G.R. No. 77372 April 29, 1988 Branch XXXII, a complaint for injuction with a prayer with LUPO L. LUPANGCO, RAYMOND S. MANGKAL, NORMAN the issuance of a writ of a preliminary injunction against A. MESINA, ALEXANDER R. REGUYAL, JOCELYN P. respondent PRC to restrain the latter from enforcing the CATAPANG, ENRICO V. REGALADO, JEROME O. ARCEGA, above-mentioned resolution and to declare the same ERNESTOC. BLAS, JR., ELPEDIO M. ALMAZAN, KARL unconstitution. CAESAR R. RIMANDO, petitioner, Respondent PRC filed a motion to dismiss on October 21, vs. 1987 on the ground that the lower court had no jurisdiction COURT OF APPEALS and PROFESSIONAL REGULATION to review and to enjoin the enforcement of its resolution. In COMMISSION, respondent. an Order of October 21, 1987, the lower court declared that Balgos & Perez Law Offices for petitioners. it had jurisdiction to try the case and enjoined the respondent commission from enforcing and giving effect to The Solicitor General for respondents. Resolution No. 105 which it found to be unconstitutional.

Not satisfied therewith, respondent PRC, on November 10, GANCAYCO, J.: 1986, filed with the Court of Appeals a petition for the Is the Regional Trial Court of the same category as the nullification of the above Order of the lower court. Said Professional Regulation Commission so that it cannot pass petiton was granted in the Decision of the Court of Appeals upon the validity of the administrative acts of the latter? promulagated on January 13, 1987, to wit: Can this Commission lawfully prohibit the examiness from WHEREFORE, finding the petition meritorious the same is attending review classes, receiving handout materials, tips, hereby GRANTED and the other dated October 21, 1986 or the like three (3) days before the date of the issued by respondent court is declared null and void. The examination? Theses are the issues presented to the court respondent court is further directed to dismiss with by this petition for certiorari to review the decision of the prejudice Civil Case No. 86-37950 for want of jurisdiction Court of Appeals promulagated on January 13, 1987, in CA- over the subject matter thereof. No cost in this instance. G.R. SP No. 10598, * declaring null and void the other dated SO ORDERED. 2 Ocober 21, 1986 issued by the Regional Trial Court of Manila, Branch 32 in Civil Case No. 86-37950 entitled " Lupo Hence, this petition. L. Lupangco, et al. vs. Professional Regulation Commission." The Court of Appeals, in deciding that the Regional Trial The records shows the following undisputed facts: Court of Manila had no jurisdiction to entertain the case and 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 licensure examinations in accountancy. The resolution That the petitioner Professional Regulatory Commission is embodied the following pertinent provisions: at least a co-equal body with the Regional Trial Court is 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 hand-out, review material, or any tip from any school, To strenghten its position, the Court of Appeals relied college or university, or any review center or the like or any heavily on National Electrification Administration vs. 4 5 reviewer, lecturer, instructor official or employee of any of Mendoza, which cites Pineda vs. Lantin and Philippine 6 the aforementioned or similars institutions during the three Pacific Fishing, Inc. vs. Luna, where this Court held that a days immediately proceeding every examination day Court of First Instance cannot interfere with the orders of including examination day. the Securities and Exchange Commission, the two being co- equal bodies. Any examinee violating this instruction shall be subject to the sanctions prescribed by Sec. 8, Art. III of the Rules and After a close scrutiny of the facts and the record of this case, Regulations of the Commission. 1 We rule in favor of the petitioner. On October 16, 1986, herein petitioners, all reviewees The cases cited by respondent court are not in point. It is preparing to take the licensure examinations in glaringly apparent that the reason why this Court ruled that accountancy schedule on October 25 and November 2 of the the Court of First Instance could not interfere with the same year, filed on their own behalf of all others similarly orders of the Securities and Exchange Commission was that situated like them, with the Regional Trial Court of Manila, this was so provided for by the law. In Pineda vs. Lantin, We

1 explained that whenever a party is aggrieved by or disagree The objection to a judicial review of a Presidential act arises with an order or ruling of the Securities and Exchange from a failure to recognize the most important principle in Commission, he cannot seek relief from courts of general our system of government, i.e., the separation of powers jurisdiction since under the Rules of Court and into three co-equal departments, the executives, the Commonwealth Act No. 83, as amended by Republic Act No. legislative and the judicial, each supreme within its own 635, creating and setting forth the powers and functions of assigned powers and duties. When a presidential act is the old Securities and Exchange Commission, his remedy is challenged before the courts of justice, it is not to be implied to go the Supreme Court on a petition for review. Likewise, therefrom that the Executive is being made subject and in Philippine Pacific Fishing Co., Inc. vs. Luna, it was stressed subordinate to the courts. The legality of his acts are under that if an order of the Securities and Exchange Commission judicial review, not because the Executive is inferior to the is erroneous, the appropriate remedy take is first, within courts, but because the law is above the Chief Executive the Commission itself, then, to the Supreme Court as himself, and the courts seek only to interpret, apply or mandated in Presidential Decree No. 902-A, the law creating implement it (the law). A judicial review of the President's the new Securities and Exchange Commission. Nowhere in decision on a case of an employee decided by the Civil the said cases was it held that a Court of First Instance has Service Board of Appeals should be viewed in this light and no jurisdiction over all other government agencies. On the the bringing of the case to the Courts should be governed by contrary, the ruling was specifically limited to the Securities the same principles as govern the jucucial review of all and Exchange Commission. administrative acts of all administrative officers. 10 The respondent court erred when it place the Securities and Republic vs. Presiding Judge, CFI of Lanao del Norte, Br. II, 11 Exchange Commission and the Professional Regulation is another case in point. Here, "the Executive Office"' of the Commsision in the same category. As alraedy mentioned, Department of Education and Culture issued Memorandum with respect to the Securities and Exchange Commission, Order No. 93 under the authority of then Secretary of the laws cited explicitly provide with the procedure that Education Juan Manuel. As in this case, a complaint for need be taken when one is aggrieved by its order or ruling. injunction was filed with the Court of First Instance of Upon the other hand, there is no law providing for the next Lanao del Norte because, allegedly, the enforcement of the course of action for a party who wants to question a ruling circular would impair some contracts already entered into or order of the Professional Regulation Commission. Unlike by public school teachers. It was the contention of Commonwealth Act No. 83 and Presidential Decree No. 902- petitioner therein that "the Court of First Instance is not A, there is no provision in Presidential Decree No. 223, empowered to amend, reverse and modify what is creating the Professional Regulation Commission, that otherwise the clear and explicit provision of the orders or resolutions of the Commission are appealable memorandum circular issued by the Executive Office which either to the Court of Appeals or to theSupreme Court. has the force and effect of law." In resolving the issue, We Consequently, Civil Case No. 86-37950, which was filed in held: order to enjoin the enforcement of a resolution of the ... We definitely state that respondent Court lawfully respondent Professional Regulation Commission alleged to acquired jurisdiction in Civil Case No. II-240 (8) because the be unconstitutional, should fall within the general plaintiff therein asked the lower court for relief, in the form jurisdiction of the Court of First Instance, now the Regional of injunction, in defense of a legal right (freedom to enter 7 Trial Court. into contracts) . . . . . What is clear from Presidential Decree No. 223 is that the Hence there is a clear infringement of private respondent's Professional Regulation Commission is attached to the constitutional right to enter into agreements not contrary to Office of the President for general direction and law, which might run the risk of being violated by the 8 coordination. Well settled in our jurisprudence is the view threatened implementation of Executive Office that even acts of the Office of the President may be Memorandum Circular No. 93, dated February 5, 1968, reviewed by the Court of First Instance (now the Regional which prohibits, with certain exceptions, cashiers and 9 Trial Court). In Medalla vs. Sayo, this rule was thoroughly disbursing officers from honoring special powers of propounded on, to wit: attorney executed by the payee employees. The respondent In so far as jurisdiction of the Court below to review by Court is not only right but duty bound to take cognizance of certiorari decisions and/or resolutions of the Civil Service cases of this nature wherein a constitutional and statutory Commission and of the residential Executive Asssistant is right is allegedly infringed by the administrative action of a concerned, there should be no question but that the power government office. Courts of first Instance have original of judicial review should be upheld. The following rulings jurisdiction over all civil actions in which the subject of the buttress this conclusion: 2 litigation is not capable of pecuniary estimation (Sec. 44, Commission on Elections awarding a contract to a private Republic Act 296, as amended). 12 (Emphasis supplied.) party which originated from an invitation to bid. The said In San Miguel Corporation vs. Avelino, 13 We ruled that a issue came about because under the laws then in force, final judge of the Court of First Instance has the authority to awards, judgments, decisions or orders of the Commission decide on the validity of a city tax ordinance even after its on Elections fall within the exclusive jurisdiction of the validity had been contested before the Secretary of Justice Supreme Court by way of certiorari. Hence, it has been and an opinion thereon had been rendered. consistently held that "it is the Supreme Court, not the Court of First Instance, which has exclusive jurisdiction to review In view of the foregoing, We find no cogent reason why on certiorari final decisions, orders, or rulings of the Resolution No. 105, issued by the respondent Professional Commission on Elections relative to the conduct of elections Regulation Commission, should be exempted from the and the enforcement of election laws." 16 general jurisdiction of the Regional Trial Court. As to whether or not the Court of First Instance had Respondent PRC, on the other hand, contends that under jurisdiction in saidcase, We said: Section 9, paragraph 3 of B.P. Blg. 129, it is the Court of Appeals which has jurisdiction over the case. The said law We are however, far from convinced that an order of the provides: 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 decisions, resolutions, orders, or awards of Regional Trial reviewable by certiorari by the Supreme Court as provided Courts and quasi-judicial agencies, instrumentalities, boards by law are those rendered in actions or proceedings before or commissions, except those falling within the appellate the COMELEC and taken cognizance of by the said body in jurisdiction of the Supreme Court in accordance with the the exercise of its adjudicatory or quasi-judicial powers. 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 B.P. Blg. 129, there has to be a final order or ruling which evidence after which the questioned order was issued; and resulted from proceedings wherein the administrative body that this order of the commission was issued pursuant to its involved exercised its quasi-judicial functions. In Black's authority to enter into contracts in relation to election Law Dictionary, quasi-judicial is defined as a term applied to purposes. In short, the COMELEC resolution awarding the the action, discretion, etc., of public administrative officers contract in favor of Acme was not issued pursuant to its or bodies required to investigate facts, or ascertain the quasi-judicial functions but merely as an incident of its existence of facts, hold hearings, and draw conclusions from inherent administrative functions over the conduct of them, as a basis for their official action, and to exercise elections, and hence, the said resolution may not be deemed discretion of a judicial nature. To expound thereon, quasi- as a "final order reviewable by certiorari by the Supreme judicial 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 applies to a specific situation . 14 This does not cover rules direct and exclusive appeal by certiorari to this Tribunal lie and regulations of general applicability issued by the from such order. Any question arising from said order may administrative body to implement its purely administrative be well taken in an ordinary civil action before the trial policies and functions like Resolution No. 105 which was courts. (Emphasis supplied.) 17 adopted by the respondent PRC as a measure to preserve One other case that should be mentioned in this regard is the integrity of licensure examinations. Salud vs. Central Bank of the Philippines. 18 Here, petitioner The above rule was adhered to in Filipinas Engineering and Central Bank, like respondent in this case, argued that Machine Shop vs. Ferrer. 15 In this case, the issue presented under Section 9, paragraph 3 of B.P. Blg. 129, orders of the was whether or not the Court of First Instance had Monetary Board are appealable only to the Intermediate jurisdiction over a case involving an order of the Appellate Court. Thus:

3

The Central Bank and its Liquidator also postulate, for the cannot be restrained from taking all the lawful steps needed very first time, that the Monetary Board is among the to assure the fulfillment of their ambition to become public "quasi-judicial ... boards" whose judgments are within the accountants. They have every right to make use of their exclusive appellate jurisdiction of the IAC; hence, it is only faculties in attaining success in their endeavors. They said Court, "to the exclusion of the Regional Trial Courts," should be allowed to enjoy their freedom to acquire useful that may review the Monetary Board's resolutions. 19 knowledge that will promote their personal growth. As Anent the posture of the Central Bank, We made the defined in a decision of the United States Supreme Court: following pronouncement: The term "liberty" means more than mere freedom from The contention is utterly devoid of merit. The IAC has no physical restraint or the bounds of a prison. It means appellate jurisdiction over resolution or orders of the freedom to go where one may choose and to act in such a Monetary Board. No law prescribes any mode of appeal manner not inconsistent with the equal rights of others, as from the Monetary Board to the IAC. 20 his judgment may dictate for the promotion of his happiness, to pursue such callings and vocations as may be In view of the foregoing, We hold that the Regional Trial most suitable to develop his capacities, and giv to them their Court has jurisdiction to entertain Civil Case No. 86-37950 highest enjoyment. 23 and enjoin the respondent PRC from enforcing its resolution. Another evident objection to Resolution No. 105 is that it violates the academic freedom of the schools concerned. Although We have finally settled the issue of jurisdiction, Respondent PRC cannot interfere with the conduct of We find it imperative to decide once and for all the validity review that review schools and centers believe would best of Resolution No. 105 so as to provide the much awaited enable their enrolees to meet the standards required before relief to those who are and will be affected by it. becoming a full fledged public accountant. Unless the means Of course, We realize that the questioned resolution was or methods of instruction are clearly found to be inefficient, adopted for a commendable purpose which is "to preserve impractical, or riddled with corruption, review schools and the integrity and purity of the licensure examinations." centers may not be stopped from helping out their students. However, its good aim cannot be a cloak to conceal its At this juncture, We call attention to Our pronouncement in constitutional infirmities. On its face, it can be readily seen Garcia vs. The Faculty Admission Committee, Loyola School of that it is unreasonable in that an examinee cannot even Theology, 24 regarding academic freedom to wit: attend any review class, briefing, conference or the like, or ... It would follow then that the school or college itself is receive any hand-out, review material, or any tip from any possessed of such a right. It decides for itself its aims and school, collge or university, or any review center or the like or objectives and how best to attain them. It is free from any reviewer, lecturer, instructor, official or employee of any outside coercion or interference save possibly when the of the aforementioned or similar institutions . ... 21 overriding public welfare calls for some restraint. It has a The unreasonableness is more obvious in that one who is wide sphere of autonomy certainly extending to the choice caught committing the prohibited acts even without any ill of students. This constitutional provision is not to be motives will be barred from taking future examinations construed in a niggardly manner or in a grudging fashion. conducted by the respondent PRC. Furthermore, it is Needless to say, the enforcement of Resolution No. 105 is inconceivable how the Commission can manage to have a not a guarantee that the alleged leakages in the licensure watchful eye on each and every examinee during the three examinations will be eradicated or at least minimized. days before the examination period. 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 make- end 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 Resolution No. 105 is not only unreasonable and arbitrary, leakages and stop it right there. If corrupt officials or it also infringes on the examinees' right to liberty personnel should be terminated from their loss, then so be guaranteed by the Constitution. Respondent PRC has no it. Fixers or swindlers should be flushed out. Strict authority to dictate on the reviewees as to how they should guidelines to be observed by examiners should be set up prepare themselves for the licensure examinations. They and if violations are committed, then licenses should be

4 suspended or revoked. These are all within the powers of Del Rosario prepared a subpoena dated January 16, 1990 the respondent commission as provided for in Presidential setting the preliminary investigation on January 29, 1990 at Decree No. 223. But by all means the right and freedom of 2:00 o'clock in the afternoon as to respondents Maria Clara the examinees to avail of all legitimate means to prepare for Lobregat, Jose Eleazar, Felix Duenas Jr., and Salvador the examinations should not be curtailed. Escudero, III, and on January 31, 1990 at 2:00 o'clock in the In the light of the above, We hereby REVERSE and SET afternoon as to petitioner Eduardo M. Cojuangco, Jr., 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 executory. No costs. motions addressed to the PCGG, namely; (1) a motion to SO ORDERED. disqualify/inhibit PCGG; alternatively, a motion to dismiss; 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, Prosecutor del Rosario denied both motions and declared vs. the proceedings closed and the cases submitted for PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT resolution. Thereafter, petitioner requested the PCGG to (PCGG) AND HON. FRANCISCO I. CHAVEZ in his capacity resolve directly his aforesaid motions. as Solicitor General, and the HON. OMBUDSMAN, On February 27, 1990, the PCGG issued an order denying respondents, MARIA CLARA L. LOBREGAT and JOSE R. petitioner's motions and required him, together with all the ELEAZAR, JR., intervenors. respondents in I.S. Nos. 74 and 75 to submit counter- Estelito P. Mendoza and Villareal Law Offices for petitioner. affidavits within five (5) days from receipt thereof. Angara, Abello, Concepcion, Regala & Cruz for intervenors. 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 GANCAYCO, J.: restraining order/writ of preliminary injunction. In these petitions the issues raised are: (1) whether or not He alleges that the PCGG may not conduct a preliminary the Presidential Commission on Good Government (PCGG) investigation of the complaints filed by the Solicitor General has the power to conduct a preliminary investigation of the without violating petitioner's rights to due process and anti-graft and corruption cases filed by the Solicitor General equal protection of the law, and that the PCGG has no right against Eduardo Cojuangco, Jr. and other respondents for to conduct such preliminary investigation. It is prayed that a the alleged misuse of coconut levy funds; and (2) on the temporary restraining order be issued enjoining the assumption that it has jurisdiction to conduct such a respondents and any or all persons acting under their preliminary investigation, whether or not its conduct orders or in their behalf from continuing with the constitutes a violation of petitioner's rights to due process preliminary investigation of I.S. Nos. 74 and 75 and and equal protection of the law. 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 1 74 and 75. respondents to comment thereon within ten (10) days from The PCGG assigned both complaints to prosecutor Cesario notice. del Rosario for preliminary investigation. The latter On the same date, the PCGG issued an order that reads as scheduled both cases for hearing. follows:

5

Considering that none of the respondents have filed their On April 2, 1990, a consolidated comment was submitted by counter-affidavits and supporting evidence, except the respondents attaching as annex thereto the letters of the respondent Hermenegildo Zayco, the complaints filed Executive Secretary dated February 9, 1990 and February against them may now be considered submitted for 21, 1990, respectively, addressed to the Chairman, PCGG, resolution by this Commission. conveying the instructions of the President of the Since the respondents, except Hermenegildo Zayco, have Philippines that the complaints involving coconut levy funds not submitted counter-affidavits and controverting be filed with the PCGG, to conduct the necessary evidence, the evidence submitted by the complainants investigation and if warranted to file and prosecute the stands uncontradicted. And this Commission finds the cases before the Sandiganbayan; and it confirmed the findings and conclusions of fact of the investigating earlier instructions of the President dated November 28, 4 prosecutor, that a prima facie case has been established 1989 to the same effect. against all the respondents, including Hermenegildo Zayco, On May 4, 1990 petitioner filed a reply to the consolidated to warrant the filing of an information for a violation of comment as required by the Court. In a resolution dated Section 3(1) in relation to Section 3(i) thus making them June 5, 1990, the Solicitor General was required to file a liable under Section 3(a) of RA 3019, to be well-founded. rejoinder. On May 31, 1990, a motion for hearing of said Wherefore, let the corresponding information be filed. 2 cases was filed by petitioner and this was granted by the Court on June 21, 1990. It was directed that the On March 14, 1990, two informations 3 were filed by the Ombudsman be impleaded as party-respondent. The Court PCGG with the Sandiganbayan against petitioner and all required the Ombudsman to comment on the petition other respondents named in I.S. Nos. 74 and 75 which were within ten (10) days from notice. The case was set for docketed as Criminal Cases No. 14398 and 14399. hearing on Tuesday, July 17, 1990 at 10:00 in the morning. Meanwhile, the Solicitor General filed with the PCGG several The Ombudsman submitted his comment on July 3, 1990 other complaints against petitioner and several others and the Court required petitioner to file a reply to the same. bearing on the misuse of the coconut levy funds. Two of these complaints were docketed as I.S. Nos. 79 and 82. A On July 6, 1990, Maria Clara Lobregat and Jose R. Eleazar, Jr. panel of prosecutors designated by the PCGG issued a filed a Motion for Leave to Intervene and a Motion to Admit subpoena to petitioner in order to compel him to appear in Petition to Intervene wherein they ask that the PCGG desist the investigation of said cases. from further proceeding with the preliminary investigation of I.S. Nos. 74, 75, 77, 79, 80, 81, 82, 83, and 84 charging the On March 20, 1990, petitioner filed a supplemental petition intervenors and other respondents, including petitioner, informing the Court of the filing of said informations and with violations of the Anti-Graft and Corrupt Practices Act the additional complaints aforestated. He prays that a (Republic Act No. 3019) in connection with the, coconut temporary restraining order be issued enjoining levy funds. The intervenors question the authority of the respondents and other persons acting under their orders or PCGG to conduct a preliminary investigation of the said in their behalf from continuing with the preliminary cases. They maintain that even assuming that the PCGG has investigation of as well as taking further action in I.S. Nos. such authority, the same cannot be delegated to a 79 and 82 and similar cases filed with the PCGG. Petitioner prosecutor or his assistants. also prays that, after hearing, the PCGG be prohibited from continuing with the preliminary investigation of I.S. Nos. 79 On July 10, 1990, the court granted the motion for leave to and 82 and that it be ordered to forward the records of the intervene and admitted the petition for intervention. The case to the Ombudsman for appropriate action, and to pay PCGG was required to comment on said petition within ten the costs of the suit. (10) days from notice. On the same date, petitioner filed a motion reiterating the On July 13, 1990, respondents filed their rejoinder to the petition for the issuance of a temporary restraining reply of petitioner to their consolidated comments. The order/writ of preliminary injunction and alternatively Ombudsman filed his comment to the petition for seeking that the case be set for hearing. intervention, while petitioner filed his reply to the comment of the Ombudsman on July 16, 1990. On March 22, 1990, the Court admitted the supplemental pleading of the petitioner; required respondents to The hearing was held as scheduled on July 17, 1990 where comment thereon within a non-extendible period of ten all the parties including the Ombudsman appeared and/or (10) days from notice; and issued a status quo order were duly represented by counsels. After the hearing, the prevailing at the time this petition was filed on March 12, parties were required to submit their simultaneous 1990. memoranda within fifteen (15) days from the date of the hearing. 6

On July 21, 1990, the Solicitor General asked for an examination and investigation simultaneously, under extension of time within which to file his comment to the Section 13 of the same rule. petition for intervention. He filed said comment within the Upon the enactment of the Anti-Graft and Corrupt Practices period of extension asked for on July 31, 1990. Act on August 17, 1960, 5 and Republic Act No. 1379 The memoranda of all the parties having been submitted, (covering unexplained wealth cases) on August 18, 1955, the petitions were deemed submitted for resolution. the preliminary investigation of cases involving the Anti- On the first issue wherein petitioner and intervenors Graft and Corrupt Practices Act and/or unexplained wealth question the authority of the PCGG to conduct a preliminary cases was vested on the aforestated officers. investigation of the criminal complaints filed against them However, on July 17, 1979, Presidential Decree No. 1630 by the Solicitor General, the Court finds and so holds the was promulgated whereby the Tanodbayan was vested with same to be devoid of merit. the "exclusive authority to conduct preliminary Under Section 2, Rule 112 of the 1985 Rules of Criminal investigation of all cases cognizable by the Sandiganbayan." 6 Procedure the officers authorized to conduct a preliminary Under Presidential Decree No. 1486 which was approved investigation are the following: on June 11, 1978, the Sandiganbayan was created and vested with exclusive jurisdiction over all offenses Sec. 2. Officers authorized to conduct preliminary committed by public officers enumerated therein. This was investigation.— amended by Presidential Decree No. 1606 dated December The following may conduct a preliminary investigation: 10, 1978 and further amended by Presidential Decree No. (a) Provincial or city fiscals and their assistants; 1861 issued on March 23, 1983 wherein the jurisdiction of the Sandiganbayan was defined as follows: (b) Judges of the Municipal Trial Courts and Municipal Circuit Trial Court; Sec. 1. Section 4 of Presidential Decree No. 1606 is hereby amended to read as follows: (c) National and Regional state prosecutors; and Sec. 4. Jurisdiction — The Sandiganbayan shall exercise: (d) Such other officers as may be authorized by law. (a) Exclusive original jurisdiction in all cases involving: Their authority to conduct preliminary investigation shall include all crimes cognizable by the proper court in their (1) Violations of Republic Act No. 3019, as amended, respective territorial jurisdictions. otherwise known as the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title Under Section 2 likewise of Rule 112 of the Rules of Court VII of the Revised Penal Code; before its present amendment, the officers authorized to conduct preliminary investigation are as follows: (2) Other offenses or felonies committed by public officers and employees in relation to their office, including those Sec. 2. Officers authorized to conduct preliminary employed in government-owned or controlled corporations, examination: — Every justice of the peace, municipal judge, whether simple or complexed with other crimes, where the city or provincial fiscal, shall have authority to conduct penalty prescribed by law is higher than prision correccional preliminary examination or investigation in accordance or imprisonment for six (6) years, or a fine of P6,000.00: with these rules of all offenses alleged to have been PROVIDED, HOWEVER, that offenses or felonies mentioned committed within his municipality, city or province, in this paragraph where the penalty prescribed by law does cognizable by the Court of First Instance. not exceed prision correccional or imprisonment for six (6) The justice of the peace of the provincial capital or of the years or a fine of P6,000.00 shall be tried by the proper municipality in which the provincial jail is located when Regional Trial Court, Metropolitan Trial Court, Municipal directed by an order of the Court of First Instance, shall Trial Court and Municipal Circuit Trial Court. have authority to conduct such preliminary examination or (b) Exclusive appellate jurisdiction: investigation of any offense committed anywhere within his province at the expense of the municipality wherein the (1) On appeal, from the final judgments, resolutions or same was committed. orders of the Regional Trial Courts in cases originally decided by them in their respective territorial jurisdiction. Under Section 3 thereof in case of temporary absence of the justice of the peace or his auxiliary, the municipal mayor (2) By petition for review, from the final judgments, may conduct the preliminary investigation. For complaints resolutions or orders of the Regional Trial Courts in the filed directly with the Court of First Instance, the judge of exercise of their appellate jurisdiction over cases originally the said court may refer the case to the justice of the peace decided by the Metropolitan Trial Courts, Municipal Trial or he may himself conduct both the preliminary Courts and Municipal Circuit Trial Courts, in their respective jurisdiction. 7

The procedure prescribed in Batas Pambansa Blg. 129, as President, his relatives and cronies. Therein it is provided, well as the implementing rules the Supreme Court has among others: promulgated and may hereinafter promulgate, relative to Sec. 2. — The Commission shall be charged with the task of appeals/petitions for review to the Intermediate Appellate assisting the President in regard to the following matters: Court shall apply to appeals and petition for review filed (a) The recovery of all ill-gotten wealth accumulated by with the Sandiganbayan. In all cases elevated to the former President Ferdinand E. Marcos, his immediate Sandiganbayan, the Office of the Tanodbayan shall family, relatives, subordinates and close associates, whether represent the People of the Philippines. located in the Philippines or abroad, including the takeover In case private individuals are charged as co-principals, or sequestration of all business enterprises and entities accomplices or accessories with the public officers or owned or controlled by them, during his administration, employees, including those employed in government- directly or through nominees, by taking undue advantage of owned or controlled corporations, they shall be tried jointly their public office and/or using their powers, authority, with said public officers and employees. influence, connections or relationship. Any provision of law or the Rules of Court to the contrary (b) The investigation of such cases of graft and corruption as notwithstanding, the criminal action and the corresponding the President may assign to the Commission from time to civil action for the recovery of civil liability arising from the time. offense charged shall at all times be simultaneously (c) The adoption of safeguards to ensure that the above instituted with and jointly determined in the same practices shall not be repeated in any manner under the proceeding by the Sandiganbayan or the appropriate courts, new government, and the institution of adequate measures the filing of the criminal action being deemed to necessarily to prevent the occurrence of corruption. carry with it the filing of the civil action, and no right to reserve the filing of such civil action separately from the Sec. 3. The Commission shall have the power and authority: criminal action shall be recognized: PROVIDED, HOWEVER, (a) To conduct investigations as may be necessary in order to that where the civil action had heretofore been filed accomplish and carry out the purposes of this order. separately but judgment therein has not yet been rendered, (Emphasis supplied.) and the criminal case is hereafter filed with the Under Executive Order No. 14 signed by President Aquino Sandiganbayan or the appropriate court, said civil action on May 7, 1986, it is also provided: shall be transferred to the Sandiganbayan or the appropriate court, as the case maybe, for consolidation and Sec. 1. Any provision of the law to the contrary joint determination with the criminal action, otherwise the notwithstanding, the Presidential Commission on Good separate civil action shall be considered abandoned. Government with the assistance of the Office of the Solicitor General and other government agencies, is hereby Sec. 2. All cases pending in the Sandiganbayan or in the empowered to file and prosecute all cases investigated by it appropriate courts as of the date of the effectivity of this under Executive Order No. 1, dated February 28, 1986 and Decree shall remain with and be disposed of by the courts Executive Order No. 2, dated March 12, 1986, as may be where they are pending. warranted by its findings. Sec. 3. The provisions of this Decree notwithstanding, the Sec. 2. The Presidential Commission on Good Government office of the Tanodbayan shall continue to have the exclusive shall file all such cases, whether civil or criminal, with the authority to conduct preliminary investigation, file the Sandiganbayan, which shall have exclusive and original necessary information, and direct and control the prosecution jurisdiction thereof . of all cases enumerated in Section 4 of Presidential Decree No. 1606, whether such cases be within the exclusive Sec. 3. Civil suits for restitution, reparation of damages, or original/appellate jurisdiction of the Sandiganbayan or the indemnification for consequential damages, forfeiture appropriate courts in accordance with the provisions of proceedings provided for under Republic Act No. 1379, or Presidential Decree No. 1630. (Emphasis supplied.) any other civil actions under the Civil Code or other existing laws, in connection with Executive Order No.1 dated However, this exclusive jurisdiction of the Tanodbayan to February 28, 1986 and Executive Order No. 2 dated March conduct preliminary investigation of said cases was 12, 1986, may be filed separately from and proceed modified by Executive Order No. 1 signed by President independently of any criminal proceedings and may be Corazon C. Aquino on February 28, 1986 creating the PCGG proved by preponderance of evidence. (Emphasis supplied.) and constituting its membership to assist the President in the recovery of ill gotten wealth accumulated by the former From the foregoing provisions of law, particularly Sections 2(b) and 3(a) of Executive Order No. 1 and Sections 1 and 2

8 of Executive Order No. 14, it is clear that the PCGG has the (7) Determine the causes of inefficiency, red tape, power to investigate and prosecute such ill-gotten wealth mismanagement, fraud, and corruption in the Government cases of the former President, his relatives and associates, and make recommendations for their elimination and the and graft and corrupt practices cases that may be assigned observance of high standards of ethics and efficiency. by the President to the PCGG to be filed with the (8) Promulgate its rules of procedure and exercise such Sandiganbayan. No doubt, the authority to investigate other powers or perform such functions or duties as may be extended to the PCGG includes the authority to conduct a provided by law. (Emphasis supplied) preliminary investigation. 7 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 8 the Sandiganbayan. 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 9 and Engineering Co. Inc. (BASECO) vs. PCGG. 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 Ombudsman was created under Article XI, as follows: such a preliminary investigation unless duly authorized by 11 Sec. 13. The Office of the Ombudsman shall have the the Ombudsman. following powers, functions, and duties: A reading of the foregoing provision of the Constitution (1) Investigate on its own, or on complaint by any person, any does not show that the power of investigation including act or omission of any public official, employee, office or preliminary investigation vested on the Ombudsman is agency, when such act or omission appears to be illegal, exclusive. Hence, the said provision of the Constitution did unjust, improper, or inefficient. not repeal or remove the power to conduct an investigation, 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 charter, to perform and expedite any act or duty required Constitution the authority of the PCGG to issue by law, or to stop, prevent, and correct any abuse or sequestration or freeze orders was maintained for not more impropriety in the performance of duties. than eighteen months after the ratification of the 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, censure, or prosecution, and ensure compliance therewith. Indeed, upon the passage of Republic Act No. 6770, 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 furnish it with copies of documents relating to contracts or Sec. 15. Powers, Functions and Duties. — The Office of the transactions entered into by his office involving the Ombudsman shall have the following powers, functions and disbursement or use of public funds or properties, and duties: report any irregularity to the Commission on Audit for (1) Investigate and prosecute on its own or on complaint by appropriate action. any person, any act or omission of any public officer or (5) Request any government agency for assistance and employee, office or agency, when such act or omission information necessary in the discharge of its appears to be illegal, unjust, improper or inefficient. It has responsibilities, and to examine, if necessary, pertinent primary jurisdiction over cases cognizable by the records and documents. Sandiganbayan and, in the exercise of this primary 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.

