G.R. No.

154243 December 22, 2007
DEPUTY DIRECTOR GENERAL ROBERTO LASTIMOSO, ACTING CHIEF
PHILIPPINE NATIONAL POLICE (PNP), DIRECTORATE FOR PERSONNEL
AND RECORDS MANAGEMENT (DPRM), INSPECTOR GENERAL, P/CHIEF
SUPT. RAMSEY OCAMPO and P/SUPT. ELMER REJANO, petitioners,
vs.
P/SENIOR INSPECTOR JOSE J. ASAYO, respondent.
RESOLUTION
AUSTRIA-MARTINEZ, J.:
Before the Court is respondent’s Motion for Reconsideration of the Decision
promulgated on March 6, 2007. In said Decision, the Court granted the
petition, holding that the Philippine National Police (PNP) Chief had jurisdiction
to take cognizance of the civilian complaint against respondent and that the
latter was accorded due process during the summary hearing.
of due process for an administrative agency to resolve a case based solely on
position papers, affidavits or documentary evidence submitted by the parties
as affidavits of witnesses may take the place of their direct testimony.2
(Emphasis supplied)
The first issue presented by respondent must, therefore, be struck down.
To resolve the second issue, respondent would have the Court re-calibrate the
weight of evidence presented before the summary hearing officer, arguing that
said evidence is insufficient to prove respondent's guilt of the charges against
him.
However, it must be emphasized that the action commenced by respondent
before the Regional Trial Court is one for certiorari under Rule 65 of the Rules
of Court and as held in People v. Court of Appeals,3 where the issue or
question involved affects the wisdom or legal soundness of the decision – not
the jurisdiction of the court to render said decision – the same is beyond the
province of a special civil action for certiorari.

Respondent argues that the decision should be reconsidered for the following
reasons:
1. The summary proceeding was null and void because no hearing was
conducted; and
2. The evidence presented at the summary hearing does not prove that
respondent is guilty of the charges against him.
Respondent insists that the summary hearing officer did not conduct any
hearing at all but only relied on the affidavits and pleadings submitted to him,
without propounding further questions to complainant's witnesses, or calling in
other witnesses such as PO2 Villarama. It should, however, be borne in mind
that the fact that there was no full-blown trial before the summary hearing
officer does not invalidate said proceedings. In Samalio v. Court of Appeals,1
the Court reiterated the time-honored principle that:
Due process in an administrative context does not require trial-type
proceedings similar to those in courts of justice. Where opportunity to be
heard either through oral arguments or through pleadings is accorded, there is
no denial of procedural due process. A formal or trial-type hearing is not at all
times and in all instances essential. The requirements are satisfied where the
parties are afforded fair and reasonable opportunity to explain their side of the
controversy at hand. The standard of due process that must be met in
administrative tribunals allows a certain degree of latitude as long as fairness
is not ignored. In other words, it is not legally objectionable for being violative
Yet, respondent-movant's arguments and the fact that the administrative case
against respondent was filed way back in 1997, convinced the Court to
suspend the rules of procedure.
The general rule is that the filing of a petition for certiorari does not toll the
running of the period to appeal.4
However, Section 1, Rule 1 of the Rules of Court provides that the Rules shall
be liberally construed in order to promote their objective of securing a just,
speedy and inexpensive disposition of every action and proceeding. In Ginete
v. Court of Appeals5 and Sanchez v. Court of Appeals,6 the Court saw it
proper to suspend rules of procedure in order to promote substantial justice
where matters of life, liberty, honor or property, among other instances, are at
stake.
The present case clearly involves the honor of a police officer who has
rendered years of service to the country.
In addition, it is also understandable why respondent immediately resorted to
the remedy of certiorari instead of pursuing his motion for reconsideration of
the PNP Chief’s decision as an appeal before the National Appellate Board
(NAB). It was quite easy to get confused as to which body had jurisdiction over
his case. The complaint filed against respondent could fall under both
Sections 41 and 42 of Republic Act (R.A.) No. 6975 or the Department of the
Interior and Local Government Act of 1990. Section 41 states that citizens'
complaints should be brought before the People's Law Enforcement Board

1
(PLEB), while Section 42 states that it is the PNP Chief who has authority to
immediately remove or dismiss a PNP member who is guilty of conduct
unbecoming a police officer.

It was only in Quiambao v. Court of Appeals,7 promulgated in 2005 or after

respondent had already filed the petition for certiorari with the trial court, when
the Court resolved the issue of which body has jurisdiction over cases that fall
under both Sections 41 and 42 of R.A. No. 6975. The Court held that the
PLEB and the PNP Chief and regional directors have concurrent jurisdiction
over administrative cases filed against members of the PNP which may
warrant dismissal from service, but once a complaint is filed with the PNP
Chief or regional directors, said authorities shall acquire exclusive original
jurisdiction over the case.

With the foregoing peculiar circumstances in this case, respondent should not
be deprived of the opportunity to fully ventilate his arguments against the
factual findings of the PNP Chief. He may file an appeal before the NAB,
pursuant to Section 45, R.A. No. 6925. It is a settled jurisprudence that in
administrative proceedings, technical rules of procedure and evidence are not
strictly applied.8 In Land Bank of the Philippines v. Celada,9 the Court
stressed thus:

After all, technical rules of procedure are not ends in themselves but are
primarily devised to help in the proper and expedient dispensation of justice. In
appropriate cases, therefore, the rules may be construed liberally in order to
meet and advance the cause of substantial justice.10

Thus, the opportunity to pursue an appeal before the NAB should be deemed
available to respondent in the higher interest of substantial justice.

WHEREFORE, respondent's Motion for Reconsideration is partly GRANTED.

The Decision of the Court dated March 6, 2007 is MODIFIED such that
respondent is hereby allowed to file his appeal with the National Appellate
Board within ten (10) days from finality of herein Resolution.

SO ORDERED.

Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, Reyes, JJ., concur.

2
G.R. No. 166197 February 27, 2007
METROPOLITAN BANK & TRUST COMPANY, Petitioner
vs.
ASB HOLDINGS, INC., ASB REALTY CORPORATION, ASB
DEVELOPMENT CORPORATION, ASB LAND, INC., ASB FINANCE, INC.,
MAKATI HOPE CHRISTIAN SCHOOL, INC., BEL-AIR HOLDINGS
CORPORATION, WINCHESTER TRADING, INC., VYL DEVELOPMENT
CORPORATION, GERICK HOLDINGS CORPORATION, NEIGHBORHOOD
HOLDINGS, INC., and ROSARIO S. BERNALDO, Respondents. CAMERON
GRANVILLE 3 ASSET MANAGEMENT, INC., Intervenor.
DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Review on Certiorari1 assailing the
Decision dated August 16, 20042 of the Court of Appeals in CA-G.R. SP No.
77260 and its Resolution dated December 1, 2004.
The facts borne by the records are:
The Metropolitan Bank and Trust Company, petitioner, is a creditor bank of
respondent corporations, collectively known as the ASB Group of Companies,
owner and developer of condominium and real estate projects. Specifically,
the loans extended by petitioner bank to respondents ASB Realty Corporation
and ASB Development Corporation amounted to P523.5 million and P1.073
billion, respectively. These loans were secured by real estate mortgages.
On May 2, 2000, the ASB Group of Companies filed with the Securities and
Exchange Commission (SEC) a Petition For Rehabilitation With Prayer For
Suspension Of Actions And Proceedings Against Petitioners,3 pursuant to
Presidential Decree (P.D.) No. 902-A, as amended, docketed as SEC Case
No. 05-00-6609. The pertinent portions of the petition allege:
6. The total assets of petitioner ASB Group of Companies, together with
petitioner ASB Allied Companies, amount to Nineteen Billion Four Hundred
Ten Million Pesos (P19,410,000,000.00).
7. The Projects were financed with loans or borrowings from bank and
individual creditors which resulted in petitioner Group of Companies having a
total liability in the amount of Twelve Billion Seven Hundred Million Pesos
(P12,700,000,000.00).
8. On account of the sudden non-renewal and/or the massive withdrawal by
3
creditors of their loans to petitioner ASB Holdings, Inc., coupled with the
recent developments in the country, like, among others, (i) the glut in the real
estate market; (ii) the severe drop in the sale of real properties; (iii) the
depreciation of the peso vis-a-vis the dollar; and (iv) the decreased investor
confidence in the economy, petitioner Group of Companies was unable to
complete and sell some of its projects on schedule and, hence, was unable to
service its obligations as they fell due.
9. Petitioner Group of Companies possesses sufficient property to cover its
obligations. However, petitioner Group of Companies foresees its inability to
pay its obligations within a period of one (1) year.
10. Because of the inability of the Group of Companies to pay its obligations
as they respectively fall due, its secured and non-secured creditors pressed
for payments of due and maturing obligations and threatened to initiate
separate actions against it, which will adversely affect its operations and
shatter its hope in rehabilitating itself for the benefit of its investors and
creditors and the general public.
11. There is a clear, present and imminent danger that the creditors of
petitioner Group of Companies will institute extrajudicial and judicial
foreclosure proceedings and file court actions unless restrained by this
Honorable Commission.
12. The institution of extrajudicial and judicial foreclosure proceedings and the
filing of court actions against petitioner Group of Companies will necessarily
result in the paralization of its business operation and its assets being lost,
dissipated or wasted.
13. There is, therefore, a need for the suspension of payment of all claims
against petitioner Group of Companies, in the separate and combined
capacities of its member companies, while it is working for its rehabilitation.
14. Petitioner Group of Companies has at least seven hundred twelve (712)
creditors, three hundred seventeen (317) contractors/suppliers and four
hundred ninety-two (492) condominium unit buyers, who will certainly be
prejudiced by the disruption of the operations of petitioner ASB Group of
Companies which seeks to protect the interest of the parties from any
precipitate action of any person who may only have his individual interest in
mind.
15. The business of petitioner ASB Group of Companies is feasible and
profitable. Petitioner Group of Companies will eventually be able to pay all its
obligations given some changes in its management, organization, policies,
strategies, operations, or finances.

