MANUEL M. LEYSON JR., petitioner, vs.
OFFICE OF THE OMBUDSMAN, The case is a simple case of breach of contract with damages
TIRSO ANTIPORDA, Chairman, UCPB and CIIF Oil Mills, and OSCAR A.
TORRALBA, President, CIIF Oil Mills, respondents. ALEX
DECISION
BELLOSILLO, J.:
On 7 February 1996 International Towage and Transport Corporation (ITTC), a
domestic corporation engaged in the lighterage or shipping business, entered into a
one (1)-year contract with Legaspi Oil Company, Inc. (LEGASPI OIL), Granexport
Manufacturing Corporation (GRANEXPORT) and United Coconut Chemicals, Inc.
(UNITED COCONUT), comprising the Coconut Industry Investment Fund (CIIF)
companies, for the transport of coconut oil in bulk through MT Transasia. The
majority shareholdings of these CIIF companies are owned by the United Coconut
Planters Bank (UCPB) as administrator of the CIIF. Under the terms of the contract,
either party could terminate the agreement provided a three (3)-month advance
notice was given to the other party. However, in August 1996, or prior to the
expiration of the contract, the CIIF companies with their new President, respondent
Oscar A. Torralba, terminated the contract without the requisite advance notice. The
CIIF companies engaged the services of another vessel, MT Marilag, operated by
Southwest Maritime Corporation. miso
On 11 March 1997 petitioner Manuel M. Leyson Jr., Executive Vice President of
ITTC, filed with public respondent Office of the Ombudsman a grievance case
against respondent Oscar A. Torralba. The following is a summary of the
irregularities and corrupt practices allegedly committed by respondent Torralba: (a)
breach of contract - unilateral cancellation of valid and existing contract; (b) bad
faith - falsification of documents and reports to stop the operation of MT
Transasia; (c) manipulation - influenced their insurance to disqualify MT
Transasia; (d) unreasonable denial of requirement imposed; (e) double standards
and inconsistent in favor of MT Marilag; (f) engaged and entered into a contract
with Southwest Maritime Corp. which is not the owner of MT Marilag, where
liabilities were waived and whose paid-up capital is only P250,000.00; and, (g)
overpricing in the freight rate causing losses of millions of pesos to Cocochem. [1]
On 2 January 1998 petitioner charged respondent Tirso Antiporda, Chairman of
UCPB and CIIF Oil Mills, and respondent Oscar A. Torralba with violation of The
Anti-Graft and Corrupt Practices Act also before the Ombudsman anchored on the
aforementioned alleged irregularities and corrupt practices. spped
On 30 January 1998 public respondent dismissed the complaint based on its finding
that
which should have been filed in the regular court. This Office
has no jurisdiction to determine the legality or validity of the
termination of the contract entered into by CIIF and ITTC.
Besides the entities involved are private corporations (over)
which this Office has no jurisdiction.[2]
On 4 June 1998 reconsideration of the dismissal of the complaint was denied. The
Ombudsman was unswayed in his finding that the present controversy involved
breach of contract as he also took into account the circumstance that petitioner had
already filed a collection case before the Regional Trial Court of Manila-Br. 15,
docketed as Civil Case No. 97-83354. Moreover, the Ombudsman found that the
filing of the motion for reconsideration on 31 March 1998 was beyond the
inextendible period of five (5) days from notice of the assailed resolution on 19
March 1998.[3] miso
Petitioner now imputes grave abuse of discretion on public respondent in dismissing
his complaint. He submits that inasmuch as Philippine Coconut Producers
Federation, Inc. (COCOFED) v. PCGG[4] and Republic v. Sandiganbayan[5] have
declared that the coconut levy funds are public funds then, conformably
with Quimpo v. Tanodbayan,[6] corporations formed and organized from those funds
or whose controlling stocks are from those funds should be regarded as government
owned and/or controlled corporations. As in the present case, since the funding or
controlling interest of the companies being headed by private respondents was given
or owned by the CIIF as shown in the certification of their Corporate Secretary,[7] it
follows that they are government owned and/or controlled corporations. Corollarily,
petitioner asserts that respondents Antiporda and Torralba are public officers subject
to the jurisdiction of the Ombudsman. Sdaadsc
Petitioner alleges next that public respondent's conclusion that his complaint refers
to a breach of contract is whimsical, capricious and irresponsible amounting to a
total disregard of its main point, i. e., whether private respondents violated The Anti-
Graft and Corrupt Practices Act when they entered into a contract with Southwest
Maritime Corporation which was grossly disadvantageous to the government in
general and to the CIIF in particular. Petitioner admits that his motion for
reconsideration was filed out of time. Nonetheless, he advances that public
respondent should have relaxed its rules in the paramount interest of justice; after
all, the delay was just a matter of days and he, a layman not aware of technicalities,
personally filed the complaint. Rtcspped
Private respondents counter that the CIIF companies were duly organized and are
existing by virtue of the Corporation Code. Their stockholders are private
individuals and entities. In addition, private respondents contend that they are not
public officers as defined underThe Anti-Graft and Corrupt Practices Act but are
private executives appointed by the Boards of Directors of the CIIF companies.
They asseverate that petitioner's motion for reconsideration was filed through the
expert assistance of a learned counsel. They then charge petitioner with forum
shopping since he had similarly filed a case for collection of a sum of money plus
damages before the trial court.
The Office of the Solicitor General maintains that the Ombudsman approved the
recommendation of the investigating officer to dismiss the complaint because he
sincerely believed there was no sufficient basis for the criminal indictment of private
respondents. spped
We find no grave abuse of discretion committed by the Ombudsman. COCOFED v.
PCGG referred to in Republic v. Sandiganbayanreviewed the history of the coconut
levy funds. I These funds actually have four (4) general classes: (a) the Coconut
Investment Fund created under R. A. No. 6260;[8] (b) the Coconut Consumers
Stabilization Fund created under P. D. No. 276;[9] (c) the Coconut Industry
Development Fund created under P. D. No. 582;[10] and, (d) the Coconut Industry
Stabilization Fund created under P. D. No. 1841.[11]
The various laws relating to the coconut industry were codified in 1976. On 21
October of that year, P. D. No. 961[12] was promulgated. On 11 June 1978 it was
amended by P. D. No. 1468[13] by inserting a new provision authorizing the use of
the balance of the Coconut Industry Development Fund for the acquisition of
"shares of stocks in corporations organized for the purpose of engaging in the
establishment and operation of industries x x x commercial activities and other allied
business undertakings relating to coconut and other palm oil indust(ries)."[14] From
this fund thus created, or the CIIF, shares of stock in what have come to be known
as the "CIIF companies" were purchased. miso
We then stated in COCOFED that the coconut levy funds were raised by the State's
police and taxing powers such that the utilization and proper management thereof
were certainly the concern of the Government. These funds have a public character
and are clearly affected with public interest.
Quimpo v. Tanodbayan involved the issue as to whether PETROPHIL was a
government owned or controlled corporation the employees of which fell within the
jurisdictional purview of the Tanodbayan for purposes of The Anti-Graft and
Corrupt Practices Act. We upheld the jurisdiction of the Tanodbayan on the
ratiocination that -
While it may be that PETROPHIL was not originally "created"
as a government-owned or controlled corporation, after it was
acquired by PNOC, which is a government-owned or controlled
corporation, PETROPHIL became a subsidiary of PNOC and
thus shed-off its private status. It is now funded and owned by
the government as, in fact, it was acquired to perform functions
related to government programs and policies on oil, a vital
commodity in the economic life of the nation. It was acquired
not temporarily but as a permanent adjunct to perform essential
government or government-related functions, as the marketing
arm of the PNOC to assist the latter in selling and distributing
oil and petroleum products to assure and maintain an adequate
and stable domestic supply. Korte
But these jurisprudential rules invoked by petitioner in support of his claim that the
CIIF companies are government owned and/or controlled corporations are
incomplete without resorting to the definition of "government owned or controlled
corporation" contained in par. (13), Sec. 2, Introductory Provisions of the
Administrative Code of 1987, i. e., any agency organized as a stock or non-stock
corporation vested with functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) percent of its capital stock. The
definition mentions three (3) requisites, namely, first, any agency organized as a
stock or non-stock corporation; second, vested with functions relating to public
needs whether governmental or proprietary in nature; and, third, owned by the
Government directly or through its instrumentalities either wholly, or, where
applicable as in the case of stock corporations, to the extent of at least fifty-one (51)
percent of its capital stock. Sclaw
In the present case, all three (3) corporations comprising the CIIF companies were
organized as stock corporations. The UCPB-CIIF owns 44.10% of the shares of
LEGASPI OIL, 91.24% of the shares of GRANEXPORT, and 92.85% of the shares
of UNITED COCONUT.[15]Obviously, the below 51% shares of stock in LEGASPI
OIL removes this firm from the definition of a government owned or controlled
corporation. Our concern has thus been limited to GRANEXPORT and UNITED
COCONUT as we go back to the second requisite. Unfortunately, it is in this regard
that petitioner failed to substantiate his contentions. There is no showing that
GRANEXPORT and/ or UNITED COCONUT was vested with functions relating to
public needs whether governmental or proprietary in nature unlike PETROPHIL
inQuimpo. The Court thus concludes that the CIIF companies are, as found by
public respondent, private corporations not within the scope of its jurisdiction. Sclex
With the foregoing conclusion, we find it unnecessary to resolve the other issues
raised by petitioner.
A brief note on private respondents' charge of forum shopping. Executive Secretary
v. Gordon[16] is instructive that forum shopping consists of filing multiple suits
involving the same parties for the same cause of action, either simultaneously or
successively, for the purpose of obtaining a favorable judgment. It is readily
apparent that the present charge will not prosper because the cause of action
herein, i. e., violation of The Anti-Graft and Corrupt Practices Act, is different from
the cause of action in the case pending before the trial court which is collection of a
sum of money plus damages. miso

WHEREFORE, the petition is DISMISSED. The Resolution of public respondent

Office of the Ombudsman of 30 January 1998 which dismissed the complaint of
petitioner Manuel M. Leyson Jr., as well as its Order of 4 June 1998 denying his
motion for reconsideration, is AFFIRMED. Costs against petitioner.

SO ORDERED.apdc
RODOLFO M. CUENCA, G.R. No. 146214 facilities of the North and South Luzon Expressway. In the course of its operations,
Petitioner, it incurred substantial credit obligations from both private and government sources.
- versus -
However, its unpaid obligations ballooned so much that by 1983, it
HON. ALBERTO P. ATAS, Present: became impossible for it to settle its maturing and overdue accounts with various
JULITO F. FABRERO, and HON. GFIs, namely, the Philippine National Bank (PNB), Development Bank of the
NATHANIEL A. LOBIGAS, in CARPIO MORALES, J., Philippines (DBP), National Development Company (NDC), Government Service
their capacity as Hearing Officers Acting Chairperson, Insurance System (GSIS), Land Bank of the Philippines (LBP), and Philippine
of the SECURITIES AND TINGA, Export and Foreign Loan Guarantee Corporation (PEFLGC), now known as the
EXCHANGE COMMISSION; VELASCO, JR., Trade and Investment Development Corporation of the Philippines.
PHILIPPINE NATIONAL NACHURA,* and On February 23, 1983, then President Ferdinand E. Marcos issued Letter
CONSTRUCTION CORPORATION, REYES,* JJ. of Instruction No. (LOI) 1295,[4] directing the creditor GFIs to convert into CDCPs
ASSET PRIVATIZATION TRUST, shares of stock the following: (1) all of the direct obligations of CDCP and those of
PHILIPPINE NATIONAL BANK, its wholly-owned subsidiaries, including, but not limited to loans, credits, accrued
DEVELOPMENT BANK OF interests, fees and advances in any currency outstanding as of December 31, 1982;
THE PHILIPPINES, NATIONAL (2) the direct obligations of CDCP maturing in 1983; and (3) obligations maturing in
DEVELOPMENT COMPANY, 1983 which were guaranteed by the GFIs.
PHILIPPINE EXPORT AND
FOREIGN LOAN GUARANTEE On April 25, 1983, a special stockholders meeting, presided by petitioner,
CORPORATION, anGOVERNMENT SERVICE Promulgated: was held whereby stockholders representing more than two-thirds (2/3) of the
INSURANCE SYSTEM, outstanding capital stock of CDCP approved the increase of its authorized capital
Respondents. October 5, 2007 stock from PhP 1.6 to 2.7 billion in accordance with LOI 1295. Thus, the CDCP,
x-----------------------------------------------------------------------------------------x pursuant to said letter, converted some of its obligations to GFIs into equity.