9 investigatory agency of Government, the investigation of 15(11) of Republic Act No. 6770, the primary jurisdiction of such cases; the Ombudsman to investigate covers ill-gotten wealth xxx xxx xxx and/or unexplained wealth cases that occurred even before February 25, 1986. (11) Investigate and initiate the proper action for the recovery of ill-gotten and/or unexplained wealth amassed The second issue raised that the preliminary investigation after February 25, 1986 and the prosecution of the parties by the PCGG of the aforestated complaints violates the right involved therein. of petitioner to due process and to equal protection of law is impressed with merit. The Ombudsman shall give priority to complaints filed against high ranking government officials and/or those Under Section 1, Rule 112 of the 1985 Rules on Criminal occupying supervisory positions, complaints involving Procedure, preliminary investigation is defined as "an grave offenses as well as complaints involving large sums of inquiry or proceeding for the purpose of determining money and/or properties. whether there is sufficient ground to engender a well- founded belief that a crime cognizable by the Regional Trial Under Section 15(l) of Republic Act No. 6770 aforecited, the Court has been committed and that the respondent is Ombudsman has primary jurisdiction over cases cognizable probably guilty thereof, and should be held for trial." by the Sandiganbayan so that it may take over at any stage from any investigatory agency of the government, the The purpose of a preliminary investigation is to secure the investigation of such cases. The authority of the innocent against hasty, malicious and oppressive Ombudsman to investigate offenses involving public officers prosecution, and to protect him from an open and public or employees is not exclusive but is concurrent with other accusation of a crime, from the trouble, expense, anxiety of a similarly authorized agencies of the government. Such public trial, and also to protect the state from useless and 13 investigatory agencies referred to include the PCGG and the expensive trials. provincial and city prosecutors and their assistants, the The conduct of a preliminary investigation is the initial step state prosecutors and the judges of the municipal trial towards the criminal prosecution of a person. After such courts and municipal circuit trial courts. 12 preliminary investigation, if the investigating officer finds In other words, the aforestated provision of the law has that there is sufficient ground to engender a well-founded opened up the authority to conduct preliminary belief that a crime has been committed and that the investigation of offenses cognizable by the Sandiganbayan respondent is probably guilty thereof and should be held for to all investigatory agencies of the government duly trial, then the corresponding complaint or information shall authorized to conduct a preliminary investigation under be filed in the competent court. It is the filing of said Section 2, Rule 112 of the 1985 Rules of Criminal Procedure complaint or information that initiates the criminal with the only qualification that the Ombudsman may take prosecution of the accused when he is brought to court for over at any stage of such investigation in the exercise of his trial. primary jurisdiction. Such a preliminary investigation is required for offenses It is also noted that under Section 15(11) of the aforestated cognizable by the Regional Trial Court and the 14 Republic Act No. 6770, among the powers vested on the Sandiganbayan. It must be undertaken in accordance with Ombudsman is to investigate and to initiate the proper the procedure provided in Section 3, Rule 112 of the 1985 action for recovery of ill-gotten wealth and/or unexplained Rules of Criminal Procedure. This procedure is to be wealth amassed after February 25, 1986 and the observed in order to assure that a person undergoing such prosecution of the parties involved therein. The Court preliminary investigation will be afforded due process. agrees with the contention of the public respondent PCGG As correctly pointed out by petitioner, an indispensable that this provision is a tacit recognition that the authority of requisite of due process is that the person who presides and the PCGG to conduct preliminary investigation of ill-gotten decides over a proceeding, including a preliminary wealth and/or unexplained wealth amassed before investigation, must possess the cold neutrality of an February 25, 1986 is maintained. impartial judge. 15 However, the Court finds and so holds that the aforesaid Although such a preliminary investigation is not a trial and provision of the law cannot in any manner dilute or is not intended to usurp the function of the trial court, it is diminish the primary jurisdiction of the Ombudsman over not a casual affair. The officer conducting the same all such types of cases committed by public officers or investigates or inquires into the facts concerning the employees as provided in Section 13, Article XI of the commission of the crime with the end in view of Constitution. Thus, notwithstanding the provision of Section determining whether or not an information may be

10 prepared against the accused. Indeed, a preliminary The complaint was filed by the PCGG through its Chairman, investigation is in effect a realistic judicial appraisal of the Ramon A. Diaz, who verified the complaint, and Solicitor merits of the case. Sufficient proof of the guilt of the accused General Francisco I. Chavez and Assistant Solicitor General must be adduced so that when the case is tried, the trial Ramon S. Desuasido. court may not be bound as a matter of law to order an Petitioner in turn filed a counterclaim against the PCGG for acquittal. A preliminary investigation has then been called a the sequestration of his properties and the institution of the judicial inquiry. It is a judicial proceeding. An act becomes suit. He also questioned the acts of the PCGG in several judicial when there is opportunity to be heard and for, the special civil actions before the court. 18 production and weighing of evidence, and a decision is On November 27, 1989, the first working day after rendered thereon. petitioner Cojuangco returned to the Philippines, the PCGG The authority of a prosecutor or investigating officer duly filed with the Sandiganbayan an information against said empowered to preside or to conduct a preliminary petitioner for violation of Republic Act No. 3019 entitled investigation is no less than that of a municipal judge or "People of the Philippines vs. Eduardo M. Cojuangco, Jr." 16 even a regional trial court judge. While the investigating docketed as Criminal Case No. 14161. However, the officer, strictly speaking is not a "judge," by the nature of his Sandiganbayan found no probable cause for the issuance of functions he is and must be considered to be a quasi judicial a warrant of arrest so a petition for certiorari was filed by officer. the Solicitor General in this Court docketed as G.R. No. Soon after the creation of the PCGG under Executive Order 91741. On March 29, 1990 this Court denied the petition. No. 1, the PCGG sequestered and froze all the properties of On November 28, 1989, President Aquino directed the petitioner Cojuangco in accordance with the powers vested Solicitor General to prosecute all persons involved in the in it by law. misuse of the coconut levy funds. The Solicitor General On July 31, 1987, said petitioner was sued by the PCGG created a task force for the purpose. before the Sandiganbayan by way of a complaint entitled On January 12, 1990, the Solicitor General filed with the "Republic of the Philippines vs. Eduardo M. Cojuangco, Jr.," et PCGG the first two criminal complaints for violation of the al. docketed as Civil Case No. 0033. Among the allegations of Anti-Graft and Corrupt Practices Act, bearing on the the complaint are as follows: anomalous use and/or misuse of the coconut levy funds This is a civil action against Defendants Eduardo Cojuangco, docketed as I.S. Nos. 74 and 75. Among the respondents Jr., Ferdinand E. Marcos, Imelda R. Marcos and the rest of were the petitioner and intervenors Lobregat and Eleazar. the Defendants in the above-entitled case to recover from The PCGG assigned assistant prosecutor Cesario del Rosario them ill-gotten wealth consisting of funds and other to conduct the preliminary investigation. property which they, in unlawful concert with one another, As hereinabove related, a subpoena was issued by the said had acquired and accumulated in flagrant breach of trust prosecutor for the preliminary investigation on January 29, and of their fiduciary obligations as public officers with, 1989 insofar as intervenors are concerned while that of grave abuse of right and power and in brazen violation of petitioner, de la Cuesta and Herminigildo Zayco was the Constitution and laws of the Republic of the Philippines, scheduled on January 31, 1990. In the same subpoena, thus resulting in their unjust enrichment during Defendant respondents were required to submit their counter- Ferdinand E. Marcos' 20 years of rule from December 30, affidavits and other supporting documents to controvert the 1965 to February 25, 1986, first as President of the complaint within ten (10) days from notice. Philippines under the 1935 Constitution and, thereafter, as On the scheduled investigation dated January 29, 1990, one man ruler under martial law and Dictator under the intervenors appeared through counsel and moved to 1973 Marcos-promulgated Constitution. 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 Agricultural Investors Inc., and I.S. No. 82 which concerns wherein it declared the preliminary investigation conducted the acquisition of coconut oil mills. by del Rosario null and void, enjoined the PCGG from filing Several other complaints were filed by the Solicitor General an information on the basis thereof and directed the PCGG with the PCGG against petitioner for preliminary to conduct another preliminary investigation of I.S. Nos. 74 investigation petition, to wit: and 75 as to the intervenors and to assign another (a) I.S. No. 80 which concerns the acquisition of the First investigating prosecutor. United Bank, now United Coconut Planters' Bank; (b) I.S. No. Earlier however, that is, on February 27, 1990, the PCGG, 81 concerning shares of the United Coconut Oil Mills Inc.; overruling prosecutor del Rosario's order, gave the (c) I.S. No. 83 regarding the acquisition of coconut oil mills intervenors in I.S. Nos. 74 and 75 another period of five (5) and certain indebtedness thereof; and (d) I.S. No. 84 days from notice within which to submit their counter- regarding settlement of an Anti-Graft suit in the United affidavits and supporting evidence. Based on this action the States. All of these complaints were for alleged violation of PCGG filed a motion for reconsideration of the aforesaid Republic Act No. 3019. decision of the Sandiganbayan which had not been resolved. The question that arises, therefore, is whether under the As to petitioner, on the day of the preliminary investigation circumstances of this case, it would be fair and just for the dated January 31, 1990, his counsel filed a motion to PCGG to conduct the preliminary investigation of the said disqualify or inhibit the PCGG, an alternative motion to complaint instead of the Ombudsman or any other duly dismiss, and a motion to have the PCGG itself hear and/or authorized investigating agency. resolve the motion to disqualify or inhibit itself Upon the creation of the PCGG under Executive Order No. 1 alternatively a motion to dismiss. The preliminary issued by President Aquino, the PCGG was charged with the investigation presided by prosecutor del Rosario started at task of assisting the President not only in the recovery of ill- 2:00 o'clock P.M. with eight other respondents duly gotten wealth or unexplained wealth accumulated by the represented by their counsel. The said motion was denied former President, his immediate family, relatives, and the preliminary investigation was adjourned. subordinates and close associates but also in the Immediately thereafter petitioner brought the matter to investigation of such cases of graft and corruption as the Chairman Mateo A.T. Caparas of the PCGG and in several President may assign to the Commission from time and to communications sought resolution of the motion by the prevent a repetition of the same in the future. PCGG. On February 27, 1990, the PCGG issued an order Section 3 of Executive Order No. 1 provides as follows: denying petitioner's motion to dismiss for lack of jurisdiction but did not resolve the motion to disqualify. Sec. 3. — The Commission shall have the power and Therein, the PCGG directed petitioner to submit his counter- authority: affidavits within five (5) days from receipt of notice. (a) To conduct investigation as may be necesssary in order On March 12, 1990, the same day this petition was filed in to accomplish and carry out the purposes of this order. this Court, the petitioner, instead of filing the counter- (b) To sequester or place or cause to be placed under its affidavit, filed with the PCGG an urgent motion to defer control or possession any building or office wherein any ill- proceedings in I.S. Nos. 74 and 75 for at least until March 22, gotten wealth or properties may be found, and any records 1990 within which to seek judicial relief from the order of pertaining thereto, in order to prevent their destruction, February 27, 1990. Upon the filing of this petition, concealment or disappearance which would frustrate or petitioner filed a supplemental urgent motion to defer hamper the investigation or otherwise prevent the proceedings with the PCGG informing it of the filing of this Commission from accomplishing its task. petition. (c) To provisionally take over in the public interest or to Nevertheless, on March 14, 1990, the PCGG filed two prevent its disposal or dissipation, business enterprises and informations corresponding to the complaints in I.S. Nos. 74 properties taken over by the government of the Marcos and 75 which are docketed as Criminal Cases Nos. 14398 administration or by entities or persons close to former and 14399, respectively, at the Sandiganbayan. The PCGG President Marcos, until the transactions leading to such recommended bail as P100,000.00 for each case. acquisition by the latter can be disposed of by the Meanwhile, the Solicitor General filed two other complaints appropriate authorities. against the petitioner with the PCGG accusing the petitioner (d) To enjoin or restrain any actual or threatened of violation of Republic Act No. 3019 and other penal laws commission of acts by any person or entity that may render in connection with the coconut levy funds, namely, I.S. No. moot and academic, or frustrate, or otherwise make 79 which concerns an alleged arbitration award in favor of 12 ineffectual the efforts of the Commission to carry out its contest these claims before appropriate Philippine tasks under this order. authorities." Section 7 of the Commission's Rules and (e) To administer oaths, and issue subpoenas requiring the Regulations provides that sequestration or freeze (and attendance and testimony of witnesses and/or the takeover) orders issue upon the authority of at least two production of such books, papers, contracts, records, commissioners, based on the affirmation or complaint of an statement of accounts and other documents as may be interested party, or motu propio when the Commission has material to the investigation conducted by the Commission. reasonable grounds to believe that the issuance thereof is warranted. A similar requirement is now found in Section (f) To hold any person in direct or indirect contempt and 26, Art. XVIII of the 1987 Constitution, which requires that impose the appropriate penalties, following the same "sequestration or freeze order shall be issued only upon procedures and penalties provided in the Rules of Court. showing of a prima facie case." 20 (g) To seek and secure the assistance of any office, agency Insofar as the general power of investigation vested in the or instrumentality of the government. 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 From the foregoing provisions of law, it is clear that the usually conducted by the law enforcement agents whereby PCGG has the following powers and authority: they gather evidence and interview witnesses after which 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 5. Administer oaths and issue subpoenas in the conduct of wealth and/or were acquired in relation to allegedly its investigation; anomalous disposition or misuse of the coconut levy funds. 6. Hold any person in direct or indirect contempt and The PCGG then filed on July 31, 1987 a complaint docketed impose the appropriate penalties as provided by the rules. 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 by the PCGG. 19 transactions now subject of the criminal complaints filed by 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 —

13

13(a) manipulated, beginning the year 1975, with the active amount of P184,935 million, then mothballed them in order collaboration of Defendants Juan Ponce Enrile, Maria Clara to control the prices of copra and other coconut products, Lobregat Danilo Ursua, Jose R. Eleazar, Jr. and Herminigildo and assumed and paid the outstanding loan obligations of C. Zayco, the purchase by Philippine Coconut Authority seven (7) of those purchased oil mills in the total amount of (PCA) of 72.2% of the outstanding capital stock of the First P805,984 million with the express consent and approval of (sic) (FUB)which was subsequently converted into a Defendant Ferdinand E. Marcos, thereby establishing a universal bank named United Coconut Planters Bank coconut monopoly for their own benefit and unjust (UCPB) through the use of the Coconut Consumers enrichment and to the grave damage of Plaintiff and the Stabilization-Fund (CCSF) levy initially in the amount of Filipino people; P85,773,100.00 in a manner contrary to law and to the (e) manipulated with the active collaboration of Defendants specific purposes for which said coconut levy funds were Mohammad Ali Dimaporo and Teodoro D. Regala, the sale of imposed and collected under P.D. 276, and under anomalous the Mindanao Coconut Oil Mills (MINCOCO) to UNICOM and sinister designs and circumstances, to wit: through the issuance of LOI 926 by Defendant Ferdinand E. xxx xxx xxx Marcos, in violation of the Guaranty Agreement dated July At pp. 22 to 22-A, Expanded Complaint, Civil Case No.0033) 23, 1976, which prohibited the sale, among others, of the MINCOCO assets/properties without the prior written [I.S. No. 080] consent of NIDC, under terms and conditions grossly (c) misappropriated, misused and dissipated P840 million disadvantageous to Plaintiff and the Filipino people; of the Coconut Industry Development Fund (CIDF) levy (f) drew up a scheme of payment to settle the accounts of funds deposited with the National Investment Development MINCOCO and other UNICOM-acquired mills with their Corporation (NIDC) as administrator-trustee of said funds respective creditors: namely the National Investment and later with UCPB, of which Defendant Eduardo Development Corporation (NIDC), Deveploment Bank of the Cojuangco, Jr. was the Chief Executive Officer in connection Philippines (DBP), Philippine Veterans Bank (PVB), under with the (i) development, improvement, operation and terms grossly disadvantageous to Plaintiff; maintenance of the Bugsuk Island Seed Garden ("BUGSUK") by Agricultural Investors, Inc. ("AII") as developer (both xxx xxx xxx Bugsuk and AII are beneficially held and controlled by (At pp. 27-28) Defendant Eduardo Cojuangco, Jr.) pursuant to a highly [I.S. Nos. 81, 82 and 83] oppressive, anomalous and one-sided memorandum (g) misappropriated and dissipated the coconut levy funds agreement, dated November 20, 1974, (ii) sale by AII to PCA by withdrawing therefrom tens of millions of pesos in order of the seed nuts produced at Bugsuk Seed Garden at to pay damages adjudged against UNICOM, headed and exorbitant prices pursuant to a very onerous, oppressive controlled by Defendant Eduardo Cojuangco, Jr., in an anti- and disadvantageous agreement, dated August 2, 1985 and trust suit in California, U.S.A.; (iii) payment of liquidated damages in the amount of P640,856,879.67 and arbitration fee of P150,000.00 xxx xxx xxx pursuant to a decision rendered by a Board of Arbitrators (At p. 29) against UCPB for alleged breach of contract.; [I.S. No. 84] xxx xxx xxx (h) misused, dissipated and unlawfully disbursed coconut (At pp. 26-27) levy funds with the active collaboration and participation of [I.S. No. 079] defendants Maria Clara Lobregat, Juan Ponce Enrile, Jose Eleazar, Jr., Rolando de la Cuesta and Herminigildo Zayco as (d) established and caused to be funded with coconut levy members of the PCA governing board for projects and funds, with the active collaboration of Defendant Ferdinand purposes completely alien to those for which the fund was E. Marcos through the issuance of LOI 926, and of collected and donations made by PCA such as . . . P6 million defendants, Juan Ponce Enrile, Jose R. Eleazar, Jr., Maria to COCOFED; and other similar unlawful disbursements, Clara Lobregat, Jose C. Concepcion, Inaki Mendezona, which all remain unaccounted for to date; Douglas Lu Ym, Teodoro D. Regala, Emmanuel Almeda, Eduardo Escueta, Leo Palma, and Rolando de la Cuesta, the xxx xxx xxx United Coconut Oil Mills, Inc. (UNICOM) a corporation (At pp 28 to 28-A Emphasis supplied) beneficially held and controlled by Defendant Eduardo [I.S. No. 74 and 75] Cojuangco, Jr. and bought sixteen (16) competing and/or non-operating oil mills at exorbitant prices in the total

14

Thereafter, as aforestated, the Solicitor General filed the In our criminal justice system, the law enforcer who first two complaints against petitioner and intervenors conducted the criminal investigation, gathered the evidence among others, under I.S. Nos. 74 and 75 for alleged violation and thereafter filed the complaint for the purpose of of the Anti Graft and Corrupt Practices Act for donations preliminary investigation cannot be allowed to conduct the allegedly made out of coconut levy funds to the Philippine preliminary investigation of his own complaint. It is to say Coconut Producers Federation (COCOFED). the least arbitrary and unjust. Petitioner and intervenors questioned not only the It is in such instances that We say one cannot be "a authority of the PCGG to conduct the preliminary prosecutor and judge at the same time." Having gathered investigation but asserted a denial of due process and equal the evidence and filed the complaint as a law enforcer, he protection of the law. There is cogent basis for their plea. cannot be expected to handle with impartiality the The PCGG, as a law enforcer, gathered evidence as to the preliminary investigation of his own complaint, this time as alleged ill-gotten wealth of petitioner and intervenors and, a public prosecutor. after satisfying itself that there is a prima facie case, The circumstances of the instant petition are even worse. To sequestered and issued a freeze order for all the properties repeat, the PCGG and the Solicitor General finding a prima of petitioner. Based also on the said finding of a prima facie facie basis filed a civil complaint against petitioner and case, the PCGG filed a civil complaint docketed as Civil Case intervenors alleging substantially the same illegal or No. 0033 against petitioner and intervenors for alleged ill- criminal acts subject of the subsequent criminal complaints gotten wealth including the alleged misuse, the Solicitor General filed with the PCGG for preliminary misappropriation, and diversion of coconut levy funds. investigation. While ostensibly, it is only the Solicitor As hereinabove discussed the criminal complaints under I.S. General who is the complainant in the criminal cases filed Nos. 74, 79, 80, 81, 82, 83 and 84 filed by the Solicitor with the PCGG, in reality the PCGG is an unidentified co- General all for alleged violation of Republic Act No. 3019, complainant. are covered and alleged in the aforesaid civil complaint Moreover, when the PCGG issued the sequestration and docketed as Civil Case No. 0033. freeze orders against petitioner's properties, it was on the The PCGG conducted the preliminary investigation of I.S. basis of a prima facie finding that the same were ill-gotten Nos. 74 and 75 and is poised to conduct the preliminary and/or were acquired in relation to the illegal disposition of investigation of the other aforementioned complaints for coconut levy funds. Thus, the Court finds that the PCGG the same alleged violations of law subject of the civil cannot possibly conduct the preliminary investigation of complaint. said criminal complaints with the "cold neutrality of an impartial judge," as it has prejudged the matter. Add to this The Court cannot close its eyes to the glaring fact that in the fact that there are many suits filed by petitioner and the earlier instances, the PCGG had already found a prima facie intervenors against the PCGG and vice versa. case against the petitioner and intervenors when, acting like a judge, it caused the sequestration of the properties and For lesser grounds this Court had disqualified a fiscal or a the issuance of the freeze order of the properties of judge from handling a case. petitioner. Thereafter, acting as a law enforcer, in A fiscal was disqualified from conducting a preliminary collaboration with the Solicitor General, the PCGG gathered investigation because he had appeared for the prosecution the evidence and upon finding cogent basis therefor filed when said case was pending in the municipal court. 21 In a the aforestated civil complaint. Consequently the Solicitor case filed before the Commission on Elections this Court General filed a series of criminal complaints. held Commissioner Opinion should not have participated in It is difficult to imagine how in the conduct of such the case since he was the former lawyer of Arturo 22 preliminary investigation the PCGG could even make a turn Pacificador. A judge was required to inhibit himself in a 23 about and take a position contradictory to its earlier case where he was a witness for the complainant. A judge findings of a prima facie case against petitioner and before whom the extrajudicial statement of one of the intervenors. This was demonstrated in the undue haste with accused was subscribed was disqualified from hearing the 24 which I.S. Nos. 74 and 75 was investigated and the case. A judge who told the complainant is case was weak informations were filed in court even as the petitioner and and it would be to his advantage to settle the case was 25 intervenors questioned its authority, invoked the denial of disqualified. A judge against whom an administrative due process and promptly informed the PCGG of the filing of complaint was filed by one of the parties was also 26 this petition. disqualified. In a case where the motion for inhibition 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 declared null and void including the informations which it a malversation case against the accused since he previously filed in the Sandiganbayan against petitioner and convicted the latter of arson. 28 In another case, the judge intervenors docketed as Criminal Cases Nos. 14398 and was ordered to inhibit himself because of strained 14399. The status quo order which this Court issued on relationship with the defendant. 29 March 12, 1990 is hereby made permanent and the PCGG is There are numerous other cases wherein the judges and permanently prohibited from further conducting the fiscals were disqualified on similar grounds as those preliminary investigation of the aforestated complaints. The aforementioned. 30 Court makes no pronouncement as to costs. Where the circumstances do not inspire confidence in the SO ORDERED. objectivity and impartiality of the judge, such judge should Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Feliciano, inhibit voluntarily or if he refuses, he should be prohibited Padilla, Bidin, Sarmiento, Cortes, Griño-Aquino, Medialdea from handling the case. Judge must not only be impartial and Regalado, JJ., concur. but must also appear impartial as an assurance to the Paras, J., took no part. 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 Separate Opinions 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 GUTIERREZ, JR., J.: concurring: given ample power to designate another prosecutor to I concur in the Court's decision penned by my distinguished handle the investigation and prosecution of a case when the colleague, Mr. Justice Emilio A. Gancayco. The PCGG cannot prosecutor handling the same is otherwise disqualified by preside over these cases with an even hand, much less personal interest, or is unable or fails to perform his duty. inspire the slightest belief in its impartiality and fairness. The Court finds that under the circumstances of the case, Where the PCGG has sequestered properties, arrived at the PCGG cannot inspire belief that it could be impartial in precise conclusions, and filed a CIVIL case for the recovery the conduct of the preliminary investigation of the aforesaid or forfeiture of those properties, it is disqualified from complaints against petitioner and intervenors. It cannot conducting any preliminary investigation of CRIMINAL possibly preside in the said preliminary investigation with charges pertaining to the same alleged ill gotten wealth. As an even hand. an interested party in the CIVIL case, it is incapable of acting The Court holds that a just and fair administration of justice fairly in the CRIMINAL case. This is the Court's ruling. can be promoted if the PCGG would be prohibited from I feel, however, that the Court should have gone further. conducting the preliminary investigation of the complaints In the light of the unquestioned jurisdiction given to the subject of this petition and the petition for intervention and Ombudsman by the Constitution and statute, the PCGG that the records of the same should be forwarded to the should no longer continue conducting preliminary Ombudsman, who as an independent constitutional officer investigations. It should limit itself to the preparation and has primary jurisdiction over cases of this nature, to filing of civil cases. Its conduct of preliminary investigations conduct such preliminary investigation and take is so colored by the basic reason for its creation, its appropriate action. institutional structure, and its obsession to recover All violators of the law must be brought before the bar of everything that it perceives and suspects to be ill gotten justice. However, they must be afforded due process and wealth that it cannot help but run roughshod over equal protection of the law, whoever they may be. fundamental requirements of fair play in criminal cases. WHEREFORE, the petitions of Eduardo M. Cojuangco, Jr. and Nowhere is pre-judgment so evident as in this case. intervenors Maria Clara Lobregat, and Jose Eleazar, Jr. are In filing the civil case against Mr. Cojuangco, the PCGG has hereby GRANTED. The PCGG is directed to transmit the concluded with certainty that he is guilty of complaints and records thereof under I.S. Nos. 74, 75, 79, "misappropriation and theft of public funds, plunder of the 80, 81, 82, 83 and 84 to the Ombudsman for appropriate nation's wealth, extortion, blackmail, bribery, action. All proceedings of the preliminary investigation embezzlement, and other acts of corruption, betrayal of conducted by the PCGG of said complaints are hereby public trust and brazen abuse of power, as more fully

