G.R. No. 77372 April 29, 1988 LUPO L. LUPANGCO, RAYMOND S. MANGKAL, NORMAN A. MESINA, ALEXANDER R.

REGUYAL, JOCELYN P. CATAPANG, ENRICO V. REGALADO, JEROME O. ARCEGA, ERNESTOC. BLAS, JR., ELPEDIO M. ALMAZAN, KARL CAESAR R. RIMANDO, petitioner, vs. COURT OF APPEALS and PROFESSIONAL REGULATION COMMISSION, respondent. Balgos & Perez Law Offices for petitioners. The Solicitor General for respondents. GANCAYCO, J.: Is the Regional Trial Court of the same category as the Professional Regulation Commission so that it cannot pass upon the validity of the administrative acts of the latter? Can this Commission lawfully prohibit the examiness from attending review classes, receiving handout materials, tips, or the like three (3) days before the date of the examination? Theses are the issues presented to the court by this petition for certiorari to review the decision of the Court of Appeals promulagated on January 13, 1987, in CAG.R. SP No. 10598, * declaring null and void the other dated Ocober 21, 1986 issued by the Regional Trial Court of Manila, Branch 32 in Civil Case No. 86-37950 entitled " Lupo L. Lupangco, et al. vs. Professional Regulation Commission."

Branch XXXII, a complaint for injuction with a prayer with the issuance of a writ of a preliminary injunction against respondent PRC to restrain the latter from enforcing the above-mentioned resolution and to declare the same unconstitution. Respondent PRC filed a motion to dismiss on October 21, 1987 on the ground that the lower court had no jurisdiction to review and to enjoin the enforcement of its resolution. In an Order of October 21, 1987, the lower court declared that it had jurisdiction to try the case and enjoined the respondent commission from enforcing and giving effect to Resolution No. 105 which it found to be unconstitutional. Not satisfied therewith, respondent PRC, on November 10, 1986, filed with the Court of Appeals a petition for the nullification of the above Order of the lower court. Said petiton was granted in the Decision of the Court of Appeals promulagated on January 13, 1987, to wit: WHEREFORE, finding the petition meritorious the same is hereby GRANTED and the other dated October 21, 1986 issued by respondent court is declared null and void. The respondent court is further directed to dismiss with prejudice Civil Case No. 86-37950 for want of jurisdiction over the subject matter thereof. No cost in this instance. SO ORDERED. 2 Hence, this petition.

The Court of Appeals, in deciding that the Regional Trial Court of Manila had no jurisdiction to entertain the case and The records shows the following undisputed facts: to enjoin the enforcement of the Resolution No. 105, stated On or about October 6, 1986, herein respondent as its basis its conclusion that the Professional Regulation Professional Regulation Commission (PRC) issued Commission and the Regional Trial Court are co-equal Resolution No. 105 as parts of its "Additional Instructions to bodies. Thus it held Examiness," to all those applying for admission to take the That the petitioner Professional Regulatory Commission is licensure examinations in accountancy. The resolution at least a co-equal body with the Regional Trial Court is embodied the following pertinent provisions: beyond question, and co-equal bodies have no power to No examinee shall attend any review class, briefing, control each other or interfere with each other's acts. 3 conference or the like conducted by, or shall receive any To strenghten its position, the Court of Appeals relied hand-out, review material, or any tip from any school, college or university, or any review center or the like or any heavily on National Electrification Administration vs. Mendoza, 4 which cites Pineda vs. Lantin 5 and Philippine reviewer, lecturer, instructor official or employee of any of 6 the aforementioned or similars institutions during the three Pacific Fishing, Inc. vs. Luna, where this Court held that a Court of First Instance cannot interfere with the orders of days immediately proceeding every examination day the Securities and Exchange Commission, the two being coincluding examination day. equal bodies. Any examinee violating this instruction shall be subject to After a close scrutiny of the facts and the record of this case, the sanctions prescribed by Sec. 8, Art. III of the Rules and Regulations of the Commission. 1 We rule in favor of the petitioner. On October 16, 1986, herein petitioners, all reviewees preparing to take the licensure examinations in accountancy schedule on October 25 and November 2 of the same year, filed on their own behalf of all others similarly situated like them, with the Regional Trial Court of Manila, The cases cited by respondent court are not in point. It is glaringly apparent that the reason why this Court ruled that the Court of First Instance could not interfere with the orders of the Securities and Exchange Commission was that this was so provided for by the law. In Pineda vs. Lantin, We

explained that whenever a party is aggrieved by or disagree with an order or ruling of the Securities and Exchange Commission, he cannot seek relief from courts of general jurisdiction since under the Rules of Court and Commonwealth Act No. 83, as amended by Republic Act No. 635, creating and setting forth the powers and functions of the old Securities and Exchange Commission, his remedy is to go the Supreme Court on a petition for review. Likewise, in Philippine Pacific Fishing Co., Inc. vs. Luna, it was stressed that if an order of the Securities and Exchange Commission is erroneous, the appropriate remedy take is first, within the Commission itself, then, to the Supreme Court as mandated in Presidential Decree No. 902-A, the law creating the new Securities and Exchange Commission. Nowhere in the said cases was it held that a Court of First Instance has no jurisdiction over all other government agencies. On the contrary, the ruling was specifically limited to the Securities and Exchange Commission. The respondent court erred when it place the Securities and Exchange Commission and the Professional Regulation Commsision in the same category. As alraedy mentioned, with respect to the Securities and Exchange Commission, the laws cited explicitly provide with the procedure that need be taken when one is aggrieved by its order or ruling. Upon the other hand, there is no law providing for the next course of action for a party who wants to question a ruling or order of the Professional Regulation Commission. Unlike Commonwealth Act No. 83 and Presidential Decree No. 902A, there is no provision in Presidential Decree No. 223, creating the Professional Regulation Commission, that orders or resolutions of the Commission are appealable either to the Court of Appeals or to theSupreme Court. Consequently, Civil Case No. 86-37950, which was filed in order to enjoin the enforcement of a resolution of the respondent Professional Regulation Commission alleged to be unconstitutional, should fall within the general jurisdiction of the Court of First Instance, now the Regional Trial Court. 7 What is clear from Presidential Decree No. 223 is that the Professional Regulation Commission is attached to the Office of the President for general direction and coordination. 8 Well settled in our jurisprudence is the view that even acts of the Office of the President may be reviewed by the Court of First Instance (now the Regional Trial Court). In Medalla vs. Sayo, 9 this rule was thoroughly propounded on, to wit: In so far as jurisdiction of the Court below to review by certiorari decisions and/or resolutions of the Civil Service Commission and of the residential Executive Asssistant is concerned, there should be no question but that the power of judicial review should be upheld. The following rulings buttress this conclusion:

The objection to a judicial review of a Presidential act arises from a failure to recognize the most important principle in our system of government, i.e., the separation of powers into three co-equal departments, the executives, the legislative and the judicial, each supreme within its own assigned powers and duties. When a presidential act is challenged before the courts of justice, it is not to be implied therefrom that the Executive is being made subject and subordinate to the courts. The legality of his acts are under judicial review, not because the Executive is inferior to the courts, but because the law is above the Chief Executive himself, and the courts seek only to interpret, apply or implement it (the law). A judicial review of the President's decision on a case of an employee decided by the Civil Service Board of Appeals should be viewed in this light and the bringing of the case to the Courts should be governed by the same principles as govern the jucucial review of all administrative acts of all administrative officers. 10 Republic vs. Presiding Judge, CFI of Lanao del Norte, Br. II, 11 is another case in point. Here, "the Executive Office"' of the Department of Education and Culture issued Memorandum Order No. 93 under the authority of then Secretary of Education Juan Manuel. As in this case, a complaint for injunction was filed with the Court of First Instance of Lanao del Norte because, allegedly, the enforcement of the circular would impair some contracts already entered into by public school teachers. It was the contention of petitioner therein that "the Court of First Instance is not empowered to amend, reverse and modify what is otherwise the clear and explicit provision of the memorandum circular issued by the Executive Office which has the force and effect of law." In resolving the issue, We held: ... We definitely state that respondent Court lawfully acquired jurisdiction in Civil Case No. II-240 (8) because the plaintiff therein asked the lower court for relief, in the form of injunction, in defense of a legal right (freedom to enter into contracts) . . . . . Hence there is a clear infringement of private respondent's constitutional right to enter into agreements not contrary to law, which might run the risk of being violated by the threatened implementation of Executive Office Memorandum Circular No. 93, dated February 5, 1968, which prohibits, with certain exceptions, cashiers and disbursing officers from honoring special powers of attorney executed by the payee employees. The respondent Court is not only right but duty bound to take cognizance of cases of this nature wherein a constitutional and statutory right is allegedly infringed by the administrative action of a government office. Courts of first Instance have original jurisdiction over all civil actions in which the subject of the

litigation is not capable of pecuniary estimation (Sec. 44, Republic Act 296, as amended). 12 (Emphasis supplied.) In San Miguel Corporation vs. Avelino, 13 We ruled that a judge of the Court of First Instance has the authority to decide on the validity of a city tax ordinance even after its validity had been contested before the Secretary of Justice and an opinion thereon had been rendered. In view of the foregoing, We find no cogent reason why Resolution No. 105, issued by the respondent Professional Regulation Commission, should be exempted from the general jurisdiction of the Regional Trial Court. Respondent PRC, on the other hand, contends that under Section 9, paragraph 3 of B.P. Blg. 129, it is the Court of Appeals which has jurisdiction over the case. The said law provides:

Commission on Elections awarding a contract to a private party which originated from an invitation to bid. The said issue came about because under the laws then in force, final awards, judgments, decisions or orders of the Commission on Elections fall within the exclusive jurisdiction of the Supreme Court by way of certiorari. Hence, it has been consistently held that "it is the Supreme Court, not the Court of First Instance, which has exclusive jurisdiction to review on certiorari final decisions, orders, or rulings of the Commission on Elections relative to the conduct of elections and the enforcement of election laws." 16 As to whether or not the Court of First Instance had jurisdiction in saidcase, We said:

We are however, far from convinced that an order of the COMELEC awarding a contract to a private party, as a result of its choice among various proposals submitted in SEC. 9. Jurisdiction. The Intermediate Appellate Court response to its invitation to bid comes within the purview of shall exercise: a "final order" which is exclusively and directly appealable xxx xxx xxx to this court on certiorari. What is contemplated by the (3) Exclusive appellate jurisdiction over all final judgments, term "final orders, rulings and decisions, of the COMELEC reviewable by certiorari by the Supreme Court as provided decisions, resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards by law are those rendered in actions or proceedings before the COMELEC and taken cognizance of by the said body in or commissions, except those falling within the appellate the exercise of its adjudicatory or quasi-judicial powers. jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (Emphasis supplied.) (1) of the third paragraph and subparagraph (4) of the xxx xxx xxx fourth paragraph of Section 17 of the Judiciary Act of 1948. We agree with petitioner's contention that the order of the The contention is devoid of merit. Commission granting the award to a bidder is not an order In order to invoke the exclusive appellate jurisdiction of the rendered in a legal controversy before it wherein the Court of Appeals as provided for in Section 9, paragraph 3 of parties filed their respective pleadings and presented evidence after which the questioned order was issued; and B.P. Blg. 129, there has to be a final order or ruling which resulted from proceedings wherein the administrative body that this order of the commission was issued pursuant to its authority to enter into contracts in relation to election involved exercised its quasi-judicial functions. In Black's Law Dictionary, quasi-judicial is defined as a term applied to purposes. In short, the COMELEC resolution awarding the contract in favor of Acme was not issued pursuant to its the action, discretion, etc., of public administrative officers quasi-judicial functions but merely as an incident of its or bodies required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from inherent administrative functions over the conduct of elections, and hence, the said resolution may not be deemed them, as a basis for their official action, and to exercise as a "final order reviewable by certiorari by the Supreme discretion of a judicial nature. To expound thereon, quasijudicial adjudication would mean a determination of rights, Court. Being non-judicial in character, no contempt order privileges and duties resulting in a decision or order which may be imposed by the COMELEC from said order, and no direct and exclusive appeal by certiorari to this Tribunal lie applies to a specific situation . 14 This does not cover rules from such order. Any question arising from said order may and regulations of general applicability issued by the administrative body to implement its purely administrative be well taken in an ordinary civil action before the trial courts. (Emphasis supplied.) 17 policies and functions like Resolution No. 105 which was adopted by the respondent PRC as a measure to preserve the integrity of licensure examinations. The above rule was adhered to in Filipinas Engineering and Machine Shop vs. Ferrer. 15 In this case, the issue presented was whether or not the Court of First Instance had jurisdiction over a case involving an order of the One other case that should be mentioned in this regard is Salud vs. Central Bank of the Philippines. 18 Here, petitioner Central Bank, like respondent in this case, argued that under Section 9, paragraph 3 of B.P. Blg. 129, orders of the Monetary Board are appealable only to the Intermediate Appellate Court. Thus:

The Central Bank and its Liquidator also postulate, for the very first time, that the Monetary Board is among the "quasi-judicial ... boards" whose judgments are within the exclusive appellate jurisdiction of the IAC; hence, it is only said Court, "to the exclusion of the Regional Trial Courts," that may review the Monetary Board's resolutions. 19 Anent the posture of the Central Bank, We made the following pronouncement: The contention is utterly devoid of merit. The IAC has no appellate jurisdiction over resolution or orders of the Monetary Board. No law prescribes any mode of appeal from the Monetary Board to the IAC. 20 In view of the foregoing, We hold that the Regional Trial Court has jurisdiction to entertain Civil Case No. 86-37950 and enjoin the respondent PRC from enforcing its resolution. Although We have finally settled the issue of jurisdiction, We find it imperative to decide once and for all the validity of Resolution No. 105 so as to provide the much awaited relief to those who are and will be affected by it. Of course, We realize that the questioned resolution was adopted for a commendable purpose which is "to preserve the integrity and purity of the licensure examinations." However, its good aim cannot be a cloak to conceal its constitutional infirmities. On its face, it can be readily seen that it is unreasonable in that an examinee cannot even attend any review class, briefing, conference or the like, or receive any hand-out, review material, or any tip from any school, collge or university, or any review center or the like or any reviewer, lecturer, instructor, official or employee of any of the aforementioned or similar institutions . ... 21 The unreasonableness is more obvious in that one who is caught committing the prohibited acts even without any ill motives will be barred from taking future examinations conducted by the respondent PRC. Furthermore, it is inconceivable how the Commission can manage to have a watchful eye on each and every examinee during the three days before the examination period.

cannot be restrained from taking all the lawful steps needed to assure the fulfillment of their ambition to become public accountants. They have every right to make use of their faculties in attaining success in their endeavors. They should be allowed to enjoy their freedom to acquire useful knowledge that will promote their personal growth. As defined in a decision of the United States Supreme Court: The term "liberty" means more than mere freedom from physical restraint or the bounds of a prison. It means freedom to go where one may choose and to act in such a manner not inconsistent with the equal rights of others, as his judgment may dictate for the promotion of his happiness, to pursue such callings and vocations as may be most suitable to develop his capacities, and giv to them their highest enjoyment. 23 Another evident objection to Resolution No. 105 is that it violates the academic freedom of the schools concerned. Respondent PRC cannot interfere with the conduct of review that review schools and centers believe would best enable their enrolees to meet the standards required before becoming a full fledged public accountant. Unless the means or methods of instruction are clearly found to be inefficient, impractical, or riddled with corruption, review schools and centers may not be stopped from helping out their students. At this juncture, We call attention to Our pronouncement in Garcia vs. The Faculty Admission Committee, Loyola School of Theology, 24 regarding academic freedom to wit: ... It would follow then that the school or college itself is possessed of such a right. It decides for itself its aims and objectives and how best to attain them. It is free from outside coercion or interference save possibly when the overriding public welfare calls for some restraint. It has a wide sphere of autonomy certainly extending to the choice of students. This constitutional provision is not to be construed in a niggardly manner or in a grudging fashion.

Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the licensure examinations will be eradicated or at least minimized. Making the examinees suffer by depriving them of It is an aixiom in administrative law that administrative legitimate means of review or preparation on those last authorities should not act arbitrarily and capriciously in the three precious days-when they should be refreshing issuance of rules and regulations. To be valid, such rules and themselves with all that they have learned in the review regulations must be reasonable and fairly adapted to the classes and preparing their mental and psychological makeend in view. If shown to bear no reasonable relation to the up for the examination day itself-would be like uprooting purposes for which they are authorized to be issued, then the tree to get ride of a rotten branch. What is needed to be they must be held to be invalid. 22 done by the respondent is to find out the source of such leakages and stop it right there. If corrupt officials or Resolution No. 105 is not only unreasonable and arbitrary, personnel should be terminated from their loss, then so be it also infringes on the examinees' right to liberty it. Fixers or swindlers should be flushed out. Strict guaranteed by the Constitution. Respondent PRC has no authority to dictate on the reviewees as to how they should guidelines to be observed by examiners should be set up and if violations are committed, then licenses should be prepare themselves for the licensure examinations. They

suspended or revoked. These are all within the powers of the respondent commission as provided for in Presidential Decree No. 223. But by all means the right and freedom of the examinees to avail of all legitimate means to prepare for the examinations should not be curtailed.

Del Rosario prepared a subpoena dated January 16, 1990 setting the preliminary investigation on January 29, 1990 at 2:00 o'clock in the afternoon as to respondents Maria Clara Lobregat, Jose Eleazar, Felix Duenas Jr., and Salvador Escudero, III, and on January 31, 1990 at 2:00 o'clock in the afternoon as to petitioner Eduardo M. Cojuangco, Jr., In the light of the above, We hereby REVERSE and SET ASIDE, the decision of the Court of Appeals in CA-G.R. SP No. Rolando de la Cuesta, and Hermenegildo Zayco. 10591 and another judgment is hereby rendered declaring At the scheduled preliminary investigation on January 31, Resolution No. 105 null and void and of no force and effect 1990 petitioner appeared through counsel. Instead of filing for being unconstitutional. This decision is immediately a counter-affidavit, as required in the subpoena, he filed two motions addressed to the PCGG, namely; (1) a motion to executory. No costs. disqualify/inhibit PCGG; alternatively, a motion to dismiss; SO ORDERED. and (2) motion to have the PCGG itself hear or resolve Cojuangco's motion to disqualify/inhibit PCGG alternatively, G.R. Nos. 92319-20 October 2, 1990 motion to dismiss. EDUARDO M. COJUANGCO, JR., petitioner, vs. PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG) AND HON. FRANCISCO I. CHAVEZ in his capacity as Solicitor General, and the HON. OMBUDSMAN, respondents, MARIA CLARA L. LOBREGAT and JOSE R. ELEAZAR, JR., intervenors. Estelito P. Mendoza and Villareal Law Offices for petitioner. Angara, Abello, Concepcion, Regala & Cruz for intervenors. GANCAYCO, J.: In these petitions the issues raised are: (1) whether or not the Presidential Commission on Good Government (PCGG) has the power to conduct a preliminary investigation of the anti-graft and corruption cases filed by the Solicitor General against Eduardo Cojuangco, Jr. and other respondents for the alleged misuse of coconut levy funds; and (2) on the assumption that it has jurisdiction to conduct such a preliminary investigation, whether or not its conduct constitutes a violation of petitioner's rights to due process and equal protection of the law. Prosecutor del Rosario denied both motions and declared the proceedings closed and the cases submitted for resolution. Thereafter, petitioner requested the PCGG to resolve directly his aforesaid motions. On February 27, 1990, the PCGG issued an order denying petitioner's motions and required him, together with all the respondents in I.S. Nos. 74 and 75 to submit counteraffidavits within five (5) days from receipt thereof. Petitioner did not submit the required counter-affidavit. Instead, he filed in this Court on March 12, 1990 the herein petitions for prohibition with prayer for a temporary restraining order/writ of preliminary injunction.

He alleges that the PCGG may not conduct a preliminary investigation of the complaints filed by the Solicitor General without violating petitioner's rights to due process and equal protection of the law, and that the PCGG has no right to conduct such preliminary investigation. It is prayed that a temporary restraining order be issued enjoining the respondents and any or all persons acting under their orders or in their behalf from continuing with the preliminary investigation of I.S. Nos. 74 and 75 and enjoining as well the PCGG from taking any further action On November 28, 1989, President Corazon C. Aquino on said cases; and after hearing on the merits, to issue a directed the Solicitor General to prosecute all persons writ of preliminary injunction prohibiting respondent PCGG involved in the misuse of coconut levy funds. Pursuant to from conducting a preliminary investigation of said criminal the above directive the Solicitor General created a task force complaints and to order that the records of I.S. Nos. 74 and to conduct a thorough study of the possible involvement of 75 be forwarded to the Ombudsman for such action he may all persons in the anomalous use of coconut levy funds. consider appropriate and to pay the costs of the suits. On January 12, 1990, the Solicitor General filed two criminal In a resolution dated March 13, 1990, this Court, without complaints with respondent PCGG docketed under I.S. Nos. giving due course to the petition, resolved to require 74 and 75. 1 respondents to comment thereon within ten (10) days from The PCGG assigned both complaints to prosecutor Cesario del Rosario for preliminary investigation. The latter scheduled both cases for hearing. notice. On the same date, the PCGG issued an order that reads as follows:

Considering that none of the respondents have filed their counter-affidavits and supporting evidence, except respondent Hermenegildo Zayco, the complaints filed against them may now be considered submitted for resolution by this Commission. Since the respondents, except Hermenegildo Zayco, have not submitted counter-affidavits and controverting evidence, the evidence submitted by the complainants stands uncontradicted. And this Commission finds the findings and conclusions of fact of the investigating prosecutor, that a prima facie case has been established against all the respondents, including Hermenegildo Zayco, to warrant the filing of an information for a violation of Section 3(1) in relation to Section 3(i) thus making them liable under Section 3(a) of RA 3019, to be well-founded. Wherefore, let the corresponding information be filed. 2 On March 14, 1990, two informations 3 were filed by the PCGG with the Sandiganbayan against petitioner and all other respondents named in I.S. Nos. 74 and 75 which were docketed as Criminal Cases No. 14398 and 14399. Meanwhile, the Solicitor General filed with the PCGG several other complaints against petitioner and several others bearing on the misuse of the coconut levy funds. Two of these complaints were docketed as I.S. Nos. 79 and 82. A panel of prosecutors designated by the PCGG issued a subpoena to petitioner in order to compel him to appear in the investigation of said cases. On March 20, 1990, petitioner filed a supplemental petition informing the Court of the filing of said informations and the additional complaints aforestated. He prays that a temporary restraining order be issued enjoining respondents and other persons acting under their orders or in their behalf from continuing with the preliminary investigation of as well as taking further action in I.S. Nos. 79 and 82 and similar cases filed with the PCGG. Petitioner also prays that, after hearing, the PCGG be prohibited from continuing with the preliminary investigation of I.S. Nos. 79 and 82 and that it be ordered to forward the records of the case to the Ombudsman for appropriate action, and to pay the costs of the suit. On the same date, petitioner filed a motion reiterating the petition for the issuance of a temporary restraining order/writ of preliminary injunction and alternatively seeking that the case be set for hearing. On March 22, 1990, the Court admitted the supplemental pleading of the petitioner; required respondents to comment thereon within a non-extendible period of ten (10) days from notice; and issued a status quo order prevailing at the time this petition was filed on March 12, 1990.

On April 2, 1990, a consolidated comment was submitted by the respondents attaching as annex thereto the letters of the Executive Secretary dated February 9, 1990 and February 21, 1990, respectively, addressed to the Chairman, PCGG, conveying the instructions of the President of the Philippines that the complaints involving coconut levy funds be filed with the PCGG, to conduct the necessary investigation and if warranted to file and prosecute the cases before the Sandiganbayan; and it confirmed the earlier instructions of the President dated November 28, 1989 to the same effect. 4 On May 4, 1990 petitioner filed a reply to the consolidated comment as required by the Court. In a resolution dated June 5, 1990, the Solicitor General was required to file a rejoinder. On May 31, 1990, a motion for hearing of said cases was filed by petitioner and this was granted by the Court on June 21, 1990. It was directed that the Ombudsman be impleaded as party-respondent. The Court required the Ombudsman to comment on the petition within ten (10) days from notice. The case was set for hearing on Tuesday, July 17, 1990 at 10:00 in the morning. The Ombudsman submitted his comment on July 3, 1990 and the Court required petitioner to file a reply to the same. On July 6, 1990, Maria Clara Lobregat and Jose R. Eleazar, Jr. filed a Motion for Leave to Intervene and a Motion to Admit Petition to Intervene wherein they ask that the PCGG desist from further proceeding with the preliminary investigation of I.S. Nos. 74, 75, 77, 79, 80, 81, 82, 83, and 84 charging the intervenors and other respondents, including petitioner, with violations of the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) in connection with the, coconut levy funds. The intervenors question the authority of the PCGG to conduct a preliminary investigation of the said cases. They maintain that even assuming that the PCGG has such authority, the same cannot be delegated to a prosecutor or his assistants. On July 10, 1990, the court granted the motion for leave to intervene and admitted the petition for intervention. The PCGG was required to comment on said petition within ten (10) days from notice. On July 13, 1990, respondents filed their rejoinder to the reply of petitioner to their consolidated comments. The Ombudsman filed his comment to the petition for intervention, while petitioner filed his reply to the comment of the Ombudsman on July 16, 1990. The hearing was held as scheduled on July 17, 1990 where all the parties including the Ombudsman appeared and/or were duly represented by counsels. After the hearing, the parties were required to submit their simultaneous memoranda within fifteen (15) days from the date of the hearing.

On July 21, 1990, the Solicitor General asked for an extension of time within which to file his comment to the petition for intervention. He filed said comment within the period of extension asked for on July 31, 1990. The memoranda of all the parties having been submitted, the petitions were deemed submitted for resolution. On the first issue wherein petitioner and intervenors question the authority of the PCGG to conduct a preliminary investigation of the criminal complaints filed against them by the Solicitor General, the Court finds and so holds the same to be devoid of merit. Under Section 2, Rule 112 of the 1985 Rules of Criminal Procedure the officers authorized to conduct a preliminary investigation are the following: Sec. 2. Officers authorized to conduct preliminary investigation. The following may conduct a preliminary investigation: (a) Provincial or city fiscals and their assistants; (b) Judges of the Municipal Trial Courts and Municipal Circuit Trial Court; (c) National and Regional state prosecutors; and (d) Such other officers as may be authorized by law. Their authority to conduct preliminary investigation shall include all crimes cognizable by the proper court in their respective territorial jurisdictions. Under Section 2 likewise of Rule 112 of the Rules of Court before its present amendment, the officers authorized to conduct preliminary investigation are as follows: Sec. 2. Officers authorized to conduct preliminary examination: Every justice of the peace, municipal judge, city or provincial fiscal, shall have authority to conduct preliminary examination or investigation in accordance with these rules of all offenses alleged to have been committed within his municipality, city or province, cognizable by the Court of First Instance. The justice of the peace of the provincial capital or of the municipality in which the provincial jail is located when directed by an order of the Court of First Instance, shall have authority to conduct such preliminary examination or investigation of any offense committed anywhere within his province at the expense of the municipality wherein the same was committed. Under Section 3 thereof in case of temporary absence of the justice of the peace or his auxiliary, the municipal mayor may conduct the preliminary investigation. For complaints filed directly with the Court of First Instance, the judge of the said court may refer the case to the justice of the peace or he may himself conduct both the preliminary

examination and investigation simultaneously, under Section 13 of the same rule. Upon the enactment of the Anti-Graft and Corrupt Practices Act on August 17, 1960, 5 and Republic Act No. 1379 (covering unexplained wealth cases) on August 18, 1955, the preliminary investigation of cases involving the AntiGraft and Corrupt Practices Act and/or unexplained wealth cases was vested on the aforestated officers. However, on July 17, 1979, Presidential Decree No. 1630 was promulgated whereby the Tanodbayan was vested with the "exclusive authority to conduct preliminary investigation of all cases cognizable by the Sandiganbayan." 6 Under Presidential Decree No. 1486 which was approved on June 11, 1978, the Sandiganbayan was created and vested with exclusive jurisdiction over all offenses committed by public officers enumerated therein. This was amended by Presidential Decree No. 1606 dated December 10, 1978 and further amended by Presidential Decree No. 1861 issued on March 23, 1983 wherein the jurisdiction of the Sandiganbayan was defined as follows: Sec. 1. Section 4 of Presidential Decree No. 1606 is hereby amended to read as follows: Sec. 4. Jurisdiction The Sandiganbayan shall exercise: (a) Exclusive original jurisdiction in all cases involving: (1) Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII of the Revised Penal Code; (2) Other offenses or felonies committed by public officers and employees in relation to their office, including those employed in government-owned or controlled corporations, whether simple or complexed with other crimes, where the penalty prescribed by law is higher than prision correccional or imprisonment for six (6) years, or a fine of P6,000.00: PROVIDED, HOWEVER, that offenses or felonies mentioned in this paragraph where the penalty prescribed by law does not exceed prision correccional or imprisonment for six (6) years or a fine of P6,000.00 shall be tried by the proper Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court and Municipal Circuit Trial Court. (b) Exclusive appellate jurisdiction: (1) On appeal, from the final judgments, resolutions or orders of the Regional Trial Courts in cases originally decided by them in their respective territorial jurisdiction. (2) By petition for review, from the final judgments, resolutions or orders of the Regional Trial Courts in the exercise of their appellate jurisdiction over cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction.

The procedure prescribed in Batas Pambansa Blg. 129, as well as the implementing rules the Supreme Court has promulgated and may hereinafter promulgate, relative to appeals/petitions for review to the Intermediate Appellate Court shall apply to appeals and petition for review filed with the Sandiganbayan. In all cases elevated to the Sandiganbayan, the Office of the Tanodbayan shall represent the People of the Philippines. In case private individuals are charged as co-principals, accomplices or accessories with the public officers or employees, including those employed in governmentowned or controlled corporations, they shall be tried jointly with said public officers and employees. Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the recovery of civil liability arising from the offense charged shall at all times be simultaneously instituted with and jointly determined in the same proceeding by the Sandiganbayan or the appropriate courts, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filing of such civil action separately from the criminal action shall be recognized: PROVIDED, HOWEVER, that where the civil action had heretofore been filed separately but judgment therein has not yet been rendered, and the criminal case is hereafter filed with the Sandiganbayan or the appropriate court, said civil action shall be transferred to the Sandiganbayan or the appropriate court, as the case maybe, for consolidation and joint determination with the criminal action, otherwise the separate civil action shall be considered abandoned. Sec. 2. All cases pending in the Sandiganbayan or in the appropriate courts as of the date of the effectivity of this Decree shall remain with and be disposed of by the courts where they are pending. Sec. 3. The provisions of this Decree notwithstanding, the office of the Tanodbayan shall continue to have the exclusive authority to conduct preliminary investigation, file the necessary information, and direct and control the prosecution of all cases enumerated in Section 4 of Presidential Decree No. 1606, whether such cases be within the exclusive original/appellate jurisdiction of the Sandiganbayan or the appropriate courts in accordance with the provisions of Presidential Decree No. 1630. (Emphasis supplied.) However, this exclusive jurisdiction of the Tanodbayan to conduct preliminary investigation of said cases was modified by Executive Order No. 1 signed by President Corazon C. Aquino on February 28, 1986 creating the PCGG and constituting its membership to assist the President in the recovery of ill gotten wealth accumulated by the former

President, his relatives and cronies. Therein it is provided, among others: Sec. 2. The Commission shall be charged with the task of assisting the President in regard to the following matters: (a) The recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad, including the takeover or sequestration of all business enterprises and entities owned or controlled by them, during his administration, directly or through nominees, by taking undue advantage of their public office and/or using their powers, authority, influence, connections or relationship. (b) The investigation of such cases of graft and corruption as the President may assign to the Commission from time to time. (c) The adoption of safeguards to ensure that the above practices shall not be repeated in any manner under the new government, and the institution of adequate measures to prevent the occurrence of corruption. Sec. 3. The Commission shall have the power and authority: (a) To conduct investigations as may be necessary in order to accomplish and carry out the purposes of this order. (Emphasis supplied.) Under Executive Order No. 14 signed by President Aquino on May 7, 1986, it is also provided: Sec. 1. Any provision of the law to the contrary notwithstanding, the Presidential Commission on Good Government with the assistance of the Office of the Solicitor General and other government agencies, is hereby empowered to file and prosecute all cases investigated by it under Executive Order No. 1, dated February 28, 1986 and Executive Order No. 2, dated March 12, 1986, as may be warranted by its findings. Sec. 2. The Presidential Commission on Good Government shall file all such cases, whether civil or criminal, with the Sandiganbayan, which shall have exclusive and original jurisdiction thereof . Sec. 3. Civil suits for restitution, reparation of damages, or indemnification for consequential damages, forfeiture proceedings provided for under Republic Act No. 1379, or any other civil actions under the Civil Code or other existing laws, in connection with Executive Order No.1 dated February 28, 1986 and Executive Order No. 2 dated March 12, 1986, may be filed separately from and proceed independently of any criminal proceedings and may be proved by preponderance of evidence. (Emphasis supplied.) From the foregoing provisions of law, particularly Sections 2(b) and 3(a) of Executive Order No. 1 and Sections 1 and 2

of Executive Order No. 14, it is clear that the PCGG has the power to investigate and prosecute such ill-gotten wealth cases of the former President, his relatives and associates, and graft and corrupt practices cases that may be assigned by the President to the PCGG to be filed with the Sandiganbayan. No doubt, the authority to investigate extended to the PCGG includes the authority to conduct a preliminary investigation. 7

(7) Determine the causes of inefficiency, red tape, mismanagement, fraud, and corruption in the Government and make recommendations for their elimination and the observance of high standards of ethics and efficiency. (8) Promulgate its rules of procedure and exercise such other powers or perform such functions or duties as may be provided by law. (Emphasis supplied)

This Court, in Zaldivar, 10 interpreting the aforesaid Thus, the Tanodbayan lost the exclusive authority to provision of the Constitution, particularly Section 13(1) conduct the preliminary investigation of these types of thereof vesting on the Ombudsman the right and the power cases by the promulgation of the said Executive Order Nos. to investigate on its own or on complaint, any act or 1 and 14 whereby the PCGG was vested concurrent omission of any public official, employee, office or agency jurisdiction with the Tanodbayan to conduct such which appears "to be illegal, unjust, improper, or preliminary investigation and to prosecute said cases before inefficient", held that the general power of investigation the Sandiganbayan. 8 The power of the PCGG to conduct a covers the lesser power to conduct a preliminary preliminary investigation of the aforementioned types of investigation. Thus, as the power of investigation vested on cases has been recognized by this Court in Bataan Shipyard the Ombudsman under the Constitution includes the power and Engineering Co. Inc. (BASECO) vs. PCGG. 9 to conduct a preliminary investigation, then the special Upon the adoption of the 1987 Constitution, the Office of the prosecutor (former Tanodbayan) may no longer conduct such a preliminary investigation unless duly authorized by Ombudsman was created under Article XI, as follows: the Ombudsman. 11 Sec. 13. The Office of the Ombudsman shall have the A reading of the foregoing provision of the Constitution following powers, functions, and duties: (1) Investigate on its own, or on complaint by any person, any does not show that the power of investigation including preliminary investigation vested on the Ombudsman is act or omission of any public official, employee, office or exclusive. Hence, the said provision of the Constitution did agency, when such act or omission appears to be illegal, not repeal or remove the power to conduct an investigation, unjust, improper, or inefficient. including the authority to conduct a preliminary (2) Direct, upon complaint or at its own instance, any public investigation, vested on the PCGG by Executive Orders Nos. official or employee of the Government, or any subdivision, 1 and 14. agency or instrumentality thereof, as well as of any government-owned or controlled corporation with original Although under Section 26 of Article XVIII of the Constitution the authority of the PCGG to issue charter, to perform and expedite any act or duty required sequestration or freeze orders was maintained for not more by law, or to stop, prevent, and correct any abuse or than eighteen months after the ratification of the impropriety in the performance of duties. Constitution, it cannot be construed thereby that its power (3) Direct the officer concerned to take appropriate action of investigation had thereby been revoked by the failure to against a public official or employee at fault, and reiterate said power in the Constitution. recommend his removal, suspension, demotion, fine, Indeed, upon the passage of Republic Act No. 6770, censure, or prosecution, and ensure compliance therewith. otherwise known as the "Ombudsman Act of 1989," it is (4) Direct the officer concerned, in any appropriate case and therein specifically provided in Section 15 as follows: subject to such limitations as may be provided by law, to Sec. 15. Powers, Functions and Duties. The Office of the furnish it with copies of documents relating to contracts or Ombudsman shall have the following powers, functions and transactions entered into by his office involving the duties: disbursement or use of public funds or properties, and report any irregularity to the Commission on Audit for (1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or appropriate action. employee, office or agency, when such act or omission (5) Request any government agency for assistance and appears to be illegal, unjust, improper or inefficient. It has information necessary in the discharge of its primary jurisdiction over cases cognizable by the responsibilities, and to examine, if necessary, pertinent Sandiganbayan and, in the exercise of this primary records and documents. jurisdiction, it may take over, at any stage, from any (6) Publicize matters covered by its investigation when circumstances so warrant and with due prudence.