DECISION
VELASCO, JR., J.:
The Case
In this Petition for Review on Certiorari[1] of the adverse November 29,
2000 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 60366, petitioner
Rodolfo M. Cuenca, in effect, questions the July 10, 2000 Decision[3] of the
Securities and Exchange Commission (SEC) Securities Investigation and Clearing
Department (SICD) in SICD SEC Case No. 05-96-5357 entitledRodolfo M. Cuenca
v. Philippine National Construction Corporation (PNCC), et al., which declared
defendants-government financial institutions (GFIs) as majority stockholders of the
PNCC. The SICD Decision was affirmed by the SEC in SEC Case No. AC 807,
which, in turn, was upheld by the CA in its assailed November 29, 2000 Decision.
The Facts
Petitioner was an incorporator, President, and Chief Executive Officer of the then
Construction Development Corporation of thePhilippines (CDCP), now PNCC, from
its incorporation in 1966 until 1983. Sometime in 1977, CDCP was granted a
franchise under Presidential Decree No. 1113 to construct, operate, and maintain toll
Consequently, CDCP issued common shares to DBP, NDC, GSIS, LBP,
PEFLGC, and preferred D shares to PNB in consideration for the extinguishment of
some of CDCPs outstanding loan obligations to said GFIs, all of which were duly
recorded in its corporate books. Subsequently, in December 1983, the SEC approved
the increase of CDCPs authorized capital stock, and the corresponding CDCP
Certificates of Stock were issued in the names of DBP, GSIS, LBP, PEFLGC, and
PNB, to wit:
Certificates of stock issued Name No. of shares issued to GFIs
Cert. of Stock No. 40269[5] DBP 26,987,477 common shares
Cert. of Stock No. 40270[6] PEFLGC 37,584,577 common shares
Cert. of Stock No. 40271[7] GSIS 47,490,000 common shares
Cert. of Stock No. 40272 LBP 657,836 common shares
Cert. of Stock No. N[8] PNB 25,500,000 Preferred Class D
The total subscription of the above issuance of shares of stock pursuant to
LOI 1295 amounted to PhP 1,405,202,000 or 1.4 billion.
 Thus, with the implementation of LOI 1295, respondents-GFIs became the
majority stockholders of CDCP to the extent of 70% of the authorized capital stocks.
The change in the corporations ownership was made public through various
announcements.[9] CDCP was later renamed to PNCC to reflect the Philippine
Government stockholding, and became a government-acquired asset corporation.
Consequently, the various GFIs were given seats in the Board of Directors of PNCC
and participated in the management of the company.
On August 19, 1987, PNCC issued Certificate of Stock No. 43032 in the
name of NDC for 14,699,000 shares of common stock.
Meanwhile, sometime in 1988, pursuant to Administrative Order Nos. 14
and 64, DBP, PNB, PEFLGC, and NDC transferred their interests in PNCC to the
Republic of the Philippines which in turn conveyed them to the Asset Privatization
Trust (APT), now the Privatization and Management Office, for disposition to the
private sector pursuant to the governments privatization program.
On May 31, 1996, more than a decade after LOI 1295 was implemented,
petitioner filed a complaint before the SEC SICD docketed as SEC Case No. 05-96-
5357 entitled Rodolfo M. Cuenca v. PNCC, et al., for the SEC to determine and
declare whether the GFIs were registered stockholders of PNCC and the number of
shares held by each of them and to compel PNCC to call and hold regular
stockholders meetings and election of directors every year.
Petitioner averred that while PNCC issued the above specified certificates
of stock to the GFIs pursuant to LOI 1295, the GFIs however refused to cancel and
never did cancel the loans in their books as payment for the shares issued in their
names by PNCC as they considered it to be a diminution of the value of their
investments. Thus, petitioner claimed that some of the GFIs refused to accept
delivery of the stock certificates from PNCC while others were not even aware of
the issuance of the certificates of stock in their names. Consequently, respondents-
GFIs continued to charge and receive payments for their loan and interest charges
from PNCC though these loans were supposed to have been converted into common
stock in 1983 pursuant to LOI 1295.
In March 1998, with the idea of spinning-off its toll-way operations,
PNCC scheduled a special stockholders meeting onApril 14, 1998. On March 31,
1998, petitioner filed before the SEC SICD an Urgent Application for Temporary
Restraining Order (TRO) and Writ of Preliminary Injunction seeking to enjoin
PNCC from allowing the GFIs to vote their shares of stock in PNCC, either issued
or subscribed, pursuant to LOI 1295, and from exercising any right arising from the
shares.
On April 14, 1998, the date of the special stockholders meeting of PNCC,
the SEC SICD, through its hearing officer, granted petitioners urgent application and
issued a TRO enjoining the GFIs from voting their shares of stock in
PNCC.[10] Thereafter, the parties presented their respective preliminary evidence
during the hearings for the issuance of a preliminary injunction.
Meanwhile, despite the pendency of SICD SEC Case No. 05-96-5357,
petitioner filed a Third Amended Complaint[11]before the Makati City Regional Trial
Court (RTC), Branch 142, docketed as Civil Case No. 95-1356 and entitled Rodolfo
M. Cuenca, for and in behalf of PNCC v. APT, et al. for (1) enforcement and strict
compliance with LOI 1295; (2) cancellation of all penalties, interest, and surcharges
accrued after December 31, 1982; (3) enjoinment of the GFIs from receiving any
real or personal properties from PNCC; and (4) cancellation of the transfer of Lot 3,
Block 1, RL-04-000001 covered by Transfer Certificate of Title (TCT) No. 34996 to
APT.
On September 8, 1998, the SEC SICD issued an Order[12] granting the
preliminary injunction. PNCCs Motion for Reconsideration was then denied in
the December 21, 1998 SEC SICD Omnibus Order.[13] Thus, on January 8, 1999,
PNCC filed a Petition for Certiorari[14] before the SEC en banc to review and set
aside the September 8, 1998 and December 21, 1998 SEC SICD Orders, docketed as
SEC-EB Case No. 640. On March 14, 2000, the SEC en banc issued an order
dismissing PNCCs petition.Consequently, PNCC brought before the CA the SEC en
banc March 14, 2000 Order through a Petition for Review,[15] docketed as CA-G.R.
SP No. 58117.
In the meantime, on May 20, 1999, petitioner filed a Motion to Admit
Amended Complaint in SEC SICD Case No. 05-96-5357, which was granted despite
oppositions from PNCC and the GFIs. Respondents PNCC and GFIs then filed their
respective answers to the amended complaint.
On March 23, 2000, PNCC filed a Motion to Designate Hearing
Panel[16] on the ground that the instant case would be better heard and resolved by a
hearing panel of three than by a sole hearing officer, considering the interests the
Philippine Government holds in PNCC through the GFIs. This was opposed by
petitioner. Nonetheless, while not finding any valid reason for said motion,
respondent SEC SICD Hearing Officer Alberto P. Atas granted PNCCs motion
through the April 6, 2000 Order[17] to allay respondent PNCCs fear that it may not
be able to obtain a sense of fairness and justness in the determination of the merits of
its claims. No Motion for Reconsideration of the April 6, 2000 Order was filed by
petitioner.
Consequently, SEC SICD Director Daisy Besa-De Asis designated
respondents Hearing Officers Alberto P. Atas, Julito F. Fabrero, and Nathaniel A.
Lobigas as the three (3)-person Hearing Panel.
 During the hearings of the instant case, through a May 4, 2000 Order, the
Hearing Panel admitted almost all of petitioners exhibits. On May 8, 2000, PNCC
filed an Amended Answer[18] raising a new matter of the April 14, 2000 Deed of
Confirmation and June 7, 2000 Supplement to Deed of Confirmation. On June 1,
2000, the Hearing Panel admitted PNCCs Amended Answer through an Order.[19]
On June 2, 2000, the Hearing Panel scheduled a new preliminary
conference on June 13, 2000. At the hearing on June 5, 2000, due to conflicts with
the schedules of some of the parties counsels, the preliminary conference was
moved to June 29, 2000.However, on June 6, 2000, PNCC filed an Urgent
Motion[20] praying that the preliminary conference be reset back to the original
schedule of June 13, 2000 so as to follow the proviso in the SEC Rules of
Procedure. PNCCs Urgent Motion was granted through aJune 8, 2000 Order,[21] and
the preliminary conference was reset back to June 13, 2000.
In the preliminary conference on June 13, 2000, petitioner adopted his
previous preliminary conference brief dated November 15, 1999. PNCC and APT
filed their preliminary conference briefs dated June 8, 2000 and June 13, 2000,
respectively; while DBP, GSIS, PNB, and PEFLGC adopted their respective
preliminary conference briefs previously filed. On the same date, petitioner was
barred from presenting additional evidence due to his failure to file a reply to
PNCCs Amended Answer and to file an amended preliminary conference brief
together with the affidavits of witnesses as required by the new SEC Rules.
On June 13 and 14, 2000, PNCC adopted the testimonial and documentary
evidence it presented during the hearing on the preliminary injunction as part of its
evidence-in-chief and adduced further additional witnesses and documentary
evidence to substantiate the new matter presented in its amended answer. The GFIs
adopted PNCCs evidence which was orally offered by PNCC over petitioners
objection.
The Hearing Panel scheduled the reception of petitioners rebuttal evidence
on June 19 and 20, 2000. However, on June 19, 2000, instead of presenting rebuttal
evidence, petitioner filed a Motion to Admit Second Amended Complaint, but an
opposition was filed to it by respondents for being dilatory.
On June 21, 2000, PNCC filed a Motion to Terminate Plaintiffs Rebuttal
Evidence and to Submit the Case for Decision on the Merits[22] which was
opposed[23] by petitioner. On July 3, 2000, the Hearing Panel issued an Omnibus
Order[24] denying petitioners motion to admit second amended complaint, granted
PNCCs motion to terminate petitioners rebuttal evidence, and submitted the case for
resolution on the merits. Thus, the instant case was submitted for decision on the
merits based on the pleadings, evidence, and other submissions of the parties.
The Ruling of the SEC SICD
On July 10, 2000, the Hearing Panel rendered its Decision dismissing
petitioners complaint for lack of merit and revoking the writ of preliminary
injunction issued on September 8, 1998. The fallo reads:
WHEREFORE, plaintiffs Complaint is hereby dismissed
for lack of merit and the Orders dated April 14,
1998 and September 8, 1998 are hereby revoked and set
aside.[25]
The Hearing Panel found that the evidence presented by PNCC and GFIs
constituted substantial proof of the implementation of LOI 1295. It reasoned that not
only did PNCC issue the shares of stock as shown in its stock ledger cards but such
fact was corroborated by Caval Securities Registry, Inc., PNCCs stock transfer
agent, which prepared PNCCs September 15, 1987 Schedule of
Subscription.[26] Moreover, prior to the filing of the instant case, the GFIs have been
nominating their representatives to PNCCs Board of Directors which is an attribute
of ownership of shares of stock in PNCC.
The Hearing Panel also took cognizance of the April 14, 2000 Deed of
Confirmation[27] and the June 7, 2000 Supplement to Deed of
Confirmation[28] executed by the GFIs, which erased all doubts on the
implementation of LOI 1295 by the conversion of the GFIs loan receivables from
PNCC into the latters equity. Thus, with the clear consideration of loan receivables
for the shares of stock, the shares issued to the GFIs cannot in any way be
considered watered stocks. It cited Section 62 of the Corporation Code which
expressly allows the issuance of shares of stock in consideration for previously
incurred indebtedness.
Moreover, the Notes to the Financial Statements[29] on the Report on
Examinations of Financial Statements[30] for comparative periods of December 31,
1982 and December 31, 1983 prepared by independent auditors from Carlos J.
Valdes & Co., Certified Public Accountants, clearly show the reduction of PNCC
loan obligations. Specifically, Note No. 11[31] stated that as ofDecember 31, 1983,
total obligations already converted into equity amounted to PhP 1,382,202 or
roughly 1.4 billion representing the increase of authorized capital stock of PNCC.
On the other hand, the Hearing Panel found the pieces of evidence
presented by petitioner, most of which were the same ones presented by
respondents, to be inconsequential and insufficient to overthrow the weight of the
evidence presented by respondents that a conversion of PNCCs debt into equity was
implemented. It ratiocinated that the badges of fraud pointed out by petitioner are
inconsequential as no clear and convincing evidence was presented by petitioner,
and that allegations cannot take the place of proof.Likewise, the lack of a
subscription agreement was not fatal to the shares of stock issued to the GFIs as LOI
1295 in no uncertain terms mandated such conversion of debt-to-equity which was
duly approved by the stockholders of PNCC in increasing its authorized capital
stock precisely pursuant to LOI 1295.
Anent the August 15, 1995 Memorandum of Agreement[32] executed by
the Department of Finance (DOF), APT, and PNCC, whereby PNCC assigned to
APT and the DOF Lot 3, Block 1, RL-04-000001 covered by TCT No. 34996, such
did not by far prove that PNCC paid its obligations to PNB and DBP, which
transferred their assets to the National Government, and the shares PNCC issued to
these GFIs were without consideration. Evidence shows that PNCC owed PNB PhP
1.79 billion and DBP PhP 629 million, but what were converted into equity were
only PhP 255 million for PNB and PhP 269.874 million for DBP, thus leaving
outstanding balances of PhP 1.535 billion for PNB and PhP 359 million for
DBP. These outstanding and unconverted loan credits were the subject of the
assignment of receivables to APT.
In fine, the Hearing Panel cited the resolution of the 1992 case
of Childrens Garden of the Philippines v. APT,[33] where this Court ruled that the
implementation of LOI 1295 was already a fait accompli; thus, there was clear
recognition by the Court of the factual conversion of GFIs loan credits to PNCC
shares.
As regards NDC, the Hearing Panel dismissed the complaint against it for
failure of petitioner to state a cause of action as the issuance of 14,699,000 shares of
common stock of PNCC in favor of NDC in 1987 was pursuant to LOI 1136 and not
LOI 1295, and the shares were issued for valuable consideration.
The Ruling of the SEC En Banc
With the adverse ruling against him, petitioner timely filed his Notice of
Appeal[34] and Petition for Review on Certiorari and/or Memorandum on
Appeal.[35] Aside from assailing the July 10, 2000 SEC SICD Decision, petitioner
also assailed the July 3, 2000 Omnibus Order terminating the presentation of his
rebuttal evidence and submitting the case for decision on the merits, and the June 27,
2000 Preliminary Conference Order[36] barring him from presenting additional
witnesses as part of his evidence-in-chief. Petitioner raised before the SEC en
banc the allegations that the Hearing Panel conspired with PNCC in railroading the
trial and issuing the questioned Orders and Decision.
Among other things, petitioner assails the speed, taking only seven (7)
days from the date the case was submitted for decision, with which the Hearing
Panel came out with a grammar-perfect decision. It concluded that it was PNCC
which prepared the decision, pointing out numerous instances where the text of the
assailed decision is identical to or very similar to some portions of PNCCs petitions
in another case.
Subsequently, the SEC en banc issued its August 8, 2000 Order denying
petitioners appeal and affirming in toto the July 10, 2000 Decision of the SEC SICD.
The decretal portion states:
FINDING NO REVERSIBLE ERROR, therefore, the
herein Appeal should be, as it is hereby DISMISSED.
The 10th July 2000 Decision in SICD Case No. 05-96-
5357 is herewith AFFIRMED in toto.
Costs adjudged against the appellant.[37]
The SEC en banc found that petitioner banked on sweeping speculations
and assumptions except the significant and substantial proof to corroborate the
serious charges leveled against the Hearing Panel. It reasoned that petitioner had not
shown malice, bad faith, or corrupt purpose on the part of the Hearing Panel to
warrant the reversal of the assailed Decision.
Moreover, it pointed out that petitioner failed to procedurally appreciate
the import of the mandatory requirements set forth in the SEC Rules of Procedure in
effect at that time, as the Hearing Panel merely adhered to Rule V, Sec. 4 of said
Rules of Procedure, which provides that hearings shall be commenced not later than
15 days from the date of the termination of the preliminary conference and
completed within 20 days from the date of the first hearing. Besides, according to
the SEC en banc, the proceedings in the SEC SICD were summary in nature; thus,
speed seemed to ensue when the case was heard and decided.
On the issue of violation or infringement of petitioners right to due
process, the SEC en banc found no basis for it, as the summary nature of the
proceedings below has to be followed by the Hearing Panel. Moreover, the SEC en
banc found a dearth of evidence to lend support to petitioners contention.
Finally, the SEC en banc likewise relied on the GFIs ratification of their
subscription to the shares issued by PNCC pursuant to LOI 1295 to erase any doubt
about its implementation and the extinguishment of PNCCs unpaid loan credits to
the extent of such issuance of shares of stock.
The Ruling of the Court of Appeals
Aggrieved, on August 24, 2000, petitioner raised through a Petition for
Review[38] before the CA the August 8, 2000 SEC en banc Order dismissing his
appeal, docketed as CA-G.R. SP No. 60366. Petitioner likewise assailed in its CA
petition the SEC SICD June 27, 2000 Preliminary Conference Order, July 3, 2000
Omnibus Order, and July 10, 2000 Decision.
Thereafter, through its assailed November 29, 2000 Decision, [39] the CA
denied and dismissed the petition for review for lack of merit; thus, it upheld the
SEC en banc order affirming the SEC SICD decision which dismissed petitioners
complaint. The CA found that neither the SEC en banc nor the SEC Hearing Panel
committed grave abuse of discretion amounting to lack or excess of jurisdiction in
rendering their respective orders and decision.
The appellate court failed to see any rhyme or reason in finding fault in or
to disturb the findings of the SEC en banc on its ruling regarding the alleged
suspicious and compelling badges of fraud pointing to a conspiracy between the
Hearing Panel and PNCC. It quoted with approbation the quasi-judicial agencys
disquisition on this matter. Moreover, it reasoned that there was nothing startling or
irregular in the fact that the text of the same decision was similar in language with
the text of the pleadings filed by PNCC as the Hearing Panel is allowed by the Rules
to adopt any part of the position papers or draft decisions the parties had filed in
their resolution or decision. As regards the constitution of the three-person Hearing
Panel, the CA held that by not filing a motion for reconsideration of the order
granting the constitution of the panel, petitioner could not now evoke suspicion on
it.
The CA further upheld the summary proceedings before the Hearing Panel
for being in accord with the SECs New Rules of Procedure, and, thus, such could
not be prejudicial to petitioner. As regards the admission of PNCCs amended
answer, the CA held that such could not be considered as a conspiratorial act as
petitioner did not oppose such admission.
On the issue of the preliminary conference brief being merely permissive,
the CA noted that during the June 5, 2000 hearing, it was specifically ordered by the
Hearing Panel for the parties to file their respective briefs with attached affidavits of
their witnesses before the actual preliminary conference. Thus, petitioner could have
prepared and filed his brief before the June 13, 2000 preliminary
conference. However, petitioner chose to remain silent and simply adopted his
previous preliminary conference brief.Petitioner never made known to the Hearing
Panel his assertion that the filing of his brief was merely permissive. Besides, it was
the Hearing Panel who had the say on whether preliminary conference briefs should
be filed or not.
On the issue of the limitation on the presentation of petitioners rebuttal
evidence, the CA likewise found it untenable as he could have filed a reply to
traverse the new one-paragraph allegation in the amended answer or, in the
alternative, referred to supporting documents and affidavits negating such new
matter in his preliminary conference brief. Petitioner did neither. The CA then
opined that [petitioner] could not now cry foul over his lapses as due process is not
violated where a person is given the opportunity to be heard but chooses not to give
his side.
Likewise, the CA reasoned that petitioner could not assail the findings of
facts and conclusions of law by the Hearing Panel as such are based on the
aggregate evidence presented by the parties. It pointed out that the evidence
presented during the hearings for the issuance of a preliminary injunction was
preliminary or only a sample to support the issuance of the injunctive writ. Verily,
the CA ruled that the findings of the Hearing Officer in the issuance of the TRO and
injunctive writ could not pre-empt the conclusive findings of the tribunal after due
trial and presentation of all the evidence adduced by the parties. Thus, the CA was
convinced that petitioner was indeed accorded due process and given ample
opportunity to ventilate his case.
In fine, the appellate court likewise held the applicability of Childrens
Garden of the Philippines[40] and the fact that the assailed issuance of shares of stock
to the GFIs was for valuable consideration, that is, the existing loan credit
obligations. The CA then ruled that petitioner was guilty of forum shopping for
having raised substantially the same issues before the SEC and RTC.
Hence, the instant petition is now before the Court.
Parenthetically, on June 19, 2000, petitioner filed a Notice of Dismissal
and Motion to Dismiss Third Amended Complaint[41] in Civil Case No. 95-1356
before the Makati City RTC, Branch 142. Petitioner reasoned that based on the
position taken and the admissions made by PNCC and the GFIs in other cases, with
respect to the validity of LOI 1295, he was no longer certain if it was proper for him
to maintain suit for the enforcement and implementation of said law. The trial court
promptly dismissed Civil Case No. 95-1356 through its June 23, 2000 Order.[42]
Similarly, sometime in September 2000, PNCC filed a motion to
dismiss CA-G.R. SP No. 58117 before the CA Ninth Division, as said case had been
rendered moot and academic by the July 10, 2000 Decision of the SEC SICD
Hearing Panel, which lifted and revoked the preliminary injunction granted through
the assailed SEC SICD September 8, 1998 Order. Consequently, CA-G.R. SP No.
58117 was dismissed through the September 19, 2000 CA Resolution.[43]
The Issues
Petitioner raises the following grounds for our consideration:
 I II
THE COURT OF APPEALS HAS COMMITTED
REVERSIBLE ERROR IN NOT FINDING THAT THE SEC
EN BANC GROSSLY ERRED IN NOT HOLDING THAT
THE PROCEEDINGS BELOW WERE PROCEDURALLY
FLAWED BECAUSE THE HEARING PANEL HAD
RAILROADED THE TRIAL IN FAVOR OF RESPONDENT
PNCC.
A. The Court of Appeals has committed reversible error in not
finding that the SEC en banc grossly erred in not holding
that the Hearing Panel, in issuing the Omnibus Order
dated 3 July 2000 terminating the presentation of
petitioners rebuttal evidence and submitting the case for
decision on the merits, committed reversible error and
grave abuse of discretion.
i. Respondent PNCCs Motion to Terminate Plaintiffs
Rebuttal Evidence was a mere scrap of paper and
should not have been given due course by the Hearing
Panel.
ii. The premature termination of petitioners rebuttal
evidence was a denial of his right to due process.
iii. The cancellation of the 19 and 20 June 2000 trial
sessions where petitioner was scheduled to present
rebuttal evidence, [sic] was due to the lack of quorum
in the Hearing Panel, which was not the fault of
petitioner and for which he should not have been
penalized.
iv. The Hearing Panel grossly erred in finding that
petitioner could not have presented new or significant
evidence on rebuttal, and that petitioner had already
presented sufficient rebuttal evidence, considering that
said findings contradict each other and are
presumptuous and bereft of any factual basis.
B. The Court of Appeals has committed reversible error in not
finding that the SEC en banc grossly erred in not holding
that the Hearing Panel, in issuing the Preliminary
Conference Order dated 27 June 2000 (released on 3 July
2000) barring petitioner from presenting additional
witnesses as part of his evidence-in-chief, committed
reversible error and grave abuse of discretion.
THE COURT OF APPEALS HAS COMMITTED
REVERSIBLE ERROR IN UPHOLDING THE SEC EN BANC
ORDER DATED 8 AUGUST 2000 AFFIRMING THE
HEARING PANELS DECISION DATED 10 JULY 2000.
A. Badges of fraud abound in the pages of the Decision dated 10
July 2000, indubitably showing the Hearing Panels utter
disregard of due process.
B. The SEC en bancs and the Hearing Panels findings of fact are
inexplicably the opposite of the findings of fact previously
made by Hearing Officer Gallegos and the SEC en banc,
even though both sets of findings of fact are based on the
very same evidence.
C. The Court of Appeals has committed reversible error in
finding that petitioner is guilty of forum shopping.
D. The Court of Appeals has committed reversible error in not
ruling that the SEC en banc grossly erred in not holding
that the Hearing Panel committed reversible error and grave
abuse of discretion in considering evidence not formally
offered and admitted.
E. The Court of Appeals has committed reversible error in
not ruling that the SEC en banc grossly erred in not holding
that the Hearing Panel committed reversible error and grave
abuse of discretion in making findings of fact not supported
by the evidence on record and in disregarding
overwhelming evidence.[44]
Petitioner challenges the CA decision on the ground that he was denied
due process. He also claims that the CA erred in ruling that the factual findings of
the SEC SICD Hearing Panel, as affirmed by the SEC en banc, were conclusive on
it. Finally, he faults the CA for its failure to appreciate circumstances that would not
only show denial of due process but of fraud and conspiracy in railroading the
instant case against him.
The Courts Ruling
The petition is bereft of merit.
Procedural Due Process
Procedural due process, in gist, is the necessity for notice and an
opportunity to be heard before judgment is rendered. Its essence is encapsulated in
the immortal cry of Themistocles to Alcibiades: Strikebut hear me first.[45] Thus, as
long as a party is given the opportunity to defend his/her interests in due course, the
party would have no reason to complain, for it is this opportunity to be heard that
makes up the essence of due process.[46]
In administrative and quasi-judicial proceedings where the magistrates or
tribunals hearing the case are not bound by the niceties and finer points of judicial
due process, the cardinal primary requirements of procedural due process, as
gleaned by Justice Laurel from an array of American decisions, were enumerated
in Tibay v. Court of Industrial Relations, as follows:
(1) 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.
xxx
(2) 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. x x x
(3) 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. x x x
(4) Not only must there be some evidence to support a
finding or conclusion (City of Manila vs. Agustin, G. R. No.
45844, promulgated November 29, 1937, XXXVI O.G. 1335),
but the evidence must be substantial. x x x
(5) 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. x x x
(6) The [c]ourt x x x 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. x x x
(7) [The court] 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 reasons for the decisions rendered. The
performance of this duty is inseparable from the authority
conferred upon it.[47] (Emphasis supplied.)
Prescinding from the above requirements, it is thus clear that the
proceedings before the SEC SICD Hearing Panel are bound by these
requirements. To determine whether petitioner was denied due process as alleged,
we will scrutinize the proceedings below.
Proceedings before the Hearing Panel
For clarity, we reiterate the significant and relevant events that transpired
which are mainly being assailed by petitioner.
It is undisputed that the instant case was pending for over four (4) years
before the SEC SICD, that is, from May 31, 1996 until the rendition of the SEC
SICD Decision on July 10, 2000. In the intervening time, petitioner was granted a
20-day TRO onApril 13, 1998 and a writ of preliminary injunction was likewise
issued in his favor on September 8, 1998.
Meanwhile, on May 20, 1999, petitioner filed a motion to admit amended
complaint which was granted by the Hearing Officer. Consequently, PNCC and the
GFIs filed their respective answers to the amended complaint. On May 8, 2000,
PNCC in turn filed a motion for leave to admit amended answer, which was not
opposed by petitioner, and duly granted by the Hearing Panel on June 1, 2000.
Likewise, PNCCs March 21, 2000 motion to designate hearing panel,
while opposed by petitioner, was granted on April 6, 2000 and the Hearing Panel
was constituted; however, petitioner did not assail this grant as he failed to file a
Motion for Reconsideration of the April 6, 2000 Order.
Consequently, a new preliminary conference was scheduled for June 13,
2000 but was moved to June 29, 2000 due to conflict of schedules of the counsels,
but was reset to the original date of June 13, 2000 upon PNCCs urgent motion to
conform with the then SEC New Rules of Procedure.
During the preliminary conference of June 13, 2000, petitioner was barred
from presenting additional evidence. The preliminary conference order was
subsequently issued on June 27, 2000. Petitioners presentation of rebuttal witnesses
was terminated through the July 3, 2000 Omnibus Order which also denied
admission of petitioners second amended complaint and submitted the case for
decision on the merits.
On July 10, 2000, the Hearing Panel rendered its Decision dismissing
petitioners case for lack of merit.