16 described below, all at the expense and to the grave distinguished Professor of Law for decades. He was irreparable damage of Plaintiff and the Filipino people." (See nominated and appointed Ombudsman on the record of his complaint in CC 0033, Sandiganbayan, pp. 2 and 3) Mr. unquestioned competence, intellectual skills, integrity, and Cojuangco has been asked to pay more than P100 Billion in independence. damages. He was placed on the "hold order" lists of PCGG In the light of the above considerations, persons who and prohibited from coming home to defend himself His appear before the PCGG and not the Ombudsman are clearly wife, children, and grandchildren hold cancelled passports denied the equal protection guaranteed by the Constitution. and are indefinitely exiled. 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 deliberate and resolve the same issues. classification. And as stressed by the petitioner, is there a Apart from its having been created for the sole purpose of substantial distinction between those who committed graft recovering the ill gotten wealth of ex-President Marcos, his and corruption under former President Marcos and those relatives and cronies, the make-up of the PCGG prevents it who are now committing (according to media and the 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 mention future appointments. now four years after EDSA. Three years after the ratification The record is replete with incidents of non-objectivity. The of the new Constitution. Must there be one kind of justice petitioner has repeatedly filed motions to inspect the for the "victors", another for the "vanquished"? Is there not records of his former companies to enable him to defend but one Filipino under the Constitution? There is no cogent himself. Motions which an ordinary Fiscal, Prosecutor, or reason why the liberty of those who were associated with Judge would routinely grant are denied. The Supreme Court former President Marcos should lie in the hands of PCGG itself in, G.R. No. 91741 has ruled that the petitioner had and not in the Ombudsman who is independent of the 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 for the arrest of Mr. Cojuangco. We sustained the and corruption cases. Sandiganbayan. It is thus a denial of equal protection of the law that the The other issue which the Court should have explored petitioner has been subjected to preliminary investigation further is the constitutional right of all accused persons to for violation of R.A. No. 3019 by PCGG rather than by the equal protection of the law. Ombudsman. (Petitioner's Memorandum, p. 41) As earlier stated, the appointment, tenure, functions, and Impartiality and fundamental fairness are inherent rights of objectives of the PCGG prevent it from being fair and all persons brought before our criminal justice system. The objective. Its actions in this case show that indeed it cannot social justice provisions of the Constitution mandate that be fair and objective. It is a temporary office given a fixed the State must take special measures to protect these rights mission. It has to accomplish that mission. when the accused are the outcasts and the poor or belong to a group which is ignored, disliked, or hated by those On the other hand, the Ombudsman is created by the currently in power. Constitution. It is vested with "independent" powers. It enjoys fiscal autonomy. It is insulated from interference by During the Marcos administration, a top leader of the then the political departments. The qualifications for opposition was ordered prosecuted in what were clearly Ombudsman are found in the Constitution. They include railroaded proceedings. The Court struck down the charade "recognized probity and independence." He must have been of a preliminary investigation and among, other things, a practising lawyer or Judge for at least ten (10) years. The stated: incumbent Ombudsman has served in the Supreme Court, The purpose of preliminary investigation is to secure the Court of Appeals, Court of First Instance, Department of innocent against hasty, malicious and oppressive Justice and high level fact finding committees. He was at the prosecution, and to protect him from an open and public top of his class at the U.P. College of Law and has been a accusation of crime, from the trouble, expense and anxiety 17 of a public trial, and also to protect the state from useless charges pertaining to the same alleged ill gotten wealth. As and expensive trials. (Trocio v. Manta, 118 SCRA 241; citing an interested party in the CIVIL case, it is incapable of acting Hashim v. Boncan, 71 Phil. 216). The right to a preliminary fairly in the CRIMINAL case. This is the Court's ruling. investigation is a statutory grant, and to withhold it would I feel, however, that the Court should have gone further. be to transgress constitutional due process. (See People v. In the light of the unquestioned jurisdiction given to the Oandasan 25 SCRA 277) However, in order to satisfy the Ombudsman by the Constitution and statute, the PCGG due process clause it is not enough that the preliminary should no longer continue conducting preliminary investigation is conducted in the sense of making sure that a investigations. It should limit itself to the preparation and transgressor shall not escape with impunity. A preliminary filing of civil cases. Its conduct of preliminary investigations investigation serves not only the purposes of the State. is so colored by the basic reason for its creation, its More important, it is a part of the guarantees of freedom institutional structure, and its obsession to recover and fair play which are birthrights of all who live in our everything that it perceives and suspects to be ill gotten country. It is, therefore, imperative upon the fiscal or the wealth that it cannot help but run roughshod over judge as the case may be, to relieve the accused from the fundamental requirements of fair play in criminal cases. pain of going through a trial once it is ascertained that the evidence is insufficient to sustain a prima facie case or that Nowhere is pre-judgment so evident as in this case. no probable cause exists to form a sufficient belief as to the In filing the civil case against Mr. Cojuangco, the PCGG has guilt of the accused. Although there is no general formula or concluded with certainty that he is guilty of fixed rule for the determination of probable cause since the "misappropriation and theft of public funds, plunder of the same must be decided in the light of the conditions nation's wealth, extortion, blackmail, bribery, obtaining in given situations and its existence depends to a embezzlement, and other acts of corruption, betrayal of large degree upon the finding or opinion of the judge public trust and brazen abuse of power, as more fully conducting the examination, such a finding should not described below, all at the expense and to the grave disregard the facts before the judge nor run counter to the irreparable damage of Plaintiff and the Filipino people." clear dictates of reason (See La Chemise Lacoste, S.A. v. (See complaint in CC 0033, Sandiganbayan, pp. 2 and 3) Mr. Fernandez, 129 SCRA 391). The judge or fiscal, therefore, Cojuangco has been asked to pay more than P100 Billion in should not go on with the prosecution in the hope that some damages. He was placed on the "hold order" lists of PCGG credible evidence might later turn up during trial for this and prohibited from coming home to defend himself His would be a flagrant violation of a basic right which the wife, children, and grandchildren hold cancelled passports courts are created to uphold. It bears repeating that the and are indefinitely exiled. judiciary lives up to its mission by vitalizing and not On January 31, 1990 when the preliminary investigation denigrating constitutional rights. So it has been before. It was to be conducted, a voluminous motion to inhibit the should continue to be so. (Salonga v. Cruz Panio, 134 SCRA PCGG was filed by the petitioner. It took the PCGG 438, 461-462) Prosecutor exactly ten (10) minutes to deny the motion and The Court today can do no less. It has to apply the same pass upon the complex constitutional and jurisdictional yardstick to the PCGG. The same guarantees of fairness and issues. The Supreme Court needed several months to justice in this decision of the Court rendered during the deliberate and resolve the same issues. time of Mr. Marcos belong in equal measure to petitioner Apart from its having been created for the sole purpose of Cojuangco and all who appear before the PCGG during the recovering the ill gotten wealth of ex-President Marcos, his term of President Aquino. relatives and cronies, the make-up of the PCGG prevents it from being independent. The Chairman and members serve Separate Opinions at the absolute pleasure of the President. The law prescribes no qualifications for their appointment. The law does not GUTIERREZ, JR., J.: concurring: mention future appointments. I concur in the Court's decision penned by my distinguished The record is replete with incidents of non-objectivity. The colleague, Mr. Justice Emilio A. Gancayco. The PCGG cannot petitioner has repeatedly filed motions to inspect the preside over these cases with an even hand, much less records of his former companies to enable him to defend inspire the slightest belief in its impartiality and fairness. himself. Motions which an ordinary Fiscal, Prosecutor, or Where the PCGG has sequestered properties, arrived at Judge would routinely grant are denied. The Supreme Court precise conclusions, and filed a CIVIL case for the recovery itself in, G.R. No. 91741 has ruled that the petitioner had or forfeiture of those properties, it is disqualified from been singled out by the PCGG and given biased treatment. In conducting any preliminary investigation of CRIMINAL 18 that same case, the Sandiganbayan found no probable cause precisely mandated by the Constitution to deal with graft for the arrest of Mr. Cojuangco. We sustained the and corruption cases. Sandiganbayan. It is thus a denial of equal protection of the law that the The other issue which the Court should have explored petitioner has been subjected to preliminary investigation further is the constitutional right of all accused persons to for violation of R.A. No. 3019 by PCGG rather than by the equal protection of the law. Ombudsman. (Petitioner's Memorandum, p. 41) As earlier stated, the appointment, tenure, functions, and Impartiality and fundamental fairness are inherent rights of objectives of the PCGG prevent it from being fair and all persons brought before our criminal justice system. The objective. Its actions in this case show that indeed it cannot social justice provisions of the Constitution mandate that be fair and objective. It is a temporary office given a fixed the State must take special measures to protect these rights mission. It has to accomplish that mission. when the accused are the outcasts and the poor or belong to On the other hand, the Ombudsman is created by the a group which is ignored, disliked, or hated by those Constitution. It is vested with "independent" powers. It currently in power. enjoys fiscal autonomy. It is insulated from interference by During the Marcos administration, a top leader of the then the political departments. The qualifications for opposition was ordered prosecuted in what were clearly Ombudsman are found in the Constitution. They include railroaded proceedings. The Court struck down the charade "recognized probity and independence." He must have been of a preliminary investigation and among, other things, a practising lawyer or Judge for at least ten (10) years. The stated: incumbent Ombudsman has served in the Supreme Court, The purpose of preliminary investigation is to secure the Court of Appeals, Court of First Instance, Department of innocent against hasty, malicious and oppressive Justice and high level fact finding committees. He was at the prosecution, and to protect him from an open and public top of his class at the U.P. College of Law and has been a accusation of crime, from the trouble, expense and anxiety distinguished Professor of Law for decades. He was of a public trial, and also to protect the state from useless nominated and appointed Ombudsman on the record of his and expensive trials. (Trocio v. Manta, 118 SCRA 241; citing unquestioned competence, intellectual skills, integrity, and Hashim v. Boncan, 71 Phil. 216). The right to a preliminary independence. 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 President Aquino? The petitioner argues: same must be decided in the light of the conditions The violation of equal protection thus becomes clear. It is obtaining in given situations and its existence depends to a now four years after EDSA. Three years after the ratification large degree upon the finding or opinion of the judge of the new Constitution. Must there be one kind of justice conducting the examination, such a finding should not for the 'victors', another for the 'vanquished'?'Is there not disregard the facts before the judge nor run counter to the but one Filipino under the Constitution? There is no cogent clear dictates of reason (See La Chemise Lacoste, S.A. v. reason why the liberty of those who were associated with Fernandez, 129 SCRA 391). The judge or fiscal, therefore, former President Marcos should lie in the hands of PCGG should not go on with the prosecution in the hope that some and not in the Ombudsman who is independent of the credible evidence might later turn up during trial for this President, and, of course, the Solicitor General, and is would be a flagrant violation of a basic right which the

19 courts are created to uphold. It bears repeating that the party giving to the other ninety (90) days notice in writing judiciary lives up to its mission by vitalizing and not of such termination. denigrating constitutional rights. So it has been before. It Respondent Yap filed a complaint with the then Court of should continue to be so. (Salonga v. Cruz Panio, 134 SCRA First Instance (CFI) of Iloilo docketed as Civil Case No. 9507 438, 461-462) for damages with preliminary injunction against petitioner The Court today can do no less. It has to apply the same Shell Respondent Yap questioned the validity of the exercise yardstick to the PCGG. The same guarantees of fairness and by petitioner of its contractual right to terminate the justice in this decision of the Court rendered during the contract. Barely less than a month from the filing of his time of Mr. Marcos belong in equal measure to petitioner complaint, respondent Yap again filed with the respondent Cojuangco and all who appear before the PCGG during the OIC Case #144 where he likewise raised the same issue. term of President Aquino. Without affording the petitioner an opportunity to be heard on the matter, respondent OIC issued an ex-parte preliminary mandatory injunction commanding petitioner G.R. No. L-41315 November 13, 1986 to perform the following acts: 1) to continue selling to PILIPINAS SHELL PETROLEUM CORPORATION, respondent Yap petroleum products 2) to maintain the petitioner, status quo insofar as the operation by respondent Yap of the vs. gasoline station is concerned 3) to sub t a verified statement THE OIL INDUSTRY COMMISSION and MANUEL B. YAP, of the unpaid accounts of respondent Yap. respondents. Petitioner Shell also filed a complaint with the then CFI of Angara, Concepcion, Regala and Cruz Law Office for Cebu docketed as Civil Case No. 13675 to collect the long petitioner. overdue debts of respondent Yap. Shell filed with the OIC an J. T. Barrera & Associates for respondent Manuel B. Yap. 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 PARAS, J.: rendered in Civil Case No. 13675 ordering respondent Yap This is a Petition for certiorari assailing certain orders to pay his overdue liabilities: 1) P47,537.30 representing issued by respondent Oil Industry Commission (hereinafter the value of petroleum products he bought from the known as OIC) in OIC Case No. 144. petitioner 2) P1,000, litigation expenses 3) P5,000, Briefly the facts of the case are as follows: attorney's fees. Respondent Manuel B. Yap is a gasoline dealer by virtue of a Despite the pendency of the controversy before the "Sublease and Dealer Agreement" entered into with ordinary civil courts, OIC persisted in asserting jurisdiction petitioner Pilipinas Shell Petroleum Corporation over it by rendering a decision stating it has jurisdiction to (hereinafter known as Shell) originally in the year 1965 and pass upon the alleged contractual right of petitioner to superseded in the year 1969 (Annex "A") of the petition). declare Yap's contract terminated. The OIC negated the The latter was filed and registered with the OIC on April 30, existence of such right because the stipulation is an "unfair 1971 as required by Republic Act #6173 (R.A. #6173). and onerous trade practice." Respondent OIC also allowed respondent Yap reasonable time from receipt of the While petitioner Shell complied with its contractual decision within which to pay his judgment debt to commitments, Manuel B. Yap defaulted in his obligations petitioner as adjudged in Civil Case No. 13675. upon failure to pay for his purchases of gasoline and other petroleum products. Petitioner Shell sent demand letters to Petitioner Shell moved for a reconsideration but respondent respondent Manuel B. Yap who continued to ignore these OIC denied it. However, a modification was made by demands letters forcing petitioner Shell to exercise its declaring that the permission it gave respondent Yap to pay contractual rights to terminate the contract. Petitioner Shell his judgment debt was "merely a suggestion." OIC ordered sent respondent Yap the required 90-day written notice to that petitioner must comply within ten (10) days from terminate their contract as provided for by Sec. 5 of their notice. "Sublease and Dealer Agreement, " to wit: The issues now of the petition are the aforementioned 5. Effective Date, Direction and Termination of Agreement. - orders of the respondent OIC, petitioner Shell submitting This Agreement, duly signed by the DEALER, shall become that they are null and void on any, or all, of the following effective for both parties first of January, 1969 and shall grounds: continue indefinitely thereafter, until terminated by either

20

1. Respondent OIC has no jurisdiction to hear and decide (4) (d) To regulate the operations and trade practices of the contractual disputes between a gasoline dealer and an oil industry in order to encourage orderly competition, prevent company. monopolies and collusive practices within the industry, 2. Respondent Manuel B. Yap himself first invoked the giving due regard to the ecological and environmental jurisdiction of the then CFI of Iloilo to resolve the dispute so needs of the country; that he is now estopped from impugning the jurisdiction of There is no question that respondent Yap first invoked the the civil courts. jurisdiction of the then CFI of Iloilo to resolve the dispute 3. Peremptory declaration by respondent OIC that the and without waiting for the determination of the issues, he contractual stipulation that either party may declare the filed a complaint with respondent OIC raising the same contract terminated after a 90-day written notice issues. Respondent Yap thus submitted a single and constitutes an "unfair and onerous trade practice" is an indivisible controversy to two different entities. This cannot unconstitutional impairment of the obligation of contracts be permitted without making a mockery of justice. and a deprivation of property without due process of law. It is not amiss to mention that even before the creation of 4. There is no factual basis for respondent OIC's conclusion the OIC in 1971, petitioner Shell and respondent Yap were and ruling that the disputed contract is an "unfair and already bound by their dealership agreement. From the onerous trade practice." time said agreement was registered with the OIC as required by R.A. 6173, respondent OIC never informed the The contentions of petitioner are well-founded. A detailed petitioner that said agreement or any of its provisions was reading of the entire OIC Act (R.A. #6173) will reveal that contrary to the provisions of R.A. No. 6173. Neither did there is no express provision conferring upon respondent respondent Yap show any disapproval of the provisions of OIC the power to hear and decide contractual disputes Sec. 5 of their agreement. Said provision is not contrary to between a gasoline dealer and an oil company. It is of law. course a well settled principle of administrative law that unless expressly empowered, administrative agencies like WHEREFORE, the questioned orders of respondent OIC, in respondent OIC, are bereft of quasi-judicial powers. As We OIC Case #144 are hereby declared null and void. declared in Miner vs. Mardo, et al (2 SCRA 898): SO ORDERED. . . . It may be conceded that the Legislature may confer on administrative boards or bodies quasi-judicial powers G.R. No. 151908 August 12, 2003 involving the exercise of judgment and discretion, as SMART COMMUNICATIONS, INC. (SMART) and PILIPINO incident to the performance of administrative functions, but TELEPHONE CORPORATION (PILTEL), petitioners, in so doing, the legislature must state its intention in vs. express terms that would leave no doubt, as even such NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), quasi-judicial prerogatives must be limited, if they are to be respondent. valid, only to those incidental to, or in connection with, the performance of administrative duties which do not amount x------x to conferment of jurisdiction over a matter exclusively G.R. No. 152063 August 12, 2003 vested in the courts. 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. A contrary interpretation would collide with the familiar COURT OF APPEALS (The Former 6th Division) and the principles of statutory construction that, in making a NATIONAL TELECOMMUNICATIONS COMMISSION, detailed enumeration, the law-making body intended to respondents. accomplish a purpose and that the all-embracing and YNARES-SANTIAGO, J.: general word "jurisdiction" must be restricted to mere Pursuant to its rule-making and regulatory powers, the regulatory and supervisory (not judicial) powers. National Telecommunications Commission (NTC) issued on The phrase "to set the conditions" under subparagraph "a" June 16, 2000 Memorandum Circular No. 13-6-2000, refers to the right to prescribe rules of conduct. It promulgating rules and regulations on the billing of appertains to rule-making functions and cannot include telecommunications services. Among its pertinent quasi-judicial powers. The limitations of supervision and provisions are the following: regulation are reiterated in the provisions of Sec. 7 (4) (d), (1) The billing statements shall be received by the to wit: subscriber of the telephone service not later than 30 days 21 from the end of each billing cycle. In case the statement is d. share all necessary information of stolen cellphone units received beyond this period, the subscriber shall have a to all other CMTS operators in order to prevent the use of specified grace period within which to pay the bill and the stolen cellphone units; and public telecommunications entity (PTEs) shall not be e. require all your existing prepaid SIM card customers to allowed to disconnect the service within the grace period. register and present valid identification cards.3 (2) There shall be no charge for calls that are diverted to a This was followed by another Memorandum dated October voice mailbox, voice prompt, recorded message or similar 6, 2000 addressed to all public telecommunications entities, facility excluding the customer's own equipment. which reads: (3) PTEs shall verify the identification and address of each This is to remind you that the validity of all prepaid cards purchaser of prepaid SIM cards. Prepaid call cards and SIM sold on 07 October 2000 and beyond shall be valid for at cards shall be valid for at least 2 years from the date of first least two (2) years from date of first use pursuant to MC 13- use. Holders of prepaid SIM cards shall be given 45 days 6-2000. from the date the prepaid SIM card is fully consumed but In addition, all CMTS operators are reminded that all SIM not beyond 2 years and 45 days from date of first use to packs used by subscribers of prepaid cards sold on 07 replenish the SIM card, otherwise the SIM card shall be October 2000 and beyond shall be valid for at least two (2) rendered invalid. The validity of an invalid SIM card, years from date of first use. Also, the billing unit shall be on however, shall be installed upon request of the customer at a six (6) seconds pulse effective 07 October 2000. no additional charge except the presentation of a valid prepaid call card. For strict compliance.4 (4) Subscribers shall be updated of the remaining value of On October 20, 2000, petitioners Isla Communications Co., their cards before the start of every call using the cards. Inc. and Pilipino Telephone Corporation filed against the National Telecommunications Commission, Commissioner (5) The unit of billing for the cellular mobile telephone Joseph A. Santiago, Deputy Commissioner Aurelio M. Umali service whether postpaid or prepaid shall be reduced from and Deputy Commissioner Nestor C. Dacanay, an action for 1 minute per pulse to 6 seconds per pulse. The authorized declaration of nullity of NTC Memorandum Circular No. 13- rates per minute shall thus be divided by 10.1 6-2000 (the Billing Circular) and the NTC Memorandum The Memorandum Circular provided that it shall take effect dated October 6, 2000, with prayer for the issuance of a writ 15 days after its publication in a newspaper of general of preliminary injunction and temporary restraining order. circulation and three certified true copies thereof furnished The complaint was docketed as Civil Case No. Q-00-42221 the UP Law Center. It was published in the newspaper, The at the Regional Trial Court of Quezon City, Branch 77.5 Philippine Star, on June 22, 2000.2 Meanwhile, the Petitioners Islacom and Piltel alleged, inter alia, that the provisions of the Memorandum Circular pertaining to the NTC has no jurisdiction to regulate the sale of consumer sale and use of prepaid cards and the unit of billing for goods such as the prepaid call cards since such jurisdiction cellular mobile telephone service took effect 90 days from belongs to the Department of Trade and Industry under the the effectivity of the Memorandum Circular. Consumer Act of the Philippines; that the Billing Circular is On August 30, 2000, the NTC issued a Memorandum to all oppressive, confiscatory and violative of the constitutional cellular mobile telephone service (CMTS) operators which prohibition against deprivation of property without due contained measures to minimize if not totally eliminate the process of law; that the Circular will result in the incidence of stealing of cellular phone units. The impairment of the viability of the prepaid cellular service by Memorandum directed CMTS operators to: unduly prolonging the validity and expiration of the prepaid a. strictly comply with Section B(1) of MC 13-6-2000 SIM and call cards; and that the requirements of requiring the presentation and verification of the identity identification of prepaid card buyers and call balance and addresses of prepaid SIM card customers; announcement are unreasonable. Hence, they prayed that b. require all your respective prepaid SIM cards dealers to the Billing Circular be declared null and void ab initio. comply with Section B(1) of MC 13-6-2000; Soon thereafter, petitioners Globe Telecom, Inc and Smart c. deny acceptance to your respective networks prepaid Communications, Inc. filed a joint Motion for Leave to 6 and/or postpaid customers using stolen cellphone units or Intervene and to Admit Complaint-in-Intervention. This cellphone units registered to somebody other than the was granted by the trial court. applicant when properly informed of all information On October 27, 2000, the trial court issued a temporary relative to the stolen cellphone units; restraining order enjoining the NTC from implementing

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Memorandum Circular No. 13-6-2000 and the COMMISSION (NTC) AND NOT THE REGULAR COURTS HAS Memorandum dated October 6, 2000.7 JURISDICTION OVER THE CASE. In the meantime, respondent NTC and its co-defendants B. filed a motion to dismiss the case on the ground of THE HONORABLE COURT OF APPEALS ALSO GRAVELY petitioners' failure to exhaust administrative remedies. ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS Subsequently, after hearing petitioners' application for FAILED TO EXHAUST AN AVAILABLE ADMINISTRATIVE preliminary injunction as well as respondent's motion to REMEDY. dismiss, the trial court issued on November 20, 2000 an C. Order, the dispositive portion of which reads: THE HONORABLE COURT OF APPEALS ERRED IN NOT WHEREFORE, premises considered, the defendants' motion HOLDING THAT THE BILLING CIRCULAR ISSUED BY THE to dismiss is hereby denied for lack of merit. The plaintiffs' RESPONDENT NTC IS UNCONSTITUTIONAL AND application for the issuance of a writ of preliminary CONTRARY TO LAW AND PUBLIC POLICY. injunction is hereby granted. Accordingly, the defendants D. are hereby enjoined from implementing NTC Memorandum Circular 13-6-2000 and the NTC Memorandum, dated THE HONORABLE COURT OF APPEALS ERRED IN HOLDING October 6, 2000, pending the issuance and finality of the THAT THE PRIVATE RESPONDENTS FAILED TO SHOW decision in this case. The plaintiffs and intervenors are, THEIR CLEAR POSITIVE RIGHT TO WARRANT THE however, required to file a bond in the sum of FIVE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.12 HUNDRED THOUSAND PESOS (P500,000.00), Philippine Likewise, Globe and Islacom filed a petition for review, currency. docketed as G.R. No. 152063, assigning the following errors: SO ORDERED.8 1. THE HONORABLE COURT OF APPEALS SO GRAVELY Defendants filed a motion for reconsideration, which was ERRED BECAUSE THE DOCTRINES OF PRIMARY denied in an Order dated February 1, 2001.9 JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS Respondent NTC thus filed a special civil action for FOR LEGAL NULLIFICATION (BECAUSE OF LEGAL certiorari and prohibition with the Court of Appeals, which INFIRMITIES AND VIOLATIONS OF LAW) OF A PURELY was docketed as CA-G.R. SP. No. 64274. On October 9, 2001, ADMINISTRATIVE REGULATION PROMULGATED BY AN a decision was rendered, the decretal portion of which AGENCY IN THE EXERCISE OF ITS RULE MAKING POWERS reads: AND INVOLVES ONLY QUESTIONS OF LAW. WHEREFORE, premises considered, the instant petition for 2. THE HONORABLE COURT OF APPEALS SO GRAVELY certiorari and prohibition is GRANTED, in that, the order of ERRED BECAUSE THE DOCTRINE ON EXHAUSTION OF the court a quo denying the petitioner's motion to dismiss ADMINISTRATIVE REMEDIES DOES NOT APPLY WHEN as well as the order of the court a quo granting the private THE QUESTIONS RAISED ARE PURELY LEGAL QUESTIONS. respondents' prayer for a writ of preliminary injunction, and the writ of preliminary injunction issued thereby, are 3. THE HONORABLE COURT OF APPEALS SO GRAVELY hereby ANNULLED and SET ASIDE. The private ERRED BECAUSE THE DOCTRINE OF EXHAUSTION OF respondents' complaint and complaint-in-intervention ADMINISTRATIVE REMEDIES DOES NOT APPLY WHERE below are hereby DISMISSED, without prejudice to the THE ADMINISTRATIVE ACTION IS COMPLETE AND referral of the private respondents' grievances and disputes EFFECTIVE, WHEN THERE IS NO OTHER REMEDY, AND on the assailed issuances of the NTC with the said agency. THE PETITIONER STANDS TO SUFFER GRAVE AND IRREPARABLE INJURY. SO ORDERED.10 4. THE HONORABLE COURT OF APPEALS SO GRAVELY Petitioners' motions for reconsideration were denied in a ERRED BECAUSE PETITIONERS IN FACT EXHAUSTED ALL Resolution dated January 10, 2002 for lack of merit.11 ADMINISTRATIVE REMEDIES AVAILABLE TO THEM. Hence, the instant petition for review filed by Smart and 5. THE HONORABLE COURT OF APPEALS SO GRAVELY Piltel, which was docketed as G.R. No. 151908, anchored on ERRED IN ISSUING ITS QUESTIONED RULINGS IN THIS the following grounds: CASE BECAUSE GLOBE AND ISLA HAVE A CLEAR RIGHT TO A. AN INJUNCTION.13 THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN The two petitions were consolidated in a Resolution dated HOLDING THAT THE NATIONAL TELECOMMUNICATIONS February 17, 2003.14