investigatory agency of Government, the investigation of such cases; xxx xxx xxx (11) Investigate and initiate the proper action for the recovery of ill-gotten and/or unexplained wealth amassed after February 25, 1986 and the prosecution of the parties involved therein. The Ombudsman shall give priority to complaints filed against high ranking government officials and/or those occupying supervisory positions, complaints involving grave offenses as well as complaints involving large sums of money and/or properties. Under Section 15(l) of Republic Act No. 6770 aforecited, the Ombudsman has primary jurisdiction over cases cognizable by the Sandiganbayan so that it may take over at any stage from any investigatory agency of the government, the investigation of such cases. The authority of the Ombudsman to investigate offenses involving public officers or employees is not exclusive but is concurrent with other similarly authorized agencies of the government. Such investigatory agencies referred to include the PCGG and the provincial and city prosecutors and their assistants, the state prosecutors and the judges of the municipal trial courts and municipal circuit trial courts. 12 In other words, the aforestated provision of the law has opened up the authority to conduct preliminary investigation of offenses cognizable by the Sandiganbayan to all investigatory agencies of the government duly authorized to conduct a preliminary investigation under Section 2, Rule 112 of the 1985 Rules of Criminal Procedure with the only qualification that the Ombudsman may take over at any stage of such investigation in the exercise of his primary jurisdiction. It is also noted that under Section 15(11) of the aforestated Republic Act No. 6770, among the powers vested on the Ombudsman is to investigate and to initiate the proper action for recovery of ill-gotten wealth and/or unexplained wealth amassed after February 25, 1986 and the prosecution of the parties involved therein. The Court agrees with the contention of the public respondent PCGG that this provision is a tacit recognition that the authority of the PCGG to conduct preliminary investigation of ill-gotten wealth and/or unexplained wealth amassed before February 25, 1986 is maintained. However, the Court finds and so holds that the aforesaid provision of the law cannot in any manner dilute or diminish the primary jurisdiction of the Ombudsman over all such types of cases committed by public officers or employees as provided in Section 13, Article XI of the Constitution. Thus, notwithstanding the provision of Section

15(11) of Republic Act No. 6770, the primary jurisdiction of the Ombudsman to investigate covers ill-gotten wealth and/or unexplained wealth cases that occurred even before February 25, 1986. The second issue raised that the preliminary investigation by the PCGG of the aforestated complaints violates the right of petitioner to due process and to equal protection of law is impressed with merit. Under Section 1, Rule 112 of the 1985 Rules on Criminal Procedure, preliminary investigation is defined as "an inquiry or proceeding for the purpose of determining whether there is sufficient ground to engender a wellfounded belief that a crime cognizable by the Regional Trial Court has been committed and that the respondent is probably guilty thereof, and should be held for trial." The purpose of a preliminary investigation is to secure the innocent against hasty, malicious and oppressive prosecution, and to protect him from an open and public accusation of a crime, from the trouble, expense, anxiety of a public trial, and also to protect the state from useless and expensive trials. 13 The conduct of a preliminary investigation is the initial step towards the criminal prosecution of a person. After such preliminary investigation, if the investigating officer finds that there is sufficient ground to engender a well-founded belief that a crime has been committed and that the respondent is probably guilty thereof and should be held for trial, then the corresponding complaint or information shall be filed in the competent court. It is the filing of said complaint or information that initiates the criminal prosecution of the accused when he is brought to court for trial. Such a preliminary investigation is required for offenses cognizable by the Regional Trial Court and the Sandiganbayan. 14 It must be undertaken in accordance with the procedure provided in Section 3, Rule 112 of the 1985 Rules of Criminal Procedure. This procedure is to be observed in order to assure that a person undergoing such preliminary investigation will be afforded due process. As correctly pointed out by petitioner, an indispensable requisite of due process is that the person who presides and decides over a proceeding, including a preliminary investigation, must possess the cold neutrality of an impartial judge. 15 Although such a preliminary investigation is not a trial and is not intended to usurp the function of the trial court, it is not a casual affair. The officer conducting the same investigates or inquires into the facts concerning the commission of the crime with the end in view of determining whether or not an information may be

10

prepared against the accused. Indeed, a preliminary investigation is in effect a realistic judicial appraisal of the merits of the case. Sufficient proof of the guilt of the accused must be adduced so that when the case is tried, the trial court may not be bound as a matter of law to order an acquittal. A preliminary investigation has then been called a judicial inquiry. It is a judicial proceeding. An act becomes judicial when there is opportunity to be heard and for, the production and weighing of evidence, and a decision is rendered thereon. The authority of a prosecutor or investigating officer duly empowered to preside or to conduct a preliminary investigation is no less than that of a municipal judge or even a regional trial court judge. 16 While the investigating officer, strictly speaking is not a "judge," by the nature of his functions he is and must be considered to be a quasi judicial officer. Soon after the creation of the PCGG under Executive Order No. 1, the PCGG sequestered and froze all the properties of petitioner Cojuangco in accordance with the powers vested in it by law. On July 31, 1987, said petitioner was sued by the PCGG before the Sandiganbayan by way of a complaint entitled "Republic of the Philippines vs. Eduardo M. Cojuangco, Jr.," et al. docketed as Civil Case No. 0033. Among the allegations of the complaint are as follows: This is a civil action against Defendants Eduardo Cojuangco, Jr., Ferdinand E. Marcos, Imelda R. Marcos and the rest of the Defendants in the above-entitled case to recover from them ill-gotten wealth consisting of funds and other property which they, in unlawful concert with one another, had acquired and accumulated in flagrant breach of trust and of their fiduciary obligations as public officers with, grave abuse of right and power and in brazen violation of the Constitution and laws of the Republic of the Philippines, thus resulting in their unjust enrichment during Defendant Ferdinand E. Marcos' 20 years of rule from December 30, 1965 to February 25, 1986, first as President of the Philippines under the 1935 Constitution and, thereafter, as one man ruler under martial law and Dictator under the 1973 Marcos-promulgated Constitution.

The complaint was filed by the PCGG through its Chairman, Ramon A. Diaz, who verified the complaint, and Solicitor General Francisco I. Chavez and Assistant Solicitor General Ramon S. Desuasido. Petitioner in turn filed a counterclaim against the PCGG for the sequestration of his properties and the institution of the suit. He also questioned the acts of the PCGG in several special civil actions before the court. 18 On November 27, 1989, the first working day after petitioner Cojuangco returned to the Philippines, the PCGG filed with the Sandiganbayan an information against said petitioner for violation of Republic Act No. 3019 entitled "People of the Philippines vs. Eduardo M. Cojuangco, Jr." docketed as Criminal Case No. 14161. However, the Sandiganbayan found no probable cause for the issuance of a warrant of arrest so a petition for certiorari was filed by the Solicitor General in this Court docketed as G.R. No. 91741. On March 29, 1990 this Court denied the petition. On November 28, 1989, President Aquino directed the Solicitor General to prosecute all persons involved in the misuse of the coconut levy funds. The Solicitor General created a task force for the purpose. On January 12, 1990, the Solicitor General filed with the PCGG the first two criminal complaints for violation of the Anti-Graft and Corrupt Practices Act, bearing on the anomalous use and/or misuse of the coconut levy funds docketed as I.S. Nos. 74 and 75. Among the respondents were the petitioner and intervenors Lobregat and Eleazar. The PCGG assigned assistant prosecutor Cesario del Rosario to conduct the preliminary investigation. As hereinabove related, a subpoena was issued by the said prosecutor for the preliminary investigation on January 29, 1989 insofar as intervenors are concerned while that of petitioner, de la Cuesta and Herminigildo Zayco was scheduled on January 31, 1990. In the same subpoena, respondents were required to submit their counteraffidavits and other supporting documents to controvert the complaint within ten (10) days from notice.

On the scheduled investigation dated January 29, 1990, intervenors appeared through counsel and moved to dismiss the complaints for lack of jurisdiction of the PCGG to 2. The wrongs committed by Defendant acting singly or conduct the preliminary investigation but this was denied collectively and in unlawful concert with one another, by said prosecutor. They were asked by the prosecutor if include the misappropriation and theft of public funds, they will submit their counter-affidavits but intervenors' plunder of the nation's wealth, extortion, blackmail, bribery, counsel replied that they were not yet ready to file the same embezzlement and other acts of corruption, betrayal of public because of their pending motion. Thus, the cases were trust and brazen abuse or power as more fully described considered closed insofar as they are concerned. below, all at the expense and to the grave and irreparable The intervenors contested the prosecutor's action before damage of Plaintiff and the Filipino people. (Emphasis the Sandiganbayan through a petition for certiorari and supplied.) 17 prohibition docketed as Criminal Case No. 0093. On March

11

13, 1990, the Sandiganbayan promulgated its decision wherein it declared the preliminary investigation conducted by del Rosario null and void, enjoined the PCGG from filing an information on the basis thereof and directed the PCGG to conduct another preliminary investigation of I.S. Nos. 74 and 75 as to the intervenors and to assign another investigating prosecutor. Earlier however, that is, on February 27, 1990, the PCGG, overruling prosecutor del Rosario's order, gave the intervenors in I.S. Nos. 74 and 75 another period of five (5) days from notice within which to submit their counteraffidavits and supporting evidence. Based on this action the PCGG filed a motion for reconsideration of the aforesaid decision of the Sandiganbayan which had not been resolved. As to petitioner, on the day of the preliminary investigation dated January 31, 1990, his counsel filed a motion to disqualify or inhibit the PCGG, an alternative motion to dismiss, and a motion to have the PCGG itself hear and/or resolve the motion to disqualify or inhibit itself alternatively a motion to dismiss. The preliminary investigation presided by prosecutor del Rosario started at 2:00 o'clock P.M. with eight other respondents duly represented by their counsel. The said motion was denied and the preliminary investigation was adjourned. Immediately thereafter petitioner brought the matter to Chairman Mateo A.T. Caparas of the PCGG and in several communications sought resolution of the motion by the PCGG. On February 27, 1990, the PCGG issued an order denying petitioner's motion to dismiss for lack of jurisdiction but did not resolve the motion to disqualify. Therein, the PCGG directed petitioner to submit his counteraffidavits within five (5) days from receipt of notice. On March 12, 1990, the same day this petition was filed in this Court, the petitioner, instead of filing the counteraffidavit, filed with the PCGG an urgent motion to defer proceedings in I.S. Nos. 74 and 75 for at least until March 22, 1990 within which to seek judicial relief from the order of February 27, 1990. Upon the filing of this petition, petitioner filed a supplemental urgent motion to defer proceedings with the PCGG informing it of the filing of this petition. Nevertheless, on March 14, 1990, the PCGG filed two informations corresponding to the complaints in I.S. Nos. 74 and 75 which are docketed as Criminal Cases Nos. 14398 and 14399, respectively, at the Sandiganbayan. The PCGG recommended bail as P100,000.00 for each case. Meanwhile, the Solicitor General filed two other complaints against the petitioner with the PCGG accusing the petitioner of violation of Republic Act No. 3019 and other penal laws in connection with the coconut levy funds, namely, I.S. No. 79 which concerns an alleged arbitration award in favor of

Agricultural Investors Inc., and I.S. No. 82 which concerns the acquisition of coconut oil mills. Several other complaints were filed by the Solicitor General with the PCGG against petitioner for preliminary investigation petition, to wit: (a) I.S. No. 80 which concerns the acquisition of the First United Bank, now United Coconut Planters' Bank; (b) I.S. No. 81 concerning shares of the United Coconut Oil Mills Inc.; (c) I.S. No. 83 regarding the acquisition of coconut oil mills and certain indebtedness thereof; and (d) I.S. No. 84 regarding settlement of an Anti-Graft suit in the United States. All of these complaints were for alleged violation of Republic Act No. 3019. The question that arises, therefore, is whether under the circumstances of this case, it would be fair and just for the PCGG to conduct the preliminary investigation of the said complaint instead of the Ombudsman or any other duly authorized investigating agency. Upon the creation of the PCGG under Executive Order No. 1 issued by President Aquino, the PCGG was charged with the task of assisting the President not only in the recovery of illgotten wealth or unexplained wealth accumulated by the former President, his immediate family, relatives, subordinates and close associates but also in the investigation of such cases of graft and corruption as the President may assign to the Commission from time and to prevent a repetition of the same in the future. Section 3 of Executive Order No. 1 provides as follows: Sec. 3. The Commission shall have the power and authority: (a) To conduct investigation as may be necesssary in order to accomplish and carry out the purposes of this order. (b) To sequester or place or cause to be placed under its control or possession any building or office wherein any illgotten wealth or properties may be found, and any records pertaining thereto, in order to prevent their destruction, concealment or disappearance which would frustrate or hamper the investigation or otherwise prevent the Commission from accomplishing its task. (c) To provisionally take over in the public interest or to prevent its disposal or dissipation, business enterprises and properties taken over by the government of the Marcos administration or by entities or persons close to former President Marcos, until the transactions leading to such acquisition by the latter can be disposed of by the appropriate authorities. (d) To enjoin or restrain any actual or threatened commission of acts by any person or entity that may render moot and academic, or frustrate, or otherwise make

12

ineffectual the efforts of the Commission to carry out its tasks under this order. (e) To administer oaths, and issue subpoenas requiring the attendance and testimony of witnesses and/or the production of such books, papers, contracts, records, statement of accounts and other documents as may be material to the investigation conducted by the Commission. (f) To hold any person in direct or indirect contempt and impose the appropriate penalties, following the same procedures and penalties provided in the Rules of Court. (g) To seek and secure the assistance of any office, agency or instrumentality of the government.

contest these claims before appropriate Philippine authorities." Section 7 of the Commission's Rules and Regulations provides that sequestration or freeze (and takeover) orders issue upon the authority of at least two commissioners, based on the affirmation or complaint of an interested party, or motu propio when the Commission has reasonable grounds to believe that the issuance thereof is warranted. A similar requirement is now found in Section 26, Art. XVIII of the 1987 Constitution, which requires that "sequestration or freeze order shall be issued only upon showing of a prima facie case." 20

Insofar as the general power of investigation vested in the PCGG is concerned, it may be divided into two stages. The (h) To promulgate such rules and regulations as may be first stage of investigation which is called the criminal necessary to carry out the purposes of this order. investigation stage is the fact-finding inquiring which is usually conducted by the law enforcement agents whereby From the foregoing provisions of law, it is clear that the they gather evidence and interview witnesses after which PCGG has the following powers and authority: they assess the evidence and if they find sufficient basis, file 1. To conduct an investigation including the preliminary the complaint for the purpose of preliminary investigation. investigation and prosecution of the ill-gotten wealth cases The second stage is the preliminary investigation stage of of former President Marcos, relatives and associates, and the said complaint. It is at this stage, as above discussed, graft and corruption cases assigned by the President to it; where it is ascertained if there is sufficient evidence to bring 2. Issue sequestration orders in relation to property claimed a person to trial. to be ill-gotten; In the petition before this Court, it is not denied that the 3. Issue "freeze orders" prohibiting persons in possession of PCGG conducted the appropriate criminal investigation of property alleged to be ill-gotten from transferring or petitioner and intervenors as a law enforcer. In the process otherwise disposing of the same; it sequestered all the properties of the petitioner after a 4. Issue provisional takeover orders of the said property; prima facie finding that the same amount to ill-gotten wealth and/or were acquired in relation to allegedly 5. Administer oaths and issue subpoenas in the conduct of anomalous disposition or misuse of the coconut levy funds. its investigation; The PCGG then filed on July 31, 1987 a complaint docketed as Civil Case No. 0033 against petitioner and intervenors not only for alleged ill-gotten wealth as associates of former Considering that the PCGG, like the courts, is vested with the President Marcos but for the unlawful concert with the authority to grant provisional remedies of (1) former President and his wife to unjustly enrich themselves sequestration, (2) freezing assets, and (3) provisional at the expense of the Filipino people through the alleged takeover, it is indispensable that, as in the case of misuse, misappropriation and dissipation of the coconut attachment and receivership, there exists a prima facie levy funds, as enumerated in the complaint. This complaint factual foundation, at least, for the sequestration order, was verified and filed by the then Chairman of the PCGG and freeze order or takeover order, an adequate and fair also signed by the Solicitor General and the Assistant opportunity to contest it and endeavor to cause its negation Solicitor General. or nullification. Both are assured under the foregoing executive orders and the rules and regulations promulgated Among the allegations in the civil complaint, are the very transactions now subject of the criminal complaints filed by by the PCGG. 19 the Solicitor General against petitioner to wit: Thus, in Baseco, this Court held, as follows: 13. Defendant Eduardo Cojuangco, Jr., taking undue Executive Order No. 14 enjoins that there be "due regard to advantage of his association, influence and connection, the requirements of fairness and due process." Executive acting in unlawful concert with Defendants Ferdinand E. Order No. 2 declares that with respect to claims on allegedly Marcos and Imelda R. Marcos, embarked upon devices, "ill-gotten" assets and properties, "it is the position of the schemes and stratagems to unjustly enrich themselves at new democratic government that President Marcos . . . (and the expense of Plaintiff and the Filipino people, such as, other parties affected) be afforded fair opportunity to when he 6. Hold any person in direct or indirect contempt and impose the appropriate penalties as provided by the rules.

13

13(a) manipulated, beginning the year 1975, with the active collaboration of Defendants Juan Ponce Enrile, Maria Clara Lobregat Danilo Ursua, Jose R. Eleazar, Jr. and Herminigildo C. Zayco, the purchase by Philippine Coconut Authority (PCA) of 72.2% of the outstanding capital stock of the First (sic) (FUB)which was subsequently converted into a universal bank named United Coconut Planters Bank (UCPB) through the use of the Coconut Consumers Stabilization-Fund (CCSF) levy initially in the amount of P85,773,100.00 in a manner contrary to law and to the specific purposes for which said coconut levy funds were imposed and collected under P.D. 276, and under anomalous and sinister designs and circumstances, to wit: xxx xxx xxx At pp. 22 to 22-A, Expanded Complaint, Civil Case No.0033) [I.S. No. 080] (c) misappropriated, misused and dissipated P840 million of the Coconut Industry Development Fund (CIDF) levy funds deposited with the National Investment Development Corporation (NIDC) as administrator-trustee of said funds and later with UCPB, of which Defendant Eduardo Cojuangco, Jr. was the Chief Executive Officer in connection with the (i) development, improvement, operation and maintenance of the Bugsuk Island Seed Garden ("BUGSUK") by Agricultural Investors, Inc. ("AII") as developer (both Bugsuk and AII are beneficially held and controlled by Defendant Eduardo Cojuangco, Jr.) pursuant to a highly oppressive, anomalous and one-sided memorandum agreement, dated November 20, 1974, (ii) sale by AII to PCA of the seed nuts produced at Bugsuk Seed Garden at exorbitant prices pursuant to a very onerous, oppressive and disadvantageous agreement, dated August 2, 1985 and (iii) payment of liquidated damages in the amount of P640,856,879.67 and arbitration fee of P150,000.00 pursuant to a decision rendered by a Board of Arbitrators against UCPB for alleged breach of contract.; xxx xxx xxx (At pp. 26-27) [I.S. No. 079] (d) established and caused to be funded with coconut levy funds, with the active collaboration of Defendant Ferdinand E. Marcos through the issuance of LOI 926, and of defendants, Juan Ponce Enrile, Jose R. Eleazar, Jr., Maria Clara Lobregat, Jose C. Concepcion, Inaki Mendezona, Douglas Lu Ym, Teodoro D. Regala, Emmanuel Almeda, Eduardo Escueta, Leo Palma, and Rolando de la Cuesta, the United Coconut Oil Mills, Inc. (UNICOM) a corporation beneficially held and controlled by Defendant Eduardo Cojuangco, Jr. and bought sixteen (16) competing and/or non-operating oil mills at exorbitant prices in the total

amount of P184,935 million, then mothballed them in order to control the prices of copra and other coconut products, and assumed and paid the outstanding loan obligations of seven (7) of those purchased oil mills in the total amount of P805,984 million with the express consent and approval of Defendant Ferdinand E. Marcos, thereby establishing a coconut monopoly for their own benefit and unjust enrichment and to the grave damage of Plaintiff and the Filipino people; (e) manipulated with the active collaboration of Defendants Mohammad Ali Dimaporo and Teodoro D. Regala, the sale of the Mindanao Coconut Oil Mills (MINCOCO) to UNICOM through the issuance of LOI 926 by Defendant Ferdinand E. Marcos, in violation of the Guaranty Agreement dated July 23, 1976, which prohibited the sale, among others, of the MINCOCO assets/properties without the prior written consent of NIDC, under terms and conditions grossly disadvantageous to Plaintiff and the Filipino people; (f) drew up a scheme of payment to settle the accounts of MINCOCO and other UNICOM-acquired mills with their respective creditors: namely the National Investment Development Corporation (NIDC), Deveploment Bank of the Philippines (DBP), Philippine Veterans Bank (PVB), under terms grossly disadvantageous to Plaintiff; xxx xxx xxx (At pp. 27-28) [I.S. Nos. 81, 82 and 83] (g) misappropriated and dissipated the coconut levy funds by withdrawing therefrom tens of millions of pesos in order to pay damages adjudged against UNICOM, headed and controlled by Defendant Eduardo Cojuangco, Jr., in an antitrust suit in California, U.S.A.; xxx xxx xxx (At p. 29) [I.S. No. 84] (h) misused, dissipated and unlawfully disbursed coconut levy funds with the active collaboration and participation of defendants Maria Clara Lobregat, Juan Ponce Enrile, Jose Eleazar, Jr., Rolando de la Cuesta and Herminigildo Zayco as members of the PCA governing board for projects and purposes completely alien to those for which the fund was collected and donations made by PCA such as . . . P6 million to COCOFED; and other similar unlawful disbursements, which all remain unaccounted for to date; xxx xxx xxx (At pp 28 to 28-A Emphasis supplied) [I.S. No. 74 and 75]

14

Thereafter, as aforestated, the Solicitor General filed the first two complaints against petitioner and intervenors among others, under I.S. Nos. 74 and 75 for alleged violation of the Anti Graft and Corrupt Practices Act for donations allegedly made out of coconut levy funds to the Philippine Coconut Producers Federation (COCOFED). Petitioner and intervenors questioned not only the authority of the PCGG to conduct the preliminary investigation but asserted a denial of due process and equal protection of the law. There is cogent basis for their plea. The PCGG, as a law enforcer, gathered evidence as to the alleged ill-gotten wealth of petitioner and intervenors and, after satisfying itself that there is a prima facie case, sequestered and issued a freeze order for all the properties of petitioner. Based also on the said finding of a prima facie case, the PCGG filed a civil complaint docketed as Civil Case No. 0033 against petitioner and intervenors for alleged illgotten wealth including the alleged misuse, misappropriation, and diversion of coconut levy funds. As hereinabove discussed the criminal complaints under I.S. Nos. 74, 79, 80, 81, 82, 83 and 84 filed by the Solicitor General all for alleged violation of Republic Act No. 3019, are covered and alleged in the aforesaid civil complaint docketed as Civil Case No. 0033. The PCGG conducted the preliminary investigation of I.S. Nos. 74 and 75 and is poised to conduct the preliminary investigation of the other aforementioned complaints for the same alleged violations of law subject of the civil complaint. The Court cannot close its eyes to the glaring fact that in earlier instances, the PCGG had already found a prima facie case against the petitioner and intervenors when, acting like a judge, it caused the sequestration of the properties and the issuance of the freeze order of the properties of petitioner. Thereafter, acting as a law enforcer, in collaboration with the Solicitor General, the PCGG gathered the evidence and upon finding cogent basis therefor filed the aforestated civil complaint. Consequently the Solicitor General filed a series of criminal complaints.

In our criminal justice system, the law enforcer who conducted the criminal investigation, gathered the evidence and thereafter filed the complaint for the purpose of preliminary investigation cannot be allowed to conduct the preliminary investigation of his own complaint. It is to say the least arbitrary and unjust. It is in such instances that We say one cannot be "a prosecutor and judge at the same time." Having gathered the evidence and filed the complaint as a law enforcer, he cannot be expected to handle with impartiality the preliminary investigation of his own complaint, this time as a public prosecutor. The circumstances of the instant petition are even worse. To repeat, the PCGG and the Solicitor General finding a prima facie basis filed a civil complaint against petitioner and intervenors alleging substantially the same illegal or criminal acts subject of the subsequent criminal complaints the Solicitor General filed with the PCGG for preliminary investigation. While ostensibly, it is only the Solicitor General who is the complainant in the criminal cases filed with the PCGG, in reality the PCGG is an unidentified cocomplainant. Moreover, when the PCGG issued the sequestration and freeze orders against petitioner's properties, it was on the basis of a prima facie finding that the same were ill-gotten and/or were acquired in relation to the illegal disposition of coconut levy funds. Thus, the Court finds that the PCGG cannot possibly conduct the preliminary investigation of said criminal complaints with the "cold neutrality of an impartial judge," as it has prejudged the matter. Add to this the fact that there are many suits filed by petitioner and the intervenors against the PCGG and vice versa. For lesser grounds this Court had disqualified a fiscal or a judge from handling a case.

A fiscal was disqualified from conducting a preliminary investigation because he had appeared for the prosecution when said case was pending in the municipal court. 21 In a case filed before the Commission on Elections this Court held Commissioner Opinion should not have participated in the case since he was the former lawyer of Arturo It is difficult to imagine how in the conduct of such 22 preliminary investigation the PCGG could even make a turn Pacificador. A judge was required to inhibit himself in a case where he was a witness for the complainant. 23 A judge about and take a position contradictory to its earlier before whom the extrajudicial statement of one of the findings of a prima facie case against petitioner and intervenors. This was demonstrated in the undue haste with accused was subscribed was disqualified from hearing the case. 24 A judge who told the complainant is case was weak which I.S. Nos. 74 and 75 was investigated and the and it would be to his advantage to settle the case was informations were filed in court even as the petitioner and disqualified. 25 A judge against whom an administrative intervenors questioned its authority, invoked the denial of due process and promptly informed the PCGG of the filing of complaint was filed by one of the parties was also disqualified. 26 In a case where the motion for inhibition this petition. was found to be groundless, this Court held that the judge should inhibit himself considering the seriousness of the

15

charges. 27 A judge was asked to inhibit himself from trying a malversation case against the accused since he previously convicted the latter of arson. 28 In another case, the judge was ordered to inhibit himself because of strained relationship with the defendant. 29 There are numerous other cases wherein the judges and fiscals were disqualified on similar grounds as those aforementioned. 30 Where the circumstances do not inspire confidence in the objectivity and impartiality of the judge, such judge should inhibit voluntarily or if he refuses, he should be prohibited from handling the case. Judge must not only be impartial but must also appear impartial as an assurance to the parties that his decision will be just. 31 His actuation must inspire that belief. This is an instance when appearance is as important as reality. 32 The same rule of thumb should apply to an investigating officer conducting a preliminary investigation. This is the reason why under Section 1679 of the former Revised Administrative Code, the Secretary of Justice, who has supervision over the prosecution arm of the government, is given ample power to designate another prosecutor to handle the investigation and prosecution of a case when the prosecutor handling the same is otherwise disqualified by personal interest, or is unable or fails to perform his duty. The Court finds that under the circumstances of the case, the PCGG cannot inspire belief that it could be impartial in the conduct of the preliminary investigation of the aforesaid complaints against petitioner and intervenors. It cannot possibly preside in the said preliminary investigation with an even hand. The Court holds that a just and fair administration of justice can be promoted if the PCGG would be prohibited from conducting the preliminary investigation of the complaints subject of this petition and the petition for intervention and that the records of the same should be forwarded to the Ombudsman, who as an independent constitutional officer has primary jurisdiction over cases of this nature, to conduct such preliminary investigation and take appropriate action. All violators of the law must be brought before the bar of justice. However, they must be afforded due process and equal protection of the law, whoever they may be. WHEREFORE, the petitions of Eduardo M. Cojuangco, Jr. and intervenors Maria Clara Lobregat, and Jose Eleazar, Jr. are hereby GRANTED. The PCGG is directed to transmit the complaints and records thereof under I.S. Nos. 74, 75, 79, 80, 81, 82, 83 and 84 to the Ombudsman for appropriate action. All proceedings of the preliminary investigation conducted by the PCGG of said complaints are hereby

declared null and void including the informations which it filed in the Sandiganbayan against petitioner and intervenors docketed as Criminal Cases Nos. 14398 and 14399. The status quo order which this Court issued on March 12, 1990 is hereby made permanent and the PCGG is permanently prohibited from further conducting the preliminary investigation of the aforestated complaints. The Court makes no pronouncement as to costs. SO ORDERED. Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Feliciano, Padilla, Bidin, Sarmiento, Cortes, Grio-Aquino, Medialdea and Regalado, JJ., concur. Paras, J., took no part.

Separate Opinions GUTIERREZ, JR., J.: concurring: I concur in the Court's decision penned by my distinguished colleague, Mr. Justice Emilio A. Gancayco. The PCGG cannot preside over these cases with an even hand, much less inspire the slightest belief in its impartiality and fairness. Where the PCGG has sequestered properties, arrived at precise conclusions, and filed a CIVIL case for the recovery or forfeiture of those properties, it is disqualified from conducting any preliminary investigation of CRIMINAL charges pertaining to the same alleged ill gotten wealth. As an interested party in the CIVIL case, it is incapable of acting fairly in the CRIMINAL case. This is the Court's ruling. I feel, however, that the Court should have gone further. In the light of the unquestioned jurisdiction given to the Ombudsman by the Constitution and statute, the PCGG should no longer continue conducting preliminary investigations. It should limit itself to the preparation and filing of civil cases. Its conduct of preliminary investigations is so colored by the basic reason for its creation, its institutional structure, and its obsession to recover everything that it perceives and suspects to be ill gotten wealth that it cannot help but run roughshod over fundamental requirements of fair play in criminal cases. Nowhere is pre-judgment so evident as in this case. In filing the civil case against Mr. Cojuangco, the PCGG has concluded with certainty that he is guilty of "misappropriation and theft of public funds, plunder of the nation's wealth, extortion, blackmail, bribery, embezzlement, and other acts of corruption, betrayal of public trust and brazen abuse of power, as more fully

16

described below, all at the expense and to the grave irreparable damage of Plaintiff and the Filipino people." (See complaint in CC 0033, Sandiganbayan, pp. 2 and 3) Mr. Cojuangco has been asked to pay more than P100 Billion in damages. He was placed on the "hold order" lists of PCGG and prohibited from coming home to defend himself His wife, children, and grandchildren hold cancelled passports and are indefinitely exiled.

distinguished Professor of Law for decades. He was nominated and appointed Ombudsman on the record of his unquestioned competence, intellectual skills, integrity, and independence.

