.
We have sustained decisions of lower
courts as having substantially or
sufficiently
complied
with
the
constitutional injunction notwithstanding
the laconic and terse manner in which
they were written and even if there (was
left) much to be desired in terms of

(their)
clarity,
coherence
and
comprehensibility provided that they
eventually set out the facts and the law
on which they were based,[25] as when
they stated the legal qualifications of the
offense constituted by the facts proved,
the
modifying
circumstances,
the
participation of the accused, the penalty
imposed and the civil liability;[26] or
discussed the facts comprising the
elements of the offense that was
charged
in
the
information,
and
accordingly rendered a verdict and
imposed the corresponding penalty;[27]
or quoted the facts narrated in the
prosecutions memorandum but made
their own findings and assessment of
evidence, before finally agreeing with
the prosecutions evaluation of the case.
[28]
We have also sanctioned the use of
memorandum decisions,[29] a specie of
succinctly written decisions by appellate
courts in accordance with the provisions
of Section 40, B.P. Blg. 129[30] on the
grounds of expediency, practicality,
convenience and docket status of our
courts. We have also declared that
memorandum decisions comply with the
constitutional mandate.[31]
In Francisco v. Permskul,[32] however,
we laid down the conditions for the of
validity of memorandum decisions, thus:
The memorandum decision, to be valid,
cannot incorporate the findings of fact
and the conclusions of law of the lower
court only by remote reference, which is
to say that the challenged decision is not
easily and immediately available to the
19

person
reading
the
memorandum
decision. For the incorporation by
reference to be allowed, it must provide
for direct access to the facts and the law
being adopted, which must be contained
in a statement attached to the said
decision.
In
other
words,
the
memorandum decision authorized under
Section 40 of B.P. Blg. 129 should
actually embody the findings of fact and
conclusions of law of the lower court in
an annex attached to and made an
indispensable part of the decision.
It is expected that this requirement will
allay the suspicion that no study was
made of the decision of the lower court
and that its decision was merely
affirmed without a proper examination of
the facts and the law on which it is
based. The proximity at least of the
annexed statement should suggest that
such
an
examination
has
been
undertaken. It is, of course, also
understood that the decision being
adopted should, to begin with, comply
with Article VIII, Section 14 as no amount
of incorporation or adoption will rectify
its violation.
The Court finds necessary to emphasize
that the memorandum decision should
be sparingly used lest it become an
addictive excuse for judicial sloth. It is an
additional condition for the validity that
this kind of decision may be resorted to
only in cases where the facts are in the
main accepted by both parties and
easily determinable by the judge and
there are no doctrinal complications
involved that will require an extended
discussion of the laws involved. The
JRCMENDOZA LAW ARCHIVES

memorandum
decision
may
be
employed in simple litigations only, such
as ordinary collection cases, where the
appeal is obviously groundless and
deserves no more than the time needed
to dismiss it.
xxx
Henceforth, all memorandum decisions
shall comply with the requirements
herein set forth both as to the form
prescribed and the occasions when they
may be rendered. Any deviation will
summon the strict enforcement of Article
VIII, Section 14 of the Constitution and
strike down the flawed judgment as a
lawless disobedience.
Tested against these standards, we find
that the RTC decision at bar miserably
failed to meet them and, therefore, fell
short of the constitutional injunction. The
RTC decision is brief indeed, but it is
starkly hallow, otiosely written, vacuous
in its content and trite in its form. It
achieved nothing and attempted at
nothing, not even at a simple summation
of facts which could easily be done. Its
inadequacy speaks for itself.
We cannot even consider or affirm said
RTC decision as a memorandum decision
because it failed to comply with the
measures of validity laid down in
Francisco v. Permskul. It merely affirmed
in toto the MeTC decision without saying
more. A decision or resolution, especially
one resolving an appeal, should directly
meet
the
issues
for
resolution;
otherwise,
the
appeal
would
be
pointless.[33]

We therefore reiterate our admonition in

Nicos Industrial Corporation v. Court of
Appeals,[34] in that while we conceded
that brevity in the writing of decisions is
an admirable trait, it should not and
cannot be substituted for substance; and
again in Francisco v. Permskul,[35]
where we cautioned that expediency
alone, no matter how compelling, cannot
excuse
non-compliance
with
the
constitutional requirements.
This is not to discourage the lower courts
to write abbreviated and concise
decisions, but never at the expense of
scholarly
analysis,
and
more
significantly, of justice and fair play, lest
the fears expressed by Justice Feria as
the ponente in Romero v. Court of
Appeals[36] come true, i.e., if an
appellate court failed to provide the
appeal the attention it rightfully
deserved, said court deprived the
appellant of due process since he was
not accorded a fair opportunity to be
heard by a fair and responsible
magistrate. This situation becomes more
ominous in criminal cases, as in this
case, where not only property rights are
at stake but also the liberty if not the life
of a human being.
Faithful adherence to the requirements
of Section 14, Article VIII of the
Constitution is indisputably a paramount
component of due process and fair play.
[37] It is likewise demanded by the due
process clause of the Constitution.[38]
The parties to a litigation should be
informed of how it was decided, with an
explanation of the factual and legal