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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 memoranda.15 not exhaust administrative remedies before going to court. We find merit in the petitions. This principle applies only where the act of the administrative agency concerned was performed pursuant Administrative agencies possess quasi-legislative or rule- to 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 granting statute and the doctrine of non-delegability The rule of requiring exhaustion of administrative remedies and separability of powers.16 before a party may seek judicial review, so strenuously 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 germane to the objects and purposes of the law, and be not Even assuming arguendo that the principle of exhaustion of in contradiction to, but in conformity with, the standards administrative remedies apply in this case, the records prescribed by law.17 They must conform to and be reveal that petitioners sufficiently complied with this consistent with the provisions of the enabling statute in requirement. Even during the drafting and deliberation order for such rule or regulation to be valid. Constitutional stages leading to the issuance of Memorandum Circular No. and statutory provisions control with respect to what rules 13-6-2000, petitioners were able to register their protests and regulations may be promulgated by an administrative to the proposed billing guidelines. They submitted their body, as well as with respect to what fields are subject to respective position papers setting forth their objections and 21 regulation by it. It may not make rules and regulations submitting proposed schemes for the billing circular. After which are inconsistent with the provisions of the the same was issued, petitioners wrote successive letters 22 23 Constitution or a statute, particularly the statute it is dated July 3, 2000 and July 5, 2000, asking for the administering or which created it, or which are in suspension and reconsideration of the so-called Billing derogation of, or defeat, the purpose of a statute. In case of Circular. These letters were not acted upon until October 6, conflict between a statute and an administrative order, the 2000, when respondent NTC issued the second assailed former must prevail.18 Memorandum implementing certain provisions of the 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 policy is to apply and to decide in accordance with the only where the administrative agency exercises its quasi- standards laid down by the law itself in enforcing and judicial or adjudicatory function. Thus, in cases involving administering the same law. The administrative body specialized disputes, the practice has been to refer the same exercises its quasi-judicial power when it performs in a to an administrative agency of special competence pursuant judicial manner an act which is essentially of an executive to the doctrine of primary jurisdiction. The courts will not or administrative nature, where the power to act in such determine a controversy involving a question which is manner is incidental to or reasonably necessary for the within the jurisdiction of the administrative tribunal prior performance of the executive or administrative duty to the resolution of that question by the administrative entrusted to it. In carrying out their quasi-judicial functions, tribunal, where the question demands the exercise of sound the administrative officers or bodies are required to administrative discretion requiring the special knowledge, investigate facts or ascertain the existence of facts, hold experience and services of the administrative tribunal to 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 a judicial nature.19 of the regulatory statute administered. The objective of the 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 and orders of lower courts in all cases in which the determined some question or some aspect of some question constitutionality or validity of any treaty, international or arising in the proceeding before the court. It applies where executive agreement, law, presidential decree, the claim is originally cognizable in the courts and comes proclamation, order, instruction, ordinance, or regulation is into play whenever enforcement of the claim requires the in question.29 resolution of issues which, under a regulatory scheme, has In their complaint before the Regional Trial Court, been placed within the special competence of an petitioners averred that the Circular contravened Civil Code administrative body; in such case, the judicial process is provisions on sales and violated the constitutional suspended pending referral of such issues to the prohibition against the deprivation of property without due 24 administrative body for its view. process of law. These are within the competence of the trial However, where what is assailed is the validity or judge. Contrary to the finding of the Court of Appeals, the constitutionality of a rule or regulation issued by the issues raised in the complaint do not entail highly technical administrative agency in the performance of its quasi- matters. Rather, what is required of the judge who will legislative function, the regular courts have jurisdiction to resolve this issue is a basic familiarity with the workings of pass upon the same. The determination of whether a the cellular telephone service, including prepaid SIM and specific rule or set of rules issued by an administrative call cards – and this is judicially known to be within the agency contravenes the law or the constitution is within the knowledge of a good percentage of our population – and jurisdiction of the regular courts. Indeed, the Constitution expertise in fundamental principles of civil law and the vests the power of judicial review or the power to declare a Constitution. law, treaty, international or executive agreement, Hence, the Regional Trial Court has jurisdiction to hear and presidential decree, order, instruction, ordinance, or decide Civil Case No. Q-00-42221. The Court of Appeals 25 regulation in the courts, including the regional trial courts. erred in setting aside the orders of the trial court and in This is within the scope of judicial power, which includes dismissing the case. the authority of the courts to determine in an appropriate WHEREFORE, in view of the foregoing, the consolidated action the validity of the acts of the political departments.26 petitions are GRANTED. The decision of the Court of Judicial power includes the duty of the courts of justice to Appeals in CA-G.R. SP No. 64274 dated October 9, 2001 and settle actual controversies involving rights which are legally its Resolution dated January 10, 2002 are REVERSED and demandable and enforceable, and to determine whether or SET ASIDE. The Order dated November 20, 2000 of the not there has been a grave abuse of discretion amounting to Regional Trial Court of Quezon City, Branch 77, in Civil Case lack or excess of jurisdiction on the part of any branch or No. Q-00-42221 is REINSTATED. This case is REMANDED to instrumentality of the Government.27 the court a quo for continuation of the proceedings. In the case at bar, the issuance by the NTC of Memorandum SO ORDERED. Circular No. 13-6-2000 and its Memorandum dated October 6, 2000 was pursuant to its quasi-legislative or rule-making Davide, Jr., C.J., Vitug, and Carpio, JJ., concur. power. As such, petitioners were justified in invoking the Azcuna, J., took no part. judicial power of the Regional Trial Court to assail the constitutionality and validity of the said issuances. In Drilon G.R. No. 110526 February 10, 1998 v. Lim,28 it was held: ASSOCIATION OF PHILIPPINE COCONUT DESICCATORS, We stress at the outset that the lower court had jurisdiction petitioner, to consider the constitutionality of Section 187, this vs. authority being embraced in the general definition of the PHILIPPINE COCONUT AUTHORITY, respondent. 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 MENDOZA, J.: jurisdiction over all civil cases in which the subject of the At issue in this case is the validity of a resolution, dated litigation is incapable of pecuniary estimation, even as the March 24, 1993, of the Philippine Coconut Authority in accused in a criminal action has the right to question in his which it declares that it will no longer require those wishing defense the constitutionality of a law he is charged with to engage in coconut processing to apply to it for a license violating and of the proceedings taken against him, or permit as a condition for engaging in such business. particularly as they contravene the Bill of Rights. Moreover, Petitioner Association of Philippine Coconut Desiccators Article X, Section 5(2), of the Constitution vests in the (hereafter referred to as APCD) brought this suit for Supreme Court appellate jurisdiction over final judgments 25 certiorari and mandamus against respondent Philippine Memorandum of February 11, 1988, has become a Coconut Authority (PCA) to invalidate the latter's Board centerpiece of the present dispensation; Resolution No. 018-93 and the certificates of registration WHEREAS, the issuance of permits or licenses prior to issued under it on the ground that the resolution in business operation is a form of regulation which is not question is beyond the power of the PCA to adopt, and to provided in the charter of nor included among the powers compel said administrative agency to comply instead with of the PCA; the mandatory provisions of statutes regulating the WHEREAS, the Governing Board of PCA has determined to desiccated coconut industry, in particular, and the coconut follow and further support the deregulation policy and industry, in general. effort of the government to promote free enterprise; As disclosed by the parties' pleadings, the facts are as NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY follows: RESOLVED, that, henceforth, PCA shall no longer require On November 5, 1992, seven desiccated coconut processing any coconut oil mill, coconut oil refinery, coconut companies belonging to the APCD brought suit in the desiccator, coconut product processor/factory, coconut Regional Trial Court, National Capital Judicial Region in fiber plant or any similar coconut processing plant to apply Makati, Metro Manila, to enjoin the PCA from issuing with PCA and the latter shall no longer issue any form of permits to certain applicants for the establishment of new license or permit as condition prior to establishment or desiccated coconut processing plants. Petitioner alleged operation of such mills or plants; that the issuance of licenses to the applicants would violate RESOLVED, FURTHER, that the PCA shall limit itself only to PCA's Administrative Order No. 02, series of 1991, as the simply registering the aforementioned coconut product applicants were seeking permits to operate in areas processors for the purpose of monitoring their volumes of considered "congested" under the administrative order. 1 production, administration of quality standards with the On November 6, 1992, the trial court issued a temporary corresponding service fees/charges. restraining order and, on November 25, 1992, a writ of ADOPTED this 24th day of March 1993, at Quezon City. 3 preliminary injunction, enjoining the PCA from processing and issuing licenses to Primex Products, Inc., Coco Manila, The PCA then proceeded to issue "certificates of Superstar (Candelaria) and Superstar (Davao) upon the registration" to those wishing to operate desiccated coconut posting of a bond in the amount of P100,000.00. 2 processing plants, prompting petitioner to appeal to the Office of the President of the Philippines on April 26, 1993 Subsequently and while the case was pending in the not to approve the resolution in question. Despite follow-up Regional Trial Court, the Governing Board of the PCA issued letters sent on May 25 and June 2, 1993, petitioner received on March 24, 1993 Resolution No. 018-93, providing for the no reply from the Office of the President. The "certificates of withdrawal of the Philippine Coconut Authority from all registration" issued in the meantime by the PCA has regulation of the coconut product processing industry. enabled a number of new coconut mills to operate. Hence While it continues the registration of coconut product this petition. processors, the registration would be limited to the "monitoring" of their volumes of production and Petitioner alleges: administration of quality standards. The full text of the I resolution reads: RESPONDENT PCA'S BOARD RESOLUTION NO. 018-93 IS RESOLUTION NO. 018-93 NULL AND VOID FOR BEING AN UNDUE EXERCISE OF POLICY DECLARATION DEREGULATING LEGISLATIVE POWER BY AN ADMINISTRATIVE BODY. THE ESTABLISHMENT OF NEW COCONUT II PROCESSING PLANTS ASIDE FROM BEING ULTRA-VIRES, BOARD RESOLUTION WHEREAS, it is the policy of the State to promote free NO. 018-93 IS WITHOUT ANY BASIS, ARBITRARY, enterprise unhampered by protective regulations and UNREASONABLE AND THEREFORE IN VIOLATION OF unnecessary bureaucratic red tapes; SUBSTANTIVE DUE PROCESS OF LAW. WHEREAS, the deregulation of certain sectors of the III coconut industry, such as marketing of coconut oils pursuant to Presidential Decree No. 1960, the lifting of IN PASSING BOARD RESOLUTION NO. 018-93, export and commodity clearances under Executive Order RESPONDENT PCA VIOLATED THE PROCEDURAL DUE No. 1016, and relaxation of regulated capacity for the PROCESS REQUIREMENT OF CONSULTATION PROVIDED IN desiccated coconut sector pursuant to Presidential PRESIDENTIAL DECREE NO. 1644, EXECUTIVE ORDER NO.

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826 AND PCA ADMINISTRATIVE ORDER NO. 002, SERIES and supervised by, the President of the Philippines," 9 and OF 1991. charged with carrying out the State's policy "to promote the On the other hand, in addition to answering petitioner's rapid integrated development and growth of the coconut arguments, respondent PCA alleges that this petition should and other palm oil industry in all its aspects and to ensure be denied on the ground that petitioner has a pending that the coconut farmers become direct participants in, and 10 appeal before the Office of the President. Respondent beneficiaries of, such development and growth." through 11 accuses petitioner of forum-shopping in filing this petition a regulatory scheme set up by law. and of failing to exhaust available administrative remedies Through this scheme, the government, on August 28, 1982, before coming to this Court. Respondent anchors its temporarily prohibited the opening of new coconut argument on the general rule that one who brings an action processing plants and, four months later, phased out some under Rule 65 must show that one has no appeal nor any of the existing ones in view of overproduction in the plain, speedy, and adequate remedy in the ordinary course coconut industry which resulted in cut-throat competition, of law. underselling and smuggling of poor quality products and I. ultimately in the decline of the export performance of coconut-based commodities. The establishment of new The rule of requiring exhaustion of administrative remedies plants could be authorized only upon determination by the before a party may seek judicial review, so strenuously PCA of the existence of certain economic conditions and the urged by the Solicitor General on behalf of respondent, has approval of the President of the Philippines. Thus, Executive obviously no application here. The resolution in question Order No. 826, dated August 28, 1982, provided: was issued by the PCA in the exercise of its rule-making or legislative power. However, only judicial review of decisions Sec. 1. Prohibition. — Except as herein provided, no of administrative agencies made in the exercise of their government agency or instrumentality shall hereafter quasi-judicial function is subject to the exhaustion doctrine. authorize, approve or grant any permit or license for the The exhaustion doctrine stands as a bar to an action which establishment or operation of new desiccated coconut is not yet complete 4 and it is clear, in the case at bar, that processing plants, including the importation of machinery after its promulgation the resolution of the PCA abandoning or equipment for the purpose. In the event of a need to regulation of the desiccated coconut industry became establish a new plant, or expand the capacity, relocate or effective. To be sure, the PCA is under the direct supervision upgrade the efficiencies of any existing desiccated plant, the of the President of the Philippines but there is nothing in Philippine Coconut Authority may, upon proper P.D. No. 232, P.D. No. 961, P.D. No. 1468 and P.D. No. 1644 determination of such need and evaluation of the condition defining the powers and functions of the PCA which relating to: requires rules and regulations issued by it to be approved a. the existing market demand; by the President before they become effective. 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 of registration indiscriminately to new coconut millers, we authorize or grant the application for, the establishment or hold that petitioner was justified in filing this case on June expansion of capacity, relocation or upgrading of 25, 1993. 5 Indeed, after writing the Office of the President efficiencies of such desiccated coconut processing plant, on April 26, 1993 6 petitioner sent inquiries to that office subject to the approval of the President. not once, but twice, on May 26, 1993 7 and on June 2, 1993, 8 On December 6, 1982, a phase-out of some of the existing but petitioner did not receive any reply. plants was ordered by the government after finding that "a II. mere freeze in the present capacity of existing plants will 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 Institute. On June 11, 1978, by P.D. No. 1468, it was made Sec. 1. The Philippine Coconut Authority is hereby ordered "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 other palm oil industry in all its aspects and to ensure that a level which will insure the survival of the remaining the coconut farmers become direct participants in, and plants. The Authority is hereby directed to determine which beneficiaries of, such development and growth." 15 Contrary of the existing processing plants should be phased out and to the assertion in the dissent, the power given to the to enter into appropriate contracts with such plants for the Philippine Coconut Authority — and before it to the above purpose. Philippine Coconut Administration — "to formulate and It was only on October 23, 1987 when the PCA adopted adopt a general program of development for the coconut 16 Resolution No. 058-87, authorizing the establishment and and other palm oils industry" is not a roving commission operation of additional DCN plants, in view of the increased to adopt any program deemed necessary to promote the demand for desiccated coconut products in the world's development of the coconut and other palm oils industry, markets, particularly in Germany, the Netherlands and but one to be exercised in the context of this regulatory Australia. Even then, the opening of new plants was made structure. subject to "such implementing guidelines to be set forth by In plain disregard of this legislative purpose, the PCA the Authority" and "subject to the final approval of the adopted on March 24, 1993 the questioned resolution President." which allows not only the indiscriminate opening of new The guidelines promulgated by the PCA, as embodied in coconut processing plants but the virtual dismantling of the Administrative Order No. 002, series of 1991, inter alia regulatory infrastructure whereby, forsaking controls authorized the opening of new plants in "non-congested theretofore placed in its keeping, the PCA limits its function areas only as declared by the PCA" and subject to to the innocuous one of "monitoring" compliance by compliance by applicants with "all procedures and coconut millers with quality standards and volumes of requirements for registration under Administrative Order production. In effect, the PCA would simply be compiling No. 003, series of 1981 and this Order." In addition, as the statistical data on these matters, but in case of violations of opening of new plants was premised on the increased global standards there would be nothing much it would do. The demand for desiccated coconut products, the new entrants field would be left without an umpire who would retire to were required to submit sworn statements of the names the bleachers to become a mere spectator. As the PCA and addresses of prospective foreign buyers. provided in its Resolution No. 018-93: This form of "deregulation" was approved by President NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY Aquino in her memorandum, dated February 11, 1988, to RESOLVED, that, henceforth, PCA shall no longer require the PCA. Affirming the regulatory scheme, the President any coconut oil mill, coconut oil refinery, coconut stated in her memorandum: desiccator, coconut product processor/factory, coconut fiber plant or any similar coconut processing plant to apply It appears that pursuant to Executive Order No. 826 with PCA and the latter shall no longer issue any form of providing measures for the protection of the Desiccated license or permit as condition prior to establishment or Coconut Industry, the Philippine Coconut Authority operation of such mills or plants; evaluated the conditions relating to: (a) the existing market demands; (b) the production capacity prevailing in the RESOLVED, FURTHER, that the PCA shall limit itself only to country or locality; (c) the level and flow of raw materials; simply registering the aforementioned coconut product and (d) other circumstances which may affect the growth or processors for the purpose of monitoring their volumes of viability of the industry concerned and that the result of production, administration of quality standards with the such evaluation favored the expansion of production and corresponding service fees/charges. market of desiccated coconut products. The issue is not whether the PCA has the power to adopt In view hereof and the favorable recommendation of the this resolution to carry out its mandate under the law "to Secretary of Agriculture, the deregulation of the Desiccated promote the accelerated growth and development of the 17 Coconut Industry as recommended in Resolution No. 058- coconut and other palm oil industry." The issue rather is 87 adopted by the PCA Governing Board on October 28, whether it can renounce the power to regulate implicit in 1987 (sic) is hereby approved. 14 the law creating it for that is what the resolution in question actually is. These measures — the restriction in 1982 on entry into the field, the reduction the same year of the number of the Under Art. II, § 3(a) of the Revised Coconut Code (P.D. No. existing coconut mills and then the lifting of the restrictions 1468), the role of the PCA is "To formulate and adopt a in 1987 — were adopted within the framework of general program of development for the coconut and other regulation as established by law "to promote the rapid palm oil industry in all its aspects." By limiting the purpose integrated development and growth of the coconut and of registration to merely "monitoring volumes of production 28

[and] administration of quality standards" of coconut (m) Except in respect of entities owned or controlled by the processing plants, the PCA in effect abdicates its role and Government or by the coconut farmers under Sections 9 leaves it almost completely to market forces how the and 10, Article III hereof, the Authority shall have full power coconut industry will develop. and authority to regulate the production, distribution and Art. II, § 3 of P.D. No. 1468 further requires the PCA: utilization of all subsidized coconut-based products, and to 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 Sec. 1. The Philippine Coconut Authority shall have full cannot order a cut back in their production. This is because power and authority to regulate the marketing and export the licensing system is the mechanism for regulation. of copra, coconut oil and their by-products, in furtherance of Without it the PCA will not be able to regulate coconut the steps being taken to rationalize the coconut oil milling plants or mills. industry. In the first "whereas" clause of the questioned resolution as Sec. 2. In the exercise of its powers under Section 1 hereof, set out above, the PCA invokes a policy of free enterprise the Philippine Coconut Authority may initiate and that is "unhampered by protective regulations and implement such measures as may be necessary to attain the unnecessary bureaucratic red tape" as justification for rationalization of the coconut oil milling industry, including, abolishing the licensing system. There can be no quarrel but not limited to, the following measures: with the elimination of "unnecessary red tape." That is within the power of the PCA to do and indeed it should (a) Imposition of floor and/or ceiling prices for all exports eliminate red tape. Its success in doing so will be applauded. of copra, coconut oil and their by-products; But free enterprise does not call for removal of "protective (b) Prescription of quality standards; regulations." (c) Establishment of maximum quantities for particular Our Constitutions, beginning with the 1935 document, have periods and particular markets; repudiated laissez-faire as an economic principle. 18 (d) Inspection and survey of export shipments through an Although the present Constitution enshrines free enterprise independent international superintendent or surveyor. as a policy, 19 it nonetheless reserves to the government the In the exercise of its powers hereunder, the Philippine power to intervene whenever necessary to promote the Coconut Authority shall consult with, and be guided by, the general welfare. This is clear from the following provisions recommendation of the coconut farmers, through of Art. XII of the Constitution which, so far as pertinent, corporations owned or controlled by them through the state: Coconut Industry Investment Fund and the private Sec. 6. . . . Individuals and private groups, including corporation authorized to be organized under Letter of corporations, cooperatives, and similar collective Instructions No. 926. organizations, shall have the right to own, establish, and and the Revised Coconut Code (P.D. No. 1468), Art. II, § 3, to operate economic enterprises, subject to the duty of the wit:

29

State to promote distributive justice and to intervene when Narvasa, C.J., Regalado, Davide, Jr., Puno, Kapunan, Francisco, the common good so demands. Panganiban and Martinez, JJ., concur. 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). Separate Opinions 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 ROMERO, J., dissenting; administrative agency to dismantle it. Indeed, petitioner The past decade, a distinct worldwide trend towards charges the PCA of seeking to render moot a case filed by economic deregulation has been evident. Both developed some of its members questioning the grant of licenses to and developing countries have seriously considered, and certain parties by adopting the resolution in question. It is extensively adopted, various measures for this purpose. The alleged that members of petitioner complained to the court Philippines has been no exception. that the PCA had authorized the establishment and operation of new plants in areas which were already To this end, the Philippine Coconut Authority (PCA) issued crowded, in violation of its Administrative Order No. 002, Board Resolution No. 018-93 (PCA-BR No 018-93) dated series of 1991. In response, the Regional Trial Court issued March 24, 1993, deregulating the coconut processing plant 1 a writ of preliminary injunction, enjoining the PCA from industry. The Association of Philippine Desiccators (APCD) issuing licenses to the private respondent in that case. has filed this instant petition for prohibition and mandamus under Rule 65 of the Rules of Court seeking the annulment These allegations of petitioner have not been denied here. It of said resolution. would thus seem that instead of defending its decision to allow new entrants into the field against petitioner's claim APCD questions the validity of PCA-BR No. 018-93 for being that the PCA decision violated the guidelines in violative of the principle of non-delegability of legislative Administrative Order No. 002, series of 1991, the PCA power. It contends that in issuing the resolution adopted the resolution in question to render the case moot. deregulating the coconut industry, the PCA exercised In so doing, the PCA abdicated its function of regulation and legislative discretion, which has not been delegated to it by left the field to untrammeled competition that is likely to Congress. It adds that when PCA deregulated the coconut 2 resurrect the evils of cut-throat competition, underselling industry, it ran counter to the very laws which mandated it and overproduction which in 1982 required the temporary to regulate and rationalize the industry. closing of the field to new players in order to save the We see no merit in this contention. PCA's authority to issue industry. PCA-BR No. 018-93 is clearly provided in Section 3(a) of The PCA cannot rely on the memorandum of then President P.D. No. 232, reading as follows: Aquino for authority to adopt the resolution in question. As . . . To formulate and adopt a general program of already stated, what President Aquino approved in 1988 development for the coconut and other palm oil industry. was the establishment and operation of new DCN plants Similar grants of authority were made in subsequent 20 subject to the guidelines to be drawn by the PCA. In the first amendatory laws. 3 place, she could not have intended to amend the several In this regard, we have ruled that legislative discretion, as to laws already mentioned, which set up the regulatory the substantive contents of a law, cannot be delegated. What system, by a mere memoranda to the PCA. In the second may be delegated is the discretion to determine how the law place, even if that had been her intention, her act would be is to be enforced, not what the law should be, a prerogative without effect considering that, when she issued the of the legislature which it can neither abdicate nor memorandum in question on February 11, 1988, she was no surrender to the delegate. 4 The principle is based on the longer vested with legislative authority. 21 separation and allocation of powers among the three WHEREFORE, the petition is GRANTED. PCA Resolution No. departments of government. 5 018-93 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 policies and regulations to adapt to ever-changing business enforce it. Under the sufficient standard test, there must be needs rather than to accommodate traditional acts of the adequate guidelines or limitations in the law to map out the legislature. 22 Even the 1987 Constitution was designed to boundaries of the delegate's authority and prevent the meet, not only contemporary events, but also future and delegation from running amiss. 6 unknown circumstances. 23 We have accepted as sufficient standards "interest of law It is worth mentioning that the PCA, after conducting its and order," 7 "adequate and efficient instruction," 8 "public studies, adopted the policy of deregulation to further interest," 9 "justice and equity," 10 "public convenience and enhance the coconut industry competition, since any welfare," 11 "simplicity, economy and efficiency," 12 continuation of the restrictive regulation in the industry "standardization and regulation of medical education," 13 would have detrimental effects. 24 This is in consonance and "fair and equitable employment practices." 14 with the constitutional mandate that the State must "adopt Consequently, the standard may be expressed or implied. In measures that help make them (locally produced goods) the former, the non delegation objection is easily met. The competitive." 25 Undoubtedly, an "agency, in light of standard though does not have to be spelled out but need changing circumstances, is free to alter interpretative and only be implied from the policy and purpose of the act policy views reflected in regulations construing an considered as a whole. 15 It may also be found in other underlying statute, so long as any changed construction of statutes on the same subject as that of the challenged the statute is consistent with express congressional intent legislation. 16 or embodies a permissible reading of the statute." 26 In no uncertain terms must it be stressed that the function Furthermore, the Constitution is cognizant of the realities of of promulgating rules and regulations may be legitimately global interdependency, as it requires the pursuit of "a trade exercised only for the purpose of carrying out the policy that serves the general welfare and utilizes all forms provisions of a law. The power of administrative agencies is and arrangements of exchanges on the basis of equality and confined to implementing the law or putting it into effect. reciprocity." 27 Corollary to this guideline is that administrative regulation In sum, the policy of deregulation must be determined by 17 cannot extend the law and amend a legislative enactment. the circumstances prevailing in a certain situation. 28 As we In the instant case, we believe that the PCA did not overstep have stressed in the past, this Court is only concerned with the limits of its power in issuing the assailed resolution. We the question of authority, not the wisdom of the measure need not belabor the point that one of the economic goals of involved which falls within the province of the Legislature. our country is the increased productivity of goods and The ponencia presents the issue: whether it is within the services provided by the nation for the benefit of the people, power of the PCA to renounce the power to regulate implicit 18 since from a purely economic standpoint, the increase in in the law creating it (P.D. No. 232). (It is to be pointed out 19 agricultural productivity is of fundamental importance. that this issue was not included in the Assignment of Errors Considering the responsibilities and powers assigned to the of Petitioner). PCA, as well as its underlying policy, namely, that "the Underlying this formulation is the assumption/admission economic well-being of a major part of the population that PCA has the power to regulate the coconut industry, as depends to a large extent on the viability of the industry and in fact the power is bestowed upon it by its organic act, P.D. its improvement in the areas of production, processing and No. 232, viz. "to promote the rapid integrated development marketing," the irresistible conclusion is that PCA-BR No. and growth of the coconut and other palm oils in industry in 018-93 is a valid exercise of delegated legislation by the all its aspects and to ensure that the coconut farmers PCA. Such resolution is in harmony with the objectives become direct participants in, and beneficiaries of, such sought to be achieved by the laws regarding the coconut development and growth." Its broad mandate is "to industry, particularly "to promote accelerated growth and formulate and adopt a general program of development for 20 development of the coconut and other palm oil industry," the coconut and other palm oils industry." and "rapid integrated development and growth of the It avers that this "legislative scheme" was disregarded when coconut and other palm oil industry." 21 These are sufficient the PCA adopted on March 24, 1993 the assailed Resolution standards to guide the PCA. Thus, measures to achieve these which is effect liberalized the registration and licensing policies are better left to the administrative agencies tasked requirements for the granting of permits to operate new with implementing them. coconut plants. But this was effected pursuant to the It must be stressed that with increasing global trade and October 23, 1987 PCA Board Resolution laying down the business and major upheavals in technology and policy of deregulating the industry and authorizing the communications, the time has come for administrative creation of additional desiccated coconut plants. 31

As with any administrative agency established to promote In the actual words of the Resolution, the PCA recognizes its the growth and development of any industry, the PCA has principal function of registration so as to be able to monitor considerable latitude to adopt policies designed to the production and administer quality standards, both accelerate the attainment of this objective and corollarily, to objectives of which are not merely nominal or minimal, but lay down rules and regulations to implement the same. We substantial, even vital, aspects of the power to regulate. Put can take judicial notice of the fact that during its 25 years of differently, there is no renunciation of the power to existence, the PCA has achieved enough experience and regulate, for the regulation is essentially recognized and expertise to introduce measures which shall ensure the accomplished through the registration function which dominant role of the crop as a major dollar-producing enables the PCA to keep track of the volume of production industry, including the manipulation of market forces to our and the observance of quality standards by new entrants comparative advantage, certainly an area beyond the into the industry. In sum, trimming down its functions to Court's ken. registration is not an abdication of the power to regulate Hence, guided by guidelines already laid down, it responded but is regulation itself. to regional developments by: If the PCA, in light of the crucial developments in the (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 1982, within reasonable limits and with safeguards (hence interplay of competitive forces to shape the configuration of the issuance of Executive Order Nos. 826 on August 28, the industry, who are we to declare such policy as one 1982 and No. 854 on December 6, 1982); characterized by "wastefulness and inefficiency . . . based on 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 It bears repeating that the above measures were not taken perceive as an obnoxious, life threatening policy. But arbitrarily but in careful compliance with guidelines instead of opposing what the PCA views as a timely, well- incorporated in the Executive Orders and subject to the considered move, the healthy competition should spur them favorable recommendation of the Secretary of Agriculture to improving their product and elevating the standards they and the approval of the President. have imposed on themselves. The crux of the ponencia is that, in the process of opening If, in the course of its monitoring which is a piece of the doors to foreign markets, the PCA "limited itself to merely regulatory function, the PCA should detect a violation of its monitoring their volumes of production and administration of guidelines that would result in a lowering of the quality of quality standards, in effect abdicating its role and leaving it the product, or unfairness to other players, surely, it is not almost totally to market forces to define how the industry powerless to impose sanctions, as categorically provided in will develop." P.D. 1469, P.D. 1644, Adm. Order No. 003, Series of 1981 and Adm. Order No. 002, Series of 1991. Any administrative Actually, the relevant provisions in the disputed resolution agency is empowered to establish its implementing rules, reads: together with sanctions guaranteed to ensure the Resolved further, that the PCA shall limit itself only to simply observance of such rules, else it would be a mere "toothless" registering the aforementioned coconut product processors entity. for the purpose of monitoring their volumes of production, The ponencia prognosticates, "The result can very well be a administration of quality standards with the corresponding repeat of 1982 when free enterprise degenerated into a service fees/charges. '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, may be delegated is the discretion to determine how the law e.g. political, dominated the economy effectively supporting, is to be enforced, not what the law should be, a prerogative even favoring, destructive capitalistic monopolies and, in of the legislature which it can neither abdicate nor the process suppressing healthy competition. surrender to the delegate. 4 The principle is based on the Not to forget, too, that we cannot close our eyes and ignore separation and allocation of powers among the three 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, With the unrelenting march of globalization in our the completeness test and the sufficient standard test. 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 rim is bound to become a truly dynamic region in the it reaches the delegate, the only thing he will have to do is economic, political and cultural arenas in the coming enforce it. Under the sufficient standard test, there must be millennium. adequate guidelines or limitations in the law to map out the 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 Separate Opinions interest," 9 "justice and equity," 10 "public convenience and 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 confined to implementing the law or putting it into effect. violative of the principle of non-delegability of legislative Corollary to this guideline is that administrative regulation power. It contends that in issuing the resolution cannot extend the law and amend a legislative enactment. 17 deregulating the coconut industry, the PCA exercised In the instant case, we believe that the PCA did not overstep legislative discretion, which has not been delegated to it by the limits of its power in issuing the assailed resolution. We Congress. It adds that when PCA deregulated the coconut need not belabor the point that one of the economic goals of 2 industry, it ran counter to the very laws which mandated it our country is the increased productivity of goods and to regulate and rationalize the industry. services provided by the nation for the benefit of the people, We see no merit in this contention. PCA's authority to issue 18 since from a purely economic standpoint, the increase in PCA-BR No. 018-93 is clearly provided in Section 3(a) of agricultural productivity is of fundamental importance. 19 P.D. No. 232, reading as follows: Considering the responsibilities and powers assigned to the . . . To formulate and adopt a general program of PCA, as well as its underlying policy, namely, that "the development for the coconut and other palm oil industry. economic well-being of a major part of the population Similar grants of authority were made in subsequent depends to a large extent on the viability of the industry and amendatory laws. 3 its improvement in the areas of production, processing and 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 development and growth." Its broad mandate is "to industry, particularly "to promote accelerated growth and formulate and adopt a general program of development for development of the coconut and other palm oil industry," 20 the coconut and other palm oils industry." and "rapid integrated development and growth of the It avers that this "legislative scheme" was disregarded when 21 coconut and other palm oil industry." These are sufficient the PCA adopted on March 24, 1993 the assailed Resolution standards to guide the PCA. Thus, measures to achieve these which is effect liberalized the registration and licensing policies are better left to the administrative agencies tasked requirements for the granting of permits to operate new with implementing them. coconut plants. But this was effected pursuant to the It must be stressed that with increasing global trade and October 23, 1987 PCA Board Resolution laying down the business and major upheavals in technology and policy of deregulating the industry and authorizing the communications, the time has come for administrative creation of additional desiccated coconut plants. policies and regulations to adapt to ever-changing business As with any administrative agency established to promote needs rather than to accommodate traditional acts of the the growth and development of any industry, the PCA has 22 legislature. Even the 1987 Constitution was designed to considerable latitude to adopt policies designed to meet, not only contemporary events, but also future and accelerate the attainment of this objective and corollarily, to 23 unknown circumstances. lay down rules and regulations to implement the same. We It is worth mentioning that the PCA, after conducting its can take judicial notice of the fact that during its 25 years of studies, adopted the policy of deregulation to further existence, the PCA has achieved enough experience and enhance the coconut industry competition, since any expertise to introduce measures which shall ensure the continuation of the restrictive regulation in the industry dominant role of the crop as a major dollar-producing would have detrimental effects. 24 This is in consonance industry, including the manipulation of market forces to our with the constitutional mandate that the State must "adopt comparative advantage, certainly an area beyond the measures that help make them (locally produced goods) Court's ken. 25 competitive." Undoubtedly, an "agency, in light of Hence, guided by guidelines already laid down, it responded changing circumstances, is free to alter interpretative and to regional developments by: policy views reflected in regulations construing an (1) taking cognizance of the overproduction in the industry underlying statute, so long as any changed construction of and curtailing the expansion of coconut processing plants in the statute is consistent with express congressional intent 1982, within reasonable limits and with safeguards (hence or embodies a permissible reading of the statute." 26 the issuance of Executive Order Nos. 826 on August 28, Furthermore, the Constitution is cognizant of the realities of 1982 and No. 854 on December 6, 1982); 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 involved which falls within the province of the Legislature. It bears repeating that the above measures were not taken 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 of Petitioner). The crux of the ponencia is that, in the process of opening 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 all its aspects and to ensure that the coconut farmers Actually, the relevant provisions in the disputed resolution become direct participants in, and beneficiaries of, such reads: 34