In the light of the above considerations, persons who appear before the PCGG and not the Ombudsman are clearly denied the equal protection guaranteed by the Constitution. There is no substantial basis for some respondents to On January 31, 1990 when the preliminary investigation appear before the biased and less competent PCGG while was to be conducted, a voluminous motion to inhibit the others appear before the impartial and more competent PCGG was filed by the petitioner. It took the PCGG Ombudsman. The line drawn between public officials in Prosecutor exactly ten (10) minutes to deny the motion and office before February 25, 1986 and those in public office pass upon the complex constitutional and jurisdictional after February 25, 1986 is arbitrary and discriminatory. issues. The Supreme Court needed several months to There are no substantial distinctions permitting a valid classification. And as stressed by the petitioner, is there a deliberate and resolve the same issues. substantial distinction between those who committed graft Apart from its having been created for the sole purpose of recovering the ill gotten wealth of ex-President Marcos, his and corruption under former President Marcos and those who are now committing (according to media and the relatives and cronies, the make-up of the PCGG prevents it from being independent. The Chairman and members serve Roman Catholic hierarchy) graft and corruption under at the absolute pleasure of the President. The law prescribes President Aquino? The petitioner argues: no qualifications for their appointment. The law does not The violation of equal protection thus becomes clear. It is now four years after EDSA. Three years after the ratification mention future appointments. of the new Constitution. Must there be one kind of justice The record is replete with incidents of non-objectivity. The for the "victors", another for the "vanquished"? Is there not petitioner has repeatedly filed motions to inspect the but one Filipino under the Constitution? There is no cogent records of his former companies to enable him to defend reason why the liberty of those who were associated with himself. Motions which an ordinary Fiscal, Prosecutor, or Judge would routinely grant are denied. The Supreme Court former President Marcos should lie in the hands of PCGG and not in the Ombudsman who is independent of the itself in, G.R. No. 91741 has ruled that the petitioner had been singled out by the PCGG and given biased treatment. In President, and, of course, the Solicitor General, and is that same case, the Sandiganbayan found no probable cause precisely mandated by the Constitution to deal with graft and corruption cases. for the arrest of Mr. Cojuangco. We sustained the Sandiganbayan. The other issue which the Court should have explored further is the constitutional right of all accused persons to equal protection of the law. As earlier stated, the appointment, tenure, functions, and objectives of the PCGG prevent it from being fair and objective. Its actions in this case show that indeed it cannot be fair and objective. It is a temporary office given a fixed mission. It has to accomplish that mission. On the other hand, the Ombudsman is created by the Constitution. It is vested with "independent" powers. It enjoys fiscal autonomy. It is insulated from interference by the political departments. The qualifications for Ombudsman are found in the Constitution. They include "recognized probity and independence." He must have been a practising lawyer or Judge for at least ten (10) years. The incumbent Ombudsman has served in the Supreme Court, Court of Appeals, Court of First Instance, Department of Justice and high level fact finding committees. He was at the top of his class at the U.P. College of Law and has been a It is thus a denial of equal protection of the law that the petitioner has been subjected to preliminary investigation for violation of R.A. No. 3019 by PCGG rather than by the Ombudsman. (Petitioner's Memorandum, p. 41) Impartiality and fundamental fairness are inherent rights of all persons brought before our criminal justice system. The social justice provisions of the Constitution mandate that the State must take special measures to protect these rights when the accused are the outcasts and the poor or belong to a group which is ignored, disliked, or hated by those currently in power. During the Marcos administration, a top leader of the then opposition was ordered prosecuted in what were clearly railroaded proceedings. The Court struck down the charade of a preliminary investigation and among, other things, stated: The purpose of preliminary investigation is to secure the innocent against hasty, malicious and oppressive prosecution, and to protect him from an open and public accusation of crime, from the trouble, expense and anxiety

17

of a public trial, and also to protect the state from useless and expensive trials. (Trocio v. Manta, 118 SCRA 241; citing Hashim v. Boncan, 71 Phil. 216). The right to a preliminary investigation is a statutory grant, and to withhold it would be to transgress constitutional due process. (See People v. Oandasan 25 SCRA 277) However, in order to satisfy the due process clause it is not enough that the preliminary investigation is conducted in the sense of making sure that a transgressor shall not escape with impunity. A preliminary investigation serves not only the purposes of the State. More important, it is a part of the guarantees of freedom and fair play which are birthrights of all who live in our country. It is, therefore, imperative upon the fiscal or the judge as the case may be, to relieve the accused from the pain of going through a trial once it is ascertained that the evidence is insufficient to sustain a prima facie case or that no probable cause exists to form a sufficient belief as to the guilt of the accused. Although there is no general formula or fixed rule for the determination of probable cause since the same must be decided in the light of the conditions obtaining in given situations and its existence depends to a large degree upon the finding or opinion of the judge conducting the examination, such a finding should not disregard the facts before the judge nor run counter to the clear dictates of reason (See La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 391). The judge or fiscal, therefore, should not go on with the prosecution in the hope that some credible evidence might later turn up during trial for this would be a flagrant violation of a basic right which the courts are created to uphold. It bears repeating that the judiciary lives up to its mission by vitalizing and not denigrating constitutional rights. So it has been before. It should continue to be so. (Salonga v. Cruz Panio, 134 SCRA 438, 461-462) The Court today can do no less. It has to apply the same yardstick to the PCGG. The same guarantees of fairness and justice in this decision of the Court rendered during the time of Mr. Marcos belong in equal measure to petitioner Cojuangco and all who appear before the PCGG during the term of President Aquino. Separate Opinions GUTIERREZ, JR., J.: concurring: I concur in the Court's decision penned by my distinguished colleague, Mr. Justice Emilio A. Gancayco. The PCGG cannot preside over these cases with an even hand, much less inspire the slightest belief in its impartiality and fairness. Where the PCGG has sequestered properties, arrived at precise conclusions, and filed a CIVIL case for the recovery or forfeiture of those properties, it is disqualified from conducting any preliminary investigation of CRIMINAL

charges pertaining to the same alleged ill gotten wealth. As an interested party in the CIVIL case, it is incapable of acting fairly in the CRIMINAL case. This is the Court's ruling. I feel, however, that the Court should have gone further. In the light of the unquestioned jurisdiction given to the Ombudsman by the Constitution and statute, the PCGG should no longer continue conducting preliminary investigations. It should limit itself to the preparation and filing of civil cases. Its conduct of preliminary investigations is so colored by the basic reason for its creation, its institutional structure, and its obsession to recover everything that it perceives and suspects to be ill gotten wealth that it cannot help but run roughshod over fundamental requirements of fair play in criminal cases. Nowhere is pre-judgment so evident as in this case. In filing the civil case against Mr. Cojuangco, the PCGG has concluded with certainty that he is guilty of "misappropriation and theft of public funds, plunder of the nation's wealth, extortion, blackmail, bribery, embezzlement, and other acts of corruption, betrayal of public trust and brazen abuse of power, as more fully described below, all at the expense and to the grave irreparable damage of Plaintiff and the Filipino people." (See complaint in CC 0033, Sandiganbayan, pp. 2 and 3) Mr. Cojuangco has been asked to pay more than P100 Billion in damages. He was placed on the "hold order" lists of PCGG and prohibited from coming home to defend himself His wife, children, and grandchildren hold cancelled passports and are indefinitely exiled. On January 31, 1990 when the preliminary investigation was to be conducted, a voluminous motion to inhibit the PCGG was filed by the petitioner. It took the PCGG Prosecutor exactly ten (10) minutes to deny the motion and pass upon the complex constitutional and jurisdictional issues. The Supreme Court needed several months to deliberate and resolve the same issues. Apart from its having been created for the sole purpose of recovering the ill gotten wealth of ex-President Marcos, his relatives and cronies, the make-up of the PCGG prevents it from being independent. The Chairman and members serve at the absolute pleasure of the President. The law prescribes no qualifications for their appointment. The law does not mention future appointments. The record is replete with incidents of non-objectivity. The petitioner has repeatedly filed motions to inspect the records of his former companies to enable him to defend himself. Motions which an ordinary Fiscal, Prosecutor, or Judge would routinely grant are denied. The Supreme Court itself in, G.R. No. 91741 has ruled that the petitioner had been singled out by the PCGG and given biased treatment. In

18

that same case, the Sandiganbayan found no probable cause for the arrest of Mr. Cojuangco. We sustained the Sandiganbayan. The other issue which the Court should have explored further is the constitutional right of all accused persons to equal protection of the law. As earlier stated, the appointment, tenure, functions, and objectives of the PCGG prevent it from being fair and objective. Its actions in this case show that indeed it cannot be fair and objective. It is a temporary office given a fixed mission. It has to accomplish that mission. On the other hand, the Ombudsman is created by the Constitution. It is vested with "independent" powers. It enjoys fiscal autonomy. It is insulated from interference by the political departments. The qualifications for Ombudsman are found in the Constitution. They include "recognized probity and independence." He must have been a practising lawyer or Judge for at least ten (10) years. The incumbent Ombudsman has served in the Supreme Court, Court of Appeals, Court of First Instance, Department of Justice and high level fact finding committees. He was at the top of his class at the U.P. College of Law and has been a distinguished Professor of Law for decades. He was nominated and appointed Ombudsman on the record of his unquestioned competence, intellectual skills, integrity, and independence.

precisely mandated by the Constitution to deal with graft and corruption cases. It is thus a denial of equal protection of the law that the petitioner has been subjected to preliminary investigation for violation of R.A. No. 3019 by PCGG rather than by the Ombudsman. (Petitioner's Memorandum, p. 41) Impartiality and fundamental fairness are inherent rights of all persons brought before our criminal justice system. The social justice provisions of the Constitution mandate that the State must take special measures to protect these rights when the accused are the outcasts and the poor or belong to a group which is ignored, disliked, or hated by those currently in power. During the Marcos administration, a top leader of the then opposition was ordered prosecuted in what were clearly railroaded proceedings. The Court struck down the charade of a preliminary investigation and among, other things, stated:

The purpose of preliminary investigation is to secure the innocent against hasty, malicious and oppressive prosecution, and to protect him from an open and public accusation of crime, from the trouble, expense and anxiety of a public trial, and also to protect the state from useless and expensive trials. (Trocio v. Manta, 118 SCRA 241; citing Hashim v. Boncan, 71 Phil. 216). The right to a preliminary investigation is a statutory grant, and to withhold it would In the light of the above considerations, persons who be to transgress constitutional due process. (See People v. appear before the PCGG and not the Ombudsman are clearly Oandasan 25 SCRA 277) However, in order to satisfy the denied the equal protection guaranteed by the Constitution. due process clause it is not enough that the preliminary There is no substantial basis for some respondents to investigation is conducted in the sense of making sure that a appear before the biased and less competent PCGG while transgressor shall not escape with impunity. A preliminary others appear before the impartial and more competent investigation serves not only the purposes of the State. Ombudsman. The line drawn between public officials in More important, it is a part of the guarantees of freedom office before February 25, 1986 and those in public office and fair play which are birthrights of all who live in our after February 25, 1986 is arbitrary and discriminatory. country. It is, therefore, imperative upon the fiscal or the There are no substantial distinctions permitting a valid judge as the case may be, to relieve the accused from the classification. And as stressed by the petitioner, is there a pain of going through a trial once it is ascertained that the substantial distinction between those who committed graft evidence is insufficient to sustain a prima facie case or that and corruption under former President Marcos and those no probable cause exists to form a sufficient belief as to the who are now committing (according to media and the guilt of the accused. Although there is no general formula or Roman Catholic hierarchy) graft and corruption under fixed rule for the determination of probable cause since the same must be decided in the light of the conditions President Aquino? The petitioner argues: obtaining in given situations and its existence depends to a The violation of equal protection thus becomes clear. It is now four years after EDSA. Three years after the ratification large degree upon the finding or opinion of the judge conducting the examination, such a finding should not of the new Constitution. Must there be one kind of justice disregard the facts before the judge nor run counter to the for the 'victors', another for the 'vanquished'?'Is there not but one Filipino under the Constitution? There is no cogent clear dictates of reason (See La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 391). The judge or fiscal, therefore, reason why the liberty of those who were associated with should not go on with the prosecution in the hope that some former President Marcos should lie in the hands of PCGG credible evidence might later turn up during trial for this and not in the Ombudsman who is independent of the would be a flagrant violation of a basic right which the President, and, of course, the Solicitor General, and is

19

courts are created to uphold. It bears repeating that the judiciary lives up to its mission by vitalizing and not denigrating constitutional rights. So it has been before. It should continue to be so. (Salonga v. Cruz Panio, 134 SCRA 438, 461-462) The Court today can do no less. It has to apply the same yardstick to the PCGG. The same guarantees of fairness and justice in this decision of the Court rendered during the time of Mr. Marcos belong in equal measure to petitioner Cojuangco and all who appear before the PCGG during the term of President Aquino. G.R. No. L-41315 November 13, 1986 PILIPINAS SHELL PETROLEUM CORPORATION, petitioner, vs. THE OIL INDUSTRY COMMISSION and MANUEL B. YAP, respondents. Angara, Concepcion, Regala and Cruz Law Office for petitioner. J. T. Barrera & Associates for respondent Manuel B. Yap. PARAS, J.: This is a Petition for certiorari assailing certain orders issued by respondent Oil Industry Commission (hereinafter known as OIC) in OIC Case No. 144. Briefly the facts of the case are as follows: Respondent Manuel B. Yap is a gasoline dealer by virtue of a "Sublease and Dealer Agreement" entered into with petitioner Pilipinas Shell Petroleum Corporation (hereinafter known as Shell) originally in the year 1965 and superseded in the year 1969 (Annex "A") of the petition). The latter was filed and registered with the OIC on April 30, 1971 as required by Republic Act #6173 (R.A. #6173). While petitioner Shell complied with its contractual commitments, Manuel B. Yap defaulted in his obligations upon failure to pay for his purchases of gasoline and other petroleum products. Petitioner Shell sent demand letters to respondent Manuel B. Yap who continued to ignore these demands letters forcing petitioner Shell to exercise its contractual rights to terminate the contract. Petitioner Shell sent respondent Yap the required 90-day written notice to terminate their contract as provided for by Sec. 5 of their "Sublease and Dealer Agreement, " to wit: 5. Effective Date, Direction and Termination of Agreement. This Agreement, duly signed by the DEALER, shall become effective for both parties first of January, 1969 and shall continue indefinitely thereafter, until terminated by either

party giving to the other ninety (90) days notice in writing of such termination. Respondent Yap filed a complaint with the then Court of First Instance (CFI) of Iloilo docketed as Civil Case No. 9507 for damages with preliminary injunction against petitioner Shell Respondent Yap questioned the validity of the exercise by petitioner of its contractual right to terminate the contract. Barely less than a month from the filing of his complaint, respondent Yap again filed with the respondent OIC Case #144 where he likewise raised the same issue. Without affording the petitioner an opportunity to be heard on the matter, respondent OIC issued an ex-parte preliminary mandatory injunction commanding petitioner to perform the following acts: 1) to continue selling to respondent Yap petroleum products 2) to maintain the status quo insofar as the operation by respondent Yap of the gasoline station is concerned 3) to sub t a verified statement of the unpaid accounts of respondent Yap. Petitioner Shell also filed a complaint with the then CFI of Cebu docketed as Civil Case No. 13675 to collect the long overdue debts of respondent Yap. Shell filed with the OIC an Urgent Ex-parte Motion to Dissolve the Writ (Annex "I") and filed its answer to complaint of respondent Yap principally impugning the jurisdiction of the OIC. A decision was rendered in Civil Case No. 13675 ordering respondent Yap to pay his overdue liabilities: 1) P47,537.30 representing the value of petroleum products he bought from the petitioner 2) P1,000, litigation expenses 3) P5,000, attorney's fees. Despite the pendency of the controversy before the ordinary civil courts, OIC persisted in asserting jurisdiction over it by rendering a decision stating it has jurisdiction to pass upon the alleged contractual right of petitioner to declare Yap's contract terminated. The OIC negated the existence of such right because the stipulation is an "unfair and onerous trade practice." Respondent OIC also allowed respondent Yap reasonable time from receipt of the decision within which to pay his judgment debt to petitioner as adjudged in Civil Case No. 13675. Petitioner Shell moved for a reconsideration but respondent OIC denied it. However, a modification was made by declaring that the permission it gave respondent Yap to pay his judgment debt was "merely a suggestion." OIC ordered that petitioner must comply within ten (10) days from notice. The issues now of the petition are the aforementioned orders of the respondent OIC, petitioner Shell submitting that they are null and void on any, or all, of the following grounds:

20

1. Respondent OIC has no jurisdiction to hear and decide contractual disputes between a gasoline dealer and an oil company. 2. Respondent Manuel B. Yap himself first invoked the jurisdiction of the then CFI of Iloilo to resolve the dispute so that he is now estopped from impugning the jurisdiction of the civil courts. 3. Peremptory declaration by respondent OIC that the contractual stipulation that either party may declare the contract terminated after a 90-day written notice constitutes an "unfair and onerous trade practice" is an unconstitutional impairment of the obligation of contracts and a deprivation of property without due process of law. 4. There is no factual basis for respondent OIC's conclusion and ruling that the disputed contract is an "unfair and onerous trade practice." The contentions of petitioner are well-founded. A detailed reading of the entire OIC Act (R.A. #6173) will reveal that there is no express provision conferring upon respondent OIC the power to hear and decide contractual disputes between a gasoline dealer and an oil company. It is of course a well settled principle of administrative law that unless expressly empowered, administrative agencies like respondent OIC, are bereft of quasi-judicial powers. As We declared in Miner vs. Mardo, et al (2 SCRA 898): . . . It may be conceded that the Legislature may confer on administrative boards or bodies quasi-judicial powers involving the exercise of judgment and discretion, as incident to the performance of administrative functions, but in so doing, the legislature must state its intention in express terms that would leave no doubt, as even such quasi-judicial prerogatives must be limited, if they are to be valid, only to those incidental to, or in connection with, the performance of administrative duties which do not amount to conferment of jurisdiction over a matter exclusively vested in the courts.

(4) (d) To regulate the operations and trade practices of the industry in order to encourage orderly competition, prevent monopolies and collusive practices within the industry, giving due regard to the ecological and environmental needs of the country; There is no question that respondent Yap first invoked the jurisdiction of the then CFI of Iloilo to resolve the dispute and without waiting for the determination of the issues, he filed a complaint with respondent OIC raising the same issues. Respondent Yap thus submitted a single and indivisible controversy to two different entities. This cannot be permitted without making a mockery of justice. It is not amiss to mention that even before the creation of the OIC in 1971, petitioner Shell and respondent Yap were already bound by their dealership agreement. From the time said agreement was registered with the OIC as required by R.A. 6173, respondent OIC never informed the petitioner that said agreement or any of its provisions was contrary to the provisions of R.A. No. 6173. Neither did respondent Yap show any disapproval of the provisions of Sec. 5 of their agreement. Said provision is not contrary to law. WHEREFORE, the questioned orders of respondent OIC, in OIC Case #144 are hereby declared null and void. SO ORDERED. G.R. No. 151908 August 12, 2003

SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE CORPORATION (PILTEL), petitioners, vs. NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent. x---------------------------------------------------------x G.R. No. 152063 August 12, 2003

GLOBE TELECOM, INC. (GLOBE) and ISLA Sec. 6 of R.A. #6173 restricts the extent and scope of the OIC COMMUNICATIONS CO., INC. (ISLACOM), petitioners, prerogative of jurisdiction in sub-paragraphs "a" to "f". vs. COURT OF APPEALS (The Former 6th Division) and the A contrary interpretation would collide with the familiar NATIONAL TELECOMMUNICATIONS COMMISSION, principles of statutory construction that, in making a respondents. detailed enumeration, the law-making body intended to accomplish a purpose and that the all-embracing and general word "jurisdiction" must be restricted to mere regulatory and supervisory (not judicial) powers. The phrase "to set the conditions" under subparagraph "a" refers to the right to prescribe rules of conduct. It appertains to rule-making functions and cannot include quasi-judicial powers. The limitations of supervision and regulation are reiterated in the provisions of Sec. 7 (4) (d), to wit: YNARES-SANTIAGO, J.: Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission (NTC) issued on June 16, 2000 Memorandum Circular No. 13-6-2000, promulgating rules and regulations on the billing of telecommunications services. Among its pertinent provisions are the following: (1) The billing statements shall be received by the subscriber of the telephone service not later than 30 days

21

from the end of each billing cycle. In case the statement is received beyond this period, the subscriber shall have a specified grace period within which to pay the bill and the public telecommunications entity (PTEs) shall not be allowed to disconnect the service within the grace period. (2) There shall be no charge for calls that are diverted to a voice mailbox, voice prompt, recorded message or similar facility excluding the customer's own equipment. (3) PTEs shall verify the identification and address of each purchaser of prepaid SIM cards. Prepaid call cards and SIM cards shall be valid for at least 2 years from the date of first use. Holders of prepaid SIM cards shall be given 45 days from the date the prepaid SIM card is fully consumed but not beyond 2 years and 45 days from date of first use to replenish the SIM card, otherwise the SIM card shall be rendered invalid. The validity of an invalid SIM card, however, shall be installed upon request of the customer at no additional charge except the presentation of a valid prepaid call card. (4) Subscribers shall be updated of the remaining value of their cards before the start of every call using the cards. (5) The unit of billing for the cellular mobile telephone service whether postpaid or prepaid shall be reduced from 1 minute per pulse to 6 seconds per pulse. The authorized rates per minute shall thus be divided by 10.1 The Memorandum Circular provided that it shall take effect 15 days after its publication in a newspaper of general circulation and three certified true copies thereof furnished the UP Law Center. It was published in the newspaper, The Philippine Star, on June 22, 2000.2 Meanwhile, the provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and the unit of billing for cellular mobile telephone service took effect 90 days from the effectivity of the Memorandum Circular. On August 30, 2000, the NTC issued a Memorandum to all cellular mobile telephone service (CMTS) operators which contained measures to minimize if not totally eliminate the incidence of stealing of cellular phone units. The Memorandum directed CMTS operators to: a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and verification of the identity and addresses of prepaid SIM card customers; b. require all your respective prepaid SIM cards dealers to comply with Section B(1) of MC 13-6-2000; c. deny acceptance to your respective networks prepaid and/or postpaid customers using stolen cellphone units or cellphone units registered to somebody other than the applicant when properly informed of all information relative to the stolen cellphone units;

d. share all necessary information of stolen cellphone units to all other CMTS operators in order to prevent the use of stolen cellphone units; and e. require all your existing prepaid SIM card customers to register and present valid identification cards.3 This was followed by another Memorandum dated October 6, 2000 addressed to all public telecommunications entities, which reads: This is to remind you that the validity of all prepaid cards sold on 07 October 2000 and beyond shall be valid for at least two (2) years from date of first use pursuant to MC 136-2000. In addition, all CMTS operators are reminded that all SIM packs used by subscribers of prepaid cards sold on 07 October 2000 and beyond shall be valid for at least two (2) years from date of first use. Also, the billing unit shall be on a six (6) seconds pulse effective 07 October 2000. For strict compliance.4 On October 20, 2000, petitioners Isla Communications Co., Inc. and Pilipino Telephone Corporation filed against the National Telecommunications Commission, Commissioner Joseph A. Santiago, Deputy Commissioner Aurelio M. Umali and Deputy Commissioner Nestor C. Dacanay, an action for declaration of nullity of NTC Memorandum Circular No. 136-2000 (the Billing Circular) and the NTC Memorandum dated October 6, 2000, with prayer for the issuance of a writ of preliminary injunction and temporary restraining order. The complaint was docketed as Civil Case No. Q-00-42221 at the Regional Trial Court of Quezon City, Branch 77.5 Petitioners Islacom and Piltel alleged, inter alia, that the NTC has no jurisdiction to regulate the sale of consumer goods such as the prepaid call cards since such jurisdiction belongs to the Department of Trade and Industry under the Consumer Act of the Philippines; that the Billing Circular is oppressive, confiscatory and violative of the constitutional prohibition against deprivation of property without due process of law; that the Circular will result in the impairment of the viability of the prepaid cellular service by unduly prolonging the validity and expiration of the prepaid SIM and call cards; and that the requirements of identification of prepaid card buyers and call balance announcement are unreasonable. Hence, they prayed that the Billing Circular be declared null and void ab initio. Soon thereafter, petitioners Globe Telecom, Inc and Smart Communications, Inc. filed a joint Motion for Leave to Intervene and to Admit Complaint-in-Intervention.6 This was granted by the trial court. On October 27, 2000, the trial court issued a temporary restraining order enjoining the NTC from implementing

22

Memorandum Circular No. 13-6-2000 and the Memorandum dated October 6, 2000.7 In the meantime, respondent NTC and its co-defendants filed a motion to dismiss the case on the ground of petitioners' failure to exhaust administrative remedies. Subsequently, after hearing petitioners' application for preliminary injunction as well as respondent's motion to dismiss, the trial court issued on November 20, 2000 an Order, the dispositive portion of which reads: WHEREFORE, premises considered, the defendants' motion to dismiss is hereby denied for lack of merit. The plaintiffs' application for the issuance of a writ of preliminary injunction is hereby granted. Accordingly, the defendants are hereby enjoined from implementing NTC Memorandum Circular 13-6-2000 and the NTC Memorandum, dated October 6, 2000, pending the issuance and finality of the decision in this case. The plaintiffs and intervenors are, however, required to file a bond in the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00), Philippine currency. SO ORDERED.8 Defendants filed a motion for reconsideration, which was denied in an Order dated February 1, 2001.9 Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of Appeals, which was docketed as CA-G.R. SP. No. 64274. On October 9, 2001, a decision was rendered, the decretal portion of which reads: WHEREFORE, premises considered, the instant petition for certiorari and prohibition is GRANTED, in that, the order of the court a quo denying the petitioner's motion to dismiss as well as the order of the court a quo granting the private respondents' prayer for a writ of preliminary injunction, and the writ of preliminary injunction issued thereby, are hereby ANNULLED and SET ASIDE. The private respondents' complaint and complaint-in-intervention below are hereby DISMISSED, without prejudice to the referral of the private respondents' grievances and disputes on the assailed issuances of the NTC with the said agency. SO ORDERED.10 Petitioners' motions for reconsideration were denied in a Resolution dated January 10, 2002 for lack of merit.11 Hence, the instant petition for review filed by Smart and Piltel, which was docketed as G.R. No. 151908, anchored on the following grounds: A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE NATIONAL TELECOMMUNICATIONS

COMMISSION (NTC) AND NOT THE REGULAR COURTS HAS JURISDICTION OVER THE CASE. B. THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO EXHAUST AN AVAILABLE ADMINISTRATIVE REMEDY. C. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BILLING CIRCULAR ISSUED BY THE RESPONDENT NTC IS UNCONSTITUTIONAL AND CONTRARY TO LAW AND PUBLIC POLICY. D. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO SHOW THEIR CLEAR POSITIVE RIGHT TO WARRANT THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.12 Likewise, Globe and Islacom filed a petition for review, docketed as G.R. No. 152063, assigning the following errors: 1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINES OF PRIMARY JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS FOR LEGAL NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES AND VIOLATIONS OF LAW) OF A PURELY ADMINISTRATIVE REGULATION PROMULGATED BY AN AGENCY IN THE EXERCISE OF ITS RULE MAKING POWERS AND INVOLVES ONLY QUESTIONS OF LAW. 2. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY WHEN THE QUESTIONS RAISED ARE PURELY LEGAL QUESTIONS. 3. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY WHERE THE ADMINISTRATIVE ACTION IS COMPLETE AND EFFECTIVE, WHEN THERE IS NO OTHER REMEDY, AND THE PETITIONER STANDS TO SUFFER GRAVE AND IRREPARABLE INJURY. 4. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE PETITIONERS IN FACT EXHAUSTED ALL ADMINISTRATIVE REMEDIES AVAILABLE TO THEM. 5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING ITS QUESTIONED RULINGS IN THIS CASE BECAUSE GLOBE AND ISLA HAVE A CLEAR RIGHT TO AN INJUNCTION.13 The two petitions were consolidated in a Resolution dated February 17, 2003.14

23

On March 24, 2003, the petitions were given due course and In questioning the validity or constitutionality of a rule or the parties were required to submit their respective regulation issued by an administrative agency, a party need not exhaust administrative remedies before going to court. memoranda.15 This principle applies only where the act of the We find merit in the petitions. administrative agency concerned was performed pursuant Administrative agencies possess quasi-legislative or ruleto its quasi-judicial function, and not when the assailed act making powers and quasi-judicial or administrative pertained to its rule-making or quasi-legislative power. In adjudicatory powers. Quasi-legislative or rule-making Association of Philippine Coconut Dessicators v. Philippine power is the power to make rules and regulations which Coconut Authority,20 it was held: results in delegated legislation that is within the confines of The rule of requiring exhaustion of administrative remedies the granting statute and the doctrine of non-delegability before a party may seek judicial review, so strenuously and separability of powers.16 urged by the Solicitor General on behalf of respondent, has The rules and regulations that administrative agencies obviously no application here. The resolution in question promulgate, which are the product of a delegated legislative was issued by the PCA in the exercise of its rule- making or power to create new and additional legal provisions that legislative power. However, only judicial review of decisions have the effect of law, should be within the scope of the of administrative agencies made in the exercise of their statutory authority granted by the legislature to the quasi-judicial function is subject to the exhaustion doctrine. administrative agency. It is required that the regulation be Even assuming arguendo that the principle of exhaustion of germane to the objects and purposes of the law, and be not administrative remedies apply in this case, the records in contradiction to, but in conformity with, the standards reveal that petitioners sufficiently complied with this prescribed by law.17 They must conform to and be requirement. Even during the drafting and deliberation consistent with the provisions of the enabling statute in stages leading to the issuance of Memorandum Circular No. order for such rule or regulation to be valid. Constitutional and statutory provisions control with respect to what rules 13-6-2000, petitioners were able to register their protests to the proposed billing guidelines. They submitted their and regulations may be promulgated by an administrative respective position papers setting forth their objections and body, as well as with respect to what fields are subject to submitting proposed schemes for the billing circular.21 After regulation by it. It may not make rules and regulations the same was issued, petitioners wrote successive letters which are inconsistent with the provisions of the dated July 3, 200022 and July 5, 2000,23 asking for the Constitution or a statute, particularly the statute it is suspension and reconsideration of the so-called Billing administering or which created it, or which are in Circular. These letters were not acted upon until October 6, derogation of, or defeat, the purpose of a statute. In case of 2000, when respondent NTC issued the second assailed conflict between a statute and an administrative order, the Memorandum implementing certain provisions of the 18 former must prevail. Billing Circular. This was taken by petitioners as a clear Not to be confused with the quasi-legislative or rule-making denial of the requests contained in their previous letters, power of an administrative agency is its quasi-judicial or thus prompting them to seek judicial relief. administrative adjudicatory power. This is the power to hear and determine questions of fact to which the legislative In like manner, the doctrine of primary jurisdiction applies only where the administrative agency exercises its quasipolicy is to apply and to decide in accordance with the judicial or adjudicatory function. Thus, in cases involving standards laid down by the law itself in enforcing and specialized disputes, the practice has been to refer the same administering the same law. The administrative body to an administrative agency of special competence pursuant exercises its quasi-judicial power when it performs in a to the doctrine of primary jurisdiction. The courts will not judicial manner an act which is essentially of an executive determine a controversy involving a question which is or administrative nature, where the power to act in such within the jurisdiction of the administrative tribunal prior manner is incidental to or reasonably necessary for the to the resolution of that question by the administrative performance of the executive or administrative duty entrusted to it. In carrying out their quasi-judicial functions, tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, the administrative officers or bodies are required to experience and services of the administrative tribunal to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them determine technical and intricate matters of fact, and a as basis for their official action and exercise of discretion in uniformity of ruling is essential to comply with the premises of the regulatory statute administered. The objective of the a judicial nature.19 doctrine of primary jurisdiction is to guide a court in determining whether it should refrain from exercising its

24

jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court. It applies where the claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative body for its view.24 However, where what is assailed is the validity or constitutionality of a rule or regulation issued by the administrative agency in the performance of its quasilegislative function, the regular courts have jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts.25 This is within the scope of judicial power, which includes the authority of the courts to determine in an appropriate action the validity of the acts of the political departments.26 Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.27 In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and its Memorandum dated October 6, 2000 was pursuant to its quasi-legislative or rule-making power. As such, petitioners were justified in invoking the judicial power of the Regional Trial Court to assail the constitutionality and validity of the said issuances. In Drilon v. Lim,28 it was held: We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law. Specifically, B.P. 129 vests in the regional trial courts jurisdiction over all civil cases in which the subject of the litigation is incapable of pecuniary estimation, even as the accused in a criminal action has the right to question in his defense the constitutionality of a law he is charged with violating and of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments

and orders of lower courts in all cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.29 In their complaint before the Regional Trial Court, petitioners averred that the Circular contravened Civil Code provisions on sales and violated the constitutional prohibition against the deprivation of property without due process of law. These are within the competence of the trial judge. Contrary to the finding of the Court of Appeals, the issues raised in the complaint do not entail highly technical matters. Rather, what is required of the judge who will resolve this issue is a basic familiarity with the workings of the cellular telephone service, including prepaid SIM and call cards and this is judicially known to be within the knowledge of a good percentage of our population and expertise in fundamental principles of civil law and the Constitution. Hence, the Regional Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221. The Court of Appeals erred in setting aside the orders of the trial court and in dismissing the case. WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 64274 dated October 9, 2001 and its Resolution dated January 10, 2002 are REVERSED and SET ASIDE. The Order dated November 20, 2000 of the Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221 is REINSTATED. This case is REMANDED to the court a quo for continuation of the proceedings. SO ORDERED. Davide, Jr., C.J., Vitug, and Carpio, JJ., concur. Azcuna, J., took no part. G.R. No. 110526 February 10, 1998 ASSOCIATION OF PHILIPPINE COCONUT DESICCATORS, petitioner, vs. PHILIPPINE COCONUT AUTHORITY, respondent. MENDOZA, J.: At issue in this case is the validity of a resolution, dated March 24, 1993, of the Philippine Coconut Authority in which it declares that it will no longer require those wishing to engage in coconut processing to apply to it for a license or permit as a condition for engaging in such business. Petitioner Association of Philippine Coconut Desiccators (hereafter referred to as APCD) brought this suit for

25

certiorari and mandamus against respondent Philippine Coconut Authority (PCA) to invalidate the latter's Board Resolution No. 018-93 and the certificates of registration issued under it on the ground that the resolution in question is beyond the power of the PCA to adopt, and to compel said administrative agency to comply instead with the mandatory provisions of statutes regulating the desiccated coconut industry, in particular, and the coconut industry, in general. As disclosed by the parties' pleadings, the facts are as follows: On November 5, 1992, seven desiccated coconut processing companies belonging to the APCD brought suit in the Regional Trial Court, National Capital Judicial Region in Makati, Metro Manila, to enjoin the PCA from issuing permits to certain applicants for the establishment of new desiccated coconut processing plants. Petitioner alleged that the issuance of licenses to the applicants would violate PCA's Administrative Order No. 02, series of 1991, as the applicants were seeking permits to operate in areas considered "congested" under the administrative order. 1 On November 6, 1992, the trial court issued a temporary restraining order and, on November 25, 1992, a writ of preliminary injunction, enjoining the PCA from processing and issuing licenses to Primex Products, Inc., Coco Manila, Superstar (Candelaria) and Superstar (Davao) upon the posting of a bond in the amount of P100,000.00. 2 Subsequently and while the case was pending in the Regional Trial Court, the Governing Board of the PCA issued on March 24, 1993 Resolution No. 018-93, providing for the withdrawal of the Philippine Coconut Authority from all regulation of the coconut product processing industry. While it continues the registration of coconut product processors, the registration would be limited to the "monitoring" of their volumes of production and administration of quality standards. The full text of the resolution reads: RESOLUTION NO. 018-93 POLICY DECLARATION DEREGULATING THE ESTABLISHMENT OF NEW COCONUT PROCESSING PLANTS WHEREAS, it is the policy of the State to promote free enterprise unhampered by protective regulations and unnecessary bureaucratic red tapes; WHEREAS, the deregulation of certain sectors of the coconut industry, such as marketing of coconut oils pursuant to Presidential Decree No. 1960, the lifting of export and commodity clearances under Executive Order No. 1016, and relaxation of regulated capacity for the desiccated coconut sector pursuant to Presidential

Memorandum of February 11, 1988, has become a centerpiece of the present dispensation; WHEREAS, the issuance of permits or licenses prior to business operation is a form of regulation which is not provided in the charter of nor included among the powers of the PCA; WHEREAS, the Governing Board of PCA has determined to follow and further support the deregulation policy and effort of the government to promote free enterprise; NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA shall no longer require any coconut oil mill, coconut oil refinery, coconut desiccator, coconut product processor/factory, coconut fiber plant or any similar coconut processing plant to apply with PCA and the latter shall no longer issue any form of license or permit as condition prior to establishment or operation of such mills or plants; RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges. ADOPTED this 24th day of March 1993, at Quezon City. 3 The PCA then proceeded to issue "certificates of registration" to those wishing to operate desiccated coconut processing plants, prompting petitioner to appeal to the Office of the President of the Philippines on April 26, 1993 not to approve the resolution in question. Despite follow-up letters sent on May 25 and June 2, 1993, petitioner received no reply from the Office of the President. The "certificates of registration" issued in the meantime by the PCA has enabled a number of new coconut mills to operate. Hence this petition. Petitioner alleges: I RESPONDENT PCA'S BOARD RESOLUTION NO. 018-93 IS NULL AND VOID FOR BEING AN UNDUE EXERCISE OF LEGISLATIVE POWER BY AN ADMINISTRATIVE BODY. II ASIDE FROM BEING ULTRA-VIRES, BOARD RESOLUTION NO. 018-93 IS WITHOUT ANY BASIS, ARBITRARY, UNREASONABLE AND THEREFORE IN VIOLATION OF SUBSTANTIVE DUE PROCESS OF LAW. III IN PASSING BOARD RESOLUTION NO. 018-93, RESPONDENT PCA VIOLATED THE PROCEDURAL DUE PROCESS REQUIREMENT OF CONSULTATION PROVIDED IN PRESIDENTIAL DECREE NO. 1644, EXECUTIVE ORDER NO.