Were the foregoing proceedings procedurally flawed as alleged by
petitioner? Were the proceedings of the instant case before the SEC SICD Hearing
Panel railroaded? Was there a conspiracy between the Hearing Panel and respondent
PNCC and the GFIs?Was petitioners right to due process violated? A review of the
then SEC New Rules of Procedure will shed light on the issue of due process.
SEC Rules prescribe a summary procedure
A cursory reading of the then prevailing SEC New Rules of Procedure
shows that the proceedings before the Hearing Officers or Hearing Panel are
summary in nature and to be conducted expeditiously in the interest of just, speedy
and inexpensive determination of disputes and claims.[48]
Notably, said rules provided:
RULE I
SEC. 4. Nature of Proceedings.Subject to the requirements
of due process, proceedings before the Commission shall be
summary in nature not necessarily adhering to or following the
technical rules of evidence obtaining in the regular
courts. Provided, however, that the Rules of Court may apply in
a suppletory manner whenever practicable.
xxxx
RULE V
PROCEEDINGS BEFORE THE
DESIGNATED HEARING OFFICER
SECTION 1. Preliminary Conference.In any action, the
Hearing Officer shall set the case for preliminary conference
within ten (10) days after the last pleading is filed, and the
parties and their attorneys shall be directed to appear before the
Hearing Officer on the dates set on the notice, to consider based
on the affidavits, documents and other evidence submitted by
the parties:
a. The possibility of an amicable settlement;
b. The simplification of the issues;
c. Schedule hearing which must be undertaken
continuously as scheduled until completed and terminated; and
No denial of due process
d. Such other matters as may aid in the just and speedy
disposition of the case.
The Hearing Officer shall terminate the preliminary
conference ten (10) days after its commencement, whether or
not the parties have agreed to settle their differences.
xxxx
SEC. 4. Preliminary Conference Order.After the
preliminary conference, the Hearing Officer shall issue an Order
reciting the action taken at the conference; the stipulations made
by the parties as to any of the matters considered; a recital of
such other evidence as the parties may have agreed upon; the
witnesses, if any, to be presented by all the parties; and the
scheduled dates of hearing for presentation of all such
witnesses. Provided, however, that the hearings shall be
commenced not later than fifteen (15) days from the date of
the termination of the preliminary conference and
completed within twenty (20) days from the date of the first
hearing. Provided, further, that the failure of a party to present a
witness or witnesses on a scheduled hearing date shall be
deemed a waiver of such hearing date. Provided, finally, that a
party may present such witness or witnesses within the
remaining hearing dates.
SEC. 5. Submission of Position Papers and Draft
Decisions. Within fifteen (15) days after the submission of case
for resolution, the parties shall submit their position papers
setting forth the law and the facts relied upon by them. They
shall also be required to submit a draft of the decision or
resolution they seek, stating clearly and distinctly the facts and
the law upon which it is based. The Hearing Officer may
adopt, in whole or in part, either of the parties draft decision
or resolution, or reject both.
RULE VI
DECISION
SECTION 1. Decision.The Hearing Officer shall render
a decision within twenty (20) days from submission of the
case for resolution. (Emphasis supplied.)