Resolved further, that the PCA shall limit itself only to simply observance of such rules, else it would be a mere "toothless" registering the aforementioned coconut product processors entity. for the purpose of monitoring their volumes of production, The ponencia prognosticates, "The result can very well be a administration of quality standards with the corresponding repeat of 1982 when free enterprise degenerated into a service fees/charges. '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 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, the production and administer quality standards, both e.g. political, dominated the economy effectively supporting, 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 economic, political and cultural arenas in the coming regional and domestic coconut industry decides to open millennium. wide its doors, allow the free entry of other players and the ACCORDINGLY, the petition should be DISMISSED. 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 G.R. No. L-48672 July 31, 1987 its naive faith in survival of the fittest." Is not this a blatant TROPICAL HOMES, INC., petitioner, incursion by the Court into the economic arena which is vs. better left to the administrative agency precisely tasked to NATIONAL HOUSING AUTHORITY, THE PROVINCIAL promote the growth of the industry, through the exercise of SHERIFF, PROVINCE OF RIZAL, and ARTURO CORDOVA, its studied discretion? To be sure, those operators already respondents. in the field, such as the petitioner members of the GUTIERREZ, JR., J.: Association of Philippine Coconut Desiccators, are expected to vigorously protest and work for the nullity of what they The question raised in this petition is whether or not perceive as an obnoxious, life threatening policy. But Presidential Decree No. 1344, in relation to Presidential instead of opposing what the PCA views as a timely, well- Decree No. 957, giving the National Housing Authority considered move, the healthy competition should spur them exclusive jurisdiction over cases involving the real estate to improving their product and elevating the standards they business and limiting the appeal from such decisions only to have imposed on themselves. the President of the Philippines, is constitutional. If, in the course of its monitoring which is a piece of the The facts which led to the filing of the present petition are regulatory function, the PCA should detect a violation of its as follows: guidelines that would result in a lowering of the quality of On April 17, 1972, petitioner Tropical Homes, Inc. entered the product, or unfairness to other players, surely, it is not into a contract with private respondent Arturo P. Cordova powerless to impose sanctions, as categorically provided in for the sale to the latter of a lot at Better Living Subdivision P.D. 1469, P.D. 1644, Adm. Order No. 003, Series of 1981 in Paranaque, Metro Manila. The contract price was and Adm. Order No. 002, Series of 1991. Any administrative P32,108.00. A ten (10) percent downpayment upon the agency is empowered to establish its implementing rules, execution of the contract was required and the balance together with sanctions guaranteed to ensure the payable at a monthly amortization of P318.16 beginning

35

May 17, 1972 for 20 years. Section 14 of the contract installments for a period of seven (7) months. Regarding the provided that the contract will be automatically cancelled claim for refund, it believes that the complainant is not upon default in payment of any installment within 90 days entitled to it under the Maceda Law as the contract was from its due date. entered into on April 17, 1972 before the effectivity of the On July 16, 1973, Cordova was informed through a letter said law. In connection with the alleged amounts given to a signed by Manuel M. Serrano, executive vice-president and certain Atty. Revilla, the said person is not an employee or general manager of the petitioner corporation that the authorized representative of the respondent corporation. contract was cancelled due to non-payment of installments We are inclined to believe the claim of complainant that for a period of seven (7) months in violation of the contract, because the SSS and THI financing plan on the first lot particularly the above-mentioned section. All the earlier pushed through, he obtained the second lot. Respondent payments were considered forfeited in favor of the claimed that there is nothing in the second contract to show corporation as liquidated damages. that it was in lieu or in substitution of the first contract. On February 14, 1975, Cordova filed a letter-complaint with However, the circumstances under which the P4,046.78 the Investigating Committee of the Department of Trade (required 20% downpayment) was paid clearly shows that asking for a refund of the total payments he made what complainant wanted was a lot which could be used for amounting to P8,627.86. SSS housing loan so that he could have a house on the lot. Because he could not obtain such housing loan on the first This case was referred to respondent National Housing lot, he applied for and was given the house and lot and for Authority (NHA) which, pursuant to Presidential Decree No. which the second contract was executed by the respondent. 957, was vested with jurisdiction over the said case. Therefore the second contract was deemed entered into by On February 21, 1978, NHA issued the following resolution: the parties in lieu of or in substitution of the first contract This is a complaint for refund of payments made on a lot especially when we consider the fact that it was on the filed by Arturo Cordova against Tropical Homes, Inc., owner second contract that complainant was able to attain his of Better Living Subdivision at Paranaque, Metro Manila. objective of having a house and lot. Complainant is, therefore, entitled to the refund of his payments on the first Complainant's evidence shows that on April 17, 1972, he contract totalling P8,627.86 with interest from 1 October bought on installment basis a lot in the above-named 1976, the date the NHA took cognizance of this case. subdivision at a contract price of P32,108.00 (Exhibit "A"); that contract was arranged by Atty. Nelson Revilla, an PREMISES CONSIDERED, it is recommended that authorized broker of said corporation; that after paying the respondent Tropical Homes, Inc. be ordered to refund to downpayment and its monthly amortization, he was asked Arturo Cordova the amount of P8,627.86 with 12% interest by Atty. Revilla to pay for the 20% of the lot value in order per annum from 1 October 1976, until fully paid." (Rollo, pp. that he may apply for a loan with the SSS; that in compliance 36-37). with this requirement, he paid the respondent corporation A subsequent motion for reconsideration was denied by the amount of P4,406.78; that not being satisfied what is to NHA. be granted to him by SSS as loan, he was told by Atty. Revilla In the meantime, on April 2, 1978, P.D. No. 1344 was passed that he will arrange for a second loan with Tropical Homes, providing, inter alia: 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 x x x x x x x x x Atty. Revilla; that he was told by the respondent Section 1. In the exercise of its functions to regulate the real corporation that Atty. Revilla was no longer connected with estate trade and business and in addition to its powers it and that he could not use his lot to secure a second loan provided for in Presidential Decree No. 957, the National from it; that he had paid a total amount of P8,627.86; that Housing Authority shall have exclusive jurisdiction to hear on May 1973, a separate contract covering a house and lot and decide cases of the following nature: on the same subdivision was entered into by complainant a) Unsound real estate business practices; with respondent; that through SSS housing loan, the house b) Claims involving refund and any other claims filed by was constructed by respondent and turned over to sub-division lot or condominium unit buyer against the complainant; and that complainant demanded for the project owner, developer, dealer, broker or salesman; and refund of the payments he made on the first lot. c) Cases involving specific performance of contractual and Respondent in its answer states that the contract it entered statutory obligations filed by buyers of subdivision lot or into with the complainant had been duly cancelled in condominium unit against the owner, developer, dealer, accordance with Section 14 thereof due to non-payment of broker or salesman.

36

Section 2. The decision of the National Housing Authority Nonetheless, we decided to give due course and require shall become final and executory after the lapse of fifteen memoranda from the parties instead of summarily denying (15) days from the date of its receipt. It is appealable only to the petition on a minute resolution because it is best for the President of the Philippines and in the event the appeal public policy that the issue raised should be resolved. (See is filed and the decision is not reversed and/or amended Edu v. Ericta, 35 SCRA 481); Gonzales v. Commission on within a period of thirty (30) days, the decision is deemed Elections, 27 SCRA 835). Sufficiently numerous persons are affirmed. Proof of the appeal of the decision must be affected by NHA powers and functions. furnished the National Housing Authority. It is alleged that the mode of review on appeal prescribed On June 19, 1978, the petitioners, availing of this decree, by the decree violates the constitutional guarantee of due appealed to the President of the Philippines. process. In said appeal, it stated that " ... we do not thereby waive the This is predicated on the petitioner's theories that (1) the right to question the constitutionality of said Decree, which word "only" as used in Sec. 2 of said decree, " ... appealable we believe to be violative of the due process clause of the only to the President of the Philippines ... ." is a bar to Constitution as well as contrary to the primordial concept of recourse to courts of law; and (2) the "affirmance-by-in separation of powers. (p. 55, Rollo) action" on the part of the President of the Philippines would No copy of this appeal was furnished to respondent NHA. render the NHA decision as final and executory. On July 10, 1978, Cordova then filed a motion for execution. Both premises are without merit. Acting on the motion, NHA issued a Writ of Execution dated The right to appeal is not a natural right nor a part of due July 14, 1978. process, except where it is granted by statute in which case On August 2, 1978, the petitioner was served with said writ it should be exercised in the manner and in accordance with by a deputy of respondent provincial sheriff of Rizal. the provisions of law. (Bello v. Francisco, 4 SCRA 134; Rodriguez v. Director of Prisons, 47 SCRA 153). In other The President failed to act on the appeal. words, appeal is a right of statutory and not constitutional Hence, this present petition for certiorari and prohibition origin. with writ of preliminary injunction. The fact that P.D. No. 1344 does not specifically provide for The only issue raised in this petition is the constitutionality judicial review of NHA decisions affirmed or reversed by the of P.D. No. 1344. President, does not necessarily preclude judicial review. The petitioner contends that P.D. No. 1344 is The extraordinary writs of certiorari, prohibition, unconstitutional on grounds that a) it deprives herein mandamus or quo warranto (Rules 65 and 66) are always petitioner access to courts of law and b) the manner of available in proper cases where there is no appeal or other appeal provided for therein is violative of due process. plain, speedy, or adequate remedy in the ordinary course of This Court does not decide questions of a constitutional law. The power of the Supreme Court to strike down acts nature unless that question is properly raised and which infringe on constitutional protections or to nullify presented in appropriate cases and is necessary to a administrative decisions contrary to constitutional determination of the case i.e. the issue of constitutionality mandates cannot be reduced or circumscribed by any must be the very lis mota presented. (Alger Electric, Inc. v. statute or decree. No statute is needed to bring arbitrary Court of Appeals, 135 SCRA 37; Dumlao v. Commission on acts or decisions within our jurisdiction. Elections, 95 SCRA 392; People Vera, 65 Phil. 56). On the issue of "affirmance-by-in action," failure on the part On this ground alone, the petition should be dismissed. of the President to act upon an appeal does not necessarily mean that the appealed decision automatically becomes The petitioner has not clearly shown how a ruling upon the final and executory. Access to the courts of law may still be constitutionality of P.D. No. 1344 will in any way affect the made as mentioned above. Therefore, any such decision is correctness of the decision rendered against him. There is far from being final and executory. no discussion whatsoever on the merits of the original case. As far as the records show, the NHA decision appears to be There is no question that a statute may vest exclusive fair and correct. Moreover, the resolution promulgated by original jurisdiction in an administrative agency over respondent NHA, was issued before the passage of the certain disputes and controversies falling within the questioned decree. The writ of execution it issued, as agency's special expertise. The very definition of an admitted by the petitioner in its memorandum, did not in administrative agency includes its being vested with quasi- anyway rely upon P.D. No. 1344. The issue of judicial powers. The ever increasing variety of powers and constitutionality is poorly discussed. functions given to administrative agencies recognizes the

37 need for the active intervention of administrative agencies Francisco A. Puray, Sr. and Inego A. Gorduiz for Municipality in matters calling for technical knowledge and speed in of Bontoc. countless controversies which cannot possibly be handled by regular courts. MEDIALDEA, J.:p Moreover, there is the well-settled principle that all This refers to two (2) petitions for certiorari under Rule 65 reasonable doubts should be resolved in favor of the of the Rules of Court seeking to annul and set aside the constitutionality of a statute, for which reason, it will not be accused orders of respondent judge which dismissed the set aside as violative of the constitution except in "clear complaints filed with the trial court, as having been issued cases" (People v. Vera, supra). with grave abuse of discretion, and to order the same We, therefore, hold that P.D. No. 1344 in so far as the respondent to assume jurisdiction and proceed with the vesting of exclusive original jurisdiction over cases determination of the cases on the merits. involving the sales of lots in commercial subdivisions to The antecedent facts of each case are as follows: NHA and the mode of appeal provided therein are concerned, is not unconstitutional. G.R. No. 38204 Parenthetically, Section 9(3) of Batas Pambansa 129 On June 15, 1950, Congress passed Republic Act No. 522 empowers the Court of Appeals to have: 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 jurisdiction of the Supreme Court in accordance with the A boundary dispute however, later arose between the Constitution, the provisions of this Act, and of subparagraph municipality of Bontoc and the municipality of Sogod with (1) of the third paragraph and subparagraph (4) of the the latter claiming that the former exercised jurisdiction not 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 provides a uniform appellate body for all administrative On June 17, 1952, the Provincial Board of Leyte issued agencies, instrumentalities, boards and commissions Resolution No. 617 directing the holding of a plebiscite subject to the limited exceptions cited above. among the barrios of Pangi, Taa part of Sta. Cruz, Tuburan, 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 G.R. No. L-38204 September 24, 1991 cast in favor of Sogod than those in favor of Bontoc. THE MUNICIPALITY OF SOGOD, petitioner, On April 4, 1959, the Provincial Board of Leyte issued vs. Resolution No. 519 recommending to the President of the HON. AVELINO S. ROSAL, as Judge of the Court of First Philippines and/or to the Congress of the Philippines that instance of Southern Leyte, Branch III, THE PROVINCIAL Republic Act 522 be amended so as to include in said Act BOARD OF SOUTHERN LEYTE, HON. SALVACION O. creating the municipality of Bontoc, the following barrios YNIGUEZ, in her capacity as Governor of Southern Leyte claimed by Sogod which are in the heart of Bontoc but not and the MUNICIPALITY OF BONTOC, respondents. included in said law, namely: Baugo, Himakilo, Esperanza, Hibagwan, Pamahawan, Mahayahay, Bunga, Da-o and G.R. No. 38205 September 24, 1991 Maoylab The Board also recommended that a law be THE MUNICIPALITY OF SOGOD, petitioner, enacted annexing to the municipality of Sogod the following vs. barrios which are very near Sogod and are claimed by the HON. AVELINO S. ROSAL, as Judge of the Court of First latter but are included in the law creating Bontoc, namely: Instance of Southern Leyte, Branch III and the Laogawan, Taa Tuburan, Sta. Cruz and Pangi he board Municipality of Bontoc, respondents. further recommended that the boundary line between the Godofredo L. Cualteros for petitioner. 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 of Sogod. The complaint prayed that the municipality of board of Leyte, and reconstituted the barrios and sitios Bontoc be ordered to pay Sogod onehalf of the total amount which shag compose the municipalities of Bontoc and of taxes collected by the former from the inhabitants of the Sogod. The executive order also specified Granada Creek as aforesaid barrios during the period from 1950 to 1959. the boundary line separating Bontoc and Sogod. On August 31, 1973, the trial court issued an order However, on July 14, 1960, the President of the Philippines, dismissing Civil Case No. R-1707 on the ground that the thru then Executive Secretary Castillo sent a telegram to the right to collect taxes would ultimately depend on Civil Case Provincial Board of Southern Leyte which states as follows: No. R-1706, which was already dismissed for lack of BY DIRECTION OF PRESIDENT PLEASE SUSPEND jurisdiction and that the issue as to boundary dispute have IMPLEMENTATION OF EXECUTIVE ORDER 368 SERIES not yet been decided in a plebiscite for that purpose. 1959 RECONSTITUTION (sic) BARRIOS AND SITIOS TO Hence this petition for certiorari under Rule 65 seeking to COMPOSE MUNICIPALITIES OF SOGOD AND BONTOC AND annul the above order of the judge. READJUSTING TERRITORIES SAID MUNICIPALITIES UNTIL The common issue to be resolved in these petitions is FURTHER ADVISE STOP TO DETERMINE TRUE WISHES OF whether or not the trial court gravely erred in dismissing INHABITANTS PLEASE SUPERVISE HOLDING OF the two cases for lack of jurisdiction. PLEBISCITE IN BARRIO AND SITIOS AFFECTED ADVISING Jurisdiction has been defined as the power and authority to THIS OFFICE IMMEDIATELY OF RESULT. 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 boundary dispute. applicable statute on the matter is indispensable. It is a On June 24, 1970, the municipality of Sogod filed Civil Case settled rule that jurisdiction of a court is determined by the No. R-1706 for certiorari and prohibition with the Court of statute in force at the time of commencement of action 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 taking cognizance of the long pending boundary dispute Court of Legaspi City Br. 1, No. 68789, November 10, 1986, between the two municipalities and to enjoin the 145 SCRA 408; Dela Cruz v. Moya, No. 65192, April 27, municipality of Bontoc from exercising territorial 1988, 160 SCRA 838). 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 municipality of Sogod. necessary for the determination of the question of whether On August 31, 1973, the trial court dismissed the action for the trial court has the authority to decide on the municipal lack of jurisdiction over the subject matter of the case. On boundary dispute are the following: 1) Republic Act No. December 17, 1973, the trial court denied petitioner's 522, creating the municipality of Bontoc; 2) Republic Act motion for reconsideration. No. 3590, the Revised Barrio Charter, revising Republic Act 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 case. Republic Act No. 522 defines the jurisdiction of the 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 which applied Republic Act No. 2370, known as the Barrio line which will separate the two municipalities. 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 on January 1, 1960 as revised by Republic Act No. 3590 on adjoining municipalities may also partake of an June 22, 1963, known as the Revised Barrio Charter, barrios administrative nature that can be decided by the may be created and their boundaries altered only by Act of administrative department, involving as it does, the Congress or by the corresponding provincial board upon adoption of means and ways to carry into effect the laws 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 boundaries of municipalities and barrios. pending investigation and proceedings on the boundary Further, the law then vested the right to settle boundary dispute. disputes between municipalities on the provincial board It is worthy to note however, that up to this time, the pursuant to Section 2167 of the Revised Administrative controversy between these two municipalities has not been Code, which reads: settled. However, this dispute has already been overtaken SEC. 2167. Municipal boundary disputes. — How settled — by events, namely, the enactment of the 1987 Constitution Disputes as to jurisdiction of municipal governments over and the New Local Government Code on February 10, 1983, places or barrios shall be decided by the province boards of which imposed new mandatory requirements and the provinces in which such municipalities are situated, procedures on the fixing of boundaries between after an investigation at which the municipalities concerned municipalities. The 1987 Constitution now mandates that shall be duly heard. From the decision of the provincial no province, city, municipality or barangay may be created, 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 Secretary), whose decision shall be final. Where the places the local government code and subject to approval by a or barrios in dispute are claimed by municipalities situated majority of the votes cast in a plebiscite in the political units in different provinces, the provincial boards of the directly affected. Hence, any alteration or modification of provinces concerned shall come to an agreement if possible, the boundaries of the municipalities shall only be by a law but, in the event of their failing to agree, an appeal shall be to be enacted by Congress subject to the approval by a had to the Secretary of Interior (Executive Secretary), majority of the votes cast in a plebiscite in the barrios whose decision shall be final. (Municipality of Hinabangan v. affected (Section 134, Local Government Code). Thus, under Municipality of Wright, 107 Phil. 394). present laws, the function of the provincial board to fix the 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 when petitioner municipality filed the civil actions in 1970 In view of the length of time that this municipal boundary before the trial court, the provincial board of Southern dispute had remained unresolved, due to the possibility that Leyte had not yet conducted a plebiscite as ordered by the Republic Act No. 522 has lost its practicability or has Executive Department in 1960 or rendered any order become obsolete considering the geographical location of settling the dispute. Petitioner municipality should have barrios in Southern Leyte, especially those enumerated in elevated the matter of delay to the then Secretary of Interior Republic Act No. 522, which apparently, are much nearer to (now Executive Secretary) for action instead of bringing it Sogod than to Bontoc, this Court finds that this matter to the trial court. Although existing laws then vested on the should be referred to the Congress of the Philippines for provincial board the power to determine or even alter whatever legislative action that may be necessary under the municipal boundaries, the Secretary of Interior or the circumstances. 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. L- Civil Service] Commission." As noted in such 38205 are AFFIRMED. communication: "This Office is not aware of any provision of SO ORDERED. law requiring that Precinct or Station Commanders should 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 ANTONIO J. VILLEGAS, in his capacity as Mayor of the Commission has invoked, contemplates positions in the City of Manila, CAPTS. JAMES BARBERS, ANTONIO competitive or classified service as provided for in an PARALEJAS and FELICISIMO LAZARO, in their respective appropriation or budget measure to which an appointment, capacity as Precinct or Station Commanders of the as the term appointment is used in Section 24 of the Civil Manila Police Department, petitioners-appellees, Service Act of 1959, is required. Obviously, this provision of vs. law cannot cover mere designations or assignments to an ABELARDO SUBIDO, in his capacity as Commissioner of area of command. Thus, Precinct or Station Commanders in Civil Service, respondent-appellant. the Manila Police Department are so designated for 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 for respondent-appellant. Respondent Commissioner of Civil Service was however 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 1 functions of the different departments," could 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 2 possessed by them. 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 assumption then that the "corrective measures" could be time eligibles to the position of inspector first class who supplied by respondent Commissioner if "unsatisfactory could be so designated. Reliance was also had, as on the situations are found" still the appropriate conclusion, original directive of respondent Commissioner, of such according to the lower court, considering "the civil service designation of petitioners as not being "in conformity with eligibilities and training of petitioners-captains, the failure the recommendation of the U.S. Agency for International of respondent Commissioner to show unsatisfactory Development to assign and shift [Manila Police Department] situations in the assignment or designation of petitioners- personnel to positions to which they have qualified in captains as precinct commanders, and the reasons stated in appropriate examinations."7 the petition, [is that] respondent Commissioner has acted The decision now on appeal, promulgated on July 14, 1966, without or in excess of jurisdiction and with grave abuse of noted that respondent Commissioner did not dispute the discretion in issuing and trying to enforce the directive in 10 civil service eligibilities and training of petitioners Barbers, question." Paralejas and Lazaro. Reference was made to the opening What cannot be denied, as stressed in such decision, is the paragraph of the petition wherein the following appeared: absence of any law "which prescribes that precinct "Petitioner Capt. Barbers passed his First Grade Civil commanders be police majors," resulting necessarily in the Service (supervisor) Promotional Examination taken on directive of respondent Commissioner of Civil Service being March 31, 1962 with a high mark of 80.1 per cent; he is also declared null and void, the writ of prohibition thus being a law graduate (1964) and graduated as a full scholar; he the appropriate remedy, with an injunction perpetually completed the Basic Course for Patrolman at the MPD restraining him from the commission of the acts complained training school (1945), the Advanced Course (1946), the of. Detective Course (1946) as class topnotcher with an The question, to repeat, is one of power. What is clear is that average of 96.5 per cent and the Senior Police Refresher it is petitioner City Mayor that could so designate the other Course (1962) at the Philippine Army School Command, Ft. petitioners to assume the position of station commanders. Bonifacio; and he also trained at the International Police That power is his, and his alone. He is not required by law to Academy in Washington, D.C., the New York City Police share it with respondent Commissioner, who must justify by Academy, the Pinkerton Detective Agency in New York, the the valid conferment of authority the action taken by him in Dade County Police Department in Miami, Florida, the U.S. requiring that the City Mayor replace the other petitioners. Military Police School at Fort Gordon, Georgia, and the Power is not to be presumed, it must be shown. Respondent Michigan State University Communications Seminar. Commissioner failed to do so. It was not surprising Petitioner Capt. Paralejas passed the civil service therefore that the lower court ruled against him. As set examination for police lieutenant in 1945 with a rating of forth at the outset, we sustain the lower court and affirm the 77.90 per cent; he is a commerce graduate (1939) 2nd year judgment appealed from. law, F.E.U.; he completed the supervisors 2nd In-Service 1. The power of petitioner City Mayor as to who could be Training in the City of Manila (medalist) and the Senior designated as station commanders of the three Manila Police Refresher Course (1962) at the Philippine School police precincts is conceded. No dispute as to his authority Command, Ft. Bonifacio. Petitioner Capt. Lazaro passed the to do so exists. The Charter is clear. The narrow question, Criminal Investigation in Secret Service examination therefore, is whether such designation could be frustrated (pensionado) given by the Civil Service Commission in by the directive of the respondent Commissioner. For this 1947, with an average of 83.62%; he completed the official to be justified in interposing a negative, he must supervisors 2nd In-Service Training in the City of Manila show that an applicable law authorizes him to do so. and the Senior Police Refresher Course (1962) at the Philippine Army School Command, Ft. Bonifacio, graduating It is well-settled that respondent Commissioner at the most as third honor; first grade eligible under Rep. Act 1080, may inquire only as to the eligibility of the person thus being a member of the Philippine Bar."8 chosen to fill up a vacant position. If he were, then respondent Commissioner of Civil Service must so attest. The decision then noted that while respondent That function being discharged, his participation ceases. So Commissioner had ruled "that the appropriate eligibility for we have held in the leading case of Villanueva v. Balallo,11 the position of precinct commander is that of police the opinion being penned by the present Chief Justice. Thus: inspector, first class (police major), no valid reason has "When the appointee is qualified, as petitioner herein been advanced to show that such eligibility is appropriate admittedly is, then the Commissioner of Civil Service has no and that of police captain is not."9 It was likewise made choice but to attest to the appointment. It has been clear in the decision that there was no law prescribing that repeatedly held that an appointment becomes complete precinct commanders be police majors. Even on the