26

826 AND PCA ADMINISTRATIVE ORDER NO. 002, SERIES OF 1991. On the other hand, in addition to answering petitioner's arguments, respondent PCA alleges that this petition should be denied on the ground that petitioner has a pending appeal before the Office of the President. Respondent accuses petitioner of forum-shopping in filing this petition and of failing to exhaust available administrative remedies before coming to this Court. Respondent anchors its argument on the general rule that one who brings an action under Rule 65 must show that one has no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law. I. The rule of requiring exhaustion of administrative remedies before a party may seek judicial review, so strenuously urged by the Solicitor General on behalf of respondent, has obviously no application here. The resolution in question was issued by the PCA in the exercise of its rule-making or legislative power. However, only judicial review of decisions of administrative agencies made in the exercise of their quasi-judicial function is subject to the exhaustion doctrine. The exhaustion doctrine stands as a bar to an action which is not yet complete 4 and it is clear, in the case at bar, that after its promulgation the resolution of the PCA abandoning regulation of the desiccated coconut industry became effective. To be sure, the PCA is under the direct supervision of the President of the Philippines but there is nothing in P.D. No. 232, P.D. No. 961, P.D. No. 1468 and P.D. No. 1644 defining the powers and functions of the PCA which requires rules and regulations issued by it to be approved by the President before they become effective.

and supervised by, the President of the Philippines," 9 and charged with carrying out the State's policy "to promote the rapid integrated development and growth of the coconut and other palm oil industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." 10 through a regulatory scheme set up by law. 11 Through this scheme, the government, on August 28, 1982, temporarily prohibited the opening of new coconut processing plants and, four months later, phased out some of the existing ones in view of overproduction in the coconut industry which resulted in cut-throat competition, underselling and smuggling of poor quality products and ultimately in the decline of the export performance of coconut-based commodities. The establishment of new plants could be authorized only upon determination by the PCA of the existence of certain economic conditions and the approval of the President of the Philippines. Thus, Executive Order No. 826, dated August 28, 1982, provided: Sec. 1. Prohibition. Except as herein provided, no government agency or instrumentality shall hereafter authorize, approve or grant any permit or license for the establishment or operation of new desiccated coconut processing plants, including the importation of machinery or equipment for the purpose. In the event of a need to establish a new plant, or expand the capacity, relocate or upgrade the efficiencies of any existing desiccated plant, the Philippine Coconut Authority may, upon proper determination of such need and evaluation of the condition relating to: a. the existing market demand;

b. the production capacity prevailing in the country or In any event, although the APCD has appealed the resolution locality; in question to the Office of the President, considering the c. the level and flow of raw materials; and fact that two months after they had sent their first letter on d. other circumstances which may affect the growth or April 26, 1993 they still had to hear from the President's viability of the industry concerned, office, meanwhile respondent PCA was issuing certificates authorize or grant the application for, the establishment or of registration indiscriminately to new coconut millers, we expansion of capacity, relocation or upgrading of hold that petitioner was justified in filing this case on June efficiencies of such desiccated coconut processing plant, 25, 1993. 5 Indeed, after writing the Office of the President 6 subject to the approval of the President. on April 26, 1993 petitioner sent inquiries to that office not once, but twice, on May 26, 1993 7 and on June 2, 1993, 8 but petitioner did not receive any reply. On December 6, 1982, a phase-out of some of the existing plants was ordered by the government after finding that "a mere freeze in the present capacity of existing plants will II. not afford a viable solution to the problem considering that We now turn to the merit of the present petition. The the total available limited market is not adequate to support Philippine Coconut Authority was originally created by P.D. all the existing processing plants, making it imperative to 232 on June 30, 1973, to take over the powers and functions reduce the number of existing processing plants." 12 of the Coconut Coordinating Council, the Philippine Coconut Accordingly, it was ordered: 13 Administration and the Philippine Coconut Research Sec. 1. The Philippine Coconut Authority is hereby ordered Institute. On June 11, 1978, by P.D. No. 1468, it was made "an independent public corporation . . . directly reporting to, to take such action as may be necessary to reduce the

27

number of existing desiccated coconut processing plants to a level which will insure the survival of the remaining plants. The Authority is hereby directed to determine which of the existing processing plants should be phased out and to enter into appropriate contracts with such plants for the above purpose. It was only on October 23, 1987 when the PCA adopted Resolution No. 058-87, authorizing the establishment and operation of additional DCN plants, in view of the increased demand for desiccated coconut products in the world's markets, particularly in Germany, the Netherlands and Australia. Even then, the opening of new plants was made subject to "such implementing guidelines to be set forth by the Authority" and "subject to the final approval of the President."

other palm oil industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." 15 Contrary to the assertion in the dissent, the power given to the Philippine Coconut Authority and before it to the Philippine Coconut Administration "to formulate and adopt a general program of development for the coconut and other palm oils industry" 16 is not a roving commission to adopt any program deemed necessary to promote the development of the coconut and other palm oils industry, but one to be exercised in the context of this regulatory structure.

In plain disregard of this legislative purpose, the PCA adopted on March 24, 1993 the questioned resolution which allows not only the indiscriminate opening of new coconut processing plants but the virtual dismantling of the The guidelines promulgated by the PCA, as embodied in regulatory infrastructure whereby, forsaking controls Administrative Order No. 002, series of 1991, inter alia theretofore placed in its keeping, the PCA limits its function authorized the opening of new plants in "non-congested to the innocuous one of "monitoring" compliance by areas only as declared by the PCA" and subject to coconut millers with quality standards and volumes of compliance by applicants with "all procedures and production. In effect, the PCA would simply be compiling requirements for registration under Administrative Order statistical data on these matters, but in case of violations of No. 003, series of 1981 and this Order." In addition, as the opening of new plants was premised on the increased global standards there would be nothing much it would do. The field would be left without an umpire who would retire to demand for desiccated coconut products, the new entrants the bleachers to become a mere spectator. As the PCA were required to submit sworn statements of the names provided in its Resolution No. 018-93: and addresses of prospective foreign buyers. This form of "deregulation" was approved by President Aquino in her memorandum, dated February 11, 1988, to the PCA. Affirming the regulatory scheme, the President stated in her memorandum: It appears that pursuant to Executive Order No. 826 providing measures for the protection of the Desiccated Coconut Industry, the Philippine Coconut Authority evaluated the conditions relating to: (a) the existing market demands; (b) the production capacity prevailing in the country or locality; (c) the level and flow of raw materials; and (d) other circumstances which may affect the growth or viability of the industry concerned and that the result of such evaluation favored the expansion of production and market of desiccated coconut products. In view hereof and the favorable recommendation of the Secretary of Agriculture, the deregulation of the Desiccated Coconut Industry as recommended in Resolution No. 05887 adopted by the PCA Governing Board on October 28, 1987 (sic) is hereby approved. 14 These measures the restriction in 1982 on entry into the field, the reduction the same year of the number of the existing coconut mills and then the lifting of the restrictions in 1987 were adopted within the framework of regulation as established by law "to promote the rapid integrated development and growth of the coconut and NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA shall no longer require any coconut oil mill, coconut oil refinery, coconut desiccator, coconut product processor/factory, coconut fiber plant or any similar coconut processing plant to apply with PCA and the latter shall no longer issue any form of license or permit as condition prior to establishment or operation of such mills or plants; RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges. The issue is not whether the PCA has the power to adopt this resolution to carry out its mandate under the law "to promote the accelerated growth and development of the coconut and other palm oil industry." 17 The issue rather is whether it can renounce the power to regulate implicit in the law creating it for that is what the resolution in question actually is. Under Art. II, 3(a) of the Revised Coconut Code (P.D. No. 1468), the role of the PCA is "To formulate and adopt a general program of development for the coconut and other palm oil industry in all its aspects." By limiting the purpose of registration to merely "monitoring volumes of production

28

[and] administration of quality standards" of coconut processing plants, the PCA in effect abdicates its role and leaves it almost completely to market forces how the coconut industry will develop.

(m) Except in respect of entities owned or controlled by the Government or by the coconut farmers under Sections 9 and 10, Article III hereof, the Authority shall have full power and authority to regulate the production, distribution and utilization of all subsidized coconut-based products, and to Art. II, 3 of P.D. No. 1468 further requires the PCA: require the submission of such reports or documents as (h) To regulate the marketing and the exportation of copra may be deemed necessary by the Authority to ascertain and its by-products by establishing standards for domestic whether the levy payments and/or subsidy claims are due trade and export and, thereafter, to conduct an inspection of and correct and whether the subsidized products are all copra and its by-products proposed for export to distributed among, and utilized by, the consumers determine if they conform to the standards established; authorized by the Authority. Instead of determining the qualifications of market players The dissent seems to be saying that in the same way that and preventing the entry into the field of those who are restrictions on entry into the field were imposed in 1982 unfit, the PCA now relies entirely on competition with all and then relaxed in 1987, they can be totally lifted now its wastefulness and inefficiency to do the weeding out, without prejudice to reimposing them in the future should it in its naive belief in survival of the fittest. The result can become necessary to do so. There is really no renunciation very well be a repeat of 1982 when free enterprise of the power to regulate, it is claimed. Trimming down of degenerated into a "free-for-all," resulting in cut-throat PCA's function to registration is not an abdication of the competition, underselling, the production of inferior power to regulate but is regulation itself. But how can this products and the like, which badly affected the foreign trade be done when, under Resolution No. 018-93, the PCA no performance of the coconut industry. longer requires a license as condition for the establishment Indeed, by repudiating its role in the regulatory scheme, the or operation of a plant? If a number of processing firms go PCA has put at risk other statutory provisions, particularly to areas which are already congested, the PCA cannot stop those of P.D. No. 1644, to wit: them from doing so. If there is overproduction, the PCA cannot order a cut back in their production. This is because Sec. 1. The Philippine Coconut Authority shall have full the licensing system is the mechanism for regulation. power and authority to regulate the marketing and export of copra, coconut oil and their by-products, in furtherance of Without it the PCA will not be able to regulate coconut plants or mills. the steps being taken to rationalize the coconut oil milling industry. Sec. 2. In the exercise of its powers under Section 1 hereof, the Philippine Coconut Authority may initiate and implement such measures as may be necessary to attain the rationalization of the coconut oil milling industry, including, but not limited to, the following measures: (a) Imposition of floor and/or ceiling prices for all exports of copra, coconut oil and their by-products; (b) Prescription of quality standards; (c) Establishment of maximum quantities for particular periods and particular markets; (d) Inspection and survey of export shipments through an independent international superintendent or surveyor. In the exercise of its powers hereunder, the Philippine Coconut Authority shall consult with, and be guided by, the recommendation of the coconut farmers, through corporations owned or controlled by them through the Coconut Industry Investment Fund and the private corporation authorized to be organized under Letter of Instructions No. 926. and the Revised Coconut Code (P.D. No. 1468), Art. II, 3, to wit: In the first "whereas" clause of the questioned resolution as set out above, the PCA invokes a policy of free enterprise that is "unhampered by protective regulations and unnecessary bureaucratic red tape" as justification for abolishing the licensing system. There can be no quarrel with the elimination of "unnecessary red tape." That is within the power of the PCA to do and indeed it should eliminate red tape. Its success in doing so will be applauded. But free enterprise does not call for removal of "protective regulations." Our Constitutions, beginning with the 1935 document, have repudiated laissez-faire as an economic principle. 18 Although the present Constitution enshrines free enterprise as a policy, 19 it nonetheless reserves to the government the power to intervene whenever necessary to promote the general welfare. This is clear from the following provisions of Art. XII of the Constitution which, so far as pertinent, state: Sec. 6. . . . Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the

29

State to promote distributive justice and to intervene when the common good so demands. Sec. 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed. (Emphasis added). At all events, any change in policy must be made by the legislative department of the government. The regulatory system has been set up by law. It is beyond the power of an administrative agency to dismantle it. Indeed, petitioner charges the PCA of seeking to render moot a case filed by some of its members questioning the grant of licenses to certain parties by adopting the resolution in question. It is alleged that members of petitioner complained to the court that the PCA had authorized the establishment and operation of new plants in areas which were already crowded, in violation of its Administrative Order No. 002, series of 1991. In response, the Regional Trial Court issued a writ of preliminary injunction, enjoining the PCA from issuing licenses to the private respondent in that case. These allegations of petitioner have not been denied here. It would thus seem that instead of defending its decision to allow new entrants into the field against petitioner's claim that the PCA decision violated the guidelines in Administrative Order No. 002, series of 1991, the PCA adopted the resolution in question to render the case moot. In so doing, the PCA abdicated its function of regulation and left the field to untrammeled competition that is likely to resurrect the evils of cut-throat competition, underselling and overproduction which in 1982 required the temporary closing of the field to new players in order to save the industry. The PCA cannot rely on the memorandum of then President Aquino for authority to adopt the resolution in question. As already stated, what President Aquino approved in 1988 was the establishment and operation of new DCN plants subject to the guidelines to be drawn by the PCA. 20 In the first place, she could not have intended to amend the several laws already mentioned, which set up the regulatory system, by a mere memoranda to the PCA. In the second place, even if that had been her intention, her act would be without effect considering that, when she issued the memorandum in question on February 11, 1988, she was no longer vested with legislative authority. 21

Narvasa, C.J., Regalado, Davide, Jr., Puno, Kapunan, Francisco, Panganiban and Martinez, JJ., concur.

Separate Opinions ROMERO, J., dissenting; The past decade, a distinct worldwide trend towards economic deregulation has been evident. Both developed and developing countries have seriously considered, and extensively adopted, various measures for this purpose. The Philippines has been no exception. To this end, the Philippine Coconut Authority (PCA) issued Board Resolution No. 018-93 (PCA-BR No 018-93) dated March 24, 1993, deregulating the coconut processing plant industry. 1 The Association of Philippine Desiccators (APCD) has filed this instant petition for prohibition and mandamus under Rule 65 of the Rules of Court seeking the annulment of said resolution. APCD questions the validity of PCA-BR No. 018-93 for being violative of the principle of non-delegability of legislative power. It contends that in issuing the resolution deregulating the coconut industry, the PCA exercised legislative discretion, which has not been delegated to it by Congress. It adds that when PCA deregulated the coconut industry, it ran counter to the very laws 2 which mandated it to regulate and rationalize the industry. We see no merit in this contention. PCA's authority to issue PCA-BR No. 018-93 is clearly provided in Section 3(a) of P.D. No. 232, reading as follows: . . . To formulate and adopt a general program of development for the coconut and other palm oil industry. Similar grants of authority were made in subsequent amendatory laws. 3 In this regard, we have ruled that legislative discretion, as to the substantive contents of a law, cannot be delegated. What may be delegated is the discretion to determine how the law is to be enforced, not what the law should be, a prerogative of the legislature which it can neither abdicate nor surrender to the delegate. 4 The principle is based on the separation and allocation of powers among the three departments of government. 5

WHEREFORE, the petition is GRANTED. PCA Resolution No. 018-93 and all certificates of registration issued under it are Thus, there are two accepted tests to determine whether or hereby declared NULL and VOID for having been issued in not there is a valid delegation of legislative power, namely, excess of the power of the Philippine Coconut Authority to the completeness test and the sufficient standard test. adopt or issue. Under the first test, the law must be complete in all its terms SO ORDERED. and conditions when it leaves the legislature such that when

30

it reaches the delegate, the only thing he will have to do is enforce it. Under the sufficient standard test, there must be adequate guidelines or limitations in the law to map out the boundaries of the delegate's authority and prevent the delegation from running amiss. 6 We have accepted as sufficient standards "interest of law and order," 7 "adequate and efficient instruction," 8 "public interest," 9 "justice and equity," 10 "public convenience and welfare," 11 "simplicity, economy and efficiency," 12 "standardization and regulation of medical education," 13 and "fair and equitable employment practices." 14 Consequently, the standard may be expressed or implied. In the former, the non delegation objection is easily met. The standard though does not have to be spelled out but need only be implied from the policy and purpose of the act considered as a whole. 15 It may also be found in other statutes on the same subject as that of the challenged legislation. 16 In no uncertain terms must it be stressed that the function of promulgating rules and regulations may be legitimately exercised only for the purpose of carrying out the provisions of a law. The power of administrative agencies is confined to implementing the law or putting it into effect. Corollary to this guideline is that administrative regulation cannot extend the law and amend a legislative enactment. 17 In the instant case, we believe that the PCA did not overstep the limits of its power in issuing the assailed resolution. We need not belabor the point that one of the economic goals of our country is the increased productivity of goods and services provided by the nation for the benefit of the people, 18 since from a purely economic standpoint, the increase in agricultural productivity is of fundamental importance. 19 Considering the responsibilities and powers assigned to the PCA, as well as its underlying policy, namely, that "the economic well-being of a major part of the population depends to a large extent on the viability of the industry and its improvement in the areas of production, processing and marketing," the irresistible conclusion is that PCA-BR No. 018-93 is a valid exercise of delegated legislation by the PCA. Such resolution is in harmony with the objectives sought to be achieved by the laws regarding the coconut industry, particularly "to promote accelerated growth and development of the coconut and other palm oil industry," 20 and "rapid integrated development and growth of the coconut and other palm oil industry." 21 These are sufficient standards to guide the PCA. Thus, measures to achieve these policies are better left to the administrative agencies tasked with implementing them. It must be stressed that with increasing global trade and business and major upheavals in technology and communications, the time has come for administrative

policies and regulations to adapt to ever-changing business needs rather than to accommodate traditional acts of the legislature. 22 Even the 1987 Constitution was designed to meet, not only contemporary events, but also future and unknown circumstances. 23 It is worth mentioning that the PCA, after conducting its studies, adopted the policy of deregulation to further enhance the coconut industry competition, since any continuation of the restrictive regulation in the industry would have detrimental effects. 24 This is in consonance with the constitutional mandate that the State must "adopt measures that help make them (locally produced goods) competitive." 25 Undoubtedly, an "agency, in light of changing circumstances, is free to alter interpretative and policy views reflected in regulations construing an underlying statute, so long as any changed construction of the statute is consistent with express congressional intent or embodies a permissible reading of the statute." 26 Furthermore, the Constitution is cognizant of the realities of global interdependency, as it requires the pursuit of "a trade policy that serves the general welfare and utilizes all forms and arrangements of exchanges on the basis of equality and reciprocity." 27 In sum, the policy of deregulation must be determined by the circumstances prevailing in a certain situation. 28 As we have stressed in the past, this Court is only concerned with the question of authority, not the wisdom of the measure involved which falls within the province of the Legislature. The ponencia presents the issue: whether it is within the power of the PCA to renounce the power to regulate implicit in the law creating it (P.D. No. 232). (It is to be pointed out that this issue was not included in the Assignment of Errors of Petitioner). Underlying this formulation is the assumption/admission that PCA has the power to regulate the coconut industry, as in fact the power is bestowed upon it by its organic act, P.D. No. 232, viz. "to promote the rapid integrated development and growth of the coconut and other palm oils in industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." Its broad mandate is "to formulate and adopt a general program of development for the coconut and other palm oils industry." It avers that this "legislative scheme" was disregarded when the PCA adopted on March 24, 1993 the assailed Resolution which is effect liberalized the registration and licensing requirements for the granting of permits to operate new coconut plants. But this was effected pursuant to the October 23, 1987 PCA Board Resolution laying down the policy of deregulating the industry and authorizing the creation of additional desiccated coconut plants.

31

As with any administrative agency established to promote the growth and development of any industry, the PCA has considerable latitude to adopt policies designed to accelerate the attainment of this objective and corollarily, to lay down rules and regulations to implement the same. We can take judicial notice of the fact that during its 25 years of existence, the PCA has achieved enough experience and expertise to introduce measures which shall ensure the dominant role of the crop as a major dollar-producing industry, including the manipulation of market forces to our comparative advantage, certainly an area beyond the Court's ken.

In the actual words of the Resolution, the PCA recognizes its principal function of registration so as to be able to monitor the production and administer quality standards, both objectives of which are not merely nominal or minimal, but substantial, even vital, aspects of the power to regulate. Put differently, there is no renunciation of the power to regulate, for the regulation is essentially recognized and accomplished through the registration function which enables the PCA to keep track of the volume of production and the observance of quality standards by new entrants into the industry. In sum, trimming down its functions to registration is not an abdication of the power to regulate Hence, guided by guidelines already laid down, it responded but is regulation itself. If the PCA, in light of the crucial developments in the to regional developments by: (1) taking cognizance of the overproduction in the industry regional and domestic coconut industry decides to open and curtailing the expansion of coconut processing plants in wide its doors, allow the free entry of other players and the interplay of competitive forces to shape the configuration of 1982, within reasonable limits and with safeguards (hence the industry, who are we to declare such policy as one the issuance of Executive Order Nos. 826 on August 28, characterized by "wastefulness and inefficiency . . . based on 1982 and No. 854 on December 6, 1982); its naive faith in survival of the fittest." Is not this a blatant (2) five years later, responding to the demand for incursion by the Court into the economic arena which is desiccated coconut products in the world market, better left to the administrative agency precisely tasked to liberalized its former policy by deregulating the industry promote the growth of the industry, through the exercise of and authorizing the creation of additional desiccated its studied discretion? To be sure, those operators already coconut plants in 1987; in the field, such as the petitioner members of the (3) complementing and supplementing (2), by easing Association of Philippine Coconut Desiccators, are expected registration and licensing requirements in 1993. to vigorously protest and work for the nullity of what they perceive as an obnoxious, life threatening policy. But It bears repeating that the above measures were not taken instead of opposing what the PCA views as a timely, wellarbitrarily but in careful compliance with guidelines considered move, the healthy competition should spur them incorporated in the Executive Orders and subject to the to improving their product and elevating the standards they favorable recommendation of the Secretary of Agriculture have imposed on themselves. and the approval of the President. The crux of the ponencia is that, in the process of opening doors to foreign markets, the PCA "limited itself to merely monitoring their volumes of production and administration of quality standards, in effect abdicating its role and leaving it almost totally to market forces to define how the industry will develop." Actually, the relevant provisions in the disputed resolution reads: Resolved further, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges. If, in the course of its monitoring which is a piece of the regulatory function, the PCA should detect a violation of its guidelines that would result in a lowering of the quality of the product, or unfairness to other players, surely, it is not powerless to impose sanctions, as categorically provided in P.D. 1469, P.D. 1644, Adm. Order No. 003, Series of 1981 and Adm. Order No. 002, Series of 1991. Any administrative agency is empowered to establish its implementing rules, together with sanctions guaranteed to ensure the observance of such rules, else it would be a mere "toothless" entity.

The ponencia prognosticates, "The result can very well be a repeat of 1982 when free enterprise degenerated into a 'free-for-all,' resulting in cutthroat competition, For the sake of clarity and accuracy, it is to be stressed that underselling, the production of inferior products and the the PCA did not limit itself "merely to monitoring . . ." as the like, which badly affected the foreign trade performance of ponencia states, but to "registering the . . . processors for the our coconut industry." Are we not encroaching on purpose of monitoring their volumes of production and legislative domain in questioning the wisdom of the action administration of quality standards. . . ." taken by the PCA which was accorded a broad mandate by the Congress? Moreover, let us bear in mind that during

32

those "abnormal times," forces other than merely economic, e.g. political, dominated the economy effectively supporting, even favoring, destructive capitalistic monopolies and, in the process suppressing healthy competition.

may be delegated is the discretion to determine how the law is to be enforced, not what the law should be, a prerogative of the legislature which it can neither abdicate nor surrender to the delegate. 4 The principle is based on the separation and allocation of powers among the three Not to forget, too, that we cannot close our eyes and ignore 5 the world-wide trend towards globalization in the economy, departments of government. as in other fields, as in fact the Court recognized this Thus, there are two accepted tests to determine whether or economic reality in its decision in the Oil Deregulation Case. not there is a valid delegation of legislative power, namely, the completeness test and the sufficient standard test. With the unrelenting march of globalization in our economy, the Philippines must find its market niches and be Under the first test, the law must be complete in all its terms able to adapt to these inevitable changes, for the Asia-Pacific and conditions when it leaves the legislature such that when it reaches the delegate, the only thing he will have to do is rim is bound to become a truly dynamic region in the enforce it. Under the sufficient standard test, there must be economic, political and cultural arenas in the coming adequate guidelines or limitations in the law to map out the millennium. boundaries of the delegate's authority and prevent the ACCORDINGLY, the petition should be DISMISSED. delegation from running amiss. 6 Bellosillo, Melo, Vitug, Quisumbing and Purisima, JJ., dissent. We have accepted as sufficient standards "interest of law and order," 7 "adequate and efficient instruction," 8 "public interest," 9 "justice and equity," 10 "public convenience and Separate Opinions welfare," 11 "simplicity, economy and efficiency," 12 ROMERO, J., dissenting; "standardization and regulation of medical education," 13 The past decade, a distinct worldwide trend towards and "fair and equitable employment practices." 14 economic deregulation has been evident. Both developed Consequently, the standard may be expressed or implied. In and developing countries have seriously considered, and the former, the non delegation objection is easily met. The extensively adopted, various measures for this purpose. The standard though does not have to be spelled out but need Philippines has been no exception. only be implied from the policy and purpose of the act To this end, the Philippine Coconut Authority (PCA) issued considered as a whole. 15 It may also be found in other Board Resolution No. 018-93 (PCA-BR No 018-93) dated statutes on the same subject as that of the challenged March 24, 1993, deregulating the coconut processing plant legislation. 16 1 industry. The Association of Philippine Desiccators (APCD) In no uncertain terms must it be stressed that the function has filed this instant petition for prohibition and mandamus of promulgating rules and regulations may be legitimately under Rule 65 of the Rules of Court seeking the annulment exercised only for the purpose of carrying out the of said resolution. provisions of a law. The power of administrative agencies is APCD questions the validity of PCA-BR No. 018-93 for being violative of the principle of non-delegability of legislative power. It contends that in issuing the resolution deregulating the coconut industry, the PCA exercised legislative discretion, which has not been delegated to it by Congress. It adds that when PCA deregulated the coconut industry, it ran counter to the very laws 2 which mandated it to regulate and rationalize the industry. We see no merit in this contention. PCA's authority to issue PCA-BR No. 018-93 is clearly provided in Section 3(a) of P.D. No. 232, reading as follows: . . . To formulate and adopt a general program of development for the coconut and other palm oil industry. confined to implementing the law or putting it into effect. Corollary to this guideline is that administrative regulation cannot extend the law and amend a legislative enactment. 17 In the instant case, we believe that the PCA did not overstep the limits of its power in issuing the assailed resolution. We need not belabor the point that one of the economic goals of our country is the increased productivity of goods and services provided by the nation for the benefit of the people, 18 since from a purely economic standpoint, the increase in agricultural productivity is of fundamental importance. 19

Considering the responsibilities and powers assigned to the PCA, as well as its underlying policy, namely, that "the economic well-being of a major part of the population depends to a large extent on the viability of the industry and Similar grants of authority were made in subsequent its improvement in the areas of production, processing and amendatory laws. 3 marketing," the irresistible conclusion is that PCA-BR No. In this regard, we have ruled that legislative discretion, as to 018-93 is a valid exercise of delegated legislation by the the substantive contents of a law, cannot be delegated. What PCA. Such resolution is in harmony with the objectives

33

sought to be achieved by the laws regarding the coconut industry, particularly "to promote accelerated growth and development of the coconut and other palm oil industry," 20 and "rapid integrated development and growth of the coconut and other palm oil industry." 21 These are sufficient standards to guide the PCA. Thus, measures to achieve these policies are better left to the administrative agencies tasked with implementing them. It must be stressed that with increasing global trade and business and major upheavals in technology and communications, the time has come for administrative policies and regulations to adapt to ever-changing business needs rather than to accommodate traditional acts of the legislature. 22 Even the 1987 Constitution was designed to meet, not only contemporary events, but also future and unknown circumstances. 23 It is worth mentioning that the PCA, after conducting its studies, adopted the policy of deregulation to further enhance the coconut industry competition, since any continuation of the restrictive regulation in the industry would have detrimental effects. 24 This is in consonance with the constitutional mandate that the State must "adopt measures that help make them (locally produced goods) competitive." 25 Undoubtedly, an "agency, in light of changing circumstances, is free to alter interpretative and policy views reflected in regulations construing an underlying statute, so long as any changed construction of the statute is consistent with express congressional intent or embodies a permissible reading of the statute." 26

development and growth." Its broad mandate is "to formulate and adopt a general program of development for the coconut and other palm oils industry." It avers that this "legislative scheme" was disregarded when the PCA adopted on March 24, 1993 the assailed Resolution which is effect liberalized the registration and licensing requirements for the granting of permits to operate new coconut plants. But this was effected pursuant to the October 23, 1987 PCA Board Resolution laying down the policy of deregulating the industry and authorizing the creation of additional desiccated coconut plants. As with any administrative agency established to promote the growth and development of any industry, the PCA has considerable latitude to adopt policies designed to accelerate the attainment of this objective and corollarily, to lay down rules and regulations to implement the same. We can take judicial notice of the fact that during its 25 years of existence, the PCA has achieved enough experience and expertise to introduce measures which shall ensure the dominant role of the crop as a major dollar-producing industry, including the manipulation of market forces to our comparative advantage, certainly an area beyond the Court's ken. Hence, guided by guidelines already laid down, it responded to regional developments by: (1) taking cognizance of the overproduction in the industry and curtailing the expansion of coconut processing plants in 1982, within reasonable limits and with safeguards (hence the issuance of Executive Order Nos. 826 on August 28, 1982 and No. 854 on December 6, 1982);

Furthermore, the Constitution is cognizant of the realities of global interdependency, as it requires the pursuit of "a trade (2) five years later, responding to the demand for policy that serves the general welfare and utilizes all forms desiccated coconut products in the world market, and arrangements of exchanges on the basis of equality and liberalized its former policy by deregulating the industry reciprocity." 27 and authorizing the creation of additional desiccated In sum, the policy of deregulation must be determined by coconut plants in 1987; the circumstances prevailing in a certain situation. 28 As we (3) complementing and supplementing (2), by easing have stressed in the past, this Court is only concerned with registration and licensing requirements in 1993. the question of authority, not the wisdom of the measure It bears repeating that the above measures were not taken involved which falls within the province of the Legislature. arbitrarily but in careful compliance with guidelines The ponencia presents the issue: whether it is within the incorporated in the Executive Orders and subject to the power of the PCA to renounce the power to regulate implicit favorable recommendation of the Secretary of Agriculture in the law creating it (P.D. No. 232). (It is to be pointed out and the approval of the President. that this issue was not included in the Assignment of Errors The crux of the ponencia is that, in the process of opening of Petitioner). doors to foreign markets, the PCA "limited itself to merely Underlying this formulation is the assumption/admission monitoring their volumes of production and administration of that PCA has the power to regulate the coconut industry, as quality standards, in effect abdicating its role and leaving it in fact the power is bestowed upon it by its organic act, P.D. almost totally to market forces to define how the industry No. 232, viz. "to promote the rapid integrated development will develop." and growth of the coconut and other palm oils in industry in Actually, the relevant provisions in the disputed resolution all its aspects and to ensure that the coconut farmers reads: become direct participants in, and beneficiaries of, such

34

Resolved further, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges.

observance of such rules, else it would be a mere "toothless" entity.

The ponencia prognosticates, "The result can very well be a repeat of 1982 when free enterprise degenerated into a 'free-for-all,' resulting in cutthroat competition, For the sake of clarity and accuracy, it is to be stressed that underselling, the production of inferior products and the the PCA did not limit itself "merely to monitoring . . ." as the like, which badly affected the foreign trade performance of ponencia states, but to "registering the . . . processors for the our coconut industry." Are we not encroaching on purpose of monitoring their volumes of production and legislative domain in questioning the wisdom of the action taken by the PCA which was accorded a broad mandate by administration of quality standards. . . ." In the actual words of the Resolution, the PCA recognizes its the Congress? Moreover, let us bear in mind that during principal function of registration so as to be able to monitor those "abnormal times," forces other than merely economic, e.g. political, dominated the economy effectively supporting, the production and administer quality standards, both objectives of which are not merely nominal or minimal, but even favoring, destructive capitalistic monopolies and, in substantial, even vital, aspects of the power to regulate. Put the process suppressing healthy competition. differently, there is no renunciation of the power to Not to forget, too, that we cannot close our eyes and ignore regulate, for the regulation is essentially recognized and the world-wide trend towards globalization in the economy, accomplished through the registration function which as in other fields, as in fact the Court recognized this enables the PCA to keep track of the volume of production economic reality in its decision in the Oil Deregulation Case. and the observance of quality standards by new entrants With the unrelenting march of globalization in our into the industry. In sum, trimming down its functions to economy, the Philippines must find its market niches and be registration is not an abdication of the power to regulate able to adapt to these inevitable changes, for the Asia-Pacific but is regulation itself. rim is bound to become a truly dynamic region in the If the PCA, in light of the crucial developments in the regional and domestic coconut industry decides to open wide its doors, allow the free entry of other players and the interplay of competitive forces to shape the configuration of the industry, who are we to declare such policy as one characterized by "wastefulness and inefficiency . . . based on its naive faith in survival of the fittest." Is not this a blatant incursion by the Court into the economic arena which is better left to the administrative agency precisely tasked to promote the growth of the industry, through the exercise of its studied discretion? To be sure, those operators already in the field, such as the petitioner members of the Association of Philippine Coconut Desiccators, are expected to vigorously protest and work for the nullity of what they perceive as an obnoxious, life threatening policy. But instead of opposing what the PCA views as a timely, wellconsidered move, the healthy competition should spur them to improving their product and elevating the standards they have imposed on themselves. If, in the course of its monitoring which is a piece of the regulatory function, the PCA should detect a violation of its guidelines that would result in a lowering of the quality of the product, or unfairness to other players, surely, it is not powerless to impose sanctions, as categorically provided in P.D. 1469, P.D. 1644, Adm. Order No. 003, Series of 1981 and Adm. Order No. 002, Series of 1991. Any administrative agency is empowered to establish its implementing rules, together with sanctions guaranteed to ensure the economic, political and cultural arenas in the coming millennium. ACCORDINGLY, the petition should be DISMISSED. G.R. No. L-48672 July 31, 1987

TROPICAL HOMES, INC., petitioner, vs. NATIONAL HOUSING AUTHORITY, THE PROVINCIAL SHERIFF, PROVINCE OF RIZAL, and ARTURO CORDOVA, respondents. GUTIERREZ, JR., J.: The question raised in this petition is whether or not Presidential Decree No. 1344, in relation to Presidential Decree No. 957, giving the National Housing Authority exclusive jurisdiction over cases involving the real estate business and limiting the appeal from such decisions only to the President of the Philippines, is constitutional. The facts which led to the filing of the present petition are as follows: On April 17, 1972, petitioner Tropical Homes, Inc. entered into a contract with private respondent Arturo P. Cordova for the sale to the latter of a lot at Better Living Subdivision in Paranaque, Metro Manila. The contract price was P32,108.00. A ten (10) percent downpayment upon the execution of the contract was required and the balance payable at a monthly amortization of P318.16 beginning

35

May 17, 1972 for 20 years. Section 14 of the contract provided that the contract will be automatically cancelled upon default in payment of any installment within 90 days from its due date. On July 16, 1973, Cordova was informed through a letter signed by Manuel M. Serrano, executive vice-president and general manager of the petitioner corporation that the contract was cancelled due to non-payment of installments for a period of seven (7) months in violation of the contract, particularly the above-mentioned section. All the earlier payments were considered forfeited in favor of the corporation as liquidated damages. On February 14, 1975, Cordova filed a letter-complaint with the Investigating Committee of the Department of Trade asking for a refund of the total payments he made amounting to P8,627.86. This case was referred to respondent National Housing Authority (NHA) which, pursuant to Presidential Decree No. 957, was vested with jurisdiction over the said case. On February 21, 1978, NHA issued the following resolution: This is a complaint for refund of payments made on a lot filed by Arturo Cordova against Tropical Homes, Inc., owner of Better Living Subdivision at Paranaque, Metro Manila. Complainant's evidence shows that on April 17, 1972, he bought on installment basis a lot in the above-named subdivision at a contract price of P32,108.00 (Exhibit "A"); that contract was arranged by Atty. Nelson Revilla, an authorized broker of said corporation; that after paying the downpayment and its monthly amortization, he was asked by Atty. Revilla to pay for the 20% of the lot value in order that he may apply for a loan with the SSS; that in compliance with this requirement, he paid the respondent corporation the amount of P4,406.78; that not being satisfied what is to be granted to him by SSS as loan, he was told by Atty. Revilla that he will arrange for a second loan with Tropical Homes, Inc. and for this he gave Atty. Revilla the amount of P650.00 for Mayor's permit; that since then, he has not heard from Atty. Revilla; that he was told by the respondent corporation that Atty. Revilla was no longer connected with it and that he could not use his lot to secure a second loan from it; that he had paid a total amount of P8,627.86; that on May 1973, a separate contract covering a house and lot on the same subdivision was entered into by complainant with respondent; that through SSS housing loan, the house was constructed by respondent and turned over to complainant; and that complainant demanded for the refund of the payments he made on the first lot. Respondent in its answer states that the contract it entered into with the complainant had been duly cancelled in accordance with Section 14 thereof due to non-payment of

installments for a period of seven (7) months. Regarding the claim for refund, it believes that the complainant is not entitled to it under the Maceda Law as the contract was entered into on April 17, 1972 before the effectivity of the said law. In connection with the alleged amounts given to a certain Atty. Revilla, the said person is not an employee or authorized representative of the respondent corporation. We are inclined to believe the claim of complainant that because the SSS and THI financing plan on the first lot pushed through, he obtained the second lot. Respondent claimed that there is nothing in the second contract to show that it was in lieu or in substitution of the first contract. However, the circumstances under which the P4,046.78 (required 20% downpayment) was paid clearly shows that what complainant wanted was a lot which could be used for SSS housing loan so that he could have a house on the lot. Because he could not obtain such housing loan on the first lot, he applied for and was given the house and lot and for which the second contract was executed by the respondent. Therefore the second contract was deemed entered into by the parties in lieu of or in substitution of the first contract especially when we consider the fact that it was on the second contract that complainant was able to attain his objective of having a house and lot. Complainant is, therefore, entitled to the refund of his payments on the first contract totalling P8,627.86 with interest from 1 October 1976, the date the NHA took cognizance of this case. PREMISES CONSIDERED, it is recommended that respondent Tropical Homes, Inc. be ordered to refund to Arturo Cordova the amount of P8,627.86 with 12% interest per annum from 1 October 1976, until fully paid." (Rollo, pp. 36-37). A subsequent motion for reconsideration was denied by NHA. In the meantime, on April 2, 1978, P.D. No. 1344 was passed providing, inter alia: xxx xxx xxx Section 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive jurisdiction to hear and decide cases of the following nature: a) Unsound real estate business practices; b) Claims involving refund and any other claims filed by sub-division lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and c) Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman.