From the foregoing provisions, it becomes clear that petitioner was indeed
accorded due process. The requirements spelled out in Ang Tibay have been
complied with. Verily, a close examination of the proceedings in the SEC SICD in
the backdrop of the above rules shows that petitioners right to due process was not
violated. He was indeed accorded ample opportunity to ventilate his position.
First, there is no cause shown for arbitrariness or ill-motive in the
constitution of the Hearing Panel. While petitioner opposed PNCCs motion for its
constitution, the April 6, 2000 Order granting it was not questioned nor assailed by
petitioner in a motion for reconsideration. Verily, the rules allow the constitution of
a hearing panel, as Sec. 2 of Rule I, SEC New Rules of Procedure on Definitions
provides that a Hearing Officer is any Commissioner, officer, body or panel duly
designated or created by the Commission to hear and decide a particular case
(emphasis supplied).
Thus, by failing to question the Hearing Panels constitution, and by
participating in the proceedings before the panel, petitioner had indeed acquiesced to
and waived any question on its constitution.
Second, the resetting of the preliminary conference back to the original
schedule of June 13, 2000 is well within the authority of the Hearing Panel and
pursuant to Rule V, Sec. 1 of the SEC Rules which provides that the preliminary
conference be set within 10 days after the last pleading was filed.
Indeed, the last pleading filed was the amended answer to which petitioner
opted not to file a reply despite the opportunity to do so. More so, when the
amended answer only raised a new one-paragraph matter on the deed of
confirmation and its supplement executed by the GFIs. In this setting, we find
nothing out of line.
Third, petitioner contends that the SEC Hearing Panel required the
submission of preliminary conference briefs for the June 13, 2000 preliminary
conference when, under the SECs Rules of Procedure, the filing of such briefs was
not mandatory. In this regard, we do not fault but rather commend the SEC Hearing
Panel for taking the necessary steps to ensure that the proceedings are conducted in
an orderly fashion. The SEC Hearing Panel, in directing the submission of briefs,
was simply mindful of the importance of pre-trial as means of facilitating the
disposal of cases by simplifying or limiting the issues and avoiding unnecessary
proof of facts at the trial, or exploring the possibility of an amicable settlement or of
submission to arbitration, and generally to do whatever may reasonably be necessary
to facilitate and shorten the formal trial.[49] Recently, we issued Resolution No. 03-1-
09-SC on the Guidelines on Pre-trial and on the Use of the Different Modes of
Discovery and Deposition, stressing that pre-trial, if used properly, is a very
effective case management tool to obliterate case delay and expedite case processing
and adjudication.
In any event, no prejudice could have been suffered by petitioner arising
from his inability to file brief for the June 13, 2000 preliminary conference as he had
already finished presentation of his evidence. The conference was conducted only
with respect to additional matters raised in PNCCs Amended Answer which did not
however alter its theory. Moreover, petitioner cannot now say that he failed to file
his preliminary conference brief due to short notice as he only received the order
granting the resetting on June 9, 2000, a Friday. It is undisputed that the parties were
granted enough time through the June 2, 2000 Order setting the original schedule on
June 13, 2000 and for the parties to file their respective briefs. Indeed, petitioner had
sufficient time to prepare and file his brief.
Fourth, on the issue of not being accorded the opportunity to file an
opposition to PNCCs urgent motion to reset the preliminary conference back to June
13, 2000, suffice it to say that the urgent motion was non-litigious, then it may be
granted ex-parte as the matter raised pertains only to the schedule of the preliminary
conference in accordance with the rules. Otherwise, the opposition will further delay
the preliminary conference proceeding which the rules precisely obviate.
Fifth, the ruling of the Hearing Panel during the June 13, 2000 preliminary
conference barring petitioner from presenting additional witnesses is within its
authority and competence. Indeed, the reasons given for such curtailment were that
petitioner failed to file his reply to address the sole new matter raised in the
amended answer, to file an amended preliminary conference brief required by the
panel, and to submit the affidavits of his witnesses required to be appended to his
brief.
While the SEC New Rules of Procedure allows the testimony of adverse
witnesses sans their affidavits, the records do not show that petitioner informed the
Hearing Panel of the names of his additional witnesses, the description of their
testimony, and the documentary evidence they would identify except the general
description that they are adverse witnesses. Indeed, petitioner did not dispute these
except to cry foul that the curtailment of presenting additional witnesses and
evidence violated his right to due process.Given the fact that petitioner was hedging
and was, so to say, fishing for evidence, it is but proper that he was barred from
further presenting additional witnesses in order not to needlessly prolong the
proceedings.
Sixth, in the same vein, the ruling of the Hearing Panel to terminate
petitioners presentation of rebuttal evidence in the July 3, 2000 Omnibus Order is
likewise well-taken. Indeed, the Hearing Panel granted petitioners oral motion for
presentation of rebuttal evidence but limited it to the testimony of petitioner himself
and Mr. Froilan V. Bacugan. However, on the scheduled date for their testimony,
petitioner presented other witnesses and again went on a fishing expedition. Given
that no persuasive additional evidence was forthcoming, the termination of rebuttal
evidence is proper. Besides, as correctly ruled by the Hearing Panel, additional
evidence of the same class may be dispensed with if such would not add anything
substantial or material to what has already been presented.
Petitioner however argues that by the termination of his rebuttal evidence,
he was deprived of the right to prove that (1) the signatories to the Deed of
Confirmation and Supplement were not authorized by their respective Boards of
Directors; (2) the GFIs have not actually cancelled PNCCs loan in their books; and
(3) the GFIs have likewise not cancelled the interest, penalties, adjustments for peso
devaluation, and other surcharges that accrued PNCCs loan from 1982 to 2000. [50]
The records reveal that petitioner could very well have introduced
evidence on the alleged non-cancellation of the loans and other charges in the books
of the GFIs during the presentation of his evidence-in-chief. Having failed to do so,
petitioner can no longer belatedly interject such evidence into the record through the
right to introduce rebuttal evidence. Such evidence, if any, can be considered as
forgotten evidence which is evidence already existing at the time of the trial but was
not presented at that stage of the proceedings.
Anent the authority of the signatories to the Deed of Confirmation and
Supplement, petitioner could also have confronted PNCCs witnesses, especially
Atty. Raul Villanueva who was presented to prove this fact, when they testified
before the SEC Hearing Panel. Petitioner again failed to do this. Lastly, the SEC
Hearing Panel had determined that there was sufficient evidence on record to render
an informed judgment on the issues of fact before it. Thus, there is nothing irregular
in the discontinuation of the presentation of rebuttal evidence.
Seventh, the disallowance of petitioners second amended complaint is also
proper as the proceedings were already at the late stage, and it was not expeditious
to go back again to the stage for respondents to file their answers and set anew a
fourth preliminary conference. Besides, the amendment which petitioner wanted to
be incorporated refers to the sole new issue in PNCCs amended answer, which he
could have addressed with a reply to the amended answer or through an amended
preliminary conference brief.Petitioner did neither. He had thus waived his right to
address the sole new matter raised in the amended answer; and if otherwise, the
summary and expeditious nature of the proceedings below would be duly
compromised. Indeed, when a party is given ample opportunity to present his case,
his failure to do so is not a denial of due process.
In no uncertain terms, the CA explicated that the assailed acts of the SEC
Hearing Panel considered as badges of fraud by petitioner find legal mooring either
in the SECs Rules of Procedure or are within its quasi-judicial powers. Petitioners
participation in the proceedings and actions taken by the panel or his failure to
vigorously pursue his objections to them can only be construed to be an
acquiescence to such actions or waiver of his rights. Petitioner cannot now be heard
to complain.
No evidence of fraud and conspiracy
We now move on to the issues of fraud and conspiracy which petitioner
foisted to show that the instant case was railroaded and fast-tracked against him.
Petitioner would like us to believe that the CA and the SEC en banc erred
in not considering the badges of fraud he presented to show that the case was
railroaded. First, petitioner points out that the SEC SICD only took seven (7) days to
come out with a grammar-perfect decision. Second, petitioner strongly asserts that
the proceedings were fast-tracked due to the governments action to privatize some of
the assets of the GFIs which include the subject shares of stock. Third, petitioner
presents numerous instances in the July 10, 2000 SEC SICD Decision which, he
proffers, indubitably showed that it was not the Hearing Panel which penned the
decision but respondent PNCC.
We are not persuaded.
Petitioner has not shown any proof or substantial evidence of fraud and
conspiracy. Indeed, he who alleges fraud must prove it for basic is the rule
that actori incumbit onus probandi.[51] Differently stated, upon the plaintiff in a civil
case, the burden of proof never parts.[52] In the case at bar, the petitioner must
therefore establish his allegation of fraud by a preponderance of evidence. [53] Once
again, petitioner utterly failed to do this. In addition, it is an aged-old rule in civil
cases that he who alleges a fact has the burden of proving it and a mere allegation is
not evidence.[54] Fraud is never presumed, but must be established by clear and
convincing evidence.[55]
Indeed, a cursory reading of the comparative statements presented by
petitioner proves nothing beyond the fact that they are similarly worded. Even
granting arguendo that these statements in the decision were taken from the
pleadings of PNCC, no ill-motive or adverse conclusion may be derived from said
decision as the SEC New Rules of Procedure, specifically Sec. 5 of Rule V, allows
the Hearing Officer to adopt in whole or in part a draft decision, position paper, or
other pleadings for that matter filed by the parties. While it is true that the parties did
not file any draft decision or position paper, yet the Hearing Panel is not barred to
adopt a part or portion of any pleadings filed by the parties. If the Hearing Panel is
allowed to adopt a draft decision or position paper, more so is it allowed to adopt
any portion from the pleadings filed by the parties.
Moreover, Sec. 1 of Rule VI particularly provides that the decision must
be rendered within 20 days from the submission of the case for resolution. Thus, by
complying with the directive provided by said Rules, the Hearing Panel cannot be
faulted in rendering the July 10, 2000 Decision after only seven (7) days from the
submission of the instant case for resolution on the merits.In fact, the Hearing Panel
must be commended for doing its job expeditiously.
Anent the issue of the governments privatization as the cause of the
alleged rapid processing of the case, such is utterly specious and bereft of any
factual basis. Petitioner wants us to believe that the government, through the GFIs,
exerted pressure on the Hearing Panel and the SEC en banc for a favorable
judgment. This is utterly an unfounded innuendo as petitioner has not presented
even an iota of proof to substantiate his accusation. Allegations are easily leveled
but proving them is another matter. In the absence of proof, petitioner only has bare
allegations and nothing more.
Findings of facts of administrative bodies accorded finality when
supported by substantial evidence
On the merits of the case, suffice it to say that the findings of facts and
conclusions of law of the SEC are controlling on the reviewing authority. Indeed,
the rule is that the findings of fact of administrative bodies, if based on substantial
evidence, are controlling on the reviewing authority.[56]
We disagree with petitioner that there was a change in the findings by the
Hearing Panel vis--vis the findings of the Hearing Officer in the grant of the
preliminary injunction upon the same set of evidence. It must be borne in mind that
the pieces of evidence presented during the hearings for the issuance of the
injunctive writ were only preliminary ones, that is, a sampling of the evidence
intended to give the tribunal an idea of the justification for the issuance of the
injunctive writ pending the decision of the case on the merits. As often repeated, the
issuance of an injunctive writ cannot preempt the resolution of the case on the
merits. Indeed, the records show that PNCC and respondent GFIs presented
additional evidence aside from what were presented during the hearings for the
issuance of the injunctive writ. Thus, petitioner has no basis to say that the decision
was based on the same evidence presented during the hearings for the issuance of
the preliminary injunction, which were held in 1998.
It has been held that it is not for the appellate court to substitute its own
judgment for that of the administrative agency on the sufficiency of the evidence
and the credibility of the witnesses.[57] The Hearing Panel had the optimum
opportunity to review the pieces of evidence presented before it and to observe the
demeanor of the witnesses. Administrative decisions on matters within their
jurisdiction are entitled to respect and can only be set aside on proof of grave abuse
of discretion, fraud, or error of law,[58]which have not been shown by petitioner in
this case.
It is well-settled that factual findings of administrative agencies are
generally held to be binding and final so long as they are supported by substantial
evidence in the record of the case. It is not the function of this Court to analyze or
weigh all over again the evidence and credibility of witnesses presented before the
lower court, tribunal, or office, as we are not a trier of facts. Our jurisdiction is
limited to reviewing and revising errors of law imputed to the lower court, the latters
findings of fact being conclusive and not reviewable by this Court. [59]
The CA found neither reversible error nor grave abuse of discretion on the
part of the SEC en banc in affirming the decision of the SEC SICD Hearing Panel,
which was supported by substantial evidence. Thus, we find no reason to rule
otherwise.
LOI 1295 has been implemented
Even without considering our factual determination in Childrens Garden
of the Philippines v. APT,[60] still we arrive at the same conclusion that LOI 1295
was indeed implemented.
First, it is undisputed that shares of stock were issued to the GFIs
converting part of their outstanding loan credit to equity with PNCC. The
certificates of stock issued attest to this fact. Moreover, the administrative body
below had duly debunked any irregularity in the face of these certificates of
stock. Second, the records and accounts of PNCC duly reflected such debt-to-equity
conversion as attested to by the independent auditors from Carlos J. Valdes & Co.,
Certified Public Accountants, in the comparative Financial Statements covering the
years 1982 and 1983. Third, the due issuance of the shares of stock in the names of
the GFIs was corroborated by PNCCs stock transfer agent, Caval Securities
Registry, Inc. Fourth, the Deed of Confirmation and its Supplement erased any
doubt as to the implementation of LOI 1295. Thus, based on these reasons, there can
be no doubt as to the implementation of LOI 1295. Corollarily, the shares of stock
subject of the instant case issued to the GFIs were for value and thus cannot be
considered as void or watered stocks.
Petitioner guilty of forum shopping
On the issue of forum shopping, we agree with both the SEC en banc and
the CA that petitioner is guilty of forum shopping.A close perusal of both the
Amended Complaint in SICD SEC Case No. 05-96-5357 and the Third Amended
Complaint in Civil Case No. 95-1356 shows that both cases are derived from the
same factual issues involving substantially the same parties. Although the actions
seem to be different, yet it can be seen that there is a splitting of a cause of action.
While, on the one hand, the instant case was for the determination whether
the GFIs are indeed stockholders of PNCC and their respective number of shares,
and on the other, Civil Case No. 95-1356 was for the enforcement and compliance
of LOI 1295, yet both actions involved substantially the same parties, stemming
from the same factual antecedent of the debt-to-equity conversion mandated by LOI
1295 and involved the same cause of action that petitioner anchors both complaints,
that is, that LOI 1295 was not fully implemented.

In this connection, we reject petitioners pretense that no identity exists

between Civil Case No. 95-1356 and the instant case, both of which substantially
involve the same parties, having the same cause of action and which stem from the
same factual antecedents. The fact remains that in Civil Case No. 95-1356,
petitioner prayed for the enforcement and compliance of LOI 1295, the same relief
he could have asked for in the instant case before the SEC proceedings below. The
fact that he made PNCC as complainant in the civil case does not alter the essence of
said case in which the GFIs are made to answer substantially the same issues raised
in the instant case. It is indeed revealing that petitioner withdrew his third amended
complaint before the trial court on June 19, 2000 when the instant case was at its last
stages before the Hearing Panel. Moreover, while petitioner informed the trial court
of the pendency of the instant case, yet petitioner fatally failed to state in his
verification and certification[61] the status of the instant case as required by Sec. 5,
1(b)[62] of Rule 7, 1997 Rules of Civil Procedure. Clearly, petitioner is guilty of
forum shopping.

SEC has jurisdiction to compel PNCC to hold annual stockholders

meetings and election of board of directors

Finally, it has been settled in Philippine National Construction

Corporation v. Pabion[63] that PNCC is an acquired asset corporation and not a
government-owned and/or controlled corporation (GOCC). In said case, we held that
PNCC did not lose its status as a private corporation upon acquisition by the
government through GFIs of the majority of its shares of stock. Our determination
that PNCC is an acquired asset corporation removed it from the category of a
GOCC. Thus, while the SEC has no jurisdiction over GOCCs with original charter
or created by special law primarily because they are governed by their charters, it
retains jurisdiction over government-acquired asset corporations. Therefore, the SEC
may compel PNCC to hold a stockholders meeting for the purpose of electing
members of the latters board of directors.

WHEREFORE, the instant petition is DISMISSED for lack of merit and

the November 29, 2000 Decision of the CA in CA-G.R. SP No. 60366 is
hereby AFFIRMED IN TOTO. Costs against petitioner.

