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G.R. No.

L-63558 May 19, 1987

SPOUSES JOSE ABEJO AND AURORA ABEJO, TELEC. TRONIC SYSTEMS,


INC., petitioners,
vs.
HON. RAFAEL DE LA CRUZ, JUDGE OF THE REGIONAL TRIAL COURT (NATIONAL
CAPITAL JUDICIAL REGION, BRANCH CLX-PASIG), SPOUSES AGAPITO BRAGA AND
VIRGINIA BRAGA, VIRGILIO BRAGA AND NORBERTO BRAGA, respondents.

No. L-68450-51 May 19, 1987

POCKET BELL PHILIPPINES, INC., AGAPITO T. BRAGA, VIRGILIO T. BRAGA,


NORBERTO BRAGA, and VIRGINIA BRAGA, petitioners,
vs.
THE HONORABLE SECURITIES AND EXCHANGE COMMISSION, TELECTRONIC
SYSTEMS, INC., JOSE ABEJO, JOSE LUIS SANTIAGO, SIMEON A. MIRAVITE, SR.,
ANDRES T. VELARDE AND L. QUIDATO BANDOLINO, respondents.

TEEHANKEE, C.J.:

These two cases, jointly heard, are jointly herein decided. They involve the question of who,
between the Regional Trial Court and the Securities and Exchange Commission (SEC), has
original and exclusive jurisdiction over the dispute between the principal stockholders of the
corporation Pocket Bell Philippines, Inc. (Pocket Bell), a "tone and voice paging corporation,"
namely, the spouses Jose Abejo and Aurora Abejo (hereinafter referred to as the Abejos) and
the purchaser, Telectronic Systems, Inc. (hereinafter referred to as Telectronics) of their
133,000 minority shareholdings (for P5 million) and of 63,000 shares registered in the name
of Virginia Braga and covered by five stock certificates endorsed in blank by her (for
P1,674,450.00), and the spouses Agapito Braga and Virginia Braga (hereinafter referred to
as the Bragas), erstwhile majority stockholders. With the said purchases, Telectronics would
become the majority stockholder, holding 56% of the outstanding stock and voting power of
the corporation Pocket Bell.

With the said purchases in 1982, Telectronics requested the corporate secretary of the
corporation, Norberto Braga, to register and transfer to its name, and those of its nominees
the total 196,000 Pocket Bell shares in the corporation's transfer book, cancel the
surrendered certificates of stock and issue the corresponding new certificates of stock in its
name and those of its nominees.

Norberto Braga, the corporate secretary and son of the Bragas, refused to register the
aforesaid transfer of shares in t e corporate oo s, asserting that the Bragas claim preemptive
rights over the 133,000 Abejo shares and that Virginia Braga never transferred her 63,000
shares to Telectronics but had lost the five stock certificates representing those shares.

This triggered off the series of intertwined actions between the protagonists, all centered on
the question of jurisdiction over the dispute, which were to culminate in the filing of the two
cases at bar.
The Bragas assert that the regular civil court has original and exclusive jurisdiction as
against the Securities and Exchange Commission, while the Abejos claim the contrary. A
summary of the actions resorted to by the parties follows:

A. ABEJOS ACTIONS IN SEC

1. The Abejos and Telectronics and the latter's nominees, as new majority shareholders, filed
SEC Cases Nos. 02379 and 02395 against the Bragas on December 17, 1982 and February
14, 1983, respectively.

2. In SEC Case No. 02379, they prayed for mandamus from the SEC ordering Norberto
Braga, as corporate secretary of Pocket Bell to register in their names the transfer and sale
of the aforesaid 196,000 Pocket Bell shares (of the Abejos 1 and Virginia Braga 2, cancel the
surrendered certificates as duly endorsed and to issue new certificates in their names.

3. In SEC Case No.02395, they prayed for injunction and a temporary restraining order that
the SEC enjoin the Bragas from disbursing or disposing funds and assets of Pocket Bell and
from performing such other acts pertaining to the functions of corporate officers.

4. Pocket Bell's corporate secretary, Norberto Braga, filed a Motion to Dismiss the
mandamus case (SEC Case No. 02379) contending that the SEC has no jurisdiction over
the nature of the action since it does not involve an intracorporate controversy between
stockholders, the principal petitioners therein, Telectronics, not being a stockholder of record
of Pocket Bell.

5. On January 8, 1983, SEC Hearing Officer Joaquin Garaygay denied the motion. On
January 14, 1983, the corporate secretary filed a Motion for Reconsideration. On March 21,
1983, SEC Hearing Officer Joaquin Garaygay issued an order granting Braga's motion for
reconsideration and dismissed SEC Case No. 02379.

6. On February 11, 1983, the Bragas filed their Motion to Dismiss the injunction case, SEC
Case No. 02395. On April 8, 1985, the SEC Director, Eugenio Reyes, acting upon the
Abejos'ex-parte motion, created a three-man committee composed of Atty. Emmanuel Sison
as Chairman and Attys. Alfredo Oca and Joaquin Garaygay as members, to hear and decide
the two SEC cases (Nos. 02379 and 02395).

7. On April 13, 1983, the SEC three-man committee issued an order reconsidering the
aforesaid order of March 21, 1983 of the SEC Hearing Officer Garaygay (dismissing the
mandamus petition SEC Case No. 02379) and directing corporate secretary Norberto Braga
to file his answer to the petitioner therein.

B. BRAGAS' ACTION IN SEC

8. On December 12, 1983, the Bragas filed a petition for certiorari, prohibition and
mandamus with the SEC en banc, SEC Case No. EB #049, seeking the dismissal of SEC
Cases Nos.' 02379 and 02395 for lack of jurisdiction of the Comn-iission and the setting
aside of the various orders issued by the SEC three-man committee in the course of the
proceedings in the two SEC cases.

9. On May 15, 1984, the SEC en banc issued an order dismissing the Bragas' petition in
SEC Case No. EB#049 for lack of merit and at the same time ordering the SEC Hearing
Committee to continue with the hearings of the Abejos and Telectronics SEC Cases Nos.
02379 and 02395, ruhng that the "issue is not the ownership of shares but rather the
nonperformance by the Corporate Secretary of the ministerial duty of recording transfers of
shares of stock of the corporation of which he is secretary."

10. On May 15, 1984 the Bragas filed a motion for reconsideration but the SEC en
banc denied the same on August 9, 1984.

C. BRAGAS' ACTION IN CFI (NOWRTC)

11. On November 25, 1982, following the corporate secretary's refusal to register the transfer
of the shares in question, the Bragas filed a complaint against the Abejos and Telectronics in
the Court of First Instance of Pasig, Branch 21 (now the Regional Trial Court, Branch 160)
docketed as Civil Case No. 48746 for: (a) rescission and annulment of the sale of the shares
of stock in Pocket Bell made by the Abejos in favor of Telectronics on the ground that it
violated the Bragas' alleged pre-emptive right over the Abej os' shareholdings and an alleged
perfected contract with the Abejos to sell the same shares in their (Bragas) favor, (Ist cause
of action); plus damages for bad faith; and (b) declaration ofnullity of any transfer,
assignment or endorsement of Virginia Bragas' stock certificates for 63,000 shares in Pocket
Ben to Telectronics for want of consent and consideration, alleging that said stock
certificates, which were intended as security for a loan application and were thus endorsed
by her in blank, had been lost (2nd cause of action).

12. On January 4, 1983, the Abejos filed a Motion to Dismiss the complaint on the ground
that it is the SEC that is vested under PD 902-A with original and exclusive jurisdiction to
hear and decide cases involving, among others, controversies "between and among
stockholders" and that the Bragas' suit is such a controversy as the issues involved therein
are the stockholders' alleged pre-emptive rights, the validity of the transfer and endorsement
of certificates of stock, the election of corporate officers and the management and control of
the corporation's operations. The dismissal motion was granted by Presiding Judge G.
Pineda on January 14, 1983.

13. On January 24, 1983, the Bragas filed a motion for reconsideration. The Abejos opposed.
Meanwhile, respondent Judge Rafael de la Cruz was appointed presiding judge of the court
(renamed Regional Trial Court) in place of Judge G. Pineda.

14. On February 14, 1983, respondent Judge de la Cruz issued an order rescinding the
January 14, 1983 order and reviving the temporary restraining order previously issued on
December 23, 1982 restraining Telectronics' agents or representatives from enforcing their
resolution constituting themselves as the new set of officers of Pocket Bell and from
assuming control of the corporation and discharging their functions.

15. On March 2, 1983, the Abejos filed a motion for reconsideration, which motion was duly
opposed by the Bragas. On March 11, 1983, respondent Judge denied the motion for
reconsideration.

D. ABEJOS' PETITION AT BAR

16. On March 26, 1983, the Abejos, alleging that the acts of respondent Judge in refusing to
dismiss the complaint despite clear lack of jurisdiction over the action and in refusing to
reconsider his erroneous position were performed without jurisdiction and with grave abuse
of discretion, filed their herein Petition for certiorari and Prohibition with Preliminary
Injunction. They prayed that the challenged orders of respondent Judge dated February 14,
1983 and March 11, 1983 be set aside for lack of jurisdiction and that he be ordered to
permanently desist from further proceedings in Civil Case No. 48746. Respondent judge
desisted from further proceedings in the case, dispensing with the need of issuing any
restraining order.

E. BRAGAS' PETITION AT BAR

17. On August 29, 1984, the Bragas, alleging in turn that the SEC has no jurisdiction over
SEC Cases Nos. 02379 and 02395 and that it acted arbitrarily, whimsically and capriciously
in dismissing their petition (in SEC Case No. EB #049) for dismissal of the said cases, filed
their herein Petition for certiorari and Prohibition with Preliminary Injunction or TRO. The
petitioner seeks the reversal and/or setting aside of the SEC Order dated May 15, 1984
dismissing their petition in said SEC Case No. EB #049 and sustaining its jurisdiction over
SEC Cases Nos. 02379 and 02395, filed by the Abejos. On September 24, 1984, this Court
issued a temporary restraining order to maintain the status quo and restrained the SEC
and/or any of its officers or hearing committees from further proceeding with the hearings in
SEC Cases Nos. 02379 and 02395 and from enforcing any and all orders and/or resolutions
issued in connection with the said cases.

The cases, having been given due course, were jointly heard by the Court on March 27,
1985 and the parties thereafter filed on April 16, 1985 their respective memoranda in
amplification of oral argument on the points of law that were crystalled during the hearing,

The Court rules that the SEC has original and exclusive jurisdiction over the dispute between
the principal stockholders of the corporation Pocket Bell, namely, the Abejos and

Telectronics, the purchasers of the 56% majority stock (supra, at page 2) on the one hand,
and the Bragas, erstwhile majority stockholders, on the other, and that the SEC, through its
en banc Resolution of May 15, 1984 co"ectly ruled in dismissing the Bragas' Petition
questioning its jurisdiction, that "the issue is not the ownership of shares but rather the
nonperformance by the Corporate Secretary of the ministerial duty of recording transfers of
shares of stock of the Corporation of which he is secretary."

1. The SEC ruling upholding its primary and exclusive jurisdiction over the dispute is
correctly premised on, and fully supported by, the applicable provisions of P.D. No. 902-A
which reorganized the SEC with additional powers "in line with the government's policy of
encouraging investments, both domestic and foreign, and more active publicParticipation in
the affairs of private corporations and enterprises through which desirable activities may be
pursued for the promotion of economic development; and, to promote a wider and more
meaningful equitable distribution of wealth," and accordingly provided that:

SEC. 3. The Commission shall have absolute jurisdiction, supervision and


control ouer all corporations, partnerships or associations, who are the
grantees of primary franchise and/or a license or permit issued by the
government to operate in the Philippines; ...

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


Securities and Exchange Commission over corporations, partnerships and
other forms of associations registered with it as expressly granted under
existing laws and decrees, it shall have original and exclusive jurisdiction to
hear and decide cases involving:
a) Devices or schemes employed by or any acts, of the board
of directors, business associations, its officers or partners,
amounting to fruud and misrepresentation which may
be detrimental to the interest of the public andlor of the
stockholder, partners, members of associations or
organizations registered with the Commission.

b) Controversies arising out of intracorporate or partnership


relations, between and among stockholders, members, or
associates; between any andlor all of them and the
corporation, partnership or association of which they are
stockholders, members or assmiates, respectively; and
between such corporation, partnership or assmiation and the
state insofar as it concems their individual franchise or right to
exist as such entity;

c) Controversies in the election or appointments of


directors, trustees, officers or managers of such corporations,
partnerships or associations. 3

Section 6 further grants the SEC "in order to effectively exercise such jurisdiction," the
power, inter alia, "to issue preliminary or permanent injunctions, whether prohibitory
or mandatory, in all cases in which it has jurisdiction, and in which cases the pertinent
provisions of the Rules of Court shall apply."

2. Basically and indubitably, the dispute at bar, as held by the SEC, is an intracorporate
dispute that has arisen between and among the principal stockholders of the corporation
Pocket Bell due to the refusal of the corporate secretary, backed up by his parents as
erstwhile majority shareholders, to perform his "ministerial duty" to record the transfers of the
corporation's controlling (56%) shares of stock, covered by duly endorsed certificates of
stock, in favor of Telectronics as the purchaser thereof. mandamus in the SEC to compel the
corporate secretary to register the transfers and issue new certificates in favor of Telectronics
and its nominees was properly resorted to under Rule XXI, Section 1 of the SEC's New
Rules of Procedure, 4 which provides for the filing of such petitions with the SEC. Section 3 of
said Rules further authorizes the SEC to "issue orders expediting the proceedings ... and also [to]
grant a preliminary injunction for the preservation of the rights of the parties pending such
proceedings, "

The claims of the Bragas, which they assert in their complaint in the Regional Trial Court,
praying for rescission and annulment of the sale made by the Abejos in favor of Telectronics
on the ground that they had an alleged perfected preemptive right over the Abejos' shares as
well as for annulment of sale to Telectronics of Virginia Braga's shares covered by street
certificates duly endorsed by her in blank, may in no way deprive the SEC of its primary and
exclusive jurisdiction to grant or not the writ of mandamus ordering the registration of the
shares so transferred. The Bragas' contention that the question of ordering the recording of
the transfers ultimately hinges on the question of ownership or right thereto over the shares
notwithstanding, the jurisdiction over the dispute is clearly vested in the SEC.

3. The very complaint of the Bragas for annulment of the sales and transfers as filed by them
in the regular court questions the validity of the transfer and endorsement of the certificates
of stock, claiming alleged pre-emptive rights in the case of the Abejos' shares and alleged
loss of thio certificates and lack of consent and consideration in the case of Virginia Braga's
shares. Such dispute c learly involve's controversies "between and among stockholders, " as
to the Abej os' right to sell and dispose of their shares to Telectronics, the validity of the
latter's acquisition of Virginia Braga's shares, who between the Bragas and the Abejos'
transferee should be recognized as the controlling shareholders of the corporation, with the
right to elect the corporate officers and the management and control of its operations. Such a
dispute and case clearly fag within the original and exclusive jurisdiction of the SEC to
decide, under Section 5 of P.D. 902-A, above-quoted. The restraining order issued by the
Regional Trial Court restraining Telectronics agents and representatives from enforcing their
resolution constituting themselves as the new set of officers of Pocket Bell and from
assuming control of the corporation and discharging their functions patently encroached
upon the SEC's exclusive jurisdiction over such specialized corporate controversies calling
for its special competence. As stressed by the Solicitor General on behalf of the SEC, the
Court has held that "Nowhere does the law [PD 902-A] empower any Court of First Instance
[now Regional Trial Court] to interfere with the orders of the Commission," 5 and consequently
"any ruling by the trial court on the issue of ownership of the shares of stock is not binding on the
Commission 6 for want of jurisdiction.

4. The dispute therefore clearly falls within the general classification of cases within the
SEC's original and exclusive jurisdiction to hear and decide, under the aforequoted
governing section 5 of the law. Insofar as the Bragas and their corporate secretary's refusal
on behalf of the corporation Pocket Bell to record the transfer of the 56% majority shares to
Telectronics may be deemed a device or scheme amounting to fraud and misrepresentation
emplolyed by them to keep themselves in control of the corporation to the detriment of
Telectronics (as buyer and substantial investor in the corporate stock) and the Abejos (as
substantial stockholders-sellers), the case falls under paragraph (a). The dispute is likewise
an intra-corporate controversy between and among the majority and minority stockholders as
to the transfer and disposition of the controlling shares of the corporation, failing under
paragraph (b). As stressed by the Court in DMRC Enterprises v. Este del Sol Mountain
Reserve, Inc, 7 Considering the announced policy of PD 902-A, the expanded jurisdiction of the
respondent Securities and Exchange Commission under said decree extends exclusively to
matters arising from contracts involving investments in private corporations, partnerships and
associations." The dispute also concerns the fundamental issue ofwhether the Bragas or
Telectronics have the right to elect the corporate directors and officers and manage its business
and operations, which falls under paragraph (c).

5. Most of the cases that have come to this Court involve those under paragraph (b), i.e.
whether the controversy is an intra-corporate one, arising "between and among
stockholders" or "between any or allof them and the corporation." The parties have focused
their arguments on this question. The Bragas' contention in his field must likewise fail.
In Philex Mining Corp. v. Reyes, 8 the Court spelled out that"'an intra-corporate controversy is
one which arises between a stockholder and the corporation. There is no distinction, qualification,
nor any exemption whatsoever. The provision is broad and covers all kinds of controversies
between stockholders and corporations. The issue of whether or not a corporation is bound to
replace a stockholder's lost certificate of stock is a matter purely between a stockholder and the
corporation. It is a typical intra-corporate dispute. The quqsjion of damage's raised is merely
incidental to that main issue. The Court rejected the stockholders' theory of excluding his
complaint (for replacement of a lost stock [dividend] certificate which he claimed to have never
received) from the classification of intra-corporate controversies as one that "does not square with
the intent of the law, which is to segregate from the general jurisdiction of regular Courts
controversies involving corporations and their stockholders and to bring them to the SEC for
exclusive resolution, in much the same way that labor disputes are now brought to the Ministry-of
Labor and Employment (MOLE) and the National Labor Relations Commission (NLRC), and not
to the Courts."
(a) The Bragas contend that Telectronics, as buyertransferee of the 56%
majority shares is not a registered stockholder, because they, through their
son the corporate secretary, appear to have refused to perform "the
ministerial duty of recording transfers of shares of stock of the corporation of
which he is the secretary," and that the dispute is therefore, not an
intracorporate one. This contention begs the question which must properly be
resolved by the SEC, but which they would prevent by their own act, through
their son, of blocking the due recording of the transfer and cannot be
sanctioned. It can be seen from their very complaint in the regular courts that
they with their two sons constituting the plaintiffs are all stockholders while
the defendants are the Abejos who are also stockholders whose sale of the
shares to Telectronics they would annul.

(b) There can be no question that the dispute between the Abejos and the
Bragas as to the sale and transfer of the former's shares to Telectronics for
P5 million is an intracorporate one under section 5 (b), prescinding from the
applicability of section 5 (a) and (c), (supra, par. 4) lt is the SEC which must
resolve the Bragas' claim in their own complaint in the court case filed by
them of an alleged pre-emptive right to buy the Abejos' shares by virtue of
"on-going negotiations," which they may submit as their defense to the
mandamus petition to register the sale of the shares to Telectronics. But
asserting such preemptive rights and asking that the same be enforced is a
far cry from the Bragas' claim that "the case relates to questions of
ownership" over the shares in question. 9 (Not to mention, as pointed out by the
Abejos, that the corporation is not a close corporation, and no restriction over the
free transferability of the shares appears in the Articles of Incorporation, as well
as in the by-laws 10 and the certificates of stock themselves, as required by law for the enforcement of
such restriction. See Go Soc & Sons, etc. v. IAC, G.R. No. 72342, Resolution of February 19, 1987.)

(c) The dispute between the Bragas and Telectronics as to the sale and
transfer for P1,674,450.00 of Virginia Braga's 63.000 shares covered by
Street certificates duly endorsed in blank by her is within the special
competence and jurisdiction of the SEC, dealing as it does with the free
transferability of corporate shares, particularly street certificates," as
guaranteed by the Corporation Code and its proclaimed policy of
encouraging foreign and domestic investments in Philippine private corpora.
tions and more active public participation therein for the Promotion of
economic development. Here again, Virginia Braga's claim of loss of her
street certificates 11 or theft thereof (denounced by Telectronics as 11 perjurious" 12 ) must be
pleaded by her as a defense against Telectronics'petition for mandamus and recognition now as the
controlling stockholder of the corporation in the light of the joint affidavit of Geneml Cerefino S. Carreon of
the National Telecommunications Commission and private respondent Jose Luis Santiago of Telectronics
narrating the facts and circumstances of how the former sold and delivered to Telectronics on behalf of his
compadres, the Bragas, Virginia Braga's street certificates for 63,000 shares equivalent to 18% of the
corporation's outstanding stock and received the cash price thereof. 13 But as to the sale and transfer of the
Abejos' shares, the Bragas cannot oust the SEC of its original and exclusive jurisdiction to hear and decide
the case, by blocking through the corporate secretary, their son, the due recording of the transfer and sale of
the shares in question and claiming that Telectronics is not a stockholder of the corporation which is the
very issue that the SEC is called upon to resolve. As the SEC maintains, "There is no requirement that a
stockholder of a corporation must be a registered one in order that,the Securities and Exchange
Commission may take cognizance of a suit seeking to enforce his rights as such stockholder." 14 This is
because the SEC by express mandate has "absolute jurisdiction, supervision and control over all
corporations" and is called upon to enforce the provisions of the Corporation Code, among which is the
stock purchaser's right to secure the corresponding certificate in his name under the provisions of Section
63 of the Code. Needless to say, any problem encountered in securing the certificates of stock representing
the investment made by the buyer must be expeditiously dealt with through administrative mandamus
proceedings with the SEC, rather than through the usual tedious regular court procedure. Furthermore, as
stated in the SEC order of April 13, 1983, notice given to the corporation of the sale of the shares and
presentation of the certificates for transfer is ,equivalent to registration: "Whether the refusal of the
(corporation) to effect the same is ivalid or not is still subject to the outcome of the hearing on the merits of
the case. 15

6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative
commissions and boards the power to resolve specialized disputes in the field of labor (as in
corporations, public transportation and public utilities) ruled that Congress in requiring the
Industrial Court's intervention in the resolution of labor-management controversies likely to
cause strikes or lockouts meant such jurisdiction to be exclusive, although it did not so
expressly state in the law. The Court held that under the "sense-making and expeditious
doctrine of primary jurisdiction ... the courts cannot or will n6t determine a controversy
involving a question which is within the jurisdiction of an administrative tribunal, where the
question demands the exercise of sound administrative discretion requiring the special
knowledge, experience, and seruices of the administratiue tribunal to determine technical
and intricate matters of fact, and a uniformity of ruling is essential to comply uith the
purposes of the regulatory statute administered " 16

In this era of clogged court dockets, the need for specialized administrative boards or
commissions with the special knowledge, experience and capability to hear and determine
promptly disputes on technical matters or essentially factual matters, subject to judicial
review in case of grave abuse of discretion, has become well nigh indispensable. Thus, in
1984, the Court noted that "between the power lodged in an administrative body and a court,
the unmistakable trend has been to refer it to the former. 'Increasingly, this Court has been
committed to the view that unless the law speaks clearly and unequivocably, the choice
should fall on [an administrative agency.]' " 17 The Court in the earlier case of Ebon vs. De Guzman 18 noted
that the lawmaking authority, in restoring to the labor arbiters and the NLRC their jurisdiction to award all kinds of damages in
labor cases, as against the previous P.D. amendment splitting their jurisdiction with the regular courts, "evidently ... had second
thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction to award damages in labor cases because that setup
would mean duplicity of suits, splitting the cause of action and possible conflicting findings and conclusions by two tribunals on
one and the same claim."

7. Thus, the Corporation Code (B.P. No. 178) enacted on May 1, 1980 specifically vests the
SEC with the Rule-making power in the discharge of its task of implementing the provisions
of the Code and particularly charges it with the duty of preventing fraud and abuses on the
part of controlling stockholders, directors and officers, as follows:

SEC. 143. Rule-making power of the Securities and Exchange Commission.


The Securities and Exchange Commission shall have the power and
authority to implement the provisions of this Code, and to promulgate rules
and regulations reasonably necessary to enable it to perform its duties
hereunder, particularly in the prevention of fraud and abuses on the part of
the controlling stockholders, members, directors, trustees or
officers. (Emphasis supplied)

The dispute between the contending parties for control of the corporation manifestly fans
within the primary and exclusive jurisdiction of the SEC in whom the law has reserved such
jurisdiction as an administrative agency of special competence to deal promptly and
expeditiously therewith.

As the Court stressed in Union Glass & Container Corp. v. SEC, 19 "This grant of jurisdiction [in Section
51 must be viewed in the light of the nature and functions of the SEC under the law. Section 3 of PD No. 902-A confers upon the
latter 'absolute jurisdiction, supervision, and control over all corporations, partnerships or associations, who are grantees of
primary franchise and/or license or permit issued by the government to operate in the Philippines ... The principal function of the
SEC is the supervision and control over corporations, partnerships and associations with the end in view that investment in these
entities may be encouraged and protected, and their activities pursued for the promotion of economic development.
"It is in aid of this office that the adjudicative power of the SEC must be exercised. Thus the
law explicitly specified and delin-dted its jurisdiction to matters intrinsically connected with
the regulation of corporations, partnerships and associations and those dealing with the
internal affairs of such corporations, partnerships or associations.

"Otherwise stated, in order that the SEC can take cognizance of a case, the controversy
must pertain to any of the following relationships: [al between the corporation, partnership or
association and the public; [b] between the corporation, partnership or association and its
stockholders, partners, members, or officers; [c] between the corporation, partnership or
association and the state in so far as its franchise, permit or license to operate is concerned;
and Id] among the stockholders, partners or associates themselves." 20

Parenthetically, the cited case of Union Glass illustrates by way of contrast what disputes do
not fall within the special jurisdiction of the SEC. In this case, the SEC had properly assumed
jurisdiction over the dissenting stockholders' com. Plaint against the corporation Pioneer
Glass questioning its dacion en pago of its glass plant and all its assets in favor of the DBP
which was clearly an intra-corporate controversy dealing with its internal affairs. But the
Court held that the SEC had no jurisdiction over petitioner Union Glass Corp., imPle,aded as
third party purchaser of the plant from DBP in the action to annul the dacion en pago. The
Court held that such action for recovery of the glass plant could be brought by the dissenting
stockholder to the regular courts only if and when the SE C rendered final judgment
annulling the dacion en pago and furthermore subject to Union Glass' defenses as a third
party buyer in good faith. Similarly, in the DMRC case, therein petitioner's,tomplaint for
collection of the amounts due to it as payment of rentals for the lease of its heavy equipment
in the form mainly of cash and part in shares of stock of the debtor-defendant corporation
was held to be not covered by the SEC's exclusive jurisdiction over intracorporate disputes,
since "to pass upon a money claim under a lease contract would be beyond the competence
Of the Securities and Exchange Commission and to separate the claim for money from the
claim for shares of stock would be splitting a single cause of action resulting in a multiplicity
of suitS." 21 Such an action for collection of a debt does not involve enforcement Of rights and
obligations under the Corporation Code nor the in. temal or intracorporate affairs of the debtor
corporation. But in aR disputes affecting and dealing With the interests of the corporation and its
stockholders, following the trend and clear legislative intent of entmsting all disputes of a
specialized nature to administrative agencies possessing. the requisite competence, special
knowledge, experience and services and facilities to expeditiously resolve them and determine
the essential facts including technical and intricate matters, as in labor and public utilities rates
disputes, the SEC has been given "the original and exclusive jurisdiction to hear anddecide" them
(under section 5 of P.D. 902-A) "in addition to [its] regulatory and adjudicative functions" (under
Section 3, vesting in it "absolute jurisdiction, supervision and control over all corporations" and
the Rule-making power granted it in Section 143 of the Corporation Code, supra). As stressed by
the Court in the Philex case, supra, "(T)here is no distinction, qualification, nor any exemption
whatsoever. The provision is broad and covers all kinds of controversies between stockholders
and corporations."

It only remains now to deal with the Order dated April 15, 1983 (Annex H, Petition) 22 of the
SEC's three-member Hearing Conunittee granting Telectronics' motion for creation of a
receivership or management committee with the ample powers therein enumerated for the
preservation pendente lite of the corporation's assets and in discharge of its "power and duty to
preserve the rights of the parties, the stockholders, the public availing of the corporation's
services and the rights of creditors," as well as "for reasons of equity and justice ... (and) to
prevent possible paralization of corporate business." The said Order has not been implemented
notwithstanding its having been upheld per the SEC en banc's Order of May 15, 1984 (Annex "V",
Petition) dismissing for lack of merit the petition for certiorari, prohibition and mandamus with
prayer for restraining order or injunction filed by the Bragas seeking the disbandment of the
Hearing Committee and the setting aside of its Orders, and its Resolution of August 9, 1984,
denying reconsideration (Annex "X", Petition), due to the Bragas' filing of the petition at bar.

Prescinding from the great concern of damage and prejudice expressed by Telectronics due
to the Bragas having remained in control of the corporation and having allegedly committed
acts of gross mismanagement and misapplication of funds, the Court finds that under the
facts and circumstances of record, it is but fair and just that the SEC's order creating a
receivership committee be implemented forthwith, in accordance with its terms, as follows:

The three-man receivership committee shall be composed of a


representative from the commission, in the person of the Director, Examiners
and Appraisers Department or his designated representative, and a
representative from the petitioners and a representative of the respondent.

The petitioners and respondent are therefore directed to sub. mit to the
Commission the name of their designated representative within three (3)
days from receipt of this order. The Conunission shall appoint the other
representatives if either or both parties fafl to comply with the requirement
within the stated time.

ACCORDINGLY, judgment is hereby rendered:

(a) Granting the petition in G.R. No. 63558, annulling the challenged Orders
of respondent Judge clated February 14, 1983 and March i 1, 1983 (Annexes
"L" and "P" of the Abejos' petition) and prohibiting respondent Judge from
further proceeding in Civil Case No. 48746 filed in his Court other than to
dismiss the same for lack or jurisdiction over the subject-matter;

(b) Dismissing the petition in G.R. Nos. 68450-51 and lifting the temporary
restraining order issued on September 24, 1984, effective immediately upon
promulgation hereof,

(c) Directing the SEC through its Hearing Committee to proceed immediately
with hearing and resolving the pending mandamus petition for recording in
the corporate books the transfer to Telectronics and its nominees of the
majority (56%) shares of stock of the corporation Pocket Bell pertaining to the
Abejos and Virginia Braga and all related issues, taking into consideration,
without need of resubmittal to it, the pleadings, annexes and exhibits filed by
the contending parties in the cases at bar; and

(d) Likewise directing the SEC through its Hearing Committee to proceed
immediately with the implementation of its receivership or management
committee Order of April 15, 1983 in SEC Case No. 2379 and for the
purpose, the contending parties are ordered to submit to said Hearing
Committee the name of their designated representatives in the
receivership/management committee within three (3) days from receipt of this
decision, on pain of forfeiture of such right in case of failure to comply
herewith, as provided in the said Order; and ordering theBragas to perform
only caretaker acts in the corporation pending the organization of such
receivership/management committee and assumption of its functions.

This decision shall be immediately executory upon its promulgation.


SO ORDERED.

Yap, Narvasa, Melencio-Herrera, Cruz, Feliciano, Gancayco and Sarmiento, JJ., concur.

ANTONIO M. BERNARDO, ERNESTO A. DOMINGO, JR. and JESUS C. CRUZ, petitioners,


vs.
BENJAMIN S. ABALOS, SR., BENJAMIN "BENHUR" D. ABALOS, JR., DR. EDEN C.
DIAZ, ROMEO F. ZAPANTA, ARCADIO S. DE VERA and THE COMMISSION ON
ELECTIONS, respondents.

SANDOVAL-GUTIERREZ, J.:

This is a petition for certiorari1 seeking the nullification of Resolution No. 98-3208 of the
Commission on Elections (COMELEC) En Banc promulgated on December 1, 1998
dismissing the complaint for vote buying filed by petitioners against respondents. 1wphi1.nt

On April 21, 1998, petitioners Antonio M. Bernardo M. Bernardo, Ernesto A. Domingo, Jr. and
Jesus C. Cruz filed with the COMELEC a criminal complaint against respondents Benjamin
S. Abalos, Sr., Benjamin C. Abalos, Jr., Dr. Eden C. Diaz, Romeo Zapanta and Arcadio de
Vera for vote buying in violation of Section 261, paragraphs (a), (b) and (j) of the Omnibus
Election Code (OEC), in relation to Section 28 of Republic Act 6646 and Section 68 of the
OEC. The complaint, docketed as E.O. Case No. 98-110,2 alleged that:

1. On April 14, 1998 (Tuesday), respondent Mandaluyong City Mayor Benjamin S.


Abalos, Sr., and his son respondent Benjamin "Benhur" C. Abalos, Jr., candidate for
City Mayor of the same city in the May 11, 1998 elections, conspiring with
respondents Dr. Eden C. Diaz, Schools Division Superintendent, Romeo F. Zapanta,
Assistant Schools Division Superintendent, and Arcadio de Vera, President,
Mandaluyong Federation of Public School Teachers, sponsored, arranged and
conducted an all-expense-free transportation, food and drinks affair for the
Mandaluyong City public school teachers, registered voters of said city, at the
Tayabas Bay Beach Resort, Sariaya, Quezon Province.

2. Among the identified public school teachers present, brought in around twelve (12)
buses, were Corazon Mayoya, principal of Highway Hills Elementary School, her
Assistant Principal of Highway Hills Elementary School, her Assistant Principal and
Mr. Dante del Remigio; Mrs. Diaz Principal of Mandaluyong City High School and Mr.
Alvia; Mrs. Parillo, Andres Bonifacio Elementary School; Mrs. Gregoria Ignacio,
Principal of Doa Pilar Gonzaga Elementary School; Ms. Magsalin, Principal of
Mandaluyong Science High School and Mrs. Rita Bondayril; Mrs. De Vera, Fabella
Elementary School; Ms. Anselmo, Principal of Isaac Lopez Elementary School and
Mrs. Fayton; Mrs. Sylvia Liwanag, District Supervisor, District II, Mrs. Nalaonan,
Principal of Amado T. Reyes Elementary School; Mrs. Teresita Vicencio,
Mandaluyong City Elemtary School; Officers of the Mandaluyong Federation of
Public School Teachers namely; Mrs. Erlinda Ilagan, Treasurer; Ms. Nancy de Leon,
Auditor; Ms. Fortunata Gondran, PRO; Mr. Nenito Pumariga, Business Manager; Mr.
Jose Guerrero, Sgt.-at-arms; and Board Members Ms. Virginia Carillo, Ms. Wilma
Fernandez, Mr Arturo Morales and Mr. Teddy Angeles.
3. During the whole-day affair, the background music loudly and repeatedly played
over the sound system was the political jingle advertisement of Mandaluyong City
candidate for Mayor, Benjamin "Benhur" Abalos, Jr., sang to the tune of the song
'SHALALA LALA'.

4. Some of the participants wore T-shirts with the name of candidate "Benhur"
Abalos, Jr., printed in oversized colored letters.

5. Mayor Benjamin Abalos, Sr. delivered a speech wherein he offered and promised
the Mandaluyong City public school teachers and employees a "hazard" pay of
P1,000.00, and increasing their allowances from P1,500.00 to P2,000.00 for food, or
with a total of P3,000.00 which they will get by the end of the month.