36

Section 2. The decision of the National Housing Authority shall become final and executory after the lapse of fifteen (15) days from the date of its receipt. It is appealable only to the President of the Philippines and in the event the appeal is filed and the decision is not reversed and/or amended within a period of thirty (30) days, the decision is deemed affirmed. Proof of the appeal of the decision must be furnished the National Housing Authority. On June 19, 1978, the petitioners, availing of this decree, appealed to the President of the Philippines. In said appeal, it stated that " ... we do not thereby waive the right to question the constitutionality of said Decree, which we believe to be violative of the due process clause of the Constitution as well as contrary to the primordial concept of separation of powers. (p. 55, Rollo) No copy of this appeal was furnished to respondent NHA. On July 10, 1978, Cordova then filed a motion for execution. Acting on the motion, NHA issued a Writ of Execution dated July 14, 1978. On August 2, 1978, the petitioner was served with said writ by a deputy of respondent provincial sheriff of Rizal. The President failed to act on the appeal. Hence, this present petition for certiorari and prohibition with writ of preliminary injunction. The only issue raised in this petition is the constitutionality of P.D. No. 1344. The petitioner contends that P.D. No. 1344 is unconstitutional on grounds that a) it deprives herein petitioner access to courts of law and b) the manner of appeal provided for therein is violative of due process. This Court does not decide questions of a constitutional nature unless that question is properly raised and presented in appropriate cases and is necessary to a determination of the case i.e. the issue of constitutionality must be the very lis mota presented. (Alger Electric, Inc. v. Court of Appeals, 135 SCRA 37; Dumlao v. Commission on Elections, 95 SCRA 392; People Vera, 65 Phil. 56). On this ground alone, the petition should be dismissed. The petitioner has not clearly shown how a ruling upon the constitutionality of P.D. No. 1344 will in any way affect the correctness of the decision rendered against him. There is no discussion whatsoever on the merits of the original case. As far as the records show, the NHA decision appears to be fair and correct. Moreover, the resolution promulgated by respondent NHA, was issued before the passage of the questioned decree. The writ of execution it issued, as admitted by the petitioner in its memorandum, did not in anyway rely upon P.D. No. 1344. The issue of constitutionality is poorly discussed.

Nonetheless, we decided to give due course and require memoranda from the parties instead of summarily denying the petition on a minute resolution because it is best for public policy that the issue raised should be resolved. (See Edu v. Ericta, 35 SCRA 481); Gonzales v. Commission on Elections, 27 SCRA 835). Sufficiently numerous persons are affected by NHA powers and functions. It is alleged that the mode of review on appeal prescribed by the decree violates the constitutional guarantee of due process. This is predicated on the petitioner's theories that (1) the word "only" as used in Sec. 2 of said decree, " ... appealable only to the President of the Philippines ... ." is a bar to recourse to courts of law; and (2) the "affirmance-by-in action" on the part of the President of the Philippines would render the NHA decision as final and executory. Both premises are without merit. The right to appeal is not a natural right nor a part of due process, except where it is granted by statute in which case it should be exercised in the manner and in accordance with the provisions of law. (Bello v. Francisco, 4 SCRA 134; Rodriguez v. Director of Prisons, 47 SCRA 153). In other words, appeal is a right of statutory and not constitutional origin. The fact that P.D. No. 1344 does not specifically provide for judicial review of NHA decisions affirmed or reversed by the President, does not necessarily preclude judicial review. The extraordinary writs of certiorari, prohibition, mandamus or quo warranto (Rules 65 and 66) are always available in proper cases where there is no appeal or other plain, speedy, or adequate remedy in the ordinary course of law. The power of the Supreme Court to strike down acts which infringe on constitutional protections or to nullify administrative decisions contrary to constitutional mandates cannot be reduced or circumscribed by any statute or decree. No statute is needed to bring arbitrary acts or decisions within our jurisdiction. On the issue of "affirmance-by-in action," failure on the part of the President to act upon an appeal does not necessarily mean that the appealed decision automatically becomes final and executory. Access to the courts of law may still be made as mentioned above. Therefore, any such decision is far from being final and executory. There is no question that a statute may vest exclusive original jurisdiction in an administrative agency over certain disputes and controversies falling within the agency's special expertise. The very definition of an administrative agency includes its being vested with quasijudicial powers. The ever increasing variety of powers and functions given to administrative agencies recognizes the

37

need for the active intervention of administrative agencies in matters calling for technical knowledge and speed in countless controversies which cannot possibly be handled by regular courts. Moreover, there is the well-settled principle that all reasonable doubts should be resolved in favor of the constitutionality of a statute, for which reason, it will not be set aside as violative of the constitution except in "clear cases" (People v. Vera, supra). We, therefore, hold that P.D. No. 1344 in so far as the vesting of exclusive original jurisdiction over cases involving the sales of lots in commercial subdivisions to NHA and the mode of appeal provided therein are concerned, is not unconstitutional. Parenthetically, Section 9(3) of Batas Pambansa 129 empowers the Court of Appeals to have:

Francisco A. Puray, Sr. and Inego A. Gorduiz for Municipality of Bontoc. MEDIALDEA, J.:p This refers to two (2) petitions for certiorari under Rule 65 of the Rules of Court seeking to annul and set aside the accused orders of respondent judge which dismissed the complaints filed with the trial court, as having been issued with grave abuse of discretion, and to order the same respondent to assume jurisdiction and proceed with the determination of the cases on the merits. The antecedent facts of each case are as follows: G.R. No. 38204

On June 15, 1950, Congress passed Republic Act No. 522 creating the municipality of Bontoc, formerly a barrio of the municipality of Sogod in the province of Leyte, which shall (3) Exclusive appellate jurisdiction over all final judgments, be composed of the barrios of Bontoc, Divisoria, Onion, decisions, resolutions, orders, or awards of Regional Trial Pacu, Beniton, Catmon, Hilaan, Taa, Sta. Cruz, Mahayahay Courts and quasi-judicial agencies, instrumentalities, boards and their corresponding sitios. or commissions, except those falling within the appellate A boundary dispute however, later arose between the jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph municipality of Bontoc and the municipality of Sogod with the latter claiming that the former exercised jurisdiction not (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948. only over the barrios above-mentioned but also over other ten (10) barrios allegedly belonging to Sogod. B.P. Blg. 129 was signed into law on August 14, 1981 and On June 17, 1952, the Provincial Board of Leyte issued provides a uniform appellate body for all administrative Resolution No. 617 directing the holding of a plebiscite agencies, instrumentalities, boards and commissions among the barrios of Pangi, Taa part of Sta. Cruz, Tuburan, subject to the limited exceptions cited above. Laogawan and their corresponding sitios. The purpose of WHEREFORE, in view of the foregoing, the petition is the plebiscite is to determine whether the people in these DISMISSED. barrios would like to remain with the municipality of Sogod SO ORDERED. or with Bontoc. The plebiscite was conducted on August 1, 1952, and the results thereof show that more votes were cast in favor of Sogod than those in favor of Bontoc. G.R. No. L-38204 September 24, 1991 THE MUNICIPALITY OF SOGOD, petitioner, vs. HON. AVELINO S. ROSAL, as Judge of the Court of First instance of Southern Leyte, Branch III, THE PROVINCIAL BOARD OF SOUTHERN LEYTE, HON. SALVACION O. YNIGUEZ, in her capacity as Governor of Southern Leyte and the MUNICIPALITY OF BONTOC, respondents. G.R. No. 38205 September 24, 1991 THE MUNICIPALITY OF SOGOD, petitioner, vs. HON. AVELINO S. ROSAL, as Judge of the Court of First Instance of Southern Leyte, Branch III and the Municipality of Bontoc, respondents. Godofredo L. Cualteros for petitioner. On April 4, 1959, the Provincial Board of Leyte issued Resolution No. 519 recommending to the President of the Philippines and/or to the Congress of the Philippines that Republic Act 522 be amended so as to include in said Act creating the municipality of Bontoc, the following barrios claimed by Sogod which are in the heart of Bontoc but not included in said law, namely: Baugo, Himakilo, Esperanza, Hibagwan, Pamahawan, Mahayahay, Bunga, Da-o and Maoylab The Board also recommended that a law be enacted annexing to the municipality of Sogod the following barrios which are very near Sogod and are claimed by the latter but are included in the law creating Bontoc, namely: Laogawan, Taa Tuburan, Sta. Cruz and Pangi he board further recommended that the boundary line between the two municipalities be placed at Granada Creek. On December 28, 1959, Carlos P. Garcia, then President of the Philippines, promulgated Executive Order No. 368,

38

which approved the recommendation of the provincial board of Leyte, and reconstituted the barrios and sitios which shag compose the municipalities of Bontoc and Sogod. The executive order also specified Granada Creek as the boundary line separating Bontoc and Sogod. However, on July 14, 1960, the President of the Philippines, thru then Executive Secretary Castillo sent a telegram to the Provincial Board of Southern Leyte which states as follows: BY DIRECTION OF PRESIDENT PLEASE SUSPEND IMPLEMENTATION OF EXECUTIVE ORDER 368 SERIES 1959 RECONSTITUTION (sic) BARRIOS AND SITIOS TO COMPOSE MUNICIPALITIES OF SOGOD AND BONTOC AND READJUSTING TERRITORIES SAID MUNICIPALITIES UNTIL FURTHER ADVISE STOP TO DETERMINE TRUE WISHES OF INHABITANTS PLEASE SUPERVISE HOLDING OF PLEBISCITE IN BARRIO AND SITIOS AFFECTED ADVISING THIS OFFICE IMMEDIATELY OF RESULT.

of Sogod. The complaint prayed that the municipality of Bontoc be ordered to pay Sogod onehalf of the total amount of taxes collected by the former from the inhabitants of the aforesaid barrios during the period from 1950 to 1959. On August 31, 1973, the trial court issued an order dismissing Civil Case No. R-1707 on the ground that the right to collect taxes would ultimately depend on Civil Case No. R-1706, which was already dismissed for lack of jurisdiction and that the issue as to boundary dispute have not yet been decided in a plebiscite for that purpose. Hence this petition for certiorari under Rule 65 seeking to annul the above order of the judge. The common issue to be resolved in these petitions is whether or not the trial court gravely erred in dismissing the two cases for lack of jurisdiction.

Jurisdiction has been defined as the power and authority to hear and determine a cause or the right to act in a case SEC. CASTILLO (P. 20, Rollo) (Herrera v. Barrette and Joaquin, 25 Phil. 245; Conchada v. On July 18, 1960, the Provincial Board of Southern Leyte Director of Prisons, 31 Phil. 4). Jurisdiction is conferred only passed Resolution No. 62 suspending the implementation of by the Constitution or by law. It cannot be fixed by the will Executive Order 368. The Board also created a committee to of the parties nor can it be acquired or diminished by any conduct the holding of a plebiscite in the barrios and sitios act of the parties. In determining whether a case lies within affected by Executive Order 368 and to finally settle the or outside the jurisdiction of a court, reference to the applicable statute on the matter is indispensable. It is a boundary dispute. settled rule that jurisdiction of a court is determined by the On June 24, 1970, the municipality of Sogod filed Civil Case statute in force at the time of commencement of action No. R-1706 for certiorari and prohibition with the Court of First Instance of Southern Leyte (now Regional Trial Court), (Tolentino v. Social Security Commission, L-28870, to enjoin the provincial board and provincial governor from September 6, 1985, 138 SCRA 428; Lee v. Municipal Trial Court of Legaspi City Br. 1, No. 68789, November 10, 1986, taking cognizance of the long pending boundary dispute 145 SCRA 408; Dela Cruz v. Moya, No. 65192, April 27, between the two municipalities and to enjoin the 1988, 160 SCRA 838). municipality of Bontoc from exercising territorial jurisdiction over the barrios of Pangi, Taa Casao, Sta. Cruz, At the time the civil actions were filed with the trial court by Tuburan and Laogawan all allegedly belonging to the petitioner municipality in 1970, the applicable laws necessary for the determination of the question of whether municipality of Sogod. On August 31, 1973, the trial court dismissed the action for the trial court has the authority to decide on the municipal boundary dispute are the following: 1) Republic Act No. lack of jurisdiction over the subject matter of the case. On 522, creating the municipality of Bontoc; 2) Republic Act December 17, 1973, the trial court denied petitioner's No. 3590, the Revised Barrio Charter, revising Republic Act motion for reconsideration. No. 2370; and 3) Section 2167 of the Revised Hence, this petition was filed alleging that the respondent Administrative Code of 1917. judge acted with grave abuse of discretion in dismissing the Republic Act No. 522 defines the jurisdiction of the case. municipality of Bontoc. It clearly enumerates the barrios G.R. No. 38205 which shag compose the municipality of Bontoc, to wit: On December 7, 1970, the municipality of Sogod filed Civil Bontoc, Divisoria, Onion, Pacu, Beniton, Catmon, Hilaan, Taa Case No. R-1707 with the Court of First Instance of Southern Sta. Cruz, Mahayahay and their corresponding sitios. This Leyte (now Regional Trial Court) for recovery of taxes with means that all the other barrios in Southern Leyte which are receivership against the municipality of Bontoc. The not included in the law creating the municipality of Bontoc complaint alleged that the municipality of Bontoc, without are deemed to remain under the jurisdiction of the any legal basis, exercised jurisdiction not only over the municipality of Sogod. Although the said law is clear as to barrios enumerated in Republic Act No. 522 but also over which territories shall belong to each municipality, the law ten (10) barrios belonging to the complainant municipality

39

is silent however, as to the specifications of the boundary line which will separate the two municipalities.

which applied Republic Act No. 2370, known as the Barrio Charter, We held that the power to fix common boundaries With the passage of Republic Act No. 2370 which took effect in order to avoid or settle conflicts of jurisdiction between adjoining municipalities may also partake of an on January 1, 1960 as revised by Republic Act No. 3590 on June 22, 1963, known as the Revised Barrio Charter, barrios administrative nature that can be decided by the administrative department, involving as it does, the may be created and their boundaries altered only by Act of adoption of means and ways to carry into effect the laws Congress or by the corresponding provincial board upon petition of the majority of the voters in the area affected and creating said municipalities. the recommendation of the municipality in which the Considering the foregoing, We find that the trial court acted proposed barrios are situated. Thus, the provincial board correctly in dismissing the cases for want of jurisdiction and was empowered under the Id law to determine and alter in allowing the provincial board to continue with the pending investigation and proceedings on the boundary boundaries of municipalities and barrios. dispute. Further, the law then vested the right to settle boundary disputes between municipalities on the provincial board pursuant to Section 2167 of the Revised Administrative Code, which reads: It is worthy to note however, that up to this time, the controversy between these two municipalities has not been settled. However, this dispute has already been overtaken by events, namely, the enactment of the 1987 Constitution SEC. 2167. Municipal boundary disputes. How settled and the New Local Government Code on February 10, 1983, Disputes as to jurisdiction of municipal governments over places or barrios shall be decided by the province boards of which imposed new mandatory requirements and procedures on the fixing of boundaries between the provinces in which such municipalities are situated, after an investigation at which the municipalities concerned municipalities. The 1987 Constitution now mandates that no province, city, municipality or barangay may be created, shall be duly heard. From the decision of the provincial board appeal may be taken by the municipality aggrieved to divided, merged, abolished or its boundary substantially the Secretary of the Interior (now the Office of the Executive altered except in accordance with the criteria established in the local government code and subject to approval by a Secretary), whose decision shall be final. Where the places or barrios in dispute are claimed by municipalities situated majority of the votes cast in a plebiscite in the political units directly affected. Hence, any alteration or modification of in different provinces, the provincial boards of the provinces concerned shall come to an agreement if possible, the boundaries of the municipalities shall only be by a law to be enacted by Congress subject to the approval by a but, in the event of their failing to agree, an appeal shall be majority of the votes cast in a plebiscite in the barrios had to the Secretary of Interior (Executive Secretary), whose decision shall be final. (Municipality of Hinabangan v. affected (Section 134, Local Government Code). Thus, under present laws, the function of the provincial board to fix the Municipality of Wright, 107 Phil. 394). municipal boundaries are now strictly limited to the factual It is clear from the aforestated legal provision that the determination of the boundary lines between authority to hear and resolve municipal boundary disputes municipalities, to be specified by natural boundaries or by belongs to the provincial boards and not to the trial courts. metes and bounds in accordance with the laws creating said The decisions of the boards are then appealable to the municipalities. Executive Secretary. Records in the instant case show that In view of the length of time that this municipal boundary when petitioner municipality filed the civil actions in 1970 dispute had remained unresolved, due to the possibility that before the trial court, the provincial board of Southern Republic Act No. 522 has lost its practicability or has Leyte had not yet conducted a plebiscite as ordered by the become obsolete considering the geographical location of Executive Department in 1960 or rendered any order barrios in Southern Leyte, especially those enumerated in settling the dispute. Petitioner municipality should have elevated the matter of delay to the then Secretary of Interior Republic Act No. 522, which apparently, are much nearer to Sogod than to Bontoc, this Court finds that this matter (now Executive Secretary) for action instead of bringing it to the trial court. Although existing laws then vested on the should be referred to the Congress of the Philippines for whatever legislative action that may be necessary under the provincial board the power to determine or even alter circumstances. municipal boundaries, the Secretary of Interior or the Executive Department for that matter, was not precluded ACCORDINGLY, the petitions are DISMISSED. The assailed during that time from taking necessary steps for the speedy orders of the respondent judge dated August 31, 1973 and settlement of the boundary dispute. In Pelaez v. Auditor December 17, 1973 in G.R. No. L-38204 and orders dated General, No. L-23825, December 24, 1965, 15 SCRA 569,

40

August 31, 1973 and December 17, 1973 in G.R. No. L38205 are AFFIRMED.

Civil Service] Commission." As noted in such communication: "This Office is not aware of any provision of law requiring that Precinct or Station Commanders should SO ORDERED. be at least a Police or Detective Major or an Inspector First Class. Paragraph 4, Section 23 of Republic Act No. 2260, G.R. No. L-26534 November 28, 1969 otherwise known as the Civil Service Act of 1959, which that Commission has invoked, contemplates positions in the ANTONIO J. VILLEGAS, in his capacity as Mayor of the competitive or classified service as provided for in an City of Manila, CAPTS. JAMES BARBERS, ANTONIO PARALEJAS and FELICISIMO LAZARO, in their respective appropriation or budget measure to which an appointment, as the term appointment is used in Section 24 of the Civil capacity as Precinct or Station Commanders of the Service Act of 1959, is required. Obviously, this provision of Manila Police Department, petitioners-appellees, law cannot cover mere designations or assignments to an vs. area of command. Thus, Precinct or Station Commanders in ABELARDO SUBIDO, in his capacity as Commissioner of the Manila Police Department are so designated for Civil Service, respondent-appellant. organizational purposes in order to delineate their specific Romeo L. Kahayon for petitioner-appellees. area of command and effect greater efficiency in the Assistant Solicitor General Pacifico P. de Castro, Solicitor administration of police affairs."3 Rosalio A. de Leon and Special Attorney Raymundo R. Villones Respondent Commissioner of Civil Service was however for respondent-appellant. adamant, reiterating on July 9, 1965 his directive for the FERNANDO, J.: replacement of the other petitioners as station The Power of respondent Commissioner of Civil Service to commanders.4 Then came the allegation why in this direct the Mayor of the City of Manila, petitioner Antonio J. particular case respondent Commissioner of Civil Service Villegas, to replace the other petitioners, James Barbers, acted without or in excess of jurisdiction or, at the very Antonio Paralejas and Felicisimo Lazaro as station least, with grave abuse of discretion. As pointed out in the commanders of the three Manila police precincts, is petition, the assignment or detail in this case of the other challenged in this prohibition proceeding filed with the petitioners as precinct or station commanders did not Manila Court of First Instance. There is no dispute that constitute "appointment to positions in the competitive or petitioner, as Mayor, by virtue of the statutory grant of classified service;" that such designation or detail was authority of "immediate control over the executive exclusively within the power and jurisdiction of petitioner functions of the different departments,"1could pick the Mayor under his specific power of direction, supervision police officials to be entrusted with such responsibility. The and control vested in him by the Charter and in view of his choice fell on the three other petitioners, then police responsibility as the chief executive of the City to maintain captains. Respondent Commissioner would dispute their peace and order therein; that there is no law, or civil service designation as such on the ground of lack for each of them regulation which requires any specific civil service of "an Inspector First Class (Police Detective Major)" eligibility for a precinct or station commander and that on eligibility. Petitioners prevailed, the lower court being the assumption that respondent Commissioner could unable to locate any legal provision to warrant such an determine the appropriate eligibility, the examination for exercise of power on the part of respondent Commissioner. police inspectors invoked by him were suspended by order The case is before us now on appeal. For reasons to be more of the President of the Philippines of March 23, 1964 insofar explicitly and fully set forth, we affirm. as the City of Manila was concerned.5 There were other The petition for prohibition, with preliminary injunction allegations to show lack or excess of jurisdiction as well as being sought, was filed in the Court of First Instance of grave abuse of discretion, but enough has been said to Manila on July 17, 1965. After the allegation as to parties, it render clear why for petitioners the directive in question was set forth therein that in an endorsement of June 30, was beyond the power of respondent Commissioner to 1965, respondent Commissioner directed that petitioners issue. Barbers, Paralejas and Lazaro be replaced as station In the answer by respondent Commissioner filed on July 29, commanders of the three police precincts of Manila as their 1965, the facts as set forth were admitted, but there was an continued employment as such was illegal, the eligibility explicit denial of the grounds relied upon to show lack or required being that of an inspector first class, allegedly not excess of jurisdiction or his acting with grave abuse of possessed by them.2 The petitioner Mayor replied on July 2, discretion.6 The stress in the affirmative and special 1965, asserting that he felt obliged "to disregard said defenses set forth was that the assignment of petitioners directive, it being in excess of the authority vested in [the Barbers, Paralejas and Lazaro was not allowable under the

41

Civil Service Act in view of the fact that there were as of that time eligibles to the position of inspector first class who could be so designated. Reliance was also had, as on the original directive of respondent Commissioner, of such designation of petitioners as not being "in conformity with the recommendation of the U.S. Agency for International Development to assign and shift [Manila Police Department] personnel to positions to which they have qualified in appropriate examinations."7 The decision now on appeal, promulgated on July 14, 1966, noted that respondent Commissioner did not dispute the civil service eligibilities and training of petitioners Barbers, Paralejas and Lazaro. Reference was made to the opening paragraph of the petition wherein the following appeared: "Petitioner Capt. Barbers passed his First Grade Civil Service (supervisor) Promotional Examination taken on March 31, 1962 with a high mark of 80.1 per cent; he is also a law graduate (1964) and graduated as a full scholar; he completed the Basic Course for Patrolman at the MPD training school (1945), the Advanced Course (1946), the Detective Course (1946) as class topnotcher with an average of 96.5 per cent and the Senior Police Refresher Course (1962) at the Philippine Army School Command, Ft. Bonifacio; and he also trained at the International Police Academy in Washington, D.C., the New York City Police Academy, the Pinkerton Detective Agency in New York, the Dade County Police Department in Miami, Florida, the U.S. Military Police School at Fort Gordon, Georgia, and the Michigan State University Communications Seminar. Petitioner Capt. Paralejas passed the civil service examination for police lieutenant in 1945 with a rating of 77.90 per cent; he is a commerce graduate (1939) 2nd year law, F.E.U.; he completed the supervisors 2nd In-Service Training in the City of Manila (medalist) and the Senior Police Refresher Course (1962) at the Philippine School Command, Ft. Bonifacio. Petitioner Capt. Lazaro passed the Criminal Investigation in Secret Service examination (pensionado) given by the Civil Service Commission in 1947, with an average of 83.62%; he completed the supervisors 2nd In-Service Training in the City of Manila and the Senior Police Refresher Course (1962) at the Philippine Army School Command, Ft. Bonifacio, graduating as third honor; first grade eligible under Rep. Act 1080, being a member of the Philippine Bar."8 The decision then noted that while respondent Commissioner had ruled "that the appropriate eligibility for the position of precinct commander is that of police inspector, first class (police major), no valid reason has been advanced to show that such eligibility is appropriate and that of police captain is not."9 It was likewise made clear in the decision that there was no law prescribing that precinct commanders be police majors. Even on the

assumption then that the "corrective measures" could be supplied by respondent Commissioner if "unsatisfactory situations are found" still the appropriate conclusion, according to the lower court, considering "the civil service eligibilities and training of petitioners-captains, the failure of respondent Commissioner to show unsatisfactory situations in the assignment or designation of petitionerscaptains as precinct commanders, and the reasons stated in the petition, [is that] respondent Commissioner has acted without or in excess of jurisdiction and with grave abuse of discretion in issuing and trying to enforce the directive in question."10 What cannot be denied, as stressed in such decision, is the absence of any law "which prescribes that precinct commanders be police majors," resulting necessarily in the directive of respondent Commissioner of Civil Service being declared null and void, the writ of prohibition thus being the appropriate remedy, with an injunction perpetually restraining him from the commission of the acts complained of. The question, to repeat, is one of power. What is clear is that it is petitioner City Mayor that could so designate the other petitioners to assume the position of station commanders. That power is his, and his alone. He is not required by law to share it with respondent Commissioner, who must justify by the valid conferment of authority the action taken by him in requiring that the City Mayor replace the other petitioners. Power is not to be presumed, it must be shown. Respondent Commissioner failed to do so. It was not surprising therefore that the lower court ruled against him. As set forth at the outset, we sustain the lower court and affirm the judgment appealed from. 1. The power of petitioner City Mayor as to who could be designated as station commanders of the three Manila police precincts is conceded. No dispute as to his authority to do so exists. The Charter is clear. The narrow question, therefore, is whether such designation could be frustrated by the directive of the respondent Commissioner. For this official to be justified in interposing a negative, he must show that an applicable law authorizes him to do so. It is well-settled that respondent Commissioner at the most may inquire only as to the eligibility of the person thus chosen to fill up a vacant position. If he were, then respondent Commissioner of Civil Service must so attest. That function being discharged, his participation ceases. So we have held in the leading case of Villanueva v. Balallo,11 the opinion being penned by the present Chief Justice. Thus: "When the appointee is qualified, as petitioner herein admittedly is, then the Commissioner of Civil Service has no choice but to attest to the appointment. It has been repeatedly held that an appointment becomes complete

42

upon the performance of the last act required by law of the appointing power. The attestation required of the Commissioner of Civil Service is merely a check to assure compliance with the civil service laws." In this particular case, the eligibility of the other petitioners as police captains is admitted. That was duly set forth in the decision now on appeal. More than that, their being exceptionally well-qualified, was likewise duly noted therein, a finding of fact binding on us as this appeal raises purely questions of law. The justification for the directive of respondent Commissioner is thus premised on his alleged power to insist on a specific eligibility for each of the other petitioners designated, that of "Inspector First Class (Police or Detective Major)." In his brief, however, he can point to no express provision that would confer on him such a power. His failure is understandable because there is none. At the most, then, he would rely on a reading of the Civil Service Act from which, mistakenly to our mind, he would infer such authority. According to his brief: "Said authority to fix appropriate eligibilities being corollary to respondent's 'exclusive jurisdiction over the approval under the Civil Service Law and rules of all appointments including promotions to positions in the competitive service" and/or being an implied power, there is therefore no need for an express provision setting forth in black and white what eligibilities are appropriate for what positions."12

the statute is silent as to the existence of power, there the matter rests. Only Congress can remedy the situation. It is not for respondent Commissioner to do so on the flimsy allegation that he possesses authority to promulgate rules and standards dealing specifically with the supervision, the preparation and rating of all civil service examinations,14 the making of investigation and special reports upon all matters relating to the enforcement of the civil service law,15 the authority to pass upon all removal, separation and suspension of permanent officers and employees in the competitive and classified service,16 and the determination of appeals instituted by any person believing himself to be aggrieved17 a power which does not have the remotest connection with an exercise by petitioner City Mayor of a competence exclusively lodged in him to designate the other petitioners as precinct commanders.

This conclusion has reinforcement from authoritative pronouncements that of late have come from us. Thus, from a 1968 decision:18 "It would seem fairly obvious then that the law does not impose a rigid or mechanistic formula on the appointing power, compliance with which is inexorable and a deviation therefrom fatal. Far from it. If there be adherence to the concept that public office is a public trust, as there ought to be, the criterion should be what public welfare demands, what satisfies public interest. For it is axiomatic that public needs could best be attended to by There is thus an admission from respondent Commissioner officials, about whose competency and ability there is no question. To that overmastering requirement, personal himself that his power is necessarily limited. He would, ambition must of necessity yield. Discretion if not plenary, however, construe such a restricted authority expansively. at least sufficient, should thus be granted to those entrusted He would rely on an ambiguity. It would be a stultification of well-settled principles of public law if from the vagueness with the responsibility of administering the officers of a statute, competence to act could be predicated. If such a concerned, primarily the department heads. They are in the most favorable position to determine who can best fulfill purpose were within the contemplation of Congress, an the functions of the office thus vacated. Unless, therefore, appropriate form of words could have been utilized. The the law speaks in the most mandatory and peremptory tone, absence of such language negates its existence. considering all the circumstances, there should be, as there Respondent Commissioner would seek support for such has been, full recognition of the wide scope of such untenable view by asserting that under certain provisions of discretionary authority. Happily, there is nothing in the Civil the Act,13 he is empowered to issue rules and regulations as Service Act, which is fittingly concerned with protecting the well as to promulgate standards, policies and guidelines. rights of those in the career service, that, rightly construed, This is to rely on a frail reed. To do so is to offend against calls for a different conclusion. It is well worth repeating the primacy that should be accorded a statute as contrasted that the broad authority of a department head appears with decrees coming from the Executive Department, indisputable. Such is the policy of the law, a policy reflected necessarily of lower category. What is worse, the rules in with fidelity in the decisions of this Court." question are not issued by the President, but by one of his 19 subordinates; their binding force then is not as great. Much Also, from Pineda v. Claudio, decided even more recently, the opinion coming from Justice Castro: "For it is not less could they supersede applicable statutes, not only in enough that an aspirant is qualified and eligible or that he is what they command but also in what they omit. It does not next in rank or line for promotion, albeit by passive admit of doubt that in the hierarchy of legal norms, such prescription. It is just as necessary, in order for public rules and standards definitely occupy an inferior status. If administration to be dynamic and responsive to the needs of the times, that the local executive be allowed the choice

43

of men of his confidence, provided they are qualified and eligible, who in his best estimation are possessed of the requisite reputation, integrity, knowledgeability, energy and judgment. After all, it is the local executive, more than anyone else, who is primarily responsible for efficient governmental administration in the locality and the effective maintenance of peace and order therein, and is directly answerable to the people who elected him. Nowhere is this more true than in the sensitive area of police administration." While the two above cases are not squarely in point, still the principle therein announced as to the respect to be accorded to the exercise of the authority to appoint by the official entrusted by law to do so and the minimum interference allowed the Commissioner of Civil Service under his power to inquire into the eligibility of the appointee lends further support to the conclusion arrived at. It would appear clear, therefore, that respondent Commissioner does not possess any statutory authority to interfere with the power of petitioner City Mayor to make the designation of the other petitioners. 2. Respondent Commissioner, in his answer to the petition assailing his directive, would lend plausibility to his claim that he was legally empowered to do so by this argument: "Furthermore, said assignments are not in conformity with the recommendation of the U.S. Agency for International Development to assign and shift MPD personnel to positions to which they have qualified in appropriate examinations."20 To state such a contention is to reject it. As a foundation for the challenged directive it is, to put it mildly, far from stable. As an asserted basis to justify what respondent did, it is far from persuasive. To put it bluntly, as a source of power, its value is nil. It would not be easy to imagine a plea more offensive to our sovereignty and derogatory to our dignity as an independent nation. All governmental powers are lodged in officials of our government both national and local. An alien agency at the most may be permitted to serve in an advisory capacity. It can suggest, but it cannot command. Its wishes do not constitute law. Our officials, therefore, are not bound to obey. If it were otherwise, then a posture of subserviency and mendicancy would be sanctioned. That this Court cannot allow.21 3. In the answer of respondent Commissioner, there was an implication that his directive finds support in the constitutional provision on the Civil Service. More specifically, he did point to the requirement that appointments in the civil service "shall be made only according to merit and fitness, to be determined as far as practicable by competitive examination."22 Apparently, he had a change of mind subsequently as to such constitutional

prop, for his brief was conspicuously silent in that respect. That sober second thought had much to recommend it. No such support is yielded by the above constitutional provision to his assertion of authority. The Constitution on the civil service has only four brief sections, two of which, prohibiting partisan political activities and additional or double compensation, have clearly no relevance.23 The fourth section guarantees security of tenure, again without any bearing on the present litigation.24 It is only the first section then, referred to above, that may conceivably touch upon the issue involved, although in a rather remote way. For it is more the expression of an ideal than a source of authority. Note that in stressing merit and fitness, it recognized that it should "be determined as far as practicable by competitive examination." There was no creation of a Civil Service Commission. No such official as a Civil Service Commissioner was provided for. Respondent's position is a statutory creation, the extent of his powers being thus limited and circumscribed. It would thus be futile on his part to trace the existence of an alleged authority to the Constitution. As a matter of fact, if there are constitutional overtones to this litigation, petitioners, not the respondents, are the beneficiaries. As they did correctly point out, not even the President is vested with the power of control over local officials. He exercises only "general supervision . . . as may be provided by law, . . . ."25 Respondent Civil Service Commissioner cannot be deemed then to be possessed of a greater prerogative, being himself an official of a lower category in the executive branch. Moreover, what the Constitution enjoins on the President as well as all those entrusted with executive functions is to "take care that the laws be faithfully executed."26 Certainly, it is a manifestation of less than fealty to such a duty if an executive official like respondent would enforce a statutory provision not as written but as expanded and enlarged by him through a process of strained construction. 4. One last word. Nothing is better settled in the law than that a public official exercises power, not rights. The government itself is merely an agency through which the will of the state is expressed and enforced. Its officers therefore are likewise agents entrusted with the responsibility of discharging its functions. As such there is no presumption that they are empowered to act. There must be a delegation of such authority, either express or implied. In the absence of a valid grant, they are devoid of power. What they do suffers from a fatal infirmity. That principle cannot be sufficiently stressed. In the appropriate language of Chief Justice Hughes: "It must be conceded that departmental zeal may not be permitted to outrun the

44

authority conferred by statute."27 Neither the high dignity of the office nor the righteousness of the motive then is an acceptable substitute. Otherwise the rule of law becomes a myth. Such an eventuality, we must take all pains to avoid. WHEREFORE, the decision of the Court of First Instance of July 14, 1966 is affirmed. Without pronouncement as to costs. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Teehankee, JJ., concur. Castro, J., concurs in the result. Barredo, J., took no part. G.R. No. 109703 July 5, 1994 REALTY EXCHANGE VENTURE CORPORATION AND/OR MAGDIWANG, REALTY CORPORATION, petitioner, vs. LUCINA S. SENDINO and the OFFICE OF THE EXECUTIVE SECRETARY, Office of the President, Malacaang, Manila, respondents. Siruelo, Muyco & Associates Law Office for petitioner. Sisenando Villaluz, Jr. for private respondent. KAPUNAN, J.: Private respondent Lucina C. Sendino entered into a reservation agreement with Realty Exchange Venture, Inc. (REVI) for a 120-square meter lot in Raymondville Subdivision in Sucat, Paranaque for P307,800.00 as its purchase price. 1 She paid P1,000.00 as partial reservation fee on January 15, 1989 and completed payment of this fee on January 20, 1989 by paying P4,000.00. 2 On July 18, 1989, private respondent paid REVI P16,600.00 as full downpayment on the purchase price. 3 However, she was advised by REVI to change her co-maker, which she agreed, asking for an extension of one month to do so. For alleged non-compliance with the requirement of submission of the appropriate documents under the terms of the original agreement, 4 REVI, through its Vice-President for Marketing, informed respondent of the cancellation of the contract on the 31st of July 1989. 5 On April 20, 1990, private respondent filed a complaint for Specific Performance against REVI with the office of Appeals, Adjudication and Legal Affairs (OAALA) of the Housing and Land Use Regulatory Board (HLURB) asking that respondent be ordered:

2. To pay complainant actual, nominal and moral damages, the amount of which will be proved in the hearing; 3. To pay complainant attorney's fee in the sum of P10,000.00; 4. To pay complainant exemplary damages in the sum of P10,000.00 to set an example and to avoid a repetition of such illegal and unsound business practices of the respondent. 6 This petition was amended on August 17, 1990 by impleading petitioners Magdiwang Realty Corporation (MRC) which appeared to be the registered owner of the subject lot as per TCT No. 76023. On April 3, 1991 the HLURB, whose authority to hear and decide the complaint was challenged by REVI in its answer, 7 rendered its judgment in favor of private respondent and ordered petitioners to continue with the sale of the house and lot and to pay private respondent P5,000 as moral damages, P5,000 as exemplary damages and P6,000 as attorney's fees and costs of the suit. 8 An appeal from this decision was taken to the HLURB OAALA Arbiter, which affirmed the Board's decision. The decision of the OAALA Arbiter was appealed to the Office of the President, herein public respondent. On January 7, 1993, the public respondent rendered its decision dismissing the petitioners' appeal. Motion for reconsideration of the decision was denied by the public respondent on January 26, 1993. Consequently petitioners come before this Court, in this petition, which the Court resolves to treat as a petition for certiorari, raising the following issues: I PUBLIC RESPONDENT COMMITTED SERIOUS ERROR IN DECLARING THAT THE HOUSING AND LAND USE REGULATORY BOARD HAS QUASI-JUDICIAL FUNCTIONS, NOTWITHSTANDING ABSENCE OF EXPRESS GRANT BY EXECUTIVE ORDER NO. 90 OF DECEMBER 17, 1986 WHICH CREATED IT. AND EVEN IF THE HLURB HAS QUASIJUDICIAL FUNCTIONS, PUBLIC RESPONDENT LIKEWISE SERIOUSLY ERRED IN DECLARING THAT THE BOARD OF COMMISSIONERS IS ALLOWED TO SIT IN A DECISION TO RENDER JUDGMENT AND TO DELEGATE ITS QUASIJUDICIAL AUTHORITY TO A SUBORDINATE OFFICE. II

PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN DECLARING THAT THE LOT SUBJECT OF THE CONTRACT SOUGHT TO BE ENFORCED IS PARAPHERNAL 1. To comply and continue with the sale of the house and lot, DESPITE ADMISSION OF ITS CONJUGAL NATURE. Block 4, Lot 17 at the Raymondville Subdivision, Sucat Road, III Paranaque, Metro Manila;

45

PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN DECLARING THAT ONLY NOTARIAL NOTICE OF RESCISSION MAY VALIDLY CANCEL A RESERVATION AGREEMENT PURSUANT TO REPUBLIC ACT NO. 6552.