SO ORDERED.
G.R. No. 79956 January 29, 1990
CORDILLERA BROAD COALITION, petitioner,
vs.
COMMISSION ON AUDIT, respondent.
G.R. No. 82217 January 29, 1990
LILIA YARANON and BONA BAUTISTA, assisted by their spouses, BRAULIO
D. YARANON and DEMETRIO D. BAUTISTA, JR., respectively; JAMES BRETT
and SINAI C. HAMADA, petitioners,
vs.
THE COMMISSION ON AUDIT, HON. CATALINO MACARAIG, Executive
Secretary, HON. VICENTE JAYME, Secretary of Finance, HON. GUILLERMO N.
CARAGUE, Secretary of Budget and Management, and HON. ROSALINA S.
CAJUCOM, OIC National Treasurer, respondents.
CORTES, J.:
In these consolidated petitions, the constitutionality of Executive Order No. 220,
dated July 15, 1987, which created the (Cordillera Administrative Region, is assailed
on the primary ground that it pre-empts the enactment of an organic act by the
Congress and the creation of' the autonomous region in the Cordilleras conditional
on the approval of the act through a plebiscite.
Relative to the creation of autonomous regions, the constitution, in Article X,
provides:
AUTONOMOUS REGIONS
Sec. 15. There shall be created autonomous regions in Muslim
Mindanao and in the Cordilleras consisting of provinces, cities,
municipalities, and geographical areas sharing common and
distinctive historical and cultural heritage, economic and social
structures, and other relevant characteristics within the
framework of this Constitution and the national sovereignty as
well as territorial integrity of the Republic of the Philippines.
SEC. 16. The President shall exercise general supervision over
autonomous regions to ensure that laws are faithfully executed.
Sec. 17. All powers, functions, and responsibilities not granted
Constitution or by law to the autonomous regions shall be vested
in the National Government.
Sec. 18. The Congress shall enact an organic act for each
autonomous region with the assistance and participation of the
regional consultative commission composed of representatives
appointed by the President from a list of nominees from multi-
sectoral bodies. The organic act shall define the basic structure
of government for the region consisting of the executive
department and legislative assembly, both of which shall be
elective and representative of the constituent political units. The
organic acts shall likewise provide for special courts with
personal, family and property law jurisdiction consistent with
the provisions of this Constitution and national laws.
The creation of the autonomous region shall be effective when
approved by majority of the votes cast by the constituent units in
a plebiscite called for the purpose, provided that only provinces,
cities, and geographic areas voting favorably in such plebiscite
shall be included in the autonomous region.
Sec. 19. The first Congress elected under this Constitution shall,
within eighteen months from the time of organization of both
Houses, pass the organic acts for the autonomous regions in
Muslim Mindanao and the Cordilleras.
Sec. 20. Within its territorial jurisdiction and subject to the
provisions of this Constitution and national laws, the organic act
of autonomous regions shall provide for legislative powers over:
(1) Administrative organization;
(2) Creation of sources of revenues;
(3) Ancestral domain and natural resources;
(4) Personal, family and property relations;
 (5) Regional urban and rural planning development;
(6) Economic, social and tourism development ;
(7) Educational policies;
(8) Preservation and development of the cultural heritage; and
(9) Such other matters as may be authorized by law for the
promotion of the general welfare of the people of the region.
Sec. 21. The preservation of peace and order within the regions
shall be the responsibility of the local police agencies which
shall be organized, maintained, supervised, and utilized in
accordance with applicable laws. The defense and security of the
regions shall be the responsibility of the National Government.
A study of E.O. No. 220 would be incomplete Without reference to its historical
background.
In April 1986, just after the EDSA Revolution, Fr. Conrado M.
Balweg, S.V.D., broke off on ideological grounds from the
Communist Party of the Philippines (CPP) and its military arm
the New People's Army. (NPA).
After President Aquino was installed into office by People
Power, she advocated a policy of national reconciliation. She
called on all revolutionary forces to a peace dialogue. The
CPLA heeded this call of the President. After the preliminary
negotiations, President Aquino and some members of her
Cabinet flew to Mt. Data in the Mountain Province on
September 13, 1986 and signed with Fr. Conrado M. Balweg
(As Commander of the CPLA and Ama Mario Yag-ao (as
President of Cordillera Bodong Administration, the civil
government of the CPLA a ceasefire agreement that signified
the cessation of hostilities (WHEREAS No. 7, E.O. 220).
The parties arrived at an agreement in principle: the Cordillera
people shall not undertake their demands through armed and
violent struggle but by peaceful means, such as political
negotiations. The negotiations shall be a continuing process until
the demands of the Cordillera people shall have been
substantially granted.
On March 27, 1987, Ambassador Pelaez [Acting as Chief
Negotiator of the government], in pursuance of the September
13, 1986 agreement, flew to the Mansion House, Baguio City,
and signed with Fr. Balweg (as Chairman of the Cordillera
panel) a joint agreement, paragraphs 2 and 3 of which state:
Par. 2- Work together in drafting an Executive Order to create a
preparatory body that could perform policy-making and
administrative functions and undertake consultations and studies
leading to a draft organic act for the Cordilleras.
Par. 3- Have representatives from the Cordillera panel join the
study group of the R.P. Panel in drafting the Executive Order.
Pursuant to the above joint agreement, E.O. 220 was drafted by
a panel of the Philippine government and of the representatives
of the Cordillera people.
On July 15, 1987, President Corazon C. Aquino signed the joint
draft into law, known now as E.O. 220. [Rejoinder G.R. No.
82217, pp. 2-3].
Executive Order No. 220, issued by the President in the exercise of her legislative
powers under Art. XVIII, sec. 6 of the 1987 Constitution, created the Cordillera
Administrative Region (CAR) , which covers the provinces of Abra, Benguet,
Ifugao, Kalinga-Apayao and Mountain Province and the City of Baguio [secs. 1 and
2]. It was created to accelerate economic and social growth in the region and to
prepare for the establishment of the autonomous region in the Cordilleras [sec. 3].
Its main function is to coordinate the planning and implementation of programs and
services in the region, particularly, to coordinate with the local government units as
well as with the executive departments of the National Government in the
supervision of field offices and in identifying, planning, monitoring, and accepting
projects and activities in the region [sec. 5]. It shall also monitor the implementation
of all ongoing national and local government projects in the region [sec. 20]. The
CAR shall have a Cordillera Regional Assembly as a policy-formulating body and a
Cordillera Executive Board as an implementing arm [secs. 7, 8 and 10]. The CAR
and the Assembly and Executive Board shall exist until such time as the autonomous
regional government is established and organized [sec. 17].
Explaining the rationale for the issuance of E.O. No. 220, its last "Whereas" clause
provides:
WHEREAS, pending the convening of the first Congress and the
enactment of the organic act for a Cordillera autonomous region,
there is an urgent need, in the interest of national security and
public order, for the President to reorganize immediately the
existing administrative structure in the Cordilleras to suit it to
the existing political realities therein and the Government's
legitimate concerns in the areas, without attempting to pre-empt
the constitutional duty of the first Congress to undertake the
creation of an autonomous region on a permanent basis.
During the pendency of this case, Republic Act No. 6766 entitled "An Act Providing
for an Organic Act for the Cordillera Autonomous Region," was enacted and signed
into law. The Act recognizes the CAR and the offices and agencies created under
E.O. No. 220 and its transitory nature is reinforced in Art. XXI of R.A. No. 6766, to
wit:
SEC. 3. The Cordillera Executive Board, the Cordillera Region
Assembly as well as all offices and agencies created under
Execute Order No. 220 shall cease to exist immediately upon the
ratification of this Organic Act.
All funds, properties and assets of the Cordillera Executive
Board and the Cordillera Regional Assembly shall automatically
be transferred to the Cordillera Autonomous Government.
I that the organic act had not yet been passed and the autonomous region created.
It is well-settled in our jurisprudence that respect for the inherent and stated powers
and prerogatives of the law-making body, as well as faithful adherence to the
principle of separation of powers, require that its enactment be accorded the
presumption of constitutionality. Thus, in any challenge to the constitutionality of a
statute, the burden of clearly and unequivocally proving its unconstitutionality
always rests upon the challenger. Conversely, failure to so prove will necessarily
defeat the challenge.
We shall be guided by these principles in considering these consolidated petitions.
In these cases, petitioners principally argue that by issuing E.O. No. 220 the
President, in the exercise of her legislative powers prior to the convening of the first
Congress under the 1987 Constitution, has virtually pre-empted Congress from its
mandated task of enacting an organic act and created an autonomous region in the
Cordilleras. We have carefully studied the Constitution and E.O. No. 220 and we
have come to the conclusion that petitioners' assertions are unfounded. Events
subsequent to the issuance of E.O. No. 220 also bear out this conclusion.
1. A reading of E.O. No. 220 will easily reveal that what it actually envisions is the
consolidation and coordination of the delivery of services of line departments and
agencies of the National Government in the areas covered by the administrative
region as a step preparatory to the grant of autonomy to the Cordilleras. It does not
create the autonomous region contemplated in the Constitution. It merely provides
for transitory measures in anticipation of the enactment of an organic act and the
creation of an autonomous region. In short, it prepares the ground for autonomy.
This does not necessarily conflict with the provisions of the Constitution on
autonomous regions, as we shall show later.
The Constitution outlines a complex procedure for the creation of an autonomous
region in the Cordilleras. A regional consultative commission shall first be created.
The President shall then appoint the members of a regional consultative commission
from a list of nominees from multi-sectoral bodies. The commission shall assist the
Congress in preparing the organic act for the autonomous region. The organic act
shall be passed by the first Congress under the 1987 Constitution within eighteen
months from the time of its organization and enacted into law. Thereafter there shall
be held a plebiscite for the approval of the organic act [Art. X, sec. 18]. Only then,
after its approval in the plebiscite, shall the autonomous region be created.
Undoubtedly, all of these will take time. The President, in 1987 still exercising
legislative powers, as the first Congress had not yet convened, saw it fit to provide
for some measures to address the urgent needs of the Cordilleras in the meantime
These measures we find in E.O. No. 220. The steps taken by the President are
obviously perceived by petitioners, particularly petitioner Yaranon who views E.O.
No. 220 as capitulation to the Cordillera People's Liberation Army (CPLA) of
Balweg, as unsound, but the Court cannot inquire into the wisdom of the measures
taken by the President, We can only inquire into whether or not the measures violate
the Constitution. But as we have seen earlier, they do not.
2. Moreover, the transitory nature of the CAR does not necessarily mean that it is, as
petitioner Cordillera Broad Coalition asserts, "the interim autonomous region in the
Cordilleras" [Petition, G.R. No. 79956, p. 25].
The Constitution provides for a basic structure of government in the autonomous
region composed of an elective executive and legislature and special courts with
personal, family and property law jurisdiction [Art. X, sec. 18]. Using this as a
guide, we find that E.O. No. 220 did not establish an autonomous regional
government. It created a region, covering a specified area, for administrative
purposes with the main objective of coordinating the planning and implementation
of programs and services [secs. 2 and 5]. To determine policy, it created a
representative assembly, to convene yearly only for a five-day regular session,
tasked with, among others, identifying priority projects and development programs
[sec. 9]. To serve as an implementing body, it created the Cordillera Executive
Board composed of the Mayor of Baguio City, provincial governors and
representatives of the Cordillera Bodong Administration, ethno-linguistic groups
and non-governmental organizations as regular members and all regional directors
of the line departments of the National Government as ex-officiomembers and
headed by an Executive Director [secs. 10 and 11]. The bodies created by E.O. No.
220 do not supplant the existing local governmental structure, nor are they
autonomous government agencies. They merely constitute the mechanism for an
"umbrella" that brings together the existing local governments, the agencies of the
National Government, the ethno-linguistic groups or tribes, and non-governmental
organizations in a concerted effort to spur development in the Cordilleras.
The creation of the CAR for purposes of administrative coordination is underscored
by the mandate of E.O. No. 220 for the President and appropriate national
departments and agencies to make available sources of funds for priority
development programs and projects recommended by the CAR [sec. 21] and the
power given to the President to call upon the appropriate executive departments and
agencies of the National Government to assist the CAR [sec. 24].
3. Subsequent to the issuance of E.O. No. 220, the Congress, after it was convened,
enacted Republic Act No. 6658 which created the Cordillera Regional Consultative
Commission. The President then appointed its members. The commission prepared a
draft organic act which became the basis for the deliberations of the Senate and the
House of Representatives. The result was Republic Act No. 6766, the organic act for
the Cordillera autonomous region, which was signed into law on October 23, 1989.
A plebiscite for the approval of the organic act, to be conducted shortly, shall
complete the process outlined in the Constitution.
In the meantime, E.O. No. 220 had been in force and effect for more than two years
and we find that, despite E.O. No. 220, the autonomous region in the Cordilleras is
still to be created, showing the lack of basis of petitioners' assertion. Events have
shown that petitioners' fear that E.O. No. 220 was a "shortcut" for the creation of the
autonomous region in the Cordilleras was totally unfounded.
Clearly, petitioners' principal challenge has failed.
II
A collateral issue raised by petitioners is the nature of the CAR: whether or not it is
a territorial and political subdivision. The Constitution provides in Article X:
Section 1. The territorial and political subdivisions of the
Republic of the Philippines are the provinces, cities,
municipalities, and barangays. There shall be autonomous
regions in Muslim Mindanao and the Cordilleras as hereinafter
provided.
xxx xxx xxx
Sec. 10. No province, city, municipality, or barangay may be
created, divided, merged, abolished, or its boundary
substantially altered, except in accordance with the criteria
established in the local government code and subject to approval
by a majority of the votes cast in a plebiscite in the political
units directly affected.
We have seen earlier that the CAR is not the autonomous region in the Cordilleras
contemplated by the Constitution, Thus, we now address petitioners' assertion that
E. 0. No. 220 contravenes the Constitution by creating a new territorial and political
subdivision.
After carefully considering the provisions of E.O. No. 220, we find that it did not
create a new territorial and political subdivision or merge existing ones into a larger
subdivision.
1. Firstly, the CAR is not a public corporation or a territorial and political
subdivision. It does not have a separate juridical personality, unlike provinces, cities
and municipalities. Neither is it vested with the powers that are normally granted to
public corporations, e.g. the power to sue and be sued, the power to own and dispose
of property, the power to create its own sources of revenue, etc. As stated earlier, the
CAR was created primarily to coordinate the planning and implementation of
programs and services in the covered areas.
The creation of administrative regions for the purpose of expediting the delivery of
services is nothing new. The Integrated Reorganization Plan of 1972, which was
made as part of the law of the land by virtue of Presidential Decree No. 1,
established eleven (11) regions, later increased to twelve (12), with definite regional
centers and required departments and agencies of the Executive Branch of the
National Government to set up field offices therein. The functions of the regional
offices to be established pursuant to the Reorganization Plan are: (1) to implement
laws, policies, plans, programs, rules and regulations of the department or agency in
the regional areas; (2) to provide economical, efficient and effective service to the
people in the area; (3) to coordinate with regional offices of other departments,
bureaus and agencies in the area; (4) to coordinate with local government units in
the area; and (5) to perform such other functions as may be provided by law. [See
Part II, chap. III, art. 1, of the Reorganization Plan].
We can readily see that the CAR is in the same genre as the administrative regions
created under the Reorganization Plan, albeit under E.O. No. 220 the operation of
the CAR requires the participation not only of the line departments and agencies of
the National Government but also the local governments, ethno-linguistic groups
and non-governmental organizations in bringing about the desired objectives and the
appropriation of funds solely for that purpose.
2. Then, considering the control and supervision exercised by the President over the
CAR and the offices created under E.O. No. 220, and considering further the
indispensable participation of the line departments of the National Government, the
CAR may be considered more than anything else as a regional coordinating agency
of the National Government, similar to the regional development councils which the
President may create under the Constitution [Art. X, sec. 14]. These councils are
"composed of local government officials, regional heads of departments and other
government offices, and representatives from non-governmental organizations
within the region for purposes of administrative decentralization to strengthen the
autonomy of the units therein and to accelerate the economic and social growth and