6. The offers and promises to said public school teachers, who are members of the
Board of Election Inspectors of Mandaluyong City and registered voters thereat, were
made a few weeks before the election to induce or unduly influence the said teachers
and the public in general (the other guests) to vote for the candidacy of Benjamin
"Benhur" Abalos, Jr.,

7. The offers and promises of Mayor Abalos, Sr., and the enthusiastic acceptance of
said monetary increase of allowances by the public school teachers and employees
of Mandaluyong City, is a violation of Section 261 pars. (a), (b) and (j) of the
Omnibus Election Code against vote-buying and vote-selling. 3

The Director4 of the Law Department of the COMELEC conducted a preliminary


investigation. All the private respondents filed separate counter-affidavits 5 with prayer to
dismiss the complaint.

On November 26, 1998, the Director of the Law Department submitted his findings to the
COMELEC En Banc recommending that the complaint be dismissed for insufficiency of
evidence.

On December 1, 1998, the COMELEC En Banc issued the assailed Resolution No. 98-
32086 dismissing the complaint "for insufficiency of evidence to establish a prima facie case,"

"Considering that this complaint, being criminal in nature, must have all its
allegations supported by direct, strong, convincing and indubitable evidence; and that
the submitted evidence of the complainant are mere self-serving statements and
uncorroborated audio and visual recordings and a photograph; and considering
further that the evidence of the respondents have more probative value and
believable than the evidence of said complainants; and that the burden of proof lies
with the complainants and not with respondents."7

On February 09, 1999, petitioners, without first submitting a motion for reconsideration, filed
the instant petition with this Court.

They alleged thereon that the COMELEC En Banc, in issuing Resolution No. 98-3208 dated
December 1, 1998, acted "with apparent grave abuse of dicretion."8

The petition must fail.


Petitioners did not exhaust all the remedies available to them at the COMELEC level.
Specifically, they did not seek a reconsideration of the assailed COMELEC En
Banc Resolution as required by Section 1, Rule 13 of the 1993 COMELEC Rules of
Procedure, thus:

"Section 1. What Pleadings are not Allowed. - The following


pleadings are not allowed:

xxx

d) motion for reconsideration of an en banc ruling,


resolution, order or decision except in election offense
cases;

x x x." (Emphasis ours)

It is not disputed that petitioners' complaint before the COMELEC involves an election
offense. But in this petition, they conveniently kept silent why they directly elevated to this
Court the questioned Resolution without first filing a motion for reconsideration with the
COMELEC En Banc. It was only after the respondents had filed their comment on the
petition and called this Court's attention to petitioners' failure to comply with Section 1 of Rule
13 that they, in their Consolidated Reply, advanced the excuse that they "deemed it best not
seek any further dilatory motion for reconsideration' , even if allowed by Sec. 1 (d) of
COMELEC Rule 13."9

Petitioners' failure to file the required motion for reconsideration utterly disregarded the
COMELEC Rules intended "to achieve
an orderly, just, expeditious and inexpensive determination and disposition of every
action and proceeding brought before the Commission." 10

Contrary to petitioners' statement that a resort to a motion for reconsideration is "dilatory, " it
bears stressing that the purpose of the said motion is to give the COMELEC an opportunity
to correct the error imputed to it.11 If the error is immediately corrected by way of a motion for
reconsideration, then it is the most expeditious and inexpensive recourse. But if the
COMELEC refuses to correct a patently erroneous act, then it commits a grave abuse of
discretion justifying a recourse by the aggrieved party to a petition for certiorari.

A petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, can
only be resorted to if "there is no appeal, or any plain, speedy, and adequate remedy in the
ordinary course of law."12 Having failed to file the required motion for reconsideration of the
challenged Resolution, petitioners' instant petition is certainly premature. 13 Significantly, they
have not raised any plausible reason for their direct recourse to this Court.

In its assailed Resolution, the COMELEC cited a valid reason for dismissing petitioners'
complaint against private respondents for vote buying. The COMELEC found that the
evidence of the respondents have "more probative value and believable than the evidence of
the complainants;" and that the evidence submitted by petitioners are "mere self-serving
statements and uncorroborated audio and visual recording and a photograph."

Moreover, Section 28 of Republic Act 6646 provides:


"SEC. 28. Prosecution of Vote-buying and Vote-selling. - The representation of a
complaint for violations of paragraph (a) or (b) of Section 261 of Batas Pambansa
Blg. 881 supported by affidavits of complaining witnesses attesting to the offer
or promise by or of the voter's acceptance of money or other consideration
from the relatives, leaders or sympathizers of candidate, shall be sufficient basis
for an investigation to be immediately conducted by the Commission, directly or
through its duly authorized legal officers, under Section 68 or Section 265 of said
Batas Pambansa Blg. 881. 1wphi1.nt

x x x." (Emphasis ours)

Petitioners' complaint expressly states that no supporting affidavits were submitted by the
complaining witness14 to sustain their charge of vote buying. Suffice it to state that the
absence of such supporting affidavits shows the frailty of petitioners' complaint. Indeed, it is
vulnerable to dismissal.

WHEREFORE, the instant petition is DISMISSED.

INDUSTRIAL ENTERPRISES, INC., petitioner,


vs.
THE HON. COURT OF APPEALS, MARINDUQUE MINING & INDUSTRIAL
CORPORATION, THE HON. GERONIMO VELASCO in his capacity as Minister of
Energy and PHILIPPINE NATIONAL BANK, respondents.

Manuel M. Antonio and Dante Cortez for petitioner.


Pelaez, Adriano & Gregorio for respondent MMIC.
The Chief Legal Counsel for respondent PNB.

MELENCIO-HERRERA, J.:

This petition seeks the review and reversal of the Decision of respondent Court of Appeals in
CA-G.R. CV No. 12660, which ruled adversely against petitioner herein.
1

Petitioner Industrial Enterprises Inc. (IEI) was granted a coal operating contract by the
Government through the Bureau of Energy Development (BED) for the exploration of two
coal blocks in Eastern Samar. Subsequently, IEI also applied with the then Ministry of Energy
for another coal operating contract for the exploration of three additional coal blocks which,
together with the original two blocks, comprised the so-called "Giporlos Area."

IEI was later on advised that in line with the objective of rationalizing the country's over-all
coal supply-demand balance . . . the logical coal operator in the area should be the
Marinduque Mining and Industrial Corporation (MMIC), which was already developing the
coal deposit in another area (Bagacay Area) and that the Bagacay and Giporlos Areas
should be awarded to MMIC (Rollo, p. 37). Thus, IEI and MMIC executed a Memorandum of
Agreement whereby IEI assigned and transferred to MMIC all its rights and interests in the
two coal blocks which are the subject of IEI's coal operating contract.
Subsequently, however, IEI filed an action for rescission of the Memorandum of Agreement
with damages against MMIC and the then Minister of Energy Geronimo Velasco before the
Regional Trial Court of Makati, Branch 150, alleging that MMIC took possession of the
2

subject coal blocks even before the Memorandum of Agreement was finalized and approved
by the BED; that MMIC discontinued work thereon; that MMIC failed to apply for a coal
operating contract for the adjacent coal blocks; and that MMIC failed and refused to pay the
reimbursements agreed upon and to assume IEI's loan obligation as provided in the
Memorandum of Agreement (Rollo, p. 38). IEI also prayed that the Energy Minister be
ordered to approve the return of the coal operating contract from MMIC to petitioner, with a
written confirmation that said contract is valid and effective, and, in due course, to convert
said contract from an exploration agreement to a development/production or exploitation
contract in IEI's favor.

Respondent, Philippine National Bank (PNB), was later impleaded as co-defendant in an


Amended Complaint when the latter with the Development Bank of the Philippines effected
extra-judicial foreclosures on certain mortgages, particularly the Mortgage Trust Agreement,
dated 13 July 1981, constituted in its favor by MMIC after the latter defaulted in its obligation
totalling around P22 million as of 15 July 1984. The Court of Appeals eventually dismissed
the case against the PNB (Resolution, 21 September 1989).

Strangely enough, Mr. Jesus S. Cabarrus is the President of both IEI and MMIC.

In a summary judgment, the Trial Court ordered the rescission of the Memorandum of
Agreement, declared the continued efficacy of the coal operating contract in favor of IEI;
ordered the reversion of the two coal blocks covered by the coal operating contract; ordered
BED to issue its written affirmation of the coal operating contract and to expeditiously cause
the conversion thereof from exploration to development in favor of IEI; directed BED to give
due course to IEI's application for a coal operating contract; directed BED to give due course
to IEI's application for three more coal blocks; and ordered the payment of damages and
rehabilitation expenses (Rollo, pp. 9-10).

In reversing the Trial Court, the Court of Appeals held that the rendition of the summary
judgment was not proper since there were genuine issues in controversy between the
parties, and more importantly, that the Trial Court had no jurisdiction over the action
considering that, under Presidential Decree No. 1206, it is the BED that has the power to
decide controversies relative to the exploration, exploitation and development of coal blocks
(Rollo, pp. 43-44).

Hence, this petition, to which we resolved to give due course and to decide.

Incidentally, the records disclose that during the pendency of the appeal before the Appellate
Court, the suit against the then Minister of Energy was dismissed and that, in the meantime,
IEI had applied with the BED for the development of certain coal blocks.

The decisive issue in this case is whether or not the civil court has jurisdiction to hear and
decide the suit for rescission of the Memorandum of Agreement concerning a coal operating
contract over coal blocks. A corollary question is whether or not respondent Court of Appeals
erred in holding that it is the Bureau of Energy Development (BED) which has jurisdiction
over said action and not the civil court.

While the action filed by IEI sought the rescission of what appears to be an ordinary civil
contract cognizable by a civil court, the fact is that the Memorandum of Agreement sought to
be rescinded is derived from a coal-operating contract and is inextricably tied up with the
right to develop coal-bearing lands and the determination of whether or not the reversion of
the coal operating contract over the subject coal blocks to IEI would be in line with the
integrated national program for coal-development and with the objective of rationalizing the
country's over-all coal-supply-demand balance, IEI's cause of action was not merely the
rescission of a contract but the reversion or return to it of the operation of the coal blocks.
Thus it was that in its Decision ordering the rescission of the Agreement, the Trial Court, inter
alia, declared the continued efficacy of the coal-operating contract in IEI's favor and directed
the BED to give due course to IEI's application for three (3) IEI more coal blocks. These are
matters properly falling within the domain of the BED.

For the BED, as the successor to the Energy Development Board (abolished by Sec. 11, P.D.
No. 1206, dated 6 October 1977) is tasked with the function of establishing a comprehensive
and integrated national program for the exploration, exploitation, and development and
extraction of fossil fuels, such as the country's coal resources; adopting a coal development
program; regulating all activities relative thereto; and undertaking by itself or through service
contracts such exploitation and development, all in the interest of an effective and
coordinated development of extracted resources.

Thus, the pertinent sections of P.D. No. 1206 provide:

Sec. 6. Bureau of Energy Development. There is created in the Department a Bureau


of Energy Development, hereinafter referred to in this Section as the Bureau, which
shall have the following powers and functions, among others:

a. Administer a national program for the encouragement, guidance, and whenever


necessary, regulation of such business activity relative to the exploration,
exploitation, development, and extraction of fossil fuels such as petroleum, coal, . . .

The decisions, orders, resolutions or actions of the Bureau may be appealed to the
Secretary whose decisions are final and executory unless appealed to the President.
(Emphasis supplied.)

That law further provides that the powers and functions of the defunct Energy Development
Board relative to the implementation of P.D. No. 972 on coal exploration and development
have been transferred to the BED, provided that coal operating contracts including the
transfer or assignment of interest in said contracts, shall require the approval of the
Secretary (Minister) of Energy (Sec. 12, P.D. No. 1206).

Sec. 12. . . . the powers and functions transferred to the Bureau of Energy
Development are:

xxx xxx xxx

ii. The following powers and functions of the Energy Development Board under PD
No. 910 . . .

(1) Undertake by itself or through other arrangements, such as service contracts, the
active exploration, exploitation, development, and extraction of energy resources . . .
(2) Regulate all activities relative to the exploration, exploitation, development, and
extraction of fossil and nuclear fuels . . .

(P.D. No. 1206) (Emphasis supplied.)

P.D. No. 972 also provides:

Sec. 8. Each coal operating contract herein authorized shall . . . be executed by the
Energy Development Board.

Considering the foregoing statutory provisions, the jurisdiction of the BED, in the first
instance, to pass upon any question involving the Memorandum of Agreement between IEI
and MMIC, revolving as its does around a coal operating contract, should be sustained.

In recent years, it has been the jurisprudential trend to apply the doctrine of primary
jurisdiction in many cases involving matters that demand the special competence of
administrative agencies. It may occur that the Court has jurisdiction to take cognizance of a
particular case, which means that the matter involved is also judicial in character. However, if
the case is such that its determination requires the expertise, specialized skills and
knowledge of the proper administrative bodies because technical matters or intricate
questions of facts are involved, then relief must first be obtained in an administrative
proceeding before a remedy will be supplied by the courts even though the matter is within
the proper jurisdiction of a court. This is the doctrine of primary jurisdiction. It applies "where
a claim is originally cognizable in the courts, and comes into play whenever enforcement of
the claim requires the resolution of issues which, under a regulatory scheme, have been
placed within the special competence of an administrative body, in such case the judicial
process is suspended pending referral of such issues to the administrative body for its
view" (United States v. Western Pacific Railroad Co., 352 U.S. 59, Emphasis supplied).

Clearly, the doctrine of primary jurisdiction finds application in this case since the question of
what coal areas should be exploited and developed and which entity should be granted coal
operating contracts over said areas involves a technical determination by the BED as the
administrative agency in possession of the specialized expertise to act on the matter. The
Trial Court does not have the competence to decide matters concerning activities relative to
the exploration, exploitation, development and extraction of mineral resources like coal.
These issues preclude an initial judicial determination. It behooves the courts to stand aside
even when apparently they have statutory power to proceed in recognition of the primary
jurisdiction of an administrative agency.

One thrust of the multiplication of administrative agencies is that the interpretation of


contracts and the determination of private rights thereunder is no longer a uniquely
judicial function, exercisable only by our regular courts (Antipolo Realty Corp. vs.
National Housing Authority, 153 SCRA 399, at 407).

The application of the doctrine of primary jurisdiction, however, does not call for the dismissal
of the case below. It need only be suspended until after the matters within the competence of
the BED are threshed out and determined. Thereby, the principal purpose behind the
doctrine of primary jurisdiction is salutarily served.

Uniformity and consistency in the regulation of business entrusted to an


administrative agency are secured, and the limited function of review by the judiciary
are more rationally exercised, by preliminary resort, for ascertaining and interpreting
the circumstances underlying legal issues, to agencies that are better equipped than
courts by specialization, by insight gained through experience, and by more flexible
procedure (Far East Conference v. United States, 342 U.S. 570).

With the foregoing conclusion arrived at, the question as to the propriety of the summary
judgment rendered by the Trial Court becomes unnecessary to resolve.

WHEREFORE, the Court Resolved to DENY the petition. No costs.

SO ORDERED.

Paras, Padilla, Sarmiento and Regalado, JJ., concur.

[G.R. No. 87146. December 11, 1991.]

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Petitioner, v. HON. CIVIL SERVICE


COMMISSION AND MARIA ASUNCION SALAZAR, Respondents.

Tanjuatco, Oreta, Tanjuatco, Berenguer and Sanvicente for Private Respondent.

DECISION

MEDIALDEA, J.:

This petition for certiorari assails Resolution No. 89-031 dated January 17, 1989, of the Civil Service
Commission (CSC) denying the appeal of the Government Service Insurance System (GSIS) from
the order of the Merit Systems Protection Board dated September 2, 1988.

As far as the service record of private respondent Salazar filed with the CSC National Capital
Region (NCR) revealed, she was employed by GSIS as a casual laborer on September 23, 1968. She
became a permanent employee in the same office on February 28, 1974 with a designation of
stenographer. Thereafter, she was promoted to Confidential Technical Assistant Aide also under
permanent status on December 9, 1975 (p. 37, Rollo).

Salazars GSIS Service Record however, revealed that also on December 9, 1975, she was appointed
to the position of Confidential Executive Assistant in the office of then GSIS President and General
Manager Roman A. Cruz, Jr. on a permanent status. On August 13, 1982, she was promoted to
Technical Assistant III, (p. 58, Rollo), the position she held when on May 16, 1986, her services
were terminated by the newly appointed President and General Manager of the GSIS for the reason
that her position was co-terminous with the term of the appointing authority, Roman A. Cruz, Jr.

Salazar filed a petition for reconsideration with the GSIS Board of Trustees, but reconsideration was
denied. Thereafter, she filed a petition for reconsideration of the denial with the Review Committee
created under Executive Order No. 17. The said Review Committee referred the petition both to the
Merit Systems Promotion Board and the Civil Service Commission, stating that Salazars removal or
separation from office was not by virtue of the general reorganization program of the government
for which the Review Committee was created.

On July 22, 1987, the Civil Service Commission, issued Resolution No. 87-230 directing the
reinstatement of Salazar, the dispositive portion of the decision reads:jgc:chanrobles.com .ph

"WHEREFORE, the Commission directs the immediate reinstatement of Ms. Salazar with back
salaries and other benefits due her without prejudice to the final determination of the position, if
any, to which she may have been subsequently appointed. chanroble s lawlibrary : rednad

"x x x." (p. 38, Rollo)

GSIS, through the Office of the Government Corporate Counsel, filed a motion for reconsideration
dated September 14, 1987 (pp. 39-42).

On the other hand, the Board, acting on the same petition of Salazar referred to it by the Review
Committee, issued an Order on March 9, 1983, finding the petition of Salazar for reinstatement,
without merit and affirmed her termination. The dispositive portion of the decision is quoted as
follows: jgc:chanroble s.com.ph

"This Board agrees with the contention of the GSIS President and General Manager that the
petitioner was not dismissed but that her employment ended with the termination of office of the
previous GSIS President, since her position as Technical Assistant III is confidential in nature,
hence, belongs to the non-career service . . .

"x x x.

"WHEREFORE, the Board finds the petition without merit. The termination of Ms. Ma. Asuncion S.
Salazar as Technical Assistant III is hereby affirmed.

"SO ORDERED." (pp. 45-46, Rollo)

On April 20, 1988, Salazar filed a motion for reconsideration of the Boards order and manifested
that the Commission already resolved her petition on July 22, 1987. On June 30, 1988, the Board
set aside its previous Order affirming Salazars dismissal in view of the Commissions prior
resolution of the case. The order reads, in part: jgc:chanrobles.com .ph

"In a position paper dated April 20, 1988, of Ms. Salazar, addressed to the Commission and
transmitted to this Board on June 6, 1988, this Board was informed that the Commission has
resolved a similar petition in Resolution No. 87-230 dated July 22, 1987; and that the GSIS has filed
a motion for reconsideration of the Resolution of the Commission on September 14, 1987.

"WHEREFORE, considering that the Commission has already acted on the matter, this Board hereby
sets aside its Order dated March 9, 1988.

"x x x." (p. 62, Rollo)

On August 18, 1988, GSIS filed a motion for reconsideration of the June 30, 1988 Order of the
Board. On September 2, 1988, the Board denied the motion. The pertinent portion of the Order
states:jgc:chanroble s.com.ph

"Records show that the Resolution dated April 22, 1987, of the Review Committee created under
Executive Order No. 17 relative to the petition for reconsideration of the termination of the services
of Ms. Salazar as Technical Assistant III in the GSIS, was forwarded to the Merit Systems Protection
Board. In an Order dated March 9, 1988, this Board affirmed the termination of the services of Ms.
Salazar. However, in a position paper dated April 20, 1988 of Ms. Salazar, this Board was informed
that the same petition had already been resolved by the Civil Service Commission in a Resolution
dated July 22, 1987, directing the GSIS to reinstate her in the service. So, this Board in an Order
dated June 30, 1988, set aside its previous Order dated March 9, 1988. cralawnad

"It must be noted that under Section 2 and 8 of Presidential Decree No. 1409, which created the
Merit Systems Board (now Merit Systems Protection Board) state that: chanrob1es virtual 1aw library

SECTION. 2. Composition. The Board shall be composed of a Commissioner (now Chairman) and
two Associate Commissioners (now Board Members) who shall be appointed by the Civil Service
Commission and who may be removed only for cause as provided by law.

SECTION 8. Relationship with the Civil Service Commission. Decisions of the Merit Systems
Board (now Merit System Protection Board) involving the removal of officers and employees from
the service shall be subject to automatic review by the Civil Service Commission. The Commission
shall hear and decide appeals from other decisions of the Board, provided that the decisions of the
Commission shall be subject to review on Certiorari only by the Supreme Court within thirty (30)
days from receipt of a copy thereof by the aggrieved party. (as amended by D.O. 135 dated
February 27, 1987).

"Based on the aforequoted provisions, it is clear that the Civil Service Commission is a higher
administrative appellate body on matters concerning the removal of officers and employees from the
service. Hence, the Board cannot in any manner modify or alter the determinations and actions of
the Civil Service Commission. (pp. 66-67, Rollo)

GSIS appealed (pp. 68-76, Rollo) this order of the Board to the Commission. However, before it
acted on the appeal, the Commission issued Resolution, No. 88-825 on November 16, 1988 denying
the motion for reconsideration filed by GSIS of the Commissions Resolution No. 88-230 ordering the
reinstatement of Salazar. The dispositive portion of the resolution reads: jgc:chanrobles.com .ph

"WHEREFORE, foregoing premises considered, and finding no cogent reason to reverse or modify
the CSC Resolution No. 87-230, this Commission resolved to deny, as it hereby denies the instant
motion for reconsideration. It is therefore directed that Ms. Ma. Asuncion Salazar be reinstated to
her former position of Technical Assistant or Aide or to any comparable position." (p. 79, Rollo)

On January 17, 1989, the Commission issued Resolution No. 89-031 denying the appeal of GSIS
from the order of the Board dated September 2, 1988. The dispositive portion of the decision
states:chanrobles.com .ph : virtual law library

"WHEREFORE, foregoing premises considered, and in the interest of justice and equity, this
Commission resolved to rule, as it hereby rules that its Resolution No. 88-825 dated November 16,
1988 has become final and executory upon receipt of notice thereof, by the GSIS. Accordingly, this
case is considered closed." (p. 35, Rollo)

GSIS filed the instant petition for certiorari, raising the following issues for resolution: jgc:chanroble s.com.ph

"1. Whether or not the respondent Civil Service Commission erred in not holding that it was the
Merit Systems Board, not said Commission, which had appellate jurisdiction over the subject
personal action of termination of services of private respondent;

"2. Whether or not the respondent Civil Service Commission erred in not holding that Resolutions
Nos. 87-230 and 88-825, dated July 22, 1987 and November 6, 1988, respectively, were issued
without jurisdiction;

"3. Whether or not the respondent Civil Service Commission erred in not holding that resolutions
Nos. 87-230 and 88-825 were void ab initio or legally inexistent;

"4. Whether or not the respondent Civil Service Commission erred in not holding that the Order of
the Merit Systems Board dated June 30, 1988 was, likewise, void and legally inexistent, and that
the Order dated March 9, 1988, which it set aside, had, accordingly, become final and executory;

"5. Whether or not the respondent Civil Service Commission erred in denying petitioners appeal on
the basis of said void resolutions;

"6. Whether or not the respondent Civil Service Commission erred in not holding that private
respondents position as Technical Assistant III was highly confidential and, therefore, belonged to
the non-career service or co-terminous with the tenure of the previous appointing authority (the
former President and General Manager of GSIS);

"7. Whether or not the respondent GSIS erred in not holding that the termination of private
respondents services entailed no removal or dismissal but an expiration of term and, therefore, not
violative of the constitutional prohibition against suspension or dismissal without cause of civil
service officers or employees; and

"8. Whether or not the respondent Civil Service Commission erred in not affirming the subject
personal action of termination of services of private Respondent." (pp. 219-220, Rollo)
The questions presented in this petition may be summarized into two: (1) which body has
jurisdiction over appeals from decisions of government officers on personnel matters?; and (2) was
the position last held by private respondent primarily confidential in nature?

It is the contention of GSIS that it is the Merit Systems Protection Board, not the respondent Civil
Service Commission that is vested with jurisdiction to hear and decide cases appealed to it by those
aggrieved by personnel actions of appointing authorities. It is not disputed that." . ., the Civil
Service Commission, under the Constitution is the single arbiter of all contest relating to the Civil
Service . . ." (Lopez v. CSC, Et Al., G.R. No. 87119, April 19, 1991, citing Dario v. Mison, G.R. Nos.
81954, 81967, 82023, 88737, 85310, 85335 and 86241, August 8, 1989). There is however, a need
to clarify the jurisdiction of the Commission in relation to the Merit Systems Board. chanroble s virtual lawlibrary

One of the relevant laws issued during the past regime is Presidential Decree No. 1409, creating the
Merit Systems Board. Under Sec. 5 of P.D. 1409 the Merit Systems Board has, inter alia, the
following powers and functions: jgc:chanrobles.com .ph

"(1) . . .

"(2) Hear and decide cases brought before it by officers and employees who feel aggrieved by the
determination of appointing authorities involving appointment, promotion, transfer, detail,
reassignment and other personnel actions, as well as complaints against any officers in the
government arising from abuses arising from personnel actions of these officers or from violations of
the merit system.

"(3) . . ." (Emphasis ours)

The public respondent Civil Service Commission had long recognized and implemented said
provision of P.D. 1409. In 1978, it issued Memorandum Circular No. 6 where it expressly stated: jgc:chanroble s.com.ph

"As provided in Presidential Decree No. 1409, which amended Presidential Decree No. 807, the
heads of ministries and agencies, on the one hand, and the Merit Systems Board on the other, have
concurrent original jurisdiction over disciplinary and non-disciplinary cases and, where the heads of
ministries and agencies assume jurisdiction first, their decisions and determinations are appealable
to the Merit Systems Board. The Civil Service Commission, however, remains the final administrative
appellate body in these matters, as provided in Section 3 of Presidential Decree No. 1409 . . ." cralaw virtua1aw library

When the law bestows upon a government body the jurisdiction to hear and decide cases involving
specific matters, it is to be presumed that such jurisdiction is exclusive unless it be proved that
another body is likewise vested with the same jurisdiction, in which case, both bodies have
concurrent jurisdiction over the matter. Presidential Decree No. 1409 clearly provides that the Merit
Systems Board shall take cognizance of appeals from parties aggrieved by decisions of appointing
officers involving personnel action. The Commission therefore cannot take original cognizance of the
cases specified under Section 5 of P.D. 1409, except in the case specified under Section 9 (j) of the
Civil Service Decree which directly gives it such power, to wit: chanrob1es virtual 1aw library

SECTION 9. Powers and Functions of the Commission. The Commission shall administer the Civil
Service Commission and shall have the following powers and functions: jgc:chanroble s.com.ph

"x x x

"j) Hear and decide administrative disciplinary cases instituted directly with it in accordance with
Section 37 or brought to it on appeal; chanrobles virtual lawlibrary

"x x x

If the Commission were vested with the authority to take original cognizance of all matters involving
government personnel, P.D. 1409 would appear to be a mere surplus age as the rationale for the
existence of the Merit Systems Protection Board would be rendered meaningless and inutile. This is
not the intention of the law creating the Board. In the "whereas" clauses of P.D. 1409, the need for
the creation of the Board was distinctly outlined, thus: jgc:chanrobles.com .ph
"WHEREAS, the need for a stable and responsive Civil Service has become especially critical with the
institution in the country of a Parliamentary form of government that stresses accountability to the
people;

"WHEREAS, while the present civil service system, by reason of its new structure, has shown itself
to have dynamic flexibility and adaptiveness, there remains the need to further promote a more
positive approach to personnel growth and development;

"WHEREAS, the two major functions of the Commission are the strengthening of the merit system
and the development of viable careers among civil service employees;

"WHEREAS, these two goals can be better achieved through a redefinition of the functions of the
Civil Service Commission so that its career development concerns may be separated from the
protective character of its responsibilities;

"x x x." (Emphasis ours)

The Commission, however, is not without power. As the final arbiter on any matter concerning
personnel action in the government, the Commission is empowered by P.D. 1409, to review the
decisions of the Board, as follows: jgc:chanrobles.com .ph

"SECTION 8. Relationship with the Civil Service Commission. Decisions of the Board involving the
removal of officers and employees from the service shall be subject to automatic review by the
Commission. The Commission shall likewise hear and decide appeals from other decisions of the
Board, provided that the decisions of the Commission shall be subject to renew only by the Courts."
virtua1aw library
cralaw

In the case at bar, We note that the appeal of Salazar was endorsed by the Review Committee
created under Executive Order No. 17 to both the Merit Systems Board and the Civil Service
Commission. In the absence of a decision from the Merit Systems Board, the Commission cannot
legally assume jurisdiction over the appeal. Hence, its decision (Resolution No. 87230) in favor of
Salazar dated July 22, 1987 and all subsequent resolutions of the Commission in this case are void.
Likewise, the Order of the Board dated June 30, 1988, setting aside its previous order upholding the
termination of Salazar in deference to the Commissions final appellate jurisdiction over the matter,
is null and void. Jurisdiction is vested by law and is not lost nor be legally transferred by voluntary
surrender in favor of a body not vested by law with such jurisdiction.

There is a disparity between the service record of private respondent on file with the GSIS and that
on file with the CSC. In the latter, her last two promotional appointments in the GSIS were not
reflected. The fact remains however, and this is admitted by both the petitioner and private
respondent Salazar, that before her termination in May 1986, she was occupying the last higher
position of Technical Assistant III and not of Technical Assistant Aide as appears in the Commissions
records.

The petitioner contends that the position of Technical Assistant III belongs to the non-career service
category and remains co-terminous. However, it also contends that even if the said position belongs
to the career service, the appointment of Salazar as Technical Assistant III is still not valid because
it requires a first grade civil service eligible of which Salazar was not at the time of her
appointment. chanroble s.com:cralaw:red

The resolution of the nature of the appointment of Salazar as Technical Assistant III, i.e., whether or
not the position is primarily confidential is necessary in the resolution of the legality of her
termination. Whether the position of Technical Assistant III belongs to the career service where the
incumbent enjoys a security of tenure or primarily confidential where her tenure is co-terminous
with that of the appointing authority or endures only as long as confidence in her exists (See Pacete
v. Acting Chairman of COA, Et Al., G.R. No. 39456, 7 May 1990) depends upon the nature of the
functions of the office (Borres v. Court of Appeals, L-36845, August 21, 1987). Not even the fact
that the position had already been classified as one under the career service and certified as
permanent by the Civil Service Commission, can conceal or alter a positions being confidential in
nature (See Hon. Simplicio Grio, Et. Al. v. CSC, Et Al., G.R. No. 91602, February 26, 1991).

However, the records with the court are not sufficient for a substantial determination of the matter.
There is no copy of the job description of the position nor any showing by the parties as regards the
nature of the position. The Board initially ruled that the position is primarily confidential and upheld
the legality of Salazars termination. Its decision however, is only a conclusion not supported by
evidence. The respondent Civil Service Commission, on the other hand, did not make any finding on
this matter after concluding that based on its records, Salazars last position is only that of a
Technical Aide, a permanent position and very much lower than that of Technical Assistant III. For
his part, the Solicitor General admits that the position is confidential in nature but did not bother to
explain why. The GSIS, on the other hand states that the position is confidential but inconsistently
contends also that Salazar had no first grade civil service eligibility required of the position.

ACCORDINGLY, the petition is granted. The questioned Resolution of the Civil Service Commission is
annulled. The Order of the Merit Systems Board dated March 9, 1988 is reinstated subject to the
right of Salazar to appeal to the Civil Service Commission.

SO ORDERED.

LEONARDO A. PAAT, in his capacity as Officer-in-Charge (OIC),


Regional Executive Director (RED), Region 2 and JOVITO
LAYUGAN, JR., in his capacity as Community Environment
and Natural Resources Officer (CENRO), both of the
Department of Environment and Natural Resources
(DENR), petitioners, vs. COURT OF APPEALS, HON.
RICARDO A. BACULI in his capacity as Presiding Judge of
Branch 2, Regional Trial Court at Tuguegarao, Cagayan,
and SPOUSES BIENVENIDO and VICTORIA DE
GUZMAN, respondents.