No. 648 in 1981 transferred all the functions of the National Housing Authority (pursuant to Presidential Decrees Nos. 957, 1216 and 1344) to the Human Settlements Regulatory Commission (HSRC) consolidating all regulatory functions relating to land use and housing development in a single As the first and third issues raised by the petitioners strike entity. 10 Being the sole regulatory body for housing and at the core of the case at bench, this Court deems it land development, the renamed body, the HLURB, 11 would appropriate to initially dispose of the issue of private have been reduced to a functionally sterile entity if, as the respondent's capacity to bring her complaint before the petitioner contends, it lacked the powers exercised by its HLURB-OAALA. predecessor which included the power to settle disputes It is settled that rules of procedure are as a matter of course concerning land use and housing development and construed liberally in proceedings before administrative acquisition. Moreover, this Court has had the occasion to bodies. 9 In the instant case, the original suit for specific definitively rule on the question as to whether or not the performance and damages was filed by the private Housing and Land Use Regulatory Board could exercise the respondent with the HLURB-OAALA, an administrative body same quantum of judicial or quasi-judicial powers not hamstrung by the strict procedural technicalities of the possessed by the HSRC under the Ministry of Human Rules of Court. Under the circumstances, it was certainly Settlements in the exercise of its regulatory functions when appropriate for the HLURB-OAALA to have acted on the it held, in United Housing Corporation vs. Hon. Dayrit 12 that: substantive questions relating to the validity of petitioners' As explicitly provided by law, jurisdiction over actions for unilateral rescission of the contract without unduly specific performance of contractual and statutory concerning itself with a mere procedural slip, the nonobligations filed by buyers of subdivision lot or joinder of private petitioner's husband in the original condominium unit against the owner or developer, is vested complaint before the HLURB. Moreover, since petitioners exclusively in the HSRC, Section 1 of PD 1344, in no participated in the administrative proceedings without uncertain terms, provides: objecting to or raising the procedural infirmity, they were certainly estopped from raising it on appeal before the Sec. 1. In the exercise of its functions to regulate real estate trade and business and in addition to its powers provided Office of the President and before this Court. for in Presidential Decree No. 957, the National Housing Proceeding to the principal issues raised by the petitioner, Authority shall have exclusive jurisdiction to hear and while E.O. 85 dated 12 December 1986 abolished the decide cases of the following nature: Ministry of Human Settlements (MHS), it is patently clear from a reading of its provisions that the said executive order did not abolish the Human Settlements Regulatory Commission (HSRC) which continued to exercise its powers and functions even after the Ministry of Human Settlements ceased to exist. In spite of the Aquino Government's stated intention of eradicating what it considered the vestiges of the previous regime, it was not its intention to create a vacuum by abolishing those juridical entities, agencies, corporations, etc., attached to or supervised by the MHS, which performed vital administrative functions. Pertinently, Section 3 of E.O. 85 mandates that: . . . The final disposition and final organizational alignment or attachment of the juridical entities, agencies, corporations and councils attached to, or under the administrative supervision of the MHS including their respective existing projects, appropriations and other assets shall be subject to subsequent enactments by the President. A. Unsound real estate business practices; B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman. (Emphasis Ours) This is reinforced by section 8 of EO 648 (otherwise known as the Charter of the Human Settlements Regulatory Commission) which took effect on February 7, 1981, thus:

Sec. 8. Transfer of Functions. The Regulatory functions of the National Housing Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and other related laws are hereby transferred to the Human Settlements Regulatory Commission. . . . Among the regulatory functions are . . . (11) Hear and decide cases of unsound real estate business Pursuant to this provision therefore, the President practices, claims involving refund filed against project subsequently issued Executive Order No. 90, series of 1986, owners, developers, dealers, brokers, or salesmen and cases recognizing the Human Settlements Regulatory Commission of specific performance (Emphasis Ours). (renamed the HLURB) as one of the principal housing agencies of the government. Prior to this, Executive Order

46

Private respondents reliance, therefore, on sections 1 and 8 of the Judiciary Reorganization Act of 1980 is untenable. Thus, as correctly pointed out by petitioner, section 19, paragraph 6 of said law is material to the issue of where jurisdiction lies, and We quote: Sec. 19. . . . (6) In all other cases not within the exclusive jurisdiction of any court, tribunal, persons or body exercising judicial or quasi-judicial functions. xxx xxx xxx Neither can We accede to private respondents' claim that resort to the courts is justified under section 41 of PD 957 specifically under the phrase "legal remedies that may be available to aggrieved subdivision lot buyers." There is no question that a statute may vest exclusive original jurisdiction in an administrative agency over certain disputes and controversies falling within the agency's special expertise. The constitutionality of such grant of exclusive jurisdiction to the National Housing Authority (now Housing and Land Use Regulatory Board) over cases involving the sale of lots in commercial subdivisions was upheld in Tropical Homes Inc. v. National Housing Authority (152 SCRA 540 [1987]) and again sustained in a later decision in Antipolo Realty Corporation v. National Housing Authority (153 SCRA 399 [1987]) where We restated that the National Housing Authority (now HLURB) shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the terms of PD No. 957 which defines the quantum of judicial or quasijudicial powers of said agency. 13 Clearly, therefore, the HLURB properly exercised its jurisdiction over the case filed by the petitioners with its adjudicative body, the OAALA, in ordering petitioners to comply with their obligations arising from the Reservation Agreement. In general, the quantum of judicial or quasijudicial powers which an administrative agency may exercise is defined in the agency's enabling act. In view of the Court's pronouncement in United Housing Corporation vs. Hon. Dayrit, supra, recognizing the HLURB as the successor agency of the HSRC's powers and functions, it therefore follows that the transfer of such functions from the NHA to the HRSC effected by Section 8 of E.O. 648, series of 1981, thereby resulted in the acquisition by the HLURB of adjudicatory powers which included the power to "(h)ear and decide cases of unsound real estate business practices . . . and cases of specific performance." 14 Obviously, in the exercise of its powers and functions, the HLURB must interpret and apply contracts, determine the rights of the parties under these contracts, and award damages whenever appropriate. 15 We fail to see how the HSRC which possessed jurisdiction over the actions for specific

performance for contractual and statutory obligations filed by buyers of subdivision lots against developers had suddenly lots its adjudicatory powers by the mere fiat of a change in name through E.O. 90. One thrust of the multiplication of administrative agencies is that the interpretation of such contracts and agreements and the determination of private rights under these agreements is no longer a uniquely judicial function. 16 The absence of any provision, express or implied, in E.O. 90, repealing those quasi-judicial powers inherited by the HSRC from the National Housing Authority, furthermore militates against petitioners' position on the question. Going to petitioners' contention that the decision of the OAALA should have been rendered by the Board of Commissioners sitting en banc, we find ample authority both in the statutes and in jurisprudence-justifying the Board's act of dividing itself into divisions of three. Under Section 5 of E.O. 648 which defines the powers and duties of the Commission, the Board is specifically mandated to "(a)dopt rules of procedure for the conduct of its business" and perform such functions necessary for the effective accomplishment of (its) above mentioned functions." Since nothing in the provisions of either E.O. 90 or E.O. 648 denies or withholds the power or authority to delegate adjudicatory functions to a division, we cannot see how the Board, for the purpose of effectively carrying out its administrative responsibilities and quasi-judicial powers as a regulatory body should be denied the power, as a matter of practical administrative procedure, to constitute its adjudicatory boards into various divisions. After all, the power conferred upon an administrative agency to issue rules and regulations necessary to carry out its functions has been held "to be an adequate source of authority to delegate a particular function, unless by express provision of the Act or by implication it has been withheld." 17 The practical necessity of establishing a procedure whereby cases are decided by three (3) Commissioners furthermore assumes greater significance when one notes that the HLURB, as constituted, only has four (4) full time commissioners and five (5) part time commissioners to deal with all the functions, administrative, adjudicatory, or otherwise, entrusted to it. 18 As the Office of the President noted in its February 26, 1993 Resolution denying petitioners' Motion for Reconsideration, "it is impossible and very impractical to gather the four (4) full time and five (5) part time commissioners (together) just to decide a case." Considering that its part time commissioners act merely in an ex-officio capacity, requiring a majority of the Board to sit en banc on each and every case brought before it would result in an administrative nightmare. 19

47

Finally, petitioners' assertion that RA 6552 is inapplicable in the instant case because the said law does not apply to cases of reservation agreements finds no merit in the case at bench in view of Section 24 of P.D. 957 which provides:

damages as may be proper under the peculiar circumstances of the cases brought before it. WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit. Costs against petitioners.

Sec. 24. Failure to Pay Installments The rights of the SO ORDERED. buyer in the event of his failure to pay the installments due Cruz, Davide, Jr., Bellosillo and Quiason, JJ., concur. for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552. G.R. No. L-46496 February 27, 1940 As the Solicitor General correctly pointed out, RA 6552 makes no distinction between "option" and "sale" 20 which, under P.D. 957 also includes "an exchange or attempt to sell, an option of sale or purchase, a solicitation of a sale or an offer to sell directly." 21 This all-embracing definition virtually includes all transactions concerning land and housing acquisition, including reservation agreements. Since R.A. 6552 mandates cancellation by notarial act among other requirements before any cancellation of a contract may be effected, petitioners' precipitate cancellation of its contract with private respondent without observing the conditions imposed by the said law was invalid and improper. In fine, the HLURB-OAALA acted within the scope of its authority in ordering petitioners to comply and continue with the sale of the house and lot subject of the contract between the original parties. It cannot be gainsaid that the quasi-judicial functions exercised by the body are necessary incidents to the proper exercise of its powers and functions under E.O. 90 and the laws enacted delineating the scope of authority of its Board of Commissioners. Denying the body those functions so necessary in carrying out its power to regulate housing and land use results in its effective emasculation as an important regulatory body in an area vital to the national economy. The acute housing shortage problem has prompted thousands of middle and lower class buyers of houses and lots and condominium units to enter into all sorts of agreements with private housing developers involving all manner of installment schemes under contracts drawn exclusively by these developers. Many of these virtual contracts of adhesion entrap innocent buyers by requiring cash deposits under reservation agreements which include, sometimes in the fine print, default clauses guaranteeing huge monetary windfalls for the developers in the event that their buyers (oftentimes for the flimsiest of reasons) default by failing to come up with certain requirements. While the Court can take judicial notice of this pernicious practice, it can only hope that future legislation would address the need to protect the innocent middle or lower class home purchaser. In the case of the individual victim, this Court can only go to the extent of awarding such ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and NATIONAL WORKERS BROTHERHOOD, petitioners, vs. THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION, INC., respondents. Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for the Court of Industrial Relations. Antonio D. Paguia for National Labor Unon. Claro M. Recto for petitioner "Ang Tibay". Jose M. Casal for National Workers' Brotherhood. LAUREL, J.: The Solicitor-General in behalf of the respondent Court of Industrial Relations in the above-entitled case has filed a motion for reconsideration and moves that, for the reasons stated in his motion, we reconsider the following legal conclusions of the majority opinion of this Court: 1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo de duracion o que no sea para una determinada, termina o bien por voluntad de cualquiera de las partes o cada vez que ilega el plazo fijado para el pago de los salarios segun costumbre en la localidad o cunado se termine la obra; 2. Que los obreros de una empresa fabril, que han celebrado contrato, ya individual ya colectivamente, con ell, sin tiempo fijo, y que se han visto obligados a cesar en sus tarbajos por haberse declarando paro forzoso en la fabrica en la cual tarbajan, dejan de ser empleados u obreros de la misma; 3. Que un patrono o sociedad que ha celebrado un contrato colectivo de trabajo con sus osbreros sin tiempo fijo de duracion y sin ser para una obra determiminada y que se niega a readmitir a dichos obreros que cesaron como consecuencia de un paro forzoso, no es culpable de practica injusta in incurre en la sancion penal del articulo 5 de la Ley No. 213 del Commonwealth, aunque su negativa a readmitir se deba a que dichos obreros pertenecen a un determinado organismo obrero, puesto que tales ya han dejado deser empleados suyos por terminacion del contrato en virtud del paro. The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the judgement rendered by

48

the majority of this Court and the remanding of the case to the Court of Industrial Relations for a new trial, and avers:

opinion that it is not necessary to pass upon the motion for reconsideration of the Solicitor-General. We shall proceed 1. That Toribio Teodoro's claim that on September 26, 1938, to dispose of the motion for new trial of the respondent there was shortage of leather soles in ANG TIBAY making it labor union. Before doing this, however, we deem it necessary for him to temporarily lay off the members of the necessary, in the interest of orderly procedure in cases of National Labor Union Inc., is entirely false and unsupported this nature, in interest of orderly procedure in cases of this nature, to make several observations regarding the nature by the records of the Bureau of Customs and the Books of of the powers of the Court of Industrial Relations and Accounts of native dealers in leather. emphasize certain guiding principles which should be 2. That the supposed lack of leather materials claimed by observed in the trial of cases brought before it. We have reToribio Teodoro was but a scheme to systematically examined the entire record of the proceedings had before prevent the forfeiture of this bond despite the breach of his the Court of Industrial Relations in this case, and we have CONTRACT with the Philippine Army. found no substantial evidence that the exclusion of the 89 3. That Toribio Teodoro's letter to the Philippine Army laborers here was due to their union affiliation or activity. dated September 29, 1938, (re supposed delay of leather The whole transcript taken contains what transpired during soles from the States) was but a scheme to systematically the hearing and is more of a record of contradictory and prevent the forfeiture of this bond despite the breach of his conflicting statements of opposing counsel, with sporadic CONTRACT with the Philippine Army. conclusion drawn to suit their own views. It is evident that 4. That the National Worker's Brotherhood of ANG TIBAY is these statements and expressions of views of counsel have no evidentiary value. a company or employer union dominated by Toribio Teodoro, the existence and functions of which are illegal. The Court of Industrial Relations is a special court whose (281 U.S., 548, petitioner's printed memorandum, p. 25.) functions are specifically stated in the law of its creation 5. That in the exercise by the laborers of their rights to collective bargaining, majority rule and elective representation are highly essential and indispensable. (Sections 2 and 5, Commonwealth Act No. 213.) 6. That the century provisions of the Civil Code which had been (the) principal source of dissensions and continuous civil war in Spain cannot and should not be made applicable in interpreting and applying the salutary provisions of a modern labor legislation of American origin where the industrial peace has always been the rule. 7. That the employer Toribio Teodoro was guilty of unfair labor practice for discriminating against the National Labor Union, Inc., and unjustly favoring the National Workers' Brotherhood. 8. That the exhibits hereto attached are so inaccessible to the respondents that even with the exercise of due diligence they could not be expected to have obtained them and offered as evidence in the Court of Industrial Relations. 9. That the attached documents and exhibits are of such farreaching importance and effect that their admission would necessarily mean the modification and reversal of the judgment rendered herein. The petitioner, Ang Tibay, has filed an opposition both to the motion for reconsideration of the respondent National Labor Union, Inc. In view of the conclusion reached by us and to be herein after stead with reference to the motion for a new trial of the respondent National Labor Union, Inc., we are of the (Commonwealth Act No. 103). It is more an administrative than a part of the integrated judicial system of the nation. It is not intended to be a mere receptive organ of the Government. Unlike a court of justice which is essentially passive, acting only when its jurisdiction is invoked and deciding only cases that are presented to it by the parties litigant, the function of the Court of Industrial Relations, as will appear from perusal of its organic law, is more active, affirmative and dynamic. It not only exercises judicial or quasi-judicial functions in the determination of disputes between employers and employees but its functions in the determination of disputes between employers and employees but its functions are far more comprehensive and expensive. It has jurisdiction over the entire Philippines, to consider, investigate, decide, and settle any question, matter controversy or dispute arising between, and/or affecting employers and employees or laborers, and regulate the relations between them, subject to, and in accordance with, the provisions of Commonwealth Act No. 103 (section 1). It shall take cognizance or purposes of prevention, arbitration, decision and settlement, of any industrial or agricultural dispute causing or likely to cause a strike or lockout, arising from differences as regards wages, shares or compensation, hours of labor or conditions of tenancy or employment, between landlords and tenants or farm-laborers, provided that the number of employees, laborers or tenants of farm-laborers involved exceeds thirty, and such industrial or agricultural dispute is submitted to the Court by the Secretary of Labor or by any or both of the parties to the controversy and certified by the

49

Secretary of labor as existing and proper to be by the Secretary of Labor as existing and proper to be dealth with by the Court for the sake of public interest. (Section 4, ibid.) It shall, before hearing the dispute and in the course of such hearing, endeavor to reconcile the parties and induce them to settle the dispute by amicable agreement. (Paragraph 2, section 4, ibid.) When directed by the President of the Philippines, it shall investigate and study all industries established in a designated locality, with a view to determinating the necessity and fairness of fixing and adopting for such industry or locality a minimum wage or share of laborers or tenants, or a maximum "canon" or rental to be paid by the "inquilinos" or tenants or less to landowners. (Section 5, ibid.) In fine, it may appeal to voluntary arbitration in the settlement of industrial disputes; may employ mediation or conciliation for that purpose, or recur to the more effective system of official investigation and compulsory arbitration in order to determine specific controversies between labor and capital industry and in agriculture. There is in reality here a mingling of executive and judicial functions, which is a departure from the rigid doctrine of the separation of governmental powers. In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673, promulgated September 13, 1939, we had occasion to joint out that the Court of Industrial Relations et al., G. R. No. 46673, promulgated September 13, 1939, we had occasion to point out that the Court of Industrial Relations is not narrowly constrained by technical rules of procedure, and the Act requires it to "act according to justice and equity and substantial merits of the case, without regard to technicalities or legal forms and shall not be bound by any technicalities or legal forms and shall not be bound by any technical rules of legal evidence but may inform its mind in such manner as it may deem just and equitable." (Section 20, Commonwealth Act No. 103.) It shall not be restricted to the specific relief claimed or demands made by the parties to the industrial or agricultural dispute, but may include in the award, order or decision any matter or determination which may be deemed necessary or expedient for the purpose of settling the dispute or of preventing further industrial or agricultural disputes. (section 13, ibid.) And in the light of this legislative policy, appeals to this Court have been especially regulated by the rules recently promulgated by the rules recently promulgated by this Court to carry into the effect the avowed legislative purpose. The fact, however, that the Court of Industrial Relations may be said to be free from the rigidity of certain procedural requirements does not mean that it can, in justifiable cases before it, entirely ignore or disregard the fundamental and essential requirements of due process in trials and investigations of an administrative

character. There are primary rights which must be respected even in proceedings of this character: (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. In the language of Chief Hughes, in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty and property of the citizen shall be protected by the rudimentary requirements of fair play. (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. (Chief Justice Hughes in Morgan v. U.S. 298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) In the language of this court in Edwards vs. McCoy, 22 Phil., 598, "the right to adduce evidence, without the corresponding duty on the part of the board to consider it, is vain. Such right is conspicuously futile if the person or persons to whom the evidence is presented can thrust it aside without notice or consideration." (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 it is a nullity, a place when directly attached." (Edwards vs. McCoy, supra.) This principle emanates from the more fundamental is contrary to the vesting of unlimited power anywhere. Law is both a grant and a limitation upon power. (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." (Washington, Virginia and Maryland Coach Co. v. national labor Relations Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.) It means such relevant evidence as a reasonable mind accept as adequate to support a conclusion." (Appalachian Electric Power v. National Labor Relations Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v. Thompson Products, 6 Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v. National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The statute provides that "the rules of evidence prevailing in courts of law and equity shall not be controlling.' The obvious purpose of this and similar provisions is to free administrative boards from the compulsion of technical rules so that the mere admission of matter which would be deemed incompetent inn judicial proceedings would not invalidate the administrative order. (Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568, 48 Law. ed. 860; Interstate Commerce Commission v. Louisville and Nashville R. Co., 227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States v.

50

Abilene and Southern Ry. Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this assurance of a desirable flexibility in administrative procedure does not go far as to justify orders without a basis in evidence having rational probative force. Mere uncorroborated hearsay or rumor does not constitute substantial evidence. (Consolidated Edison Co. v. National Labor Relations Board, 59 S. Ct. 206, 83 Law. ed. No. 4, Adv. Op., p. 131.)"

In the right of the foregoing fundamental principles, it is sufficient to observe here that, except as to the alleged agreement between the Ang Tibay and the National Worker's Brotherhood (appendix A), the record is barren and does not satisfy the thirst for a factual basis upon which to predicate, in a national way, a conclusion of law.

This result, however, does not now preclude the concession of a new trial prayed for the by respondent National Labor (5) The decision must be rendered on the evidence Union, Inc., it is alleged that "the supposed lack of material presented at the hearing, or at least contained in the record claimed by Toribio Teodoro was but a scheme adopted to and disclosed to the parties affected. (Interstate Commence systematically discharged all the members of the National Commission vs. L. & N. R. Co., 227 U.S. 88, 33 S. Ct. 185, 57 Labor Union Inc., from work" and this avernment is desired Law. ed. 431.) Only by confining the administrative tribunal to be proved by the petitioner with the "records of the to the evidence disclosed to the parties, can the latter be Bureau of Customs and the Books of Accounts of native protected in their right to know and meet the case against dealers in leather"; that "the National Workers Brotherhood them. It should not, however, detract from their duty Union of Ang Tibay is a company or employer union actively to see that the law is enforced, and for that purpose, dominated by Toribio Teodoro, the existence and functions to use the authorized legal methods of securing evidence of which are illegal." Petitioner further alleges under oath and informing itself of facts material and relevant to the that the exhibits attached to the petition to prove his controversy. Boards of inquiry may be appointed for the substantial avernments" are so inaccessible to the purpose of investigating and determining the facts in any respondents that even within the exercise of due diligence given case, but their report and decision are only advisory. they could not be expected to have obtained them and (Section 9, Commonwealth Act No. 103.) The Court of offered as evidence in the Court of Industrial Relations", and Industrial Relations may refer any industrial or agricultural that the documents attached to the petition "are of such far dispute or any matter under its consideration or reaching importance and effect that their admission would advisement to a local board of inquiry, a provincial fiscal. a necessarily mean the modification and reversal of the justice of the peace or any public official in any part of the judgment rendered herein." We have considered the reply Philippines for investigation, report and recommendation, of Ang Tibay and its arguments against the petition. By and and may delegate to such board or public official such large, after considerable discussions, we have come to the powers and functions as the said Court of Industrial conclusion that the interest of justice would be better Relations may deem necessary, but such delegation shall served if the movant is given opportunity to present at the not affect the exercise of the Court itself of any of its powers. hearing the documents referred to in his motion and such other evidence as may be relevant to the main issue (Section 10, ibid.) involved. The legislation which created the Court of (6) The Court of Industrial Relations or any of its judges, Industrial Relations and under which it acts is new. The therefore, must act on its or his own independent failure to grasp the fundamental issue involved is not consideration of the law and facts of the controversy, and not simply accept the views of a subordinate in arriving at a entirely attributable to the parties adversely affected by the decision. It may be that the volume of work is such that it is result. Accordingly, the motion for a new trial should be and the same is hereby granted, and the entire record of this literally Relations personally to decide all controversies case shall be remanded to the Court of Industrial Relations, coming before them. In the United States the difficulty is with instruction that it reopen the case, receive all such solved with the enactment of statutory authority authorizing examiners or other subordinates to render final evidence as may be relevant and otherwise proceed in accordance with the requirements set forth hereinabove. So decision, with the right to appeal to board or commission, ordered. but in our case there is no such statutory authority. Avancea, C. J., Villa-Real, Imperial, Diaz, Concepcion and (7) The Court of Industrial Relations should, in all Moran, JJ., concur. 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 decision rendered. The performance of this duty is inseparable from the authority conferred upon it. G.R. No. L-58292 July 23, 1987

ADAMSON & ADAMSON, INC., petitioner, vs. HON. AUGUSTO M. AMORES, JOHNSON & JOHNSON

51

[PHILIPPINES], INC. and the BOARD OF INVESTMENTS, respondents. FERNAN, J.: In this petition for certiorari, one of two competing manufacturers of hygienic and other related products claims that it was denied its right to procedural due process by the Board of Investments. Since its organization on April 5, 1954, Adamson & Adamson, Inc. [hereinafter referred to as Adamson] has been actually engaged in the "manufacture, sale and exportation of absorbent cotton wool products, surgical dressings, bandages, medicinal, pharmaceutical products, chemicals, chemical products, sanitary towels and other articles and commodities.1 Similarly, Johnson & Johnson [Philippines], Inc. [Johnson for short] was organized on February 17, 1956 "to manufacture, import, export, buy, sell or otherwise acquire and deal in and with, either at wholesale or retail, pharmaceutical drugs, toiletry, hygiene products and related products of every kind, and chemical compositions of all kinds and uses."2 As it was not yet a Philippine national as defined by the Investment Incentives Act [Republic Act No. 5186], Adamson applied for certificates of authority from the Board of Investments [BOI] in compliance with Section 4 of the Foreign Investment Act [Republic Act No. 5455]. According to Adamson, said certificates were necessary to enable it "to expand its business activities to areas which while within its aforealleged primary purpose, Adamson was neither actually manufacturing nor marketing as at the effectivity of the aforesaid two laws." ...3 After the publications and postings of notices regarding said applications, Johnson registered its opposition thereto. On May 28, 1973 and on November 7, 1974, the BOI granted Adamson said certificates of authority which it held on to until it became a Philippine national on January 6, 1979.4

national economy on a self-sustaining basis;" and that Johnson's expanded activities would cause Adamson not only irreparable injury but also injustice, on March 17, 1980, Adamson filed in the BOI a petition praying that therein respondent Johnson be "ordered not only to forthwith stop and desist in the manufacture, distribution, and sale of its aforealleged expanded product lines but also to recall from the market all said products being distributed for sale and that after proper investigation and hearing to make the same permanent."5 The BOI, through its Vice-Chairman and Managing Head, Edgardo L. Tordesillas, required Johnson to answer the petition. Upon motion of Johnson, the BOI granted it an extension of time to file its answer. Thereafter, Adamson filed an urgent motion reiterating its prayer for the issuance of a stop and desist order. On May 8, 1980, Director Justiniano Y. Ascao of the BOI's Project Administration and Legal Department, set the petition for hearing in a letter which reads thus: Please be informed that the Petition filed by Adamson & Adamson, Inc. praying that the Board of Investments issue an immediate order to respondent Johnson & Johnson Philippines, Inc. to stop and desist from manufacturing, distributing and selling disposable diapers, sanitary feminine tampons and absorbent cotton has been set for hearing on May 14, 1980 at the PALD Conference Room at 2:30 P.M. 6

On May 9, 1980, Johnson filed its answer to the petition alleging that it did not have to secure from the BOI a certificate of authority for the manufacture, distribution and sale of disposable diapers, sanitary tampons and absorbent cotton because said business activities were but a continuation of its principal business activity; that assuming that it had expanded or developed its principal business activity, such expansion or development was in the same line of business that it was actually and lawfully engaged in On the other hand, Johnson has remained a foreign prior to the effectivity of Republic Act No. 5455; that the corporation. Sometime in 1979, after it had acquired new products complained of were within the category of the machineries, Johnson commenced the manufacture and marketing of disposable diapers. During the first quarter of products the manufacture, importation or sale of which it had disclosed to the BOI prior to the effectivity of the 1980, it manufactured sanitary feminine tampons and aforesaid law; and that assuming that there were absorbent cotton. modifications in the form and quality of said products, such Alleging that Johnson should not be allowed to expand its were mere improvements and/or development of the same business activities "to areas in which it was not licensed and line of products which needed no prior authorization from in which it was not actually engaged as at the effectivity of the BOI.7 Rep. Act Nos. 5186 and 5455 without first obtaining from The May 14, 1980 hearing was held as scheduled and per its the Board of Investments the corresponding certificates of minutes the following transpired therein: authority after prior publication and posting of notices;" that Johnson's expanded field of business and economic NOTES ON THE HEARING ON THE PETITION OF ADAMSON & activities was then being adequately exploited by Philippine ADAMSON AGAINST JOHNSON & JOHNSON CONDUCTED ON nationals and therefore, such expansion would not 14 MA Y 1980 A T THE BOI BOARD ROOM contribute to a "sound and balanced development of the

52

Present: Director J. Y. Ascao Div. Chief, E.O. Arrobio Div. Arturo C. del Rosario Oscar C. Pacquing Jaime Torres Matilde Domingo Atty. J. R. Blanco Mr. Lucas Adamson Atty. Esguerra Atty. E. de los Angeles Mr. de Leon Mr. Robles Mr Natividad - Legal Department

- Foreign Business

Counsel for the Petitioner, Atty. Blanco expounded on his views on the merits of the Petition and upon summing up the justifications for the prayer in the Petition, cited the letter of Minister Ongpin as Head of the Iron and Steel Authority to Goodyear Steel Pipe Corporation, directing it to cease operations on its activities which were not authorized by the ISA, that BOI a government instrumentality has the power and authority to issue a stop and desist order. Thereafter, the Chairman asked counsel for the Respondent, Atty. de los Angeles, if Respondent added equipment in the manufacture of diapers in 1979; if these were imported and the value thereof, to which Counsel answered that there were new equipment introduced and imported valued at US$4 Million and that the required authority from the Central Bank was secured. Counsel also stated that there was an investment made in the amount of US$l Million generated by borrowings. Counsel for Respondent also stated that the composition of diaper is similar to that of the sanitary napkins which Respondent has been producing since 1971 which is made of rayon and cotton, that the product is an improvement of the product to meet the policy of the Board. Mr. Natividad, one of the representatives of Johnson & Johnson likewise stated that Respondent has installed equipment to produce sanitary tampons way back in 1968 but were actually completed in 1972. However, marketing thereof was not pursued for strictly business marketing reasons. Production of Johnson's cottonette [soft puff], on the other hand, was discontinued after 2 years from 1967 but Johnson's buds have been introduced since 1968. In the production of diapers, Mr. Natividad informed the Committee that surplus profits of the corporation was put in and therefore not considered as fresh capital. At this juncture, Mr. Adamson discussed three types of tampons and inquired how Johnson & Johnson can install machines to produce tampons [OB] type in 1968 when the product was introduced by Karl Heinz only in 1973. In this connection, Mr. Natividad stated that their mother company has been producing tampons but it was not the OB type but of another type, however, construction is the same, as can be supported by documents. On the Chairman's acknowledgment, Counsel for Petitioner, Atty. Blanco presented three issues to the Committee. 1] Johnson & Johnson allegedly manufactured, distributed and marketed disposable cotton diapers in 1979 which it is not actually and lawfully engaged in as of the effectivity of R.A. 5455; 2] Johnson & Johnson manufactured, distributed and marketed likewise tampons and absorbent cotton in the early 1980 without prior authority from the Board; and

-do-do- Chemical Industries Dept. -do- Counsel, Adamson & Adamson - Pres., Adamson & Adamson - Blanco Law Office - Counsel, Johnson & Johnson - Johnson's Representative -do-do-

The Chairman made the opening statement that the proceedings was for the purpose of hearing the Petition filed by Adamson against Johnson and to hear arguments and receive evidences from the parties in order to resolve the case expeditiously. The Chairman re-stated the main issue raised on the petition, that Johnson & Johnson allegedly expanded into another line of business without securing prior authority from the Board of Investments as provided under the law and the rules because Respondent is not actually and lawfully engaged in the manufacture of the products [disposable diapers, sanitary feminine tampons and absorbent cotton] and that a stop and desist order be issued by the Board against Respondent. The Chairman then requested both parties to give their views and evidences so that on the basis of which, the Board can act immediately on the Petition.