development of the units in the region." [Ibid.] In this wise, the CAR may be
considered as a more sophisticated version of the regional development council.
III
Finally, petitioners incidentally argue that the creation of the CAR contravened the
constitutional guarantee of the local autonomy for the provinces (Abra, Benguet,
Ifugao, Kalinga-Apayao and Mountain Province) and city (Baguio City) which
compose the CAR.
We find first a need to clear up petitioners' apparent misconception of the concept of
local autonomy.
It must be clarified that the constitutional guarantee of local autonomy in the
Constitution [Art. X, sec. 2] refers to the administrative autonomy of local
government units or, cast in more technical language, the decentralization of
government authority [Villegas v. Subido, G.R. No. L-31004, January 8, 1971, 37
SCRA 1]. Local autonomy is not unique to the 1987 Constitution, it being
guaranteed also under the 1973 Constitution [Art. II, sec. 10]. And while there was
no express guarantee under the 1935 Constitution, the Congress enacted the Local
Autonomy Act (R.A. No. 2264) and the Decentralization Act (R.A. No. 5185),
which ushered the irreversible march towards further enlargement of local autonomy
in the country [Villegas v. Subido, supra.]
On the other hand, the creation of autonomous regions in Muslim Mindanao and the
Cordilleras, which is peculiar to the 1987 Constitution contemplates the grant
of political autonomy and not just administrative autonomy these regions. Thus, the
provision in the Constitution for an autonomous regional government with a basic
structure consisting of an executive department and a legislative assembly and
special courts with personal, family and property law jurisdiction in each of the
autonomous regions [Art. X, sec. 18].
As we have said earlier, the CAR is a mere transitory coordinating agency that
would prepare the stage for political autonomy for the Cordilleras. It fills in the
resulting gap in the process of transforming a group of adjacent territorial and
political subdivisions already enjoying local or administrative autonomy into an
autonomous region vested with political autonomy.
Anent petitioners' objection, we note the obvious failure to show how the creation of
the CAR has actually diminished the local autonomy of the covered provinces and
city. It cannot be over-emphasized that pure speculation and a resort to probabilities
are insufficient to cause the invalidation of E.O. No. 220.
WHEREFORE, the petitions are DISMISSED for lack of merit.
SO ORDERED.
ISABELO T. CRISOSTOMO, petitioner, vs. THE COURT OF APPEALS and
the PEOPLE OF THE PHILIPPINES,respondents.*
DECISION
MENDOZA, J.:
This is a petition to review the decision of the Court of Appeals dated July 15,
1992, the dispositive portion of which reads:
WHEREFORE, the present petition is partially granted. The questioned Orders and
writs directing (1) reinstatement of respondent Isabelo T. Crisostomo to the position
of President of the Polytechnic University of the Philippines, and (2) payment of
salaries and benefits which said respondent failed to receive during his suspension
insofar as such payment includes those accruing after the abolition of the PCC and
its transfer to the PUP, are hereby set aside. Accordingly, further proceedings
consistent with this decision may be taken by the court a quo to determine the
correct amounts due and payable to said respondent by the said university.
The background of this case is as follows:
Petitioner Isabelo Crisostomo was President of the Philippine College of
Commerce (PCC), having been appointed to that position by the President of the
Philippines on July 17, 1974.
During his incumbency as president of the PCC, two administrative cases
were filed against petitioner for illegal use of government vehicles, misappropriation
of construction materials belonging to the college, oppression and harassment, grave
misconduct, nepotism and dishonesty. The administrative cases, which were filed
with the Office of the President, were subsequently referred to the Office of the
Solicitor General for investigation.
Charges of violations of R.A. No. 3019, 3 (e) and R.A. No. 992, 20-21 and
R.A. No. 733, 14 were likewise filed against him with the Office of Tanodbayan.
On June 14, 1976, three (3) informations for violation of Sec. 3 (e) of the
Anti-Graft and Corrupt Practices Act (R.A. No. 3019, as amended) were filed
against him. The informations alleged that he appropriated for himself a bahay kubo,
which was intended for the College, and construction materials worth P250,000.00,
more or less. Petitioner was also accused of using a driver of the College as his
personal and family driver.[1]
On October 22, 1976, petitioner was preventively suspended from office
pursuant to R.A. No. 3019, 13, as amended. In his place Dr. Pablo T. Mateo, Jr. was
designated as officer-in-charge on November 10, 1976, and then as Acting President
on May 13, 1977.
On April 1, 1978, P.D. No. 1341 was issued by then President Ferdinand E.
Marcos, CONVERTING THE PHILIPPINE COLLEGE OF COMMERCE INTO A
POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES,
ORGANIZATIONAL STRUCTURE AND FUNCTIONS, AND EXPANDING ITS
CURRICULAR OFFERINGS.
Mateo continued as the head of the new University. On April 3, 1979, he was
appointed Acting President and on March 28, 1980, as President for a term of six (6)
years.
On July 11, 1980, the Circuit Criminal Court of Manila rendered judgment
acquitting petitioner of the charges against him. The dispositive portion of the
decision reads:
WHEREFORE, the Court finds the accused, Isabelo T. Crisostomo, not guilty of the
violations charged in all these three cases and hereby acquits him therefrom, with
costs de oficio. The bail bonds filed by said accused for his provisional liberty are
hereby cancelled and released.
Pursuant to the provisions of Section 13, R.A. No. 3019, as amended, otherwise
known as The Anti-Graft and Corrupt Practices Act, and under which the accused
has been suspended by this Court in an Order dated October 22, 1976, said accused
is hereby ordered reinstated to the position of President of the Philippine College of
Commerce, now known as the Polytechnic University of the Philippines, from
which he has been suspended. By virtue of said reinstatement, he is entitled to
receive the salaries and other benefits which he failed to receive during suspension,
unless in the meantime administrative proceedings have been filed against him.
The bail bonds filed by the accused for his provisional liberty in these cases are
hereby cancelled and released.
SO ORDERED.
The cases filed before the Tanodbayan (now the Ombudsman) were likewise
dismissed on August 8, 1991 on the ground that they had become moot and
academic. On the other hand, the administrative cases were dismissed for failure of
the complainants to prosecute them.
On February 12, 1992, petitioner filed with the Regional Trial Court a motion
for execution of the judgment, particularly the part ordering his reinstatement to the
position of president of the PUP and the payment of his salaries and other benefits
during the period of suspension.
The motion was granted and a partial writ of execution was issued by the trial
court on March 6, 1992. On March 26, 1992, however, President Corazon C. Aquino
appointed Dr. Jaime Gellor as acting president of the PUP, following the expiration
of the term of office of Dr. Nemesio Prudente, who had succeeded Dr.
Mateo. Petitioner was one of the five nominees considered by the President of the
Philippines for the position.
On April 24, 1992, the Regional Trial Court, through respondent Judge
Teresita Dy-Liaco Flores, issued another order, reiterating her earlier order for the
reinstatement of petitioner to the position of PUP president. A writ of execution,
ordering the sheriff to implement the order of reinstatement, was issued.
In his return dated April 28, 1992, the sheriff stated that he had executed the
writ by installing petitioner as President of the PUP, although Dr. Gellor did not
vacate the office as he wanted to consult with the President of the Philippines
first. This led to a contempt citation against Dr. Gellor. A hearing was set on May 7,
1992. On May 5, 1992, petitioner also moved to cite Department of Education,
Culture and Sports Secretary Isidro Cario in contempt of court. Petitioner assumed
the office of president of the PUP.
On May 18, 1992, therefore, the People of the Philippines filed a petition
for certiorari and prohibition (CA G.R. No. 27931), assailing the two orders and the
writs of execution issued by the trial court. It also asked for a temporary restraining
order.
On June 25, 1992, the Court of Appeals issued a temporary restraining order,
enjoining petitioner to cease and desist from acting as president of the PUP pursuant
to the reinstatement orders of the trial court, and enjoining further proceedings in
Criminal Cases Nos. VI-2329-2331.
On July 15, 1992, the Seventh Division of the Court of Appeals rendered a
decision,[2] the dispositive portion of which is set forth at the beginning of this
opinion. Said decision set aside the orders and writ of reinstatement issued by the
trial court. The payment of salaries and benefits to petitioner accruing after the
conversion of the PCC to the PUP was disallowed. Recovery of salaries and benefits
was limited to those accruing from the time of petitioners suspension until the
conversion of the PCC to the PUP. The case was remanded to the trial court for a
determination of the amounts due and payable to petitioner.
Hence this petition. Petitioner argues that P.D. No. 1341, which converted the
PCC into the PUP, did not abolish the PCC. He contends that if the law had intended
the PCC to lose its existence, it would have specified that the PCC was being
abolished rather than converted and that if the PUP was intended to be a new
institution, the law would have said it was being created. Petitioner claims that the
PUP is merely a continuation of the existence of the PCC, and, hence, he could be
reinstated to his former position as president.
In part the contention is well taken, but, as will presently be explained,
reinstatement is no longer possible because of the promulgation of P.D. No. 1437 by
the President of the Philippines on June 10, 1978.
P.D. No. 1341 did not abolish, but only changed, the former Philippine
College of Commerce into what is now the Polytechnic University of the
Philippines, in the same way that earlier in 1952, R.A. No. 778 had converted what
was then the Philippine School of Commerce into the Philippine College of
Commerce. What took place was a change in academic status of the educational
institution, not in its corporate life. Hence the change in its name, the expansion of
its curricular offerings, and the changes in its structure and organization.
As petitioner correctly points out, when the purpose is to abolish a department
or an office or an organization and to replace it with another one, the lawmaking
authority says so. He cites the following examples:
E.O. No. 709:
1. There is hereby created a Ministry of Trade and Industry, hereinafter referred to
as the Ministry. The existing Ministry of Trade established pursuant to Presidential
Decree No. 721 as amended, and the existing Ministry established pursuant to
Presidential Decree No. 488 as amended, are abolished together with their services,
bureaus and similar agencies, regional offices, and all other entities under their
supervision and control. . . .
E.O. No. 710:
1. There is hereby created a Ministry of Public Works and Highways, hereinafter
referred to as the Ministry. The existing Ministry of Public Works established
pursuant to Executive Order No. 546 as amended, and the existing Ministry of
Public Highways established pursuant to Presidential Decree No. 458 as amended,
are abolished together with their services, bureaus and similar agencies, regional
offices, and all other entities within their supervision and control. . . .
R.A. No. 6975:
13. Creation and Composition. - A National Police Commission, hereinafter referred
to as the Commission, is hereby created for the purpose of effectively discharging
the functions prescribed in the Constitution and provided in this Act. The
Commission shall be a collegial body within the Department. It shall be composed
of a Chairman and four (4) regular commissioners, one (1) of whom shall be
designated as Vice-Chairman by the President. The Secretary of the Department
shall be the ex-officio Chairman of the Commission, while the Vice-Chairman shall
act as the executive officer of the Commission.
 xxx xxx xxx
90. Status of Present NAPOLCOM, PC-INP. - Upon the effectivity of this Act, the
present National Police Commission, and the Philippine Constabulary-Integrated
National Police shall cease to exist. The Philippine Constabulary, which is the
nucleus of the integrated Philippine Constabulary-Integrated National Police, shall
cease to be a major service of the Armed Forces of the Philippines. The Integrated
National Police, which is the civilian component of the Philippine Constabulary-
Integrated National Police, shall cease to be the national police force and in lieu
thereof, a new police force shall be established and constituted pursuant to this Act.
In contrast, P.D. No. 1341, provides:
1. The present Philippine College of Commerce is hereby converted into a university
to be known as the Polytechnic University of the Philippines, hereinafter referred to
in this Decree as the University.
As already noted, R.A. No. 778 earlier provided:
1. The present Philippine School of Commerce, located in the City of Manila,
Philippines, is hereby granted full college status and converted into the Philippine
College of Commerce, which will offer not only its present one-year and two-year
vocational commercial curricula, the latter leading to the titles of Associate in
Business Education and/or Associate in Commerce, but also four-year courses
leading to the degrees of Bachelor of Science in Business in Education and Bachelor
of Science in Commerce, and five-year courses leading to the degrees of Master of
Arts in Business Education and Master of Arts in Commerce, respectively.
The appellate court ruled, however, that the PUP and the PCC are not one and
the same institution but two different entities and that since petitioner Crisostomos
term was coterminous with the legal existence of the PCC, petitioners term expired
upon the abolition of the PCC. In reaching this conclusion, the Court of Appeals
took into account the following:
a) After respondent Crisostomos suspension, P.D. No. 1341 (entitled
CONVERTING THE PHILIPPINE COLLEGE OF COMMERCE INTO A
POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES,
ORGANIZATIONAL STRUCTURE AND FUNCTIONS, AND EXPANDING ITS
CURRICULAR OFFERINGS) was issued on April 1, 1978. This decree explicitly
provides that PUPs objectives and purposes cover not only PCCs offering of
programs in the field of commerce and business administration but also programs in
other polytechnic areas and in other fields such as agriculture, arts and trades and
fisheries . . . (section 2). Being a university, PUP was conceived as a bigger
institution absorbing, merging and integrating the entire PCC and other national
schools as may be transferred to this new state university.
b) The manner of selection and appointment of the university head is substantially
different from that provided by the PCC Charter. The PUP President shall be
appointed by the President of the Philippines upon recommendation of the Secretary
of Education and Culture after consultation with the University Board of
Regents (section 4, P.D. 1341). The President of PCC, on the other hand, was
appointed by the President of the Philippines upon recommendation of the Board of
Trustees (Section 4, R.A. 778).
c) The composition of the new universitys Board of Regents is likewise different
from that of the PCC Board of Trustees (which included the chairman of the Senate
Committee on Education and the chairman of the House Committee on Education,
the President of the PCC Alumni Association as well as the President of the
Chamber of Commerce of the Philippines). Whereas, among others, the NEDA
Director-General, the Secretary of Industry and the Secretary of Labor are members
of the PUP Board of Regents. (Section 6, P.D. 1341).
d) The decree moreover transferred to the new university all the properties including
equipment and facilities:
. . . owned by the Philippine College of Commerce and such other National
Schools as may be integrated . . . including their obligations andappropriations . . .
(Sec. 12; Italics supplied).[3]
But these are hardly indicia of an intent to abolish an existing institution and
to create a new one. New course offerings can be added to the curriculum of a
school without affecting its legal existence. Nor will changes in its existing structure
and organization bring about its abolition and the creation of a new one. Only an
express declaration to that effect by the lawmaking authority will.
The Court of Appeals also cites the provision of P.D. No. 1341 as allegedly
implying the abolition of the PCC and the creation of a new one the PUP in its stead:
12. All parcels of land, buildings, equipment and facilities owned by the Philippine
College of Commerce and such other national schools as may be integrated by virtue
of this decree, including their obligations and appropriations thereof, shall stand
transferred to the Polytechnic University of the Philippines, provided, however, that
said national schools shall continue to receive their corresponding shares from the
special education fund of the municipal/provincial/city government concerned as are
now enjoyed by them in accordance with existing laws and/or decrees.
 The law does not state that the lands, buildings and equipment owned by the benefits which he failed to receive during his suspension in so far as such payment
PCC were being transferred to the PUP but only that they stand transferred to would include salaries accruing after March 28, 1980 when petitioner Crisostomos
it. Stand transferred simply means, for example, that lands transferred to the PCC term was terminated. Further proceedings in accordance with this decision may be
were to be understood as transferred to the PUP as the new name of the institution. taken by the trial court to determine the amount due and payable to petitioner by the
university up to March 28, 1980.
But the reinstatement of petitioner to the position of president of the PUP
could not be ordered by the trial court because on June 10, 1978, P.D. No. 1437 had SO ORDERED.
been promulgated fixing the term of office of presidents of state universities and
colleges at six (6) years, renewable for another term of six (6) years, and authorizing
the President of the Philippines to terminate the terms of incumbents who were not
reappointed. P.D. No. 1437 provides:
6. The head of the university or college shall be known as the President of the
university or college. He shall be qualified for the position and appointed for a term
of six (6) years by the President of the Philippines upon recommendation of the
Secretary of Education and Culture after consulting with the Board which may be
renewed for another term upon recommendation of the Secretary of Education and
Culture after consulting the Board. In case of vacancy by reason of death, absence or
resignation, the Secretary of Education and Culture shall have the authority to
designate an officer in charge of the college or university pending the appointment
of the President.