16. With the support of this Honorable Commission, petitioner Group of
Companies is confident that it will be able to embark on a sound and viable
rehabilitation plan, with a built-in debt repayment schedule through the optimal
use of their present facilities, assets and resources. Although a proposed
rehabilitation plan is attached to this petition, a detailed and comprehensive
rehabilitation proposal will be presented for the approval of this Honorable
Commission, with the foregoing salient features:
a. Servicing and eventual full repayment of all debts and liabilities, focusing on
debt restructure and possible liquidation through dacion en pago, transfer and
assignment, or outright sale of assets, in order to lighten the debt burden of
petitioner Group of Companies;
b. Forming of strategic alliances with third party investors, including joint
ventures and similar arrangements;
c. Contributing specified properties from petitioner ASB Allied Companies;
d. Streamlining the operations of petitioner ASB Group of Companies, and the
effective management of its revenues and funds towards the strengthening of
its financial and business positions; and
e. Stabilizing the operations of petitioner Group of Companies, and preparing
it to take advantage of future opportunities for growth and development.
On May 4, 2000, the Hearing Panel of the SEC Securities Investigation and
Clearing Department, finding the petition for rehabilitation sufficient in form
and substance, issued a sixty-day Suspension Order (a) suspending all
actions for claims against the ASB Group of Companies pending or still to be
filed with any court, office, board, body, or tribunal; (b) enjoining the ASB
Group of Companies from disposing of their properties in any manner, except
in the ordinary course of business, and from paying their liabilities outstanding
as of the date of the filing of the petition; and (c) appointing Atty. Monico V.
Jacob as interim receiver of the ASB Group of Companies.
On May 22, 2000, the SEC Hearing Panel issued an Order appointing Mr.
Fortunato Cruz as interim receiver of the ASB Group of Companies, replacing
Atty. Monico Jacob.
On August 18, 2000, the ASB Group of Companies submitted to the SEC for
its approval a Rehabilitation Plan,4 thus:
Metropolitan Bank and Trust Co.
4
Principal Amount – Principal (amount) plus any interest due and unpaid as of
April 30, 2000, less any prepaid interest, without any penalties and charges.
Form of Agreement – Dacion en Pago Agreement
Purpose – To retire existing loans.
Tenor – Immediate Dacion en Pago of related properties, subject to the
approval of the Securities and Exchange Commission (SEC).
Effective Date – September 1, 2000, subject to the approval of the SEC.
Dacion En Pago
Arrangement – ASB will dacion the bank’s equity in St. Francis Square and
apply the excess dacion value on its BSA Twin Tower loan. Further, Makati
Hope, Buendia cor. Malugay, 21 Annapolis (which is expected to be released
by PNB) and # 28 & 23 Eisenhower St., will be dacioned to Metrobank, the
excess of which will also be applied to Metrobank’s exposure on BSA Twin
Towers. In return, State Condominium will be freed up and placed in the ASB
creditors’ asset pool. Further, Metrobank shall also undertake the completion
of BSA Twin Towers.
Outstanding Loan Balance
After Dacion En Pago – None51awphi1.net
Petitioner bank, in its Comment/Opposition to the Rehabilitation Plan,6
objected to the above Plan, specifically the arrangement concerning the mode
of payment by respondents ASB Realty Corporation and ASB Development
Corporation of their loan obligations.
Petitioner bank claimed that the above arrangement "is not acceptable"
because: (1) it does not agree with the valuation of the properties offered for
dacion; (2) the waiver of interests, penalties and charges after April 30, 2000
is not feasible considering that the bank continues to incur costs on the funds
owed by ASB Realty Corporation and ASB Development Corporation; and (3)
since the proposed dacion is not acceptable to the bank, there is no basis to
release the properties which serve as collateral for the loans. Petitioner thus
prayed that the Rehabilitation Plan be disapproved.
On April 26, 2001, the SEC Hearing Panel, finding petitioner bank’s objections
unreasonable, issued an Order7 approving the Rehabilitation Plan and
appointing Mr. Fortunato Cruz as rehabilitation receiver, thus:
PREMISES CONSIDERED, the objections to the rehabilitation plan raised by
the creditors are hereby considered unreasonable.
Accordingly, the Rehabilitation Plan submitted by petitioners is hereby
APPROVED, except those pertaining to Mr. Roxas’ advances, and the ASB-
Malayan Towers. Finally, Interim Receiver Mr. Fortunato Cruz is appointed as
Rehabilitation Receiver.
SO ORDERED.
On July 10, 2001, petitioner bank filed with the SEC En Banc a Petition for
Certiorari,8 docketed as EB-725, alleging that the SEC Hearing Panel, in
approving the Rehabilitation Plan, committed grave abuse of discretion
amounting to lack or excess of jurisdiction; and praying for the issuance of a
temporary restraining order and/or a writ of preliminary injunction to enjoin its
implementation. Subsequently, the ASB Group of Companies filed their
Opposition9 to the petition, to which petitioner bank filed its Reply.10
In a Resolution11 dated April 15, 2003, the SEC En Banc denied petitioner
bank’s Petition for Certiorari and affirmed the SEC Hearing Panel’s Order of
April 26, 2001.
Petitioner bank then filed with the Court of Appeals a Petition for Review.12
On August 16, 2004, the appellate court rendered its Decision13 denying due
course to the petition, thus:
WHEREFORE, finding the instant petition not impressed with merit, the same
is DENIED DUE COURSE. No pronouncement as to costs.
SO ORDERED.
Petitioner bank’s Motion for Reconsideration was likewise denied in a
Resolution dated December 1, 2004.14
Hence, this petition for review on certiorari.
In the meantime, or on June 1, 2006, Cameron Granville 3 Asset
Management, Inc. (Cameron Granville) filed a Motion For Intervention15
alleging that in September of 2003, petitioner bank assigned the loans and
mortgages of ASB Realty Corporation and ASB Development Corporation to
Asset Recovery Corporation (ARC). However, pursuant to its Service
Agreement with ARC, petitioner continued to pursue its action before the
Court of Appeals in CA-G.R. SP No. 77260 and before this Court in the instant
case. On March 31, 2006, ARC in turn assigned the loans and mortgages of
the said two respondent corporations to herein intervenor, Cameron Granville.
5
In a Resolution dated June 5, 2006,16 the Court granted the motion for
intervention. Accordingly, on August 28, 2006, the intervenor filed its Petition
For Intervention17 and manifested therein that it adopts as its own petitioner
bank’s petition and all its other pleadings. Thereafter, respondent ASB Group
of Companies filed their Comment.18
Now to the resolution of the instant petition.
Petitioner bank contends that the Court of Appeals erred:
1. In not nullifying the SEC Resolution dated April 15, 2003 approving the
Rehabilitation Plan. Such approval illegally compels petitioner bank to accept,
through a dacion en pago arrangement, the mortgaged properties based on
ASB Group of Companies’ transfer values and to release part of the collateral.
This forced transfer of properties and diminution of the bank’s right to enforce
its lien on the mortgaged properties violate its constitutional right against
impairment of contracts and right to due process.
2. In not finding that the Rehabilitation Plan compels petitioner bank to waive
the interests, penalties and other charges that accrued after the SEC issued
its Stay Order. Again, this is in violation of the constitutional mandate on non-
impairment of contracts and due process.
3. In not finding that only respondent ASB Holdings, Inc. suffered financial
distress as stated in the Rehabilitation Plan and, as such, the coercive reach
of the SEC’s Stay Order under P.D. 902-A can extend only to the enforcement
of claims against this distressed corporation. It cannot suspend the claims and
actions against its affiliate corporations.
In their Comment, respondent corporations comprising the ASB Group of
Companies prayed for the dismissal of the instant petition for being
unmeritorious.
The first two (2) assigned errors lack merit. We shall discuss them jointly as
they are closely interrelated.
We are not convinced that the approval of the Rehabilitation Plan impairs
petitioner bank’s lien over the mortgaged properties. Section 6 [c] of P.D. No.
902-A provides that "upon appointment of a management committee,
rehabilitation receiver, board or body, pursuant to this Decree, all actions for
claims against corporations, partnerships or associations under management
or receivership pending before any court, tribunal, board or body shall be
suspended."
By that statutory provision, it is clear that the approval of the Rehabilitation
Plan and the appointment of a rehabilitation receiver merely suspend the
actions for claims against respondent corporations. Petitioner bank’s preferred
status over the unsecured creditors relative to the mortgage liens is retained,
but the enforcement of such preference is suspended. The loan agreements
between the parties have not been set aside and petitioner bank may still
enforce its preference when the assets of ASB Group of Companies will be
liquidated. Considering that the provisions of the loan agreements are merely
suspended, there is no impairment of contracts, specifically its lien in the
mortgaged properties.
As we stressed in Rizal Commercial Banking Corporation v. Intermediate
Appellate Court,19 such suspension "shall not prejudice or render ineffective
the status of a secured creditor as compared to a totally unsecured creditor,"
for what P.D. No. 902-A merely provides is that all actions for claims against
the distressed corporation, partnership or association shall be suspended.
This arrangement provided by law is intended to give the receiver a chance to
rehabilitate the corporation if there should still be a possibility for doing so,
without being unnecessarily disturbed by the creditors’ actions against the
distressed corporation. However, in the event that rehabilitation is no longer
feasible and the claims against the distressed corporation would eventually
have to be settled, the secured creditors, like petitioner bank, shall enjoy
preference over the unsecured creditors.
Likewise, there is no compulsion on the part of petitioner bank to accept a
dacion en pago arrangement of the mortgaged properties based on ASB
Group of Companies’ transfer values and to condone interests and penalties.
The Rehabilitation Plan itself, under item IV-A, explains the dacion en pago
proposal, thus:
IV. THE REVISED REHABILITATION PLAN
A. The Total Approach
It is apparent that ASB’s corporate indebtedness needs to be reduced as
quickly as possible in order to prevent rapid deterioration in equity. x x x. In
order to reduce debt quickly, we must do the following:
1. Complete or sell on-going projects;
2. Invite secured creditors to complete dacion en pago transactions, waiving
all penalties; and
3. Invite unsecured creditors to purchase real estate parcels and other assets
and set-off the amount of their outstanding claim against the purchase price.
6
The assets included in the above program include all real estate assets.
In order to determine the feasibility of the above, representatives of our
financial advisors met with or had discussions with most of the secured
creditors. Preliminary discussions indicate support from the secured creditors
towards the concepts of the program associated with them. The majority of
these secured creditors appear to want to complete dacion en pago
transactions based on MUTUALLY AGREED UPON TERMS. x x x. We
continue to pursue discussions with secured creditors. Based on the program,
secured creditors’ claims amounting to PhP5.192 billion will be paid in full
including interest up to April 30, 2000. Secured creditors have been asked to
waive all penalties and other charges. This dacion en pago program is
essential to eventually pay all creditors and rehabilitate the ASB Group of
Companies. If the dacion en pago herein contemplated does not materialize
for failure of the secured creditors to agree thereto, this rehabilitation plan
contemplates to settle the obligations (without interest, penalties, and other
related charges accruing after the date of the initial suspension order) to
secured creditors with mortgaged properties at ASB selling prices for the
general interest on the employees, creditors, unit buyers, government, general
public and the economy.
x x x.20 (Underscoring supplied)
Indeed, based on the above explanation in the Rehabilitation Plan, the dacion
en pago program and the intent of respondent ASB Group of Companies to
ask creditors to waive the interests, penalties and related charges are not
compulsory in nature. They are merely proposals for the creditors to accept. In
fact, as explained, there was already an initial discussion on these proposals
and the majority of the secured creditors showed their desire to complete
dacion en pago transactions, but they must be "based on MUTUALLY
AGREED UPON TERMS." The SEC En Banc in its Resolution dated April 15,
2003, affirming the SEC Hearing Panel’s Order of April 26, 2001 approving the
Rehabilitation Plan, aptly declared:
x x x, petitioner asserts that the Rehabilitation Plan is not legally feasible
because respondents cannot dictate the terms of dacion.
We do not agree. A cursory reading of the Rehabilitation Plan debunks this
assertion. The Plan provides that dacion en pago transaction will be effected
only if the secured creditors, like petitioner, agree thereto and under terms and
conditions mutually agreeable to private respondents and the secured creditor
concerned. The dacion en pago program is essential to eventually pay all
creditors and rehabilitate private respondents. If the dacion en pago does not
materialize in case secured creditors refuse to agree thereto, the
Rehabilitation Plan contemplates to settle the obligations to secured creditors
with mortgaged properties at selling prices. This is for the general interest of assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
the employees, creditors, unit buyers, government, general public, and the 77260 are AFFIRMED.
economy.21 (Underscoring supplied)
Costs against intervenor Cameron Granville.
With respect to the third assigned error, we note that the same was not raised
by petitioner bank in its Comment/Opposition to the Rehabilitation Plan filed SO ORDERED.
with the SEC Hearing Panel. Such belated issue cannot be considered,
especially because it involves a question of fact, the resolution of which is
normally beyond the authority of this Court as it is not a trier of facts.22