42 upon the performance of the last act required by law of the the statute is silent as to the existence of power, there the appointing power. The attestation required of the matter rests. Commissioner of Civil Service is merely a check to assure Only Congress can remedy the situation. It is not for compliance with the civil service laws." respondent Commissioner to do so on the flimsy allegation In this particular case, the eligibility of the other petitioners that he possesses authority to promulgate rules and as police captains is admitted. That was duly set forth in the standards dealing specifically with the supervision, the decision now on appeal. More than that, their being preparation and rating of all civil service examinations,14 exceptionally well-qualified, was likewise duly noted the making of investigation and special reports upon all therein, a finding of fact binding on us as this appeal raises matters relating to the enforcement of the civil service purely questions of law. The justification for the directive of law,15 the authority to pass upon all removal, separation respondent Commissioner is thus premised on his alleged and suspension of permanent officers and employees in the power to insist on a specific eligibility for each of the other competitive and classified service,16 and the determination petitioners designated, that of "Inspector First Class (Police of appeals instituted by any person believing himself to be or Detective Major)." aggrieved17 — a power which does not have the remotest In his brief, however, he can point to no express provision connection with an exercise by petitioner City Mayor of a that would confer on him such a power. His failure is competence exclusively lodged in him to designate the other understandable because there is none. At the most, then, he petitioners as precinct commanders. would rely on a reading of the Civil Service Act from which, This conclusion has reinforcement from authoritative mistakenly to our mind, he would infer such authority. pronouncements that of late have come from us. Thus, from According to his brief: "Said authority to fix appropriate a 1968 decision:18 "It would seem fairly obvious then that eligibilities being corollary to respondent's 'exclusive the law does not impose a rigid or mechanistic formula on jurisdiction over the approval under the Civil Service Law the appointing power, compliance with which is inexorable and rules of all appointments including promotions to and a deviation therefrom fatal. Far from it. If there be positions in the competitive service" and/or being an adherence to the concept that public office is a public trust, implied power, there is therefore no need for an express as there ought to be, the criterion should be what public provision setting forth in black and white what eligibilities welfare demands, what satisfies public interest. For it is are appropriate for what positions."12 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 himself that his power is necessarily limited. He would, question. To that overmastering requirement, personal however, construe such a restricted authority expansively. ambition must of necessity yield. Discretion if not plenary, He would rely on an ambiguity. It would be a stultification at least sufficient, should thus be granted to those entrusted 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 purpose were within the contemplation of Congress, an most favorable position to determine who can best fulfill appropriate form of words could have been utilized. The the functions of the office thus vacated. Unless, therefore, absence of such language negates its existence. the law speaks in the most mandatory and peremptory tone, 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, less could they supersede applicable statutes, not only in the opinion coming from Justice Castro: "For it is not what they command but also in what they omit. It does not enough that an aspirant is qualified and eligible or that he is admit of doubt that in the hierarchy of legal norms, such next in rank or line for promotion, albeit by passive rules and standards definitely occupy an inferior status. If prescription. It is just as necessary, in order for public 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 prop, for his brief was conspicuously silent in that respect. eligible, who in his best estimation are possessed of the That sober second thought had much to recommend it. No requisite reputation, integrity, knowledgeability, energy and such support is yielded by the above constitutional judgment. After all, it is the local executive, more than provision to his assertion of authority. anyone else, who is primarily responsible for efficient The Constitution on the civil service has only four brief governmental administration in the locality and the sections, two of which, prohibiting partisan political effective maintenance of peace and order therein, and is activities and additional or double compensation, have directly answerable to the people who elected him. clearly no relevance.23 The fourth section guarantees Nowhere is this more true than in the sensitive area of security of tenure, again without any bearing on the present police administration." litigation.24 It is only the first section then, referred to While the two above cases are not squarely in point, still the above, that may conceivably touch upon the issue involved, principle therein announced as to the respect to be although in a rather remote way. For it is more the accorded to the exercise of the authority to appoint by the expression of an ideal than a source of authority. Note that official entrusted by law to do so and the minimum in stressing merit and fitness, it recognized that it should interference allowed the Commissioner of Civil Service "be determined as far as practicable by competitive under his power to inquire into the eligibility of the examination." appointee lends further support to the conclusion arrived There was no creation of a Civil Service Commission. No at. It would appear clear, therefore, that respondent such official as a Civil Service Commissioner was provided Commissioner does not possess any statutory authority to for. Respondent's position is a statutory creation, the extent interfere with the power of petitioner City Mayor to make of his powers being thus limited and circumscribed. It the designation of the other petitioners. would thus be futile on his part to trace the existence of an 2. Respondent Commissioner, in his answer to the petition alleged authority to the Constitution. assailing his directive, would lend plausibility to his claim As a matter of fact, if there are constitutional overtones to that he was legally empowered to do so by this argument: this litigation, petitioners, not the respondents, are the "Furthermore, said assignments are not in conformity with beneficiaries. As they did correctly point out, not even the the recommendation of the U.S. Agency for International President is vested with the power of control over local Development to assign and shift MPD personnel to positions officials. He exercises only "general supervision . . . as may 20 to which they have qualified in appropriate examinations." be provided by law, . . . ."25 Respondent Civil Service To state such a contention is to reject it. As a foundation for Commissioner cannot be deemed then to be possessed of a the challenged directive it is, to put it mildly, far from stable. greater prerogative, being himself an official of a lower As an asserted basis to justify what respondent did, it is far category in the executive branch. Moreover, what the from persuasive. To put it bluntly, as a source of power, its Constitution enjoins on the President as well as all those value is nil. It would not be easy to imagine a plea more entrusted with executive functions is to "take care that the offensive to our sovereignty and derogatory to our dignity laws be faithfully executed."26 Certainly, it is a manifestation as an independent nation. of less than fealty to such a duty if an executive official like All governmental powers are lodged in officials of our respondent would enforce a statutory provision not as government both national and local. An alien agency at the written but as expanded and enlarged by him through a most may be permitted to serve in an advisory capacity. It process of strained construction. can suggest, but it cannot command. Its wishes do not 4. One last word. Nothing is better settled in the law than constitute law. Our officials, therefore, are not bound to that a public official exercises power, not rights. The obey. If it were otherwise, then a posture of subserviency government itself is merely an agency through which the and mendicancy would be sanctioned. That this Court will of the state is expressed and enforced. Its officers 21 cannot allow. therefore are likewise agents entrusted with the 3. In the answer of respondent Commissioner, there was an responsibility of discharging its functions. As such there is implication that his directive finds support in the no presumption that they are empowered to act. There constitutional provision on the Civil Service. More must be a delegation of such authority, either express or specifically, he did point to the requirement that implied. In the absence of a valid grant, they are devoid of appointments in the civil service "shall be made only power. What they do suffers from a fatal infirmity. That according to merit and fitness, to be determined as far as principle cannot be sufficiently stressed. In the appropriate practicable by competitive examination."22 Apparently, he language of Chief Justice Hughes: "It must be conceded that had a change of mind subsequently as to such constitutional departmental zeal may not be permitted to outrun the

44 authority conferred by statute."27 Neither the high dignity of 2. To pay complainant actual, nominal and moral damages, the office nor the righteousness of the motive then is an the amount of which will be proved in the hearing; acceptable substitute. Otherwise the rule of law becomes a 3. To pay complainant attorney's fee in the sum of myth. Such an eventuality, we must take all pains to avoid. P10,000.00; WHEREFORE, the decision of the Court of First Instance of 4. To pay complainant exemplary damages in the sum of July 14, 1966 is affirmed. Without pronouncement as to P10,000.00 to set an example and to avoid a repetition of costs. such illegal and unsound business practices of the Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, respondent. 6 Sanchez and Teehankee, JJ., concur. This petition was amended on August 17, 1990 by Castro, J., concurs in the result. impleading petitioners Magdiwang Realty Corporation Barredo, J., took no part. (MRC) which appeared to be the registered owner of the subject lot as per TCT No. 76023. G.R. No. 109703 July 5, 1994 On April 3, 1991 the HLURB, whose authority to hear and REALTY EXCHANGE VENTURE CORPORATION AND/OR decide the complaint was challenged by REVI in its answer, 7 MAGDIWANG, REALTY CORPORATION, petitioner, rendered its judgment in favor of private respondent and vs. ordered petitioners to continue with the sale of the house LUCINA S. SENDINO and the OFFICE OF THE EXECUTIVE and lot and to pay private respondent P5,000 as moral SECRETARY, Office of the President, Malacañang, damages, P5,000 as exemplary damages and P6,000 as 8 Manila, respondents. attorney's fees and costs of the suit. An appeal from this decision was taken to the HLURB OAALA Arbiter, which Siruelo, Muyco & Associates Law Office for petitioner. affirmed the Board's decision. The decision of the OAALA Sisenando Villaluz, Jr. for private respondent. Arbiter was appealed to the Office of the President, herein public respondent. KAPUNAN, J.: On January 7, 1993, the public respondent rendered its decision dismissing the petitioners' appeal. Motion for Private respondent Lucina C. Sendino entered into a reconsideration of the decision was denied by the public reservation agreement with Realty Exchange Venture, Inc. respondent on January 26, 1993. Consequently petitioners (REVI) for a 120-square meter lot in Raymondville come before this Court, in this petition, which the Court Subdivision in Sucat, Paranaque for P307,800.00 as its resolves to treat as a petition for certiorari, raising the purchase price. 1 She paid P1,000.00 as partial reservation following issues: fee on January 15, 1989 and completed payment of this fee on January 20, 1989 by paying P4,000.00. 2 I On July 18, 1989, private respondent paid REVI P16,600.00 PUBLIC RESPONDENT COMMITTED SERIOUS ERROR IN as full downpayment on the purchase price. 3 However, she DECLARING THAT THE HOUSING AND LAND USE was advised by REVI to change her co-maker, which she REGULATORY BOARD HAS QUASI-JUDICIAL FUNCTIONS, agreed, asking for an extension of one month to do so. NOTWITHSTANDING ABSENCE OF EXPRESS GRANT BY EXECUTIVE ORDER NO. 90 OF DECEMBER 17, 1986 WHICH For alleged non-compliance with the requirement of CREATED IT. AND EVEN IF THE HLURB HAS QUASI- submission of the appropriate documents under the terms JUDICIAL FUNCTIONS, PUBLIC RESPONDENT LIKEWISE of the original agreement, 4 REVI, through its Vice-President SERIOUSLY ERRED IN DECLARING THAT THE BOARD OF for Marketing, informed respondent of the cancellation of COMMISSIONERS IS ALLOWED TO SIT IN A DECISION TO the contract on the 31st of July 1989. 5 RENDER JUDGMENT AND TO DELEGATE ITS QUASI- On April 20, 1990, private respondent filed a complaint for JUDICIAL AUTHORITY TO A SUBORDINATE OFFICE. Specific Performance against REVI with the office of II Appeals, Adjudication and Legal Affairs (OAALA) of the Housing and Land Use Regulatory Board (HLURB) asking PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION that respondent be ordered: 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, Paranaque, Metro Manila; III

45

PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION No. 648 in 1981 transferred all the functions of the National IN DECLARING THAT ONLY NOTARIAL NOTICE OF Housing Authority (pursuant to Presidential Decrees Nos. RESCISSION MAY VALIDLY CANCEL A RESERVATION 957, 1216 and 1344) to the Human Settlements Regulatory AGREEMENT PURSUANT TO REPUBLIC ACT NO. 6552. Commission (HSRC) consolidating all regulatory functions As the first and third issues raised by the petitioners strike relating to land use and housing development in a single 10 at the core of the case at bench, this Court deems it entity. Being the sole regulatory body for housing and 11 appropriate to initially dispose of the issue of private land development, the renamed body, the HLURB, would respondent's capacity to bring her complaint before the have been reduced to a functionally sterile entity if, as the HLURB-OAALA. petitioner contends, it lacked the powers exercised by its 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' unilateral rescission of the contract without unduly As explicitly provided by law, jurisdiction over actions for concerning itself with a mere procedural slip, the non- specific performance of contractual and statutory joinder of private petitioner's husband in the original obligations filed by buyers of subdivision lot or complaint before the HLURB. Moreover, since petitioners condominium unit against the owner or developer, is vested participated in the administrative proceedings without exclusively in the HSRC, Section 1 of PD 1344, in no objecting to or raising the procedural infirmity, they were uncertain terms, provides: certainly estopped from raising it on appeal before the Sec. 1. In the exercise of its functions to regulate real estate Office of the President and before this Court. trade and business and in addition to its powers provided Proceeding to the principal issues raised by the petitioner, for in Presidential Decree No. 957, the National Housing while E.O. 85 dated 12 December 1986 abolished the Authority shall have exclusive jurisdiction to hear and Ministry of Human Settlements (MHS), it is patently clear decide cases of the following nature: from a reading of its provisions that the said executive A. Unsound real estate business practices; order did not abolish the Human Settlements Regulatory B. Claims involving refund and any other claims filed by Commission (HSRC) which continued to exercise its powers subdivision lot or condominium unit buyer against the and functions even after the Ministry of Human Settlements project owner, developer, dealer, broker or salesman; and ceased to exist. In spite of the Aquino Government's stated C. Cases involving specific performance of contractual and intention of eradicating what it considered the vestiges of statutory obligations filed by buyers of subdivision lot or the previous regime, it was not its intention to create a condominium unit against the owner, developer, dealer, vacuum by abolishing those juridical entities, agencies, broker or salesman. (Emphasis Ours) corporations, etc., attached to or supervised by the MHS, which performed vital administrative functions. Pertinently, This is reinforced by section 8 of EO 648 (otherwise known Section 3 of E.O. 85 mandates that: as the Charter of the Human Settlements Regulatory Commission) which took effect on February 7, 1981, thus: . . . The final disposition and final organizational alignment or attachment of the juridical entities, agencies, Sec. 8. Transfer of Functions. — The Regulatory functions of corporations and councils attached to, or under the the National Housing Authority pursuant to Presidential administrative supervision of the MHS including their Decree Nos. 957, 1216, 1344 and other related laws are respective existing projects, appropriations and other assets hereby transferred to the Human Settlements Regulatory shall be subject to subsequent enactments by the President. 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 performance for contractual and statutory obligations filed of the Judiciary Reorganization Act of 1980 is untenable. by buyers of subdivision lots against developers — had Thus, as correctly pointed out by petitioner, section 19, suddenly lots its adjudicatory powers by the mere fiat of a paragraph 6 of said law is material to the issue of where change in name through E.O. 90. One thrust of the jurisdiction lies, and We quote: multiplication of administrative agencies is that the Sec. 19. . . . interpretation of such contracts and agreements and the determination of private rights under these agreements is (6) In all other cases not within the exclusive jurisdiction of no longer a uniquely judicial function. 16 The absence of any any court, tribunal, persons or body exercising judicial or provision, express or implied, in E.O. 90, repealing those quasi-judicial functions. quasi-judicial powers inherited by the HSRC from the xxx xxx xxx National Housing Authority, furthermore militates against Neither can We accede to private respondents' claim that petitioners' position on the question. resort to the courts is justified under section 41 of PD 957 Going to petitioners' contention that the decision of the specifically under the phrase "legal remedies that may be OAALA should have been rendered by the Board of available to aggrieved subdivision lot buyers." Commissioners sitting en banc, we find ample authority — There is no question that a statute may vest exclusive both in the statutes and in jurisprudence-justifying the original jurisdiction in an administrative agency over Board's act of dividing itself into divisions of three. Under certain disputes and controversies falling within the Section 5 of E.O. 648 which defines the powers and duties of agency's special expertise. The constitutionality of such the Commission, the Board is specifically mandated to grant of exclusive jurisdiction to the National Housing "(a)dopt rules of procedure for the conduct of its business" Authority (now Housing and Land Use Regulatory Board) and perform such functions necessary for the effective over cases involving the sale of lots in commercial accomplishment of (its) above mentioned functions." Since subdivisions was upheld in Tropical Homes Inc. v. National nothing in the provisions of either E.O. 90 or E.O. 648 denies Housing Authority (152 SCRA 540 [1987]) and again or withholds the power or authority to delegate sustained in a later decision in Antipolo Realty Corporation adjudicatory functions to a division, we cannot see how the v. National Housing Authority (153 SCRA 399 [1987]) where Board, for the purpose of effectively carrying out its We restated that the National Housing Authority (now administrative responsibilities and quasi-judicial powers as HLURB) shall have exclusive jurisdiction to regulate the real a regulatory body should be denied the power, as a matter estate trade and business in accordance with the terms of of practical administrative procedure, to constitute its PD No. 957 which defines the quantum of judicial or quasi- adjudicatory boards into various divisions. After all, the judicial powers of said agency. 13 power conferred upon an administrative agency to issue rules and regulations necessary to carry out its functions Clearly, therefore, the HLURB properly exercised its has been held "to be an adequate source of authority to jurisdiction over the case filed by the petitioners with its delegate a particular function, unless by express provision adjudicative body, the OAALA, in ordering petitioners to of the Act or by implication it has been withheld." 17 The comply with their obligations arising from the Reservation practical necessity of establishing a procedure whereby Agreement. In general, the quantum of judicial or quasi- cases are decided by three (3) Commissioners furthermore judicial powers which an administrative agency may assumes greater significance when one notes that the exercise is defined in the agency's enabling act. In view of HLURB, as constituted, only has four (4) full time the Court's pronouncement in United Housing Corporation commissioners and five (5) part time commissioners to deal vs. Hon. Dayrit, supra, recognizing the HLURB as the with all the functions, administrative, adjudicatory, or successor agency of the HSRC's powers and functions, it otherwise, entrusted to therefore follows that the transfer of such functions from it. 18 As the Office of the President noted in its February 26, the NHA to the HRSC effected by Section 8 of E.O. 648, series 1993 Resolution denying petitioners' Motion for of 1981, thereby resulted in the acquisition by the HLURB of Reconsideration, "it is impossible and very impractical to adjudicatory powers which included the power to "(h)ear gather the four (4) full time and five (5) part time and decide cases of unsound real estate business practices . . commissioners (together) just to decide a case." . and cases of specific performance." 14 Obviously, in the Considering that its part time commissioners act merely in exercise of its powers and functions, the HLURB must an ex-officio capacity, requiring a majority of the Board to sit interpret and apply contracts, determine the rights of the en banc on each and every case brought before it would parties under these contracts, and award damages result in an administrative nightmare. 19 whenever appropriate. 15 We fail to see how the HSRC — which possessed jurisdiction over the actions for specific 47

Finally, petitioners' assertion that RA 6552 is inapplicable in damages as may be proper under the peculiar the instant case because the said law does not apply to cases circumstances of the cases brought before it. of reservation agreements finds no merit in the case at WHEREFORE, premises considered, the petition is hereby bench in view of Section 24 of P.D. 957 which provides: 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 ANG TIBAY, represented by TORIBIO TEODORO, makes no distinction between "option" and "sale" 20 which, manager and propietor, and under P.D. 957 also includes "an exchange or attempt to sell, NATIONAL WORKERS BROTHERHOOD, petitioners, an option of sale or purchase, a solicitation of a sale or an vs. offer to sell directly." 21 This all-embracing definition THE COURT OF INDUSTRIAL RELATIONS and NATIONAL virtually includes all transactions concerning land and LABOR UNION, INC., respondents. housing acquisition, including reservation agreements. Office of the Solicitor-General Ozaeta and Assistant Attorney Since R.A. 6552 mandates cancellation by notarial Barcelona for the Court of Industrial Relations. act — among other requirements — before any cancellation Antonio D. Paguia for National Labor Unon. of a contract may be effected, petitioners' precipitate Claro M. Recto for petitioner "Ang Tibay". cancellation of its contract with private respondent without Jose M. Casal for National Workers' Brotherhood. observing the conditions imposed by the said law was invalid and improper. LAUREL, J.: In fine, the HLURB-OAALA acted within the scope of its The Solicitor-General in behalf of the respondent Court of authority in ordering petitioners to comply and continue Industrial Relations in the above-entitled case has filed a with the sale of the house and lot subject of the contract motion for reconsideration and moves that, for the reasons between the original parties. It cannot be gainsaid that the stated in his motion, we reconsider the following legal quasi-judicial functions exercised by the body are necessary conclusions of the majority opinion of this Court: incidents to the proper exercise of its powers and functions 1. Que un contrato de trabajo, asi individual como colectivo, under E.O. 90 and the laws enacted delineating the scope of sin termino fijo de duracion o que no sea para una authority of its Board of Commissioners. Denying the body determinada, termina o bien por voluntad de cualquiera de those functions so necessary in carrying out its power to las partes o cada vez que ilega el plazo fijado para el pago de regulate housing and land use results in its effective los salarios segun costumbre en la localidad o cunado se emasculation as an important regulatory body in an area termine la obra; vital to the national economy. 2. Que los obreros de una empresa fabril, que han celebrado The acute housing shortage problem has prompted contrato, ya individual ya colectivamente, con ell, sin tiempo thousands of middle and lower class buyers of houses and fijo, y que se han visto obligados a cesar en sus tarbajos por lots and condominium units to enter into all sorts of haberse declarando paro forzoso en la fabrica en la cual agreements with private housing developers involving all tarbajan, dejan de ser empleados u obreros de la misma; manner of installment schemes under contracts drawn 3. Que un patrono o sociedad que ha celebrado un contrato exclusively by these developers. Many of these virtual colectivo de trabajo con sus osbreros sin tiempo fijo de contracts of adhesion entrap innocent buyers by requiring duracion y sin ser para una obra determiminada y que se cash deposits under reservation agreements which include, niega a readmitir a dichos obreros que cesaron como sometimes in the fine print, default clauses guaranteeing consecuencia de un paro forzoso, no es culpable de practica huge monetary windfalls for the developers in the event injusta in incurre en la sancion penal del articulo 5 de la Ley that their buyers (oftentimes for the flimsiest of reasons) No. 213 del Commonwealth, aunque su negativa a readmitir default by failing to come up with certain requirements. se deba a que dichos obreros pertenecen a un determinado While the Court can take judicial notice of this pernicious organismo obrero, puesto que tales ya han dejado deser practice, it can only hope that future legislation would empleados suyos por terminacion del contrato en virtud del address the need to protect the innocent middle or lower paro. class home purchaser. In the case of the individual victim, The respondent National Labor Union, Inc., on the other this Court can only go to the extent of awarding such hand, prays for the vacation of the judgement rendered by 48 the majority of this Court and the remanding of the case to opinion that it is not necessary to pass upon the motion for the Court of Industrial Relations for a new trial, and avers: 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 by the records of the Bureau of Customs and the Books of nature, to make several observations regarding the nature Accounts of native dealers in leather. of the powers of the Court of Industrial Relations and 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 re- Toribio 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 a company or employer union dominated by Toribio no evidentiary value. 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 (Commonwealth Act No. 103). It is more an administrative collective bargaining, majority rule and elective than a part of the integrated judicial system of the nation. It representation are highly essential and indispensable. is not intended to be a mere receptive organ of the (Sections 2 and 5, Commonwealth Act No. 213.) Government. Unlike a court of justice which is essentially passive, acting only when its jurisdiction is invoked and 6. That the century provisions of the Civil Code which had deciding only cases that are presented to it by the parties been (the) principal source of dissensions and continuous litigant, the function of the Court of Industrial Relations, as civil war in Spain cannot and should not be made applicable will appear from perusal of its organic law, is more active, in interpreting and applying the salutary provisions of a affirmative and dynamic. It not only exercises judicial or modern labor legislation of American origin where the quasi-judicial functions in the determination of disputes industrial peace has always been the rule. between employers and employees but its functions in the 7. That the employer Toribio Teodoro was guilty of unfair determination of disputes between employers and labor practice for discriminating against the National Labor employees but its functions are far more comprehensive Union, Inc., and unjustly favoring the National Workers' and expensive. It has jurisdiction over the entire Brotherhood. Philippines, to consider, investigate, decide, and settle any 8. That the exhibits hereto attached are so inaccessible to question, matter controversy or dispute arising between, the respondents that even with the exercise of due diligence and/or affecting employers and employees or laborers, and they could not be expected to have obtained them and regulate the relations between them, subject to, and in offered as evidence in the Court of Industrial Relations. accordance with, the provisions of Commonwealth Act No. 9. That the attached documents and exhibits are of such far- 103 (section 1). It shall take cognizance or purposes of reaching importance and effect that their admission would prevention, arbitration, decision and settlement, of any necessarily mean the modification and reversal of the industrial or agricultural dispute causing or likely to cause a judgment rendered herein. strike or lockout, arising from differences as regards wages, shares or compensation, hours of labor or conditions of The petitioner, Ang Tibay, has filed an opposition both to tenancy or employment, between landlords and tenants or the motion for reconsideration of the respondent National farm-laborers, provided that the number of employees, Labor Union, Inc. laborers or tenants of farm-laborers involved exceeds In view of the conclusion reached by us and to be herein thirty, and such industrial or agricultural dispute is after stead with reference to the motion for a new trial of submitted to the Court by the Secretary of Labor or by any the respondent National Labor Union, Inc., we are of the or both of the parties to the controversy and certified by the

49

Secretary of labor as existing and proper to be by the character. There are primary rights which must be Secretary of Labor as existing and proper to be dealth with respected even in proceedings of this character: by the Court for the sake of public interest. (Section 4, ibid.) (1) The first of these rights is the right to a hearing, which It shall, before hearing the dispute and in the course of such includes the right of the party interested or affected to hearing, endeavor to reconcile the parties and induce them present his own case and submit evidence in support to settle the dispute by amicable agreement. (Paragraph 2, thereof. In the language of Chief Hughes, in Morgan v. U.S., section 4, ibid.) When directed by the President of the 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty Philippines, it shall investigate and study all industries and property of the citizen shall be protected by the established in a designated locality, with a view to rudimentary requirements of fair play. determinating the necessity and fairness of fixing and (2) Not only must the party be given an opportunity to adopting for such industry or locality a minimum wage or present his case and to adduce evidence tending to establish share of laborers or tenants, or a maximum "canon" or the rights which he asserts but the tribunal must consider rental to be paid by the "inquilinos" or tenants or less to the evidence presented. (Chief Justice Hughes in Morgan v. landowners. (Section 5, ibid.) In fine, it may appeal to U.S. 298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) In the voluntary arbitration in the settlement of industrial language of this court in Edwards vs. McCoy, 22 Phil., 598, disputes; may employ mediation or conciliation for that "the right to adduce evidence, without the corresponding purpose, or recur to the more effective system of official duty on the part of the board to consider it, is vain. Such investigation and compulsory arbitration in order to right is conspicuously futile if the person or persons to determine specific controversies between labor and capital whom the evidence is presented can thrust it aside without industry and in agriculture. There is in reality here a notice or consideration." mingling of executive and judicial functions, which is a departure from the rigid doctrine of the separation of (3) "While the duty to deliberate does not impose the governmental powers. obligation to decide right, it does imply a necessity which cannot be disregarded, namely, that of having something to In the case of Goseco vs. Court of Industrial Relations et al., support it is a nullity, a place when directly attached." G.R. No. 46673, promulgated September 13, 1939, we had (Edwards vs. McCoy, supra.) This principle emanates from occasion to joint out that the Court of Industrial Relations et the more fundamental is contrary to the vesting of al., G. R. No. 46673, promulgated September 13, 1939, we unlimited power anywhere. Law is both a grant and a had occasion to point out that the Court of Industrial limitation upon power. Relations is not narrowly constrained by technical rules of procedure, and the Act requires it to "act according to (4) Not only must there be some evidence to support a justice and equity and substantial merits of the case, finding or conclusion (City of Manila vs. Agustin, G.R. No. without regard to technicalities or legal forms and shall not 45844, promulgated November 29, 1937, XXXVI O. G. 1335), be bound by any technicalities or legal forms and shall not but the evidence must be "substantial." (Washington, be bound by any technical rules of legal evidence but may Virginia and Maryland Coach Co. v. national labor Relations inform its mind in such manner as it may deem just and Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. equitable." (Section 20, Commonwealth Act No. 103.) It shall 965.) It means such relevant evidence as a reasonable mind not be restricted to the specific relief claimed or demands accept as adequate to support a conclusion." (Appalachian made by the parties to the industrial or agricultural dispute, Electric Power v. National Labor Relations Board, 4 Cir., 93 but may include in the award, order or decision any matter F. 2d 985, 989; National Labor Relations Board v. Thompson or determination which may be deemed necessary or Products, 6 Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting expedient for the purpose of settling the dispute or of Co. v. National Labor Relations Board, 2 Cir., 98 F. 2d 758, preventing further industrial or agricultural disputes. 760.) . . . The statute provides that "the rules of evidence (section 13, ibid.) And in the light of this legislative policy, prevailing in courts of law and equity shall not be appeals to this Court have been especially regulated by the controlling.' The obvious purpose of this and similar rules recently promulgated by the rules recently provisions is to free administrative boards from the promulgated by this Court to carry into the effect the compulsion of technical rules so that the mere admission of avowed legislative purpose. The fact, however, that the matter which would be deemed incompetent inn judicial Court of Industrial Relations may be said to be free from the proceedings would not invalidate the administrative order. rigidity of certain procedural requirements does not mean (Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, that it can, in justifiable cases before it, entirely ignore or 24 S. Ct. 563, 568, 48 Law. ed. 860; Interstate Commerce disregard the fundamental and essential requirements of Commission v. Louisville and Nashville R. Co., 227 U.S. 88, due process in trials and investigations of an administrative 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. In the right of the foregoing fundamental principles, it is 624.) But this assurance of a desirable flexibility in sufficient to observe here that, except as to the alleged administrative procedure does not go far as to justify orders agreement between the Ang Tibay and the National without a basis in evidence having rational probative force. Worker's Brotherhood (appendix A), the record is barren Mere uncorroborated hearsay or rumor does not constitute and does not satisfy the thirst for a factual basis upon which substantial evidence. (Consolidated Edison Co. v. National to predicate, in a national way, a conclusion of law. Labor Relations Board, 59 S. Ct. 206, 83 Law. ed. No. 4, Adv. This result, however, does not now preclude the concession Op., p. 131.)" 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 (Section 10, ibid.) other evidence as may be relevant to the main issue (6) The Court of Industrial Relations or any of its judges, involved. The legislation which created the Court of therefore, must act on its or his own independent Industrial Relations and under which it acts is new. The consideration of the law and facts of the controversy, and failure to grasp the fundamental issue involved is not 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 literally Relations personally to decide all controversies the same is hereby granted, and the entire record of this coming before them. In the United States the difficulty is case shall be remanded to the Court of Industrial Relations, solved with the enactment of statutory authority with instruction that it reopen the case, receive all such authorizing examiners or other subordinates to render final evidence as may be relevant and otherwise proceed in decision, with the right to appeal to board or commission, accordance with the requirements set forth hereinabove. So but in our case there is no such statutory authority. ordered. (7) The Court of Industrial Relations should, in all Avanceña, C. J., Villa-Real, Imperial, Diaz, Concepcion and controversial questions, render its decision in such a Moran, JJ., concur. manner that the parties to the proceeding can know the various issues involved, and the reasons for the decision G.R. No. L-58292 July 23, 1987 rendered. The performance of this duty is inseparable from ADAMSON & ADAMSON, INC., petitioner, the authority conferred upon it. vs. HON. AUGUSTO M. AMORES, JOHNSON & JOHNSON