reasons that led to the conclusions of

the court. The court cannot simply say
that judgment is rendered in favor of X
and against Y and just leave it at that
without any justification whatsoever for
its action. The losing party is entitled to
know why he lost, so he may appeal to
the higher court, if permitted, should he
believe that the decision should be
reversed. A decision that does not
clearly and distinctly state the facts and
the law on which it is based leaves the
parties in the dark as to how it was
reached and is precisely prejudicial to
the losing party, who is unable to
pinpoint the possible errors of the court
for review by a higher tribunal.[39] More
than that, the requirement is an
assurance to the parties that, in
reaching judgment, the judge did so
through
the
processes
of
legal
reasoning. It is, thus, a safeguard
against the impetuosity of the judge,
preventing him from deciding ipse dixit.
Vouchsafed neither the sword nor the
purse
by
the
Constitution
but
nonetheless vested with the sovereign
prerogative of passing judgment on the
life, liberty or property of his fellowmen,
the judge must ultimately depend on the
power of reason for sustained public
confidence in the justness of his
decision.[40]
Thus the Court has struck down as void,
decisions of lower courts and even of the
Court of Appeals whose careless
disregard of the constitutional behest
exposed
their
sometimes
cavalier
attitude not only to their magisterial
responsibilities but likewise to their
avowed fealty to the Constitution.
20

Thus, we nullified or deemed to have

failed to comply with Section 14, Article
VIII of the Constitution, a decision,
resolution or order which: contained no
analysis of the evidence of the parties
nor reference to any legal basis in
reaching its conclusions; contained
nothing more than a summary of the
testimonies of the witnesses of both
parties;[41] convicted the accused of
libel but failed to cite any legal authority
or principle to support conclusions that
the letter in question was libelous;[42]
consisted merely of one (1) paragraph
with mostly sweeping generalizations
and failed to support its conclusion of
parricide;[43] consisted of five (5) pages,
three (3) pages of which were quotations
from the labor arbiters decision including
the dispositive portion and barely a page
(two [2] short paragraphs of two [2]
sentences each) of its own discussion or
reasonings[44]; was merely based on
the findings of another court sans
transcript of stenographic notes;[45] or
failed to explain the factual and legal
bases for the award of moral damages.
[46]
In the same vein do we strike down as a
nullity the RTC decision in question.
In sum, we agree with YAO that he was
denied due process but not on the
grounds he ardently invoked but on the
reasons already extensively discussed
above. While he indeed resorted to the
wrong mode of appeal and his right to
appeal is statutory, it is still an essential
part of the judicial system that courts
should proceed with caution so as not to
JRCMENDOZA LAW ARCHIVES

deprive a party of the prerogative, but

instead afford every party-litigant the
amplest opportunity for the proper and
just disposition of his cause, freed from
the constraints of technicalities.[47]
In the interest of substantial justice,
procedural rules of the most mandatory
character in terms of compliance, may
be relaxed.[48] In other words, if strict
adherence to the letter of the law would
result
in
absurdity
and
manifest
injustice[49] or where the merit of a
partys cause is apparent and outweighs
consideration of non-compliance with
certain
formal
requirements,[50]
procedural rules should definitely be
liberally construed. A party-litigant is to
be given the fullest opportunity to
establish the merits of his complaint or
defense rather than for him to lose life,
liberty, honor or property on mere
technicalities.[51] We therefore withhold
legal approbation on the RTC decision at
bar for its palpable failure to comply with
the constitutional and legal mandates
thereby denying YAO of his day in court.
We also remind all magistrates to heed
the demand of Section 14, Article VIII of
the Constitution. It is their solemn and
paramount
duty
to
uphold
the
Constitution and the principles enshrined
therein, lest they be lost in the nittygritty of their everyday judicial work.

rendered in its appellate jurisdiction is

NULLIFIED. The records are hereby
remanded to said Regional Trial Court for
further proceedings and for the rendition
of judgment in accordance with the
mandate of Section 14, Article VIII of the
Constitution.
No costs.
SO ORDERED.s

WHEREFORE, in view of all the foregoing,

the petition in this case is GRANTED. The
questioned 25 April 1995 resolution of
the Court of Appeals in CA-G.R. No.
16893 is hereby SET ASIDE and the 27
July 1994 decision of the Regional Trial
Court, Branch 121 of Kalookan City
21