53

3] Can Johnson & Johnson resurrect the production of products which it has abandoned in 1974? That in its report it failed to consider the phrase 'in which they were actually and lawfully engaged in provided in the law. Mr. Robles, representative of Respondent Johnson & Johnson, in answer to the above manifestations of Atty. Blanco, stated that they did not omit consideration of Sec. 3, Rule IV of the Rules of R.A. 5455 and that the activities contained in their Form 7 is a matter of generalization. Mr. Robles explained that Johnson & Johnson's expansion is in the same line of business for which no authority is required from the Board as it has been engaged prior to 1968 in the manufacture and marketing of pharmaceutical drugs, hygienic products, toiletries and which activities they were engaged in as to date. He further explained that if Johnson see [sic] that the markets are good, there is no reason for Johnson to make an expansion but only to improve its products for the benefit of the consumers.

of stenographic notes and/or excerpts of the preliminary hearing on 14th May 1980 and the rules of this Honorable Commission's procedures for hearings on the merits."10 Johnson opposed the motion and Adamson filed a rejoinder thereto. Director Ascao denied said motion for lack of merit in his order of October 16, 1980. The order noted that during the May 14, 1980 hearing, both parties were afforded every opportunity to fully discuss the facts and the issues involved and that after Adamson had filed its motion of August 19, 1980, another hearing was conducted on September 5, 1980. It stated that there was no compelling reason to hold another hearing considering that the parties had discussed extensively the facts and expounded in a scholarly manner the legal provisions involved in their respective memoranda, and that another hearing would be inconsistent with Adamson's plea for an early disposition of the petition and the BOI's objectives and policies on the matter.11

Mr. Robles further stated that under the law, they have the right to engage in business as long as they do not violate any On October 21, 1980, the BOI sent Adamson the following provision of law. letter: The Chairman, then emphasized to the parties that the issues have been cleared and the facts gathered from the hearing shall be useful and that there being no other matters to be discussed, he asked the parties to submit their respective memorandum within fifteen [15] days from the date of the hearing. On this point, Atty. Blanco informed the Chairman that he cannot produce his memo within said period but he will submit it later, which the Chairman granted The meeting was adjourned at 3:30 p.m. Certified correct: [Sgd.] MARILOU P. OCAMPO NOTED: [Sgd.] LETICIA VIA-IBAY Acting Division Head. 8 Gentlemen:

Please be informed of the Board decision dismissing the Petition filed by Adamson & Adamson, Inc. against Johnson & Johnson [Phils.], Inc. praying that the Board of Investments issue a stop and desist order against the latter from continuing in the manufacture and marketing of disposable diapers, sanitary feminine tampons and absorbent cotton. The Board finds that the said activities constitute expansion in the same line of business in which Johnson & Johnson [Phils.], Inc. was actually and lawfully engaged in as of the effectivity of Republic Act No. 5455 and the same were financed by internally generated funds, hence do not need prior BOI approval. Please be guided accordingly. Very truly yours, [Sgd.] LILIA R. BAUTISTA Governor. 12

The parties thereafter expounded on their arguments in Dismayed by the turn of events against it, on November 20, said hearing thru the following pleadings: Johnson's 1980 Adamson filed in the Court of First Instance of Manila memorandum, Adamson's reply memorandum, the former's a petition seeking judicial relief from the BOI decision rejoinder memorandum, and the latter's surrejoinder.9 pursuant to Section 8 of Republic Act No. 5455 [Civil Case Impatient over what it considered a delay in the resolution No. 136282]. Contending that the BOI's letter-decision of its prayer for a preliminary stop and desist order, dismissing its petition was based merely on the oral Adamson filed a motion dated August 19, 1980 praying that arguments of the parties at the May 14, 1980 hearing, "hearings be forthwith scheduled for the reception of Adamson averred that its right to be heard and to present evidence on the merits of petitioner's petition's prayer for a evidence on the merits of its prayer for a permanent stop permanent stop and desist order, as well as the parties and desist order was violated. It argued that as Johnson notified thereof and furnished with a copy of the transcript continued to engage in its expanded business activities in

54

violation of Republic Act No. 5455 to the detriment of Philippine nationals who were adequately exploiting Johnson's expanded business activities, it was entitled to exemplary and moral damages. It prayed that the BOI's letter decision be set aside and that a writ of preliminary injunction and/or restraining order be issued enjoining Johnson from engaging in its expanded business activities.13

heard, the issue of whether or not Adamson may introduce new evidence in support of its motion, arose. After the parties had submitted their respective memoranda, the lower court allowed the introduction of new evidence. Adamson then filed a request for subpoena. The pertinent portions of said request state:

Please forthwith issue subpoena duces tecum to the The lower court gave due course to the petition, issued a following persons commanding them to appear before this temporary restraining order and set a hearing on the prayer Honorable Court at the hearing on Thursday 4th June 1981 for a writ of preliminary injunction. at 1:30 p.m. with the following documents and to there and On December 19, 1980, after the said hearing was then give testimony in connection thereto: conducted, the lower court issued an order denying Names: Adamson's prayer for a preliminary injunction and 1. Atty. Lilia R. Bautista, herself Governor dissolved the temporary restraining order it had issued.14 The lower court saw no extreme urgency for the issuance of 2. Atty. Justiniano Y. Ascao himself Director, Project Adm. & Legal Dept. a preliminary injunction and held that to grant said writ would prejudge the case in favor of Adamson considering that the status quo or the last actual peaceable uncontested status prior to the filing of the petition in the BOI was that Johnson was manufacturing and/or marketing absorbent cotton, sanitary tampons and disposable diapers. Citing Section 4, Rule IV of the Rules and Regulations to Implement Republic Act No. 5455, the lower court ruled that Johnson did not have to obtain BOI prior authorization to engage in the questioned business activities because on September 30, 1968 [when the said law took effect], Johnson was actually engaged in the manufacture and/or marketing of absorbent cotton, sanitary tampons and disposable diapers and therefore its alleged expanded business activities were in the same line of business it was engaged in prior to the aforesaid date. The lower court stressed that fact was best shown in Johnson's report to the BOI wherein it listed absorbent cotton, sanitary tampons and disposable diapers under the respective product groups of cotton products, hygiene products and non-woven fabrics. Common Address: BOARD OF INVESTMENTS Industry & Investments Bldg. 385 Buendia Avenue Extension Makati, Metro Manila Common Documents: 1. BOI's entire file on the 1980 case of Adamson & Adamson, Inc. vs. Johnson & Johnson [Phils.], Inc. 2. BOI's entire file on Adamson & Adamson, Inc. 3. BOI's entire file on Johnson & Johnson [Phils.], Inc. 4. BOI's written rules of procedure in litigious proceedings before BOI. 15

As said request was granted by the lower court, Johnson moved to quash the subpoena on the grounds, among other things, that it was improper and oppressive to require Director Ascao and Governor Bautista to testify and explain their decision of October 21, 1980 and the proceedings relative thereto; that said officials were not the custodians of BOI records; and that the documents sought Anent Adamson's claims that the May 14, 1980 hearing at the BOI was only on the issue of whether or not a temporary to be produced had no relevance to the issues raised in the desist order should be issued and that it was denied its right motion for reconsideration. to present its evidence on the merits of the petition, the The BOI joined Johnson in objecting to the request for lower court found that Adamson's right to due process was subpoena and adopted as its own Johnson's motion to respected in the aforesaid hearing. It noted that Johnson quash. Adamson opposed said motion. even presented witnesses who were cross-examined by On August 18, 1981, the lower court issued the following Adamson's counsel. It added that the question of whether or order: not Adamson was deprived of its day in court was immaterial to the issue of whether or not it was entitled to a Considering the contentions and arguments respectively invoked by the parties through counsel, the Court finds the writ of preliminary injunction as Adamson had failed to Motion to Quash subpoena meritorious. In so far as the establish its right to said writ and that said right was request for subpoena concerns Governor Lilia R. Bautista violated. and Atty. Justiniano Y. Ascao the Court finds that the Adamson's motion for reconsideration of the lower court's testimony of the two BOI officials does not appear to be order was duly opposed by Johnson. When said motion was relevant and indispensable in the light of the allegations in

55

the opposition of the petitioner that these BOI officers would be asked merely on the procedure that was followed in the questioned hearing of 14 May 1980 and since the proceedings that transpired would appear in the record of the BOI case entitled Adamson & Adamson, Inc., petitioner, versus Johnson & Johnson [Philippines], Inc., respondent.

subpoena thereby preventing it from establishing the irregular BOI proceeding and exercising its right to examine the entire BOI records of both companies.18 Adamson comes to this Court raising the following issues:

a. Can a Court of First Instance for the purpose of denying a verified petition for preliminary injunction adopt a decision With respect to the BOI files of the petitioner and private of an administrative agency rendered in violation of a respondent Johnson & Johnson, the petitioner concedes that party's constitutional right to procedural due process? trade and industrial secrets will be excluded from b. Is a party entitled to establish by testimonial and examination. However, the petitioner did not specify which documentary evidence the fact of such denial of due files it sought to be brought before the Court. If the request process? 19 of petitioner refers to the record of said BOI case only, the Although the instant petition was filed before the lower Court agrees with the petitioner that the said record may be court could resolve petitioner's motion for reconsideration presented in Court at the trial of the present case, provided, of the order denying its prayer for a preliminary injunction however, that the documents which the BOI considers and, therefore, strictly speaking, it was prematurely filed, confidential for being trade and industrial secrets be We opt to rule on the issues raised herein to facilitate the excluded. But the request for the production of the record of final disposition of the case in the lower court [See said BOI case could not be entertained for the present, Philippine Global Communications, Inc. vs. Relova, G.R. No. because it was erroneously addressed to Governor Bautista 52819, October 2, 1980, 100 SCRA 254,260]. and Atty. Ascao who are not the custodians of said records. While administrative tribunals exercising quasi-judicial PREMISES CONSIDERED, the Request for subpoena filed by powers are free from the rigidity of certain procedural the petitioner is hereby denied. requirements they are bound by law and practice to SO ORDERED. 16 observe the fundamental and essential requirements of due Thereafter, Adamson filed the instant petition for certiorari process in justiciable cases presented before them.20 However, the standard of due process that must be met in with a prayer for the issuance of a preliminary injunction. Alleging that the May 14, 1980 hearing was held only for the administrative tribunals allows a certain latitude as long as the element of fairness is not ignored.21 Hence, there is no purpose of determining whether an immediate stop and desist order should be issued considering that no issues had denial of due process where records show that hearings were held with prior notice to adverse parties.22 But even in as yet been joined as the notice for the hearing was sent to the absence of previous notice, there is no denial of the parties a day before Johnson filed its answer, Adamson procedural due process as long as the parties are given the claims that in acting on the merits of the petition, the BOI opportunity to be heard.23 violated its right to procedural due process. Specifically, Adamson contends that its "cardinal primary rights" were violated in the BOI proceedings because: [a] the May 14, 1980 hearing being merely on the issuance of an immediate stop and desist order and not on the merits of the petition, it was "not given an opportunity to fully present its case and to adduce evidence to establish its right to the issuance of a permanent stop and desist order against Johnson"; [b] the decision of the BOI Board of Governors was not supported by substantial evidence as no documentary and testimonial evidence were presented under oath; and [c] said decision was based on the views and findings of Director Ascao and not on the Board of Governors' independent consideration of the law and the facts of the controversy because the members of said board were not present and no stenographic notes were taken during the hearing.17 According to Adamson, the lower court acted with grave abuse of discretion amounting to lack of jurisdiction in relying on said void BOI decision and in issuing the order of August 18, 1981 which sustained the motion to quash Based on the foregoing, We rule that petitioner was not deprived of its right to procedural due process in the BOI. In the first place, it was notified of the May 14, 1980 hearing. The notice specified that the hearing was on the petition although it also stated therein with particularity, petitioner's prayer for a stop and desist order. Necessarily, it is immaterial that said notice was sent before Johnson filed its answer to the petition and there was yet no joinder of issues considering that the proceeding was before an administrative tribunal where technicalities that should be observed in a regular court may be dispensed with. Secondly, during the hearing, petitioner was given the opportunity to present its case, including its prayer for a stop and desist order. As clearly enunciated in the minutes of the hearing which We have painstakingly studied and set forth herein to determine if any irregularity attended the questioned BOI proceeding, it was conducted for the purpose of hearing the arguments and receiving evidence of the parties "to resolve the case expeditiously." Having been

56

given the opportunity to put forth its case, petitioner has only itself, or, better still, its counsel and officers who were present therein, to blame for its failure to do so.24 Petitioner's right to procedural due process was not violated when the hearing was conducted before a director of the BOI and not before the members of the board themselves who decided the case. The requirements of a fair hearing do not mandate that the actual taking of testimony or the presentation of evidence be before the same officer who will make the decision on the case.251avvphi1 Neither does the absence of stenographers during the hearing affect petitioner's right to due process. Section 16 of Republic Act No. 5186, which provides for the powers and duties of the BOI, does not specify that said board is a board of record. The first paragraph of said section merely mentions minutes" in connection with proceedings of the board. Therefore, the absence of a transcript of stenographic notes taken during the BOI hearing cannot be claimed to have deprived petitioner of due process of law.26 Petitioner's suspicion that something aberrant surrounded the drafting of the minutes of the May 14, 1980 hearing because it received a copy thereof five months later is unfounded as it is unsupported by evidence. The delayed delivery of the minutes to the petitioner does not at all alter the fact that a hearing was conducted on the petition in the BOI and petitioner was given the opportunity to present its side of the controversy.

SPOUSES JOSE and CARMEN SANTOS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND LUDOVICO PAMPLONA, respondents. DECISION MENDOZA, J.: This is a petition for certiorari to annul and set aside the decisioni[1] of the National Labor Relations Commission, dated June 29, 1994, affirming the labor arbiters decision and ordering petitioners to pay private respondent Ludovico Pamplona wage differential, 13th month pay, service incentive leave pay, and attorneys fees. The facts are as follows: Petitioner spouses Jose and Carmen Santos operate two gasoline stations and maintain a depot for the storage of gasoline in Iloilo City. Private respondent Ludovico Pamplona worked in said gasoline stations and at the depot. The question is whether he was an employee of petitioners or an independent contractor doing vulcanizing jobs.

The question arose because on November 13, 1992, private respondent filed a complaint against petitioners for underpayment of wages, non-payment of 13th month pay, and attorneys fees.ii[2] His complaint was later amended to include nonpayment of overtime pay, premium pay for holiday, premium pay for rest day, holiday pay, service incentive leave pay, night shift differential, and separation pay.iii[3] In his position paper, private respondent alleged that he started working for petitioners on November 23, It should be noted that said hearing was not the only venue 1970 as a gasoline station helper at the latters gasoline for the ventilation of petitioner's arguments. Aside from the station located at Fuentes-Ledesma Streets;iv[4] that he September 5, 1980 hearing, the parties also submitted their was later assigned to work as watchman at petitioners respective memoranda. They were, therefore, afforded Getty Installation in Lapuz, Iloilo City in 1981;v[5] that in ample opportunity to assert their arguments in both the 1985, he was transferred and assigned to petitioners petition and the prayer for a stop and desist order. gasoline station in Oton, Iloilo City where he worked as The BOI decision having been arrived at with due regard for attendant until his retirement in 1991;vi[6] that he was the parties' right to procedural due process, petitioner's petitioners employee, as defined in Art. 280 of the Labor contention that the lower court abused its discretion in Code, due to the fact that he had performed services which relying on said BOI decision when it denied petitioner's were necessary or desirable in the usual course of business prayer for a writ of preliminary injunction and granted of petitioners;vii[7] that he was paid wages below the Johnson's motion to quash subpoena, does not merit further prevailing minimum wage at that time;viii[8] that he was consideration. Suffice it to state that whatever objections not given either overtime payix[9] or 13th month pay, petitioner may have on the validity and correctness of the retirement benefits, and other bonuses to which he was BOI decision may be threshed out in the lower court. entitled.x[10] In support of these allegations he submitted WHEREFORE, the petition for certiorari is hereby dismissed his affidavit and that of Bonifacio Mirasol.xi[11] and the lower court is ordered to expedite the disposition of Petitioners filed a position paper, dated October 12, 1993, in Civil Case No. 136282 for judicial relief. Costs against which they denied that private respondent Pamplona was petitioner. their employee and alleged that the latter was, in fact, a SO ORDERED. Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur. [G.R. No. 120944. July 23, 1998] vulcanizer who had a shop beside their gasoline station in Oton, Iloilo; that private respondent was not on their payroll and had no SSS record.xii[12] The position paper

57

was supported by the affidavit of petitioner Jose Santos.xiii[13] On October 27, 1993, the labor arbiter rendered a decision ordering petitioners to pay private respondent wage differential, 13th month pay, service incentive leave pay, and attorneys fees. The dispositive portion of the decision reads:xiv[14] FOREGOING PREMISES CONSIDERED, judgment is hereby rendered directing the respondents to pay the complainant, jointly and severally, his benefits, to wit: P41,157.28 as wage differential; 4,865.98 as 13th month pay; 445.00 as service incentive leave pay; or a total of P51,115.09 Said respondents are further ordered to pay attorneys fees equivalent to ten (10%) per centum of the total award or P5,111.50. All other claims are hereby ordered DISMISSED. SO ORDERED. In finding the existence of an employer-employee relationship between the parties, the labor arbiter said:xv[15] We give credence to the allegations of the complainant and Bonifacio Mirasol. It would be easy for the respondents to deny their relationship with the complainant. It would be very easy for the respondents to say that the complainant is not their employee. But respondents should bear in mind that complainant had been an instrument to their business. Including the name of the complainant in the payrolls is a unilateral act of the respondents. Whether or not the name of the complainant is included in their payroll is immaterial as long as the complainant is suffered to work for them. Covering the employees with Social Security System coverage [sic] is also a unilateral act of the respondents. Employers, more often than not, do not report their employees for SSS coverage. Moreover, why should respondents allow complainant to live in Lapuz with their employees and in Oton when they bought the Oton Gasoline Station? Why should respondents allow complainant to live in Oton or Lapuz when they claim that complainant is an independent vulcanizer? Apparently, the respondents did these because [respondents] suffered the complainant to work for them.

Attached to the supplemental memorandum are the following:xviii[18] EXHIBITS 1 1993; DESCRIPTION Complaint of Appellee dated 13 November,

2 Notification and Summons dated 25 November, 1993; 3 4 5 6 Notice of Hearing dated 16 February, 1993; Notice of Hearing dated 05 May, 1993; Notice of Hearing dated 07 June, 1993; Order dated 19 July, 1993

7 Motion for Extension of Time to File Position Paper dated 05 August 1993 filed by complai-nant; 8 Motion to Amend Complaint dated 12 August, 1993 filed by Complainant; 9 Position Paper for the Complainant dated 19 August, 1993; 10 Affidavit of appellee Ludovico Pamplona dated 12 August 1993; 11 Affidavit of Bonifacio Mirasol dated 17 August, 1993; 12 Order dated 24 September, 1993; 13 Motion for Reconsideration of the Order dated September 24, 1993, filed by respondents-appellants; 14 Position Paper for the Appellants dated 12 October, 1993; 15 Affidavit of appellant Jose Santos dated 12 October, 1993; 16 Opposition to the Motion for reconsideration dated 23 Oct. 1993; 17 Reply to Opposition to the Motion for Reconsidera-tion dated 05 Nov. 93; 18 Decision dated 27 October, 1993; 19 Affidavit of Rodolfo Mirasol dated 28 December, 1993; 20 Affidavit of Camelo Terente dated 28 December, 1993; 21 Affidavit of Nestor Bautista dated 28 December, 1993;

22 Affidavit of Magela A. Malaca dated 28 On November 19, 1993, petitioners appealed to the National December, 1993; Labor Relations Commission.xvi[16] On January 4, 1994, 23 Affidavit of Gerondio Mente dated 28 they filed a supplemental memorandum of appeal to December, 1993; correct, supplement and amplify inadequate allegations and 24 Affidavit of Juanito Navarro dated 28 certain omissions in their memorandum of appeal.xvii[17] December, 1993;

58

25 Affidavit of Mario Martinez dated 28 December, 1993;

On the other hand, private respondent contends that the supplemental memorandum of appeal of petitioner was filed beyond the ten-day reglementary period provided by 26 Affidavit of Bonifacio Mirasol dated 17 law; that petitioners are bound by their counsels failure to December, 1993; present in the NLRC the additional evidence they sought to 26-A Official translation of Annex 26; introduce; that, in fact, the nonproduction of the evidence 27 Certification issued by Pilipinas Shell Petro- was a strategy consciously adopted by petitioners counsel leum Corporation; with their conformity; that new evidence should not really be allowed on appeal; that petitioners should have asked for 28 Certification issued by the Department of a full-blown hearing earlier; that the existence of an Labor and Employment. employer-employee relationship between him and Private respondent filed an opposition to petitioners petitioners was sufficiently proved; and, that the factual Motion for Leave to File and for Admission of Supplemental findings of the NLRC and the labor arbiter on this matter Memorandum of Appeal.xix[19] should be accorded great weight. On June 29, 1994, the NLRC rendered a decision affirming The Solicitor General, in behalf of the NLRC, filed a comment that of the labor arbiter. The NLRC denied petitioners in which he argues that the factual findings of the NLRC and motion for leave to adduce additional evidence.xx[20] the labor arbiter are based on substantial evidence and that Petitioners filed a motion for reconsideration, but it was petitioners have not given any justifiable reason for the likewise denied by the NLRC in its resolution dated May 2, allowance in the NLRC of additional evidence for them. 1995.xxi[21] Hence, this petition. Indeed, in his affidavit,xxii[22] private respondent stated: Petitioners contend: I, LUDOVICO P. PAMPLONA, of legal age, single, Filipino and 1. THE HONORABLE COMMISSION COMMITTED resident of Zone 5, Molo Blvd., Iloilo City after having been GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR sworn to in accordance with law do hereby depose and say, EXCESS OF JURISDICTION IN DENYING PETITIONERS that: MOTION FOR LEAVE TO FILE AND FOR ADMISSION OF 1. I started working on November 23, 1970 as a gasoline SUPPLEMENTAL MEMORANDUM OF APPEAL; station helper from 2:00 PM to 10:00 PM and 4:00 AM to 2. THE HONORABLE COMMISSION COMMITTED 7:00 AM, the whole week at the Caltex Gasoline Station GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR located in Fuentes-Ledesma Sts., Iloilo City owned and EXCESS OF JURISDICTION IN HOLDING THAT AN operated by Spouses Jose and Carmen Santos; EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED 2. I was transferred in 1981 as a watchman by Spouses Jose BETWEEN HEREIN PETITIONERS AND RESPONDENT and Carmen Santos to the Getty Installation in Lapuz, Iloilo LUDOVICO PAMPLONA DESPITE WANT OF EVIDENCE; City which they rented and used for storing petroleum 3. THE HONORABLE COMMISSION COMMITTED products; GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR 3. Aside from being a watchman in that installation, I [was] EXCESS OF JURISDICTION IN HOLDING THAT also made to work on Saturdays and Sundays receiving RESPONDENT LUDOVICO PAMPLONA IS ENTITLED TO purchase orders for gasoline and other petroleum products WAGE DIFFERENTIAL, 13TH MONTH PAY AND SERVICE sold by the aforementioned spouses from their stored INCENTIVE LEAVE WITH PAY; gasoline and other petroleum products in that installation; Petitioners argue that since they filed their memorandum of 4. When the said rent over the Getty Installation expired in appeal within the ten-day reglementary period, their 1985 I was assigned and transferred to the gasoline station subsequent pleadings seeking to introduce new evidence in Oton, Iloilo owned and operated by the Spouses Jose and should have been admitted by the NLRC. They claim that Carmen Santos and I worked in that gasoline station from the new evidence would show the lack of employer4:00 AM to 10:00 AM and from 2:00 PM to 7:00 PM until employee relationship between them and private my retirement in August, 1991; respondent Pamplona; that a hearing should have been conducted by the labor arbiter considering their denial that an employer-employee relationship existed between them and private respondent; that there was no legal or factual basis for the awards made by the labor arbiter; and, that they should not be bound by the gross negligence of their former counsel. 5. I received a salary of twenty pesos per week when I was working at the Caltex Gasoline Station at Fuentes-Ledesma, Iloilo City: at the Getty Installation, my salary was one hundred twenty pesos per week, and in the Oton Gasoline Station my salary was one hundred pesos per week until my retirement in August, 1991;

59

6. After working for more than twenty years (20) in the businesses of Spouses Jose and Carmen Santos, I retired from work in 1991 at the age of seventy-two (72), because of old age and my frail body which had been exposed to gasoline and other petroleum products can no longer sustain the daily grind of a gasoline station attendant;

7. I intended to enjoy my retirement secured that I will be supported by retirement benefits and privileges mandated Sometime in 1981 Ludovico Pamplona was assigned as by law, hence I demanded from my employer my retirement watchman in the Getty Installation at Lapuz, Iloilo City, rented by Spouses Jose and Carmen Santos and used by pay; them for storing gasoline and other petroleum products; 8. But to my disappointment and dismay Spouses Jose and

Ludovico Pamplona was a gasoline station helper in the gasoline station of my employer in Fuentes-Ledesma Sts., Iloilo City while I was the driver of the first gasoline tanker of my employer and part of my work was also to deliver gasoline and other petroleum products to different stations including that in Fuentes-Ledesma Sts., Iloilo City, owned and operated by Sps. Jose and Carmen Santos;

Carmen Santos spurned my plea to be paid of my retirement I personally knew that Ludovico Pamplona was assigned there because the installation was just across the street benefits; from the Caltex Depot where I got gasoline and other 9. Adding to my anguish, I found out that the salary I was receiving during the time I was working with my employers petroleum products considering my tanker at that time was a Caltex tanker, and sometimes I parked my tanker in the were below the minimum wage provided by law, and the mentioned spouses did not pay me any overtime pay, night Getty Installation because it was rented also by my employer; shift differentials, 13th month pay and other premiums mandated by labor laws; 10. I also found that I was not reported as an employee in the business of Spouses Jose and Carmen Santos to the Social Security System hence as a consequence I could not claim any benefit from the Social Security System; 11. I am executing this affidavit to attest to the fact that Spouses Jose and Carmen Santos, as my employers paid my wages not in accordance with the minimum wage law, nor did they pay me overtime pay, night shift differentials, holiday pay, and other premiums provided by the Labor Code; furthermore Spouses Jose and Carmen Santos failed to pay me retirement benefits and did not report my employment to the Social Security System. IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of August, 1993, in Iloilo City, Philippines. LUDOVICO P. PAMPLONA (Affiant) Private respondents witness, Bonifacio Mirasol, stated in his affidavit:xxiii[23] I, BONIFACIO MIRASOL of legal age, Filipino, married and a resident of Tabuc Suba, Jaro, Iloilo City after having been sworn to in accordance with law do hereby depose and say, that: I was employed as driver of a gasoline tanker truck by Spouses Jose and Carmen Santos in their business from February 1977 up to the time when I retired in 1990; Since the time I was employed in 1972 with the abovementioned spouses I came to know already a certain employee of my employer Spouses Jose and Carmen Santos by the name of Ludovico Pamplona; And when I returned from out of town trips early in the morning at around 4:00 AM in the gasoline station at Fuentes-Ledesma Sts., Iloilo City, Ludovico Pamplona was already attending the gas pumps which opened at 4:00 AM, similarly when I returned late at night Ludovico Pamplona was still working at the gasoline station which closed at around 10:00 PM and when I returned at anytime of the day I always found [sic] Mr. Pamplona manning the gas pumps or doing other work at the said gasoline station; Since I also went to the Getty Installation when Ludovico Pamplona was a watchman there he was the one took care all of the petroleum products stored and he was the one who received purchase orders on Saturdays and Sundays; Likewise, I delivered gasoline at the Oton gasoline station owned and operated by the Spouses Jose and Carmen Santos and I came to know starting in 1985 that Ludovico Pamplona was transferred and assigned there because he was the one who climbed the top of the gasoline tanker to check its content before it will be transferred to the underground tank of the gasoline station; I was able to know that Ludovico Pamplona was transferred to the gasoline station in Oton, Iloilo because the rent over the Getty installation expired and when I retired in 1990 he was still working there until his retirement also in 1991; Out of my concern for Ludovico Pamplona who was my coemployee in the businesses of Jose and Carmen Santos, I asked him sometimes if he was reported to the Social Security System (SSS), and if he was only paying SSS premiums and our employer was paying their counterpart contributions and he said he did not know if he was reported in the SSS with an added assurance that it will be

60

taken care of by our employer, Spouses Jose and Carmen Santos; Every December, during our Christmas party, it was customary and natural for Spouses Jose and Carmen Santos to declare in front of other employees, guests and their immediate relatives that we, Ludovico Pamplona, Roberto Bravo and myself were their most loyal and trusted employees and their businesses prospered because of our efforts and dedication; In fact the three of us were given medallion [sic] because of our exemplary service which they could no longer refuse to notice nor take for granted; I am executing this affidavit to attest to the truth and fact that Ludovico Pamplona was an employee of Spouses Jose and Carmen Santos continuously from 1970 up to his retirement in 1991 in their various businesses so that he Ludovico Pamplona could claim whatever benefits accruing to him as mandated by labor law; IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of August 1993, in Iloilo City, Philippines. (SGD) BONIFACIO MIRASOL (Affiant) A Petition for Certiorari under Rule 65 of the Rules of Court will lie only where a grave abuse of discretion or an act without or in excess of jurisdiction on the part of the respondent Commission is clearly shown.xxiv[24] It is axiomatic that findings of fact made by labor arbiters and affirmed by the National Labor Relations Commission are not only entitled to great respect, but even finality, and are considered binding on this Court if the same is supported by substantial evidence.xxv[25] The question of whether an employer-employee relationship exists is a question of fact.xxvi[26] No particular form of evidence is required to prove the existence of such employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted.xxvii[27] The elements considered in determining the existence of an employer-employee relationship are present in this case, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct.xxviii[28]

it was likewise found that she was not subject to the control of the alleged employer. In contrast, it has not been really proven that private respondent was not included in the payroll. Nor is the fact that private respondent has no SSS records conclusive of the question whether he was an employee of petitioners. For the fact is that he did not have any SSS record because his employment was not reported to the SSS by petitioners. To find that private respondent was not petitioners employee because he did not have a record of employment in the SSS, when the duty of reporting his employment is that of petitioners, is to reward law violations. Private respondents allegation was corroborated by Bonifacio Mirasol who, in his affidavit, stated: Out of my concern for Ludovico Pamplona who was my coemployee in the businesses of Jose and Carmen Santos, I asked him sometimes if he was reported to the Social Security System (SSS), and if he was only paying SSS premiums and our employer was paying their counterpart contributions and he said he did not know if he was reported in the SSS with an added assurance that it will be taken care of by our employer, Spouses Jose and Carmen Santos. Nor was it an abuse of discretion for the NLRC to deny petitioners motion for leave to submit additional evidence to disprove the existence of an employer-employee relationship. It is true that, in some cases, the power of the NLRC to admit additional evidence on appeal has been upheld, but in those cases the failure to submit the evidence was justified.xxx[30] In New Valley Times Press v. NLRC,xxxi[31] which petitioners cite, the partys failure to present evidence before the labor arbiter was justified. The person in possession of the pertinent documents was ill and had to go abroad for treatment. Counsel was in his mideighties and himself was suffering from the debilitating effects of old age. On the other hand, the new counsel did not immediately come to know about the existence of the documents which had to be submitted in evidence.

In contrast, petitioners had every opportunity to submit before the labor arbiters office the evidence which they sought to adduce in the NLRC. They did not even try to submit their evidence together with their appeal memorandum but only did so with a supplemental one Petitioners deny that private respondent Ludovico which they filed more than a month after their main Pamplona was ever their employee. They claim that he was memorandum on appeal had been filed. not on their payroll and that he did not have any SSS record. Petitioners cannot claim that the failure to present the The payrolls were not, however, even presented in evidence before the labor arbiters office was due to their evidence, either before the labor arbiter or before the counsels mistake. They invoke the ruling in Legarda v. NLRC. Petitioners cite the ruling in Sevilla v. Court of Court of Appeals,xxxii[32] but the negligence of counsel in Appeals.xxix[29] In that case, however, it was not only admitted that Sevilla was not on the companys payroll, but

61

that case was gross and palpable. As this Court said in that case:xxxiii[33]

At any rate, if petitioners thought they should submit additional evidence, they should have asked for a chance to do so. The fact, however, is that after belatedly filing their Nothing is more settled than the rule that the mistake of a position paper in the labor arbiters office, they did nothing counsel binds the client. It is only in case of gross or palpable negligence of counsel when the courts must step in more and, in fact, agreed to submit the case for decision. The mere fact that petitioners denied the allegations in and accord relief to a client who suffered thereby. What happened there was that the defendants counsel did private respondents affidavit and that of Bonifacio Mirasol did not necessarily warrant the holding of a full-blown not only fail to file an answer, as a result of which a judgment by default was entered against the defendant, but hearing considering the above-mentioned observations of the labor arbiter. In addition, it cannot be said that the NLRC also failed to appeal from the judgment or to file a petition and the labor arbiter gravely abused their discretion by for relief therefrom. relying only on said affidavits of private respondent and Nothing of that sort happened in this case. The general rule Bonifacio Mirasol. As we have said:xxxvi[36] should, therefore, apply: petitioners are bound by the This Court will not ordinarily disturb findings of fact of mistake of their counsel. In fact, it is doubtful there was an administrative agencies like the public respondents. It is oversight in not presenting the evidence which petitioners sought to introduce later. As accurately observed by private axiomatic that in their exercise of adjudicative functions they are not bound by strict rules of evidence and of respondent, the nonproduction of the evidence was procedure. When confronted with conflicting versions of calculated. It was part of counsels strategy adopted with factual matters, it is for them in the exercise of discretion to the knowledge and consent of petitioners. determine which party deserves credence on the basis of Petitioners contention that there should have been a fullevidence received. [Halili v. Floro, 90 Phil. 245 (1951); blown trial is likewise untenable. Under Rule VII, 3 of the Estate of Florencio Buan v. Pampanga Bus Co. and La Revised Rules of the NLRC, labor arbiters have the power to Mallorca, 99 Phil. 373 (1956); Luzon Brokerage Co. v. Luzon determine whether there is a need for a formal hearing or Labor Union, 117 Phil. 118 (1963), 7 SCRA 116]. investigation . . . after the submission by the parties of their position papers and supporting proofs.xxxiv[34] The labor WHEREFORE, petition is DISMISSED. arbiters reasons for considering the case submitted for SO ORDERED. decision are stated in the following portion of his decision:xxxv[35] G.R. No. 102358 November 19, 1992 . . . Hearings were scheduled and on the hearing on 08 SPOUSES VICENTE and GLORIA MANALO, petitioners, March 1993, respondents [now petitioners] manifested to vs. submit their position paper within fifteen (15) days. Again HON. NIEVES ROLDAN-CONFESOR, in her capacity as hearings were scheduled and on 19 July 1993 an Order was Undersecretary of Labor and Employment, JOSE issued directing parties to file their position paper within SARMIENTO as POEA Administrator, CAREERS twenty (20) days. On 05 August 1993, counsel for the PLANNERS SPECIALISTS INTERNATIONAL, INC., and complainant [now private respondent] filed a motion for SPOUSES VICTOR and ELNORA FERNANDEZ, extension of time to file position paper and eventually filed respondents. his position paper on 23 August 1993. The [petitioners], despite receipt of the order failed to file their position paper, so that on 25 August 1993, an Order was again issued BELLOSILLO, J.: directing counsel to file his position paper within fifteen The Court views with grave concern the alarming incidents (15) days from receipt of the Order. Receipt of the Order of illegal recruitment which demonstrate all too clearly that dated 25 August 1993, notwithstanding, counsel for the overseas employment has fast developed into a major [petitioners] failed to file [their] position paper. Meanwhile, source not only of much-needed foreign exchanged but also, counsel for the complainant filed a motion to submit case for the cunning and the crafty, of easy money. for immediate resolution. On 24 September 1993, an Order was issued considering the case as submitted for resolution In response to a newspaper advertisement looking for a on the basis of the evidence available on record. The Order couple to work as driver and tutor cum baby sitter, petitioners Vicente and Gloria Manalo went to Career was received by counsel for the [petitioners] and on 14 Planners Specialists International, Inc. (CPSI), a licensed October 1993 counsel filed his motion for reconsideration of the Order dated September 24, 1993 and position paper. service contracting firm owned by private respondents, the spouses Victor and Elnora Fernandez. After the requisite

62

interview and testing, they were hired to work for a family in Saudi Arabia for a monthly salary of US$350.00 each. According to petitioners, a placement fee of P40,000.00 was imposed as a precondition for the processing of their papers. They paid only P30,000.00 in cash and executed a promissory note for the balance. Then they were allowed by respondent Elnora Fernandez to sign their contract papers but did not issue a receipt for the placement fee despite demand. Shortly before boarding their flight to Saudi Arabia, petitioners were handed their contracts. According to Gloria, she was surprised to discover that her position had been changed to that of domestic help. However, a CPSI employee assured her that the change was only for the purpose of facilitating her departure and did not in any way alter her employment as tutor. Incidentally, CPSI provided petitioners with the Travel Exit Pass (TEP) of Filipino Manpower Services, Inc. (FILMAN), a duly licensed recruitment agency. Contrary to the representation of her recruiter, Gloria was actually hired as a domestic help and not as a tutor, so that after working for only twenty-five (25) days in Jeddah, she returned to Manila. Soon after, Vicente also resigned from his work and followed her home. He could not stand the unbearable working conditions of his employment. However, before leaving, he had to execute a promissory note to cover his plane fare which respondent Victor Fernandez advanced. Vicente also had to sign a quitclaim in favor of CPSI and his employer. On 29 February 1988, petitioners sued private respondents before the Philippines Overseas Employment Administration (POEA) charging them with illegal exaction, 1 false adverstisement, 2 and violation of other pertinents laws, rules and regulations. They demanded the refund of the amount exacted from them, plus payment of moral damages and the imposition of administrative sanctions. 3 Private respondents countered: (1) that Gloria applied as domestic help fully aware that she could not be a tutor since she did not speak Arabic; (2) that the promissory note for P10,000.00 was required of petitioners because they were hired without paying placement fees; (3) that it was unlikely for petitioners, who were mature, educated and experienced in overseas work, to part with P30,000.00 without securing a receipt; (4) that Vicente executed a quitclaim in favor of CPSI duly authenticated by embassy officials in Saudi Arabia; (5) that there was no impropriety in having the employment papers of petitioners processed by FILMAN because it was a sister company of CPSI, and private respondents Victor and Elnora were officers in both agencies.