51

[PHILIPPINES], INC. and the BOARD OF INVESTMENTS, national economy on a self-sustaining basis;" and that respondents. Johnson's expanded activities would cause Adamson not FERNAN, J.: only irreparable injury but also injustice, on March 17, 1980, Adamson filed in the BOI a petition praying that In this petition for certiorari, one of two competing therein respondent Johnson be "ordered not only to manufacturers of hygienic and other related products forthwith stop and desist in the manufacture, distribution, claims that it was denied its right to procedural due process and sale of its aforealleged expanded product lines but also by the Board of Investments. to recall from the market all said products being distributed Since its organization on April 5, 1954, Adamson & for sale and that after proper investigation and hearing to Adamson, Inc. [hereinafter referred to as Adamson] has make the same permanent."5 been actually engaged in the "manufacture, sale and The BOI, through its Vice-Chairman and Managing Head, exportation of absorbent cotton wool products, surgical Edgardo L. Tordesillas, required Johnson to answer the dressings, bandages, medicinal, pharmaceutical products, petition. Upon motion of Johnson, the BOI granted it an chemicals, chemical products, sanitary towels and other extension of time to file its answer. Thereafter, Adamson articles and commodities.1 Similarly, Johnson & Johnson filed an urgent motion reiterating its prayer for the issuance [Philippines], Inc. [Johnson for short] was organized on of a stop and desist order. February 17, 1956 "to manufacture, import, export, buy, sell or otherwise acquire and deal in and with, either at On May 8, 1980, Director Justiniano Y. Ascaño of the BOI's wholesale or retail, pharmaceutical drugs, toiletry, hygiene Project Administration and Legal Department, set the products and related products of every kind, and chemical petition for hearing in a letter which reads thus: compositions of all kinds and uses."2 Please be informed that the Petition filed by Adamson & As it was not yet a Philippine national as defined by the Adamson, Inc. praying that the Board of Investments issue Investment Incentives Act [Republic Act No. 5186], an immediate order to respondent Johnson & Johnson Adamson applied for certificates of authority from the Philippines, Inc. to stop and desist from manufacturing, Board of Investments [BOI] in compliance with Section 4 of distributing and selling disposable diapers, sanitary the Foreign Investment Act [Republic Act No. 5455]. feminine tampons and absorbent cotton has been set for According to Adamson, said certificates were necessary to hearing on May 14, 1980 at the PALD Conference Room at 6 enable it "to expand its business activities to areas which 2:30 P.M. while within its aforealleged primary purpose, Adamson On May 9, 1980, Johnson filed its answer to the petition was neither actually manufacturing nor marketing as at the alleging that it did not have to secure from the BOI a effectivity of the aforesaid two laws." ...3 After the certificate of authority for the manufacture, distribution and publications and postings of notices regarding said sale of disposable diapers, sanitary tampons and absorbent applications, Johnson registered its opposition thereto. On cotton because said business activities were but a May 28, 1973 and on November 7, 1974, the BOI granted continuation of its principal business activity; that assuming Adamson said certificates of authority which it held on to that it had expanded or developed its principal business until it became a Philippine national on January 6, 1979.4 activity, such expansion or development was in the same On the other hand, Johnson has remained a foreign line of business that it was actually and lawfully engaged in corporation. Sometime in 1979, after it had acquired new prior to the effectivity of Republic Act No. 5455; that the machineries, Johnson commenced the manufacture and products complained of were within the category of the marketing of disposable diapers. During the first quarter of products the manufacture, importation or sale of which it 1980, it manufactured sanitary feminine tampons and had disclosed to the BOI prior to the effectivity of the absorbent cotton. aforesaid law; and that assuming that there were 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 Board of Investments the corresponding certificates of The May 14, 1980 hearing was held as scheduled and per its authority after prior publication and posting of notices;" minutes the following transpired therein: 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: Counsel for the Petitioner, Atty. Blanco expounded on his views on the merits of the Petition and upon summing up Director J. Y. - Legal Department the justifications for the prayer in the Petition, cited the Ascaño letter of Minister Ongpin as Head of the Iron and Steel Authority to Goodyear Steel Pipe Corporation, directing it to Div. Chief, E.O. - Foreign Business cease operations on its activities which were not authorized Arrobio by the ISA, that BOI a government instrumentality has the power and authority to issue a stop and desist order. Div. Arturo C. del -do- Rosario Thereafter, the Chairman asked counsel for the Respondent, Atty. de los Angeles, if Respondent added equipment in the Oscar C. Pacquing -do- manufacture of diapers in 1979; if these were imported and the value thereof, to which Counsel answered that there - Chemical Industries were new equipment introduced and imported valued at Jaime Torres Dept. US$4 Million and that the required authority from the Central Bank was secured. Counsel also stated that there Matilde Domingo -do- was an investment made in the amount of US$l Million generated by borrowings. - Counsel, Adamson & Atty. J. R. Blanco Counsel for Respondent also stated that the composition of Adamson diaper is similar to that of the sanitary napkins which Respondent has been producing since 1971 which is made Mr. Lucas - Pres., Adamson & of rayon and cotton, that the product is an improvement of Adamson Adamson the product to meet the policy of the Board. Atty. Esguerra - Blanco Law Office Mr. Natividad, one of the representatives of Johnson & Johnson likewise stated that Respondent has installed Atty. E. de los - Counsel, Johnson & equipment to produce sanitary tampons way back in 1968 Angeles Johnson but were actually completed in 1972. However, marketing thereof was not pursued for strictly business marketing - Johnson's reasons. Production of Johnson's cottonette [soft puff], on Mr. de Leon Representative the other hand, was discontinued after 2 years from 1967 but Johnson's buds have been introduced since 1968. In the Mr. Robles -do- production of diapers, Mr. Natividad informed the Committee that surplus profits of the corporation was put in Mr Natividad -do- and therefore not considered as fresh capital. The Chairman made the opening statement that the At this juncture, Mr. Adamson discussed three types of proceedings was for the purpose of hearing the Petition tampons and inquired how Johnson & Johnson can install filed by Adamson against Johnson and to hear arguments machines to produce tampons [OB] type in 1968 when the and receive evidences from the parties in order to resolve product was introduced by Karl Heinz only in 1973. the case expeditiously. In this connection, Mr. Natividad stated that their mother The Chairman re-stated the main issue raised on the company has been producing tampons but it was not the OB petition, that Johnson & Johnson allegedly expanded into type but of another type, however, construction is the same, another line of business without securing prior authority as can be supported by documents. from the Board of Investments as provided under the law On the Chairman's acknowledgment, Counsel for Petitioner, and the rules because Respondent is not actually and Atty. Blanco presented three issues to the Committee. lawfully engaged in the manufacture of the products 1] Johnson & Johnson allegedly manufactured, distributed [disposable diapers, sanitary feminine tampons and and marketed disposable cotton diapers in 1979 which it is absorbent cotton] and that a stop and desist order be issued not actually and lawfully engaged in as of the effectivity of by the Board against Respondent. The Chairman then R.A. 5455; requested both parties to give their views and evidences so that on the basis of which, the Board can act immediately on 2] Johnson & Johnson manufactured, distributed and the Petition. marketed likewise tampons and absorbent cotton in the early 1980 without prior authority from the Board; and

53

3] Can Johnson & Johnson resurrect the production of of stenographic notes and/or excerpts of the preliminary products which it has abandoned in 1974? That in its report hearing on 14th May 1980 and the rules of this Honorable it failed to consider the phrase 'in which they were actually Commission's procedures for hearings on the merits."10 and lawfully engaged in provided in the law. Johnson opposed the motion and Adamson filed a rejoinder Mr. Robles, representative of Respondent Johnson & thereto. Johnson, in answer to the above manifestations of Atty. Director Ascaño denied said motion for lack of merit in his Blanco, stated that they did not omit consideration of Sec. 3, order of October 16, 1980. The order noted that during the Rule IV of the Rules of R.A. 5455 and that the activities May 14, 1980 hearing, both parties were afforded every contained in their Form 7 is a matter of generalization. Mr. opportunity to fully discuss the facts and the issues involved Robles explained that Johnson & Johnson's expansion is in and that after Adamson had filed its motion of August 19, the same line of business for which no authority is required 1980, another hearing was conducted on September 5, from the Board as it has been engaged prior to 1968 in the 1980. It stated that there was no compelling reason to hold manufacture and marketing of pharmaceutical drugs, another hearing considering that the parties had discussed hygienic products, toiletries and which activities they were extensively the facts and expounded in a scholarly manner engaged in as to date. He further explained that if Johnson the legal provisions involved in their respective see [sic] that the markets are good, there is no reason for memoranda, and that another hearing would be Johnson to make an expansion but only to improve its inconsistent with Adamson's plea for an early disposition of products for the benefit of the consumers. the petition and the BOI's objectives and policies on the 11 Mr. Robles further stated that under the law, they have the matter. 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 Gentlemen: issues have been cleared and the facts gathered from the Please be informed of the Board decision dismissing the hearing shall be useful and that there being no other Petition filed by Adamson & Adamson, Inc. against Johnson matters to be discussed, he asked the parties to submit their & Johnson [Phils.], Inc. praying that the Board of respective memorandum within fifteen [15] days from the Investments issue a stop and desist order against the latter date of the hearing. from continuing in the manufacture and marketing of On this point, Atty. Blanco informed the Chairman that he disposable diapers, sanitary feminine tampons and cannot produce his memo within said period but he will absorbent cotton. The Board finds that the said activities submit it later, which the Chairman granted constitute expansion in the same line of business in which The meeting was adjourned at 3:30 p.m. Johnson & Johnson [Phils.], Inc. was actually and lawfully engaged in as of the effectivity of Republic Act No. 5455 and Certified correct: the same were financed by internally generated funds, [Sgd.] hence do not need prior BOI approval. MARILOU P. OCAMPO Please be guided accordingly. NOTED: Very truly yours, [Sgd.] [Sgd.] LETICIA VIÑA-IBAY LILIA R. BAUTISTA Acting Division Head. 8 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 heard, the issue of whether or not Adamson may introduce Philippine nationals who were adequately exploiting new evidence in support of its motion, arose. After the Johnson's expanded business activities, it was entitled to parties had submitted their respective memoranda, the exemplary and moral damages. It prayed that the BOI's lower court allowed the introduction of new evidence. letter decision be set aside and that a writ of preliminary Adamson then filed a request for subpoena. The pertinent injunction and/or restraining order be issued enjoining portions of said request state: Johnson from engaging in its expanded business activities.13 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. Ascaño himself Director, Project Adm. a preliminary injunction and held that to grant said writ & Legal Dept. would prejudge the case in favor of Adamson considering Common Address: that the status quo or the last actual peaceable uncontested BOARD OF INVESTMENTS status prior to the filing of the petition in the BOI was that Johnson was manufacturing and/or marketing absorbent Industry & Investments Bldg. cotton, sanitary tampons and disposable diapers. 385 Buendia Avenue Extension Makati, Metro Manila Citing Section 4, Rule IV of the Rules and Regulations to Implement Republic Act No. 5455, the lower court ruled Common Documents: that Johnson did not have to obtain BOI prior authorization 1. BOI's entire file on the 1980 case of Adamson & Adamson, to engage in the questioned business activities because on Inc. vs. Johnson & Johnson [Phils.], Inc. September 30, 1968 [when the said law took effect], 2. BOI's entire file on Adamson & Adamson, Inc. Johnson was actually engaged in the manufacture and/or 3. BOI's entire file on Johnson & Johnson [Phils.], Inc. marketing of absorbent cotton, sanitary tampons and disposable diapers and therefore its alleged expanded 4. BOI's written rules of procedure in litigious proceedings business activities were in the same line of business it was before BOI. 15 engaged in prior to the aforesaid date. The lower court As said request was granted by the lower court, Johnson stressed that fact was best shown in Johnson's report to the moved to quash the subpoena on the grounds, among other BOI wherein it listed absorbent cotton, sanitary tampons things, that it was improper and oppressive to require and disposable diapers under the respective product groups Director Ascaño and Governor Bautista to testify and of cotton products, hygiene products and non-woven explain their decision of October 21, 1980 and the fabrics. proceedings relative thereto; that said officials were not the Anent Adamson's claims that the May 14, 1980 hearing at custodians of BOI records; and that the documents sought 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 writ of preliminary injunction as Adamson had failed to invoked by the parties through counsel, the Court finds the establish its right to said writ and that said right was Motion to Quash subpoena meritorious. In so far as the violated. request for subpoena concerns Governor Lilia R. Bautista and Atty. Justiniano Y. Ascaño 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 subpoena thereby preventing it from establishing the would be asked merely on the procedure that was followed irregular BOI proceeding and exercising its right to examine in the questioned hearing of 14 May 1980 and since the the entire BOI records of both companies.18 Adamson comes proceedings that transpired would appear in the record of to this Court raising the following issues: the BOI case entitled Adamson & Adamson, Inc., petitioner, a. Can a Court of First Instance for the purpose of denying a versus Johnson & Johnson [Philippines], Inc., respondent. 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. Ascaño 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 16 SO ORDERED. observe the fundamental and essential requirements of due Thereafter, Adamson filed the instant petition for certiorari process in justiciable cases presented before them.20 with a prayer for the issuance of a preliminary injunction. However, the standard of due process that must be met in Alleging that the May 14, 1980 hearing was held only for the administrative tribunals allows a certain latitude as long as 21 purpose of determining whether an immediate stop and the element of fairness is not ignored. Hence, there is no desist order should be issued considering that no issues had denial of due process where records show that hearings 22 as yet been joined as the notice for the hearing was sent to were held with prior notice to adverse parties. But even in the parties a day before Johnson filed its answer, Adamson the absence of previous notice, there is no denial of claims that in acting on the merits of the petition, the BOI procedural due process as long as the parties are given the 23 violated its right to procedural due process. Specifically, opportunity to be heard. Adamson contends that its "cardinal primary rights" were Based on the foregoing, We rule that petitioner was not violated in the BOI proceedings because: [a] the May 14, deprived of its right to procedural due process in the BOI. In 1980 hearing being merely on the issuance of an immediate the first place, it was notified of the May 14, 1980 hearing. stop and desist order and not on the merits of the petition, it The notice specified that the hearing was on the petition was "not given an opportunity to fully present its case and although it also stated therein with particularity, to adduce evidence to establish its right to the issuance of a petitioner's prayer for a stop and desist order. Necessarily, permanent stop and desist order against Johnson"; [b] the it is immaterial that said notice was sent before Johnson decision of the BOI Board of Governors was not supported filed its answer to the petition and there was yet no joinder by substantial evidence as no documentary and testimonial of issues considering that the proceeding was before an evidence were presented under oath; and [c] said decision administrative tribunal where technicalities that should be was based on the views and findings of Director Ascaño and observed in a regular court may be dispensed with. not on the Board of Governors' independent consideration Secondly, during the hearing, petitioner was given the of the law and the facts of the controversy because the opportunity to present its case, including its prayer for a members of said board were not present and no stop and desist order. As clearly enunciated in the minutes 17 stenographic notes were taken during the hearing. of the hearing which We have painstakingly studied and set According to Adamson, the lower court acted with grave forth herein to determine if any irregularity attended the abuse of discretion amounting to lack of jurisdiction in questioned BOI proceeding, it was conducted for the relying on said void BOI decision and in issuing the order of purpose of hearing the arguments and receiving evidence of August 18, 1981 which sustained the motion to quash the parties "to resolve the case expeditiously." Having been 56 given the opportunity to put forth its case, petitioner has SPOUSES JOSE and CARMEN SANTOS, petitioners, vs. only itself, or, better still, its counsel and officers who were NATIONAL LABOR RELATIONS COMMISSION AND present therein, to blame for its failure to do so.24 LUDOVICO PAMPLONA, respondents. Petitioner's right to procedural due process was not D E C I S I O N violated when the hearing was conducted before a director MENDOZA, J.: of the BOI and not before the members of the board This is a petition for certiorari to annul and set aside the themselves who decided the case. The requirements of a fair decisioni[1] of the National Labor Relations Commission, hearing do not mandate that the actual taking of testimony dated June 29, 1994, affirming the labor arbiter’s decision or the presentation of evidence be before the same officer and ordering petitioners to pay private respondent who will make the decision on the case.251avvphi1 Ludovico Pamplona wage differential, 13th month pay, Neither does the absence of stenographers during the service incentive leave pay, and attorney’s fees. hearing affect petitioner's right to due process. Section 16 of The facts are as follows: Republic Act No. 5186, which provides for the powers and duties of the BOI, does not specify that said board is a board Petitioner spouses Jose and Carmen Santos operate two of record. The first paragraph of said section merely gasoline stations and maintain a depot for the storage of mentions minutes" in connection with proceedings of the gasoline in Iloilo City. Private respondent Ludovico board. Therefore, the absence of a transcript of Pamplona worked in said gasoline stations and at the depot. stenographic notes taken during the BOI hearing cannot be The question is whether he was an employee of petitioners claimed to have deprived petitioner of due process of law.26 or an independent contractor doing vulcanizing jobs. Petitioner's suspicion that something aberrant surrounded The question arose because on November 13, 1992, private the drafting of the minutes of the May 14, 1980 hearing respondent filed a complaint against petitioners for because it received a copy thereof five months later is underpayment of wages, non-payment of 13th month pay, unfounded as it is unsupported by evidence. The delayed and attorney’s fees.ii[2] His complaint was later amended to delivery of the minutes to the petitioner does not at all alter include nonpayment of overtime pay, premium pay for the fact that a hearing was conducted on the petition in the holiday, premium pay for rest day, holiday pay, service BOI and petitioner was given the opportunity to present its incentive leave pay, night shift differential, and separation side of the controversy. 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 latter’s 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. vulcanizer who had a shop beside their gasoline station in Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur. Oton, Iloilo; that private respondent was not on their payroll and had no SSS record.xii[12] The position paper

[G.R. No. 120944. July 23, 1998] 57 was supported by the affidavit of petitioner Jose Attached to the supplemental memorandum are the Santos.xiii[13] following:xviii[18] On October 27, 1993, the labor arbiter rendered a decision EXHIBITS DESCRIPTION ordering petitioners to pay private respondent wage “1” Complaint of Appellee dated 13 November, differential, 13th month pay, service incentive leave pay, 1993; and attorney’s fees. The dispositive portion of the decision “2” Notification and Summons dated 25 reads:xiv[14] November, 1993; FOREGOING PREMISES CONSIDERED, judgment is hereby “3” Notice of Hearing dated 16 February, 1993; rendered directing the respondents to pay the complainant, jointly and severally, his benefits, to wit: “4” Notice of Hearing dated 05 May, 1993; P41,157.28 as wage differential; “5” Notice of Hearing dated 07 June, 1993; 4,865.98 as 13th month pay; “6” Order dated 19 July, 1993 445.00 as service incentive leave pay; or a total of “7” Motion for Extension of Time to File Position Paper dated 05 August 1993 filed by complai-nant; P51,115.09 “8” Motion to Amend Complaint dated 12 August, 1993 Said respondents are further ordered to pay attorney’s fees filed by Complainant; equivalent to ten (10%) per centum of the total award or P5,111.50. “9” Position Paper for the Complainant dated 19 August, 1993; All other claims are hereby ordered DISMISSED. “10” Affidavit of appellee Ludovico Pamplona SO ORDERED. dated 12 August 1993; In finding the existence of an employer-employee “11” Affidavit of Bonifacio Mirasol dated 17 relationship between the parties, the labor arbiter August, 1993; said:xv[15] “12” Order dated 24 September, 1993; We give credence to the allegations of the complainant and Bonifacio Mirasol. It would be easy for the respondents to “13” Motion for Reconsideration of the Order deny their relationship with the complainant. It would be dated September 24, 1993, filed by respondents-appellants; very easy for the respondents to say that the complainant is “14” Position Paper for the Appellants dated 12 not their employee. But respondents should bear in mind October, 1993; that complainant had been an instrument to their business. “15” Affidavit of appellant Jose Santos dated 12 Including the name of the complainant in the payrolls is a October, 1993; unilateral act of the respondents. Whether or not the name of the complainant is included in their payroll is immaterial “16” Opposition to the Motion for as long as the complainant is suffered to work for them. reconsideration dated 23 Oct. 1993; Covering the employees with Social Security System “17” Reply to Opposition to the Motion for coverage [sic] is also a unilateral act of the respondents. Reconsidera-tion dated 05 Nov. 93; Employers, more often than not, do not report their “18” Decision dated 27 October, 1993; employees for SSS coverage. “19” Affidavit of Rodolfo Mirasol dated 28 Moreover, why should respondents allow complainant to December, 1993; live in Lapuz with their employees and in Oton when they “20” Affidavit of Camelo Terente dated 28 bought the Oton Gasoline Station? Why should respondents December, 1993; allow complainant to live in Oton or Lapuz when they claim that complainant is an independent vulcanizer? Apparently, “21” Affidavit of Nestor Bautista dated 28 the respondents did these because [respondents] suffered December, 1993; the complainant to work for them. “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 On the other hand, private respondent contends that the December, 1993; supplemental memorandum of appeal of petitioner was “26” Affidavit of Bonifacio Mirasol dated 17 filed beyond the ten-day reglementary period provided by December, 1993; law; that petitioners are bound by their counsel’s failure to 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 “28” Certification issued by the Department of be allowed on appeal; that petitioners should have asked for Labor and Employment. a full-blown hearing earlier; that the existence of an 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 SUPPLEMENTAL MEMORANDUM OF APPEAL; 1. I started working on November 23, 1970 as a gasoline 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 BETWEEN HEREIN PETITIONERS AND RESPONDENT 2. I was transferred in 1981 as a watchman by Spouses Jose LUDOVICO PAMPLONA DESPITE WANT OF EVIDENCE; and Carmen Santos to the Getty Installation in Lapuz, Iloilo City which they rented and used for storing petroleum 3. THE HONORABLE COMMISSION COMMITTED products; GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT 3. Aside from being a watchman in that installation, I [was] RESPONDENT LUDOVICO PAMPLONA IS ENTITLED TO also made to work on Saturdays and Sundays receiving WAGE DIFFERENTIAL, 13TH MONTH PAY AND SERVICE purchase orders for gasoline and other petroleum products INCENTIVE LEAVE WITH PAY; sold by the aforementioned spouses from their stored gasoline and other petroleum products in that installation; Petitioners argue that since they filed their memorandum of appeal within the ten-day reglementary period, their 4. When the said rent over the Getty Installation expired in subsequent pleadings seeking to introduce new evidence 1985 I was assigned and transferred to the gasoline station should have been admitted by the NLRC. They claim that in Oton, Iloilo owned and operated by the Spouses Jose and the new evidence would show the lack of employer- Carmen Santos and I worked in that gasoline station from employee relationship between them and private 4:00 AM to 10:00 AM and from 2:00 PM to 7:00 PM until respondent Pamplona; that a hearing should have been my retirement in August, 1991; conducted by the labor arbiter considering their denial that 5. I received a salary of twenty pesos per week when I was an employer-employee relationship existed between them working at the Caltex Gasoline Station at Fuentes-Ledesma, and private respondent; that there was no legal or factual Iloilo City: at the Getty Installation, my salary was one basis for the awards made by the labor arbiter; and, that hundred twenty pesos per week, and in the Oton Gasoline they should not be bound by the gross negligence of their Station my salary was one hundred pesos per week until my former counsel. retirement in August, 1991;

59

6. After working for more than twenty years (20) in the Ludovico Pamplona was a gasoline station helper in the businesses of Spouses Jose and Carmen Santos, I retired gasoline station of my employer in Fuentes-Ledesma Sts., from work in 1991 at the age of seventy-two (72), because Iloilo City while I was the driver of the first gasoline tanker of old age and my frail body which had been exposed to of my employer and part of my work was also to deliver gasoline and other petroleum products can no longer gasoline and other petroleum products to different stations sustain the daily grind of a gasoline station attendant; including that in Fuentes-Ledesma Sts., Iloilo City, owned 7. I intended to enjoy my retirement secured that I will be and operated by Sps. Jose and Carmen Santos; 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, pay; rented by Spouses Jose and Carmen Santos and used by 8. But to my disappointment and dismay Spouses Jose and them for storing gasoline and other petroleum products; Carmen Santos spurned my plea to be paid of my retirement I personally knew that Ludovico Pamplona was assigned benefits; there because the installation was just across the street 9. Adding to my anguish, I found out that the salary I was from the Caltex Depot where I got gasoline and other receiving during the time I was working with my employers petroleum products considering my tanker at that time was were below the minimum wage provided by law, and the a Caltex tanker, and sometimes I parked my tanker in the mentioned spouses did not pay me any overtime pay, night Getty Installation because it was rented also by my shift differentials, 13th month pay and other premiums employer; mandated by labor laws; And when I returned from out of town trips early in the 10. I also found that I was not reported as an employee in morning at around 4:00 AM in the gasoline station at the business of Spouses Jose and Carmen Santos to the Fuentes-Ledesma Sts., Iloilo City, Ludovico Pamplona was Social Security System hence as a consequence I could not already attending the gas pumps which opened at 4:00 AM, claim any benefit from the Social Security System; similarly when I returned late at night Ludovico Pamplona was still working at the gasoline station which closed at 11. I am executing this affidavit to attest to the fact that around 10:00 PM and when I returned at anytime of the day Spouses Jose and Carmen Santos, as my employers paid my I always found [sic] Mr. Pamplona manning the gas pumps wages not in accordance with the minimum wage law, nor or doing other work at the said gasoline station; did they pay me overtime pay, night shift differentials, holiday pay, and other premiums provided by the Labor Since I also went to the Getty Installation when Ludovico Code; furthermore Spouses Jose and Carmen Santos failed Pamplona was a watchman there he was the one took care to pay me retirement benefits and did not report my all of the petroleum products stored and he was the one employment to the Social Security System. who received purchase orders on Saturdays and Sundays; IN WITNESS WHEREOF, I have hereunto set my hand this Likewise, I delivered gasoline at the Oton gasoline station 12th day of August, 1993, in Iloilo City, Philippines. owned and operated by the Spouses Jose and Carmen Santos and I came to know starting in 1985 that Ludovico LUDOVICO P. PAMPLONA Pamplona was transferred and assigned there because he (Affiant) was the one who climbed the top of the gasoline tanker to Private respondent’s witness, Bonifacio Mirasol, stated in check its content before it will be transferred to the his affidavit:xxiii[23] underground tank of the gasoline station; I, BONIFACIO MIRASOL of legal age, Filipino, married and a I was able to know that Ludovico Pamplona was transferred resident of Tabuc Suba, Jaro, Iloilo City after having been to the gasoline station in Oton, Iloilo because the rent over sworn to in accordance with law do hereby depose and say, the Getty installation expired and when I retired in 1990 he that: was still working there until his retirement also in 1991; I was employed as driver of a gasoline tanker truck by Out of my concern for Ludovico Pamplona who was my co- Spouses Jose and Carmen Santos in their business from employee in the businesses of Jose and Carmen Santos, I February 1977 up to the time when I retired in 1990; asked him sometimes if he was reported to the Social Security System (SSS), and if he was only paying SSS Since the time I was employed in 1972 with the above- premiums and our employer was paying their counterpart mentioned spouses I came to know already a certain contributions and he said he did not know if he was employee of my employer Spouses Jose and Carmen Santos reported in the SSS with an added assurance that it will be by the name of Ludovico Pamplona;