DECISION
TORRES, JR., J.:

Without violating the principle of exhaustion of administrative remedies, may


an action for replevin prosper to recover a movable property which is the subject
matter of an administrative forfeiture proceeding in the Department of
Environment and Natural Resources pursuant to Section 68-A of P. D. 705, as
amended, entitled The Revised Forestry Code of the Philippines?
Are the Secretary of DENR and his representatives empowered to confiscate
and forfeit conveyances used in transporting illegal forest products in favor of the
government?
These are two fundamental questions presented before us for our resolution.
The controversy on hand had its incipiency on May 19, 1989 when the truck
of private respondent Victoria de Guzman while on its way to Bulacan from San
Jose, Baggao, Cagayan, was seized by the Department of Environment and
Natural Resources (DENR, for brevity) personnel in Aritao, Nueva Vizcaya
because the driver could not produce the required documents for the forest
products found concealed in the truck. Petitioner Jovito Layugan, the Community
Environment and Natural Resources Officer (CENRO) in Aritao, Cagayan, issued
on May 23, 1989 an order of confiscation of the truck and gave the owner thereof
fifteen (15) days within which to submit an explanation why the truck should not
be forfeited. Private respondents, however, failed to submit the required
explanation.On June 22, 1989, Regional Executive Director Rogelio Baggayan
[1]

of DENR sustained petitioner Layugans action of confiscation and ordered


the forfeiture of the truck invoking Section 68-A of Presidential Decree No. 705 as
amended by Executive Order No. 277. Private respondents filed a letter of
reconsideration dated June 28, 1989 of the June 22, 1989 order of Executive
Director Baggayan, which was, however, denied in a subsequent order of July
12, 1989. Subsequently, the case was brought by the petitioners to the
[2]

Secretary of DENR pursuant to private respondents statement in their letter


dated June 28, 1989 that in case their letter for reconsideration would be denied
then this letter should be considered as an appeal to the Secretary. Pending
[3]

resolution however of the appeal, a suit for replevin, docketed as Civil Case
4031, was filed by the private respondents against petitioner Layugan and
Executive Director Baggayan with the Regional Trial Court, Branch 2 of
[4]

Cagayan, which issued a writ ordering the return of the truck to private
[5]

respondents. Petitioner Layugan and Executive Director Baggayan filed a


[6]

motion to dismiss with the trial court contending, inter alia, that private
respondents had no cause of action for their failure to exhaust administrative
remedies. The trial court denied the motion to dismiss in an order dated
December 28, 1989. Their motion for reconsideration having been likewise
[7]

denied, a petition for certiorari was filed by the petitioners with the respondent
Court of Appeals which sustained the trial courts order ruling that the question
involved is purely a legal question. Hence, this present petition, with prayer for
[8] [9]

temporary restraining order and/or preliminary injunction, seeking to reverse the


decision of the respondent Court of Appeals was filed by the petitioners on
September 9, 1993. By virtue of the Resolution dated September 27, 1993, the [10]

prayer for the issuance of temporary restraining order of petitioners was granted
by this Court.
Invoking the doctrine of exhaustion of administrative remedies, petitioners
aver that the trial court could not legally entertain the suit for replevin because
the truck was under administrative seizure proceedings pursuant to Section 68-A
of P.D. 705, as amended by E.O. 277. Private respondents, on the other hand,
would seek to avoid the operation of this principle asserting that the instant case
falls within the exception of the doctrine upon the justification that (1) due
process was violated because they were not given the chance to be heard, and
(2) the seizure and forfeiture was unlawful on the grounds: (a) that the Secretary
of DENR and his representatives have no authority to confiscate and forfeit
conveyances utilized in transporting illegal forest products, and (b) that the truck
as admitted by petitioners was not used in the commission of the crime.
Upon a thorough and delicate scrutiny of the records and relevant
jurisprudence on the matter, we are of the opinion that the plea of petitioners for
reversal is in order.
This Court in a long line of cases has consistently held that before a party is
allowed to seek the intervention of the court, it is a pre-condition that he should
have availed of all the means of administrative processes afforded him. Hence, if
a remedy within the administrative machinery can still be resorted to by giving the
administrative officer concerned every opportunity to decide on a matter that
comes within his jurisdiction then such remedy should be exhausted first before
courts judicial power can be sought. The premature invocation of courts
intervention is fatal to ones cause of action. Accordingly, absent any finding of
[11]

waiver or estoppel the case is susceptible of dismissal for lack of cause of action.
This doctrine of exhaustion of administrative remedies was not without its
[12]

practical and legal reasons, for one thing, availment of administrative remedy
entails lesser expenses and provides for a speedier disposition of
controversies. It is no less true to state that the courts of justice for reasons of
comity and convenience will shy away from a dispute until the system of
administrative redress has been completed and complied with so as to give the
administrative agency concerned every opportunity to correct its error and to
dispose of the case. However, we are not amiss to reiterate that the principle of
exhaustion of administrative remedies as tested by a battery of cases is not an
ironclad rule. This doctrine is a relative one and its flexibility is called upon by
the peculiarity and uniqueness of the factual and circumstantial settings of a
case. Hence, it is disregarded (1) when there is a violation of due process, (2) [13]

when the issue involved is purely a legal question, (3) when the administrative
[14]

action is patently illegal amounting to lack or excess of jurisdiction, (4) when


[15]

there is estoppel on the part of the administrative agency concerned, (5) when
[16]

there is irreparable injury, (6) when the respondent is a department secretary


[17]

whose acts as an alter ego of the President bears the implied and assumed
approval of the latter, (7) when to require exhaustion of administrative remedies
[18]

would be unreasonable, (8) when it would amount to a nullification of a claim,


[19]

(9) when the subject matter is a private land in land case proceedings, (10)
[20] [21]

when the rule does not provide a plain, speedy and adequate remedy, and (11)
when there are circumstances indicating the urgency of judicial intervention. [22]

In the case at bar, there is no question that the controversy was pending
before the Secretary of DENR when it was forwarded to him following the denial
by the petitioners of the motion for reconsideration of private respondents
through the order of July 12, 1989. In their letter of reconsideration dated June
28, 1989, private respondents clearly recognize the presence of an
[23]

administrative forum to which they seek to avail, as they did avail, in the
resolution of their case. The letter, reads, thus:

xxx

Ifthismotionforreconsiderationdoesnotmerityourfavorableaction,thenthis
lettershouldbeconsideredasanappealtotheSecretary. [24]

It was easy to perceive then that the private respondents looked up to the
Secretary for the review and disposition of their case. By appealing to him, they
acknowledged the existence of an adequate and plain remedy still available and
open to them in the ordinary course of the law. Thus, they cannot now, without
violating the principle of exhaustion of administrative remedies, seek courts
intervention by filing an action for replevin for the grant of their relief during the
pendency of an administrative proceedings.
Moreover, it is important to point out that the enforcement of forestry laws,
rules and regulations and the protection, development and management of forest
lands fall within the primary and special responsibilities of the Department of
Environment and Natural Resources. By the very nature of its function, the
DENR should be given a free hand unperturbed by judicial intrusion to determine
a controversy which is well within its jurisdiction. The assumption by the trial
court, therefore, of the replevin suit filed by private respondents constitutes an
unjustified encroachment into the domain of the administrative agencys
prerogative. The doctrine of primary jurisdiction does not warrant a court to
arrogate unto itself the authority to resolve a controversy the jurisdiction over
which is initially lodged with an administrative body of special competence. In [25]

Felipe Ismael, Jr. and Co. vs. Deputy Executive Secretary, which was reiterated
[26]

in the recent case of Concerned Officials of MWSS vs. Vasquez, this Court [27]

held:

Thus,whiletheadministrationgrappleswiththecomplexandmultifarious
problemscausedbyunbriddledexploitationoftheseresources,thejudiciary
willstandclear.Alonglineofcasesestablishthebasicrulethatthecourtswill
notinterfereinmatterswhichareaddressedtothesounddiscretionof
governmentagenciesentrustedwiththeregulationofactivitiescomingunder
thespecialtechnicalknowledgeandtrainingofsuchagencies.

To sustain the claim of private respondents would in effect bring the instant
controversy beyond the pale of the principle of exhaustion of administrative
remedies and fall within the ambit of excepted cases heretofore stated. However,
considering the circumstances prevailing in this case, we can not but rule out
these assertions of private respondents to be without merit. First, they argued
that there was violation of due process because they did not receive the May 23,
1989 order of confiscation of petitioner Layugan. This contention has no leg to
stand on. Due process does not necessarily mean or require a hearing, but
simply an opportunity or right to be heard. One may be heard , not solely by
[28]

verbal presentation but also, and perhaps many times more creditably and
practicable than oral argument, through pleadings. In administrative [29]

proceedings moreover, technical rules of procedure and evidence are not strictly
applied; administrative process cannot be fully equated with due process in its
strict judicial sense. Indeed, deprivation of due process cannot be successfully
[30]

invoked where a party was given the chance to be heard on his motion for
reconsideration, as in the instant case, when private respondents were
[31]

undisputedly given the opportunity to present their side when they filed a letter of
reconsideration dated June 28, 1989 which was, however, denied in an order of
July 12, 1989 of Executive Director Baggayan. In Navarro III vs. Damasco, we [32]

ruled that :
Theessenceofdueprocessissimplyanopportunitytobeheard,orasapplied
toadministrativeproceedings,anopportunitytoexplainonessideoran
opportunitytoseekareconsiderationoftheactionorrulingcomplainedof.A
formalortrialtypehearingisnotatalltimesandinallinstancesessential.The
requirementsaresatisfiedwhenthepartiesareaffordedfairandreasonable
opportunitytoexplaintheirsideofthecontroversyathand.Whatisfrowned
uponistheabsolutelackofnoticeorhearing.

Second, private respondents imputed the patent illegality of seizure and


forfeiture of the truck because the administrative officers of the DENR allegedly
have no power to perform these acts under the law. They insisted that only the
court is authorized to confiscate and forfeit conveyances used in transporting
illegal forest products as can be gleaned from the second paragraph of Section
68 of P.D. 705, as amended by E.O. 277. The pertinent provision reads as
follows:

SECTION68.xxx

xxx

Thecourtshallfurtherordertheconfiscationinfavorofthegovernmentof
thetimberoranyforestproductscut,gathered,collected,removed,or
possessed,aswellasthemachinery,equipments,implementsandtoolsillegaly
[sic]usedintheareawherethetimberorforestproductsarefound.(Underline
ours)

A reading, however, of the law persuades us not to go along with private


respondents thinking not only because the aforequoted provision apparently
does not mention nor include conveyances that can be the subject of confiscation
by the courts, but to a large extent, due to the fact that private respondents
interpretation of the subject provision unduly restricts the clear intention of
the law and inevitably reduces the other provision of Section 68-A , which is
quoted herein below:

SECTION68A.AdministrativeAuthorityoftheDepartmentorHisDuly
AuthorizedRepresentativeToOrderConfiscation.Inallcasesofviolationof
thisCodeorotherforestlaws,rulesandregulations,theDepartmentHeador
hisdulyauthorizedrepresentative,mayordertheconfiscationofanyforest
productsillegallycut,gathered,removed,orpossessedorabandoned,andall
conveyancesusedeitherbyland,waterorairinthecommissionoftheoffense
andtodisposeofthesameinaccordancewithpertinentlaws,regulationsand
policiesonthematter.(Underlineours)
It is, thus, clear from the foregoing provision that the Secretary and his duly
authorized representatives are given the authority to confiscate and forfeit
any conveyances utilized in violating the Code or other forest laws, rules and
regulations. The phrase to dispose of the same is broad enough to cover the act
of forfeiting conveyances in favor of the government. The only limitation is that it
should be made in accordance with pertinent laws, regulations or policies on the
matter. In the construction of statutes, it must be read in such a way as to give
effect to the purpose projected in the statute. Statutes should be construed in
[33]

the light of the object to be achieved and the evil or mischief to be suppressed,
and they should be given such construction as will advance the object, suppress
the mischief, and secure the benefits intended. In this wise, the observation of
[34]

the Solicitor General is significant, thus:

Butpreciselybecauseoftheneedtomakeforestrylawsmoreresponsiveto
presentsituationsandrealitiesandinviewoftheurgencytoconservethe
remainingresourcesofthecountry,thatthegovernmentoptedtoaddSection
68A.Thisamendatoryprovisionisanadministrativeremedytotallyseparate
anddistinctfromcriminalproceedings.Morethananythingelse,itisintended
tosupplanttheinadequaciesthatcharacterizeenforcementofforestrylaws
throughcriminalactions.ThepreambleofEO277thelawthataddedSection
68AtoPD705ismostrevealing:

WHEREAS,thereisanurgencytoconservetheremainingforestresourcesof
thecountryforthebenefitandwelfareofthepresentandfuturegenerationsof
Filipinos;

WHEREAS,ourforestresourcesmaybeeffectivelyconservedandprotected
throughthevigilantenforcementandimplementationofourforestrylaws,rules
andregulations;

WHEREAS,theimplementationofourforestrylawssuffersfromtechnical
difficulties,duetocertaininadequaciesinthepenalprovisionsoftheRevised
ForestryCodeofthePhilippines;and

WHEREAS,toovercomethisdifficulties,thereisaneedtopenalizecertain
actsmoreresponsivetopresentsituationsandrealities;

ItisinterestingtonotethatSection68Aisanewprovisionauthorizingthe
DENRtoconfiscate,notonlyconveyances,butforestproductsaswell.Onthe
otherhand,confiscationofforestproductsbythecourtinacriminalactionhas
longbeenprovidedforinSection68.Ifasprivaterespondentsinsist,thepower
onconfiscationcannotbeexercisedexceptonlythroughthecourtunder
Section68,thenSection68Awouldhavenopurposeatall.Simplyput,
Section68Awouldnothaveprovidedanysolutiontotheproblemperceivedin
EO277,supra. [35]

Private respondents, likewise, contend that the seizure was illegal because
the petitioners themselves admitted in the Order dated July 12, 1989 of
Executive Director Baggayan that the truck of private respondents was not used
in the commission of the crime. This order, a copy of which was given to and
received by the counsel of private respondents, reads in part , viz. :

xxxwhileitistruethatthetruckofyourclientwasnotusedbyherinthe
commissionofthecrime,weupholdyourclaimthatthetruckownerisnot
liableforthecrimeandinnocasecouldacriminalcasebefiledagainstheras
providedunderArticle309and310oftheRevisedPenalCode.xxx [36]

We observed that private respondents misread the content of the aforestated


order and obviously misinterpreted the intention of petitioners. What
is contemplated by the petitioners when they stated that the truck "was not used
in the commission of the crime" is that it was not used in the commission of the
crime of theft, hence, in no case can a criminal action be filed against the owner
thereof for violation of Article 309 and 310 of the Revised Penal Code. Petitioners
did not eliminate the possibility that the truck was being used in the commission
of another crime, that is, the breach of Section 68 of P.D.705 as amended by
E.O. 277. In the same order of July 12, 1989, petitioners pointed out:

xxxHowever,underSection68ofP.D.705asamendedandfurtheramended
byExecutiveOrderNo.277specificallyprovidesfortheconfiscationofthe
conveyanceusedinthetransportofforestproductsnotcoveredbytherequired
legaldocuments.Shemaynothavebeeninvolvedinthecuttingandgathering
oftheproductinquestionbutthefactthatsheacceptedthegoodsforafeeor
farethesameisthereforliable.xxx
[37]

Private respondents, however, contended that there is no crime defined and


punishable under Section 68 other than qualified theft, so that, when petitioners
admitted in the July 12, 1989 order that private respondents could not be
charged for theft as provided for under Articles 309 and 310 of the Revised Penal
Code, then necessarily private respondents could not have committed an act
constituting a crime under Section 68. We disagree. For clarity, the provision of
Section 68 of P.D. 705 before its amendment by E.O. 277 and the provision of
Section 1 of E.O. No.277 amending the aforementioned Section 68 are
reproduced herein, thus:

SECTION68.Cutting,gatheringand/orcollectingtimberorotherproducts
withoutlicense.Anypersonwhoshallcut,gather,collect,orremovetimber
orotherforestproductsfromanyforestland,ortimberfromalienableand
disposablepubliclands,orfromprivatelands,withoutanyauthorityundera
licenseagreement,lease,licenseorpermit,shallbeguiltyofqualifiedtheftas
definedandpunishedunderArticles309and310oftheRevisedPenalCode
xxx.(Underscoringours;Section68,P.D.705beforeitsamendment
byE.O.277)

SECTION1.Section68ofPresidentialDecreeNo.705,asamended,ishereby
amendedtoreadasfollows:

Section68.Cutting,gatheringand/orcollectingtimberorotherforestproducts
withoutlicense.Anypersonwhoshallcut,gather,collect,removetimberor
otherforestproductsfromanyforestland,ortimberfromalienableor
disposablepublicland,orfromprivateland,withoutanyauthority,or
possesstimberorotherforestproductswithoutthelegaldocumentsasrequired
underexistingforestlawsandregulations,shallbepunishedwiththepenalties
imposedunderArticles309and310oftheRevisedPenal
Codexxx."(Underscoringours;Section1,E.ONo.277amendingSection68,
P.D.705asamended)

With the introduction of Executive Order No. 277 amending Section 68 of


P.D. 705, the act of cutting, gathering, collecting, removing, or possessing forest
products without authority constitutes a distinct offense independent now from
the crime of theft under Articles 309 and 310 of the Revised Penal Code, but the
penalty to be imposed is that provided for under Article 309 and 310 of the
Revised Penal Code. This is clear from the language of Executive Order No. 277
when it eliminated the phrase shall be guilty of qualified theft as defined and
punished under Articles 309 and 310 of the Revised Penal Code and inserted the
words shall be punished with the penalties imposed under Article 309 and 310 of
the Revised Penal Code . When the statute is clear and explicit, there is
hardlyroom for any extended court ratiocination or rationalization of the law. [38]

From the foregoing disquisition, it is clear that a suit for replevin can not be
sustained against the petitioners for the subject truck taken and retained by them
for administrative forfeiture proceedings in pursuant to Section 68-A of the P. D.
705, as amended. Dismissal of the replevin suit for lack of cause of action in view
of the private respondents failure to exhaust administrative remedies should have
been the proper course of action by the lower court instead of assuming
jurisdiction over the case and consequently issuing the writ ordering the return of
the truck. Exhaustion of the remedies in the administrative forum, being a
condition precedent prior to ones recourse to the courts and more importantly,
being an element of private respondents right of action, is too significant to be
waylaid by the lower court.
It is worth stressing at this point, that a suit for replevin is founded solely on
the claim that the defendant wrongfully withholds the property sought to be
recovered. It lies to recover possession of personal chattels that are unlawfully
detained. To detain is defined as to mean to hold or keep in custody, and it
[39] [40]

has been held that there is tortuous taking whenever there is an unlawful
meddling with the property, or an exercise or claim of dominion over it, without
any pretense of authority or right; this, without manual seizing of the property is
sufficient. Under the Rules of Court, it is indispensable in replevin proceedings,
[41]

that the plaintiff must show by his own affidavit that he is entitled to the
possession of property, that the property is wrongfully detained by the defendant,
alleging the cause of detention, that the same has not been taken for tax
assessment, or seized under execution, or attachment, or if so seized, that it is
exempt from such seizure, and the actual value of the property. Private [42]

respondents miserably failed to convince this Court that a wrongful detention of


the subject truck obtains in the instant case. It should be noted that the truck was
seized by the petitioners because it was transporting forest products with out the
required permit of the DENR in manifest contravention of Section 68 of P.D. 705
as amended by E.O 277. Section 68-A of P.D. 705, as amended, unquestionably
warrants the confiscation as well as the disposition by the Secretary of DENR or
his duly authorized representatives of the conveyances used in violating the
provision of forestry laws. Evidently, the continued possession or detention of the
truck by the petitioners for administrative forfeiture proceeding is legally
permissible, hence , no wrongful detention exists in the case at bar.
Moreover, the suit for replevin is never intended as a procedural tool to
question the orders of confiscation and forfeiture issued by the DENR in
pursuance to the authority given under P.D.705, as amended. Section 8 of the
said law is explicit that actions taken by the Director of the Bureau of Forest
Development concerning the enforcement of the provisions of the said law are
subject to review by the Secretary of DENR and that courts may not review the
decisions of the Secretary except through a special civil action for certiorari or
prohibition. It reads :

SECTION8.REVIEWAllactionsanddecisionsoftheDirectoraresubject
toreview,motupropiooruponappealofanypersonaggrievedthereby,bythe
DepartmentHeadwhosedecisionshallbefinalandexecutoryafterthelapseof
thirty(30)daysfromthereceiptoftheaggrievedpartyofsaiddecision,unless
appealedtothePresidentinaccordancewithExecutiveOrderNo.19,Seriesof
1966.TheDecisionoftheDepartmentHeadmaynotbereviewedbythecourts
exceptthroughaspecialcivilactionforcertiorariorprohibition.

WHEREFORE, the Petition is GRANTED; the Decision of the respondent


Court of Appeals dated October 16, 1991 and its Resolution dated July 14, 1992
are hereby SET ASIDE AND REVERSED; the Restraining Order promulgated on
September 27, 1993 is hereby made permanent; and the Secretary of DENR is
directed to resolve the controversy with utmost dispatch.
SO ORDERED.
Regalado, (Chairman), Romero, Puno, and Mendoza, JJ., concur.

G.R. No. 74930 February 13, 1989

RICARDO VALMONTE, OSWALDO CARBONELL, DOY DEL CASTILLO, ROLANDO


BARTOLOME, LEO OBLIGAR, JUN GUTIERREZ, REYNALDO BAGATSING, JUN
"NINOY" ALBA, PERCY LAPID, ROMMEL CORRO and ROLANDO FADUL, petitioners,
vs.
FELICIANO BELMONTE, JR., respondent.

Ricardo C. Valmonte for and in his own behalf and his co-petitioners.

The Solicitor General for respondent.

CORTES, J.:

Petitioners in this special civil action for mandamus with preliminary injunction invoke their
right to information and pray that respondent be directed:

(a) to furnish petitioners the list of the names of the Batasang


Pambansa members belonging to the UNIDO and PDP-
Laban who were able to secure clean loans immediately
before the February 7 election thru the intercession/marginal
note of the then First Lady Imelda Marcos; and/or

(b) to furnish petitioners with certified true copies of the


documents evidencing their respective loans; and/or

(c) to allow petitioners access to the public records for the


subject information. (Petition, pp. 4-5; paragraphing supplied.]

The controversy arose when petitioner Valmonte wrote respondent Belmonte the following
letter:

June 4, 1986

Hon. Feliciano Belmonte


GSIS General Manager
Arroceros, Manila

Sir:
As a lawyer, member of the media and plain citizen of our Republic, I am
requesting that I be furnished with the list of names of the opposition
members of (the) Batasang Pambansa who were able to secure a clean loan
of P2 million each on guarranty (sic) of Mrs. Imelda Marcos. We understand
that OIC Mel Lopez of Manila was one of those aforesaid MPs. Likewise,
may we be furnished with the certified true copies of the documents
evidencing their loan. Expenses in connection herewith shall be borne by us.

If we could not secure the above documents could we have access to them?

We are premising the above request on the following provision of the


Freedom Constitution of the present regime.

The right of the people to information on matters of public


concern shall be recognized. Access to official records, and to
documents and papers pertaining to official acts, transactions
or decisions, shall be afforded the citizen subject to such
limitation as may be provided by law. (Art. IV, Sec. 6).

We trust that within five (5) days from receipt hereof we will receive your
favorable response on the matter.

Very truly yours,

(Sgd.)
RICARDO C.
VALMONTE

[Rollo, p. 7.]

To the aforesaid letter, the Deputy General Counsel of the GSIS replied:

June 17, 1986

Atty. Ricardo C. Valmonte


108 E. Benin Street
Caloocan City

Dear Compaero:

Possibly because he must have thought that it contained serious legal


implications, President & General Manager Feliciano Belmonte, Jr. referred
to me for study and reply your letter to him of June 4, 1986 requesting a list
of the opposition members of Batasang Pambansa who were able to secure
a clean loan of P2 million each on guaranty of Mrs. Imelda Marcos.

My opinion in this regard is that a confidential relationship exists between the


GSIS and all those who borrow from it, whoever they may be; that the GSIS
has a duty to its customers to preserve this confidentiality; and that it would
not be proper for the GSIS to breach this confidentiality unless so ordered by
the courts.
As a violation of this confidentiality may mar the image of the GSIS as a
reputable financial institution, I regret very much that at this time we cannot
respond positively to your request.

Very truly yours,

(Sgd.) MEYNARDO A. TIRO


Deputy General Counsel
[Rollo, p. 40.]

On June 20, 1986, apparently not having yet received the reply of the Government Service
and Insurance System (GSIS) Deputy General Counsel, petitioner Valmonte wrote
respondent another letter, saying that for failure to receive a reply, "(W)e are now considering
ourselves free to do whatever action necessary within the premises to pursue our desired
objective in pursuance of public interest." [Rollo, p. 8.]

On June 26, 1986, Valmonte, joined by the other petitioners, filed the instant suit.

On July 19, 1986, the Daily Express carried a news item reporting that 137 former members
of the defunct interim and regular Batasang Pambansa, including ten (10) opposition
members, were granted housing loans by the GSIS [Rollo, p. 41.]

Separate comments were filed by respondent Belmonte and the Solicitor General. After
petitioners filed a consolidated reply, the petition was given due course and the parties were
required to file their memoranda. The parties having complied, the case was deemed
submitted for decision.

In his comment respondent raises procedural objections to the issuance of a writ of


mandamus, among which is that petitioners have failed to exhaust administrative remedies.

Respondent claims that actions of the GSIS General Manager are reviewable by the Board
of Trustees of the GSIS. Petitioners, however, did not seek relief from the GSIS Board of
Trustees. It is therefore asserted that since administrative remedies were not exhausted,
then petitioners have no cause of action.

To this objection, petitioners claim that they have raised a purely legal issue, viz., whether or
not they are entitled to the documents sought, by virtue of their constitutional right to
information. Hence, it is argued that this case falls under one of the exceptions to the
principle of exhaustion of administrative remedies.

Among the settled principles in administrative law is that before a party can be allowed to
resort to the courts, he is expected to have exhausted all means of administrative redress
available under the law. The courts for reasons of law, comity and convenience will not
entertain a case unless the available administrative remedies have been resorted to and the
appropriate authorities have been given opportunity to act and correct the errors committed
in the administrative forum. However, the principle of exhaustion of administrative remedies
is subject to settled exceptions, among which is when only a question of law is involved
[Pascual v. Provincial Board, 106 Phil. 466 (1959); Aguilar v. Valencia, et al., G.R. No. L-
30396, July 30, 1971, 40 SCRA 210; Malabanan v. Ramento, G.R. No. L-2270, May 21,
1984, 129 SCRA 359.] The issue raised by petitioners, which requires the interpretation of
the scope of the constitutional right to information, is one which can be passed upon by the
regular courts more competently than the GSIS or its Board of Trustees, involving as it does
a purely legal question. Thus, the exception of this case from the application of the general
rule on exhaustion of administrative remedies is warranted. Having disposed of this
procedural issue, We now address ourselves to the issue of whether or not mandamus hes
to compel respondent to perform the acts sought by petitioners to be done, in pursuance of
their right to information.

We shall deal first with the second and third alternative acts sought to be done, both of which
involve the issue of whether or not petitioners are entitled to access to the documents
evidencing loans granted by the GSIS.

This is not the first time that the Court is confronted with a controversy directly involving the
constitutional right to information. In Taada v. Tuvera, G.R. No. 63915, April 24,1985, 136
SCRA 27 and in the recent case of Legaspi v. Civil Service Commission, G.R. No. 72119,
May 29, 1987,150 SCRA 530, the Court upheld the people's constitutional right to be
informed of matters of public interest and ordered the government agencies concerned to act
as prayed for by the petitioners.

The pertinent provision under the 1987 Constitution is Art. 111, Sec. 7 which states:

The right of the people to information on matters of public concern shall be


recognized. Access to official records, and to documents, and papers
pertaining to official acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law.

The right of access to information was also recognized in the 1973 Constitution, Art. IV Sec.
6 of which provided:

The right of the people to information on 'matters of public concern shall be


recognized. Access to official records, and to documents and papers
pertaining to official acts, transactions, or decisions, shall be afforded the
citizen subject to such limitations as may be provided by law.

An informed citizenry with access to the diverse currents in political, moral and artistic
thought and data relative to them, and the free exchange of ideas and discussion of issues
thereon, is vital to the democratic government envisioned under our Constitution. The
cornerstone of this republican system of government is delegation of power by the people to
the State. In this system, governmental agencies and institutions operate within the limits of
the authority conferred by the people. Denied access to information on the inner workings of
government, the citizenry can become prey to the whims and caprices of those to whom the
power had been delegated. The postulate of public office as a public trust, institutionalized in
the Constitution (in Art. XI, Sec. 1) to protect the people from abuse of governmental power,
would certainly be were empty words if access to such information of public concern is
denied, except under limitations prescribed by implementing legislation adopted pursuant to
the Constitution.

Petitioners are practitioners in media. As such, they have both the right to gather and the
obligation to check the accuracy of information the disseminate. For them, the freedom of the
press and of speech is not only critical, but vital to the exercise of their professions. The right
of access to information ensures that these freedoms are not rendered nugatory by the
government's monopolizing pertinent information. For an essential element of these
freedoms is to keep open a continuing dialogue or process of communication between the
government and the people. It is in the interest of the State that the channels for free political
discussion is maintained to the end that the government may perceive and be responsive to
the people's will. Yet, this open dialogue can be effective only to the extent that the citizenry
is informed and thus able to formulate its will intelligently. Only when the participants in the
discussion are aware of the issues and have access to information relating thereto can such
bear fruit.

The right to information is an essential premise of a meaningful right to speech and


expression. But this is not to say that the right to information is merely an adjunct of and
therefore restricted in application by the exercise of the freedoms of speech and of the press.
Far from it. The right to information goes hand-in-hand with the constitutional policies of full
public disclosure * and honesty in the public service. ** It is meant to enhance the widening role of the citizenry in
governmental decision-making as well as in checking abuse in government.

Yet, like all the constitutional guarantees, the right to information is not absolute. As stated
in Legaspi, the people's right to information is limited to "matters of public concern," and is
further "subject to such limitations as may be provided by law." Similarly, the State's policy of
full disclosure is limited to "transactions involving public interest," and is "subject to
reasonable conditions prescribed by law."

Hence, before mandamus may issue, it must be clear that the information sought is of "public
interest" or "public concern," and is not exempted by law from the operation of the
constitutional guarantee [Legazpi v. Civil Service Commission, supra, at p. 542.]

The Court has always grappled with the meanings of the terms "public interest" and "public
concern". As observed in Legazpi:

In determining whether or not a particular information is of public concern


there is no rigid test which can be applied. "Public concern" like "public
interest" is a term that eludes exact definition. Both terms embrace a broad
spectrum of subjects which the public may want to know, either because
these directly affect their lives, or simply because such matters naturally
arouse the interest of an ordinary citezen. In the final analysis, it is for the
courts to determine on a case by case basis whether the matter at issue is of
interest or importance, as it relates to or affects the public. [Ibid. at p. 541]

In the Taada case the public concern deemed covered by the constitutional right to
information was the need for adequate notice to the public of the various laws which are to
regulate the actions and conduct of citezens. In Legaspi, it was the "legitimate concern of
citezensof ensure that government positions requiring civil service eligibility are occupied
only by persons who are eligibles" [Supra at p. 539.]

The information sought by petitioners in this case is the truth of reports that certain Members
of the Batasang Pambansa belonging to the opposition were able to secure "clean" loans
from the GSIS immediately before the February 7, 1986 election through the intercession of
th eformer First Lady, Mrs. Imelda Marcos.

The GSIS is a trustee of contributions from the government and its employees and the
administrator of various insurance programs for the benefit of the latter. Undeniably, its funds
assume a public character. More particularly, Secs. 5(b) and 46 of P.D. 1146, as amended
(the Revised Government Service Insurance Act of 1977), provide for annual appropriations
to pay the contributions, premiums, interest and other amounts payable to GSIS by the
government, as employer, as well as the obligations which the Republic of the Philippines
assumes or guarantees to pay. Considering the nature of its funds, the GSIS is expected to
manage its resources with utmost prudence and in strict compliance with the pertinent laws
or rules and regulations. Thus, one of the reasons that prompted the revision of the old GSIS
law (C.A. No. 186, as amended) was the necessity "to preserve at all times the actuarial
solvency of the funds administered by the System" [Second Whereas Clause, P.D. No.
1146.] Consequently, as respondent himself admits, the GSIS "is not supposed to grant
'clean loans.'" [Comment, p. 8.] It is therefore the legitimate concern of the public to ensure
that these funds are managed properly with the end in view of maximizing the benefits that
accrue to the insured government employees. Moreover, the supposed borrowers were
Members of the defunct Batasang Pambansa who themselves appropriated funds for the
GSIS and were therefore expected to be the first to see to it that the GSIS performed its
tasks with the greatest degree of fidelity and that an its transactions were above board.

In sum, the public nature of the loanable funds of the GSIS and the public office held by the
alleged borrowers make the information sought clearly a matter of public interest and
concern.

A second requisite must be met before the right to information may be enforced through
mandamus proceedings, viz., that the information sought must not be among those excluded
by law.

Respondent maintains that a confidential relationship exists between the GSIS and its
borrowers. It is argued that a policy of confidentiality restricts the indiscriminate
dissemination of information.

Yet, respondent has failed to cite any law granting the GSIS the privilege of confidentiality as
regards the documents subject of this petition. His position is apparently based merely on
considerations of policy. The judiciary does not settle policy issues. The Court can only
declare what the law is, and not what the law should be. Under our system of government,
policy issues are within the domain of the political branches of the government, and of the
people themselves as the repository of all State power.

Respondent however contends that in view of the right to privacy which is equally protected
by the Constitution and by existing laws, the documents evidencing loan transactions of the
GSIS must be deemed outside the ambit of the right to information.

There can be no doubt that right to privacy is constitutionally protected. In the landmark case
of Morfe v. Mutuc [130 Phil. 415 (1968), 22 SCRA 424], this Court, speaking through then Mr.
Justice Fernando, stated:

... The right to privacy as such is accorded recognition independently of its


identification with liberty; in itself, it is fully deserving of constitutional
protection. The language of Prof. Emerson is particularly apt: "The concept of
limited government has always included the idea that governmental powers
stop short of certain intrusions into the personal life of the citizen. This is
indeed one of the basic distinctions between absolute and limited
government. UItimate and pervasive control of the individual, in all aspects of
his life, is the hallmark of the absolute. state, In contrast, a system of limited
government safeguards a private sector, which belongs to the individual,
firmly distinguishing it from the public sector, which the state can control.
Protection of this private sector protection, in other words, of the dignity
and integrity of the individual has become increasingly important as
modem society has developed. All the forces of technological age
industrialization, urbanization, and organization operate to narrow the area
of privacy and facilitate intrusion into it. In modern terms, the capacity to
maintain and support this enclave of private life marks the difference between
a democratic and a totalitarian society." [at pp. 444-445.]

When the information requested from the government intrudes into the privacy of a citizen, a
potential conflict between the rights to information and to privacy may arise. However, the
competing interests of these rights need not be resolved in this case. Apparent from the
above-quoted statement of the Court in Morfe is that the right to privacy belongs to the
individual in his private capacity, and not to public and governmental agencies like the GSIS.
Moreover, the right cannot be invoked by juridical entities like the GSIS. As held in the case
of Vassar College v. Loose Wills Biscuit Co. [197 F. 982 (1912)], a corporation has no right of
privacy in its name since the entire basis of the right to privacy is an injury to the feelings and
sensibilities of the party and a corporation would have no such ground for relief.

Neither can the GSIS through its General Manager, the respondent, invoke the right to
privacy of its borrowers. The right is purely personal in nature [Cf. Atkinson v. John Doherty
& Co., 121 Mich 372, 80 N.W. 285, 46 L.RA. 219 (1899); Schuyler v. Curtis, 147 N.Y. 434, 42
N.E. 22, 31 L.R.A. 286 (1895)), and hence may be invoked only by the person whose privacy
is claimed to be violated.

It may be observed, however, that in the instant case, the concerned borrowers themselves
may not succeed if they choose to invoke their right to privacy, considering the public offices
they were holding at the time the loans were alleged to have been granted. It cannot be
denied that because of the interest they generate and their newsworthiness, public figures,
most especially those holding responsible positions in government, enjoy a more limited right
to privacy as compared to ordinary individuals, their actions being subject to closer public
scrutiny [Cf. Ayer Productions Pty. Ltd. v. Capulong, G.R. Nos. 82380 and 82398, April 29,
1988; See also Cohen v. Marx, 211 P. 2d 321 (1949).]

Respondent next asserts that the documents evidencing the loan transactions of the GSIS
are private in nature and hence, are not covered by the Constitutional right to information on
matters of public concern which guarantees "(a)ccess to official records, and to documents,
and papers pertaining to official acts, transactions, or decisions" only.

It is argued that the records of the GSIS, a government corporation performing proprietary
functions, are outside the coverage of the people's right of access to official records.

It is further contended that since the loan function of the GSIS is merely incidental to its
insurance function, then its loan transactions are not covered by the constitutional policy of
full public disclosure and the right to information which is applicable only to "official"
transactions.

First of all, the "constituent ministrant" dichotomy characterizing government function has
long been repudiated. In ACCFA v. Confederation of Unions and Government Corporations
and Offices (G.R. Nos. L-21484 and L-23605, November 29, 1969, 30 SCRA 6441, the Court
said that the government, whether carrying out its sovereign attributes or running some
business, discharges the same function of service to the people.
Consequently, that the GSIS, in granting the loans, was exercising a proprietary function
would not justify the exclusion of the transactions from the coverage and scope of the right to
information.

Moreover, the intent of the members of the Constitutional Commission of 1986, to include
government-owned and controlled corporations and transactions entered into by them within
the coverage of the State policy of fun public disclosure is manifest from the records of the
proceedings:

xxx xxx xxx

THE PRESIDING OFFICER (Mr. Colayco).

Commissioner Suarez is recognized.

MR. SUAREZ. Thank you. May I ask the Gentleman a few question?

MR. OPLE. Very gladly.

MR. SUAREZ. Thank you.

When we declare a "policy of full public disclosure of all its


transactions" referring to the transactions of the State
and when we say the "State" which I suppose would include
all of the various agencies, departments, ministries and
instrumentalities of the government....

MR. OPLE. Yes, and individual public officers, Mr. Presiding Officer.

MR. SUAREZ. Including government-owned and controlled corporations.

MR. OPLE. That is correct, Mr. Presiding Officer.

MR. SUAREZ. And when we say


"transactions" which should be distinguished
from contracts, agreements, or treaties or
whatever, does the Gentleman refer to the
steps leading to the consummation of the
contract, or does he refer to the contract
itself?