The powers and duties of the President of the university or college, in addition to
those specifically provided for in this Decree shall be those usually pertaining to the
office of the president of a university or college.

7. The incumbent president of a chartered state college or university whose term

may be terminated according to this Decree, shall be entitled to full retirement
benefits: provided that he has served the government for at least twenty (20) years;
and provided, further that in case the number of years served is less than 20 years, he
shall be entitled to one month pay for every year of service.

In this case, Dr. Pablo T. Mateo Jr., who had been acting president of the
university since April 3, 1979, was appointed president of PUP for a term of six (6)
years on March 28, 1980, with the result that petitioners term was cut short. In
accordance with 7 of the law, therefore, petitioner became entitled only to retirement
benefits or the payment of separation pay. Petitioner must have recognized this fact,
that is why in 1992 he asked then President Aquino to consider him for appointment
to the same position after it had become vacant in consequence of the retirement of
Dr. Prudente.
WHEREFORE, the decision of the Court of Appeals is MODIFIED by
SETTING ASIDE the questioned orders of the Regional Trial Court directing the
reinstatement of the petitioner Isabelo T. Crisostomo to the position of president of
the Polytechnic University of the Philippines and the payment to him of salaries and
VICTOR TING SENG DEE and EMILY CHAN-
AZAJAR, petitioners, vs. COURT OF APPEALS and PEOPLE OF
THE PHILIPPINES, respondents.
DECISION
MELO, J.:
Before us is a petition for certiorari under Rule 45 seeking the reversal of the
February 12, 1999 decision of the Court of Appeals which affirmed that of the
Regional Trial Court of the National Capital Judicial Region (Manila, Branch 45)
finding petitioners guilty of seven (7) counts of violation of Batas Pambansa
Blg. 22.
Petitioners version of the background events is as follows:
From 1991 to 1992, Juliet Ting Chan Sioc Hiu obtained loans, in the aggregate
amount of P2,750,000.00, from private complainant Josefina K. Tagle for use in
Juliets furniture business. As payment thereof, Juliet issued eleven (11) post-dated
checks which, upon maturity, were dishonored for reasons of Closed Account or
Drawn Against Insufficient Funds. Juliet was subsequently prosecuted for violation
of Batas Pambansa Blg. 22.
Due to her financial difficulties, Juliet requested her husband Victor Ting
Seng Dee and her sister Emily Chan-Azajar (petitioners herein) to take over her
furniture business, including the obligations appurtenant thereto. Agreeing to Juliets
request, petitioners issued nineteen (19) checks in replacement of the eleven (11)
checks earlier issued by Juliet. The planned take-over, however, never materialized
since the Naga Hope Christian School, petitioner Emily Chan-Azajars employer in
Naga, refused to let her resign to attend to her sisters business.Since the planned
take-over did not take place, petitioners requested Juliet to reassume her obligation
to private complainant Tagle by replacing the checks they had previously issued to
the latter. Thus, Juliet replaced the nineteen (19) checks issued by petitioners with
twenty-three (23) Far East Bank checks in favor of Tagle. Petitioners then requested
private complainant Tagle to return the nineteen (19) checks they had issued to
her. Instead of returning the checks, Tagle deposited seven of the checks with
MetroBank where they were dishonored for being Drawn Against Insufficient
Funds.
On the other hand, private complainant Tagle alleged that sometime in April
1993, petitioners obtained a loan of P950,000.00 from her, issuing several post-
dated checks in payment thereof. When the checks were deposited by Tagle with
MetroBank, they were dishonored for having been drawn against insufficient funds.
Tagle alleged that despite verbal and written demands, petitioners failed to pay her
the value of the dishonored checks.
Consequently, seven informations for violation of Batas Pambansa Blg. 22
were filed against petitioners. Said informations are similarly worded except with
respect to the check number, the amount involved, and the date the check was
issued. The information in Criminal Case No. 94-131945 (the other cases are
Criminal Case No. 94-131946, Criminal Case No. 94-131947, Criminal Case No.
94-131948, Criminal Case No. 94-131949, Criminal Case No. 94-131950, and
Criminal Case No. 94-131951) charged:
That sometime prior to May 27, 1993, in the City of Manila, Philippines, the said
accused, conspiring and confederating together and mutually helping each other, did
then and there wilfully, unlawfully and feloniously make or draw and issue to
JOSEPHINE K. TAGLE, to apply on account or for value Producers Bank of the
Philippines, Check No. 946072 dated May 27, 1993 payable to CASH in the amount
of P250,000.00 said accused well knowing that at the time of issue they did not have
sufficient funds in or credit with the drawee bank for payment of such check in full
upon its presentment, which check when presented for payment within ninety (90)
days from the date thereof, was subsequently dishonored by the drawee bank for
Drawn Against Insufficient Funds and despite receipt of notice of such dishonor,
said accused failed to pay said JOSEFINA K. TAGLE the amount of the check or to
make arrangements for full payment of the same within five (5) banking days after
receiving said notice.
(p. 2, Original Records.)
Criminal Cases No. 94-131945 to 94-131951 were consolidated and jointly
tried. When arraigned, petitioners, assisted by counsel, pleaded not guilty. During
trial, the prosecution presented only one witness, the private complainant, the
testimony of Producers Bank representative Ferdinand Lazo being dispensed with
after counsel for petitioners admitted the dishonor of the checks subject matter of the
action.
On March 16, 1995, the trial court found petitioners guilty of violating Batas
Pambansa Blg. 22 in each of the seven cases, disposing as follows:
WHEREFORE, in view of the foregoing, accused VICTOR TING and EMILY
CHAN AZAJAR are hereby found GUILTY beyond reasonable doubt of all the
charges contained in Criminal Case Nos. 94-131945; 94-131946; 94-131947; 94-
131948; 94-131949; 94-131950 and 94-131951 and for each count, they are hereby
sentenced to suffer the penalty of one (1) year imprisonment; to pay Josefina K.
Tagle the total amount of P950,000.00; and to pay the cost.
(p. 294, Rollo.)
 Aggrieved, petitioners filed an appeal with the Court of Appeals which was
docketed therein as C.A.-G.R. No. 18054. However, the appellate court, on February
12, 1999, affirmed. Petitioners motion for reconsideration was, likewise, denied for
lack of merit. Hence, the instant petition.
Petitioners claim that the Court of Appeals erred in affirming the decision of
the trial court, given the absence of proof beyond reasonable doubt or in the
presence of facts creating reasonable doubt.
The petition has merit.
Section 1 of Batas Pambansa Blg. 22, otherwise known as the Bouncing
Checks Law, provides:
Section 1. Checks without sufficient funds. Any person who makes or draws and
issues any check to apply on account or for value, knowing at the time of issue that
he does not have sufficient funds in or credit with the drawee bank for the payment
of such check in full upon its presentment, which check is subsequently dishonored
by the drawee bank for insufficiency of funds or credit or would have been
dishonored for the same reason had not the drawer, without any valid
reason, ordered the bank to stop payment, shall be punished by imprisonment of not
less than thirty days but not more than one (1) year or by a fine of not less than but
not more double the amount of the check which fine shall in no case exceed Two
hundred thousand pesos, or both such fine and imprisonment at the discretion of the
court.
The same penalty shall be imposed upon any person who having sufficient funds in
or credit with the drawee bank when he makes or draws and issues a check, shall fail
to keep sufficient funds or to maintain a credit to cover the full amount of the check
if presented within a period of ninety (90) days from the date appearing thereon, for
which reason it is dishonored by the drawee bank.
Where the check is drawn by a corporation, company or entity, the person or persons
who actually signed the check in behalf of such drawer shall be liable under this Act.
For a violation of Batas Pambansa Blg. 22 to be committed, the following
elements must be present:
(1) the making, drawing, and issuance of any check to apply for account
or for value;
(2) the knowledge of the maker, drawer, or issuer that at the time of
issue there are no sufficient funds in or credit with the drawee bank
for the payment of such check in full upon is presentment; and
(3) the subsequent dishonor of the check by the drawee bank for
insufficiency of funds or credit or dishonor for the same reason had
not the drawer, without any valid cause, ordered the bank to stop
payment (Sycip, Jr. vs. CA, G.R. No. 125059, March 17, 2000).
An analysis of the evidence presented, however, shows that not all the
aforementioned elements have been established by the prosecution beyond
reasonable doubt.
That the seven checks in question were issued by petitioners is beyond
dispute. Not only were the dishonored checks presented in court, but petitioners
even admitted signing the checks and issuing them to private complainant. From the
evidence on record, it is clear that petitioners signed and issued the seven checks in
question.
That the checks were dishonored is also clearly established. Section 3 of Batas
Pambansa Blg. 22 provides that the introduction in evidence of any unpaid and
dishonored check, having the drawees refusal to pay stamped or written thereon, or
attached thereto, with the reason therefor as aforesaid, shall be prima facie evidence
of the making or issuance of said check, and the due presentment to the drawee for
payment and the dishonor thereof, and that the same was properly dishonored for the
reason written, stamped, or attached by the drawee on such dishonored check. In the
instant case, the fact of the checks dishonor is sufficiently shown by the return slips
issued by MetroBank, the depository bank, stating that the checks had been returned
for the reason DAIF Drawn Against Insufficient Funds. Not only are these check
return slips prima facie evidence that the drawee bank dishonored the checks, but
the defense did not present any evidence to rebut these documents. In fact, counsel
for petitioners even admitted the fact of the checks dishonor, agreeing to dispense
with the presentation of the bank representative who was supposed to prove the fact
of dishonor of said checks (p. 162, Rollo.).
However, for liability to attach under Batas Pambansa Blg. 22, it is not enough
that the prosecution establishes that a check was issued and that the same was
subsequently dishonored. The prosecution must also prove the second element, that
is, it must further show that the issuer, at the time of the checks issuance, had
knowledge that he did not have enough funds or credit in the bank for payment
thereof upon its presentment. Since the second element involves a state of mind
which is difficult to verify, Section 2 of Batas Pambansa Blg. 22 creates a
presumption juris tantum that the second element prima facie exists when the first
and third elements of the offense are present (Magno v. People, 210 SCRA 471
[1992]). Section 2 provides:
Section 2. Evidence of knowledge of insufficient funds. The making, drawing, and
issuance of a check payment of which is refused by the drawee because of
insufficient funds or credit with such bank, when presented within ninety days from
the date of the check, shall be prima facie evidence of knowledge of such
insufficiency of funds or credit unless such maker or drawer pays the holder thereof
the amount due thereon, or makes arrangements for payment in full by the drawee of
such check within five (5) banking days after receiving notice that such check has
not been paid by the drawee.
In truth, this Court declared in King v. People (G.R. No. 131540, December 2,
1999) that the prima facie presumption arises when the check is issued. But the law
also provides that the presumption does not arise when the issuer pays the amount of
the check or makes arrangement for its payment within five banking days after
receiving notice that such check has not been paid by the drawee. Verily, BP 22
gives the accused an opportunity to satisfy the amount indicated in the check and
thus avert prosecution This opportunity, however, can be used only upon receipt by
the accused of a notice of dishonor. Thus, the presumption that the issuer had
knowledge of the insufficiency of funds is brought into existence only after it is
proved that the issuer had received a notice of dishonor and that, within five days
from receipt thereof, he failed to pay the amount of the check or to make
arrangement for its payment.
A: I demanded the return of my money from them.
Q: Now, what was the reply of the two accused?
A: They kept on promising that they will pay but up to now they have not paid
any single centavo.
Q: What other step did you take?
A: I requested my lawyer to write a demand letter.
Q: And that demand letter was sent to the accused?
A: Yes, Sir.
Q: In what manner?
A: By registered mail.
Q: Now, was that demand letter received by the two accused?