At any rate, the SEC En Banc found that the SEC Hearing Panel "acted within
its legal authority in resolving this case. Neither it overstepped its lawful
authority nor acted whimsically in approving the Rehabilitation Plan. Hence, it
cannot be faulted of grave abuse of discretion."23 We find no reason to disturb
such finding, it being a fundamental rule that factual findings of quasi-judicial
agencies, like the SEC, which have acquired expertise as their jurisdiction is
confined to special matters such as the subject of this case, are generally
accorded great respect and even finality, absent any showing that they
arbitrarily disregarded evidence or misapprehended evidence to such an
extent as to compel a contrary conclusion if such evidence had been properly
appreciated.24

Petitioner bank also argues that "ASB Group of Companies" is merely a

generic name used to describe collectively various companies and as such, it
is not a legal entity with juridical personality and cannot be a party to a suit.
True, "ASB Group of Companies" is merely used in this case as a generic
name, for brevity, to collectively describe the various companies/corporations
that filed a Petition For Rehabilitation with the SEC. However, in their petition,
all the respondent corporations are individually named as petitioners, not "ASB
Group of Companies."

One last word. The purpose of rehabilitation proceedings is to enable the

company to gain new lease on life and thereby allows creditors to be paid their
claims from its earnings.25 Rehabilitation contemplates a continuance of
corporate life and activities in an effort to restore and reinstate the financially
distressed corporation to its former position of successful operation and
solvency.26 This is in consonance with the State’s objective to promote a
wider and more meaningful equitable distribution of wealth to protect
investments and the public.27 The approval of the Rehabilitation Plan by the
SEC Hearing Panel, affirmed by both the SEC En Banc and the Court of
Appeals, is precisely in furtherance of the rationale behind P.D. No. 902-A, as
amended, which is "to effect a feasible and viable rehabilitation"28 of ailing
corporations which affect the public welfare.