MR. OPLE. The "transactions" used here I


suppose is generic and, therefore, it can
cover both steps leading to a contract, and
already a consummated contract, Mr.
Presiding Officer.

MR. SUAREZ. This contemplates inclusion of


negotiations leading to the consummation of
the transaction.
MR. OPLE. Yes, subject only to reasonable
safeguards on the national interest.

MR. SUAREZ. Thank you. [V Record of the


Constitutional Commission 24-25.] (Emphasis
supplied.)

Considering the intent of the framers of the Constitution which, though not binding upon the
Court, are nevertheless persuasive, and considering further that government-owned and
controlled corporations, whether performing proprietary or governmental functions are
accountable to the people, the Court is convinced that transactions entered into by the GSIS,
a government-controlled corporation created by special legislation are within the ambit of the
people's right to be informed pursuant to the constitutional policy of transparency in
government dealings.

In fine, petitioners are entitled to access to the documents evidencing loans granted by the
GSIS, subject to reasonable regulations that the latter may promulgate relating to the
manner and hours of examination, to the end that damage to or loss of the records may be
avoided, that undue interference with the duties of the custodian of the records may be
prevented and that the right of other persons entitled to inspect the records may be insured
[Legaspi v. Civil Service Commission, supra at p. 538, quoting Subido v. Ozaeta, 80 Phil.
383, 387.] The petition, as to the second and third alternative acts sought to be done by
petitioners, is meritorious.

However, the same cannot be said with regard to the first act sought by petitioners, i.e., "to
furnish petitioners the list of the names of the Batasang Pambansa members belonging to
the UNIDO and PDP-Laban who were able to secure clean loans immediately before the
February 7 election thru the intercession/marginal note of the then First Lady Imelda
Marcos."

Although citizens are afforded the right to information and, pursuant thereto, are entitled to
"access to official records," the Constitution does not accord them a right to compel
custodians of official records to prepare lists, abstracts, summaries and the like in their
desire to acquire information on matters of public concern.

It must be stressed that it is essential for a writ of mandamus to issue that the applicant has
a well-defined, clear and certain legal right to the thing demanded and that it is the
imperative duty of defendant to perform the act required. The corresponding duty of the
respondent to perform the required act must be clear and specific [Lemi v. Valencia, G.R. No.
L-20768, November 29,1968,126 SCRA 203; Ocampo v. Subido, G.R. No. L-28344, August
27, 1976, 72 SCRA 443.] The request of the petitioners fails to meet this standard, there
being no duty on the part of respondent to prepare the list requested.

WHEREFORE, the instant petition is hereby granted and respondent General Manager of
the Government Service Insurance System is ORDERED to allow petitioners access to
documents and records evidencing loans granted to Members of the former Batasang
Pambansa, as petitioners may specify, subject to reasonable regulations as to the time and
manner of inspection, not incompatible with this decision, as the GSIS may deem necessary.

SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla,
Bidin, Sarmiento, Grio-Aquino, Medialdea and Regalado, JJ., concur.

[1]
Rollo p. 235.

SECOND DIVISION

[A.M. No. RTJ-01-1651. September 4, 2001]

PROSECUTOR LEO C. TABAO, Regional Chairman, Special Task


Force on Environment and Natural Resources (STF-ENR) of
Region 8, Tacloban City, complainant, vs.JUDGE FRISCO T.
LILAGAN, Presiding Judge, Regional Trial Court, Leyte, Branch
34, and SHERIFF IV LEONARDO V. AGUILAR, Office of the
Clerk of Court, Regional Trial Court, Tacloban City, respondents.

DECISION
QUISUMBING, J.:

This is an administrative complaint filed by Atty. Leo C. Tabao, Assistant City


Prosecutor of Tacloban, in his capacity as Regional Chairman of the Region 8 Special
Task Force on Environment and Natural Resources, against (1) Judge Frisco T. Lilagan,
presiding judge of the Leyte Regional Trial Court, Branch 34, for gross ignorance of the
law, gross abuse of judicial authority, and willful disobedience to settled jurisprudence;
and (2) Sheriff IV Leonardo V. Aguilar of the Leyte RTC, Office of the Clerk of Court,
for gross irregularity in the performance of official duties, giving unwarranted benefits to
a private individual, violation of Section 1(b) and (c) of P.D. No. 1829, and conduct
prejudicial to the best interest of the service.
The records of this case reveal the following facts.
On February 24, 1998, a water craft registered under the name M/L Hadija, from
Bongao, Tawi-tawi, was docked at the port area of Tacloban City with a load of around
100 tons of tanbark. Due to previous irregular and illegal shipments of tanbark from
Bongao, agents of the National Bureau of Investigation in Region 8 (NBI-EVRO #8)
decided to verify the shipments accompanying documents as the M/L Hadija was
unloading its cargo to its consignee, a certain Robert Hernandez.
The NBI agents found the documents irregular and incomplete, and consequently
they ordered the unloading of the cargo stopped. The tanbark, the boat M/L Hadija, and
three cargo trucks were seized and impounded.
On March 5, 1998, NBI-EVRO #8 Regional Director Carlos S. Caabay filed a
criminal complaint for violation of Section 68 (now Section 78) of P.D. No. 705, the [1]

Forestry Reform Code of the Philippines (as amended), against the captain and crew of
the M/L Hadija, Robert Hernandez, Tandico Chion, Alejandro K. Bautista, and Marcial A.
Dalimot. Bautista was a forester while Dalimot was a Community Environment and
Natural Resources Officer (CENRO) of the Department of Environment and Natural
Resources (DENR) office in Tacloban City. Bautista and Dalimot were, thus, also charged
with violation of Section 3(e) of R.A. No. 3019 or the Anti-Graft and Corrupt Practices
Act, along with Habi A. Alih and Khonrad V. Mohammad of the CENRO-Bongao,
[2]

Tawi-tawi. The complaint was docketed as I.S. No. 98-296 at the Prosecutors Office of
Tacloban City.
In an order dated March 6, 1998, complainant directed the seizure by the DENR of
[3]

the M/L Hadija, its cargo, and the three trucks pending preliminary investigation of the
case. DENR thus took possession of the aforesaid items on March 10, 1998, with notice
to the consignee Robert Hernandez and the NBI Regional Director.
On March 11, 1998, Hernandez filed in the Regional Trial Court of Leyte a case for
replevin to recover the items seized by the DENR. The case was raffled off to Branch 34
of said court and docketed as Civil Case No. 98-03-42.
On March 16, 1998, subpoenas were issued to the respondents in I.S. No. 98-296. On
March 17, 1998, confiscation proceedings were conducted by the Provincial Environment
and Natural Resources Office (PENRO)-Leyte, with both Hernandez and his counsel
present.
On March 19, 1998, herein respondent Judge Frisco T. Lilagan issued a writ of
replevin and directed respondent Sheriff IV Leonardo V. Aguilar to take possession of the
items seized by the DENR and to deliver them to Hernandez after the expiration of five
days. Respondent sheriff served a copy of the writ to the Philippine Coast Guard station
[4]

in Tacloban City at around 5:45 p.m. of March 19, 1998.


Thus, the filing of this administrative complaint against respondents via a letter
addressed to the Chief Justice and dated April 13, 1998, by Atty. Tabao.
Complainant avers that replevin is not available where the properties sought to be
recovered are involved in criminal proceedings for illegal logging. He points out that this
is a well-settled issue and cites several decisions of this Court and the Court of Appeals
[5]

on the matter. He argues that respondent judge should have known of the existing
jurisprudence on this issue, particularly since they are subject to mandatory judicial
notice per Section 1, Rule 129 of the Revised Rules of Court.
Complainant submits that respondent judge is either grossly ignorant of the law and
jurisprudence or purposely disregarded them. But he avers that it is respondent judges
duty to keep abreast of developments in law and jurisprudence.
Complainant claims that respondent judge cannot claim ignorance of the proceedings
in I.S. No. 98-296 for the following reasons: (1) the defendants in the replevin case were
all DENR officers, which should have alerted respondent judge to the possibility that the
items sought to be recovered were being held by the defendants in their official
capacities; and (2) the complaint for replevin itself states that the items were intercepted
by the NBI for verification of supporting documents, which should have made respondent
judge suspect that the same were being held by authority of law.
As regards respondent sheriff Leonardo V. Aguilar, complainant states that it was
incumbent upon Aguilar to safeguard the M/L Hadija and prevent it from leaving the port
of Tacloban City, after he had served a writ of seizure therefor on the Philippine Coast
Guard. However, on March 19, 1998, the vessel left the port of Tacloban City, either
through respondent sheriffs gross negligence or his direct connivance with interested
parties, according to complainant. As of the time of the filing of the complaint, according
to complainant, the whereabouts of the vessel and its crew were unknown.
Moreover, complainant points out that respondent sheriff released the seized tanbark
to Hernandez on March 20 and 21, 1998, or within the five-day period that he was
supposed to keep it under the terms of the writ.Complainant argues that the tanbark
formed part of the peoples evidence in the criminal complaint against Hernandez and the
others. By his act, respondent sheriff effectively altered, suppressed, concealed, or
destroyed the integrity of said evidence. For this act, complainant contends that
respondent sheriff may be held liable under Section 1(b) of P.D. 1829, Penalizing
Obstruction of Apprehension and Prosecution of Criminal Offenders. Respondent [6]

sheriffs acts also constitute gross irregularity in the performance of his duty as a court
employee.
Complainant notes that respondent sheriff was absent from his office from March 20
to March 24, 1998. This period included the dates he was supposed to have released the
tanbark to Hernandez. Complainant contends that respondent sheriff not only unlawfully
released the tanbark, he also made it appear that he was not physically present when such
act was done.
In separate indorsements dated September 9, 1998, then Court Administrator Alfredo
L. Benipayo referred this administrative matter to both respondents for comment.
In his comment dated October 12, 1998, respondent judge calls the attention of the
[7]

Office of the Court Administrator to a pending motion to dismiss filed by the defendants
in the replevin case that effectively prevented him from commenting on the issue. The
discussions that would have to be included in the comment, he says, would also resolve
the pending motion to dismiss. Respondent judge contends that complainant should have
been prudent enough to wait for the resolution of the motion to dismiss before filing the
instant administrative case.
Respondent judge claims that he was unaware of the existence of I.S. No. 98-296. He
only learned of the criminal case from an urgent manifestation dated March 20, 1998,
filed by complainant. He argues that he issued an order dated March 25, 1998,
suspending the transfer to Hernandez of possession of the subject items, pending
resolution of the urgent manifestation.
Respondent judge stresses that the writ of replevin was issued in strict compliance
with the requirements laid down in Rule 60 of the Revised Rules of Court. He also points
out that said writ was issued provisionally and was not intended to be the final disposition
of the replevin case.
Respondent judge avers that the charge of gross ignorance of the law is premature
since he has not made a ruling yet on the motion to dismiss filed in the replevin case. He
contends that it was too much to ask from him to take note of the fact that the defendants
in said case were officials of DENR and make assumptions based on such fact. Moreover,
respondent judge submits that while the complaint alleged that the cargo of tanbark was
intercepted by the NBI, it also alleged that the consignee thereof produced documents to
prove that the shipment was legal.
In conclusion, respondent judge points out that no apprehension report was issued by
the NBI regarding the shipment. Neither did the DENR issue a seizure
report. Respondent judge contends that the validity of the seizure of the subject items by
the DENR is a matter that will have to be resolved in relation to the motion to dismiss.
For his part, respondent sheriff submits that he served the writ of replevin on the
[8]

Coast Guard precisely to prevent the departure of the subject vessel, since he does not
have the means to physically prevent said vessel from sailing. The Coast Guard
commander should have examined the vessel and its crew after being served the writ, to
determine whether or not they were engaged in any illegal activity.
Respondent sheriff narrates that no cargo was on board the vessel when he served the
writ on the Coast Guard. He verified the cargos status with DENR, which furnished him a
copy of a fax transmission stating that the tanbark came from legitimate sources except
that the shipment documents were not in order. [9]

Respondent sheriff contends that it was his ministerial duty to serve the writ of
replevin, absent any instruction to the contrary. He argues further that since the items
subject of the writ are in the custody of the court and could be disposed of only through
court order, there could not be any unwarranted benefit to a private individual as claimed
by complainant.
Noting that the questioned shipment of tanbark was not covered by either an NBI
apprehension report or a DENR seizure report, respondent sheriff contends that
complainant should have taken steps to protect the integrity of the shipment instead of
heaping blame upon others for his own negligence. Respondent sheriff avers that it was
not his intention to obstruct the apprehension and prosecution of criminal offenders,
contrary to complainants claim.
Respondent sheriff refutes complainants claim that he was absent from his office
from March 20 to March 24, 1998, and alleges that it was complainant who was absent
from court hearings on several occasions, in violation of his duty as a prosecutor.
Respondent submitted two supplemental comments dated October 30, 1998, and [10]

May 3, 1999, (1) reiterating his contention that the tanbark seized by the DENR and
[11]

subject of the replevin case had been found to come from a legitimate source, per an
order signed by the Regional Director (Region 8) of the DENR, and (2) informing the
[12]

OCA that the main replevin case was dismissed per an order of respondent judge dated
November 27, 1998. [13]
As required by resolution of the Court dated January 24, 2001, the parties herein
separately manifested that they are willing to have the present case resolved based on the
record on hand.
We note that in its report dated April 8, 1999, the OCA, after reviewing the case,
recommended that respondent judge be fined in the amount of P15,000.00 for gross
ignorance of the law. At the same time, the OCA recommended that the charges against
respondent sheriff be dismissed for lack of merit.
The recommendation of the OCA is well taken, except for the amount of the fine to
be imposed on said respondent judge.
The complaint for replevin itself states that the shipment of tanbark as well as the
vessel on which it was loaded were seized by the NBI for verification of supporting
documents. It also states that the NBI turned over the seized items to the DENR for
[14]

official disposition and appropriate action. A copy of the document evidencing the
[15]

turnover to DENR was attached to the complaint as Annex D. To our mind, these
[16]

allegations would have been sufficient to alert respondent judge that the DENR has
custody of the seized items and that administrative proceedings may have already been
commenced concerning the shipment. Under the doctrine of primary jurisdiction, courts
cannot take cognizance of cases pending before administrative agencies of special
competence. Note, too, that the plaintiff in the replevin suit who seeks to recover the
[17]

shipment from the DENR had not exhausted the administrative remedies available to
him. The prudent thing for respondent judge to have done was to dismiss the replevin
[18]

suit outright.
Under Section 78-A of the Revised Forestry Code, the DENR secretary or his
authorized representatives may order the confiscation of forest products illegally cut,
gathered, removed, or possessed or abandoned, including the conveyances used in the
commission of the offense.
In this regard, we declared in Paat v. Court of Appeals:

theenforcementofforestrylaws,rulesandregulationsandtheprotection,
developmentandmanagementofforestlandsfallwithintheprimaryand
specialresponsibilitiesoftheDepartmentofEnvironmentandNatural
Resources.Bytheverynatureofitsfunction,theDENRshouldbegivenafree
handunperturbedbyjudicialintrusiontodetermineacontroversywhichiswell
withinitsjurisdiction.Theassumptionbythetrialcourt,therefore,ofthe
replevinsuitfiledbyprivaterespondentsconstitutesanunjustified
encroachmentintothedomainoftheadministrativeagencysprerogative.The
doctrineofprimaryjurisdictiondoesnotwarrantacourttoarrogateuntoitself
theauthoritytoresolveacontroversythejurisdictionoverwhichisinitially
lodgedwithanadministrativebodyofspecialcompetence.xxx [19]

Respondent judges act of taking cognizance of the subject replevin suit clearly
demonstrates ignorance of the law. He has fallen short of the standard set forth in Canon
1, Rule 1.01 of the Code of Judicial Conduct, that a judge must be the embodiment of
competence, integrity, and independence. To measure up to this standard, judges are
expected to keep abreast of all laws and prevailing jurisprudence. Judges are duty
[20]

bound to have more than just a cursory acquaintance with laws and jurisprudence. Failure
to follow basic legal commands constitutes gross ignorance of the law from which no one
may be excused, not even a judge. [21]

We find, however, that respondent judge had already vacated the Writ of Seizure he
issued on March 19, 1998, in a subsequent Order dated November 27, 1998, dismissing
the Civil Complaint for replevin filed by Robert Hernandez against the Regional Director
of the DENR and other officers. He also directed in said order the sheriff to return to
CENRO, Tacloban City, all the chattels confiscated by virtue of the Writ of Seizure. [22]

Further, we find that Sheriff Aguilar in his Final Return of the Writ, dated December
15, 1998, had already delivered to CENRO the 102 tons and 120 kilos of tanbark duly
receipted by CENRO representative Marcial A. Dalimot on the same date. [23]

The OCA recommends that respondent judge be fined in the amount of


P15,000.00. Under the circumstances, considering that this is the first complaint against
him, we deem a fine of P10,000.00 to be sufficient.
Regarding the charges against respondent sheriff, we agree with the OCA that they
should be dismissed. Respondent sheriff merely complied with his ministerial duty to
serve the writ with reasonable celerity and to execute it promptly in accordance with its
mandates. [24]

WHEREFORE, respondent Judge Frisco T. Lilagan is hereby found liable for gross
ignorance of the law and is accordingly ordered to pay a FINE of P10,000.00, with a
WARNING that a repetition of the same or a similar offense will be dealt with more
severely. The complaint against respondent Sheriff IV Leonardo V. Aguilar is
DISMISSED for lack of merit.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

G.R. No. L-39655 March 21, 1975

ARROW TRANSPORTATION CORPORATION, petitioner,


vs.
BOARD OF TRANSPORTATION and SULTAN RENT-A-CAR, INC., respondents.

Manuel Imbong for petitioner.

Office of the Solicitor General Estelito P. Mendoza and Assistant Solicitor General Reynato
S. Puno for respondent Board.

Pastor C. Bacani and Ernesto Ganiban for private respondent.


FERNANDO, J.: +.wph!1

It must have been the realization that a challenge to a provisional permit issued by
respondent Board of Transportation 1 based on the absence of a hearing is not likely to be
attended with success that prompted petitioner to rely on another aspect of procedural due
process, the infirmity alleged being traceable to what it considered lack of jurisdiction. 2There is
the invocation of Philippine Long Distance Telephone Company v. Medina 3 with its mention of
both competitors and the public being notified. It does not suffice. Something more, which more,
is necessary. The reliance is misplaced. Its applicability is by no means obvious. As was pointed
out in the answer of respondent Board of Transportation, such a claim is hardly persuasive with
the procedure set forth in Presidential Decree No. 101 being followed and the provisional
authority to operate being based on an urgent public need. Such a contention merits the approval
of the Court. The petition cannot prosper.

Both petitioner and private respondent Sultan Rent-a-Car are domestic corporations. 4 The
former has in his favor a certificate of public convenience to operate a public utility bus air-
conditioned-auto-truck service from Cebu City to Mactan International Airport and vice-versa with
the use of twenty (20) units. 5 Private respondent on September 12, 1974 filed a petition with the
respondent Board for the issuance of a certificate of public convenience to operate a similar
service on the same line. 6 Eight days later, without the required publication, the Board issued an
order granting it provisional permit to operate such auto-truck service on the line applied
for. 7 There was a motion for reconsideration and for the cancellation of such provisional permit
filed on October 21, 1974, 8 but without awaiting final action thereon, this petition was filed. 9 This is
the explanation: "That petitioner has not waited for the resolution of his Motion for Reconsideration before going to this Court
considering that the question involved herein is purely a legal one, aside from the fact that the issuance of the Order without the
Board having acquired jurisdiction of the case yet, is patently illegal or was performed without jurisdiction." 10

So it was set forth in the petition filed on November 16, 1974. As a preliminary injunction was
likewise sought, a hearing was scheduled for November 29, 1974. It was cancelled, this
Court issuing a resolution instead, requiring respondents to file an answer not later than
December 6, 1974 and setting the hearing on the merits of the case on Wednesday,
December 11, 1974. In the answer submitted the facts alleged were substantially
admitted. 11 It denied the allegation that there must be a publication before a provisional permit
can be issued, reference being made, as noted, to Presidential Decree No. 101, which authorized
respondent Board to grant provisional permits when warranted by compelling circumstances and
to proceed promptly along the method of legislative inquiry. 12 The case was then argued on
December 11, 1974, Attorney Manuel Imbong appearing for petitioner and Assistant Solicitor
General Reynato S. Puno appearing for respondent Board of Transportation. 13 Thereafter, the
parties were given twenty days to file their respective memoranda and an additional ten-day
period to submit replies thereto if so minded. In time all the pleadings were submitted, and the
case was ready for decision.

The petition, to repeat, cannot prosper.

1. It is to be, admitted that the claim for relief on the asserted constitutional deficiency based
on procedural due process, not from the standpoint of the absence of a hearing but from the
lack of jurisdiction without the required publication having been made, was argued vigorously
and developed exhaustively in the memoranda of petitioner. The arguments set forth, while
impressed with plausibility, do not suffice to justify the grant of certiorari. Moreover, the
doctrine announced in the Philippine Long Distance Telephone Company decision, heavily
leaned on by petitioner is, at the most, a frail and insubstantial support and gives way to
decisions of this Court that have an even more specific bearing on this litigation.
2. A barrier to petitioner's pretension, not only formidable but also insurmountable, is the
well-settled doctrine that for a provisional permit, an ex parte hearing suffices. 14 The decisive
consideration is the existence of the public need. 15That was shown in this case, respondent
Board, on the basis of demonstrable data, being satisfied of the pressing necessity for the grant
of the provisional permit sought. There is no warrant for the nullification of what was ordered by it.
It must have been, as already noted, this state of the law that did lead petitioner to harp on its
interpretation of what for it is the teaching of the Philippine Long Distance Telephone Company
decision. 16 There was therein stated that one of the compelling reasons that led this Court to hold
that the defunct Public Service Commission did not acquire jurisdiction was that no provision was
made for bringing in as parties thereto the competitors of the Philippine Long Distance Telephone
Company. 17 That is the basis for the objection on procedural due process ground. While no doubt
such a holding was necessary for the decision of that case which dealt with a petition for the
reexamination of a decision that was held to be final and executory, it finds no application to this
controversy dealing with a provisional permit. This is made clear by this portion of the opinion of
Justice Sanchez: "Araneta seeks reexamination of the rates approved by the Commission.
Araneta avers that PLDT can carry out its improvement and expansion program at less onerous
terms to the subscribers. But Araneta [University] was not a party to the rate-fixing case or to any
of the other proceedings below. These rate-fixing and allied cases terminated with the final
judgment of January 9, 1964. Not being a party, it could not have moved to reconsider said
decision. Nor could it have appealed from that decision it had no standing in that case. Even if
we treat Araneta's reexamination petition as one for reconsideration, the time therefor has long
passed. 18 It was then stated: The reexamination herein sought by Araneta, perforce seeks the
fixing of new and different rates. 19 Further: Araneta in effect, institutes a fresh
petition for new rates different from those already established. Such petition is a proceeding
separate and distinct from those concluded by the final judgment of PSC of January 9,
1964. 20 The conclusion, therefore, necessarily follows:" We hold that the Public Service
Commission may not reduce or increase rates established in a judgment that has become final,
without proper notice; and that a Commission order reducing or increasing said rates without
such notice is void." 21 Under the facts of that case, the procedural due process infirmity
amounting to lack of jurisdiction is quite apparent. The opposite is true with this present petition
which deals with a grant of provisional permit. It would be to lift out of context the reference made
in the aforesaid opinion with reference to notification to the competitors to give a color of
applicability to the situation before us. Clearly then, the allegation of a failure to follow the
command of the due process guarantee is bereft of any legal foundation.

3. The question of whether the controversy is ripe for judicial determination was likewise
argued by the parties. For it is undeniable that at the time the petition was filed. there was
pending with the respondent Board a motion for reconsideration. Ordinarily, its resolution
should be awaited. Prior thereto, an objection grounded on prematurity can be raised.
Nonetheless, counsel for petitioner would stress that certiorari lies as the failure to observe
procedural due process ousted respondent Board of whatever jurisdiction it could have had
in the premises. This Court was impelled to go into the merits of the controversy at this
stage, not only because of the importance of the issue raised but also because of the strong
public interest in having the matter settled. As was set forth in Executive Order No. 101
which prescribes the procedure to be followed by respondent Board, it is the policy of the
State, as swiftly as possible, to improve the deplorable condition of vehicular traffic, obtain
maximum utilization of existing public motor vehicles and eradicate the harmful and unlawful
trade of clandestine operators, as well as update the standard of those carrying such
business, making it "imperative to provide, among other urgently needed measures, more
expeditious methods in prescribing, redefining, or modifying the lines and mode of operation
of public utility motor vehicles that now or thereafter, may operate in this country. 22 It is
essential then both from the standpoint of the firms engaged as well as of the riding public to
ascertain whether or not the procedure followed in this case and very likely in others of a similar
nature satisfies the procedural due process requirement. Thus its ripeness for adjudication
becomes apparent.
To paraphrase what was said in Edu v. Ericta 23 where the validity of a legislation was passed
upon in a certiorari proceeding to annul and set aside a writ of preliminary injunction, to so act
would be to conserve both time and effort. Those desiring to engage in public utility business as
well as the public are both vitally concerned with the final determination of the standards to be
followed in the procedure that must be observed. There is, to repeat, a great public interest in a
definitive outcome of the crucial issue involved. One of the most noted authorities on
Administrative Law, professor Kenneth Culp Davis, discussing the ripeness concept, is of the
view that the resolution of what could be a debilitating uncertainty with the conceded ability of the
judiciary to work out a solution of the problem posed is a potent argument for minimizing the
emphasis laid on its technical aspect. 24

WHEREFORE, the petition for certiorari is dismissed. No costs.

Makalintal, C.J., Barredo, Antonio and Fernandez, JJ., concur. 1wph1.t

Aquino, J., is on leave.

. No. 85439 January 13, 1992

KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA NG BAGONG


PAMILIHANG BAYAN NG MUNTINLUPA, INC. (KBMBPM), TERESITA A. FAJARDO,
NADYESDA B. PONSONES, MA. FE V. BOMBASE, LOIDA D. LUCES, MARIO S.
FRANCISCO, AMADO V. MANUEL and ROLANDO G. GARCIA, incumbent members of
the Board, AMADO G. PEREZ and MA. FE V. BOMBASE, incumbent General Manager
and Secretary-Treasurer, respectively, petitioners,
vs.
HON. CARLOS G. DOMINGUEZ, Secretary of Agriculture, Regional Director of Region
IV of the Department of Agriculture ROGELIO P. MADRIAGA, RECTO CORONADO and
Municipal Mayor IGNACIO R. BUNYE, both in his capacity as Municipal Mayor of
Muntinlupa, Metro Manila and as Presiding Officer of Sangguniang Bayan ng
Muntinglupa, and JOHN DOES, respondents.

G.R. No. 91927 January 13, 1992

IGNACIO R. BUNYE, JAIME R. FRESNEDI, CARLOS G. TENSUAN, VICTOR E.


AGUINALDO, ALEJANDRO I. MARTINEZ, EPIFANIO A. ESPELETA, REY E. BULAY,
LUCIO B. CONSTANTINO, ROMAN E. NIEFES, NEMESIO O. MOZO, ROGER SMITH,
RUFINO B. JOAQUIN, NOLASCO I. DIAZ, RUFINO IBE and NESTOR
SANTOS, petitioners,
vs.
THE SANDIGANBAYAN, THE OMBUDSMAN and ROGER C. BERBANO, Special
Prosecutor III, respondents.

Jose O. Villanueva and Roberto B. Romanillos for petitioners in G.R. No. 85439.

Alampay & Manhit Law Offices for petitioners in G.R. No. 91927.

DAVIDE, JR., J.:


These cases have been consolidated because they are closely linked with each other as to
factual antecedents and issues.

The first case, G.R. No. 85439 (hereinafter referred to as the Kilusang Bayan case),
questions the validity of the order of 28 October 1988 of then Secretary of Agriculture Hon.
Carlos G. Dominguez which ordered: (1) the take-over by the Department of Agriculture of
the management of the petitioner Kilusang Bayan sa Paglilingkod Ng Mga Magtitinda ng
Bagong Pamilihang Bayan ng Muntilupa, Inc. (KBMBPM) pursuant to the Department's
regulatory and supervisory powers under Section 8 of P.D. No. 175, as amended, and
Section 4 of Executive Order No. 13, (2) the creation of a Management Committee which
shall assume the management of KBMBPM upon receipt of the order, (3) the disbandment of
the Board of Directors, and (4) the turn over of all assets, properties and records of the
KBMBPM the Management Committee.

The second case. G.R. No. 91927 (hereinafter referred to as the Bunye case), seeks the
nullification of the Resolution of 4 January 1990 of the Sandiganbayan admitting the
Amended Information against petitioners in Criminal Case No. 13966 and denying their
motion to order or direct preliminary investigation, and its Resolution of 1 February 1990
denying the motion to reconsider the former.

The procedural and factual antecedents are not disputed.

On 2 September 1985, the Municipal Government of Muntinlupa (hereinafter, Municipality),


Metro Manila, thru its then Mayor Santiago Carlos, Jr., entered into a contract with the
KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA SA BAGONG PAMILIHANG
BAYAN NG MUNTINLUPA, INC. (KBMBPM) represented by its General Manager, Amado
Perez, for the latter's management and operation of the new Muntinlupa public market. The
contract provides for a twenty-five (25) year term commencing on 2 September 1985,
renewable for a like period, unless sooner terminated and/or rescinded by mutual agreement
of the parties, at a monthly consideration of Thirty-Five Thousand Pesos (P35,000) to be
paid by the KBMBPM within the first five (5) days of each month which shall, however, be
increased by ten percent (10%) each year during the first five (5) years only. 1

The KBMBPM is a service cooperative organized by and composed of vendors occupying


the New Muntinlupa Public Market in Alabang, Muntinlupa, Metro Manila pursuant to
Presidential Decree No. 175 and Letter of Implementation No. 23; its articles of incorporation
and by-laws were registered with the then Office of the Bureau of Cooperatives Development
(thereafter the Bureau of Agricultural Cooperatives Development or BACOD and now the
Cooperative Development Authority). 2

Following his assumption into office as the new mayor succeeding Santiago Carlos, Jr.,
petitioner Ignacio Bunye, claiming to be particularly scandalized by the "virtual 50-year term
of the agreement, contrary to the provision of Section 143, paragraph 3 of Batas Pambansa
Blg. 337," and the "patently inequitable rental," directed a review of the aforesaid
contract. 3 He sought opinions from both the Commission on Audit and the Metro Manila
Commission (MMC) on the validity of the instrument. In separate letters, these agencies urged
that appropriate legal steps be taken towards its rescission. The letter of Hon. Elfren Cruz of the
MMC even granted the Municipality authority "to take the necessary legal steps for the
cancellation/recission of the above cited contract and make representations with KBMBPM for the
immediate transfer/takeover of the possession, management and operation of the New
Muntinlupa Market to the Municipal Government of Muntinlupa." 4
Consequently, upon representations made by Bunye with the Municipal Council, the latter
approved on 1 August 1988 Resolution No. 45 abrogating the contract. To implement this
resolution, Bunye, together with his co-petitioners and elements of the Capital Command of
the Philippine Constabulary, proceeded, on 19 August 1986, to the public market and
announced to the general public and the stallholders thereat that the Municipality was taking
over the management and operation of the facility, and that the stallholders should
henceforth pay their market fees to the Municipality, thru the Market Commission, and no
longer to the KBMBPM. 5

On 22 August 1988, the KBMBPM filed with Branch 13 of the Regional Trial Court of Makati
a complaint for breach of contract, specific performance and damages with prayer for a writ
of preliminary injunction against the Municipality and its officers, which was docketed as Civil
Case No. 88-1702. 6 The complaint was premised on the alleged illegal take-over of the public
market effected "in excess of his (Bunye's) alleged authority" and thus "constitutes breach of
contract and duty as a public official."

The writ applied for having been denied, 7 the KBMBPM officers resisted the attempts of Bunye
and company to complete the take-over; they continued holding office in the KBS building, under
their respective official capacities. The matter having been elevated to this Court by way
of certiorari, 8 We remanded the same to the Court of Appeals which docketed it as C.A.-G.R. No. L-16930. 9

On 26 August 1988, Amado Perez filed with the Office of the Ombudsman a letter-complaint
charging Bunye and his co-petitioners with oppression, harassment, abuse of authority and
violation of the Anti-Graft and Corrupt Practices Act 10 for taking over the management and
operation of the public market from KBMBPM. 11

In a subpoena dated 7 October 1988, prosecutor Mothalib C. Onos of the Office of the
Special Prosecutor directed Bunye and his co-petitioners to submit within ten (10) days from
receipt thereof counter-affidavits, affidavits of their witnesses and other supporting
documents. 12 The subpoena and letter-complaint were received on 12 October 1988.

On 20 October 1988, two (2) days before the expiration of the period granted to file said
documents, Bunye, et al. filed by mail an urgent motion for extension of "at least fifteen (15)
days from October 22, 1988" within which to comply 13 with the subpoena.

Thereafter, the following transpired which subsequently gave rise to these petitions:

G.R. No. 85439

In the early morning of 29 October 1988, a Saturday, respondent Madriaga and Coronado,
allegedly accompanied by Mayor Bunye and the latters' heavily armed men, both in uniform
and in civilian clothes, together with other civilians, namely: Romulo Bunye II, Alfredo Bunye,
Tomas Osias, Reynaldo Camilon, Benjamin Taguibao, Benjamin Bulos and other unidentified
persons, allegedly through force, violence and intimidation, forcibly broke open the doors of
the offices of petitioners located at the second floor of the KBS Building, new Muntinlupa
Public Market, purportedly to serve upon petitioners the Order of respondent Secretary of
Agriculture dated 28 October 1988, and to implement the same, by taking over and
assuming the management of KBMBPM, disbanding the then incumbent Board of Directors
for that purpose and excluding and prohibiting the General Manager and the other officers
from exercising their lawful functions as such. 14 The Order of the Secretary reads as follows: 15

ORDER
WHEREAS, the KILUSANG BAYAN SA PAGLILINGKOD NG MGA
MAGTITINDA NG BAGONG PAMILIHANG BAYAN NG MUNTINLUPA, INC.,
(KBMBPM), Alabang, Muntinlupa, Metro Manila is a Cooperative registered
under the provisions of Presidential Decree No. 175, as amended;

WHEREAS, the Department of Agriculture is empowered to regulate and


supervise cooperatives registered under the provisions of Presidential
Decree No. 175, as amended;

WHEREAS, the general membership of the KBMBPM has petitioned the


Department of Agriculture for assistance in the removal of the members of
the Board of Directors who were not elected by the general membership of
said cooperative;

WHEREAS, the on-going financial and management audit of the Department


of Agriculture auditors show (sic) that the management of the KBMBPM is not
operating that cooperative in accordance with PD. 175, LOI No. 23, the
Circulars issued by DA/BACOD and the provisions of the by-laws of
KBMBPM;

WHEREAS, the interest of the public so demanding it is evident and urgently


necessary that the KBMBPM MUST BE PLACED UNDER MANAGEMENT
TAKE-OVER of the Department of Agriculture in order to preserve the
financial interest of the members of the cooperative and to enhance the
cooperative development program of the government;

WHEREAS, it is ordered that the Department of Agriculture in the exercise of


its regulatory and supervisory powers under Section 8 of PD 175, as
amended, and Section 4 of Executive Order No. 113, take over the
management of KBMBPM under the following directives:

1. THAT a Management Committee is hereby created


composed of the following:

a) Reg. Dir. or OIC RD DA Region IV

b) Atty. Rogelio P. Madriaga BACOD

c) Mr. Recto Coronado KBMBPM

d) Mrs. Nadjasda Ponsones KBMBPM

e) One (1) from the Municipal Government of Muntinlupa to


be designated by the Sangguniang Pambayan ng Muntinlupa;

2. THAT the Management Committee shall, upon receipt of


this Order, assume the management of KBMBPM;

3. THAT the present Board of Directors is hereby disbanded


and the officers and Manager of the KBMBPM are hereby
directed to turnover all assets, properties and records of the
KBMBPM to the Management Committee herein created;

4. THAT the Management Committee is hereby empowered


to promulgate rules of procedure to govern its workings as a
body;

5. THAT the Management Committee shall submit to the


undersigned thru the Director of BACOD monthly reports on
the operations of KBMBPM;

6. THAT the Management Committee shall call a General


Assembly of all registered members of the KBMBPM within
Ninety (90) days from date of this Order to decide such
matters affecting the KBMBPM, including the election of a
new set of Board of Director (sic).