Private respondents prayed for the disqualification of petitioners from overseas employment, and sought to recover from them the SR 1,150 plane fare advanced by Victor for Vicente, P10,000.00 as placement fee evidenced by a promissory note, and attorney's fees. Mainly, on the basis of the transcripts of petitioners' testimonies in the clarificatory questioning before the Rizal Provincial Prosecutor in a related criminal case, 4 the POEA issued its Order of 7 May 1990 giving more weight and credence to petitioners' version thus After a careful evaluation of the facts and the evidence presented, we are more inclined to give weight to complainants' posture. Complainants' version of the case spontaneously presented in their pleadings is, to our mind, more convincing than respondent's stand. Moreover, the manner by which complainants narrated the whole incident inspired belief in the allegation that respondent Career is indeed guilty of illegal exaction. Thus, the actual expenses incurred by herein complainants computed hereinbelow less the allowable fees of P3,000.00 (P1,500.00 per worker, respondent being a service contractor) should be returned to them. Actual Expenses P30,000.00 placement fees 14.00 application form 300.00 psychological test 1,400.00 medical exam P31,000.00 total less 3,000.00 processing fees at P1,500.00 per applicant P28,714.00 amount to be refunded It appearing, however, that only respondent Career Planners Specialist(s) Int'l. Inc., took part in the collection of the aforesaid amount, the same should be solely held liable. We cannot likewise give credence to the Final Quitclaim signed by complainant Vicente Manalo before he left for the Philippines and presented by respondent as defense. While its genuineness may not be in question, we believe that it has no bearing on the issue at bar. The aforesaid Quitclaim deals more with matters concerning complainants' employment abroad. However, the subject of the instant claim is the refund of complainants' expenses prior to their deployment to Saudi Arabia. On the other hand, we hold FILMAN liable for allowing its document such as the TEP to be used by other agency. Respondent's defense that there is nothing wrong in this because FILMAN is a sister company of CAREER does not merit consideration because such practice is not allowed under the POEA Rules and Regulations. A check with our records, however, showed that respondent FILMAN had

63

been put in the list of forever banned agencies effective April 5, 1989. Anent the claim for moral damages, this Office has no jurisdiction to entertain the same. WHEREFORE, . . . the Authority of Career Planners Specialist(s) International is hereby suspended for four (4) months or in lieu thereof, a fine of P40,000.00 is hereby imposed for illegal exaction on two counts plus restitution of the amount of P28,714.00 to herein complainants in both instances. Filipino Manpower Services, Inc. is hereby meted a fine of P40,000.00 for two counts of misrepresentation. Its perpetual disqualification from recruitment activities is hereby reiterated. The claim for moral damages is dismissed for lack of jurisdiction. Respondent Career's counterclaim is likewise dismissed or lack of merit. 5 Private respondents filed a motion for reconsideration and on 4 February 1991, POEA issued a resolution setting arise its earlier order stating that

Records reveal that the only basis for holding respondent Career Planners Specialist(s) International, Inc., liable for illegal exaction, as held in the previous POEA Order dated May 7, 1990 was the uncorroborated testimony of the complainants. There was no concrete evidence or proof to support the POEA Administrator's initial findings. We take this opportunity to inform the complainants that the charge of illegal exaction is a serious charge which may cause the suspension or cancellation of the authority or license of a recruitment agency. Therefore, said charge must be proven and substantiated by clear and convincing evidence. A mere allegation will not suffice to find an agency liable for illegal exaction unless said allegation is supported by other corroborative circumstantial evidence. In this connection, records show that complainants could not narrate the specific circumstances surrounding their alleged payment of the amount of P30,000.00. They could not even remember the specific date when said amount was paid to respondent agency. In addition, when complainants were separately questioned as to how the money was kept bundled together prior to being handed to respondent agency for payment, Gloria Manalo said it was wrapped in a piece of paper while Vicente Manalo said it was placed inside an envelope. 7

It is worth mentioning at this point that our sole basis for holding respondent Career liable for illegal exaction was the On the charge of petitioners that they were given jobs uncorroborated testimony of the complainants. (driver/domestic help) different from those advertised by As we have consistently held, (the) charge of illegal exaction private respondents, the Undersecretary ruled that there is a serious charge which may cause the suspension or was no misrepresentation by way of false advertisement cancellation of the authority or license of the offending because it was established that private respondents also agency. Hence, it should be proven and substantiated by a caused to be printed in the same newspaper page a second clear and convincing evidence. Mere allegation of box looking for a couple driver/domestic help. complainant that the agency charged more than the In her Order of 9 October 1991, then Undersecretary Ma. authorized fee will not suffice to indict the agency for illegal Nieves Roldan-Confesor denied petitioners' motion for exaction unless the allegation is supported by other reconsideration. 8 corroborative circumstantial evidence. In the present recourse, petitioners claim that public Thus, for lack of concrete evidence or proof to support our respondent POEA committed a fatal jurisdictional error initial findings, we are inclined to reconsider the penalty when it resolved private respondents' motion for imposed upon respondent. reconsideration in violation of Rule V, Book VI of the 1985 Foregoing premises, the penalty of suspension imposed POEA Rules and Regulations directing the transmittal of upon respondent Career Planners Specialist(s) motions for reconsideration to the National Labor Relations International, Inc. pursuant to our Order dated May 7, 1990 Commission (NLRC) for determination. Consequently, for is hereby LIFTED. want of legal competence to act on said motion, the Order of Accordingly, the alternative fine of P40,000.00 which was 4 February 1991, as well as the subsequent orders of public paid under protest by respondent is hereby ordered respondent Undersecretary of Labor dated 5 July 1991 and refunded to them. 6 9 October 1991, is null and void. Petitioners appealed to the Secretary of Labor. On 5 July 1991, then Undersecretary of Labor Ma. Nieves RoldanConfesor (now Secretary of Labor) sustained the reconsideration of POEA. Her Order reads in part We find . . . no cogent reason or sufficient justification to reverse or modify the assailed Order. In Aguinaldo Industries Corporation v. Commissioner of Internal Revenue 9 We ruled To allow a litigant to assume a different posture when he comes before the court and challenge the position he had accepted at the administrative level, would be to sanction a procedure whereby the court which is supposed to

64

review administrative determinations would not review, but determine and decide for the first time, a question not raised at the administrative forum. This cannot be permitted, for the same reason that underlies the requirement of prior exhaustion of administrative remedies to give administrative authorities the prior opportunity to decide controversies within its competence, and in much the same way that, on the judicial level, issues not raised in the lower court cannot be raised for the first time on appeal. The alleged procedural lapse by respondent POEA was raised by petitioners only before Us, notwithstanding that such ground was already existing when they appealed to the Secretary of Labor. Ironically, petitioners now question the jurisdiction of the Secretary of Labor over the appeal which they themselves elevated to that office. When petitioners filed their motion for reconsideration with the Undersecretary of Labor, this procedural issue was not even mentioned. Clearly, it would be the height of unfairness and inequity if We now allow petitioners to backtrack after getting an unfavorable verdict from public respondents whose authority they themselves involved. In Tijam v. Sibonghanoy 10 We said: ". . . we frown upon the "undesirable practice" of a party submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse . . . ." In this regard, however, We find no procedural infirmity constituting reversible error. The 1985 POEA Rules and Regulations 11 is divided into eight (8) Books. Book VI, cited by petitioners, is entitled "Adjudication Rules". The procedure outlined therein relates to the original and exclusive jurisdiction exercised by POEA through its Adjudication Department "to hear and decide all cases involving employer-employee relations arising out of or by virtue of a law or contact involving Filipino workers for overseas employment," involving "[v]iolation of the terms and conditions of employment . . . . [d]isputes relating to the implementation and interpretation of employment contracts . . . [m]oney claims of workers against their employers and/or their duly authorized agents in the Philippines or vice versa . . . . [c]laims for death, disability and other benefits arising out of employment . . . . and . . . . [v]iolations of our noncompliance with any compromise agreement entered into by and between the parties in an overseas employment contract." On the other hand, Book II entitled "Licensing and Regulations" of the 1985 POEA Rules and Regulations, notably Rule VI cited by private respondents, refers particularly to the procedure for suspension, cancellation and revocation of Authority or License 12 through the POEA Licensing and Regulation Office (LRO).

The controversy in the present case centers on the liability of private respondents for illegal exaction, false advertisement and violation of pertinent laws and rules on recruitment of overseas workers and the resulting imposition of penalty of suspension of the Authority of respondent CPSI. Quite plainly, We are not concerned here with employer-employee relations, the procedure of which is outlined in Book VI; rather, with the suspension or revocation of Authority embodied in Book II. Evidently, no jurisdictional error was accordingly committed because in cases affecting suspension, revocation or cancellation of Authority, the POEA has authority under Sec. 18, Rule VI, Book II, to resolve motions for reconsideration which may thereafter be appealed to the Secretary of Labor. Section 18, provides: "A motion for reconsideration of an order o suspension (issued by POEA) or an appeal to the Minister (now Secretary of Labor) from an order cancelling a license or authority may be entertained only when filed with the LRO within ten (10) working days from the service of the order or decision" (parenthesis supplied). Petitioners also argue that public respondents gravely abused their discretion when they violated petitioners' right to administrative due process by requiring clear and convincing evidence to establish the charge illegal exaction. This point is well taken. There was grave abuse of discretion. In the administrative proceedings for cancellation, revocation or suspension of Authority or License, no rule requires that testimonies of complainants be corroborated by documentary evidence, if the charge of unlawful exaction is substantially proven. All administrative determinations require only substantial proof and not clear and convincing evidence as erroneously contended by pubic respondents. Clear and convincing proof is ". . . more than mere preponderance, but not to extent of such certainty as is required beyond reasonable doubt as in criminal cases . . ." 13 while substantial evidence ". . . consists of more than a mere scintilla of evidence but may be somewhat less than a preponderance . . . ." 14 Consequently, in the hierarchy of evidentiary values, We find proof beyond reasonable doubt at the highest level, followed by clear and convincing evidence, preponderance of evidence, and substantial evidence, in that order. That the administrative determination of facts may result in the suspension or revocation of the authority of CPSI does not require a higher degree of proof. The proceedings are administrative, and the consequent imposition of suspension/revocation of Authority/License does not make the proceedings criminal. Moreover, the sanctions are administrative and, accordingly, their infliction does not

65

give rise to double jeopardy when a criminal action is instituted for the same act. Thus We held in Atlas Consolidated Mining and Development Corporation v. Factoran, Jr. 15 . . . it is sufficient that administrative findings of fact are supported by evidence, or negatively stated, it is sufficient that findings of fact are not shown to be unsupported by evidence. Substantial evidence is all that is needed to support an administrative finding of fact, and substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion (Ang Tibay v. Court of Industrial Relations, 69 Phil. 635, 642; Police Commission v. Lood, 127 SCRA 762 [1984]. The POEA, after assessing the evidence of both parties, found that private respondents collected from petitioners P30,000.00 as placement fees; consequently, it ruled that there was illegal exaction. Surprisingly, without altering its findings of fact, POEA reconsidered its order. It held that uncorroborated testimonies were not enough to conclude that illegal exaction was committed, particularly so that this might result in the suspension or revocation of respondents' authority to engage in recruitment activities. The premise that testimonies of petitioners should be supported by some other form of evidence is, to say the least, fallacious. In Castillo v. Court of Appeals, 16 where the appellate court reversed the findings of fact of the trial court by requiring a higher degree of proof, We held . . . we find no strong and cogent reason which justifies the appellate court's deviation from the findings and conclusions of the trial court. As pointed out in Hernandez v. Intermediate Appellate Court (189 SCRA 758 [1990]), in agrarian cases, all that is required is mere substantial evidence. Hence, the agrarian court's findings of fact which went beyond the minimum evidentiary support demanded by law, that is, supported by substantial evidence, are final and conclusive and cannot be reversed by the appellate tribunal.

In either case, petitioners, could have viewed them differently; but the difference is ultimately inconsequential. The crucial point to consider is that the petitioners categorically and unequivocally testified that respondents collected from them the amount of P30,000.00 as their placement fees and that they paid the amount demanded. In this regard, it may be worth to emphasize that only substantial evidence, not necessarily clear and convincing evidence, is required. Moreover, when confronted with conflicting assertions, the rule that "as between a positive and categorical testimony which has a ring of truth on one hand, and a bare denial on the other, the former is generally held to prevail . . . ." 17 applies. But even on the supposition that there was no payment of P30,000.00, it cannot be denied that private respondents required petitioners to execute a promissory note for P10,000.00 purportedly because petitioners were hired without paying placement fees. The mere charging of P10,000.00, standing alone, is enough to hold private respondents answerable for illegal exaction because the allowable amount to be collected per contract worker according to respondent POEA was only P1,500.00, or P3,000.00 for both petitioners. WHEREFORE, the petition is GRANTED. The challenged Orders of respondent Undersecretary of Labor dated 5 July 1991 and 9 October 1991, as well as the Resolution of respondent POEA dated 4 February 1991, having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction are SET ASIDE, and the original Order of respondent POEA dated 7 May 1990 is ordered REINSTATED and AFFIRMED. SO ORDERED. G.R. No. L-64284 July 3, 1992

SPS. JOSE S. VELASQUEZ and JUSTINA ADVINCULAVELASQUEZ, petitioners, vs. The seeming discrepancy in the statements of the witnesses SPS. MARTIN NERY and LEONCIA DE LEON NERY; and (one saying the money was wrapped in paper, the other, ROSARIO LORENZO, SALUD RODRIGUEZ, VDA. DE that the money was in an envelope; neither testified on the LORENZO, MARIANO LORENZO, PACIFICO LORENZO, specific date of the exaction), refers only to minor details. ONOFRE LORENZO, GERTRUDES DE LEON VDA. DE Perhaps it would be different if the variance refers to LORENZO; AND LOLOY LORENZO, TRINIDAD LORENZO, essential points, e.g., whether the amount of P30,000.00 was DIONISIO LORENZO, PERFECTO LORENZO, MARIA actually paid by petitioners to private respondents. REBECCA LORENZO, ASUNCION LORENZO, MAURO Consequently, whether the money was wrapped in paper, or LORENZO and LOURDES LORENZO; DELTA MOTOR placed in an envelope, or unwrapped or whether the parties CORPORATION represented by its President/Manager, could not recall when there payment was effected is Mr. RICARDO C. SILVERIO; and FISCAL ERNESTO A. unimportant. After all, the money could have been wrapped BERNABE in his personal and official capacity as Exin paper and placed in the envelope, or placed in the Officio Register of Deeds of Metro Manila District IV, envelope without being wrapped, or wrapped with use of an Pasay City; and HON. JUDGE MANUEL E. VALENZUELA, in unpasted envelope that appeared to be the envelope itself. his personal and official capacity as Judge of the Court

66

of First Instance, Seventh Judicial, Branch XXIX, now Regional Trial Court, National Capital Region, Pasay City, Metro Manila; and the HON. INTERMEDIATE APPELLATE COURT, FIRST SPECIAL CASES DIVISION, respondents. NOCON, J.: Petitioners Jose Velasquez and Justina Velasquez are the agricultural lessees of a certain riceland consisting of 51,538 square meters, situated at Sitio Malaking Kahoy, Bo. Ibayo, Paraaque, Metro Manila. The subject property was originally possessed and claimed by respondent Martin Nery. In an action for annulment and reconveyance, the Supreme Court finally decided 1 and declared in 1972, that private respondents Lorenzos are co-owners of the land together with Martin Nery. They applied for the confirmation of their title with the then Court of First Instance of Rizal and the parcel of land was subsequently registered under TCT No. 64132. The title was issued in the name of following respondents, spouses Martin Nery and Leoncia de Leon Nery, Salud Rodriguez, Gertrudes de Leon, Rosario, Mariano, Pacifico, Onofre, Loloy, Trinidad, Dionisio, Perfecto, Maria Rebecca, Asuncion, Mauro and Lourdes all surnamed Lorenzo. In 1978, respondents Lorenzos filed an action for partition against their co-owners Martin and Leoncia Nery which was docketed as Civil Case No. 5313-P before the Court of First Instance of Rizal, Pasay City Branch. In a compromise agreement 2 submitted by the parties, the latter agreed to sell the said land to respondent Delta Motors Corporation. On August 24, 1979, petitioner Jose B. Velasquez, in his capacity as agricultural leasehold tenant, filed an action before the then Court of Agrarian Relations against private respondents, which was docketed as CAR Case No. 42, 6th Regional District, Branch I, Quezon City for the redemption of the subject property, as he has information that the said land is offered for sale. On January 25, 1980, private respondent Delta Motor Corporation purchased the subject property for P2,319,210.00, evidenced by a Deed of Sale 3 and was issued TCT No. 26486 by the Register of Deeds of Metro Manila on March 4, 1980. Petitioner Jose S. Velasquez seeks to redeem the said land from Delta Motors for the sum of P8,800.00 anchoring his right under Presidential Decree No. 27. The then Court of Agrarian Relations rendered a decision dismissing the complaint on the ground that the reasonable value of the land is P2,319,210.00 and not P8,800.00, the dispositive portion of which reads:

Foregoing premises considered, judgment is hereby rendered: 1. Dismissing the instant action for lack of interest on plaintiff's part to redeem the land in question at its acquisition price in the amount of P2,319,210.00, which we find reasonable; 2. Directing defendants to maintain plaintiff as agricultural lessee in the peaceful possession and enjoyment of the land subject matter of this litigation containing an area of 51,538 square meters, more or less, covered by TCT No. 64132 and to respect the rights accorded to him as such by law. 3. Directing the Clerk of Court, this Court, (sic) to return to plaintiff the amount of P600.00 which he consigned with the Court as part of the redemption price for the land in question covered by OR. No. 2402913 dated June 13, 1980. 4. Dismissing all other claims and counterclaims for lack of evidence in support thereof. 4 Petitioner appealed the case to the then Intermediate Appellate Court, which affirmed the decision of the lower court, as follows: IN VIEW WHEREOF, the appeals interposed by the plaintiffs (sic) and the defendants Martin Nery, Leoncia de Leon Nery, Dionisio, Perfecto, Maria Rebecca, Lourdes, Asuncion and Mauro, all surnamed Lorenzo, are both dismissed for lack of merit, We affirm in toto the Decision in CAR Case No 42. 5 Not satisfied with the decision of the appellate court, petitioners now elevated the case to this court in a petition for review on certiorari. We find no merit in the instant petition. The issues raised by the petitioners before Us is but a reiteration of the issues they have raised before the defunct Court of Agrarian Relations and the then Intermediate Appellate Court. The main issue in the instant case however, is whether or not the subject property is covered by Presidential Decree No. 27 or Republic Act 6389. Petitioners contend that they should be declared owners of the land pursuant to Presidential Decree No. 27. But as aptly found by the Court of Agrarian Relations, the land in question is not covered by Operation Land Transfer. 6 The agricultural land involved in this case consists of 51,538 square meters or about 5.15 hectares. The retention limit provided by P.D. No. 27 is seven (7) hectares. The law provides: In all cases, the landowner may retain an area of not more than seven (7) hectares if such landowner is cultivating such area or will now cultivate it. Clearly, the property in question is not covered by P.D. No. 27 but by Section 12 of RA 6389, as amended, which provides:

67

In case the landholding is sold to a third person without the knowledge of the agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and consideration . . . . The redemption price shall be the reasonable price of the land at the time of the sale. Thus, in its discussion as to what is the "reasonable price" as provided under Section 12 of RA 6389, the Intermediate Appellate Court stated: Under this Section, the redemption price shall be the "reasonable price" of the land at the time of the sale. We are not convinced that the price of P2,319.210.00 fixed by the court a quo (sic) as redemption price is unreasonable. The subject land consisting of 51,538 square meters is located in Paraaque, Metro Manila, near the South Diversion Road, surrounded by residential subdivisions and by industrial firms. The above-quoted price is the same amount paid by Delta Motors Corporation to the other defendants. There is no showing that the price is a product of collusion between Delta Motors and the other defendants. 7 We agree with the findings of the defunct Court of Agrarian Relations and the then Intermediate Appellate Court, that the reasonable redemption price of the land is P2,319,210, which is the amount or consideration at the time of the sale. Petitioners claim that the transfer of the land by the respondents Nery and Lorenzo's in favor of Delta Motor Corporation is null and void ab initio on the ground that the transfer was not accompanied by an affidavit of nontenancy as required by Republic Act 6389 and Circular No. 31 of the Department of Justice. What militates against this claim of the petitioners is the evidence borne by the records that the transfer was effected through a judgment 8 of the respondent lower court in a civil case, and not through a sale as envisioned by Republic Act No. 6389. Though the date of the sale was earlier than the date of the judgment, it is correct to say that the transfer was effected through a judgment, because the sale must be approved by the court, considering the pendency of a case (partition) before the court that issued the judgment. Moreover, there is nothing in the Act declaring any sale or transfer as null and void ab initio when the sale was without the knowledge of the lessee. As a matter of fact, Republic Act No. 6389 states the remedy available to the agricultural lessee, the petitioners herein, which is to redeem the land based on the reasonable price at the time of the sale and not to seek the declaration of nullity of the alleged sale. Further, the review sought by petitioners does not fall under any of the grounds warranting the exercise of this Court's discretionary power. The matter of what is the reasonable redemption price being factual, precludes this Court from reviewing the factual findings of the appellate

court. The findings and conclusions of the Intermediate Appellate Court that the sum of P2,319,210 is the "reasonable price" is supported by evidence. The land being located in Paraaque, surrounded by residential subdivisions and industrial firms near the South Diversion road are factors in determining its reasonable price for sale or for redemption as in the instant case. It is the established doctrine in this jurisdiction supported by unbroken line of decisions that such findings of facts and conclusions can not be reviewed on appeal by certiorari. 9 As a general rule, the findings of facts of the Court of Agrarian Relations will not be disturbed on appeal where there is substantial evidence to support the same and all that this Court is called upon to do insofar as the evidence is concerned, is to find out if the conclusion of the lower court is supported by "substantial evidence". 10 Substantial evidence in support of the findings of the Court of Agrarian Relations does not necessarily import preponderant evidence as is required in ordinary civil cases. Substantial evidence has been defined to be such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, and its absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial, for the appellate court cannot substitute its own judgment or criterion for that of the trial court in determining wherein lies the weight of evidence or what evidence is entitled to belief. 11 Noteworthy mentioning is that the Philippine National Bank (PNB), although not a party to the instant case, has extrajudicially foreclosed the subject property, and will consolidate its ownership thereof if private respondent Delta Motor Corporation does not redeem the same within one year. Still, petitioners are protected in their rights as agricultural lessees pursuant to Section 10 of Republic Act No. 3844, as amended, which provides: Sec. 10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period, etc. The agricultural leasehold relation under this Code shall not be extinguished by mere expiration of the term or period in a leasehold contract nor by the sale, alienation or transfer of the legal possession of the landholding. In case the agricultural lessor, sells, alienates or transfers the legal possession of the landholding, the purchaser or transferee thereof shall be subrogated to the rights and substitutes to the obligations of the agricultural lessor. Because of the extra-judicial foreclosure of the mortgage over the subject property by the Philippine National Bank, the present case has become moot and academic with regard to petitioner's claim against Delta Motor Corporation. It is now the PNB or its subsequent transferees from whom the petitioners must redeem, if and when PNB

68

decides to sell or alienate the subject property in the future, and of course subject to the provisions of the 1975 Revised Charter of the Philippine National Bank. 12

WHEREFORE, the instant petition for review on certiorari is hereby DISMISSED and the appealed decision of the then Intermediate Appellate Court which affirmed the decision of Under the Trade-mark Law (Republic Act No. 166 ), the the defunct Court of Agrarian Relations is hereby Director of Patents is vested with jurisdiction over the above-mentioned cases. Likewise, the Rules of Practice in AFFIRMED. Costs against petitioners. Trade-mark Cases contains a similar provision, thus: SO ORDERED. G.R. No. L-26803 October 14, 1975 AMERICAN TOBACCO COMPANY, CARNATION COMPANY, CURTISS CANDY COMPANY, CUDAHY PACKING CO., CLUETT, PEABODY & CO., INC., CANNONMILLS COMPANY, FORMICA CORPORATION, GENERALMOTORS CORPORATION, INTERNATIONAL LATEX CORPORATION, KAYSER-ROTH CORPORATION, M and R DIETETIC LABORATORIES, INC., OLIN MATHIESON, PARFUM CIRO, INC., PROCTER and GAMBLE COMPANY, PROCTER and GAMBLE PHILIPPINE MANUFACTURING CORPORATION, PARFUMS PORVIL DENTRIFICES DU DOCTEUR PIERRE REUNIS SOCIETE ANONYME, R.J. REYNOLDS TOBACCO COMPANY, SWIFT AND COMPANY, STERLING PRODUCTS INTERNATIONAL, THE CLOROX COMPANY, WARNER LAMBERT PHARMACEUTICALS COMPANY and ZENITH RADIO CORPORATION, petitioners, vs. THE DIRECTOR OF PATENTS, ATTYS. AMANDO L. MARQUEZ, TEOFILO P. VELASCO, RUSTICO A. CASIA and HECTOR D. BUENALUZ, respondents. Lichauco, Picazo and Agcaoili for petitioners. Office of the Solicitor General for respondents. ANTONIO, J.:

Petitioners are parties, respectively, in the following opposition, interference and cancellation proceedings in said Office: Inter Partes Cases Nos. 157, 392, 896, 282, 247, 354, 246,332, 398, 325, 374, 175, 297, 256, 267, 111, 400, 324, 114, 159, 346, and 404.

168. Original jurisdiction over inter partes proceeding. the Director of Patents shall have original jurisdiction over inter partes proceedings. In the event that the Patent Office should be provided with an Examiner of Interferences, this Examiner shall have the original jurisdiction over these cases, instead of the Director. In the case that the Examiner of Interferences takes over the original jurisdiction over inter partes proceedings, his final decision subject to appeal to the Director of Patents within three months of the receipt of notice of decisions. Such appeals shall be governed by sections 2, 3, 4, 6, 7, 8, 10, 11, 12, 13, 14, 15 and 22 of Rule 41 of the Rules of Court insofar as said sections are applicable and appropriate, and the appeal fee shall be P25.00. The Rules of Practice in Trade-mark Cases were drafted and promulgated by the Director of Patents and approved by the then Secretary of Agriculture and Commerce.. 1 Subsequently, the Director of Patents, with the approval of the Secretary of Agriculture and Commerce, amended the afore-quoted Rule 168 to read as follows: 168. Original Jurisdiction over inter partes proceedings. The Director of Patents shall have original jurisdiction over inter partes proceedings, [In the event that the Patent Office is provided with an Examiner of Interferences, this Examiner shall then have the original jurisdiction over these cases, instead of the Director. In the case that the Examiner of Interferences takes over the original jurisdiction over inter partes proceedings, his final decisions shall be subject to appeal to the Director of Patents within three months of the receipt of notice decision. Such appeals shall be governed by Sections 2, 3, 4, 6, 7, 8,10, 11, 12, 13, 14, 15, and 22 of Rule 41 of the Rules of Court insofar as said sections are applicable and appropriate, and the appeal fee shall be [P25.00.] Such inter partes proceedings in the Philippine Patent Office under this Title shall be heard before the Director of Patents, any hearing officer, or any ranking official designated by the Director, but all judgments determining the merits of the case shall be personally and directly prepared by the Director and signed by him. (Emphasis supplied.)

In this petition for mandamus with preliminary injunction, petitioners challenge the validity of Rule 168 of the "Revised Rules of Practice before the Philippine Patent Office in Trademark Cases" as amended, authorizing the Director of Patents to designate any ranking official of said office to hear "inter partes" proceedings. Said Rule likewise provides that "all judgments determining the merits of the case shall be personally and directly prepared by the Director and signed by him." These proceedings refer to the hearing of opposition to the registration of a mark or trade name, interference proceeding instituted for the purpose of determining the question of priority of adoption and use of a trade-mark, trade name or service-mark, and cancellation of registration of a trade-mark or trade name pending at the In accordance with the amended Rule, the Director of Patents delegated the hearing of petitioners' cases to Patent Office.

69

hearing officers, specifically, Attys. Amando Marquez, Teofilo Velasco, Rustico Casia and Hector Buenaluz, the other respondents herein.

proceedings, 5 decide applications for reinstatement of a lapsed patent, 6 cancellations of patents under Republic Act No. 165, 7 inter partes proceedings such as oppositions, 8 claims of interference, 9 cancellation cases under the TradePetitioners filed their objections to the authority of the mark Law 10 and other matters in connection with the hearing officers to hear their cases, alleging that the amendment of the Rule is illegal and void because under the enforcement of the aforesaid laws. It could hardly be expected, in view of the magnitude of his responsibility, to law the Director must personally hear and decide inter partes cases. Said objections were overruled by the Director require him to hear personally each and every case pending in his Office. This would leave him little time to attend to his of Patents, hence, the present petition for mandamus, to 11 compel The Director of Patents to personally hear the cases other duties. For him to do so and at the same time attend personally to the discharge of every other duty or of petitioners, in lieu of the hearing officers. responsibility imposed upon his Office by law would not It would take an extremely narrow reading of the powers of further the development of orderly and responsible the Director of Patents under the general law 2 and Republic administration. The reduction of existing delays in Acts Nos. 165 3 and 166 3* to sustain the contention of regulating agencies requires the elimination of needless petitioners. Under section 3 of RA 165, the Director of work at top levels. Unnecessary and unimportant details Patents is "empowered to obtain the assistance of technical, often occupy far too much of the time and energy of the scientific or other qualified officers or employees of other heads of these agencies and prevent full and expeditious departments, bureaus, offices, agencies and consideration of the more important issues. the remedy is a instrumentalities of the Government, including corporations far wider range of delegations to subordinate officers. This owned, controlled or operated by the Government, when sub-delegation of power has been justified by "sound deemed necessary in the consideration of any matter principles of organization" which demand that "those at the submitted to the Office relative to the enforcement of the top be able to concentrate their attention upon the larger provisions" of said Act. Section 78 of the same Act also and more important questions of policy and practice, and empowers "the Director, subject to the approval of the their time be freed, so far as possible, from the Department Head," to "promulgate the necessary rules and consideration of the smaller and far less important matters regulations, not inconsistent with law, for the conduct of all of detail." 12 business in the Patent Office." The aforecited statutory Thus, it is well-settled that while the power to decide authority undoubtedly also applies to the administration resides solely in the administrative agency vested by law, and enforcement of the Trade-mark Law (Republic Act No. this does not preclude a delegation of the power to hold a 166). hearing on the basis of which the decision of the It has been held that power-conferred upon an administrative agency will be administrative agency to which the administration of a made. 13 statute is entrusted to issue such regulations and orders as may be deemed necessary or proper in order to carry out its The rule that requires an administrative officer to exercise his own judgment and discretion does not preclude him purposes and provisions maybe an adequate source of from utilizing, as a matter of practical administrative authority to delegate a particular function, unless by procedure, the aid of subordinates to investigate and report express provisions of the Act or by implication it has been to him the facts, on the basis of which the officer makes his withheld. 4 There is no provision either in Republic Act No. 14 165 or 166 negativing the existence of such authority, so far decisions. It is sufficient that the judgment and discretion finally exercised are those of the officer authorized by law. as the designation of hearing examiners is concerned. Nor Neither does due process of law nor the requirements of can the absence of such authority be fairly inferred from fair hearing require that the actual taking of testimony be contemporaneous and consistent Executive interpretation before the same officer who will make the decision in the of the Act. case. As long as a party is not deprived of his right to The nature of the power and authority entrusted to The present his own case and submit evidence in support Director of Patents suggests that the aforecited laws thereof, and the decision is supported by the evidence in the (Republic Act No. 166, in relation to Republic Act No. 165) record, there is no question that the requirements of due should be construed so as to give the aforesaid official the process and fair trial are fully met. 15 In short, there is no administrative flexibility necessary for the prompt and abnegation of responsibility on the part of the officer expeditious discharge of his duties in the administration of concerned as the actual decision remains with and is made said laws. As such officer, he is required, among others, to by said officer. 16 It is, however, required that to "give the determine the question of priority in patent interference substance of a hearing, which is for the purpose of making

70

determinations upon evidence the officer who makes the determinations must consider and appraise the evidence which justifies them." 17 In the case at bar, while the hearing officer may make preliminary rulings on the myriad of questions raised at the hearings of these cases, the ultimate decision on the merits of all the issues and questions involved is left to the Director of Patents. Apart from the circumstance that the point involved is procedural and not jurisdictional, petitioners have not shown in what manner they have been prejudiced by the proceedings. Moreover, as the Solicitor General Antonio P. Barredo, now a Member of this Court has correctly pointed out, the repeated appropriations by Congress for hearing officers of the Philippine Patent Office form 1963 to 1968 18 not only confirms the departmental construction of the statute, but also constitutes a ratification of the act of the Director of Patents and the Department Head as agents of Congress in the administration of the law. 19 WHEREFORE, the instant petition is hereby dismissed, with costs against petitioners. Castro (Actg., C.J.), Muoz Palma, Aquino and Martin, JJ., concur. Fernando, J, is on leave. Barredo, J., took no part.

71

72