WHEREFORE, we DENY the instant petition for review on certiorari. The

7
[G.R. No. 154377. December 8, 2003]
LAND CAR, INC., Petitioner, vs. BACHELOR EXPRESS, INC. AND
VALLACAR TRANSIT, INC., respondents.
DECISION
VITUG, J.:chanroblesvirtuallawlibrary
On 21 May 1999, petitioner filed with the Regional Office of the Land
Transportation Franchising and Regulatory Board (LTFRB), Region XII, a
verified application to operate a public utility bus service from Davao City to
Cagayan de Oro City via Butuan City.chanroblesvirtuallawlibrary
Respondents, themselves grantees of certificates of public convenience,
opposed petitioners application alleging that the route applied for was
sufficiently being served by them, and that cutthroat competition would only
result if petitioners application were to be favorably acted
upon.chanroblesvirtuallawlibrary
On 29 October 1999, the LTFRB rendered its decision granting petitioners
application and directing the issuance of the corresponding Certificate of
Public Convenience. Respondents motion for reconsideration was denied in
the boards resolution of 27 January 2000. Respondents then appealed to the
Office of the Secretary of the Department of Transportation and
Communication (DOTC). On 05 June 2000, the DOTC Secretary reversed the
decision of the LTFRB. This time, it was petitioners turn to move for
reconsideration of the DOTC Secretarys resolution. The motion, however, was
denied by the DOTC Secretary in his order of 30 August 2000. Respondents
thereupon moved for the immediate implementation by the LTFRB of the
decision of the DOTC Secretary. On 03 October 2000, the LTFRB granted
respondents motion and directed petitioner to cease and desist from operating
its buses along the contested route.chanroblesvirtuallawlibrary
On 07 October 2000, petitioner filed a letter-appeal to the Office of the
President seeking to set aside the resolution and order, dated 05 June 2000
and 30 August 2000, respectively, of the DOTC Secretary. Petitioner then
likewise filed before the Court of Appeals a petition for certiorari, docketed
C.A.-G.R. SP No. 61159, questioning the same resolution and order of the
DOTC Secretary subject of the letter-appeal addressed to the Office of the
President. Upon advice of its new counsel, however, petitioner filed a notice of
withdrawal of its petition for certiorari (C.A.-G.R. SP No. 61159) pending with
the appellate court. The appellate court did not act upon the notice of
withdrawal of the petition (C.A. G.R. SP No. 61159) but, instead, dismissed, in
its resolution of 09 November 2000, the petition for failure of compliance with
8
Section 1, Rule 42, of the 1997 Rules of Civil Procedure on non-forum
shopping.chanroblesvirtuallawlibrary
On 20 October 2000, the Office of the President issued a memorandum
directing that the execution of the resolution and order of the DOTC Secretary,
dated 05 June 2000 and 30 August 2000, respectively, be meanwhile
stayed.chanroblesvirtuallawlibrary
On 15 January 2001, respondents filed with the Court of Appeals a petition for
certiorari under Rule 65 of the 1997 Rules of Civil Procedure, docketed C.A.-
G.R. SP No. 62619, assailing the Memorandum Order of the Office of the
President. Respondents argued that the Office of the President had no
jurisdiction to issue the assailed order in the absence of any law providing for
an appeal from the DOTC to the Office of the President, adding that petitioner
was guilty of forum shopping in addressing a letter-appeal to the Office of the
President.chanroblesvirtuallawlibrary
On 18 June 2001, the Court of Appeals granted respondents petition for
certiorari basically on the ground that petitioner was guilty of forum shopping.
It ordered the dismissal of the appeal filed by petitioner before the Office of the
President and reinstated the resolution and order of the DOTC Secretary
enjoining petitioner from operating its buses along the contested
route.chanroblesvirtuallawlibrary
In the instant appeal, petitioner contends that the appellate court has decided
a question in a way not in accord with applicable jurisprudence. There is merit
in the petition.chanroblesvirtuallawlibrary
Forum shopping refers to the act of availing oneself of several judicial
remedies in different courts, either simultaneously or successively,
substantially founded on the same transaction and identical material facts and
circumstances, raising basically like issues either pending in, or already
resolved by, some other court.[1] The principle applies not only with respect to
suits filed before courts but also in connection with a litigation commenced in
court while an administrative proceeding is pending in order to defeat
administrative processes in anticipation of an unfavorable administrative ruling
and possibly a favorable court ruling.[2] Forum shopping is said to exist where
the elements of litis pendentia are present or where a final judgment in one
case would amount to res judicata in the other;[3] or where, in the two or more
cases pending, there is identity of (a) parties, (b) rights or causes of action,
and (c) reliefs sought.[4]chanroblesvirtuallawlibrary
In order to deter the evils of forum shopping, Circular 28-91, dated 08
February 1994, issued by the Supreme Court requires that every petition filed
with the Supreme Court or the Court of Appeals must be accompanied by a
certification of non-forum shopping. Administrative Circular 04-94, made
effective on 01 April 1994, expands the certification requirement to include
cases filed in court and quasi-judicial agencies below the Supreme Court and
the Court of Appeals. Ultimately, the Court adopted paragraphs (1) and (2) of
Administrative Circular No. 04-94 to become Section 5, Rule 7, of the 1997
Rules of Civil Procedure. Significantly, to curb the malpractice of forum
shopping, the rule ordains that a violation thereof would constitute contempt of
court and be a cause for the summary dismissal of both petitions without
prejudice to the taking of appropriate action against the counsel of the party
concerned.[5]chanroblesvirtuallawlibrary
Undeniably, there is identity of cause of action and reliefs sought between the
petitioners letter-appeal filed with the Office of the President and the petition
for certiorari filed with the Court of Appeals (C.A. G.R. SP No. 61159). The
DOTC resolution and order, dated 05 June 2000 and 30 August 2000,
respectively, were sought to be set aside in both appeals filed by
petitioner.chanroblesvirtuallawlibrary
behooves courts of justice, if only for reasons of comity and convenience, to
shy away from a dispute until the system of administrative redress is
completed so as to give the administrative office every opportunity to correct
its error and to properly dispose of the case. In fact, the appellate courts order
to dismiss the appeal pending with the Office of the President could well
constitute an undue intrusion into a valid exercise of jurisdiction by the
President over acts of subordinates within that
office.chanroblesvirtuallawlibrary
WHEREFORE, the petition is GRANTED, and the assailed decision is SET
ASIDE. No costs.chanroblesvirtuallawlibrary
SO ORDERED.chanroblesvirtuallawlibrary
Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

The doctrine of exhaustion of administrative remedies empowers the Office of

the President to review any determination or disposition of a department head.
The doctrine allows, indeed requires, an administrative decision to first be
appealed to the administrative superiors up to the highest level before it may
be elevated to a court of justice for review. Thus, if a remedy within the
administrative machinery can still be had by giving the administrative officer
concerned every opportunity to decide on the matter that comes within his
jurisdiction, then such remedy should be priorly exhausted before the courts
judicial power is invoked.[6]chanroblesvirtuallawlibrary

The appellate court correctly ruled that the action of a department head bears
only the implied approval of the President, and the latter is not precluded from
exercising the power to review the decision of the former pursuant to the
Presidents power of control over all executive departments, bureaus and
offices.[7] The Office of the President validly acquired jurisdiction over the
case upon the filing therewith of the appeal by herein petitioner, and said
jurisdiction is not lost by the subsequent recourse by the petitioner of the
certiorari proceedings before the Court of Appeals. Jurisdiction which has
attached in the first instance continues until the final resolution of the case.
Incongruently, the appellate court, while recognizing to be valid the exercise of
jurisdiction by the Office of the President, ordered the dismissal of the appeal
pending with the said office based on forum
shopping.chanroblesvirtuallawlibrary

The decision of the appellate court ordering the dismissal of the appeal taken
to the Office of the President is clearly flawed. It is the latter, not the appellate
court, which could dismiss the case pending before that office. It also

9
G.R. No. 169277 February 9, 2007
DEPARTMENT OF AGRARIAN REFORM,1 represented by OIC-Secretary
Nasser C. Pangandaman, Petitioner, vs.VICENTE K. UY, Respondent.
DECISION
CALLEJO, SR., J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court of the Amended Decision2 of the Court of Appeals
(CA) in CA-G.R. SP No. 70541 and the Resolution3 of the appellate court
denying the motion for reconsideration thereof. The CA reversed and set aside
the Decision4 of the Office of the President (OP) which had affirmed the
Order5 of the Department of Agrarian Reform (DAR) exempting only a portion
(219.50 hectares) of respondent Vicente K. Uy’s 349.9996-ha landholding
from the coverage of the Comprehensive Agrarian Reform Program (CARP).
On December 4, 1990, this Court promulgated its decision in Luz Farms v.
Secretary of the Department of Agrarian Reform6 where it declared
unconstitutional Sections 3(b), 11, 13 and 32 of Republic Act (R.A.) No.
6657.7 The nullified provisions pertain to the inclusion of land used in raising
livestock, poultry, and swine in the coverage of the law. The Court likewise
nullified the Implementing Rules and Guidelines promulgated in accordance
therewith.8
On December 27, 1993, the DAR issued Administrative Order (A.O.) No. 9,
Series of 19939 primarily to curb the pernicious practice of landowners who
convert their lands from agricultural to livestock and poultry in order to
circumvent the law. The prefatory statement reads:
x x x, the Supreme Court held that lands devoted to the raising of livestock,
poultry and swine are excluded from the coverage of R.A. No. 6657. Following
the said decision, numerous reports have been received that some
landowners had taken steps to convert their agricultural lands to livestock,
poultry and swine raising.
In order to prevent circumvention of the Comprehensive Agrarian Reform
Program and to protect the rights of the [a]grarian reform beneficiaries,
specifically against their possible unlawful ejectment due to the unauthorized
change or conversion or fraudulent declaration of areas actually, directly, and
exclusively used for livestock, poultry and swine raising purposes, the
following rules and regulations are hereby prescribed for the guidance of all
concerned.10
10
The DAR also declared that as of June 15, 1988, the date R.A. No. 6657 took
effect, the following rules shall apply in determining the "areas qualified for
exclusion":
A. Private Agricultural lands or portions thereof exclusively, directly and
actually used for livestock, poultry and swine raising as of 15 June 1998 shall
be excluded from the coverage of CARP.
B. In determining the areas qualified for exclusion under this Administrative
Order, the following ratios of land, livestock, poultry and swine raising shall be
adopted:
1.0 Grazing
1.1 Cattle, Carabao11 and Horse Raising
- cattle, carabao and horse (regardless of age) – the maximum ratio is one (1)
head to one (1) hectare
xxxx
2.0 Infrastructure
2.1 Cattle, Horses and Carabao Raising – a ratio of 21 heads
for every 1.7815 hectares of infrastructure x x x.12
Dr. Vicente K. Uy, Wellington K. Ong, Jaime Chua, and Daniel Sy, among
others, are owners of a 349.9996-ha parcel of land located in Barangay
Camaflora, Barrio of San Andres, Municipality of San Narciso, Province of
Quezon. The property is covered by Transfer Certificate of Title (TCT) No.
160988.
Sometime in 1993, some 44 farmers who occupied portions of the property
filed petitions in the DAR, seeking to be declared as owners- beneficiaries. On
December 20, 1994, the DAR issued a Notice of Coverage under the CARP
over the property. For his part, respondent, in behalf of the co-owners, filed an
Application for Exclusion13 in the form of a letter dated May 10, 1995, through
Provincial Agrarian Reform Officer (PARO) Durante L. Ubeda. To substantiate
his request to exclude their landholding from CARP coverage under the Luz
Farms ruling, respondent declared that their property had been exclusively
used for livestock-raising for several years prior to June 15, 1988. According
to the applicants, they had 400 heads of cattle, 5 horses, and 25 carabaos in
the landholding and –
Our private landholding has been devoted and actually used for cattle and/or 8) 346.00
livestock raising, together with raising of carabaos, and horses continuously hectares
from the time it was owned by our predecessors-in-interest, Emiterio Florido, more or less 3.00 more
and even when we acquired title over the property in 1979, we continually or less Flat to
devoted and actually used the said landholding for cattle raising from 1979 up undulating
to the present.14 2. Goat Sheep allegedly owned by FBs and overseer
3. Swine none
On May 10, 1995, the Provincial Task Force on Exclusion led by Municipal 4. Poultry
Agrarian Reform Officer (MARO) Belen T. Babalcon conducted an ocular 4.1 layers
inspection of the property and an actual "headcount" was conducted. The 4.2 broilers none
following were present to witness the inspection: the Mayor of San Andres, the F. Other Land Uses
Barangay Agrarian Reform Committee Chairman, Legal Officer III James Agriculture
Carigo, and representatives of the applicants, farmers-beneficiaries, the Crops Planted No. of Has. No. of Tenants No. of FWs &
Provincial Agrarian Reform Office, and the Philippine National Police. The employees
findings of the Task Force are contained in the Investigation Report: 1. Coconut and auxillary crops 346.00 more or less and
presently utilized for pasture and grazing of livestock. more than 44 29
Registered Owner/s: (If deceased, indicate name of heirs)
Others (specify)
OWNER
20 hectares more or less are sporadically planted to coconut with "aroma
1. Dr. Vicente K. Uy shrubs" also utilized for pasture at sitio Ipil.