This Order takes effect immediately and shall continue to be in force until the
members of the Board of Directors shall have been duly elected and
qualified.

Done this 28th day of October, 1988 at Quezon City.

As claimed by petitioners, the Order served on them was not written on the stationary of the
Department, does not bear its seal and is a mere xerox copy.

The so-called petition upon which the Order is based appears to be an unverified petition
dated 10 October 1988 signed, according to Mayor Bunye, 16 by 371 members of the
KBMBPM.

On 2 November 1988, petitioners filed the petition in this case alleging, inter alia, that:

(a) Respondent Secretary acted without or in excess of jurisdiction in issuing


the Order for he arrogated unto himself a judicial function by determining the
alleged guilt of petitioners on the strength of a mere unverified petition; the
disbandment of the Board of Directors was done without authority of law
since under Letter of Implementation No. 23, removal of officers, directors or
committee members could be done only by the majority of the members
entitled to vote at an annual or special general assembly and only after an
opportunity to be heard at said assembly.

(b) Respondent Secretary acted in a capricious, whimsical, arbitrary and


despotic manner, so patent and gross that it amounted to a grave abuse of
discretion.

(c) The Order is a clear violation of the By-Laws of KBMBPM and is likewise
illegal and unlawful for it allows or tolerates the violation of the penal
provisions under paragraph (c), Section 9 of P.D. No. 175.

(d) The Order is a clear violation of the constitutional right of the individual
petitioners to be heard. 17
They pray that upon the filing of the petition, respondents, their agents, representatives or
persons acting on their behalf be ordered to refrain, cease and desist from enforcing and
implementing the questioned Order or from excluding the individual petitioners from the
exercise of their rights as such officers and, in the event that said acts sought to be
restrained were already partially or wholly done, to immediately restore the management and
operation of the public market to petitioners, order respondents to vacate the premises and,
thereafter, preserve the status quo; and that, finally, the challenged Order be declared null
and void.

In the Resolution of 9 October 1988, 18 We required the respondents to Comment on the


petition. Before any Comment could be filed, petitioners filed on 2 January 1989 an Urgent Ex-
Parte Motion praying that respondent Atty. Rogelio Madriaga, who had assumed the position of
Chairman of the Management Committee, be ordered to stop and/or cancel the scheduled
elections of the officers of the KBMBPM on 6 January 1989 and, henceforth, desist from
scheduling any election of officers or Members of the Board of Directors thereof until further
orders on the Court. 19 The elections were, nevertheless, held and a new board of directors was
elected. So, on 19 January 1989, petitioners filed a supplemental motion 20 praying that
respondent Madriaga and the "newly elected Board of Directors be ordered to cease and desist
from assuming, performing or exercising powers as such, and/or from removing or replacing the
counsels of petitioners as counsels for KBMBPM and for Atty. Fernando Aquino, Jr., to cease and
desist from unduly interfering with the affairs and business of the cooperative."

Respondent Bunye, by himself, filed his Comment on 23 January 1989. 21 He denies the
factual allegations in the petition and claims that petitioners failed to exhaust administrative
remedies. A reply thereto was filed by petitioners on 7 February 1989. 22

Respondent Recto Coronado filed two (2) Comments. The first was filed on 6 February
1989 23 by his counsel, Atty. Fernando Aquino, Jr., and the second, which is for both him and Atty.
Madriaga, was filed by the latter on 10 February 1989. 24

On 20 February 1989, petitioners filed a Reply to the first Comment of Coronado 25 and
an Ex-Parte Motion for the immediate issuance of a cease and desist order 26 praying that the so-
called new directors and officers of KBMBPM, namely: Tomas M. Osias, Ildefonso B. Reyes,
Paulino Moldez, Fortunato M. Medina, Aurora P. del Rosario, Moises Abrenica, and Lamberto
Casalla, be ordered to immediately cease and desist from filing notices of withdrawals or motions
to dismiss cases filed by the Cooperative now pending before the courts, administrative offices
and the Ombudsman and Tanodbayan, and that if such motions or notices were already filed, to
immediately withdraw and desist from further pursuing the same until further orders of this Court.
The latter was precipitated by the Resolution No. 19 of the "new" board of directors withdrawing
all cases filed by its predecessors against Bunye, et al., and more particularly the following cases:
(a) G.R. No. 85439 (the instant petition), (b) Civil Case No. 88-1702, (c) OSP Case No. 88-2110
before the Ombudsman, (d) IBP Case No. 88-0119 before the Tanodbayan, and Civil Case No.
88-118 for Mandamus. 27

On 1 March 1989, We required the Solicitor General to file his Comment to the petition and
the urgent motion for the immediate issuance of a cease and desist order. 28

A motion to dismiss the instant petition was filed on 30 March 1989. 29 On 19 April 1989, We
resolved to dismiss the case and consider it closed and terminated. 30 Thereupon, after some
petitioners filed a motion for clarification and reconsideration, We set aside the dismissal order
and required the new directors to comment on the Opposition to Motion to Dismiss filed by the
former. 31
The new board, on 14 June 1989, prayed that its Manifestation of 6 June 1989 and
Opposition dated 9 June 1989, earlier submitted it response to petitioners' motion for
reconsideration of the order dismissing the instant petition, be treated as its
Comment. 32 Both parties then continued their legal fencing, serving several pleadings on each
other.

In Our Resolution of 9 August 1989, 33 We gave the petition due course and required the parties
to submit their respective Memoranda.

On 14 August 1989, petitioners filed an urgent ex-parte motion for the immediate issuance of
a cease and desist order 34 in view of the new board's plan to enter into a new management
contract; the motion was noted by this Court on 23 August 1989. A second ex-parte motion, noted
on 18 October 1989, was filed on 19 September 1989 asking this court to consider the "Invitation
to pre-qualify and bid" for a new contract published by respondent Bunye. 35

In a belated Comment 36 for the respondent Secretary of Agriculture filed on 22 September 1989,
the Office of the Solicitor General asserts that individual petitioners, who were not allegedly
elected by the members or duly designated by the BACOD Director, have no right or authority to
file this case; the assailed Order of the Secretary was issued pursuant to P.D. No. 175, more
particularly Section 8 thereof which authorizes him "(d) to suspend the operation or cancel the
registration of any cooperative after hearing and when in its judgment and based on findings,
such cooperative is operating in violation of this Decree, rules and regulations, existing laws as
well as the by-laws of the cooperative itself;" the Order is reasonably necessary to correct serious
flaws in the cooperative and provide interim measures until election of regular members to the
board and officers thereof; the elections conducted on 6 January 1989 are valid; and that the
motion to dismiss filed by the new board of directors binds the cooperative. It prays for the
dismissal of the petition.

Respondent Secretary of Agriculture manifested on 22 September 1989 that he is adopting


the Comment submitted by the Office of the Solicitor General as his
memorandum; 37 petitioners and respondents Coronado and Madriaga filed their separate
Memoranda on 6 November 1989; 38 while the new board of directors submitted its Memorandum
on 11 December 1989. 39

The new KBMBPM board submitted additional pleadings on 16 February 1990 which it
deemed relevant to the issues involved herein. Reacting, petitioners filed a motion to strike
out improper and inadmissible pleadings and annexes and sought to have the pleaders cited
for contempt. Although We required respondents to comment, the latter did not comply.

Nevertheless, a manifestation was filed by the same board on 25 February 1991 40 informing
this Court of the holding, on 9 January 1991, of its annual general assembly and election of its
board of directors for 1991. It then reiterates the prayer that the instant petition be considered
withdrawn and dismissed. Petitioners filed a counter manifestation alleging that the instant
petition was already given due course on 9 August 1989. 41 In its traverse to the counter
manifestation, the new board insists that it "did not derive authority from the October 28, 1988
Order, the acts of the Management Committee, nor (sic) from the elections held in (sic) January
6, 1989," but rather from the members of the cooperative who elected them into office during the
elections.

Petitioners filed a rejoinder asserting that the election of new directors is not a supervening
event independent of the main issue in the present petition and that to subscribe to the
argument that the issues in the instant petition became moot with their assumption into office
is to reward a wrong done.
G. R. NO. 91927

Petitioners claim that without ruling on their 20 October 1988 motion for an extension of at
last 15 days from 22 October 1988 within which to file their counter-affidavits, which was
received by the Office of the Special Prosecutor on 3 November 1988, Special Prosecutor
Onos promulgated on 11 November 1988 a Resolution finding the evidence on hand
sufficient to establish a prima facie case against respondents (herein petitioners) and
recommending the filing of the corresponding information against them before the
Sandiganbayan. 42 Petitioners also claim that they submitted their counter-affidavits on 9
November 1988. 43

In their motion dated 2 December 1988, petitioners move for a reconsideration of the above
Resolution, 44 which was denied by Onos 45 in his 18 January 1989 Order. The information
against the petitioners was attached to this order.

Upon submission of the records for his approval, the Ombudsman issued a first indorsement
on 4 April 1989 referring to "Judge Gualberto J. de la Llana, Acting Director , IEO/RSSO, this
Office, the within records of OSP Case No. 88-02110 . . . for further preliminary
investigation . . ." 46

Thereafter, on 28 April 1989, Bunye and company received a subpoena from de la Llana
requiring them to appear before the latter on 25 April 1989, 47 submit a report and file
comment. After being granted an extension, Bunye and company submitted their comment on 18
May 1989. 48

On 22 August 1989, de la Llana recommended the filing of an information for violation of


section 3 (e) of the Anti-Graft and Corrupt Practices Act. 49 The case was referred to special
prosecuting officer Jose Parentela, Jr. who, in his Memorandum 50 to the Ombudsman through the
Acting Special Prosecutor, likewise urged that an information be filed against herein petitioners.
On 3 October 1989, the Ombudsman signed his conformity to the Memorandum and approved
the 18 January information prepared by Onos, which was then filed with the Sandiganbayan.

Consequently, Bunye, et al. were served arrest warrants issued by the Sandiganbayan.
Detained at the NBI on 9 October 1989, they claim to have discovered only then the
existence of documents recommending and approving the filing of the complaint and a
memorandum by special prosecutor Bernardita G. Erum proposing the dismissal of the
same. 51

Arraignment was set for 18 October 1989. 52

However, on 14 October 1989, petitioners filed with the Sandiganbayan an "Omnibus Motion
to Remand to the Office of the Ombudsman; to Defer Arraignment and to Suspend
Proceedings." 53

Subsequently, through new counsel, petitioners filed on 17 October 1989 a Consolidated


Manifestation and Supplemental Motion 54 praying, inter alia, for the quashal of the information
on the ground that they were deprived of their right to a preliminary investigation and that the
information did not charge an offense.

The Sandiganbayan issued an order on 18 October 1989 deferring arraignment and directing
the parties to submit their respective memoranda, 55 which petitioners complied with on 2
November 1989. 56 On 16 November 1989, special Prosecutor Berbano filed a motion to admit
amended
information. 57

On 17 November 1989, the Sandiganbayan handed down a Resolution 58 denying for lack of
merit the Omnibus Motion to Remand the Case To The Office of the Ombudsman, to Defer
Arraignment and to Suspend Proceedings. Petitioners then filed a motion to order a preliminary
investigation 59 on the basis of the introduction by the amended information of new, material and
substantive allegations, which the special prosecutor opposed, 60 thereby precipitating a rejoinder
filed by petitioners. 61

On 4 January 1990, the Sandiganbayan handed down a Resolution 62 admitting the Amended
Information and denying the motion to direct preliminary investigation. Their motion to reconsider
this Resolution having been denied in the Resolution of 1 February 1990, 63 petitioners filed the
instant petition on 12 February 1990.

Petitioners claim that respondent Sandiganbayan acted without or in excess of jurisdiction or


with manifest grave abuse of discretion amounting to lack of jurisdiction in denying
petitioners their right to preliminary investigation and in admitting the Amended Information.

They then pray that: (a) the 4 January and 1 February 1990 Resolutions of the
Sandiganbayan, admitting the amended information and denying the motion for
reconsideration, respectively, be annulled; (b) a writ be issued enjoining the Sandiganbayan
from proceeding further in Criminal Case No. 13966; and (c) respondents be enjoined from
pursuing further actions in the graft case.

We required the respondents to Comment on the petition.

On 21 February 1990, petitioners' counsel filed a motion to drop Epifanio Espeleta and Rey
E. Dulay as petitioners, 64 and in the Comment they filed on 30 March 1990, in compliance with
Our Resolution of 1 March 1990, they state that they do not interpose any objection to the motion.

On 20 March 1990, the Office of the Solicitor General moved that it be excused from filing
comment for the respondents as it cannot subscribe to the position taken by the latter with
respect to the questions of law involved. 65 We granted this motion in the resolution of 8 May
1990.

Respondent Berbano filed his comment on 10 September 1991 and petitioners replied on 20
December 1990; Berbano subsequently filed a Rejoinder thereto on 11 January 1991. 66 The
Sandiganbayan then filed a manifestation proposing that it be excused from filing comment as its
position
on the matters in issue is adequately stated in the resolutions sought to be annulled. 67 On 7
March 1991, We resolved to note the manifestation and order the instant petition consolidated
with G.R. No. 85439.

The present dispute revolves around the validity of the antecedent proceedings which led to
the filing of the original information on 18 January 1989 and the amended information
afterwards.

THE ISSUES AND THEIR RESOLUTION

1. G. R. No. 85439.
As adverted to in the introductory portion of this Decision, the principal issue in G.R. No.
85439 is the validity of the 28 October 1988 Order of respondent Secretary of Agriculture.
The exordium of said Order unerringly indicates that its basis is the alleged petition of the
general membership of the KBMBPM requesting the Department for assistance "in the
removal of the members of the Board of Directors who were not elected by the general
membership" of the cooperative and that the "ongoing financial and management audit of the
Department of Agriculture auditors show (sic) that the management of the KBMBPM is not
operating that cooperative in accordance with P.D. 175, LOI 23, the Circulars issued by
DA/BACOD and the provisions and by-laws of KBMBPM." It is also professed therein that
the Order was issued by the Department "in the exercise of its regulatory and supervisory
powers under Section 8 of P.D. 175, as amended, and Section 4 of Executive Order No.
113."

Respondents challenge the personality of the petitioners to bring this action, set up the
defense of non-exhaustion of administrative remedies, and assert that the Order was lawfully
and validly issued under the above decree and Executive Order.

We find merit in the petition and the defenses interposed do not persuade Us.

Petitioners have the personality to file the instant petition and ask, in effect, for their
reinstatement as Section 3, Rule 65 of the Rules of Court, defining an action for mandamus,
permits a person who has been excluded from the use and enjoyment of a right or office to
which he is entitled, to file suit. 68 Petitioners, as ousted directors of the KBMBPM, are
questioning precisely the act of respondent Secretary in disbanding the board of directors; they
then pray that this Court restore them to their prior stations.

As to failure to exhaust administrative remedies, the rule is well-settled that this requirement
does not apply where the respondent is a department secretary whose acts, as an alter ego
of the President, bear the implied approval of the latter, unless actually disapproved by
him. 69 This doctrine of qualified political agency ensures speedy access to the courts when most
needed. There was no need then to appeal the decision to the office of the President; recourse to
the courts could be had immediately. Moreover, the doctrine of exhaustion of administrative
remedies also yields to other exceptions, such as when the question involved is purely legal, as in
the instant case, 70 or where the questioned act is patently illegal, arbitrary or oppressive. 71 Such
is the claim of petitioners which, as hereinafter shown, is correct.

And now on the validity of the assailed Order.

Regulation 34 of Letter of Implementation No. 23 (implementing P.D. No. 175) provides the
procedure for the removal of directors or officers of cooperatives, thus:

An elected officer, director or committee member may be removed by a vote


of majority of the members entitled to vote at an annual or special general
assembly. The person involved shall have an opportunity to be heard.

A substantially identical provision, found in Section 17, Article III of the KBMBPM's by-laws,
reads:

Sec. 17. Removal of Directors and Committee Members. Any elected


director or committee member may be removed from office for cause by a
majority vote of the members in good standing present at the annual or
special general assembly called for the purpose after having been given the
opportunity to be heard at the assembly.

Under the same article are found the requirements for the holding of both the annual general
assembly and a special general assembly.

Indubitably then, there is an established procedure for the removal of directors and officers of
cooperatives. It is likewise manifest that the right to due process is respected by the express
provision on the opportunity to be heard. But even without said provision, petitioners cannot
be deprived of that right.

The procedure was not followed in this case. Respondent Secretary of Agriculture arrogated
unto himself the power of the members of the KBMBPM who are authorized to vote to
remove the petitioning directors and officers. He cannot take refuge under Section 8 of P.D.
No. 175 which grants him authority to supervise and regulate all cooperatives. This section
does not give him that right.

An administrative officer has only such powers as are expressly granted to him and those
necessarily implied in the exercise thereof. 72 These powers should not be extended by
implication beyond what may to necessary for their just and reasonable execution. 73

Supervision and control include only the authority to: (a) act directly whenever a specific
function is entrusted by law or regulation to a subordinate; (b) direct the performance of duty;
restrain the commission of acts; (c) review, approve, reverse or modify acts and decisions of
subordinate officials or
units; (d) determine priorities in the execution of plans and programs; and (e) prescribe
standards, guidelines, plans and programs. Specifically, administrative supervision is limited
to the authority of the department or its equivalent to: (1) generally oversee the operations of
such agencies and insure that they are managed effectively, efficiently and economically but
without interference with day-to-day activities; (2) require the submission of reports and
cause the conduct of management audit, performance evaluation and inspection to
determine compliance with policies, standards and guidelines of the department; (3) take
such action as may be necessary for the proper performance of official functions, including
rectification of violations, abuses and other forms of mal-administration; (4) review and pass
upon budget proposals of such agencies but may not increase or add to them. 74

The power to summarily disband the board of directors may not be inferred from any of the
foregoing as both P.D. No. 175 and the by-laws of the KBMBPM explicitly mandate the
manner by which directors and officers are to be removed. The Secretary should have
known better than to disregard these procedures and rely on a mere petition by the general
membership of the KBMBPM and an on-going audit by Department of Agriculture auditors in
exercising a power which he does not have, expressly or impliedly. We cannot concede to
the proposition of the Office of the Solicitor General that the Secretary's power under
paragraph (d), Section 8 of P.D. No. 175 above quoted to suspend the operation or cancel
the registration of any cooperative includes the "milder authority of suspending officers and
calling for the election of new officers." Firstly, neither suspension nor cancellation includes
the take-over and ouster of incumbent directors and officers, otherwise the law itself would
have expressly so stated. Secondly, even granting that the law intended such as postulated,
there is the requirement of a hearing. None was conducted.

Likewise, even if We grant, for the sake of argument, that said power includes the power to
disband the board of directors and remove the officers of the KBMBPM, and that
a hearing was not expressly required in the law, still the Order can be validly issued only
after giving due process to the affected parties, herein petitioners.

Due process is guaranteed by the Constitution 75 and extends to administrative proceedings. In


the landmark case of Ang Tibay vs. Court of Industrial Relations, 76 this Court, through Justice
Laurel, laid down the cardinal primary requirements of due process in administrative proceedings,
foremost of which is the right to a hearing, which includes the right to present one's case and
submit evidence in support thereof. The need for notice and the opportunity to be heard is the
heart of procedural due process, be it in either judicial or administrative
proceedings. 77 Nevertheless, a plea of a denial of procedural due process does not lie where a
defect consisting in an absence of notice of hearing was thereafter cured by the aggrieved party
himself as when he had the opportunity to be heard on a subsequent motion for reconsideration.
This is consistent with the principle that what the law prohibits is not the absence of previous
notice but the absolute absence thereof and lack of an opportunity to be heard. 78

In the instant case, there was no notice of a hearing on the alleged petition of the general
membership of the KBMBPM; there was, as well, not even a semblance of a hearing. The
Order was based solely on an alleged petition by the general membership of the KBMBPM.
There was then a clear denial of due process. It is most unfortunate that it was done after
democracy was restored through the peaceful people revolt at EDSA and the overwhelming
ratification of a new Constitution thereafter, which preserves for the generations to come the
gains of that historic struggle which earned for this Republic universal admiration.

If there were genuine grievances against petitioners, the affected members should have
timely raise these issues in the annual general assembly or in a special general assembly.
Or, if such a remedy would be futile for some reason or another, judicial recourse was
available.

Be that as it may, petitioners cannot, however, be restored to their positions. Their terms
expired in 1989, thereby rendering their prayer for reinstatement moot and academic.
Pursuant to Section 13 of the by-laws, during the election at the first annual general
assembly after registration, one-half plus one (4) of the directors obtaining the highest
number of votes shall serve for two years, and the remaining directors (3) for one year;
thereafter, all shall be elected for a term of two years. Hence, in 1988, when the board was
disbanded, there was a number of directors whose terms would have expired the next year
(1989) and a number whose terms would have expired two years after (1990). Reversion to
the status quo preceding 29 October 1988 would not be feasible in view of this turn of
events. Besides, elections were held in 1990 and 1991. 79 The affairs of the cooperative are
presently being managed by a new board of directors duly elected in accordance with the
cooperative's by-laws.

2. G. R. No. 91927.

The right of an accused to a preliminary investigation is not among


the rights guaranteed him in the Bill of Rights. As stated in Marcos, et al. vs. Cruz, 80 "the
preliminary investigation in criminal cases is not a creation of the Constitution; its origin is statutory and it exists and the right
thereto can be invoked when so established and granted by law. It is so specifically granted by procedural law. 81 If not waived,
absence thereof may amount to a denial of due process. 82 However, lack of preliminary investigation is not a ground to quash or
dismiss a complaint or information. Much less does it affect the court's jurisdiction. In People vs. Casiano, 83 this Court ruled:

Independently of the foregoing, the absence of such investigation


[preliminary] did not impair the validity of the information or otherwise render
it defective. Much less did it affect the jurisdiction of the court of first instance
over the present case. Hence, had the defendant-appellee been entitled to
another preliminary investigation, and had his plea of not guilty upon
arraignment not implied a waiver of said right, the court of first instance
should have, either conducted such preliminary investigation, or ordered the
Provincial Fiscal to make it, in pursuance of section 1687 of the Revised
Administrative Code (as amended by Republic Act No. 732), or remanded the
record for said investigation to the justice of the peace court, instead of
dismissing the case as it did in the order appealed from.

This doctrine was thereafter reiterated or affirmed in several case. 84

In the instant case, even if it is to be conceded for argument's sake that there was in fact no
preliminary investigation, the Sandiganbayan, per Doromal vs. Sandiganbayan, 85 "should merely
suspend or hold in abeyance proceedings upon the questioned Amended Information and remand the case to the Office of the
Ombudsman for him to conduct a preliminary investigation."

It is Our view, however, that petitioners were not denied the right to preliminary investigation.
They, nevertheless, insist that the preliminary investigation conducted by the Office of the
Special Prosecutor existed more in form than in substance. This is anchored on the failure by
prosecutor Onos to consider the counter-affidavits filed by petitioners. The same sin of
omission is ascribed to Acting Director de la Llana who purportedly failed to consider the
comments submitted by the petitioners pursuant to a subpoena dated 13 April 1989. The
failure of special prosecutor Berbano to conduct a preliminary investigation before amending
the information is also challenged.

It is finally urged that the Sandiganbayan completely disregarded the "glaring anomaly that
on its face the Information filed by the Office of the Special Prosecutor" was prepared and
subscribed on 18 January 1989, while the records indicate that the preliminary investigation
was concluded on 3 October 1989.

In his Comment, respondent Berbano dispassionately traces the genesis of the criminal
information filed before the Sandiganbayan. His assessment that a preliminary investigation
sufficient in substance and manner was conducted prior to the filing of the information
reflects the view of the Sandiganbayan, maintained in both the 17 November 1989 and 4
January 1990 resolutions, that there was compliance with the requirements of due process.

Petitioners were provided a reasonable period within which to submit their counter-affidavits;
they did not avail of the original period; they moved for an extension of at least fifteen (15)
days from 22 October 1988. Despite the urgency of its nature, the motion was sent by mail.
The extension prayed for was good up to 6 November 1988. But, as admitted by them, they
filed the Counter-Affidavits only on 9 November 1988. Yet, they blamed prosecutor Onos for
promulgating the 11 November 1989 Resolution and for, allegedly, not acting on the motion.
Petitioners then should not lay the blame on Onos; they should blame themselves for
presuming that the motion would be granted.

This notwithstanding, petitioners were able to file a Motion for Reconsideration on 13


December 1988 requesting that the reviewing prosecutor consider the belatedly filed
documents; 86 thus, there is the recommendation of prosecutor Bernardita Erum calling for the dismissal of the charges on 2
March 1989, which, however, was not sustained upon subsequent review. The Sandiganbayan, in its 17 November 1989
Resolution, succinctly summed up the matter when it asserted that "even granting, for the sake of argument, that prosecutor Onos
. . . failed to consider accused-movants' counter-affidavits, such defect was cured when a "Motion for Reconsideration" was filed,
and
which . . . de la Llana took into account upon review."
It may not then be successfully asserted that the counter-affidavits were not considered by
the Ombudsman in approving the information. Perusal of the factual antecedents reveals
that a second investigation was conducted upon the "1st Indorsement" of the Ombudsman of
4 April 1989. As a result, subpoenas were issued and comments were asked to be
submitted, which petitioners did, but only after a further extension of fifteen (15) days from
the expiration of the original deadline. From this submission the matter underwent further
review.

Moreover, in the 18 January 1989 Order of prosecutor Onos, there was an ample discussion
of the defenses raised by the petitioners in their counter-affidavits, thus negating the charge
that the issues raised by them were not considered at all. 87

It is indisputable that the respondents were not remiss in their duty to afford the petitioners
the opportunity to contest the charges thrown their way. Due process does not require that
the accused actually file his counter-affidavits before the preliminary investigation is deemed
completed. All that is required is that he be given the opportunity to submit such if he is so
minded. 88

In any event, petitioners did in fact, although belatedly, submit their counter-affidavits and as
a result thereof, the prosecutors concerned considered them in subsequent reviews of the
information, particularly in the re-investigation ordered by the Ombudsman.

And now, as to the protestation of lack of preliminary investigation prior to the filing of the
Amended Information. The prosecution may amend the information without leave of court
before arraignment, 89 and such does not prejudice the accused. 90 Reliance on the pronouncements
in Doromal vs. Sandiganbayan 91 is misplaced as what obtained therein was the preparation of an
entirely new information as contrasted with mere amendments introduced in the amended
information, which also charges petitioners with violating Section 3 (e) of the Anti-Graft Law.

In Gaspar vs. Sandiganbayan, 92 We held that there is no rule or law requiring the Tanodbayan
to conduct another preliminary investigation of a case under review by it. On the contrary, under
P.D. No. 911, in relation to Rule 12, Administrative Order No. VII, the Tanodbayan may, upon
review, reverse the findings of the investigator and thereafter "where he finds a prima facie case,
to cause the filing of an information in court against the respondent, based on the same sworn
statements or evidence submitted, without the necessity of conducting another preliminary
investigation."

Respondent Sandiganbayan did not then commit any grave abuse of discretion in respect to
its Resolutions of 4 January 1990 and 1 February 1990.

The petition then must fail.

CONCLUSION

WHEREFORE, judgment is hereby rendered:

1. GRANTING the petition in G.R. No. 85439; declaring null and void the challenged Order of
28 October 1988 of the respondent Secretary of Agriculture; but denying, for having become
moot and academic, the prayer of petitioners that they be restored to their positions in the
KBMBPM.

2. DISMISSING, for lack of merit, the petition in G.R. No. 91927.


No pronouncement as to costs.

IT IS SO ORDERED.

Narvasa, C.J., Melencio-Herrera, Cruz, Paras, Feliciano, Padilla, Bidin, Grio-Aquino,


Medialdea, Regalado and Romero, JJ., concur.

Gutierrez, Jr. and Nocon, JJ., took no part.

G.R. No. L-65718

NATIONAL DEVELOPMENT COMPANY AND DOLE PHILIPPINES, INC., petitioners,


vs.
WILFREDO HERVILLA, respondent.

PADILLA, J.:

Assailed in this petition for review on certiorari is the decision dated 10 November 1983 of
1

the Intermediate Appellate Court (now Court of Appeals) in AC-G.R. No. CV-66215 entitled,
"Wilfredo Hervilla, Plaintiff-Appellant, versus Dole Philippines, Inc., Candido de Pedro, and
National Development Co., Defendants-Appelleea, "which reversed the decision of the Court
of First Instance of South Cotabato, General Santos City, as well as its resolution dated 9
August 1985 denying the motion for reconsideration of said decision.

The facts of the case, as gathered from the decision under review, are as follows:

An action for Recovery of Possession and Damages filed on December 20, 1973 by
Wilfredo Hervilla against Dole Philippines, a duly registered corporation doing
business in Polomolok, South Cotabato, involving Lots Nos. 3284, and 3283, GSS-
269-D, each containing four (4) hectares, more or less, situated at Sitio Bahsong,
Palkan, Polomolok, South Cotabato, now in the possession of defendant corporation
as Administrator of the properties of National Development Corporation (NDC)
impleaded as party defendant (Records, p. 48).

On December 28, 1958, claimant Rolando Gabales, for a consideration of P450.00,


sold to Hernane Hervilla all his rights and interest over a four-hectare land located in
Palkan, Polomolok, South Cotabato but Identified only by its boundaries:

... On the North, by the property of Teopisto Espafiola; on the south, by Mr.
Macarandan; on the east by Francisco Macarandan and on the west by
Regina Fabrea ...(Exh."K").

It was apparently on the strength of the Tax Declaration No. 1376 that Hernane
Hervilla was induced to acquire it (Exh. "L").
On August 1, 1959, its adjoining occupant-claimant, Fernando Jabagat, for a
consideration of P270.00, also sold his interest and rights to Hernane Hervilla over
another four (4) hectares of land, situated at Balisong, Bo. Kablon, Tupi [later plotted
in Palkan, Polomolok] South Cotabato, Identified by its boundaries:

...On the North by the property of Candido de Pedro; on the south by the
property of Santiago Macarandan; on the East by creek and on the West by
the property of HernaneHervilla ...(Exh."H").

Undoubtedly, while adjoining each other, one of these is situated on Polomolok,


South Cotabato, while the other is in Tupi, South Cotabato [the two lots were later
plotted to be in Palkan, Polomolok). For, at the time of these transfers, the boundary
between these places had not definitely been settled. Hence, the discrepancy.

On June 1, 1961, Wilfredo Hervilla, claiming to be the successor-in-interest of his


brother, Hernane Hervilla who vacated these properties, [in favor of the former], filed
with the District Land Office of the Bureau of Lands in General Santos City Free
Patent Application Nos. 2054 and 2054-A, respectively, over the lots, after the same
were surveyed and designated as Lot Nos. 3264, GSS-269-D and 3l66 (Exhs. "A",
"A-7", "B", "B-4", tsn, p. 249).

On April 1, 1963, as claimant and occupant of Lots 3283 and 3284, GSS-269-D,
situated at Balisong, Kablon, Tupi, South Cotabato since 1945, Candido de Pedro
filed with the Bureau of Lands, Manila, his Free Patent Application, having planted it
to abaca, coffee, banana, corn and other seasonal crops, erecting therein a farm
house (Exhs, "E", "2", "2-A", "2-B"). Land taxes from 1945 until 1963 were paid per
Official Receipts Nos. B-9134501 and B-913492 (Record, pp. 126, 131). Then,
exactly four months after filing his application, Candido de Pedro ceded all his rights
to the National Development Corporation, represented by Pedro Changco, Jr. (Exhs.
"J", "J-1").

On April 27, 1968, Wilfredo Hervilla who was then in Palawan, thru his wife, Enuna V.
Hervilla, filed an ejectment suit against Dole before the Municipal Court of Tupi,
South Cotabato (then Cotabato) alleging that "sometime in the early part of March
1968 defendant by means of threats, of force, intimidation, strategy and stealth and
against the wig of the plaintiffs, entered and occupied the entire parcels (lots Nos.
3264 and 3265, GSS-269-D)... constructing ..." (Exh. "F", Record, p. 109). This was
dismissed, however, on September 30, 1970 for failure to state a cause of action and
without the benefit of trying it upon the merits (Exh. "H", Record, p. 195).

On July 28, 1972, as Lots 3264 and 3265 applied by plaintiff on June 1, 1961, had
obviously been designated as Lots 3283 and 3284 initially applied on August 1, 1963
by Candido de Pedro, predecessorin-interest of Dole, counsel for plaintiff's Wilfredo
Hervilla wrote the District Land Officer of the Bureau of Lands, stationed in
Koronadal, South Cotabato, requesting for an Investigation of these Lots (Exh. "G").

On January 30, 1975, Jesus Ma. Baltazar, supplied with verbal information by
Wilfredo Hervilla in his occular inspection about the facts surrounding the claim of
plaintiff, [in an investigation duly conducted with the aid of the map of the Bureau and
in the presence of Candido de Pedro] submitted his report to the District Land Officer,
recommending:
... that PPa, Nos. (VIII-4)-40 54 and (VII-4) 2054-A be amended accordingly
such that it shall cover Lot No. 3284 and 3283, respectively both of GSS-269-
D, Palkan, Polomolok, South Cotabato, instead of Lot Nos. 3264 and 3265,
respectively, both of GSS-269-D, and Kablon, Tupi, South Cotabato (Exh.
"H", "H l").

On June 15, 1973, Hernando Jereos, Provincial Officer of Koronadal, South


Cotabato, pursuant to the report of the Land Investigator, Jesus Ma. Baltazar, issued
an order:

"That the Free Patent Application No. (VIII-4) 2054 and Free Patent
Application No. (VIII-4) 2054-A of Wilfredo D. Hervilla for Lots Nos. 3264 and
3265, GSS-269-D, respectively, be, as hereby they are, modified in the sense
that the disposition therein contained shall in the order named refer to Lots
Nos. 3284 and 3283, GSS-269-D and, as thus modified, further action on the
herein mentioned application held in abeyance pending the final
determination of the adverse claim of Dolefil thereto"(Exh."D").