King v. People, decided by this Division, involves a set of facts similar to the A: Yes, Sir.
case at bar. In said case, the accused therein was proven to have issued eleven
checks, all of which were duly filled up and signed by her. It was also clearly Q: What is your evidence?
established that these eleven checks were dishonored, as shown by the checks A: The return card.
themselves which were stamped ACCOUNT CLOSED and further supported by the
return tickets issued by PCI Bank stating that the checks had been dishonored. Yet, Q: If you are shown anew the copy of the demand letter which is already marked
even if the prosecution had already established the issuance of the checks and their as Exhibit B, would you be able to recognize the same?
subsequent dishonor, this Court still required the prosecution to show that the issuer
knew of the insufficiency of funds by proving that he or she received a notice of A: Yes, Sir.
dishonor and, within five banking days thereafter, failed to satisfy the amount of the Q: Is that the one that you are referring to?
check or make arrangement for its payment.
A: Yes, Sir.
Moreover, in Lina Lim Lao v. CA (274 SCRA 572 [1997]), we emphasized
that the full payment of the amount appearing in the check within five banking days Q: How about the return card, is that correct?
from notice of dishonor is a complete defense. The absence of a notice of dishonor
necessarily deprives an accused an opportunity to preclude a criminal A: Yes, Sir, this is the one.
prosecution. Accordingly, procedural due process clearly enjoins that a notice of
Q: Now, upon receipt of this letter by the two accused, did the two accused pay
dishonor be actually served on petitioner. Petitioner has a right to demand and the
the amount of the said check?
basic postulate of fairness require that the notice of dishonor be actually sent to and
received by her to afford her the opportunity to avert prosecution under BP 22. A: No, Sir.
To prove that petitioners received a notice of dishonor, the prosecution Q: So what did you do next?
presented a copy of the demand letter allegedly sent to petitioners through registered
mail and its corresponding registry receipt. Private complainant Josefina Tagle, the A: I told my lawyer to file charges against them.
sole witness for the prosecution, testified thus:
Q: You mean the present charge?
Q: Now, when these seven (7) checks bounced for insufficiency of funds, what
step did you take? A: Yes, Sir.
 Atty. Acuesta:
That is all, Your Honor.
(TSN, Aug. 24, 1994, p. 8-9.)
Aside from the above testimony, no other reference was made to the demand
letter by the prosecution. As can be noticed from the above exchange, the
prosecution alleged that the demand letter had been sent by mail. To prove mailing,
it presented a copy of the demand letter as well as the registry return
receipt. However, no attempt was made to show that the demand letter was indeed
sent through registered mail nor was the signature on the registry return receipt
authenticated or identified. It cannot even be gleaned from the testimony of private
complainant as to who sent the demand letter and when the same was sent. In fact,
the prosecution seems to have presumed that the registry return receipt was proof
enough that the demand letter was sent through registered mail and that the same
was actually received by petitioners or their agents.
As adverted to earlier, it is necessary in cases for violation of Batas Pambansa
Blg. 22, that the prosecution prove that the issuer had received a notice of
dishonor. It is a general rule that when service of notice is an issue, the person
alleging that the notice was served must prove the fact of service (58 Am Jur 2d,
Notice, 45). The burden of proving notice rests upon the party asserting its
existence. Now, ordinarily, preponderance of evidence is sufficient to prove
notice. In criminal cases, however, the quantum of proof required is proof beyond
reasonable doubt. Hence, for Batas Pambansa Blg. 22 cases, there should be clear
proof of notice. Moreover, it is a general rule that, when service of a notice is sought
to be made by mail, it should appear that the conditions on which the validity of
such service depends had existence, otherwise the evidence is insufficient to
establish the fact of service (C.J.S., Notice, 18). In the instant case, the prosecution
did not present proof that the demand letter was sent through registered mail, relying
as it did only on the registry return receipt.In civil cases, service made through
registered mail is proved by the registry receipt issued by the mailing office and an
affidavit of the person mailing of facts showing compliance with Section 7 of Rule
13 (See Section 13, Rule 13, 1997 Rules of Civil Procedure). If, in addition to the
registry receipt, it is required in civil cases that an affidavit of mailing as proof of
service be presented, then with more reason should we hold in criminal cases that a
registry receipt alone is insufficient as proof of mailing. In the instant case, the
prosecution failed to present the testimony, or at least the affidavit, of the person
mailing that, indeed, the demand letter was sent.
Moreover, petitioners, during the pre-trial, denied having received the demand
letter (p. 135, Rollo.). Given petitioners denial of receipt of the demand letter, it
behooved the prosecution to present proof that the demand letter was indeed sent
through registered mail and that the same was received by petitioners. This, the
prosecution miserably failed to do. Instead, it merely presented the demand letter
and registry return receipt as if mere presentation of the same was equivalent to
proof that some sort of mail matter was received by petitioners.Receipts for
registered letters and return receipts do not prove themselves; they must be properly
authenticated in order to serve as proof of receipt of the letters (Central Trust Co. v.
City of Des Moines, 218 NW 580).
Likewise, for notice by mail, it must appear that the same was served on the
addressee or a duly authorized agent of the addressee. In fact, the registry return
receipt itself provides that [a] registered article must not be delivered to anyone but
the addressee, or upon the addressees written order, in which case the authorized
agent must write the addressees name on the proper space and then affix legibly his
own signature below it. In the case at bar, no effort was made to show that the
demand letter was received by petitioners or their agent. All that we have on record
is an illegible signature on the registry receipt as evidence that someone received the
letter. As to whether this signature is that of one of the petitioners or of their
authorized agent remains a mystery. From the registry receipt alone, it is possible
that petitioners or their authorized agent did receive the demand letter. Possibilities,
however, cannot replace proof beyond reasonable doubt.There being insufficient
proof that petitioners received notice that their checks had been dishonored, the
presumption that they knew of the insufficiency of the funds therefor cannot arise.
As we stated in Savage v. Taypin (G.R. No. 134217, May 11, 2000), penal
statutes must be strictly construed against the State and liberally in favor of the
accused. Likewise, the prosecution may not rely on the weakness of the evidence for
the defense to make up for its own blunders in prosecuting an offense. Having failed
to prove all the elements of the offense, petitioners may not thus be convicted for
violation of Batas Pambansa Blg. 22.
That petitioners are civilly liable to private complainant is also
doubtful. Private complainant claims that petitioners borrowed Nine Hundred Fifty
Thousand (P950,000.00) Pesos from her on or about the end of April 1993, in
payment of which petitioners issued several post-dated checks in her favor. The
seven checks issued by petitioners as payment for the amount borrowed add up to
P950,000.00. If private complainant is the businesswoman that she claims to be, she
should be collecting interest on the loan she granted to petitioners. In other words,
the amount to be repaid by petitioners should be more than P950,000.00, to account
for interest on the loan. The checks issued by petitioners, however, do not provide
for interest. It is thus more credible that the seven checks involved in this case form
part of nineteen checks issued to replace the checks issued by Juliet Ting to private
complainant. This conclusion is bolstered by private complainants admission in her
reply-affidavit that more than seven checks were issued by petitioners (p.
11, Original Records). In said reply-affidavit, private complainant states that
respondents issued and delivered to me in Manila several checks, which partially
include their seven (7) bouncing checks herein. I say partially because I will have to
file additional bouncing check cases against them, as these other checks likewise
bounced. Furthermore, in the same reply-affidavit, private complainant claims that
the checks in question were not replaced, allegedly because the replacement checks
must first be cleared, which did not happen in this case. By implication, had the 23
Far East Bank checks issued by Juliet Ting to replace the nineteen checks issued by
petitioners been cleared, then private complainant would have considered the checks
in question as having been replaced. This only supports our conclusion that it was
Juliet Ting who owed money to private complainant, not petitioners.
Moreover, the original debtor Juliet Ting was convicted by the Regional Trial
Court of Manila in Criminal Cases 93-126581-91 for eleven counts of violation of
Batas Pambansa Blg. 22. These eleven bouncing check cases involved the same
obligation being sued upon by private complainant Tagle herein. The trial court
expressly acknowledged in said cases that nineteen (19) checks were issued by
petitioners as payment for Juliet Tings obligation. In its August 7, 1997 decision
convicting Juliet Ting for violation of Batas Pambansa Blg. 22, the trial court
declared that to cover the additional loans, accused (Juliet Ting) delivered 19 post-
dated checks issued by Victor Ting and Emily Azajar (p. 55, Rollo.). The trial courts
decision further provides:
Since she could not fund the other checks (Exhs. B to K), she replaced the same with
19 post-dated checks of her husband Victor Ting and her sister Emily Azajar
totaling P2,450,000.00. They issued the checks as they would take over her furniture
business. The intended partnership of Victor and Emily was aborted as the latter was
not allowed to resign from her teaching post in Naga City. She then replaced the
checks issued by Victor and Emily with her own checks 23 FEB post-dated checks
per list (Exh. 9) prepared by Suzanne Azajar.

Despite receipt of the replacement checks, complainant refused to return the checks
of Victor and Emily and even filed cases against them.

(p. 56, Rollo.)

Not having borrowed the amount of Nine Hundred Fifty Thousand

(P950,000.00) from private complainant, petitioners may not thus be held liable
therefor.
WHEREFORE, premises considered, the instant petition is GRANTED and
the assailed decision of the Court of Appeals dated February 12, 1999 REVERSED
and SET ASIDE. Petitioners Victor Ting Seng Dee and Emily Chan-Azajar are
hereby ACQUITTED of the charges against them for violation of Batas Pambansa
Blg. 22, for lack of sufficient evidence to prove the offenses charged beyond
reasonable doubt. No special pronouncement is made as to costs.
SO ORDERED.
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. and
TELECOMMUNICATIONS TECHNOLOGIES, INC., petitioners,
vs.
INTERNATIONAL COMMUNICATION CORPORATION, Respondent.
AMENDED DECISION
AUSTRIA-MARTINEZ, J.:
On July 23, 2004, the Court promulgated its Decision in the above-captioned case
with the following dispositive portion:
WHEREFORE, the petition for review on certiorari is PARTIALLY GRANTED.
The Order of the National Telecommunications Commissions dated November 10,
1997 in NTC Case No. 96-195 is AFFIRMED with the following modifications:
Respondent International Communication Corporation, in accordance with Section
27 of NTC MC No. 11-9-93, is required to:
(1) Deposit in escrow in a reputable bank 20% of the investment required
for the first two years of the implementation of the proposed project; and
(2) Post a performance bond equivalent to 10% of the investment required
for the first two years of the approved project but not to exceed P500
Million.
within such period to be determined by the National Telecommunications
Commission.
No pronouncement as to costs.
SO ORDERED.1
Respondent now seeks a partial reconsideration of the portion of the Court’s
decision requiring it to make a 20% escrow deposit and to post a 10% performance
bond. Respondent claims that Section 27 of NTC MC No. 11-9-93, which required
the foregoing amounts, pertains only to applications filed under Executive Order No.
109 (E.O. No. 109) and not to applications voluntarily filed. In its Manifestation in
support of the motion for partial reconsideration, respondent attached a letter from
Deputy Commissioner and Officer-in-Charge (OIC), Kathleen G. Heceta, of the
National Telecommunications Commission (NTC), stating thus:
xxx
Please be informed that the escrow deposit and performance bond were required to
public telecommunications entities to ensure that the mandated installation of local
exchange lines are installed within three (3) years pursuant to EO 109 and RA 7925.
Since your company has already complied with its obligation by the installation of
more than 300,000 lines in Quezon City, Malabon City and Valenzuela City in the
National Capital Region and Region V in early 1997, the escrow deposit and
performance bond were not required in your subsequent authorizations. 2
In a Resolution dated October 4, 2004, the Court required petitioners and the NTC to
file their respective comments on the motion.3
Subsequently, in its Manifestation/Comment filed on January 11, 2005, the Office of
the Solicitor General (OSG), in behalf of the NTC, likewise referred to the same
letter of OIC Heceta and declared that it fully agrees with respondent that the escrow
deposit and performance bond are not required in subsequent authorizations for
additional/new areas outside its original roll-out obligation under the Service Area
Scheme of E.O. No. 109.
Petitioners did not file any comment and it was only after the Court issued a show
cause and compliance Resolution on October 19, 2005 that petitioners manifested in
their Entry of Special Appearance, Manifestation and Compliance dated November
25, 2005 that they have no further comments on respondent’s motion for partial
reconsideration.4
The Court has observed in its Decision that Section 27 of NTC MC No. 11-9-93 is
silent as to whether the posting of an escrow deposit and performance bond is a
condition sine qua non for the grant of a provisional authority. The NTC, through
the OSG, explicitly clarified, which was not disputed by petitioners, that the escrow
deposit and performance bond are not required in subsequent authorizations for
additional/new areas outside its original roll-out obligation under E.O. No. 109. The
OSG agreed with respondent’s stance that since the provisional authority in this case
involves a voluntary application not covered by the original service areas created by
the NTC under E.O. No. 109, then it is not subject to the posting of an escrow
deposit and performance bond as required by E.O. No. 109, but only to the
conditions provided in the provisional authority. Further, the OSG adapted the
ratiocination of the Court of Appeals on this matter, i.e., respondent was not
subjected to the foregoing escrow deposit and performance bond requirement
because the landline obligation is already outside its original roll-out commitment
under E.O. No. 109.5
The NTC, being the government agency entrusted with the regulation of activities
coming under its special and technical forte, and possessing the necessary rule-
making power to implement its objectives,6 is in the best position to interpret its own
rules, regulations and guidelines. The Court has consistently yielded and accorded
great respect to the interpretation by administrative agencies of their own rules
unless there is an error of law, abuse of power, lack of jurisdiction or grave abuse of
discretion clearly conflicting with the letter and spirit of the law. 7
In City Government of Makati vs. Civil Service Commission, 8 the Court cited cases
where the interpretation of a particular administrative agency of a certain rule was
adhered to, viz.:
As properly noted, CSC was only interpreting its own rules on leave of absence and
not a statutory provision in coming up with this uniform rule. Undoubtedly, the
CSC like any other agency has the power to interpret its own rules and any
phrase contained in them with its interpretation significantly becoming part of
the rules themselves. As observed in West Texas Compress & Warehouse Co. v.
Panhandle & S.F. Railing Co. –
xxx
This principle is not new to us. In Geukeko v. Araneta this Court upheld the
interpretation of the Department of Agriculture and Commerce of its own rules of
procedure in suspending the period of appeal even if such action was nowhere stated
therein. We said -
xxx
x x x It must be remembered that Lands Administrative Order No. 6 is in the nature
of procedural rules promulgated by the Secretary of Agriculture and Natural
Resources pursuant to the power bestowed on said administrative agency to
promulgate rules and regulations necessary for the proper discharge and
management of the functions imposed by law upon said office. x x x x Recognizing
the existence of such rule-making authority, what is the weight of an interpretation
given by an administrative agency to its own rules or regulations?Authorities
sustain the doctrine that the interpretation given to a rule or regulation by
those charged with its execution is entitled to the greatest weight by the Court
construing such rule or regulation, and such interpretation will be followed
unless it appears to be clearly unreasonable or arbitrary (42 Am. Jur. 431). It
has also been said that:
xxx
The same precept was enunciated in Bagatsing v. Committee on Privatization where
we upheld the action of the Commission on Audit (COA) in validating the sale of
Petron Corporation to Aramco Overseas Corporation on the basis of COA's
interpretation of its own circular that set bidding and audit guidelines on the disposal
of government assets –
The COA itself, the agency that adopted the rules on bidding procedure to be
followed by government offices and corporations, had upheld the validity and
legality of the questioned bidding. The interpretation of an agency of its own
rules should be given more weight than the interpretation by that agency of the
law it is merely tasked to administer (underscoring supplied).
Given the greater weight accorded to an agency's interpretation of its own rules than
to its understanding of the statute it seeks to implement, we simply cannot set aside
the former on the same grounds as we would overturn the latter. More specifically,
in cases where the dispute concerns the interpretation by an agency of its own rules,
we should apply only these standards: "Whether the delegation of power was valid;
whether the regulation was within that delegation; and if so, whether it was a
reasonable regulation under a due process test." An affirmative answer in each of
these questions should caution us from discarding the agency's interpretation of its
own rules. (Emphasis supplied)
Thus, the Court holds that the interpretation of the NTC that Section 27 of NTC MC
No. 11-9-93 regarding the escrow deposit and performance bond shall pertain only
to a local exchange operator’s original roll-out obligation under E.O. No. 109, and
not to roll-out obligations made under subsequent or voluntary applications outside
E.O. No. 109, should be sustained.
IN VIEW THEREOF, respondent’s Motion for Partial Reconsideration
is GRANTED. The Court’s Decision dated July 23, 2004 is AMENDED, the
dispositive portion of which should read as follows:
WHEREFORE, the petition for review on certiorari is DENIED. The Order of the
National Telecommunications Commission dated November 10, 1997 in NTC Case
No. 96-195 is AFFIRMED.
thereby deleting the order requiring respondent to make a 20% escrow deposit and
to post a 10% performance bond.
SO ORDERED.