2. Wellington K. Ong, mrd. to So Ngo Grace Ong G. Improvements and Infrastructures. Describe the kind of improvements and
infrastructures whether constructed with strong or light materials and indicate
3. Jaime Chua, mrd. to Letty Ong Chua the date constructed.

4. Daniel Sy, mrd. to Carolyn T. Ngo 2 corral made of coco lumber. The old one have constructed in 1980 and the
other one constructed sometime on February 1995. Barb wire and fences on
5. Nancy Ong Uy the perimeter of the area, wooden primary and secondary gate, feed storage,
embankments. Cayab and potot creek are utilized for drinking purposes of the
6. Emily Ong Uy livestock.

7. Lucy Ong H. Finishing.

8. Wilson Ong The landholding are entirely planted to bearing coconut trees "tenanted by
more or less 44 FBs with sharing arrangement of 60:40 in favor of the
9. John Ong Uy landowner. The tenanted coconut land are presently used as pasture and
E. Actual Land Use No. of Animal grazing of the livestock." Landowner alleged that they are engaged in livestock
heads/birds Actual Area (has.) used for grazing Approximate Area used raising prior to June 15, 1988. FBs are now petitioning for the acquisition and
for infrastructure Topography distribution of their occupied area under CARP coverage.15
1. Livestock
1.1 cattle The Task Force made the following declaration:
1.2 horse
1.3 carabao 401 ) I. Comments/Remarks/Recommendations:
20 )

11
The density required on commercial farming as far as the number of livestock
is concerned have been met; however, the necessary infrastructure and
facilities like paddocks, dike, water trough and others were not present much
more per information revealed by farmers in the area majority of the cattles
were only brought in the early part of this year. Therefore, it is recommended
that the areas actually cultivated and occupied by the tenants be covered by
CARP and only areas not affected be excluded from CARP coverage.16
Thus, on the basis of the aforesaid findings, MARO Belen Babalcon made a
Final Report, declaring that 346.000 ha, more or less, is devoted to coconut
and livestock farming; the registered owner is Dr. Vicente K. Uy; 346 ha is
used for grazing and 3 ha for infrastructure. She declared that while a total of
429 livestock heads (401 cows, 20 horses, 8 carabaos) are being raised in the
property, "the total area for exclusion is undetermined because there are
portions occupied by tenants which should not be excluded from CARP
coverage."17
Meanwhile, PARO Durante L. Ubeda submitted a separate Report18 dated
July 4, 1995 where he declared:
1) THAT the total number of Certificate[s] of Ownership is 434 which is more
than the actual headcount of 401;
2) THAT the number of cattle 7 years old and above totaled 134 heads with 13
males and 121 females as of date of certification;
3) THAT 300 cattles were of ages 6 years old and below with 76 males and
234 females, [also as of the date of certification.]19
Ubeda’s basis for exclusion is the Certificate of Ownership of Large Cattle
issued by the Municipal Treasurer of San Andres on May 12-29, 1995,
submitted by the landowner, which, according to Ubeda is "more conclusive"
(although issued fairly recently). He recommended the exclusion from CARP
coverage a total of 219.50 has: 134 has. for cattle-grazing, 28 has. for horse
and carabao grazing, 12.5 has. for infrastructure and 45 has. for retention of
nine landowners.
The applicants, through Uy, wrote a letter20 to DAR Region IV Director
Percival C. Dalugdug dated July 18, 1995, requesting for a reinvestigation of
the Report of PARO Ubeda. This request was reiterated in an August 11, 1995
letter21 where the applicants requested, for the first time, the exclusion of
another parcel of land – 22.2639 ha and covered by TCT No. T-11948 – which
is contiguous to the 349.9996-ha lot covered by their earlier application.
On August 14, 1995, the Regional Director issued an Order affirming the
12
findings and recommendation of PARO Ubeda. Respondent and his co-
owners appealed the order to the DAR Secretary on August 28, 1995. They
argued that the properties have been devoted to livestock-raising even prior to
1977. Thus, the landholdings should be excluded from CARP coverage.22
They further argued that for purposes of determining the area for exclusion
under A.O. No. 9, the entire number of livestock should be credited in applying
the ratio of one head to one hectare. Considering that the landholdings totaled
only 370 ha and there are 429 heads of livestock, they have more than
complied with A.O. No. 9, Series of 1993.23
On March 15, 1996, the DAR issued an Order suspending the processing and
issuance of Certificates of Land Ownership Awards to the farmers-
beneficiaries of the landholding covered by TCT No. 160988 pending the
resolution of the appeal.24
On October 7, 1996, the DAR issued an Order25 partially granting the
application for exclusion. It held that, in accordance with the Luz Farms ruling
and A.O. No. 9, private agricultural lands are considered excluded from the
CARP if already devoted to livestock, poultry, and swine-raising as of June 15,
1988. According to the DAR, this means that the livestock must have been in
the area at the time the law took effect. Since the Certificates of Ownership of
Large Cattle were issued only on May 12 to 29, 1995, only those livestock
which are seven years of age or more can be presumed to be within the area
as of June 15, 1988. Consequently, following the animal to land ratio provided
in A.O. No. 9 for 134 cattle and 28 horses and carabaos, only 162 ha should
be exempted from CARP coverage.
The DAR also ruled that additional exemptions include 12.50 ha for
infrastructure (following the ratio 21 heads for every 1.7815 ha) and 45 ha for
retention of nine landowners, for a total of 219.50 ha. The dispositive portion
of the Order reads:
WHEREFORE, premises considered, Order is hereby issued:
1. GRANTING the instant application for exclusion/exemption from CARP
coverage pursuant to Administrative Order No. 09 Series [o]f 1993 but only
with respect to a total of TWO HUNDRED NINETEEN POINT FIFTY (219.50)
hectares. The remainder of ONE HUNDRED THIRTY POINT FOUR NINE
NINE SIX (130.4996) hectares are hereby placed under CARP coverage;
2. Directing the MARO/PARO concerned to cause the survey of the entire
area for purposes of segregating the areas which are covered from those
which are excluded.
SO ORDERED.26