So, on September 20, 1973, armed with that recommendation, counsel for plaintiff
wrote Dolefil demanding the immediate return of Lots 3284 and 3283 to Wilfredo
Hervilla as well as payment of actual and moral damages since the former's
occupation and fencing of the land in March 1968, with a warning of a court suit if it
failed (Exh. "I", Record, p. 125). Falling on deaf ears, plaintiff instituted the
presentsuit, engaged the services of a counsel in the sum of P2,000.00 (tsn, p.
115). 2

On the basis of the foregoing facts, the court a quo rendered a decision in favor of the
National Development Company (NDC, for short) and Dole Philippines, Inc., (Dolephil, for
short), petitioners herein, by dismissing the herein private respondent's complaint against
them. On 30 March 1979, private respondent iplaintiff in the trial court) appealed to the
Intermediate Appellate Court which, on 10 November 1983, rendered the herein assailed
decision, thus:

WHEREFORE, in view of an the foregoing considerations, the decision appealed


from is hereby REVERSED and set aside and another one entered herein;

1. Declaring that plaintiff-appellant, Wilfredo Hervilla, the rightful possessor of the


subject lots or lots designated as Lots Nos. 3283 and 3284, GSS-269-D, situated at
Palkan, Polomololok, South Cotabato;

2. Ordering the NDC and DOLE to vacate the said lots and deliver possession
thereof to the said plaintiff-appellant;

3. Ordering the defendants-appellees: Dole (Philippines, Inc.); Candido de Pedro and


National Development Co. (NDC), jointly and severally to pay Wilfredo Hervilla
P700.00 per annum, representing the value of the yearly harvest of the land at the
time it was taken, with legal interest from the tune of judicial demand until funy paid;
and

4. Ordering the said defendants-appeuees jointly and severally to pay P5,000.00 in


the concept of attorney's fees and to pay the costs. 3
A motion for reconsideration was timely filed by herein petitioners and on 9 January 1984, a
Supplement to the Motion for Reconsideration with Motion for New Trial was filed praying
that the case be reopened and a new trial conducted for the purpose of submitting original
certificate of Title Nos. 26651 and 26653. Petitioners alleged therein that, on 5 December
1980, or while the case was pending with respondent Court, the Bureau of Lands issued the
free patents in favor of Petitioners' predecessor-in-interest.

On 9 August 1985, respondent Court issued a resolution denying the Motion for
Reconsideration and Supplement to the Motion for Reconsideration with Motion for New
Trial, stating thus:

Finding that all the grounds and arguments raised in the Motion for Reconsideration
are practically the same or at least included, considered and passed upon adversely
against movant by this Court in its decision now sought to be reconsidered, the Court
RESOLVED to DENY the Motion for Reconsideration.

Regarding the Supplement to the Motion for Reconsideration with Motion for New
Trial, in which defendants-appellees now claim that the "issue of possession and
ownership have been conclusively determined in favor of defendant-appellee
National Development Co. " per patents OCTs Nos. p-26651 and p-26653 both
recently dated December 5, 1980, as Annexes "1" & "2", We do not think the Bureau
of Lands could validly make a pronouncement on the issue of possession over the
subject land upon which rested the issuance of the patents in favor of defendants-
appellee, as against the prior finding of this Court that the plaintiff-appellant had the
prior, superior and physical possession thereof, since said issue is the very
sameDecision of the Intermediate Appellate Court, issue litigated in this case
submitted by the parties to the court of justice. In other words, when the Bureau of
Lands issued the patents and OCT's in question, the case was already pending in
court; hence, subjudice. The issuance of the patents and Original Certificates of Title
over the subject land, therefore, is nun and void, the same having been issued, while
the case is still pending in court.

In view thereof, this Court likewise hereby RESOLVES to DENY the Supplement to
the Motion for Reconsideration with Motion for New Trial, for being unmeritorious. 4

Hence, the present petition interposed by the National Development Company (NDC).

There is no question that the authority given to the Lands Department over the disposition of
public lands does not exclude the courts from their jurisdiction over possessory actions, the
5

public character of the land notwithstanding and that the exercise by the courts of such
6

jurisdiction is not an interference with the alienation, disposition and control of public
lands. The question that is raised by petitioner NDC before this Court is: "May the Court in
7

deciding a case involving recovery of possession declare null and void title issued by an
administrative body or office during the pendency of such case? Specifically, is the Bureau of
Lands precluded, on the ground that the matter is subjudice, from issuing a free patent
during the pendency of a case in court for recovery of possession?

The questions are answered in the negative. It is now well settled that the administration and
disposition of public lands are committed by law to the Director of Lands primarily, and,
ultimately, to the Secretary of Agriculture and Natural Resources. The jurisdiction of the
8

Bureau of Lands is confined to the determination of the respective rights of rival claimantsx
to public lands or to cases which involve disposition and alienation of public lands. The
9 10
jurisdiction of courts in possessory actions involving public lands is limited to the
determination of who has the actual, physical possession or occupation of the land in
question (in forcible entry cases, before municipal courts) or, the better right of possession
(in accion publiciana, in cases before Courts of First Instance, now Regional Trial Courts). 11

In forcible entry cases, moreover, title is not in issue; as a matter of fact, evidence thereof is
expressly barred, except to prove the nature of the possession. 12

In any event, petitioners' possession of the lands in question has been confirmed by the
issuance of Free Patents in favor of their predecessor-in-interest. By this act, nothing more is
left for the courts to pursue. Thus, the private respondent's cause of action has been
rendered moot and academic by the decision of the Director of Lands. In Rallon vs.
Ruiz, this Court said:
13

The reason then for possessory actions in court, namely, to "facilitate adjudication"
by the Lands Department of a dispute over public land no longer exists. For,
defendants' applications are no longer pending investigation. Defendants' possession
of the lands disputed, for purposes of the free patents, has been confirmed in the
administrative case. The administrative branch of the government has thus already
spoken. Its action has lapsed into finality. Accordingly, plaintiffs' claim of possession
is lost. Since plaintiffs' protests, in reference to possession, has already been
resolved adversely against them by the Lands Department, nothing more is left for
the courts to pursue.

In Realize vs. Duarte, this Court stated:


14

The land on which Duarte settled may be initially presumed as pubhe land, his
homestead application over it having been approved by the Director of Lands. It is
our considered opinion that the approval of his homestead application legalized his
possession, and such approval constitutes a justifiable defense against the action for
revival of judgment as it necessarily affects the appellee's right of possession of the
land from which Duarte was ordered ejected.

The principle was reiterated in De los Santos vs. Rodriguez thus:[[15

At the time of the rendition of the decision in CA-G.R. No. 18912-R, the question of
whether or not said portion was to be part of her homestead had not as yet been
definitely settled. Accordingly, it became necessary to determine in that case who
rhafl meanwhile be in possession. The aforementioned question was finany decided
in favor of Rodriguez, in the order of the Director of Fisheries, dated February 27,
1959. Thereafter he is, therefore, the party entitled to said possession. In other
words, the decision in CA-G.R. 18912-R may no longer be executed, not because
the decision in CA-G.R. 32970-R has annulled it, but because of events subsequent
to the first decision, which events have changed materially the situation between the
parties. Thus, in Hernandez vs. Clapis, this Court, speaking through then Chief
Justice Paras, said:

In our opinion the present appeal is meritorious. While the decision in the forcible
entry and detainer case is final, it can no longer be executed at least in so far as the
possession of the land in question is concerned, because, under section 4 of
Commonwealth Act No. 141, the Director of Lands has direct executive control of the
survey, classification, lease, sale or any other form of concession of disposition and
management of the lands of the public domain, and his decisions as to questions of
fact are conclusive when approved by the Secretary of Agriculture; and because the
latter had already cancelled the right of plaintiff Maria L. Hernandez to administer the
land in question and rejected both her sales application and that of her husband,
plaintiff Antonio Hernandez, at the same time giving the defendants the preferential
right to apply for said land in virtue of the provisions of Republic Act No. 65. The
correctness of the final decision of the Secretary of Agriculture is not herein involved,
but it is valid and binding until reversed in a proper proceeding by the No. L-23170,
January 31, 1968, 22 SCRA 451, 457court. The situation is not that the judgment in
the forcible entry and detainer case has lost its virtuality, but that the plaintiffs had
subsequently ceased to be entitled to the relief awarded by said judgment.
(Emphasis supplied.)

Moreover, records do not show that private respondent Wilfredo Hervilla ever filed a motion
for reconsideration of the decision of the Director of Lands issuing free patent over the lands
in dispute in favor of petitioners' predecessor-in-interest. Neither did he appeal said decision
to the Secretary of Agriculture and Natural Resources, nor did he appeal to the office of the
President of the Philippines. In short, Hervilla failed to exhaust administrative remedies, a
flaw which, to our mind, is fatal to a court review. The decision of the Director of Lands has
now become final. The Courts may no longer interfere with such decision. 16

WHEREFORE, the decision dated 10 November 1983 and the resolution dated 9 August
1985 of the respondent Appellate Court are hereby reversed and set aside. The decision of
the court a quo dated 28 February 1979 is hereby ordered reinstated. No costs.

SO ORDERED.

Fenan, Gutierrez, Jr., Paras, Bidin and Cortes, JJ., concur.

G.R. No. 75501 September 15, 1987

ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION, petitioner,


vs.
Hon. FULGENCIO S. FACTORAN, JR., in his capacity as Deputy Executive Secretary,
and ASTERIO BUQUERON, respondents.

PARAS, J:

This is a petition for review on certiorari, seeking to set aside the decision rendered by public
respondent Deputy Executive Secretary Fulgencio S. Factoran, Jr., by authority of the
President, reinstating and confirming the decision dated April 17, 1978 of the Director of
Mines and Geo Sciences, and setting aside the decision of the Minister of Natural
Resources.

The undisputed facts of this case are as follows:

On February 9, 1972, Atlas Consolidated Mining and Development Corporation registered


the location of its "Master VII Fr." mining claim with the Mining Recorder of Toledo City. On
September 10, 1973, private respondent Asterio Buqueron registered the declarations of
location of his "St. Mary Fr." and "St. Joseph Fr." mining claims with the same Mining
Recorder. On October 15, 1973, Atlas registered the declarations of location of its "Carmen I
Fr." to "Carmen V. Fr. " with the same Mining Recorder.

Buqueron's "St. Mary Fr." and "St. Joseph Fr." were surveyed and the survey plans thereof
were duly approved by the Director of Mines and Geo Sciences. Notice of Buqueron's lease
application was published in the February 22 and 28, 1977 issues of the Evening Post.

During the said period of publication, petitioner filed an adverse claim against private
respondent's mining claims on the ground that they allegedly overlapped its own mining
claims.

After hearing, the Director of Mines rendered a decision, dated April 17, 1978, the dispositive
portion of which reads:

VIEWED IN THE LIGHT OF THE FOREGOING, respondent (Buqueron) is


hereby given the preferential right to possess, lease, explore, exploit and
operate the areas covered by his "St. Mary Fr." and "St. Joseph Fr." mining
claims, except the area covered thereby which is in conflict with adverse
claimant's (Atlas) "Master VII Fr." Adverse claimant (Atlas) on the other hand,
is given the preferential right to possess, lease, explore, exploit and operate
the area covered by its "Master VII Fr." case.

Atlas appealed to the Minister of Natural Resources who rendered a decision dated
November 10, 1978, the dispositive portion of which reads as follows:

PREMISES CONSIDERED, the derision of the Director of Mines dated April


17, 1978, should be, as hereby it is, set aside. In lieu thereof, it is hereby
decision that the "St. Mary Fr." and "St. Joseph Fr." mining claims of Asterio
Buqueron are null and void, that the "Carmen I Fr. " to "Carmen V. Fr. "
mining claims of Atlas Consolidated Mining and Development Corporation
are valid, and that it be given the preferential right to possesses, explore,
exploit, lease and operate the areas covered thereby. (Decision, Office of the
President; Rollo, pp. 52-57; Decision of the Minister of Natural Resources,
Rollo, pp. 47-51; Comment of Public Respondent, Rollo, pp. 88-90; Decision,
Director of Mines, Rollo, pp. 157-160).

As aforestated, on further appeal, the Deputy Executive Secretary, Office of the President,
reversed the decision of the Minister of Natural Resources and reinstated the decision of the
Director of Mines and Geo Sciences.

Hence, this petition.

Briefly stated, petitioner's assignment of errors may be combined into the following issues:

(1) Whether or not private respondent's appeal to the Office of the President
was time-barred;

(2) Whether or not there was a valid location and discovery of the disputed
mining claims.
The Second Division of this Court without giving due course to the petition, required
respondents to comment in the resolution of October 6, 1986 (Rollo, p. 76). Both private
respondent and public respondent filed their respective comments on November 17, 1986
(Rollo, pp. 81-86; pp. 88-95).

On December 8, 1986 (Rollo, p. 104) this Court required the respondents to file a rejoinder
to the consolidated reply filed by counsel for petitioner dated November 4, 1986 (Rollo, pp.
97-102). Said rejoinder was filed on February 6, 1987 (Rollo, pp. 108-111), by the Solicitor
General for public respondent, after which petitioner filed a sur-rejoinder thereto on March
13, 1987 (Rollo, pp. 113-116). Thereafter the Court in the resolution of March 30, 1987 gave
due course to the petition and required both parties to file their respective memoranda.

Counsel for public respondent filed a Manifestation/Motion praying to be allowed to adopt its
comment dated November 2, 1986 and Rejoinder dated February 4, 1987 as the
memorandum for public respondent. Petitioner filed its memorandum on May 25,1987 (Rollo,
p. 136).

The petition is devoid of merit.

I.

It is not disputed that private respondent received a copy of the decision of the Minister of
Natural Resources dated November 10, 1978 on November 27, 1978 and that under Section
50 of Presidential Decree No. 463, the decision of the Minister is appealable to the Office of
the President within five (5) days from receipt thereof. In the case at bar, the 5-day period
expired on December 2, 1978, a Saturday, private respondent filed his appeal on December
4, 1978, a Monday.

Petitioner contends that the appeal was filed out of time and therefore, the Office of the
President did not acquire jurisdiction over the case and should have dismissed the same
outright (Rollo, pp. 20-21).

This contention is untenable.

Petitioner and private respondent are in accord on the fact that at the time of the filing of the
questioned appeal, Saturday was observed as a legal holiday in the Office of the President
pursuant to Section 29 of the Revised Administrative Code as amended.

The same law provides:

Section 31. Pretermission of holiday. Where the day, or the last day, for
doing any act required or permitted by law falls on a holiday, the act may be
done on the next succeeding business day.

Apart from the fact that the law is clear and needs no interpretation, this Court in accordance
therewith has invariably held that in case the last day for doing an act is a legal holiday, it
does not have the effect of making the preceding day, the last day for doing the same; the
act may be done on the next succeeding business day (Gonzaga vs. Ce David, 110 Phil.
463-464 [1960]; Calano vs. Cruz, 91 Phil. 247 [1952]; Austria, et al. vs. The Solicitor General,
et al., 71 Phil. 288 [1941]).
Coming back to the case at bar, as the next working day after December 2,1978 was
December 4, 1978 a Monday, it is evident that private respondent's appeal was filed on
time.

II.

It is apparent that the second issue as to whether or not there was a valid location and
discovery of the disputed mining claims is a question of fact best left to the determination of
the administrative bodies charged with the implementation of the law they are entrusted to
enforce. As uniformly held by the Court, it is sufficient that administrative findings of fact are
supported by evidence, or negatively stated, it is sufficient that findings of fact are not shown
to be unsupported by evidence. Substantial evidence is all that is needed to support an
administrative finding of fact, and substantial evidence is "such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion." (Ang Tibay vs. Court of
Industrial Relations, 69 Phil. 635, 642; Police Commission vs. Lood, 127 SCRA 762 [1984]).

In the case at bar, the record amply shows that the Director of Mines' decision was
supported by substantial evidence.

Petitioner claimed that it is a registered surface land owner and locator of six (6) lode claims
duly registered with the Office of the Mining Recorder as above stated and that in derogation
of its permission, caused the "table" location and survey and applied for the lease of his
alleged mining claims known as "St. Mary Fr." and "St. Joseph Fr. " lode claims.

In his answer, private respondent denied the material allegations of the adverse claim and by
way of affirmative defense alleged that all of petitioner's claims including a portion of Master
VII Fr. are null and void for having been located in areas which were closed to mining
location in open and gross violation of paragraph 1 (d) of Section 28 and of Section 60 of the
Mining Act as amended.

The main thrust of petitioner's claim is that all of the mining claims of both petitioner and
private respondent are located inside the premises or properties of the former, so that it is
hardly possible for private respondent to have conducted the requisite location and survey
without having been seen or noticed by petitioner and its personnel.

The Director of Mines established that there is in fact an overlapping of mining claims of
petitioner and private respondent and that as a matter of record petitioner's mining claims
were registered subsequent to those of private respondent with the exception of Master VII
Fr. which was registered on February 9, 1972 or prior to the registration of the mining claims
of private respondent.

In ruling as to who, between the parties shall be given preferential right to lease the area in
question, the Director of Mines' findings are as follows:

Adverse claimant in its attempt to impugn the validity of the mining claims of
respondent alleged that said mining claims were the result of table locations
and survey and in support thereof submitted the sworn statements of its
Chief Geologist and Chief Security.

On the other hand, respondent asserted that he, through his authorized
representative actually and validly performed all the acts of discovery and
location required by law and the field survey of his mining claims was actually
conducted by Geodetic Engineer Salvador Aligaen from December 16 to 18,
1974. In support of this assertion, respondent submitted in evidence affidavit
of the authorized agent (Annex "D" of the answer) and another affidavit of
Geodetic Engineer Salvador Aligaen (Annex "F" of the answer). Respondent
also submitted in evidence Bureau of Forestry map and Bureau of Coast and
Geodetic Survey map of the total area (Exhs. "9" to "10") which embraces the
area in question. These maps tend to prove that the Atlas main gate is not
the only point of ingress and egress such that one can enter the area in
question for the purpose of mining location and survey without being noticed
by any of the personnel of Atlas.

After a careful appraisal of the evidence submitted, and cognizance as we


are of the provisions of Presidential Decree No. 99-A, we are of the view that
adverse claimant failed to adduce sufficient evidence to nullify the prior
claims of respondent. Stated differently, the evidence submitted are not
sufficient to destroy the prima facie character of the sworn declarations of
location of respondent's mining claims which were duly registered on the date
herein before stated. Thus "A location notice certificate or statement when re-
examine accorded is prima facie evidence of all the facts the statute requires
it to contain and which were sufficiently set forth" (40 C.J. pp. 811-812) and
constitute notice to all persons and to the whole world of the contents of the
same (Sec. 56 of the Mining Act, as amended).

It is, therefore, pertinent to quote hereunder Sections 28(d) and 60 of the


Mining Act, as amended, as well as Section 1 of Presidential Decree No. 99-
A:

SEC. 28 No Prospecting shall be allowed:

(d)-In lands which have been located for


mining leases by other prospectors under the
provisions of this Act.

SEC. 60. No valid mining claim or any part


thereof, may be located by others until the
original locator or his successors in interest
abandons the claim or forfeits his rights on the
same under the provisions of this Act.

SEC. 1 Whenever there is any conflict


between claim owners over any mining claims
whether mineral or non-mineral, the locator of
the claim who first registered his claim with
the proper mining registrar, notwithstanding
any defect in form or technicality, shall have
the exclusive right to possess, exploit,
explore, develop and operate such mining
claims. ...

In the light of the aforequoted provisions of law applicable on


the matter, and in view of our findings, earlier discussed, the
subsequent mining claims of adverse claimant insofar as they
conflict the prior claims of respondent are hereby declared
nun and void.

On the other hand, it is also our view that respondent failed to


adduce sufficient evidence to prove that the prior claim of
adverse claimant (Master VII Fr.) is null and void. Considering
that this mining claim is prior in point of location and
registration, it follows that this claim will have to prevail over
that of respondent. For the same reason, therefore, that the
subsequent claims of adverse claimant were declared null
and void insofar as they conflict with the prior claims of
respondent, the mining claims of respondent insofar as they
conflict with "Master VII Fr." claim of adverse claimant are
likewise declared null and void. (Decision, Director of Mines;
rollo pp. 157-160).

As earlier stated the above findings, although reversed by the Minister of Natural Resources,
were affirmed by the Office of the President.

However, petitioner would have this Court look into the said findings because of the open
divergence of views and findings by the adjudicating authorities in this mining conflict
involving highly contentious issues which warrant appellate review (Rollo, p. 18).

This Court has repeatedly ruled that judicial review of the decision of an administrative
official is of course subject to certain guide posts laid down in many decided cases. Thus, for
instance, findings of fact in such decision should not be disturbed if supported by substantial
evidence, but review is justified when there has been a denial of due process, or mistake of
law or fraud, collusion or arbitrary action in the administrative proceeding (L-21588-Atlas
Development and Acceptance Corp. vs. Gozon, etc. et al., 64 O.G. 11511 [1967]), where the
procedure which led to factual findings is irregular; when palpable errors are committed; or
when a grave abuse of discretion, arbitrariness, or capriciousness is manifest (Ateneo de
Manila University vs. CA, 145 SCRA 100-101 [1986]; International Hardwood and Veneer
Co., of the Philippines vs. Leogardo, 117 SCRA 967; Baguio Country Club Corporation vs.
National Labor Relations Commission, 118 SCRA 557; Sichangco vs. Commissioner of
Immigration, 94 SCRA 61; and Eusebio vs. Sociedad Agricola de Balarin, 16 SCRA 569).

A careful study of the records shows that none of the above circumstances is present in the
case at bar, which would justify the overturning of the findings of fact of the Director of Mines
which were affirmed by the Office of the President. On the contrary, in accordance with the
prevailing principle that "in reviewing administrative decisions, the reviewing Court cannot re-
examine the sufficiency of the evidence as if originally instituted therein, and receive
additional evidence, that was not submitted to the administrative agency concerned," the
findings of fact in this case must be respected. As ruled by the Court, they will not be
disturbed so long as they are supported by substantial evidence, even if not overwhelming or
preponderant (Police Commission vs. Lood, supra).

PREMISES CONSIDERED, this petition is hereby DENIED and the assailed decision of the
Office of the President, is hereby AFFIRMED.

SO ORDERED.
Teehankee, C.J., Narvasa and Cruz, JJ., concur.

Gancayco, J., is on leave.

G.R. No. 96409 February 14, 1992

CITIZEN J. ANTONIO M. CARPIO, petitioner,


vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF LOCAL GOVERNMENTS, THE
SECRETARY OF NATIONAL DEFENSE and THE NATIONAL TREASURER, respondents.

PARAS, J.:

At the very outset, it should be well to set forth the constitutional provision that is at the core
of the controversy now confronting us, thus:

Article XVI, Section 6:

The State shall establish and maintain one police force, which stall be
national in scope and civilian in character, to be administered and controlled
by a national police commission. The authority of local executives over the
police units in their jurisdiction shall be provided by law. 1

With the aforequoted provision in mind, Congress passed Republic Act No. 6975 entitled "AN
ACT ESTABLISHING THE PHILIPPINE NATIONAL POLICE UNDER A REORGANIZED
DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AND FOR OTHER
PURPOSES" as the consolidated version of House Bill No. 23614 and Senate Bill No. 463.

Following the said Act's approval by President Corazon C. Aquino on December 13, 1990, it
was published on December 17, 1990. 2

Presently, however, petitioner as citizen, taxpayer and member of the Philippine Bar sworn to
defend the Constitution, filed the petition now at bar on December 20, 1990, seeking this
Court's declaration of unconstitutionality of RA 6975 with prayer for temporary restraining
order.

But in an en banc resolution dated December 27, 1990, We simply required the public
respondents to file their Comment, without however giving due course to the petition and the
prayer therein. Hence, the Act took effect after fifteen days following its publication, or on
January 1, 1991. 3

Before we settle down on the merits of the petition, it would likewise be well to discuss albeit
briefly the history of our police force and the reasons for the ordination of Section 6, Article
XVI in our present Constitution.

During the Commonwealth period, we had the Philippine Constabulary as the nucleus of the
Philippine Ground Force (PGF), now the Armed Forces of the Philippines (AFP). The PC was
made part of the PGF but its administrative, supervisory and directional control was handled
by the then Department of the Interior. After the war, it remained as the "National Police"
under the Department of National Defense, as a major service component of the AFP. 4

Later, the Integration Act of 1975 5 created the Integrated National Police (INP) under the Office
of the President, with the PC as the nucleus, and the local police forces as the civilian
components. The PC-INP was headed by the PC Chief who, as concurrent Director-General of
the INP, exercised command functions over the INP. 6

The National Police Commission (NAPOLCOM) 7 exercised administrative control and


supervision while the local executives exercised operational supervision and direction over the
INP units assigned within their respective localities. 8

The set-up whereby the INP was placed under the command of the military component,
which is the PC, severely eroded the INP's civilian character and the multiplicity in the
governance of the PC-INP resulted in inefficient police service. 9 Moreover, the integration of
the national police forces with the PC also resulted in inequities since the military component had
superior benefits and privileges. 10

The Constitutional Commission of 1986 was fully aware of the structural errors that beset the
system. Thus, Com. Teodulo C. Natividad explained that:

xxx xxx xxx

MR. NATIVIDAD. . . . The basic tenet of a modern police


organization is to remove it from the military. 11

xxx xxx xxx

Here in our draft Constitution, we have already made a constitutional


postulate that the military cannot occupy any civil service position [in Section
6 of the Article on the Civil Service 12] Therefore, in keeping with this and
because of the universal acceptance that a police force is a civilian function, a
public service, and should not be performed by military force, one of the basic
reforms we are presenting here is that it should be separated from the military
force which is the PC. 13

xxx xxx xxx

Furthermore:

xxx xxx xxx

. . . the civilian police cannot blossom into full profession because most of the
key positions are being occupied by the military So, it is up to this
Commission to remove the police from such a situation so that it can develop
into a truly professional civilian police. . . . 14

Hence, the "one police force, national in scope, and civilian in character" provision that is
now Article XVI, Section 6 of the 1987 Constitution.

And so we now come to the merits of the petition at hand.


In the main, petitioner herein respectfully advances the view that RA 6975 emasculated the
National Police Commission by limiting its power "to administrative control" over the
Philippine National Police (PNP), thus, "control" remained with the Department Secretary
under whom both the National Police Commission and the PNP were placed. 15

We do not share this view.

To begin with, one need only refer to the fundamentally accepted principle in Constitutional
Law that the President has control of all executive departments, bureaus, and offices to lay
at rest petitioner's contention on the matter.

This presidential power of control over the executive branch of government extends over all
executive officers from Cabinet Secretary to the lowliest clerk 17 and has been held by us, in
the landmark case of Mondano vs. Silvosa, 18 to mean "the power of [the President] to alter or
modify or nullify or set aside what a subordinate officer had done in the performance of his duties
and to substitute the judgment of the former with that of the latter." It is said to be at the very
"heart of the meaning of Chief Executive." 19

Equally well accepted, as a corollary rule to the control powers of the President, is the
"Doctrine of Qualified Political Agency". As the President cannot be expected to exercise his
control powers all at the same time and in person, 20he will have to delegate some of them to
his Cabinet members.

Under this doctrine, which recognizes the establishment of a single executive, 21 "all executive
and administrative organizations are adjuncts of the Executive Department, the heads of the
various executive departments are assistants and agents of the Chief Executive, and, except in
cases where the Chief Executive is required by the Constitution or law to act in person on the
exigencies of the situation demand that he act personally, the multifarious executive and
administrative functions of the Chief Executive are performed by and through the executive
departments, and the acts of the Secretaries of such departments, performed and promulgated in
the regular course of business, unless disapproved or reprobated by the Chief Executive
presumptively the acts of the Chief Executive." 22 (emphasis ours)

Thus, and in short, "the President's power of control is directly exercised by him over the
members of the Cabinet who, in turn, and by his authority, control the bureaus and other
offices under their respective jurisdictions in the executive department." 23

Additionally, the circumstance that the NAPOLCOM and the PNP are placed under the
reorganized Department of Interior and Local Government is merely an administrative
realignment that would bolster a system of coordination and cooperation among the citizenry,
local executives and the integrated law enforcement agencies and public safety agencies
created under the assailed Act, 24 the funding of the PNP being in large part subsidized by the
national government.

Such organizational set-up does not detract from the mandate of the Constitution that the
national police force shall be administered and controlled by a national police commission as
at any rate, and in fact, the Act in question adequately provides for administration
and control at the commission level, as shown in the following provisions, to wit:

Sec. 14. Powers and Functions of the Commission. The Commission shall
exercise the following powers and functions:
xxx xxx xxx

(i) Approve or modify plans and programs on education and training, logistical
requirements, communications, records, information systems, crime
laboratory, crime prevention and crime reporting;

(j) Affirm, reverse or modify, through the National Appellate Board, personnel
disciplinary actions involving demotion or dismissal from the service imposed
upon members of the Philippine National Police by the Chief of the PNP;

(k) Exercise appellate jurisdiction through .the regional. appellate boards over
administrative cases against policemen and over decisions on claims for
police benefits;

xxx xxx xxx

Sec. 26. The Command and direction of the PNP shall be vested in the Chief
of the PNP . . . Such command and direction of the Chief of the PNP may be
delegated to subordinate officials with respect to the units under their
respective commands, in accordance with the rules and regulations
prescribed by the Commission. . . .

xxx xxx xxx

Sec. 35. . . . To enhance police operational efficiency and effectiveness, the


Chief of the PNP may constitute such other support units as may be
necessary subject to the approval of the Commission. . . .

xxx xxx xxx

Sec. 37. . . . There shall be established a performance evaluation system


which shall be administered in accordance with the rules, regulations and
standards; and a code of conduct promulgated by the Commission for
members of the PNP. . . .

xxx xxx xxx

Petitioner further asserts that in manifest derogation of the power of control of the
NAPOLCOM over the PNP, RA 6975 vested the power to choose the PNP Provincial Director
and the Chiefs of Police in the Governors and Mayors, respectively; the power of
"operational supervision and control" over police units in city and municipal mayors; in the
Civil Service Commission, participation in appointments to the positions of Senior
Superintendent to Deputy Director-General as well as the administration of qualifying
entrance examinations; disciplinary powers over PNP members in the "People's Law
Enforcement Boards" and in city and municipal mayors. 25

Once more, we find no real controversy upon the foregoing assertions.

It is true that when the Constitutional Commissioners of 1986 provided that the authority of
local executives over the police units in their jurisdiction shall be provided by law, they
intended that the day-to-day functions of police work like crime, investigation, crime
prevention activities, traffic control, etc., would be under the operational control of the local
executives as it would not be advisable to give full control of the police to the local
executives. 26

They reasoned that in the past, this gave rise to warlordism, bossism, and sanctuaries for
vices and abuses. 27

It would appear then that by vesting in the local executives the power to choose the officers
in question, the Act went beyond the bounds of the Constitution's intent.

Not so. We find light in the principle of constitutional construction that every presumption
should be indulged in favor of constitutionality and the court in considering the validity of the
statute in question should give it such reasonable construction as can be reached to bring it
within the fundamental
law. 28

Under the questioned provisions, which read as follows:

D. PARTICIPATION OF LOCAL EXECUTIVES IN THE ADMINISTRATION


OF THE PNP.

Sec. 51. Powers of Local Government Officials over the PNP Units or Forces.

Governors and mayors shall be deputized as representatives of the


Commission in their respective territorial jurisdictions. As such, the local
executives shall discharge the following functions:

a.) Provincial Governor (1) . . .

The provincial governor shall choose the provincial director from a list of
three (3) eligibles recommended by the PNP Regional Director.

4) . . . City and municipal mayors shall have the following authority over the
PNP units in their respective jurisdictions:

i.) Authority to choose the chief of police from a list of five (5) eligibles
recommended by the Provincial Police Director. . . . (Emphasis ours)

full control remains with the National Police Commission.

We agree, and so hold, with the view of the Solicitor General that "there is no usurpation of
the power of control of the NAPOLCOM under Section 51 because under this very same
provision, it is clear that the local executives are only acting as representatives of the
NAPOLCOM. . . . As such deputies, they are answerable to the NAPOLCOM for their actions
in the exercise of their functions under that section. Thus, unless countermanded by the
NAPOLCOM, their acts are valid and binding as acts of the NAPOLCOM." 29 It is significant to
note that the local officials, as NAPOLCOM representatives, will choose the officers concerned
from a list of eligibles (those who meet the general qualifications for appointment to the PNP) 30 to
be recommended by PNP officials.
The same holding is true with respect to the contention on the operational supervision and
control exercised by the local officials. Those officials would simply be acting as
representatives of the Commission.

As regards the assertion involving the Civil Service Commission, suffice it to say that the
questioned provisions, which read:

Sec. 31. Appointment of PNP Officers and Members. The Appointment of


the officers and members of the PNP shall be effected in the following
manner:

a.) Police Officer I to Senior Police Officer IV. Appointed by the PNP
regional director for regional personnel or by the Chief of the PNP for national
headquarters personnel and attested by the Civil Service Commission;

b.) Inspector to Superintendent. Appointed by the Chief of the PNP, as


recommended by their immediate superiors, and attested by the Civil Service
Commission;

c.) Senior Superintendent to Deputy Director-General. Appointed by the


President upon recommendation of the Chief of the PNP, with proper
endorsement by the Chairman of the Civil Service
Commission . . .

Sec. 32. Examinations for Policemen. The Civil Service Commission shall
administer the qualifying entrance examinations for policemen on the basis of
the standards set by the NAPOLCOM.

precisely underscore the civilian character of the national police force, and will undoubtedly
professionalize the same.

The grant of disciplinary powers over PNP members to the "People's Law Enforcement
Boards" (or the PLEB) and city and municipal mayors is also not in derogation of the
commission's power of control over the PNP.

Pursuant to the Act, the Commission exercises appellate jurisdiction, thru the regional
appellate boards, over decisions of both the PLEB and the said mayors. This is so under
Section 20(c). Furthermore, it is the Commission which shall issue the implementing
guidelines and procedures to be adopted by the PLEB for in the conduct of its hearings, and
it may assign NAPOLCOM hearing officers to act as legal consultants of the PLEBs (Section
43-d4, d5).

As a disciplinary board primarily created to hear and decide citizen's complaints against
erring officers and members of the PNP, the establishment of PLEBs in every city, and
municipality would all the more help professionalize the police force.

Petitioner would likewise have this Court imagine that Section 12 of the questioned Act, the
pertinent portion of which reads:

Sec. 12. Relationship of the Department with the Department of National


Defense. During a period of twenty- four (24) months from the effectivity of
this Act, the Armed Forces of the Philippines (AFP) shall continue its present
role of preserving the internal and external security of the State: Provided,
that said period may be extended by the President, if he finds it justifiable, for
another period not exceeding twenty-four (24) months, after which, the
Department shall automatically take over from the AFP the primary role of
preserving internal security, leaving to the AFP its primary role of preserving
external security.

xxx xxx xxx

constitutes an "encroachment upon, interference with, and an abdication by the President of,
executive control and commander-in-chief powers."

That We are not disposed to do for such is not the case at all here. A rejection thus of
petitioner's submission anent Section 12 of the Act should be in order in the light of the
following exchanges during the CONCOM deliberations of Wednesday, October 1, 1986:

xxx xxx xxx

MR. RODRIGO. Just a few questions. The President of the Philippines is the
Commander-in-Chief of all the armed forces.

MR. NATIVIDAD. Yes, Madam President.

MR. RODRIGO. Since the national police is not integrated with the armed
forces, I do not suppose they come under the Commander-in-Chief powers of
the President of the Philippines.

MR. NATIVIDAD. They do, Madam President. By law they are under the
supervision and control of the President of the Philippines.

MR. RODRIGO. Yes, but the President is not the Commander-in-Chief of the
national police.

MR. NATIVIDAD. He is the President.

MR. RODRIGO. Yes, the Executive. But they do not come under that specific
provision that the President is Commander-in-Chief of all the armed forces.

MR. NATIVIDAD. No, not under the Commander-in-Chief provision.

MR. RODRIGO. There are two other powers of the President. The President
has control over departments, bureaus and offices, and supervision over
local governments. Under which does the police fall, under control or under
supervision?

MR. NATIVIDAD. Both, Madam President.

MR. RODRIGO. Control and Supervision.