60 taken care of by our employer, Spouses Jose and Carmen it was likewise found that she was not subject to the control Santos; of the alleged employer. In contrast, it has not been really Every December, during our Christmas party, it was proven that private respondent was not included in the customary and natural for Spouses Jose and Carmen Santos payroll. to declare in front of other employees, guests and their Nor is the fact that private respondent has no SSS records immediate relatives that we, Ludovico Pamplona, Roberto conclusive of the question whether he was an employee of Bravo and myself were their most loyal and trusted petitioners. For the fact is that he did not have any SSS employees and their businesses prospered because of our record because his employment was not reported to the SSS efforts and dedication; by petitioners. To find that private respondent was not In fact the three of us were given medallion [sic] because of petitioners’ employee because he did not have a record of our exemplary service which they could no longer refuse to employment in the SSS, when the duty of reporting his notice nor take for granted; employment is that of petitioners, is to reward law violations. Private respondent’s allegation was I am executing this affidavit to attest to the truth and fact corroborated by Bonifacio Mirasol who, in his affidavit, that Ludovico Pamplona was an employee of Spouses Jose stated: and Carmen Santos continuously from 1970 up to his retirement in 1991 in their various businesses so that he Out of my concern for Ludovico Pamplona who was my co- Ludovico Pamplona could claim whatever benefits accruing employee in the businesses of Jose and Carmen Santos, I to him as mandated by labor law; asked him sometimes if he was reported to the Social Security System (SSS), and if he was only paying SSS IN WITNESS WHEREOF, I have hereunto set my hand this premiums and our employer was paying their counterpart 17th day of August 1993, in Iloilo City, Philippines. contributions and he said he did not know if he was (SGD) BONIFACIO MIRASOL reported in the SSS with an added assurance that it will be (Affiant) taken care of by our employer, Spouses Jose and Carmen Santos. A Petition for Certiorari under Rule 65 of the Rules of Court will lie only where a grave abuse of discretion or an act Nor was it an abuse of discretion for the NLRC to deny without or in excess of jurisdiction on the part of the petitioners’ motion for leave to submit additional evidence respondent Commission is clearly shown.xxiv[24] It is to disprove the existence of an employer-employee axiomatic that findings of fact made by labor arbiters and relationship. It is true that, in some cases, the power of the affirmed by the National Labor Relations Commission are NLRC to admit additional evidence on appeal has been not only entitled to great respect, but even finality, and are upheld, but in those cases the failure to submit the evidence considered binding on this Court if the same is supported by was justified.xxx[30] In New Valley Times Press v. substantial evidence.xxv[25] NLRC,xxxi[31] which petitioners cite, the party’s failure to present evidence before the labor arbiter was justified. The The question of whether an employer-employee person in possession of the pertinent documents was ill and relationship exists is a question of fact.xxvi[26] No had to go abroad for treatment. Counsel was in his mid- particular form of evidence is required to prove the eighties and himself was suffering from the debilitating existence of such employer-employee relationship. Any effects of old age. On the other hand, the new counsel did competent and relevant evidence to prove the relationship not immediately come to know about the existence of the may be admitted.xxvii[27] documents which had to be submitted in evidence. The elements considered in determining the existence of an In contrast, petitioners had every opportunity to submit employer-employee relationship are present in this case, to before the labor arbiter’s office the evidence which they wit: (1) the selection and engagement of the employee; (2) sought to adduce in the NLRC. They did not even try to the payment of wages; (3) the power of dismissal; and (4) submit their evidence together with their appeal the power to control the employee’s conduct.xxviii[28] 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 arbiter’s office was due to their evidence, either before the labor arbiter or before the counsel’s 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 company’s payroll, but 61 that case was gross and palpable. As this Court said in that At any rate, if petitioners thought they should submit case:xxxiii[33] additional evidence, they should have asked for a chance to Nothing is more settled than the rule that the mistake of a do so. The fact, however, is that after belatedly filing their counsel binds the client. It is only in case of gross or position paper in the labor arbiter’s office, they did nothing palpable negligence of counsel when the courts must step in more and, in fact, agreed to submit the case for decision. and accord relief to a client who suffered thereby. The mere fact that petitioners denied the allegations in What happened there was that the defendant’s counsel did private respondent’s affidavit and that of Bonifacio Mirasol not only fail to file an answer, as a result of which a did not necessarily warrant the holding of a full-blown judgment by default was entered against the defendant, but hearing considering the above-mentioned observations of also failed to appeal from the judgment or to file a petition the labor arbiter. In addition, it cannot be said that the NLRC for relief therefrom. and the labor arbiter gravely abused their discretion by 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 mistake of their counsel. In fact, it is doubtful there was an This Court will not ordinarily disturb findings of fact of oversight in not presenting the evidence which petitioners administrative agencies like the public respondents. It is sought to introduce later. As accurately observed by private axiomatic that in their exercise of adjudicative functions respondent, the nonproduction of the evidence was they are not bound by strict rules of evidence and of calculated. It was part of counsel’s strategy adopted with procedure. When confronted with conflicting versions of the knowledge and consent of petitioners. factual matters, it is for them in the exercise of discretion to determine which party deserves credence on the basis of Petitioners’ contention that there should have been a full- evidence 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. arbiter’s 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, was received by counsel for the [petitioners] and on 14 petitioners Vicente and Gloria Manalo went to Career October 1993 counsel filed his motion for reconsideration Planners Specialists International, Inc. (CPSI), a licensed 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 Private respondents prayed for the disqualification of in Saudi Arabia for a monthly salary of US$350.00 each. petitioners from overseas employment, and sought to According to petitioners, a placement fee of P40,000.00 was recover from them the SR 1,150 plane fare advanced by imposed as a precondition for the processing of their Victor for Vicente, P10,000.00 as placement fee evidenced papers. They paid only P30,000.00 in cash and executed a by a promissory note, and attorney's fees. promissory note for the balance. Then they were allowed by Mainly, on the basis of the transcripts of petitioners' respondent Elnora Fernandez to sign their contract papers testimonies in the clarificatory questioning before the Rizal but did not issue a receipt for the placement fee despite Provincial Prosecutor in a related criminal case, 4 the POEA demand. issued its Order of 7 May 1990 giving more weight and Shortly before boarding their flight to Saudi Arabia, credence to petitioners' version thus — petitioners were handed their contracts. According to After a careful evaluation of the facts and the evidence Gloria, she was surprised to discover that her position had presented, we are more inclined to give weight to been changed to that of domestic help. However, a CPSI complainants' posture. Complainants' version of the case employee assured her that the change was only for the spontaneously presented in their pleadings is, to our mind, purpose of facilitating her departure and did not in any way more convincing than respondent's stand. Moreover, the alter her employment as tutor. Incidentally, CPSI provided manner by which complainants narrated the whole incident petitioners with the Travel Exit Pass (TEP) of Filipino inspired belief in the allegation that respondent Career is Manpower Services, Inc. (FILMAN), a duly licensed indeed guilty of illegal exaction. Thus, the actual expenses recruitment agency. incurred by herein complainants computed hereinbelow Contrary to the representation of her recruiter, Gloria was less the allowable fees of P3,000.00 (P1,500.00 per worker, actually hired as a domestic help and not as a tutor, so that respondent being a service contractor) should be returned after working for only twenty-five (25) days in Jeddah, she to them. returned to Manila. Soon after, Vicente also resigned from Actual Expenses — his work and followed her home. He could not stand the P30,000.00 — placement fees unbearable working conditions of his employment. 14.00 — application form However, before leaving, he had to execute a promissory 300.00 — psychological test note to cover his plane fare which respondent Victor 1,400.00 — medical exam Fernandez advanced. Vicente also had to sign a quitclaim in P31,000.00 — total favor of CPSI and his employer. less 3,000.00 — processing fees at On 29 February 1988, petitioners sued private respondents P1,500.00 per applicant before the Philippines Overseas Employment Administration (POEA) charging them with illegal exaction, P28,714.00 — amount to be refunded 1 false adverstisement, 2 and violation of other pertinents It appearing, however, that only respondent Career laws, rules and regulations. They demanded the refund of Planners Specialist(s) Int'l. Inc., took part in the collection of the amount exacted from them, plus payment of moral the aforesaid amount, the same should be solely held liable. damages and the imposition of administrative sanctions. 3 We cannot likewise give credence to the Final Quitclaim Private respondents countered: (1) that Gloria applied as signed by complainant Vicente Manalo before he left for the domestic help fully aware that she could not be a tutor since Philippines and presented by respondent as defense. While she did not speak Arabic; (2) that the promissory note for its genuineness may not be in question, we believe that it P10,000.00 was required of petitioners because they were has no bearing on the issue at bar. The aforesaid Quitclaim hired without paying placement fees; (3) that it was deals more with matters concerning complainants' unlikely for petitioners, who were mature, educated and employment abroad. However, the subject of the instant experienced in overseas work, to part with P30,000.00 claim is the refund of complainants' expenses prior to their without securing a receipt; (4) that Vicente executed a deployment to Saudi Arabia. quitclaim in favor of CPSI duly authenticated by embassy On the other hand, we hold FILMAN liable for allowing its officials in Saudi Arabia; (5) that there was no impropriety document such as the TEP to be used by other agency. in having the employment papers of petitioners processed Respondent's defense that there is nothing wrong in this by FILMAN because it was a sister company of CPSI, and because FILMAN is a sister company of CAREER does not private respondents Victor and Elnora were officers in both merit consideration because such practice is not allowed agencies. 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 Records reveal that the only basis for holding respondent April 5, 1989. Career Planners Specialist(s) International, Inc., liable for Anent the claim for moral damages, this Office has no illegal exaction, as held in the previous POEA Order dated jurisdiction to entertain the same. May 7, 1990 was the uncorroborated testimony of the complainants. There was no concrete evidence or proof to WHEREFORE, . . . the Authority of Career Planners support the POEA Administrator's initial findings. Specialist(s) International is hereby suspended for four (4) months or in lieu thereof, a fine of P40,000.00 is hereby We take this opportunity to inform the complainants that imposed for illegal exaction on two counts plus restitution the charge of illegal exaction is a serious charge which may of the amount of P28,714.00 to herein complainants in both cause the suspension or cancellation of the authority or instances. license of a recruitment agency. Therefore, said charge must be proven and substantiated by clear and convincing Filipino Manpower Services, Inc. is hereby meted a fine of evidence. A mere allegation will not suffice to find an agency P40,000.00 for two counts of misrepresentation. Its liable for illegal exaction unless said allegation is supported perpetual disqualification from recruitment activities is by other corroborative circumstantial evidence. In this hereby reiterated. connection, records show that complainants could not The claim for moral damages is dismissed for lack of narrate the specific circumstances surrounding their alleged jurisdiction. payment of the amount of P30,000.00. They could not even Respondent Career's counterclaim is likewise dismissed or remember the specific date when said amount was paid to lack of merit. 5 respondent agency. In addition, when complainants were separately questioned as to how the money was kept Private respondents filed a motion for reconsideration and bundled together prior to being handed to respondent on 4 February 1991, POEA issued a resolution setting arise agency for payment, Gloria Manalo said it was wrapped in a its earlier order stating that — piece of paper while Vicente Manalo said it was placed It is worth mentioning at this point that our sole basis for inside an envelope. 7 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 In Aguinaldo Industries Corporation v. Commissioner of 1991, then Undersecretary of Labor Ma. Nieves Roldan- Internal Revenue 9 We ruled — Confesor (now Secretary of Labor) sustained the To allow a litigant to assume a different posture when he reconsideration of POEA. Her Order reads in part — comes before the court and challenge the position he had We find . . . no cogent reason or sufficient justification to accepted at the administrative level, would be to sanction a reverse or modify the assailed Order. procedure whereby the court — which is supposed to 64 review administrative determinations — would not review, The controversy in the present case centers on the liability but determine and decide for the first time, a question not of private respondents for illegal exaction, false raised at the administrative forum. This cannot be advertisement and violation of pertinent laws and rules on permitted, for the same reason that underlies the recruitment of overseas workers and the resulting requirement of prior exhaustion of administrative remedies imposition of penalty of suspension of the Authority of to give administrative authorities the prior opportunity to respondent CPSI. Quite plainly, We are not concerned here decide controversies within its competence, and in much with employer-employee relations, the procedure of which the same way that, on the judicial level, issues not raised in is outlined in Book VI; rather, with the suspension or the lower court cannot be raised for the first time on appeal. revocation of Authority embodied in Book II. The alleged procedural lapse by respondent POEA was Evidently, no jurisdictional error was accordingly raised by petitioners only before Us, notwithstanding that committed because in cases affecting suspension, such ground was already existing when they appealed to the revocation or cancellation of Authority, the POEA has Secretary of Labor. Ironically, petitioners now question the authority under Sec. 18, Rule VI, Book II, to resolve motions jurisdiction of the Secretary of Labor over the appeal which for reconsideration which may thereafter be appealed to the they themselves elevated to that office. When petitioners Secretary of Labor. Section 18, provides: "A motion for filed their motion for reconsideration with the reconsideration of an order o suspension (issued by POEA) Undersecretary of Labor, this procedural issue was not even or an appeal to the Minister (now Secretary of Labor) from mentioned. Clearly, it would be the height of unfairness and an order cancelling a license or authority may be inequity if We now allow petitioners to backtrack after entertained only when filed with the LRO within ten (10) getting an unfavorable verdict from public respondents working days from the service of the order or decision" whose authority they themselves involved. In Tijam v. (parenthesis supplied). 10 Sibonghanoy We said: ". . . we frown upon the Petitioners also argue that public respondents gravely "undesirable practice" of a party submitting his case for abused their discretion when they violated petitioners' right decision and then accepting the judgment, only if favorable, to administrative due process by requiring clear and and attacking it for lack of jurisdiction, when adverse . . . ." convincing evidence to establish the charge illegal exaction. In this regard, however, We find no procedural infirmity This point is well taken. There was grave abuse of constituting reversible error. discretion. The 1985 POEA Rules and Regulations 11 is divided into In the administrative proceedings for cancellation, eight (8) Books. Book VI, cited by petitioners, is entitled revocation or suspension of Authority or License, no rule "Adjudication Rules". The procedure outlined therein requires that testimonies of complainants be corroborated relates to the original and exclusive jurisdiction exercised by documentary evidence, if the charge of unlawful exaction by POEA through its Adjudication Department "to hear and is substantially proven. All administrative determinations decide all cases involving employer-employee relations require only substantial proof and not clear and convincing arising out of or by virtue of a law or contact involving evidence as erroneously contended by pubic respondents. Filipino workers for overseas employment," involving Clear and convincing proof is ". . . more than mere "[v]iolation of the terms and conditions of employment . . . . preponderance, but not to extent of such certainty as is [d]isputes relating to the implementation and required beyond reasonable doubt as in criminal cases . . ." interpretation of employment contracts . . . [m]oney claims 13 while substantial evidence ". . . consists of more than a of workers against their employers and/or their duly mere scintilla of evidence but may be somewhat less than a authorized agents in the Philippines or vice versa . . . . preponderance . . . ." 14 Consequently, in the hierarchy of [c]laims for death, disability and other benefits arising out evidentiary values, We find proof beyond reasonable doubt of employment . . . . and . . . . [v]iolations of our non- at the highest level, followed by clear and convincing compliance with any compromise agreement entered into evidence, preponderance of evidence, and substantial by and between the parties in an overseas employment evidence, in that order. contract." That the administrative determination of facts may result in On the other hand, Book II entitled "Licensing and the suspension or revocation of the authority of CPSI does Regulations" of the 1985 POEA Rules and Regulations, not require a higher degree of proof. The proceedings are notably Rule VI cited by private respondents, refers administrative, and the consequent imposition of particularly to the procedure for suspension, cancellation suspension/revocation of Authority/License does not make 12 and revocation of Authority or License through the POEA the proceedings criminal. Moreover, the sanctions are Licensing and Regulation Office (LRO). administrative and, accordingly, their infliction does not

65 give rise to double jeopardy when a criminal action is In either case, petitioners, could have viewed them instituted for the same act. differently; but the difference is ultimately inconsequential. Thus We held in Atlas Consolidated Mining and Development The crucial point to consider is that the petitioners Corporation v. Factoran, Jr. 15 — categorically and unequivocally testified that respondents collected from them the amount of P30,000.00 as their . . . it is sufficient that administrative findings of fact are placement fees and that they paid the amount demanded. In supported by evidence, or negatively stated, it is sufficient this regard, it may be worth to emphasize that only that findings of fact are not shown to be unsupported by substantial evidence, not necessarily clear and convincing evidence. Substantial evidence is all that is needed to evidence, is required. Moreover, when confronted with support an administrative finding of fact, and substantial conflicting assertions, the rule that "as between a positive evidence is such relevant evidence as a reasonable mind and categorical testimony which has a ring of truth on one might accept as adequate to support a conclusion (Ang hand, and a bare denial on the other, the former is generally Tibay v. Court of Industrial Relations, 69 Phil. 635, 642; held to prevail . . . ." 17 applies. Police Commission v. Lood, 127 SCRA 762 [1984]. But even on the supposition that there was no payment of The POEA, after assessing the evidence of both parties, P30,000.00, it cannot be denied that private respondents found that private respondents collected from petitioners required petitioners to execute a promissory note for P30,000.00 as placement fees; consequently, it ruled that P10,000.00 purportedly because petitioners were hired there was illegal exaction. Surprisingly, without altering its without paying placement fees. The mere charging of findings of fact, POEA reconsidered its order. It held that P10,000.00, standing alone, is enough to hold private uncorroborated testimonies were not enough to conclude respondents answerable for illegal exaction because the that illegal exaction was committed, particularly so that this allowable amount to be collected per contract worker might result in the suspension or revocation of respondents' according to respondent POEA was only P1,500.00, or authority to engage in recruitment activities. The premise P3,000.00 for both petitioners. that testimonies of petitioners should be supported by some other form of evidence is, to say the least, fallacious. In WHEREFORE, the petition is GRANTED. The challenged Castillo v. Court of Appeals, 16 where the appellate court Orders of respondent Undersecretary of Labor dated 5 July reversed the findings of fact of the trial court by requiring a 1991 and 9 October 1991, as well as the Resolution of higher degree of proof, We held — respondent POEA dated 4 February 1991, having been issued with grave abuse of discretion amounting to lack or . . . we find no strong and cogent reason which justifies the excess of jurisdiction are SET ASIDE, and the original Order appellate court's deviation from the findings and of respondent POEA dated 7 May 1990 is ordered conclusions of the trial court. As pointed out in Hernandez REINSTATED and AFFIRMED. v. Intermediate Appellate Court (189 SCRA 758 [1990]), in agrarian cases, all that is required is mere substantial SO ORDERED. evidence. Hence, the agrarian court's findings of fact which went beyond the minimum evidentiary support demanded G.R. No. L-64284 July 3, 1992 by law, that is, supported by substantial evidence, are final SPS. JOSE S. VELASQUEZ and JUSTINA ADVINCULA- and conclusive and cannot be reversed by the appellate VELASQUEZ, petitioners, tribunal. 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 Ex- in 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 Foregoing premises considered, judgment is hereby Regional Trial Court, National Capital Region, Pasay rendered: City, Metro Manila; and the HON. INTERMEDIATE 1. Dismissing the instant action for lack of interest on APPELLATE COURT, FIRST SPECIAL CASES DIVISION, plaintiff's part to redeem the land in question at its respondents. acquisition price in the amount of P2,319,210.00, which we find reasonable; NOCON, J.: 2. Directing defendants to maintain plaintiff as agricultural Petitioners Jose Velasquez and Justina Velasquez are the lessee in the peaceful possession and enjoyment of the land agricultural lessees of a certain riceland consisting of subject matter of this litigation containing an area of 51,538 51,538 square meters, situated at Sitio Malaking Kahoy, Bo. square meters, more or less, covered by TCT No. 64132 and Ibayo, Parañaque, Metro Manila. The subject property was to respect the rights accorded to him as such by law. originally possessed and claimed by respondent Martin 3. Directing the Clerk of Court, this Court, (sic) to return to Nery. In an action for annulment and reconveyance, the plaintiff the amount of P600.00 which he consigned with the Supreme Court finally decided 1 and declared in 1972, that Court as part of the redemption price for the land in private respondents Lorenzos are co-owners of the land question covered by OR. No. 2402913 dated June 13, 1980. together with Martin Nery. They applied for the 4. Dismissing all other claims and counterclaims for lack of confirmation of their title with the then Court of First evidence in support thereof. 4 Instance of Rizal and the parcel of land was subsequently Petitioner appealed the case to the then Intermediate registered under TCT No. 64132. The title was issued in the Appellate Court, which affirmed the decision of the lower name of following respondents, spouses Martin Nery and court, as follows: Leoncia de Leon Nery, Salud Rodriguez, Gertrudes de Leon, Rosario, Mariano, Pacifico, Onofre, Loloy, Trinidad, Dionisio, IN VIEW WHEREOF, the appeals interposed by the plaintiffs Perfecto, Maria Rebecca, Asuncion, Mauro and Lourdes all (sic) and the defendants Martin Nery, Leoncia de Leon Nery, surnamed Lorenzo. Dionisio, Perfecto, Maria Rebecca, Lourdes, Asuncion and Mauro, all surnamed Lorenzo, are both dismissed for lack of In 1978, respondents Lorenzos filed an action for partition merit, We affirm in toto the Decision in CAR Case No 42. 5 against their co-owners Martin and Leoncia Nery which was docketed as Civil Case No. 5313-P before the Court of First Not satisfied with the decision of the appellate court, Instance of Rizal, Pasay City Branch. In a compromise petitioners now elevated the case to this court in a petition agreement 2 submitted by the parties, the latter agreed to for review on certiorari. sell the said land to respondent Delta Motors Corporation. We find no merit in the instant petition. On August 24, 1979, petitioner Jose B. Velasquez, in his The issues raised by the petitioners before Us is but a capacity as agricultural leasehold tenant, filed an action reiteration of the issues they have raised before the defunct before the then Court of Agrarian Relations against private Court of Agrarian Relations and the then Intermediate respondents, which was docketed as CAR Case No. 42, 6th Appellate Court. The main issue in the instant case however, Regional District, Branch I, Quezon City for the redemption is whether or not the subject property is covered by of the subject property, as he has information that the said Presidential Decree No. 27 or Republic Act 6389. land is offered for sale. Petitioners contend that they should be declared owners of On January 25, 1980, private respondent Delta Motor the land pursuant to Presidential Decree No. 27. But as aptly Corporation purchased the subject property for found by the Court of Agrarian Relations, the land in P2,319,210.00, evidenced by a Deed of question is not covered by Operation Land Transfer. 6 Sale 3 and was issued TCT No. 26486 by the Register of The agricultural land involved in this case consists of 51,538 Deeds of Metro Manila on March 4, 1980. square meters or about 5.15 hectares. The retention limit Petitioner Jose S. Velasquez seeks to redeem the said land provided by P.D. No. 27 is seven (7) hectares. The law from Delta Motors for the sum of P8,800.00 anchoring his provides: right under Presidential Decree No. 27. In all cases, the landowner may retain an area of not more The then Court of Agrarian Relations rendered a decision than seven (7) hectares if such landowner is cultivating dismissing the complaint on the ground that the reasonable such area or will now cultivate it. value of the land is P2,319,210.00 and not P8,800.00, the Clearly, the property in question is not covered by P.D. No. dispositive portion of which reads: 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 court. The findings and conclusions of the Intermediate knowledge of the agricultural lessee, the latter shall have Appellate Court that the sum of P2,319,210 is the the right to redeem the same at a reasonable price and "reasonable price" is supported by evidence. The land being consideration . . . . The redemption price shall be the located in Parañaque, surrounded by residential reasonable price of the land at the time of the sale. subdivisions and industrial firms near the South Diversion Thus, in its discussion as to what is the "reasonable price" road are factors in determining its reasonable price for sale as provided under Section 12 of RA 6389, the Intermediate or for redemption as in the instant case. It is the established Appellate Court stated: doctrine in this jurisdiction supported by unbroken line of decisions that such findings of facts and conclusions can not Under this Section, the redemption price shall be the be reviewed on appeal by certiorari. 9 "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 As a general rule, the findings of facts of the Court of court a quo (sic) as redemption price is unreasonable. The Agrarian Relations will not be disturbed on appeal where subject land consisting of 51,538 square meters is located in there is substantial evidence to support the same and all Parañaque, Metro Manila, near the South Diversion Road, that this Court is called upon to do insofar as the evidence is surrounded by residential subdivisions and by industrial concerned, is to find out if the conclusion of the lower court 10 firms. The is supported by "substantial evidence". Substantial above-quoted price is the same amount paid by Delta evidence in support of the findings of the Court of Agrarian Motors Corporation to the other defendants. There is no Relations does not necessarily import preponderant showing that the price is a product of collusion between evidence as is required in ordinary civil cases. Substantial Delta Motors and the other defendants. 7 evidence has been defined to be such relevant evidence as a reasonable mind might accept as adequate to support a We agree with the findings of the defunct Court of Agrarian conclusion, and its absence is not shown by stressing that Relations and the then Intermediate Appellate Court, that there is contrary evidence on record, direct or the reasonable redemption price of the land is P2,319,210, circumstantial, for the appellate court cannot substitute its which is the amount or consideration at the time of the sale. own judgment or criterion for that of the trial court in Petitioners claim that the transfer of the land by the determining wherein lies the weight of evidence or what respondents Nery and Lorenzo's in favor of Delta Motor evidence is entitled to belief. 11 Corporation is null and void ab initio on the ground that the Noteworthy mentioning is that the Philippine National Bank transfer was not accompanied by an affidavit of non- (PNB), although not a party to the instant case, has extra- tenancy as required by Republic Act 6389 and Circular No. judicially foreclosed the subject property, and will 31 of the Department of Justice. What militates against this consolidate its ownership thereof if private respondent claim of the petitioners is the evidence borne by the records Delta Motor Corporation does not redeem the same within that the transfer was effected through a judgment 8 of the one year. Still, petitioners are protected in their rights as respondent lower court in a civil case, and not through a agricultural lessees pursuant to Section 10 of Republic Act sale as envisioned by Republic Act No. 6389. Though the No. 3844, as amended, which provides: date of the sale was earlier than the date of the judgment, it is correct to say that the transfer was effected through a Sec. 10. Agricultural Leasehold Relation Not Extinguished by judgment, because the sale must be approved by the court, Expiration of Period, etc. — The agricultural leasehold considering the pendency of a case (partition) before the relation under this Code shall not be extinguished by mere court that issued the judgment. Moreover, there is nothing expiration of the term or period in a leasehold contract nor in the Act declaring any sale or transfer as null and void ab by the sale, alienation or transfer of the legal possession of initio when the sale was without the knowledge of the the landholding. In case the agricultural lessor, sells, lessee. As a matter of fact, Republic Act No. 6389 states the alienates or transfers the legal possession of the remedy available to the agricultural lessee, the petitioners landholding, the purchaser or transferee thereof shall be herein, which is to redeem the land based on the reasonable subrogated to the rights and substitutes to the obligations price at the time of the sale and not to seek the declaration of the agricultural lessor. of nullity of the alleged sale. Because of the extra-judicial foreclosure of the mortgage Further, the review sought by petitioners does not fall over the subject property by the Philippine National Bank, under any of the grounds warranting the exercise of this the present case has become moot and academic with Court's discretionary power. The matter of what is the regard to petitioner's claim against Delta Motor reasonable redemption price being factual, precludes this Corporation. It is now the PNB or its subsequent transferees Court from reviewing the factual findings of the appellate from whom the petitioners must redeem, if and when PNB

68 decides to sell or alienate the subject property in the future, Petitioners are parties, respectively, in the following and of course subject to the provisions of the 1975 Revised opposition, interference and cancellation proceedings in Charter of the Philippine National Bank. 12 said Office: Inter Partes Cases Nos. 157, 392, 896, 282, 247, WHEREFORE, the instant petition for review on certiorari is 354, 246,332, 398, 325, 374, 175, 297, 256, 267, 111, 400, hereby DISMISSED and the appealed decision of the then 324, 114, 159, 346, and 404. 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 AFFIRMED. Costs against petitioners. above-mentioned cases. Likewise, the Rules of Practice in SO ORDERED. Trade-mark Cases contains a similar provision, thus: 168. Original jurisdiction over inter partes proceeding. — the Director of Patents shall have original jurisdiction over inter G.R. No. L-26803 October 14, 1975 partes proceedings. In the event that the Patent Office AMERICAN TOBACCO COMPANY, CARNATION should be provided with an Examiner of Interferences, this COMPANY, CURTISS CANDY COMPANY, CUDAHY Examiner shall have the original jurisdiction over these PACKING CO., CLUETT, PEABODY & CO., INC., cases, instead of the Director. In the case that the Examiner CANNONMILLS COMPANY, FORMICA CORPORATION, of Interferences takes over the original jurisdiction over GENERALMOTORS CORPORATION, INTERNATIONAL inter partes proceedings, his final decision subject to appeal LATEX CORPORATION, KAYSER-ROTH CORPORATION, to the Director of Patents within three months of the receipt M and R DIETETIC LABORATORIES, INC., OLIN of notice of decisions. Such appeals shall be governed by MATHIESON, PARFUM CIRO, INC., PROCTER and sections 2, 3, 4, 6, 7, 8, 10, 11, 12, 13, 14, 15 and 22 of Rule GAMBLE COMPANY, PROCTER and GAMBLE PHILIPPINE 41 of the Rules of Court insofar as said sections are MANUFACTURING CORPORATION, PARFUMS PORVIL applicable and appropriate, and the appeal fee shall be DENTRIFICES DU DOCTEUR PIERRE REUNIS SOCIETE P25.00. ANONYME, R.J. REYNOLDS TOBACCO COMPANY, SWIFT The Rules of Practice in Trade-mark Cases were drafted and AND COMPANY, STERLING PRODUCTS INTERNATIONAL, promulgated by the Director of Patents and approved by the THE CLOROX COMPANY, WARNER LAMBERT then Secretary of Agriculture and Commerce.. 1 PHARMACEUTICALS COMPANY and ZENITH RADIO CORPORATION, petitioners, Subsequently, the Director of Patents, with the approval of vs. the Secretary of Agriculture and Commerce, amended the THE DIRECTOR OF PATENTS, ATTYS. AMANDO L. afore-quoted Rule 168 to read as follows: MARQUEZ, TEOFILO P. VELASCO, RUSTICO A. CASIA and 168. Original Jurisdiction over inter partes proceedings. — HECTOR D. BUENALUZ, respondents. The Director of Patents shall have original jurisdiction over Lichauco, Picazo and Agcaoili for petitioners. inter partes proceedings, [In the event that the Patent Office is provided with an Examiner of Interferences, this Office of the Solicitor General for respondents. Examiner shall then have the original jurisdiction over these cases, instead of the Director. In the case that the Examiner ANTONIO, J.: of Interferences takes over the original jurisdiction over inter partes proceedings, his final decisions shall be subject In this petition for mandamus with preliminary injunction, to appeal to the Director of Patents within three months of petitioners challenge the validity of Rule 168 of the the receipt of notice decision. Such appeals shall be "Revised Rules of Practice before the Philippine Patent governed by Sections 2, 3, 4, 6, 7, 8,10, 11, 12, 13, 14, 15, Office in Trademark Cases" as amended, authorizing the and 22 of Rule 41 of the Rules of Court insofar as said Director of Patents to designate any ranking official of said sections are applicable and appropriate, and the appeal fee office to hear "inter partes" proceedings. Said Rule likewise shall be [P25.00.] Such inter partes proceedings in the provides that "all judgments determining the merits of the Philippine Patent Office under this Title shall be heard case shall be personally and directly prepared by the before the Director of Patents, any hearing officer, or any Director and signed by him." These proceedings refer to the ranking official designated by the Director, but all judgments hearing of opposition to the registration of a mark or trade determining the merits of the case shall be personally and name, interference proceeding instituted for the purpose of directly prepared by the Director and signed by him. determining the question of priority of adoption and use of (Emphasis supplied.) 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 Patent Office. Patents delegated the hearing of petitioners' cases to 69 hearing officers, specifically, Attys. Amando Marquez, proceedings, 5 decide applications for reinstatement of a Teofilo Velasco, Rustico Casia and Hector Buenaluz, the lapsed patent, 6 cancellations of patents under Republic Act other respondents herein. No. 165, 7 inter partes proceedings such as oppositions, 8 Petitioners filed their objections to the authority of the claims of interference, 9 cancellation cases under the Trade- 10 hearing officers to hear their cases, alleging that the mark Law and other matters in connection with the amendment of the Rule is illegal and void because under the enforcement of the aforesaid laws. It could hardly be law the Director must personally hear and decide inter expected, in view of the magnitude of his responsibility, to partes cases. Said objections were overruled by the Director require him to hear personally each and every case pending of Patents, hence, the present petition for mandamus, to in his Office. This would leave him little time to attend to his 11 compel The Director of Patents to personally hear the cases other duties. For him to do so and at the same time attend of petitioners, in lieu of the hearing officers. personally to the discharge of every other duty or 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 authority undoubtedly also applies to the administration Thus, it is well-settled that while the power to decide and enforcement of the Trade-mark Law (Republic Act No. resides solely in the administrative agency vested by law, 166). this does not preclude a delegation of the power to hold a 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 purposes and provisions maybe an adequate source of his own judgment and discretion does not preclude him authority to delegate a particular function, unless by from utilizing, as a matter of practical administrative express provisions of the Act or by implication it has been procedure, the aid of subordinates to investigate and report withheld. 4 There is no provision either in Republic Act No. to him the facts, on the basis of which the officer makes his 14 165 or 166 negativing the existence of such authority, so far decisions. It is sufficient that the judgment and discretion as the designation of hearing examiners is concerned. Nor finally exercised are those of the officer authorized by law. can the absence of such authority be fairly inferred from Neither does due process of law nor the requirements of contemporaneous and consistent Executive interpretation fair hearing require that the actual taking of testimony be of the Act. before the same officer who will make the decision in the 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 17 which justifies them." 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 19 the administration of the law. WHEREFORE, the instant petition is hereby dismissed, with costs against petitioners.

Castro (Actg., C.J.), Muñoz Palma, Aquino and Martin, JJ., concur. Fernando, J, is on leave. Barredo, J., took no part.

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