On October 15, 1996, the applicants appealed the order to the OP via an
Appeal with Prayer for Status Quo/Stay of Execution. The case was docketed
as OP Case No. 98-D-8316.
On April 13, 1998, the President, through then Deputy Executive Secretary
Renato C. Corona (now a member of the Court), rendered a decision
dismissing the appeal for lack of merit, as follows:
The language of DAR Administrative Order No. 09 appears to be quite explicit:
"Private agricultural lands or portions thereof exclusively, directly and actually
used for livestock, poultry and swine raising as of 15 June 1988 shall be
excluded from the coverage of CARP." By simple reading, it is obvious that the
livestock, poultry and swine, in order to be included in the computation of the
area to be exempted from CARP coverage, should have been existing in the
area sought to be exempted at the time of the effectivity of RA 6657, which is
June 15, 1988. Thus, in ascertaining the animal/land ratio, the age of the cattle
should be reckoned with. From the certification of the Municipal Treasurer of
San Andres, Quezon, it appears that only 134 of the 434 cattles are found to
be at least seven years of age. Accordingly, only 162 hectares (134 for the
cattle and 28 for the horses and carabaos) are exempted from CARP
coverage following the one hectare per one head of cattle ratio provided under
the same administrative order. This, of course, does not include the retention
area of the appellants-landowners and the area reserved for the
infrastructures.27
Respondent and his co-owners filed a Motion for Reconsideration dated May
21, 1998 of the decision. In an Order dated September 15, 1998 signed by the
then Executive Secretary Ronaldo Zamora, by authority of the President, the
appeal was denied for being devoid of substantial merit.28
However, on October 5, 1998, then Chief Presidential Legal Adviser Harriet
Demetriou submitted the following Memorandum to the President:
1. For total exemption:
Administrative Order No. 9 provides that the maximum ratio in determining
areas to be exempted is one head to one hectare "regardless of age."
Hence, if Administrative Order No. 9 does not distinguish, neither should we.
The use of age as a reference when not so required is arbitrary and very
dangerous because it would then variably depend on the arbitrary decision of
the DAR on when to conduct an inspection, and this is no fault of the
landowner. Thus, the more recent the inspection is made, the higher the age
13
requirement will be just to reckon the animals’ existence from 15 June 1988.
The ultimate result is that an owner will never be able to augment his herd, or
replace lost or deceased livestock, after 1988, which is absurd and an undue
limitation of property rights.
The arbitrary use of age to determine the number of head of livestock as of 15
June 1988 is based on an unwieldy theory that the business of raising
livestock involves a fixed number of head of livestock. At any rate, Mr. Uy’s
land admittedly has always been devoted to livestock. Therefore, there should
be no apprehension that the land was merely converted to circumvent the
application of the CARL. Hence, in the absence of collusion or intent to
circumvent the law, the number of heads of livestock should be counted as of
the date of inspection.
Finally, we would like to inform the following that the dispute is pending
resolution before the Office of the President to which the case was elevated.
Hence, the case also merits the opinion of Hon. Secretary Ronaldo B. Zamora
as the final reviewing authority.29
On October 19, 1998, the respondent and his co-owners filed a Second
Motion for Reconsideration of the decision of the OP. On April 16, 2002, the
President, through Deputy Executive Secretary Arthur P. Autea, issued an
Order denying the October 19, 1998 second motion for reconsideration for
being a prohibited pleading and for lack of merit.30 Citing Ortigas and
Company Limited Partnership v. Velasco,31 the OP also declared that the
Second Motion for Reconsideration was a prohibited pleading. Furthermore,
Section 7 of A.O. No. 18 dated February 12, 1987 allows only one motion for
reconsideration save for exceptionally meritorious cases.
On December 22, 2002, the OP, through Executive Secretary Ronaldo B.
Zamora, issued a Memorandum32 for DAR Secretary Horacio Morales
referring the case for the Secretary’s final disposition, on the matter of
exemption from CARP coverage the subject landholding, as indicated in the
aforesaid Memorandum of the Chief Presidential Legal Adviser to the
President.33
Respondent for himself and in behalf of other owners then filed a "Petition for
Review with Application/Prayer for Status Quo and/or Stay of Execution"34
before the CA, docketed as CA-G.R. SP. No. 70541. They alleged that the OP
committed the following errors:
I
IT UNILATERALLY RE-ASSUMED JURISDICTION OVER THE CASE AND
ISSUED THE ORDER OF APRIL 16, 2002, DENYING THE SECOND
MOTION FOR RECONSIDERATION AND FOR RULING THAT IT WAS NOT
"EXCEPTIONALLY MERITORIOUS ENOUGH," EITHER OF WHICH
CONSTITUTES GRAVE ABUSE OF DISCRETION AND/OR EXCESS OF
JURISDICTION, AND THEREFORE, REVERSIBLE.35
II
IT DECLINED TO PASS UPON A JURISDICTIONAL ISSUE RAISED;
THAT IS THE ASSUMPTION OF JURISDICTION BY DAR OVER SUBJECT
LANDHOLDING/S, POPULARLY KNOWN AND ACCEPTED AS DEVOTED
TO LIVESTOCK RAISING DESPITE JURISPRUDENCE EXPLICITLY
DECLARING IT, TOGETHER WITH POULTRY AND SWINE RAISING, AS
NOT COVERED BY THE AGRARIAN REFORM PROGRAM OF THE
GOVERNMENT, THEREFORE, BEYOND THE OFFICIAL COMPETENCE OF
DAR.36
III
IT UPHELD DAR ADMINISTRATIVE ORDER NO. 9, SERIES OF 1993,
BUT, IN EFFECT, ONLY AS TO THE GENERAL RULE PRESCRIBED, FOR
IT DISREGARDED THE CONDITIONS AND/OR QUALIFICATIONS
ATTACHED THERETO [AND] THEREBY CONSTITU[TING] AN ARBITRARY
AND DISCRIMINATORY APPLICATION OF THE RULE, A GRAVE ABUSE
OF DISCRETION.37
The appellate court rendered judgment affirming the decision of the OP and,
consequently, the October 7, 1996 DAR Order. According to the appellate
court –
The DAR has the power to establish and promulgate operational policies,
rules and regulations and priorities for agrarian reform implementation
(Executive Order 129-A, Section 5(c), July 26, 1987). The Comprehensive
Agrarian Reform Law (R.A. 6657) itself mandates that:
"SECTION 49. Rules and Regulations. – The PARC and the DAR shall have
the power to issue rules and regulations, whether substantive or procedural, to
carry out the objects and purposes of this Act. Said rules shall take effect ten
(10) days after publication in two (2) national newspapers of general
circulation."
Thus, applying DAR Administrative Order No. 9, Series of 1993, and based on
the ocular inspection and Certificate of Ownership of Large Cattle issued by
the Municipal Treasurer, the DAR exempted 219.50 hectares of the subject
landholding from CARP coverage. It was found that of the 434 heads of cattle,
only 134 were over seven years of age. Added to this number of cattle were
14
the 28 heads of horses and carabaos, totaling 162 heads. Accordingly,
pursuant to the one hectare per one head ratio, 162 hectares were exempted.
The retention areas of the landowners amounting to 45 hectares and the
12.50 hectares allotted for infrastructure was also exempted.
Such application by the DAR is in accordance with the spirit of the law and its
aim of preventing unlawful conversion of agricultural lands to escape coverage
under the CARP.
It is well-settled that factual findings of administrative agencies, which have
acquired expertise in their field, are generally binding and conclusive upon the
Court. (Cagayan Robina Sugar Milling Co. v. Court of Appeals, 342 SCRA
663)38
Respondent and his co-owners filed a motion for reconsideration of the
decision, praying that the entire 349.9996 ha be exempted from CARP
coverage.
On May 24, 2004, the CA rendered an Amended Decision39 reversing and
setting aside its previous decision. The fallo reads:
WHEREFORE, based on the foregoing premises, the instant motion for
reconsideration is hereby GRANTED. The Decision of this Court promulgated
on February 18, 2003 is accordingly RECONSIDERED and SET ASIDE.
Consequently, the April 13, 1998 Decision of the Office of the President is
REVERSED and the areas under TCT No. T-160988 and T-111948 are
declared EXEMPTED from CARP coverage.
SO ORDERED.40
This time the CA declared that A.O. No. 9, Series of 1993, requires that the
landholding be devoted to cattle-raising when R.A. No. 6657 took effect. It also
pointed out that Section III-B of the A.O. provides that in determining the areas
qualified for exclusion, the ratio shall be one head of livestock to one hectare
of land, regardless of age. Neither the law nor the A.O. requires that the
livestock during inspection should be those that already existed on the
landholding on or before June 15, 1988. Consequently, the appellate court
declared that in order to determine the area for exclusion, the counting of
livestock should be, as stated in the administrative order, "regardless of age"
during actual inspection. The appellate court concluded that all 434 heads of
cattle present in the subject property should have been considered in
determining the exempt area used for livestock raising.
On June 21, 2004, the DAR, represented by the Secretary of Agrarian Reform,
filed a motion for reconsideration41 of the appellate court’s amended decision.
It reiterated that the pronouncement by this Court that "the law only requires
that for exemption of CARP to apply, the subject landholding should be
devoted to cattle-raising as of June 15, 1988" is not entirely correct, for the law
requires that it be exclusively, directly and actually used for livestock as of
June 15, 1988. Under A.O. No. 9, Series of 1993, two conditions must be
established:
1) It must be shown that the subject landholding was EXCLUSIVELY,
DIRECTLY AND ACTUALLY used for livestock, poultry or swine on or before
June 15, 1988; and
2) The farm must satisfy the ratios of land to livestock.42
It must be shown that the entire landholding, and not just portions of it, should
be devoted to livestock raising. The words "regardless of age" in the order
should be interpreted to mean only those heads of cattle existing as of June
15, 1988. Accordingly, the ratio of land to livestock should be based on those
livestock found existing in the landholding at the time R.A. No. 6657 took
effect on June 15, 1988. This is consistent with the intent of the law to prevent
fraudulent declaration of areas actually, directly and exclusively used for
livestock as well as to protect the rights of agrarian beneficiaries therein.
It was not proven that the entire landholding was exclusively used for livestock
as of June 15, 1988. In fact, the ocular inspection of the property conducted by
the Provincial Task Force on Exclusion reported that about 20 ha were planted
with coconuts. It also revealed that the topography is flat and undulated, and
that 44 farmers-beneficiaries occupied portions of the said landholding. On
these bases alone, it is hard to imagine how the said landholding could have
been "exclusively, directly and actually used for livestock as of June 15, 1988."
Moreover, out of the 434 heads of cattle found in the subject landholding as of
May 1995, only 134 heads of cattle and 28 horses and carabaos could have
been present in the subject landholding. This is based on the finding that only
134 heads of cattle were 7 years and older, and, consequently, were the only
ones that could have existed as of June 15, 1988. Hence, they could not be
made as basis for the computation of the areas qualified for exclusion, for to
do so would clearly violate the first condition that the heads of cattle must be
in existence as of June 15, 1988.43
The appellate court was not persuaded and resolved to deny, for lack of merit,
the motion for the reconsideration of its amended decision.44
The DAR, now the petitioner, filed the instant petition for review, alleging that
the appellate court erred as follows:
15
I
IT GAVE DUE COURSE AND GRANTED RESPONDENT’S [DR. UY]
PETITION DESPITE BEING FILED OUT OF TIME.45
II
IT DECLARED THE ENTIRE 349.9996 HECTARE-PROPERTY OF
RESPONDENT AS EXEMPT FROM COVERAGE OF THE
COMPREHENSIVE AGRARIAN REFORM PROGRAM.46
Thus, the pivotal issues to be resolved here are (1) whether or not the second
motion for reconsideration filed by respondent tolled the reglementary period
to appeal; and (2) whether or not the phrase "regardless of age" in Section III-
B of DAR A.O. No. 9, Series of 1993 should be reckoned from June 15, 1988,
or from the date of inspection.
On the first issue, petitioner claims that, under the OP Rules of Procedure,
specifically the second paragraph of Section 7, A.O. No. 18, Series of 1987,
only one motion for reconsideration is allowed except in meritorious cases.
Hence, the period to file the petition for review had already expired 15 days
after the denial of the first motion for reconsideration. Petitioner insists that the