MR. NATIVIDAD. Yes, in fact, the National Police Commission is under the
Office of the President. (CONCOM RECORDS, Vol. 5, p. 296)

It thus becomes all too apparent then that the provision herein assailed precisely gives
muscle to and enforces the proposition that the national police force does not fall under the
Commander-in-Chief powers of the President. This is necessarily so since the police force,
not being integrated with the military, is not a part of the Armed Forces of the Philippines. As
a civilian agency of the government, it properly comes within, and is subject to, the exercise
by the President of the power of executive control.

Consequently, Section 12 does not constitute abdication of commander-in-chief powers. It


simply provides for the transition period or process during which the national police would
gradually assume the civilian function of safeguarding the internal security of the State.
Under this instance, the President, to repeat, abdicates nothing of his war powers. It would
bear to here state, in reiteration of the preponderant view, that the President, as
Commander-in-Chief, is not a member of the Armed Forces. He remains a civilian whose
duties under the Commander-in-Chief provision "represent only a part of the organic duties
imposed upon him. All his other functions are clearly civil in nature." 31 His position as a civilian
Commander-in-Chief is consistent with, and a testament to, the constitutional principle that
"civilian authority is, at all times, supreme over the military." (Article II, Section 3, 1987
Constitution)

Finally, petitioner submits that the creation of a "Special Oversight Committee" under Section
84 of the Act, especially the inclusion therein of some legislators as members (namely: the
respective Chairmen of the Committee on Local Government and the Committee on National
Defense and Security in the Senate, and the respective Chairmen of the Committee on
Public Order and Security and the Committee on National Defense in the House of
Representatives) is an "unconstitutional encroachment upon and a diminution of, the
President's power of control over all executive departments, bureaus and offices."

But there is not the least interference with the President's power of control under Section 84.
The Special Oversight Committee is simply an ad hoc or transitory body, established and
tasked solely with planning and overseeing the immediate "transfer, merger and/or
absorption" into the Department of the Interior and Local Governments of the "involved
agencies." This it will undertake in accordance with the phases of implementation already
laid down in Section 85 of the Act and once this is carried out, its functions as well as the
committee itself would cease altogether. 32 As an ad hoc body, its creation and the functions it
exercises, decidedly do not constitute an encroachment and in diminution of the power of control
which properly belongs to the President. What is more, no executive department, bureau or office
is placed under the control or authority, of the committee. 33

As a last word, it would not be amiss to point out here that under the Constitution, there are
the so-called independent Constitutional Commissions, namely: The Civil Service
Commission, Commission on Audit, and the Commission on Elections. (Article IX-A, Section
1)

As these Commissions perform vital governmental functions, they have to be protected from
external influences and political pressures. Hence, they were made constitutional bodies,
independent of and not under any department of the government. 34 Certainly, they are not
under the control of the President.
The Constitution also created an independent office called the "Commission on Human
Rights." (Article XIII, Section 17[1]).However, this Commission is not on the same level as
the Constitutional Commissions under Article IX, although it is independent like the latter
Commissions. 35 It still had to be constituted thru Executive Order No. 163 (dated May 5, 1987).

In contrast, Article XVI, Section 6 thereof, merely mandates the statutory creation of a
national police commission that will administer and control the national police force to be
established thereunder.

This commission is, for obvious reasons, not in the same category as
the independent Constitutional Commissions of Article IX and the other constitutionally
created independent Office, namely, the Commission on Human Rights.

By way of resume, the three Constitutional Commissions (Civil Service, Audit, Elections) and
the additional commission created by the Constitution (Human Rights) are all independent of
the Executive; but the National Police Commission is not. 36 In fact, it was stressed during the
CONCOM deliberations that this commission would be under the President, and hence may be
controlled by the President, thru his or her alter ego, the Secretary of the Interior and Local
Government.

WHEREFORE, having in view all of the foregoing holdings, the instant petition is hereby
DISMISSED for lack of merit.

SO ORDERED.

Narvasa, C.J., Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino,
Medialdea, Regalado, Davide, Jr., Romero and Nocon, JJ., concur.

G.R. No. L-67195 May 29, 1989

HEIRS OF EUGENIA V. ROXAS, INC., BENIGNA V. ROXAS, JULITA N. ROXAS,


VICTORIA R. VALLARTA, JUANITA ROXAS, and MARGARITA R. TIOSECO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, REBECCA BOYER ROXAS, GUILLERMO LUIS
ROXAS, JUDITH ROXAS and MARIA PILAR ROXAS, respondents.

G.R. No. 78618 May 29, 1989

HEIRS OF EUGENIA V. ROXAS, INC., petitioner,


vs.
HON. JOSE ANTONIO U. GONZALES, in his capacity as Secretary of Tourism,
SOSTENES L. CAMPILLO, JR., in his capacity as Undersecretary of Tourism Services,
both of the Department of Tourism and GUILLERMO ROXAS, doing business under
the name and style "MJB Food and Services", respondents.

G.R. Nos. 78619-20 May 29, 1989


HEIRS OF EUGENIA V. ROXAS, INC., petitioner,
vs.
HON. ODILON I. BAUTISTA, Jugde Presiding over Branch 37 of the Regional Trial
Court of Calamba, Laguna, HON. JAIME GASAPOS, in his capacity as OIC Calauan,
Laguna, and GUILLERMO ROXAS, doing business under the name and style MJB
FOOD and SERVICES, respondents.

Benito P. Fable for petitioners.

Conrado L. Manicad for respondents.

Ramon C. Fernandez for private respondents.

CORTES, J.:

These consolidated cases relate to various incidents in the long running dispute between the
heirs of Eufrocino and Eugenia Roxas regarding the operation of a restaurant within the
Hidden Valley Springs Resort in Calauan, Laguna.

All of the instant petitions filed by the petitioners arise from the same factual antecedents
and are bound by petitioners' singular intent of enjoining private respondents from operating
the restaurant at the Hidden Valley Springs Resort. It must be clear, however, that the issue
as to who has the legal right to operate the subject restaurant is not for this Court to decide
in these petitions, for such issue is the crux of the appeal pending before the Court of
Appeals. For the present, the Court is only called upon to determine whether or not grave
abuse of discretion as would vitiate the jurisdiction of the public respondents and would
warrant the annulment of their assailed resolutions and/or orders, was committed.

FACTS OF THE CASE

Petitioner corporation, Heirs of Eugenia V. Roxas, Inc. (hereinafter referred to as HEVR),


was incorporated on December 4, 1962 by the late Eufrocino Roxas and his seven children
(Pedro, Benigna, Julita, Antonio, Ramon, Victoria and Eriberto), with the primary purpose of
owning and developing the properties of Eufrocino Roxas and the estate of his late wife,
Dona Eugenia V. Roxas, located in the Province of Laguna. Petitioners Benigna V. Roxas,
Julita N. Roxas, Victoria R. Vallarta, Juanita Roxas and Margarita R. Tioseco are some of the
surviving heirs of Eufrocino and Eugenia Roxas.

In 1971, its articles of incorporation were amended to include the operation of a resort
among its purposes. In early 1972, it opened to the public the Hidden Valley Springs Resort
situated in Calauan. Laguna.

Eufrocino Roxas was Chairman of the Board of Directors and President of HEVR until the
time of his death on August 28, 1979. One of his sons, Eriberto, a director, was manager of
the resort until his death in 1980. He also succeeded his father as President upon the latter's
demise.

Private respondents are the heirs of Eriberto Roxas: Rebecca Boyer-Roxas, his wife;
Guillermo Luis and Maria Pilar, his children: and Judith Roxas, his daughter-in-law.
Eriberto Roxas and his family had been exclusively operating the restaurant and liquor
concession at the resort under an "Agreement" dated May 27, 1975 executed between
Pufrocino Roxas, as President of HEVR, and Eriberto Roxas, in his behalf and that of his
family.

When Eriberto Roxas was taken ill a few months before his death, Guillermo Roxas took it
upon himself to take over all the corporate duties and assume the authority of his father
pertaining to the resort.

After Eriberto Roxas' death on December 4, 1980, private respondents continued the
operations of the restaurant and liquor concession. In 1981, they incorporated under the
name "Hidden Valley Agri-Business and Restaurant, Inc." (hereinafter referred to as
HVABR), and through this entity they continued to carry on the concession.

The HEVR held a stockholders and Board of Directors' meeting on January 31, 1981,
elected members of the Board and appointed officers of the corporation. The Board then set
up a management committee and commenced an inquiry into the financial status of the
resort, requiring Guillermo Roxas to submit documents relative to its earnings and
expenditures. Steps were subsequently taken to restrict private respondents' previously
unlimited access to the corporate funds. Not surprisingly, private respondents were defiant.

In the Board meeting of July 30, 1981, the treasurer of HEVR reported that the income of the
resort could not satisfy its payroll requirements and loan amortizations. It appeared that the
resort's financial difficulty was due to the fact that the biggest profit center, the restaurant
therein, was not managed and operated by HEVR itself and that the concession fee paid by
private respondents was not even enough to pay for the interest and amortizations on the
loan secured by HEVR to upgrade the restaurant and kitchen facilities. It was suggested that
HEVR should take over the operation of the restaurant. Hence, the Board of Directors
adopted Resolution No. 3-81 authorizing the President to notify HVABR of its intent to take
over the operation of the restaurant, and in the event the latter refuses or fails to peaceably
vacate the premises within thirty (30) days from notice, to close the resort for an indefinite
period of time to prevent further losses to the corporation, and finally to order a financial,
legal and management audit of the operations of the resort [Rollo, G.R. No. 67195, p. 99].
The President then sent a letter dated August 13, 1981 to private respondents informing
them of the above resolution, and asking them to vacate the restaurant premises and to turn
over possession thereof to HEVR.

Private respondents consequently filed on September 18, 1981 an action for injunction with a
prayer for preliminary injunction and/or restraining order against HEVR and the other
petitioners, including Rafael J. Roxas, in the Regional Trial Court (RTC) of San Pablo,
Laguna, docketed as Civil Case No. SP-1920, to prevent the closure of the resort and the
unilateral termination by HEVR of the concession agreement.

The petitioners, in their answer, prayed for the dismissal of the complaint, the declaration of
the nullity of the concession agreement, and for an order requiring private respondents to
vacate and surrender the restaurant premises.

In the meantime, HVABR filed with the Bureau of Tourism Services of the Ministry of Tourism
(MOT) ; a petition to increase the food and beverage prices at the resort restaurant. HEVR,
being the holder of a license to operate the resort, contested this petition by impugning the
authority of HVABR to file the petition and to continue operating the restaurant.
Pending resolution of HVABR'S petition in the (MOT) the RTC, on June 13, 1983, dismissed
private respondent's complaint. The concession agreement between Eriberto and Eufrocino
Roxas was declared null and void for being ultra vires since it was neither authorized nor
ratified by the Board of HEVR, and for being violative of the doctrine of corporate opportunity
as embodied in Section 34 of the Corporation Code. 1 The trial court also upheld Resolution
No. 3-81 as a valid and reasonable exercise of corporate power by the Board of Directors of
HEVR [Id. at pp. 88-113].

With the decision of the trial court to support them, HEVR immediately caused the temporary
closure of the resort.

Private respondents, on the other hand, appealed to the Intermediate Appellate Court (IAC)
on June 27, 1983 (AC-G.R. CV No. 00764), and in an "Urgent Omnibus Motion" 2 prayed for
the issuance of a writ of preliminary injunction to prohibit petitioners from closing the resort [Id. at
pp. 114-126.]

On July 22, 1983, the IAC granted a temporary restraining order (TRO) which not only
directed petitioners to refrain from further commission of "acts that will tend to interfere,
impede, frustrate and obstruct the operation by plaintiffs-appellants [private respondents
herein] of the restaurant and liquor concession at the Hidden Valley Springs Resort," but also
"to undo such acts" if already done [Id. at p. 131.]

Immediately thereafter, petitioners filed a Comment to the appellants' "Urgent Omnibus


Motion", praying for the lifting of the TRO [Id. at pp. 134-143.]

Meanwhile, the MOT promulgated on July 28, 1983 its resolution dismissing HVABR'S
petition, finding inter alia that HVABR was operating the restaurant and liquor facilities of the
resort without the requisite MOT license. The dispositive portion of the resolution provides in
part:

WHEREFORE, in view of the the foregoing considerations, we hereby


resolved to:

xxx

2. The Heirs of Eugenia V. Roxas, Inc. (HEVR) is hereby ORDERED TO


TAKE OVER IMMEDIATELY the active management and operation of the
RESTAURANT and WINE outlets of the Hidden Valley Springs Resort from
the Hidden Valley Agri Business & Restaurant, Inc. (HVABR).

3. The Hidden Valley Agri-Business & Restaurant Inc. (HVABR) and/or any
person claiming under it the management and operation of the
RESTAURANT and WINE outlets of the Hidden Valley Springs Resort, Inc. is
hereby ORDERED to CEASE and DESIST from and to TURN OVER
IMMEDIATELY to the Heirs of Eugenia V. Roxas, Inc. (HEVR), the
MANAGEMENT and OPERATION of the RESTAURANT and WINE outlets of
the Hidden Valley Springs Resort;

4. The Director of the Bureau of Tourism Services is hereby ORDERED NOT


TO ISSUE in favor of the Hidden Valley Agri-Business Inc. (HVABR) a
Provisional Authority to operate the restaurant outlet of the Hidden Valley
Springs Resort;
xxx

9. Considering that the rightful owner/operator of the Hidden Valley Springs


Resort, the Heirs of Eugenia V. Roxas, Inc. (HEVR), has been deprived of its
right to operate and/or manage the restaurant and wine outlets of the resort
for a considerable length of time already and the added fact that the present
operator of said outlets of the resort has been operating the same illegally for
quite a long period of time already notwithstanding the mandate of the Rules
of this Ministry that only licensed operators may operate the same, to
immediately stop such illegal act, this Resolution is hereby declared
IMMEDIATELY EXECUTORY.

SO ORDERED.

[Id. at pp. 153-155.]

Private respondents filed a Manifestation (actually a motion for reconsideration) seeking to


hold in abeyance the execution of the aforementioned judgment. However, the MOT
subsequently issued its Order dated August 3, 1983 reiterating its findings and emphasizing
the final and executory nature of its directive [Id. at pp. 202-205.]

Petitioners then filed on August 31, 1983 with the IAC a Manifestation inviting the attention of
the appellate court to the above MOT resolution and Order [Id. at pp. 199-201.]

In the following month, petitioners filed a motion to dismiss the appeal and an application for
a writ of preliminary injunction alleging that private respondents had no right to operate the
restaurant per the August 3, 1 983 MOT Order, and that in fact they had ceased operating
the same since September 8, 1983, thereby rendering the appealed injunction case moot
and academic [Id. at pp. 206-212.]

However, on October 3, 1983, the IAC promulgated a resolution whereby petitioners were
enjoined from disturbing the status quo or from doing acts that tend to frustrate, impede,
obstruct, disturb or interfere with the operation by private respondents of the restaurant and
liquor concession. The IAC opined:

Since, the complaint filed by the plaintiffs-appellants was for the purpose of
seeking to enjoin and restrain the defendant-appellees from closing the
subject resort, the issue is thus the object of the appeal which is perfected
and now pending before us.

To allow defendants-appellees to close the resort in question would thus


amount to execution of the decision pending appeal, and,

Execution pending appeal, being an exception to the general rule that


execution may issue only after the decision in any case has become
executory, may issue only upon allegation and proof of the existence of a
special reason therefor." (De la Rea v. Subido, G.R. No. L-26082, March 1,
1968, 22 SCRA 953).

The decision in the main case was rendered on June 13, 1983 and plaintiffs-
appellants filed their Notice of Appeal on June 18, 1983. The appeal was
given due course on July 6, 1983 and is now before this Court. No special
reason is cited for immediate execution pending appeal nor is such execution
pending appeal properly applied for. [Id. at p. 78.]

Then Associate Appellate Justice Bidin 3 dissented, stressing the failure of private respondents
to establish a clear right to continue operating the restaurant in view of the dismissal of their
action in the lower court and the MOT resolution of July 28, 1983.

Petitioners filed a motion for reconsideration with the IAC on October 13, 1983.

On November 3, 1983, the MOT denied private respondents' motion for reconsideration [Id.
at pp. 277-300.] Thus, petitioners once again filed a Manifestation dated November 5, 1983
with the IAC, informing it of this denial [Id. at pp. 275-276.]

On November 17, 1983, petitioners filed another Manifestation and Motion with the IAC,
bringing to said court's attention an October 27, 1983 decision of the Bureau of Domestic
Trade rendered in C.A.D. Case No. 343, wherein the Bureau found that HVABR was
operating the restaurant in violation of the Retail Trade Nationalization Law (Republic Act No.
1180, as amended) because one of its stockholders, Rebecca Boyer-Roxas, was a foreigner
actually participating in the operation and management of the restaurant [Id. at pp. 301-303.]

This notwithstanding, the IAC promulgated its April 4, 1984 resolution denying petitioners's
motion for reconsideration and motion to dismiss the appeal, with Justice Bidin dissenting
once again [Id. at pp. 82-87.] Aggrieved by the IAC resolutions, petitioners, with the
exception of Rafael J. Roxas, brought a petition for certiorari, prohibition and mandamus with
preliminary injunction in this Court docketed as G.R. No. 67195.

On May 16, 1984, the Court issued a temporary restraining order to stop the IAC from
enforcing and/or carrying out the resolutions dated October 3, 1983 and April 4, 1984 and its
writ of preliminary injunction [Id. at pp. 350-351.]

On September 2, 1985, HEVR entered into a contract of lease with Valley Resort
Corporation, whereby the latter leased the Hidden Valley Springs Resort, with all the
equipment, vehicles, facilities and structures used in the resort operation, including the
subject restaurant premises, for a term of ten (10) years. After the contract was approved by
the MOT on September 4, 1985, a MOT license to operate the Hidden Valley Springs Resort
was issued to Valley Resort Corporation effective until July 31,1987 [Rollo, G.R. No. 78618,
pp. 92-104.]

On the other hand, during the pendency of G.R. No. 67195, respondent Guillermo Roxas
doing, business under the name and style "MJB Food and Services" (hereinafter referred to
as MJBFS), obtained on March 23, 1987 a license dated March 3, 1987 from the Department
of Tourism (DOT) to operate the restaurant at the Hidden Valley Springs Resort as a "Class A
- De Luxe restaurant [Id. at p.110.] Various letters were sent by HEVR to the DOT contesting
the issuance of the license alleging, inter alia, that Guillermo Roxas was not authorized to
possess and operate the restaurant [Id. at pp. 105-121.]

No response was heard from the DOT until the Secretary of Tourism sent a letter to HEVR
dated June 1, 1987 refusing to reconsider the issuance of the license to MJBFS. Hence,
HEVR filed the herein second petition docketed as G.R. No. 78618, on June 11, 1987,
seeking the nullification of the license issued to MJBFS.
A temporary restraining order was issued by the Court on June 22, 1987. The order
restrained the Secretary of Tourism from "allowing respondent Guillermo Roxas from utilizing
the license in question to operate the restaurant inside the Hidden Valley Springs Resort and
in the restaurant building/premises owned by petitioner, and from further granting license to
said respondent Roxas under any business name he may use to apply therefor" (Id. at pp.
124-125.]

Prior to the filing of the second petition, a mayor's permit to engage in the restaurant
business was issued by Hon. Jaime Gasapos, the Officer-in-Charge (OIC) of Calauan,
Laguna, to Guillermo Roxas/MJBFS on March 30, 1987, despite protests by HEVR Thus,
HEVR filed a complaint for injunction on April 6, 1987 in the Regional Trial Court (RTC) of
Calamba, Laguna, docketed as Civil Case No. 1086-87-C, against the OIC and Guillermo
Roxas from utilizing the mayor's permit in order to operate the resort restaurant. In its Order
dated April 29, 1987, the trial court denied HEVRs prayer for the issuance of a writ of
preliminary injunction. HEVRS subsequent motion for reconsideration was likewise denied.

Consequently, HERV filed a third petition in this Court, docketed as G.R. Nos. 78619-78620,
assailing the RTC Orders in Civil Case No. 1086-87-C.

The Court issued a temporary restraining order on June 23, 1987 restraining respondent
Guillermo Roxas and/or MJBFS from utilizing the Mayor's permit to operate the subject
restaurant [Rollo, G.R. Nos. 78619-78620, pp. 183-184.]

Incidentally, on March 31, 1987 a motion to declare Guillermo Roxas in contempt of court in
G.R. No. 67195 was filed by petitioners therein, on the ground that he violated the Court's
temporary restraining order dated May 16, 1984 when he obtained the DOT license to
operate the resort restaurant [Rollo, G.R. No. 67195, pp 510-525.]

On June 22, 1987, G.R. Nos. 78619-78620 were ordered consolidated with G.R. No. 67195
[Rollo, G.R. Nos. 78619-78620, p. 182.] On July 27, 1987, G.R. No. 78618 was ordered
consolidated with G.R. No. 61795 and G.R. Nos. 78619-78620 [Rollo, G.R. No. 78618, p.
157.]

G.R. No. 67195

In this petition for certiorari, prohibition and mandamus with preliminary injunction, petitioners
pray for the nullification of the October 3, 1983 and the April 4, 1984 Resolutions of the IAC.
The issues raised in this petition may be paraphrased as follows:

I. Whether or not Respondent IAC gravely abused its discretion tantamount


to lack of or excess of jurisdiction in granting the writ of preliminary injunction;
and

II. Whether or not Respondent lAC gravely abused its discretion tantamount
to lack of or excess of jurisdiction in denying the petitioner's Motion to
Dismiss the Appeal.

At times referred to as the "Strong Arm of Equity," the writ of preliminary injunction, whether
prohibitory or mandatory, is sought for the protection of the rights of a party before the final
determination of his rights vis-a-vis others' in a pending case before the court. It will issue
only upon a showing that there exists a clear and present right to be protected and that the
facts upon which the writ is to be directed are violative of said right [Angela Estate Inc., et al.
v. CFI of Negros Occidental, et al., G.R. No. L-27084, July 31, 1968, 24 SCRA 500; Locsin v.
Climaco G.R. No. L-27319, January 31, 1969, 26 SCRA 816; Buayan Cattle Co., Inc. v.
Quintillan, G.R. No. L-26970, March 19,1984,128 SCRA 276.] It cannot be over-emphasized
that the mere prayer for the preservation of the status quo pending the appellate court's
adjudication of the issues is not sufficient to warrant the issuance of this writ. "The possibility
of irreparable damage, without proof of violation of an actually existing light, is no ground for
an injunction, being a mere damnum absque injuria" [Bacolod-Murcia Milling Co., Inc., et al.
v. Capitol Subdivision, Inc., et al., G.R. No. L-25887, July 26, 1966, 17 SCRA 731, 737.]

With these principles in mind, and after a careful consideration of the undisputed facts and
the arguments of the parties, the Court finds that the IAC acted without or in excess of
jurisdiction and/or with grave abuse of discretion amounting to lack or excess of jurisdiction
in issuing the writ of preliminary injunction.

Private respondents failed to establish a clear and present right to continue operating the
restaurant and liquor concession at the resort considering that they, who were then
incorporated and doing business under HVABR had NO license or authorization from the
MOT to operate the restaurant and liquor concession in the resort. Without a license private
respondents cannot legally continue to operate the restaurant, therefore they cannot claim a
right which could be protected by a writ of preliminary injunction.

Petitioners invited the attention of the IAC to the July 28, 1983 MOT Resolution finding that
HVABR lacked the requisite license to operate the restaurant and liquor facilities in the
resort, and the August 3, 1983 MOT Order directing HVABR to desist from operating the
restaurant and to effect its closure [See Petitioners' Manifestation, Rollo, G.R. No. 67195, pp.
199-201.] The IAC nevertheless promulgated its October 3, 1983 Resolution granting private
respondents' prayer for a writ of preliminary injunction.

Subsequently, petitioners brought to the attention of the IAC the MOT resolution denying
HVABR's motion for reconsideration as well as the Bureau of Domestic Trade decision
finding that HVABR'S restaurant business violated the Retail Trade Nationalization Law
[See Petitioners' Manifestation and Motions, Id. at pp. 275-276; 301-304.] Once again, the
IAC denied petitioners' motions in its April 4, 1984 Resolution.

Contrary to the IAC's opinion, the July 28, 1983 MOT Resolution was not based on the trial
court's conclusion that the disputed concession agreement was invalid. As correctly pointed
out by the petitioners, the MOT Resolution and Order were based on the undisputed fact that
HVABR was operating the restaurant and liquor facilities of the resort without the requisite
license.

More importantly, the IAC ignored the basic implication of these circumstances that
HVABR'S unlicensed restaurant business was in gross violation of the Rules of the MOT and
tantamount to a criminal offense punishable under Sec. 19 (b) and (c) of PD 1463. 4

In fact, the MOT, in its August 3,1983 Order denying private respondent's manifestation
(motion for reconsideration), opined that:

. . . to grant the prayer contained in the Manifestation (actually motion) under


consideration would sweep away the barrier erected by the law against
unlicensed operators of tourism-oriented establishment [sic]. Indeed, even by
the greatest violence of construction of our powers and extravagant exercise
of our discretion, we cannot, without being prodigal in our actuation, grant the
said prayer of the movant which could be dangerous influence with respect to
subsequent cases that may come before us for resolution.

Again, to grant the prayer contained in the Manifestation under consideration


would amount to a condonnation [sic] of the illegal act that has been and still
is, being committed by the management of the HIDDEN VALLEY AGRI-
BUSINESS & RESTAURANT, INC. HVABR and thus give a premium to a
violation of the law. Precisely, we declared our resolution "IMMEDIATELY
EXECUTORY" so as to put an immediate stop to its illegal act. Movant is thus
plainly in error in claiming that "the same is not yet final and executory. [Id. at
p. 204.]

Consequently, the Court is compelled to declare null and void the writ issued by the IAC
which allowed private respondents to continue their operation of the restaurant and liquor
concession despite absence of the requisite MOT license permitting them to do so, thereby
sanctioning their illegal operation [See Suarez v. Reyes, G.R. No. L-19828, February 28,
1963, 7 SCRA 461; Utleg v. Arca, G.R. No. L-25026, August 31, 1971, 40 SCRA 597.1

II

Petitioners allege that the aforementioned MOT resolutions as well as the decision of the
Bureau of Domestic Trade which declared private respondents' restaurant business violative
of the Retail Trade Nationalization Law, rendered the main issue in the injunction case on
appeal before the IAC moot and academic.

The above contention springs from an erroneous analysis of the issues and must be
rejected.

A case is considered moot and academic when a determination is sought on a matter which,
when rendered, cannot have any practical effect on the existing controversy, or where no
practical relief can be granted [Meralco Workers Union v. Yatco, G.R. No. L-19785, January
30, 1967, 19 SCRA 177; Bongat v. BLR, G.R. No. L-41039, April 30, 1985, 136 SCRA 225.]

The issue in the injunction case, which is now raised on appeal before the IAC, hinges on a
determination of the contractual relationship between the petitioners and private respondents
as heirs of Eufrocino and Eugenia Roxas vis-a-vis the operation and management of the
restaurant and liquor concession in the resort. Its resolution rests on a judicial declaration of
the validity or nullity of the disputed concession agreement between the parties. This issue is
unaffected by the fact that private respondents have no license to operate the restaurant, or
that the participation of Rebecca Boyer-Roxas in HVABR'S activities was violative of the
Retail Trade Nationalization Law, for the rights between the parties remain largely unsettled.

G.R. No. 78618

In this petition for prohibition with preliminary injunction, petitioner HEVR seeks to nullify
MJBFS' license to operate the restaurant in the Hidden Valley Springs Resort and to prohibit
the DOT from issuing any other license to respondent Guillermo Roxas.
The function of the writ of prohibition is to prevent the doing of some act which is about to be
done. It is not intended to provide a remedy for acts already accomplished [Cabanero v.
Torres, 61 Phil. 522 (1935); Agustin, et al. v. de la Fuente, 84 Phil. 515 (1949); Navarro v.
Lardizabal, G.R. No. L-25361, September 28, 1968, 25 SCRA 370.]

As a license to operate the restaurant had already been issued to private respondents, a writ
of prohibition cannot issue.

Nevertheless, it does not mean that no other affirmative relief may be given to petitioner if
found to be deserving. For it is not the title or caption of a pleading, but the substance and
averments thereof that is controlling; so that, in the interest of justice, although a petition is
styled "Prohibition", it may be considered a petition for certiorari if the facts alleged make out
a case for the issuance of the latter writ [Cajefe et al. v. Fernandez, et al., 109 Phil. 743
(1960); See also Concepcion v. Vera, et al., 67 Phil. 122 (1939); Tambunting de Tengco v.
San Jose, et al., 97 Phil. 491 (1955).]

The Court will treat the instant petition as if it were a special civil action for certiorari.

It is a recognized principle that courts of justice will generally not interfere in executive and
administrative matters which are addressed to the sound discretion of government agencies,
such as, the grant of licenses, permits, leases, or the approval, rejection or revocation of
applications therefor [Manuel v. Villena, G.R. No. L-28218, February 27, 1971, 37 SCRA
745.] However, there is a limit to the deference accorded by the courts to the actions of such
agencies. Jurisprudence is replete with cases wherein the Supreme Court expounded on the
exception to the general rule. 5

In laying down the guidelines for the review of decisions of administrative agencies in the
exercise of their quasi-judicial powers, the Supreme Court, in the oft-cited case of Pajo, et al.
v. Ago, et al., 108 Phil. 905 (1960), stated that:

In general, courts have no supervising power over the proceedings and


actions of the administrative departments of the government. This is
generally true with respect to acts involving the exercise of judgment or
discretion, and findings of fact. Findings of fact by an administrative board or
officials, following a hearing, are binding upon the courts and will not be
disturbed except where the board or official has gone beyond his statutory
authority, exercised unconstitutional powers or clearly acted arbitrarily and
without regard to his duty or with grave abuse of discretion. And we have
repeatedly held that there is grave abuse of discretion justifying the issuance
of the writ of certiorari only when there is capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction . . . as where the power is
exercised in an arbitrary or despotic manner by reason of passion, prejudice,
or personal hostility amounting to an evasion of positive duty, or to a virtual
refusal to perform the duty enjoined, or to act at all in contemplation of
law . . . . [Id. at pp. 915-916.]

This standard has been unequivocally embraced in the 1987 Constitution, which affirms the
power of the judiciary to determine whether or not there has been grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
government. [Article VIII, Sec. 1, par. 2.]
In the instant case, petitioner contends that public respondents acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in issuing the contested restaurant
license despite the failure of Guillermo Roxas and/or MJBFS to satisfy the conditions
mandated by the "Rules and Regulations governing the Business and Operations of All
Resorts in the Philippines," such as, the submission of a contract of lease or written permit
from the petitioner as resort and restaurant owner allowing MJBFS to operate the subject
restaurant. Petitioner further contends that pursuant to Section 21, Chapter IV of the rules
and regulations on resorts. 6 Valley Resort Corporation as lessee and holder of the license to
operate the resort must be deemed licensed to operate the subject restaurant [Rollo, G.R. No.
78615, pp. 11-14.]

Public respondents, on the other hand, argue that no grave abuse of discretion was
committed by them because under the "Rules and Regulations Governing the Business and
Operation of all restaurants in the Philippines," MJBFS was not required to submit a contract
of lease or written permit from petitioner, the restaurant owner, allowing the former to operate
the latter's restaurant. Moreover, they contend that the issuance of the license in favor of
MJBFS was predicated on the favorable recommendation of a DOT Team of Inspectors 7 that
evaluated MJBFS' application and inspected the premises of the subject restaurant in accordance
with Section 8, Chapter IV of the rules and regulations on restaurants. Public respondents
likewise contend that Section 21, Chapter IV of the rules and regulations on resorts was
inapplicable because Valley Resort Corporation does not "own and operate" the subject
restaurant, therefore it cannot be deemed licensed to operate the same by virtue of its resort
license alone. And inasmuch as no previous license had been issued to petitioner or Valley
Resort Corporation to operate the subject restaurant, and in fact no party was operating the
restaurant pending the approval of the application of Guillermo Roxas and/or MJBFS, no grave
abuse of discretion attended the issuance of a restaurant license in favor of the latter [Id. at pp.
248-258.]

The Court, after a careful study of the various pleadings submitted by the parties, and the
DOT rules and regulations governing the operation of restaurants and resorts in the country,
holds that public respondents acted arbitrarily and capriciously and, therefore, with grave
abuse of discretion amounting to lack or excess of jurisdiction in the issuance of the
restaurant license in favor of MJBFS.

Although the premises of public respondents' arguments cannot be disputed, the conclusion
drawn therefrom is misplaced in view of the fact that public respondents undeniably had
knowledge prior to the issuance of the license to Guillermo Roxas and/or MJBFS that the
subject restaurant was owned by petitioner and presently leased to Valley Resort
Corporation, and that Guillermo Roxas and/or MJBFS' right to possess and operate the
restaurant was the subject of a pending litigation.

As far back as 1983, the MOT records show that the department was aware of the
controversy between petitioner and Guillermo Roxas, et al., who were then doing business
under the name HVABR regarding the restaurant and liquor concession at the resort. In fact,
the MOT resolutions promulgated on July 28, 1983 and November 3, 1983 in MOT Appealed
Case #83-1 precisely addressed petitioner's charge impugning the alleged right of Guillermo
Roxas, et al. to operate its resort restaurant, the subject restaurant in this case. The
judgment rendered by the RTC in Civil Case No. SP-1920 finding that Guillermo Roxas, et al.
had no contractual right to operate the restaurant and liquor concession in the resort was
noted by the department in that MOT case. Moreover, the Director of the Bureau of Tourism
Services was ordered not to issue in favor of HVABR a provisional authority to operate the
subject restaurant on the finding that it had no contractual right to manage and/or operate
the same [See MOT Resolution and MOT Order promulgated on July 28, 1983 and August 3,
1983, respectively, in MOT Appealed Case No. 83-1, Rollo, G.R. No. 67195, pp. 144155,
202-205; MOT Resolution on the Motion for Reconsideration promulgated on November 3,
1983, Id. at pp. 277-300.]

On September 4, 1985, the MOT, after appropriate proceedings, duly approved the ten-year
contract of lease between petitioner and Valley Resort Corporation, whereby the latter, as
LESSEE, was granted not only the exclusive fight to possess, enjoy and use the Hidden
Valley Springs resort, and all its equipment, vehicles, facilities and structures, including the
subject restaurant, but also "the right and privilege to make use of the license and
registration rights of the LESSOR over the resort. and, in addition, the LESSEE shall have
the exclusive right, during the period that the lease is in full force and effect, to make use of
the tradename and tradestyle 'HIDDEN VALLEY SPRINGS RESORT . . . [Rollo, G.R. No.
78618, p. 95.] Subsequently, Valley Resort Corporation was issued a license to operate the
Hidden Valley Springs resort by the MOT effective until July 31, 1987. Incidentally, in that
same contract was included a provision regarding the civil cases between petitioner and
Guillermo Roxas, et al., pending before the IAC and Supreme Court concerning the rights of
the parties to operate the subject restaurant covered by the lease, to the effect that petitioner
warranted that it would continue to pursue with vigor the pending cases and other cases
relative thereto, and that for the duration in which Valley Resort Corporation would be unable
to utilize the restaurant, rental payment would be reduced by 50% [Id. at pp. 96-97]

Then, even prior to the release of MJBFS' license to operate the restaurant on March 26,
1987, the DOT received petitioner's letter dated March 9,1987 opposing the issuance of that
license and reminded the DOT that, inter alia, the issue of whether or not Guillermo Roxas,
et al., had the right to operate petitioner's restaurant was still pending resolution before the
courts and that the subject restaurant was covered by the MOT approved contract of lease
between petitioner and Valley Resort Corporation.

Petitioner reiterated its grounds for opposition in its letters dated March 27, 1987, April 28,
1987 and May 28, 1987 to public respondent Secretary.

Public respondents make much of the fact that petitioner's letters objecting to the application
for a MJBFS restaurant license were not under oath as required under Section 17 of Chapter
IV of the rules and regulations on restaurants.8 The Court holds that this defect was not fatal to
the cause of petitioner for the simple reason that the essential facts upon which petitioner's
opposition was based were readily apparent from DOT registration and licensing department
records.

Moreover, by virtue of the approval by the MOT of the abovementioned contract of lease and
the subsequent issuance of a resort license in favor of Valley Resort Corporation, the
department had acknowledged the right of Valley Resort Corporation to operate the resort
business and to possess, use and enjoy all the resort facilities, including the subject
restaurant, which under department records has always been considered a facility of the
Hidden Valley Springs Resort and a part of the resort business [Rollo, G.R. No. 67195, p.
152; Rollo, G.R. No. 78618, pp. 93-103.] Under the above circumstances, the party entitled
to a DOT license to operate the subject restaurant is either Valley Resort Corporation, as
lessee, or any other party clearly authorized by petitioner, as restaurant owner, to possess
and use the same.

In fine, the Court holds that it was an arbitrary and capricious exercise of discretion on the
part of public respondents to have issued, and thereafter to have refused to revoke, the
restaurant license in favor of Guillermo Roxas and/or MJBFS knowing that: (1) the latter was
not the owner of the restaurant for which the license was sought; (2) the latter's right to
possess the same was being disputed by no less than petitioner as restaurant owner; and,
(3) the subject restaurant was already leased to Valley Resort Corporation pursuant to a
contract of lease approved by the department.

Public respondents' action, which contravenes the acceptable standards of justice and
reason, is indicative of grave abuse of discretion amounting to lack or excess of jurisdiction.

G.R. Nos. 78619-78620

Petitioner HEVR prays for the nullification of the RTC Orders of April 29, 1987 and May 8,
1987 denying its prayer for the issuance of a writ of preliminary injunction against Guillermo
Roxas, enjoining the latter from using and enjoying the mayors permit to operate the
restaurant of the Hidden Valley Springs Resort. Petitioner alleges grave abuse of discretion
amounting to lack of jurisdiction on the part of respondent judge, on the main premise that
his Orders allowed private respondent to operate the subject restaurant in violation of the
restraining order issued by this Court on May 16, 1984 in G.R. No. 67195.

The denial of petitioner's prayer for the issuance of the writ was predicated on the failure of
petitioner to establish a present and clear right to operate the subject restaurant, since the
issue as to who among the parties had a better right to operate the restaurant is still being
litigated in the IAC LRTC Order of April 29, 1987; Rollo, G.R. No. 78619-78620, pp. 29-31.]
Furthermore, the denial was held not to be in violation of the Supreme Court's restraining
order issued in G.R. No. 67195, since such order neither expressly prohibited Guillermo
Roxas from operating the restaurant nor gave the petitioner a right to operate the restaurant
[RTC Order of May 8, 1987, Id. at pp. 32-34.]

The Court does not find merit in the instant petition.

Whether or not a writ of injunction will issue lies exclusively within the discretion of
respondent judge, and this Court will not interfere with the exercise of respondent judge's
discretion unless there is a showing of grave abuse [North Negros Sugar Co. v. Hidalgo, 63
Phil. 664 (1936); Rodulfa v. Alfonso, 76 Phil. 225 (1946); Yaptinchay v. Torres, G.R. No. L-
26462, June 9, 1969, 28 SCRA 489.]

In the instant case, there is no indication that respondent judge acted with manifest abuse of
his discretion in denying the issuance of the writ that would compel this Court to set aside his
orders. Firstly, petitioner herein failed to establish a clear and present right justifying the
issuance of a writ of preliminary injunction considering that its right to operate the subject
restaurant to the exclusion of private respondent is still under litigation in AC-G.R. CV No.
00764. Secondly, at the inception of the action below, private respondent was a holder of a
DOT license and a mayor's permit to operate the restaurant which were regular on their face.

The Court's conclusion is not necessarily in conflict with that in G.R. No. 67195. Although
both cases involve the issuance of a writ of preliminary injunction, in G.R. No. 67195 the
Court declared that the writ of preliminary injunction cannot issue to protect the illegal
restaurant business of private respondents in view of the fact that the latter was not then
licensed by the MOT to operate the subject restaurant. The Court did not in any way attempt
to resolve the issue of who among the parties had the right to operate the subject restaurant.
Furthermore, this Court finds that the assailed RTC Orders did not violate its May 16, 1984
restraining order enjoining the IAC from enforcing and carrying out the October 3, 1984 and
April 4, 1984 resolutions and its writ of preliminary injunction.

Petitioner claims that the implication of this restraining order was to prohibit private
respondent from operating the subject restaurant and to affirm the right of petitioner to
operate the restaurant, pending resolution of G.R. No. 67195. This contention is unsound.

The October 3, 1984 and April 4, 1984 IAC resolutions and its writ of preliminary injunction
responded to private respondents' prayer to enjoin petitioner from closing the restaurant,
disturbing the status quo and frustrating, impeding, obstructing, disturbing or interfering with
private respondent's right to operate the restaurant and liquor concession.

Consequently, this Court's restraining order had the effect of staying the writ of preliminary
injunction and permitting petitioner to close the resort over and above the protests of private
respondent. It did not ipso facto create and affirm a right on the part of petitioner to operate
the restaurant.

In addition, considering the thrust of the above holding, it is appropriate at this point to
declare petitioner's motion to cite private respondent in contempt filed in G.R. No. 67195,
charging as contumacious the act of private respondent in applying for a restaurant license
with the DOT under the business name MJBFS (in order to operate the subject resort
restaurant as MJB Restaurant), without merit.

Well-settled is the rule that an act to be considered contemptuous must be clearly contrary or
prohibited by the order of the Court. "A person cannot, for disobedience, be punished for
contempt unless the act which is forbidden or required to be done is clearly and exactly
defined, so that there can be no reasonable doubt or uncertainty as to what specific act or
thing is forbidden or required" [Cua v. Lecaros, G.R. No. 71909, May 24, 1988, citing Anglo-
Fil Trading Corporation v. Lazaro, G.R. No. L54958, September 2, 1983, 124 SCRA 494,
525.] Once again it must be noted that this Court's restraining order of May 16, 1984 was
addressed to the IAC and had the effect of staying the writ of preliminary injunction issued by
the latter. The only clear import of the restraining order was to allow petitioner as resort
owner to close the resort. It did not prohibit private respondent from applying for a restaurant
license with the DOT.

However, the Court, in upholding the assailed orders of respondent judge herein, does not in
any way purport to declare that private respondent has a clear and established right to
operate the subject restaurant, and that he can, in fact, operate the same to the exclusion of
the petitioner. It must be stressed that the issue of who among the parties has the right to
operate the restaurant is still pending resolution before the Court of Appeals in the Civil Case
AC-G.R. CV No. 00764.

WHEREFORE, the Court rules:

(1) In G.R.No. 67195, the October 3, 1983 Resolution of the IAC is SET ASIDE. The April 4,
1984 Resolution of the IAC is AFFIRMED insofar as it denies petitioners' motion to dismiss
the appeal; but REVERSED insofar as it denies petitioners' motion for reconsideration of the
October 3, 1983 Resolution seeking to set aside the writ of preliminary injunction issued by
the IAC.
In view of the Court's decision in G.R. Nos. 78619-78620, the motion to cite Guillermo Roxas
in contempt of court is DENIED.

The temporary restraining order issued by this Court on May 16, 1984, whereby the IAC was
restrained from enforcing and/ or carrying out its resolutions dated October 3, 1983 and April
4, 1984, and its writ of preliminary injunction, shall remain in force and effect pending the
resolution of Civil Case AC-G.R. CV No. 00764.

(2) The petition in G.R.No.78618 is GRANTED. The license to operate the subject restaurant
in the Hidden Valley Springs Resort issued by the DOT in favor of MJB Food and Services
(or Guillermo Roxas) is NULLIFIED.

The temporary restraining order issued by this Court on June 22, 1987, whereby public
respondents were restrained from further granting a similar license to respondent Guillermo
Roxas under any business name he may use to apply therefor, shall remain in force and
effect pending the final resolution of Civil Case AC-G.R. CV No. 00764.

(3) The petition for certiorari and prohibition in G.R. Nos. 78619-78620 is DISMISSED for
lack of merit.

The temporary restraining order issued by this Court on June 23, 1987 is hereby SET
ASIDE.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., and Feliciano, JJ., concur.

G.R. No. L-29171 April 15, 1988

INDUSTRIAL POWER SALES, INC., petitioner-appellant,


vs.
HON. DUMA SINSUAT etc., et al., respondents-appellees.

Norberto J. Quisumbing for petitioner-appellant.

Emerito M. Salva Law Offices and Juan B. Diaz for private respondents- appellees.

The Solicitor General for public respondent.

NARVASA, J.:

Certain universally accepted axioms govern judicial review through the extraordinary actions
of certiorari or prohibition of determinations of administrative officers or agencies: first, that
before said actions may be entertained in the courts of justice, it must be shown that all the
administrative remedies prescribed by law or ordinance have been exhausted; and second,
that the administrative decision may properly be annulled or set aside only upon a clear
showing that the administrative official or tribunal has acted without or in excess of
jurisdiction, or with grave abuse of discretion. 1 There are however exceptions to the principle
known as exhaustion of administrative remedies, these being: (1) where the issue is purely a
legal one, (2) where the controverted act is patently illegal or was done without jurisdiction or in
excess of jurisdiction; (3) where the respondent is a department secretary whose acts as an alter
ego of the President bear the latter's implied or assumed approval, unless actually disapproved;
or (4) where there are circumstances indicating the urgency of judicial intervention. 2

Application of these established precepts to the undisputed facts, hereunder briefly set
out, 3 impels the grant of the writ of certiorari to annul the administrative decision complained of in
the proceedings at bar.

In April of 1965 two (2) Invitations To Bid were advertised by the Bureau of Supply
Coordination of the Department of General Services.

The first, dated April 6, 1965, called for 'eight (8) units TRUCKS, Line Construction, left-hand
drive, complete and special factory built, series of 1965, brand new, for the use of the Bureau
of Telecommunications pursuant to Requisition No. 18792 dated March 9,1965." The
Invitation to Bid as well as the requisition itself contained a proviso limiting the offers to
foreign made products on a CIF basis, Port of Manila.

The second, dated April 29, 1965, amended the first notice on the basis of suggestions
contained in letters of Industrial Power Sales, Inc. sent on April 7 and 13, 1965, which were
evidently found worth considering. Those letters proposed that the invitation include not only
foreign made products on a CIF-Manfla basis but also those of local manufacture on an FOB
Manila basis. Concerning this, Acting Undersecretary of Public Works & Communications
Lachica addressed a 3rd Indorsement to the Director of Supply Coordination, dated April 22,
1965.4

... advising that Office would not have any objection to locally manufactured
utility truck bodies provided they conform to the approved technical
specification of this Office as well as to the manufacturer's standard product
specification, since this type of body manufacture has been acceptable in
most government vehicles ... (and in view thereof) it may therefore be
necessary that both CIP and FOB Manila quotations be considered.

The second Invitation to Bid thus announced that both CIF Port of Manila and FOB
Manila quotations would be accepted and made part of bid requirements.

The bidding took place on May 11, 1965, as scheduled. Among the bidders were Industrial
Power Sales, Inc. and Delta Motor Corporation, hereafter respectively referred to simply as
IPSI and DELTA.

The bids were deliberated on by the Committee on Awards. In attendance at the


deliberations, at the Chairman's explicit request, were two (2) authorized representatives of
the Bureau of Telecommunications, the requisitioner of the vehicles. 5 The Committee
thereafter recommended.
Award to Industrial Power Sales at P52,500 each, FOB Manila has the same
is the lowest complying; the offer in dollars is higher. The lowest offer at
$10,688.77 is non-complying.

On the strength thereof, Letter-Order No. B-207495 was drawn up in IPSI's favor, dated June
10, 1965 and signed by the acting Director of Supply, Conrado L. Ledda.

DELTA protested the award to IPSI by telegram sent to the Bureau of Telecommunications
on June 11, 1965. It claimed that the trucks offered by IPSI were not factory built, as
stipulated in the specifications contained in the requisition itself and in the Invitation to Bid
The telegraphic protest of DELTA was considered and adjudicated adversely to it by the
Acting Director of Supply Coordination. In his decision dated June 23, 1965, the Director
ruled that the bidding had been made in strict compliance with the technical specifications
and requirements stated by the Bureau of Telecommunications as modified by the Chairman,
Committee on Specifications Review of Equipment, Plant and Machinery of the Department
of Public Works and Communications; and that after due deliberation on the different bids
received, the Committee on Awards, with the concurrence of the requisitioner's duly
authorized representatives, had resolved to award the contract in IPSI's favor. On the same
date, the Acting Director of Supply informed the Acting Director of the Bureau of
Telecommunications of the Letter-Order dated June 10, 1965 in IPSI's favor, and that
delivery of the units was to be made within sixty (60) working days from date of receipt of
that order. 6

On July 16, 1965, however, Acting Undersecretary Lachica tried to reverse himself. He wrote
to the Director of Bureau of Supply Coordination recalling his 3rd indorsement of April 22, in
which he had expressed his office's absence of objection to offers of trucks with locally
manufactured utility bodies, it having been "found out that the requisition as approved by the
Secretary calls for special factory built, Line Construction Trucks, and not merely utility
trucks." 7 The reply of the Acting Director of Supply dated July 27,1965 however reiterated and
reaffirmed the conclusions in his Decision of June 23, 1965 8 just mentioned, i.e., that IPSI's bid
conformed stictly to all declared requirements and specifications and had thus been correctly
accepted. The director further made the points 9 that

The term "special" as stated in the ... (Undersecretary's) basic letter, which
qualified the (description) factory built line construction trucks was not
originally required in the specifications and requirements submitted by the
Bureau of Telecommunications, which espicification and requirement were
approved by that Department, hence, not included in the bid
advertisement. Requirements that are not contained in the advertisement for
bids could not be entertained as they voiolate Rule 46 (7) of the Department
of General Services Order No. 32, Series of 1963.

It may not be amiss to inform in this connection that based on the results of
public bidding the offer of Industrial Power Sales for eight (8) Utility
Construction trucks at P52,000.00 each net all taxes included, delivered at
site, conforms to the specifications and requirements, and the price is the
lowest as against Delta Motor Corporation's $14,000.00 each, CIF Port of
Manila, (which) excludes government taxes, banking charges, local arrastre
and wharfage fees.

This letter of the Director of Supply was forwarded by the Undersecretary to the Director of
Telecommunications. The latter wrote back to the Undersecretary on August 18,
1965, 10 expressing his concurrence with the views set forth in said letter of the Director of Supply.
He also stressed his Bureau's "dire need" for the vehicles; 'further postponement" of their
acquisition "will contribute greatly to the delay in the early completion of our projects to be derived
from expected income." Obviously satisfied, the Undersecretary transmitted the
Telecommunications Director's letter to the Acting Director of Supply (by 4th Indorsement dated
August 20, 1965), making no reference to his recall of 3rd Indorsement of April 22, 1965. 11

Delta's next move was to file with the Office of the Secretary of General Services a letter of
protest against the proposed award to IPSI accompanied by a protest bond in the amount of
P44,000.00 executed by the Meridian Assurance Corporation. DELTA's position was that
IPSI's offer of locally assembled trucks was not in accordance with the bid specification
for bread new, complete and factory-built trucks. 12 Acting thereon, Secretary Duma Sinsuat, in
his 1st Indorsement dated Septemb er 3, 1965 addressed to the Director of the Bureau of Supply,
opined that

... only Delta Motor Corporation has complied with the technical
specifications originally called for in Requisition No. 198792 dated March 9,
1965, duly approved by Secretary Abad. The award of the eight (8) line
construction trucks called for ... should, therefore, be made to Delta ... at a
price equal to that offered by the Industrial Power Sales, Inc., as manifested
by the Protestant in its letter-protest and as provided for in Rule 45 of
Department Order No. 32, Series of 1963.

In Secretary Sinsuat's view, when Acting Director Lachica agreed to announce and advertise
a supplemental or amended Invitation to Bid which would admit offers of trucks with locally
manufactured utility bodies," the latter had violated a department rule 13 that

Any subsequent alteration or modification made separately or on the


requisition itself by any subordinate official should bear the approval of the
Department Head concerned, pursuant to Section 2048 of the Revised
Administrative Code, or of the Undersecretary if so delegated.

Sinsuat asserted that as there was no showing that Undersecretary Lachica had been
authorized to approve any modifications of the requisition, the modification sanctioned by
him in his aforesaid 3rd Indorsement of April 22, 1965 was null and void; besides, Lachica
had afterwards withdrawn his approval thereof in his letter of July 16, 1965.

Replying to Secretary Sinsuat, the Acting Director of Supply, by 2nd Indorsement dated
September 7, 1965, drew attention to the fact that DELTA's quoted price of U.S. $13,425.00
per unit, CIF-Manila computed on the basis of FOB Manila, to place it on a parity with
IPSI's bid and would then like IPSI's have to include banking charges, duties and taxes,
would in Philippine Currency amount to P65,467.88 and, therefore, would not be equal to
IPSI's tendered price of P52,500.00. Secretary Sinsuat however wrote back the following
day, September 8, 1965 (3rd Indorsement), and told the Acting Director that the Department
had already approved DELTA's price of $13,425.00, CIFManila per unit of Toyota Line
Construction Trucks and categorically directed him to award to DELTA the purchase order for
the eight Line Construction Trucks with the least possible delay. In view thereof, Letter-Order
No. B210230 was forthwith made by Acting Supply Director Ledda and approved and signed
by Secretary of General Services Duma Sinsuat. Even at this time, one other dissenting
voice still made itself heard. The Senior Buyer of the Committee on Awards wrote to the
Committee Chairman on September 9, 1965, confessing hims "at a loss in framing out the
legend of the order (in DELTA's favor) and also the minutes of the Committee's deliberation,"
and stating that he would "refrain in the award in favor of the Delta Motor Corporation." 14

IPSI lost no time in appealing from Secretary Sinsuat's decision to award the purchase
contract to DELTA. It appealed on September 9, 1965 to the Office of the President 15 as well
as to the Office of the Auditor General. 16 The latter acted just as promptly. By lst Indorsement
dated September 10, 1965 of the Deputy Auditor General, the Secretary of General Services was
required to comment on IPSI's letter-appeal and to forward the pertinent papers to the General
Auditing Office for final consideration. 17 The appeal notwithstanding, the Letter-Order in favor of
DELTA was released to it on September 17,1965. 18

IPSI then filed with the Quezon City Court of First Instance on September 21, 1965, a
petition for certiorari, prohibition and mandamus, with application for preliminary prohibitory
and mandatory injunction, which was docketed as Case No. Q9477. 19 The injunction prayed
for issued upon a bond in the amount of P100,000.00 given by Capitol Insurance & Surety Co.,
Inc. The verdict went against IPSI, however. After trial, the Court rendered judgment dismissing
IPSI's petition and sentencing it and its surety, on the counterclaim, to pay damages to DELTA.
The dispositive portion of that judgment reads:

WHEREFORE, judgment is hereby rendered in favor of respondent Delta


Motors Corporation and its co-respondents and against the petitioner
Industrial Power Sales, Inc., dismiss the latter's petition for certiorari,
prohibition and mandamus, dated September 20,1965, and dissolving the
preliminary injunction issued in this case, and ordering petitioner Industrial
Power Sales;

1. To pay P400,000.00, jointly and severally with the Capital Insurance and Surety Co., Inc.,
the latter, to the extent of P100,000.00 only, as damages to respondent Delta Motors
Corporation by reason of the writ of preliminary injunction issued in this case;

2. To pay attorney's fees in the sum of P20,000.00, and

3. To pay the costs of this suit.

From this judgment IPSI has appealed to this Court, contending that the Trial Court erred

1) in not holding that regardless of the validity of the modification approved by


Undersecretary Lachica, local manufacturers cannot be lawfully excluded from the bidding
even under the original invitation to bid because mandatorily required by law;

2) in holding that IPSI is not a local manufacturer or domestic entity entitled to 15%
preference over DELTA;

3) in not holding that Secretary Sinsuat exceeded his jurisdiction petition in giving due course
to DELTA's appeal although filed beyond the reglementary period therefor;

4) in not holding that even if DELTA's appeal were timely perfected, Secretary Sinsuat
gravely abused his discretion or exceeded his jurisdiction in not affording IPSI a right to be
heard on that appeal;
5) in not holding that Secretary Sinsuat had gravely abused his discretion in reversing the
decision to award the contract to IPSI and ruling that Undersecretary's approval of the
modification of the bidding terms was unauthorized;

6) in not holding that Secretary Sinsuat gravely abused his discretion in permitting DELTA to
reduce its price to equal that of qqqIPSI the latter's bid not being defective, and in insisting
on approval of DELTA's reduced price although higher than IPSI's;

7) in not holding that the award in DELTA's favor violated the Retail Trade Nationalization
Law;

8) in denying IPSI's claim for damages; and

9) in awarding excessive damages to DELTA, the evidence to justify the same being
insufficient and the award being, in any case, against the law.

It appears that respondent Secretary of General Services disregarded certain material facts,
or considered them as of no consequence, these being:

1) the amended notice to bidders or Invitation to Bid was duly advertised;

2) it was clear from that advertised, modified Invitation to Bid that offers not only of foreign
made or factory-built trucks but also of trucks with bodies of local manufacture, or offers of
trucks either CIF Manila or FOB-Manila, would be acceptable;

3) the modification had been favorably considered by the Bureau of Supply Coordination and
approved by the Undersecretary of Public Works & Communications, who had observed on
that occasion that "this type of body manufacture (i.e., 'locally manufactured utility truck
bodies') has been acceptable in most government vehicles;"

4) no protest whatever had been made by DELTA to the terms set forth in that second
Invitation to Bid prior to the scheduled bidding on May 11, 1965;

5) All bids submitted were studied and weighed by the Committee on Awards, with the
participation of two (2) representatives of the requisitioning agency; and thereafter, the
Committee, in a reasoned report, unanimously declared IPSI's bid as the winning bid and
recommended award to it of the contract;

6) the recommendation of the Awards Committee was approved by the Director of Supply;

7) that approval was reaffirmed by the Director of Supply-in his decision on the protest of
DELTA, which it filed after learning that it had lost in the bidding-aserting that the bidding had
been done in strict compliance with all relevant requisites, and the award given not only after
due deliberations, but also with the concurrence of the representatives of the requisitioning
bureau;

8) although the Undersecretary of Public Works & Communications had subsequently tried to
recall his approval of the modification (for acceptance of bids, FOB-Manila, or of trucks with
locally manufactured bodies), supra, he had abandoned that attempt after receiving
communications from
a) the Director of Supply, reiterating his stand on the propriety of the bidding
and the award to IPSI; and

b) the Director of the requisitioning agency, the Bureau of


Telecommunications, concurring with the position of the Director of Supply,
and requesting quick action on the award in view of the Bureau's "dire need"
therefor;

9) the Senior Buyer of the Committee on Awards refused to go along with the Award to
DELTA;

10) in fine all the Government agencies concerned were agreed on the correctness of the
award to IPSI the requisitioner, the Bureau of Telecommunications, the Department of Public
Works & Communications to which said Bureau of Telecommunications pertains, the Bureau
of Supply, which had direct supervision and control of the bidding, and of course, the
Committee on Awards.

These material circumstances were, to repeat, considered of no moment by respondent


Secretary of General Services. He ignored, too, the additional circumstance of estoppel as
regards DELTA. For DELTA, with full knowledge of the amendment of the notice to bidders
(making acceptable bids for truly with locally manufactured bodies, or FOB-Manila) made no
protest at all but, on the contrary, participated in the bidding under said advertised terms,
objecting thereto only after its bid had been rejected by the Committee on Awards and the
other Government offices concerned.

Respondent Secretary's justification for doing so is that (1) the modification had not been
validly approved by the Undersecretary of Public Works & Communications, because there
was "no showing that the latter ... (had been) authorized by (the) Secretary ... to make the
modifications;" and (2) said Undersecretary had subsequently withdrawn the approval to the
modification

It should at once be apparent that the second ground of justification is not borne out by the
facts. As already above stated, the Undersecretary did not persist in but implicitly abandoned
his attempt to withdraw his approval of the modification. As to the first ground, it being a legal
presumption that official duty 20 has been regularly performed, 20it must be a assigned, no
evidence having been adduced to destroy the presumption, that Undersecretary Lachica indeed
possessed the requisite authority to approve the modifications in question. In any event, his
possession of that authority may be demonstrated by Department Order No. 82 dated November
30,1964 by which the Secretary of Public Works & Communications delineated the powers of his
two undersecretaries and the chiefs of offices in relation to his own. 21

Apart from material facts, also ignored were applicable provisions of law conferring
preferential status to locally manufactured equipment and supplies, etc., and to domestic, as
distinguished from foreign, entities. Republic Act No. 4164, the Appropriations Act relevant to
the time in question, provided 22 that all appropriations for the purchase of equipment, supplies
and materials authorized thereunder shall be available only for locally manufactured equipment,
parts, accessories, supplies and materials, unless none be available in the market, or the price of
the locally manufactured article exceed those determined by the Flag Law by 10%. The
applicability of the provision in IPSI's favor seems indisputable. The Flag Law, 23 on the other
hand, provides that whenever several bidders participate in a bidding for supplying articles,
materials, and equipment for any office of the government for public use ... or public works, the
award shall be made to the domestic entity making the lowest bid, provided it is not more than
15% in excess of the lowest bid made by a bidder other than a domestic entity. While DELTA was
organized under Philippine laws, it was acting in this case merely as agent of a foreign company;
it was the latter which to all intents and purposes was the bidder, hence, as between it and IPSI,
IPSI should be considered the preferred bidder.

The plea made in behalf of respondent Secretary that IPSI had gone to Court without first
exhausting all administrative remedies cannot be sustained in view of the doctrines set out in
the opening paragraph of this opinion.

There is merit in IPSI's appeal, therefore. The respondent Secretary had indeed acted with
grave abuse of diwmtion amount to lack or excess of jurisdiction. His acts must be nullified,
and the Trial Court's judgment upholding those acts must be set aside.

WHEREFORE, the decision of the Trial Court subject of the appeal is REVERSED AND SET
ASIDE and another entered NULLIFYING the orders of respondent Secretary of General
Services embodied in his l st Indorsement dated September 8, 1965 and those in affirmance
and implementation thereof, and SENTENCING defendant-appellee Delta Motor Corporation
to pay the sum of P 20,000.00 to Plaintiff-appellant Industrial Power Sales, Inc. as and for
attomey's fees, and the costs of the suit.

Teehankee, C.J., Cruz, Gancayco and Grio-Aquino, JJ., concur.

Footnotes

G.R. No. L-19180 October 31, 1963

NATIONAL DEVELOPMENT COMPANY, ET AL., petitioners-appellees,


vs.
THE COLLECTOR OF CUSTOMS OF MANILA, respondent-appellant.

Ross, Selph and Carrascoso for petitioners-appellees.


Office of the Solicitor General for respondent-appellant.

BAUTISTA ANGELO, J.:

The National Development Company which is engaged in the shipping business under the
name of "Philippine National Lines" is the owner of steamship "S.S. Doa Nati" whose local
agent in Manila is A. V. Rocha. On August 4, 1960, the Collector of Customs sent a notice to
C.F. Sharp & Company as alleged operator of the vessel informing it that said vessel was
apprehended and found to have committed a violation of the customs laws and regulations in
that it carried an unmanifested cargo consisting of one RCA Victor TV set 21" in violation of
Section 2521 of the Tariff and Customs Code. Inserted in said notice is a note of the
following tenor: "The above article was being carried away by Dr. Basilio de Leon y Mendez,
official doctor of M/S "Doa Nati" who readily admitted ownership of the same." C.F. Sharp &
Company was given 48 hours to show cause why no administrative fine should be imposed
upon it for said violation.

C.F. Sharp & Company, not being the agent or operator of the vessel, referred the notice to
A. V. Rocha, the agent and operator thereof, who on August 8, 1960, answered the notice
stating, among other things, that the television set referred to therein was not a cargo of the
vessel and, therefore, was not required by law to be manifested. Rocha stated further: "If this
explanation is not sufficient, we request that this case be set for investigation and hearing in
order to enable the vessel to be informed of the evidence against it to sustain the charge and
to present evidence in its defense."

The Collector of Customs replied to Rocha on August 9, 1960 stating that the television set
in question was a cargo on board the vessel and that he does not find his explanation
satisfactory enough to exempt the vessel from liability for violating Section 2521 of the Tariff
and Customs Code. In said letter, the collector imposed a fine of P5,000.00 on the vessel
and ordered payment thereof within 48 hours with a threat that he will deny clearance to said
vessel and will issue a warrant of seizure and detention against it if the fine is not paid.

And considering that the Collector of Customs has exceeded his jurisdiction or committed a
grave abuse of discretion in imposing the fine of P5,000.00 on the vessel without the benefit
of an investigation or hearing as requested by A. V. Rocha, the National Development
Company, as owner of the vessel, as well as A. V. Rocha as agent and operator thereof, filed
the instant special civil action of certiorari with preliminary injunction before the Court of First
Instance of Manila against the official abovementioned. The court, finding the petition for
injunction sufficient in form and substance, issued ex parte the writ prayed for upon the filing
of a bond in the amount of P5,00.00.

Respondent set up the following special defenses: (1) the court a quo has no jurisdiction to
act on matters arising from violations of the Customs Law, but the Court of Tax Appeals; (2)
assuming that it has, petitioners have not exhausted all available administrative remedies,
one of which is to appeal to the Commissioner of Customs; (3) the requirements of
administrative due process have already been complied with in that the written notice given
by respondent to petitioner Rocha clearly specified the nature of the violation complained of
and that the defense set up by Rocha constitute merely a legal issue which does not require
further investigation; and (4) the investigation conducted by the customs authorities showed
that the television set in question was unloaded by the ship's doctor without going thru the
custom house as required by law and was not declared either in the ship's manifest or in the
crew declaration list.

On the basis of the stipulation of facts submitted by the parties, the court a quo rendered
decision setting aside the ruling of respondent which imposes a fine of P5,000.00 on the
vessel Doa Nati payable within 48 hours from receipt thereof. The court stated that said
ruling appears to be unjust and arbitrary because the party affected has not been accorded
the investigation it requested from the Collector of Customs.

Respondent interposed the present appeal.

When the customs authorities found that the vessel Doa Nati carried on board an
unmanifested cargo consisting of one RCA Victor TV set 21" in violation of Section 2521 of
the Tariff and Customs Code, respondent sent a written notice to C. F. Sharp & Company,
believing it to be the operator or agent of the vessel, and when the latter referred the notice
to A. V. Rocha, the real operator of the vessel, for such step as he may deem necessary to
be taken the latter answered the letter stating that the television set was not cargo and so
was not required by law to be manifested, and he added to his answer the following: "If this
explanation is not sufficient, we request that this case be set for investigation and hearing in
order to enable the vessel to be informed of the evidence against it to sustain the charge and
to present evidence in its defense. "Respondent, however, replied to this letter saying that
said television was a cargo within the meaning of the law and so he does not find his
explanation satisfactory and then and there imposed on the vessel a fine of P5,00.00.
Respondent even went further. He ordered that said fine be paid within 48 hours from receipt
with a threat that the vessel would be denied clearance and a warrant of seizure would be
issued if the fine will not be paid. Considering this to be a grave abuse of discretion,
petitioners commenced the present action for certiorari before the court a quo.

We find this action proper for it really appears that petitioner Rocha was not given an
opportunity to prove that the television set complained of is not a cargo that needs to be
manifested as required by Section 2521 of the Tariff and Customs Code. Under said section,
in order that an imported article or merchandise may be considered a cargo that should be
manifested it is first necessary that it be so established for the reason that there are other
effects that a vessel may carry that are excluded from the requirement of the law, among
which are the personal effects of the members of the crew. The fact that the set in question
was claimed by the customs authorities not to be within the exception does not automatically
make the vessel liable. It is still necessary that the vessel, its owner or operator, be given a
chance to show otherwise. This is precisely what petitioner Rocha has requested in his letter.
Not only was he denied this chance, but respondent collector immediately imposed upon the
vessel the huge fine of P5,000.00. This is a denial of the elementary rule of due process.

True it is that the proceedings before the Collector of Customs insofar as the determination
of any act or irregularity that may involve a violation of any customs law or regulation is
concerned, or of any act arising under the Tariff and Customs Code, are not judicial in
character, but merely administrative, where the rules of procedure are generally disregarded,
but even in the administrative proceedings due process should be observed because that is
a right enshrined in our Constitution. The right to due process is not merely statutory. It is a
constitutional right. Indeed, our Constitution provides that "No person shall be deprived of
life, liberty, or property without due process of law", which clause epitomize the principle of
justice which hears before it condemns, which proceeds upon inquiry and renders judgment
only after trial. That this principle applies with equal force to administrative proceedings was
well elaborated upon by this Court in the Ang Tibay case as follows:

... The fact, however, that the Court of Industrial Relations may be said to be free
from the rigidity of certain procedural requirements does not mean that it can, in
justiciable case coming before it, entirely ignore or disregard the fundamental and
essential requirements of due process in trials and investigations of an administrative
character.

... There are cardinal primary rights which must be respected even in proceedings of
this character. The first of these rights is the right to a hearing, which includes the
right of the party interested or affected to present his own case and submit evidence
in support thereof. Not only must the party be given an opportunity to present his
case and to adduce evidence tending to establish the rights which he asserts but the
tribunal must consider the evidence presented. While the duty to deliberate does not
impose the obligation to decide right, it does imply a necessity which cannot be
disregarded, namely, that of having something to support its decision. No only must
there be some evidence to support a finding or conclusion, but the evidence must be
substantial. The decision must be rendered on the evidence presented at the
hearing, or at least contained in the record and disclosed to the parties affected. The
Court of Industrial Relations or any of its judges, therefore, must act on its or his own
independent consideration of the law and facts of the controversy, and not simply
accept the views of a subordinate in arriving at a decision. The Court of Industrial
Relations should, in all controversial questions, render its decision in such a manner
that the parties to the proceeding can know the various issues involved, and the
reason for the decision rendered. The performance of this duty is inseparable from
the authority conferred upon it. (Ang Tibay, et al. v. The Court of Industrial Relations,
et al., 40 O.G., No. 11, Supp. p. 29).

There is, therefore, no point in the contention that the court a quo has no jurisdiction over the
present case because what is here involved is not whether the imposition of the fine by the
Collector of Customs on the operator of the ship is correct or not but whether he acted
properly in imposing said fine without first giving the operator an opportunity to be heard.
Here we said that he acted improvidently and so the action taken against him is in
accordance with Rule 67 of our Rules of Court.

Another point raised is that petitioners have brought this action prematurely for they have not
yet exhausted all the administrative remedies available to them, one of which is to appeal the
ruling to the Commissioner of Customs. This may be true, but such step we do not consider
a plain, speedy or adequate remedy in the ordinary course of law as would prevent
petitioners from taking the present action, for it is undisputed that respondent collector has
acted in utter disregard of the principle of due process.

WHEREFORE, the decision appealed from is affirmed. No costs.

Bengzon, C.J., Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon,
Regala and Makalintal, JJ., concur.