filing of the second motion for reconsideration is of no consequence since the
OP had already concluded that the case was "not exceptionally meritorious to
justify additional motions for reconsiderations."
On the second issue, petitioner contends that in the Luz Farms case, the
entire property therein was devoted to livestock and poultry prior to June 15,
1988; in the present case, only a minimal portion of the property involved is so
devoted. It further insists that the report of the Task Force on Exclusion
revealed that 20 ha are planted with coconut trees while undetermined
portions are occupied by 44 farmers-beneficiaries. Thus, the 20 ha planted
with coconuts were not intended for cattle grazing, neither do they serve the
purpose of shade and fodder for the bovines. The presence of farmers-
beneficiaries who tend to the trees indicates that respondent is also engaged
in the coconut industry, belying the fact that the entire 349.9996 ha is
exclusively devoted to livestock-raising. Petitioner further claims that Luz
Farms was a corporation engaged in the livestock and poultry business even
before 1988. On the other hand, respondent did not present any business
permit or articles of incorporation to prove that the entire 349.9996 ha is
devoted to the livestock business.
Petitioner further avers that it had received reports that A.O. No. 9 was issued
to prescribe the rules for exclusion of the land used for livestock production.
Petitioner posits that the order is curative in nature and retroactive in
application; and the phrase "regardless of age" refers to heads of cattle in the
year 1988 and not during actual inspection. Petitioner argues that if the phrase
were to be given any other meaning, landowners could easily fill their land with
livestock and apply for exemption, defeating the purpose of agrarian reform.
Thus, during actual inspection, the headcount should be based on the
existence of the animals in 1988 through available records; if there be none,
then the tallying must be done according to the age of the animals alive at that
time.
By way of Comment,47 respondent maintains that Section 7 of A.O. No. 18,
Series of 1987 does not totally rule out a second motion for reconsideration;
the governing principle in the resolution of the case is its merits. Citing a
plethora of cases, he avers that substantial justice should overrule rules of
procedure. Respondent further points out that even his predecessor-in-interest
was engaged in the business of livestock raising on the landholding. This
livestock business was evident during the ocular inspection of the Task Force
on Exclusion. Contrary to petitioner’s claim, he does have a business permit,
and the absence of the articles of incorporation is irrelevant because no
corporate personality is involved here.
Respondent further asserts that the 20 ha planted with coconut trees is a
minimal part of the 349.9996 ha. The diminutive size of the area is in keeping
with the purpose of providing shade to the animals and the young leaves used
as fodder when grasses are scarce during dry weather. Respondent also
asserts that the DAR interpretation of the phrase "regardless of age" referring
to the year 1988 is an "amendment under the guise of interpretation." He
emphasized that since the law does not distinguish, petitioner should not
distinguish. He argues that the DAR interpretation falls short of acceptability
even on practical considerations, because in the business of raising livestock,
the inventory is never fixed at any given time especially for long periods, i.e.,
seven years. It constantly changes either due to natural causes prevalent in
the business or the interplay of market forces or the peace and order condition
within the area.
The petition is partially granted.
In Land Car, Inc. v. Bachelor Express Inc. and Vallacar Transit, Inc.,48 the
Court ruled that the doctrine of exhaustion of administrative remedies
empowers the OP to review any determination or disposition of a department
head. In fact, the doctrine requires an administrative decision to first be
appealed to the administrative superiors up to the highest level before it may
be elevated to a court of justice for review. Thus, if a remedy within the
administrative machinery can still be had by giving the administrative officer
concerned every opportunity to decide on the matter that comes within his
jurisdiction, then such remedy should be priorly exhausted before the court's
16
judicial power is invoked.49
Appeals to the OP are governed by A.O. No. 18, Series of 1987. Section 7
thereof, provides the rule on filing a motion for reconsideration:
Sec. 7 Decisions/resolutions/orders of the Office of the President shall, except
as otherwise provided for by special laws, become final after the lapse of
fifteen (15) days from receipt of a copy thereof by the parties, unless a motion
for reconsideration thereof is filed within such period.
Only one motion for reconsideration by any one party shall be allowed and
entertained, save in exceptionally meritorious cases.
It is clear then that only one motion for reconsideration is allowed to be filed
from a decision, resolution or order of the OP. However, the filing of a second
motion for reconsideration is not absolutely prohibited. A second motion for
reconsideration is allowed in exceptionally meritorious cases.50
Furthermore, the explanation of the OP that the second motion for
reconsideration deserves scant merit because the "grounds therein are not
substantially different from the same ones discussed in the first motion for
reconsideration" is untenable.
A rehash of arguments may not necessarily be pro forma per se. In Security
Bank and Trust Company, Inc. v. Cuenca,51 the Court declared that a motion
for reconsideration is not pro forma just because it reiterated the arguments
earlier passed upon and rejected by the appellate court; a movant may raise
the same arguments precisely to convince the court that its ruling was
erroneous.52 The Court also held that the pro forma rule will not be applicable
if the arguments were not sufficiently passed upon and answered in the
decision sought to be reconsidered, and elucidated the raison d’ etre of the
pro forma principle as follows:
x x x a pro forma motion had no other purpose than to gain time and to delay
or impede the proceedings. Hence, "where the circumstances of a case do not
show an intent on the part of the movant merely to delay the proceedings, our
Court has refused to characterize the motion as simply pro forma." x x x
We note finally that because the doctrine relating to pro forma motions for
reconsideration impacts upon the reality and substance of the statutory right of
appeal, that doctrine should be applied reasonably, rather than literally. The
right to appeal, where it exists, is an important and valuable right. Public policy
would be better served by according the appellate court an effective
opportunity to review the decision of the trial court on the merits, rather than
by aborting the right to appeal by a literal application of the procedural rules
relating to pro forma motions for reconsideration.
Respondent certainly did not intend to delay the proceedings here; in fact, it
would adversely affect his cause if he were to delay his appeal to the regular
courts because he would certainly lose vast tracts of land which are integral
elements of his trade. In this case, not only was a second motion for
reconsideration allowed by the OP rules, more importantly, the OP decision
and the order denying the first motion for reconsideration failed to provide its
basis in law. The ends of justice would have been served if the OP decision
did more than copy the DAR order and turned toward the important issues
presented before it.
In any event, even if we considered the second motion for reconsideration as
pro forma or not "exceptionally meritorious," the argument of petitioner would
still be untenable. It is settled that rules of procedure are, as a matter of
course, construed liberally in proceedings before administrative bodies. Thus,
technical rules of procedure imposed in judicial proceedings are unavailing in
cases before administrative bodies. Administrative bodies are not bound by
the technical niceties of law and procedure and the rules obtaining in the
courts of law. Rules of procedure are not to be applied in a very rigid and
technical manner, as they are used only to help secure and not to override
substantial justice.53
It bears stressing that the threshold substantive issue is the validity and
implementation of DAR Administrative Order No. 9, Series of 1993 on the
respondent’s landholding of more or less 472 ha in light of the ruling of this
Court in Department of Agrarian Reform v. Sutton,54 where DAR
Administrative Order No. 9, Series of 1993 was declared unconstitutional.
The fundamental rule in administrative law is that, to be valid, administrative
rules and regulations must be issued by authority of law and must not
contravene the provisions of the Constitution. The rule-making power of an
administrative agency may not be used to abridge the authority given to it by
Congress or by the Constitution. Nor can it be used to enlarge the power of
the administrative agency beyond the scope intended. Constitutional and
statutory provisions control with respect to what rules and regulations may be
promulgated by administrative agencies and the scope of their regulations.
In the case at bar, we find that the impugned A.O. is invalid as it contravenes
the Constitution. The A.O. sought to regulate livestock farms by including them
in the coverage of agrarian reform and prescribing a maximum retention limit
for their ownership. However, the deliberations of the 1987 Constitutional
Commission show a clear intent to exclude, inter alia, all lands exclusively
devoted to livestock, swine and poultry-raising. The Court clarified in the Luz
Farms case that livestock, swine and poultry-raising are industrial activities
17
and do not fall within the definition of "agriculture" or "agricultural activity." The
raising of livestock, swine and poultry is different from crop or tree farming. It
is an industrial, not an agricultural, activity. A great portion of the investment in
this enterprise is in the form of industrial fixed assets, such as: animal housing
structures and facilities, drainage, waterers and blowers, feedmill with
grinders, mixers, conveyors, exhausts and generators, extensive warehousing
facilities for feeds and other supplies, anti-pollution equipment like bio-gas and
digester plants augmented by lagoons and concrete ponds, deepwells,
elevated water tanks, pumphouses, sprayers, and other technological
appurtenances.
Clearly, petitioner DAR has no power to regulate livestock farms which have
been exempted by the Constitution from the coverage of agrarian reform. It
has exceeded its power in issuing the assailed A.O.
The subsequent case of Natalia Realty, Inc. v. DAR reiterated our ruling in the
Luz Farms case. In Natalia Realty, the Court held that industrial, commercial
and residential lands are not covered by the CARL. We stressed anew that
while Section 4 of R.A. No. 6657 provides that the CARL shall cover all public
and private agricultural lands, the term "agricultural land" does not include
lands classified as mineral, forest, residential, commercial or industrial. Thus,
in Natalia Realty, even portions of the Antipolo Hills Subdivision, which are
arable yet still undeveloped, could not be considered as agricultural lands
subject to agrarian reform as these lots were already classified as residential
lands.
A similar logical deduction should be followed in the case at bar.1awphi1.net
Lands devoted to raising of livestock, poultry and swine have been classified
as industrial, not agricultural, lands and thus exempt from agrarian reform.
Petitioner DAR argues that, in issuing the impugned A.O. it was seeking to
address the reports it has received that some unscrupulous landowners have
been converting their agricultural lands to livestock farms to avoid their
coverage by the agrarian reform. Again, we find neither merit nor logic in this
contention. The undesirable scenario which petitioner seeks to prevent with
the issuance of the A.O. clearly does not apply in this case. Respondents’
family acquired their landholdings as early as 1948. They have long been in
the business of breeding cattle in Masbate which is popularly known as the
cattle-breeding capital of the Philippines. Petitioner DAR does not dispute this
fact. Indeed, there is no evidence on record that respondents have just
recently engaged in or converted to the business of breeding cattle after the
enactment of the CARL that may lead one to suspect that respondents
intended to evade its coverage. It must be stressed that what the CARL
prohibits is the conversion of agricultural lands for non-agricultural purposes
after the effectivity of the CARL. There has been no change of business
interest in the case of respondents.

Moreover, it is a fundamental rule of statutory construction that the
reenactment of a statute by Congress without substantial change is an implied
legislative approval and adoption of the previous law. On the other hand, by
making a new law, Congress seeks to supersede an earlier one. In the case at
bar, after the passage of the 1988 CARL, Congress enacted R.A. No. 7881
which amended certain provisions of the CARL. Specifically, the new law
changed the definition of the terms "agricultural activity" and "commercial
farming" by dropping from its coverage lands that are devoted to commercial
livestock, poultry and swine-raising. With this significant modification,
Congress clearly sought to align the provisions of our agrarian laws with the
intent of the 1987 Constitutional Commission to exclude livestock farms from
the coverage of agrarian reform.
In sum, it is doctrinal that rules of administrative bodies must be in harmony
with the provisions of the Constitution. They cannot amend or extend the
Constitution. To be valid, they must conform to and be consistent with the
Constitution. In case of conflict between an administrative order and the
provisions of the Constitution, the latter prevails. The assailed A.O. of
petitioner DAR was properly stricken down as unconstitutional as it enlarges
the coverage of agrarian reform beyond the scope intended by the 1987
Constitution.55
The Report56 of MARO Babalcon clearly declared that 346 ha are used for
grazing of the 429 heads of livestock; and indicated that the density required
on commercial farming as far as the number of livestock is concerned was
satisfied. This was confirmed in the DAR Order stating that the land has been
devoted to livestock-raising since its acquisition in 1979, and that the 20 ha
planted with coconut trees are simultaneously used as pasture land. These
facts are borne by the records and undisputed by the parties. The courts
generally accord great respect, if not finality, to factual findings of
administrative agencies because of their special knowledge and expertise
over matters falling under their jurisdiction.57
It is not uncommon for an enormous landholding to be intermittently planted
with trees, and this would not necessarily detract it from the purpose of
livestock farming and be immediately considered as an agricultural land. It
would be surprising if there were no trees on the land. Also, petitioner did not
adduce any proof to show that the coconut trees were planted by respondent
and used for agricultural business or were already existing when the land was
purchased in 1979. In the present case, the area planted with coconut trees
bears an insignificant value to the area used for the cattle and other livestock-
raising, including the infrastructure needed for the business. There can be no
presumption, other than that the "coconut area" is indeed used for shade and
to augment the supply of fodder during the warm months; any other use would
18
be only be incidental to livestock farming. The substantial quantity of livestock
heads could only mean that respondent is engaged in farming for this
purpose. The single conclusion gathered here is that the land is entirely
devoted to livestock farming and exempted from the CARP.
This Court’s ruling in the Luz Farms case and Natalia Realty, Inc. v. DAR58
was emphatic on the exemption from CARP of land devoted to residential,
commercial and industrial purposes without any other qualifications. Moreover,
after the passage of the 1988 CARL, Congress enacted R.A. No. 7881,
amending certain provisions of the CARL. Specifically, the new law changed
the definition of the terms "agricultural activity" and "commercial farming" by
dropping from its coverage lands that are devoted to commercial livestock,
poultry and swine-raising. With this significant modification, Congress clearly
sought to align the provisions of our agrarian laws with the intent of the 1987
Constitutional Commission to exclude livestock farms from the coverage of
agrarian reform.59
Notably, however, a careful review of the records of the case reveal that the
Notice of Coverage, the Investigation Report by MARO Babalcon and Report
of PARO Ubeda, the DAR Order, and the OP Decision referred only to the
349.9996-ha landholding covered by TCT No. 160988. There is no showing in
the records that the landholding covered by TCT No. 11948 had been included
for CARP coverage; or that any investigation had been conducted by the
MARO or PARO on whether such landholding is exempt from CARP
coverage. The Court notes that respondent sought exemption of their property
covered by TCT No. 11948 only in their letter dated August 11, 1995 when
they appealed from the Report of the PARO. Absent any evidence showing
that this land was investigated by the DAR, there can be no basis as to
whether the said landholding is exempt from CARP coverage or not.
IN LIGHT OF THE FOREGOING, the instant petition is PARTIALLY
GRANTED. The Amended Decision of the Court of Appeals in CA-G.R. SP
No. 70541 exempting the parcel of land under TCT No. T-160988 with an area
of 349.9996 hectares from coverage of the Comprehensive Agrarian Reform
Law is AFFIRMED. However, the Amended Decision exempting the 22.2639-
hectare landholding covered by TCT No. 11948 from the coverage of the
CARP is REVERSED and SET ASIDE.
No pronouncement as to costs.
SO ORDERED.