You are on page 1of 207

QUASI-JUDICIAL POWERS G.R. No.

83578 March 16, 1989 THE PRESIDENTIAL ANTI-DOLLAR SALTING TASK FORCE, petitioner, vs. HONORABLE COURT OF APPEALS, HONORABLE TEOFILO L, GUADIZ, JR.,Presiding Judge, REGIONAL TRIAL COURT, Branch 147: NCR (MAKATI), and KARAMFIL IMPORT-EXPORT CO., INC., respondents. K. V. Faylona & Associates for respondents.

SARMIENTO, J.: The petitioner, the Presidential Anti-Dollar Salting Task Force, the President's arm assigned to investigate and prosecute so-called "dollar salting" activities in the country (per Presidential Decree No. 1936 as amended by Presidential Decree No. 2002), asks the Court to hold as null and void two Resolutions of the Court of Appeals, dated September 24, 1987 1 and May 20, 1988, 2 reversing its Decision, dated October 24, 1986. 3 The Decision set aside an Order, dated April 16, 1985, of the Regional Trial Court, 4 as well as its Order, dated August 21, 1985. The Resolution, dated September 24, 1987 disposed of, and granted, the private respondent Karamfil Import-Export Co., Inc.'s motion for reconsideration of the October 24, 1986 Decision; the Resolution dated May 20, 1988, in turn, denied the petitioner's own motion for reconsideration. The facts are not in controversy. We quote: On March 12, 1985, State Prosecutor Jose B. Rosales, who is assigned with the Presidential Anti-Dollar Salting Task Force hereinafter referred to as PADS Task Force for purposes of convenience, issued search warrants Nos. 156, 157, 158, 159, 160 and 161 against the petitioners Karamfil Import-Export Co., Inc., P & B Enterprises Co., Inc., Philippine Veterans Corporation, Philippine Veterans Development Corporation, Philippine Construction Development Corporation, Philippine Lauan Industries Corporation, Inter-trade Development (Alvin Aquino), Amelili U. Malaquiok Enterprises and Jaime P. Lucman Enterprises. The application for the issuance of said search warrants was filed by Atty. Napoleon Gatmaytan of the Bureau of Customs who is a deputized member of the PADS Task Force. Attached to the said application is the affidavit of Josefin M. Castro who is an operative and investigator of the PADS Task Force. Said Josefin M. Castro is likewise the sole deponent in the purported deposition to support the application for the issuance of the six (6) search warrants involved in this case. The application filed by Atty. Gatmaytan, the affidavit and deposition of Josefin M. Castro are all dated March 12, 1985. 5 Shortly thereafter, the private respondent (the petitioner below) went to the Regional Trial Court on a petition to enjoin the implementation of the search warrants in question. 6 On March 13, 1985, the trial court issued a temporary restraining order [effective "for a period of five (5) days notice " 7 ] and set the case for hearing on March 18, 1985. In disposing of the petition, the said court found the material issues to be: 1) Competency of this Court to act on petition filed by the petitioners; 2) Validity of the search warrants issued by respondent State Prosecutor; 3) Whether or not the petition has become moot and academic because all the search warrants sought to be quashed had already been implemented and executed. 8 On April 16, 1985, the lower court issued the first of its challenged Orders, and held: WHEREFORE, in view of all the foregoing, the Court hereby declares Search Warrant Nos. 156, 157, 158, 159, 160, and 161 to be null and void. Accordingly, the respondents are hereby ordered to return and surrender immediately

all the personal properties and documents seized by them from the petitioners by virtue of the aforementioned search warrants. SO ORDERED. 9 On August 21, 1985, the trial court denied reconsideration. On April 4, 1986, the Presidential Anti-Dollar Salting Task Force went to the respondent Court of Appeals to contest, on certiorari, the twin Order(s) of the lower court. In ruling initially for the Task Force, the Appellate Court held: Herein petitioner is a special quasi-judicial body with express powers enumerated under PD 1936 to prosecute foreign exchange violations defined and punished under P.D. No. 1883. The petitioner, in exercising its quasi-judicial powers, ranks with the Regional Trial Courts, and the latter in the case at bar had no jurisdiction to declare the search warrants in question null and void. Besides as correctly pointed out by the Assistant Solicitor General the decision of the Presidential Anti-Dollar Salting Task Force is appealable to the Office of the President.10 On November 12, 1986, Karamfil Import-Export Co., Inc. sought a reconsideration, on the question primarily of whether or not the Presidential Anti-Dollar Salting Task Force is "such other responsible officer' countenanced by the 1973 Constitution to issue warrants of search and seizure. As we have indicated, the Court of Appeals, on Karamfil's motion, reversed itself and issued its Resolution, dated September 1987, and subsequently, its Resolution, dated May 20, 1988, denying the petitioner's motion for reconsideration. In its petition to this Court, the petitioner alleges that in so issuing the Resolution(s) above-mentioned, the respondent Court of Appeals "committed grave abuse of discretion and/or acted in excess of its appellate jurisdiction," 11 specifically: a) In deviating from the settled policy and rulings of the Supreme Court that no Regional Trial Courts may countermand or restrain the enforcement of lawful writs or decrees issued by a quasi-judicial body of equal and coordinate rank, like the PADS Task Force; b) For resorting to judicial legislation to arrive at its erroneous basis for reconsidering its previous Decision dated October 24, 1986 (see Annex "I") and thus promulgated the questioned Resolutions (Annexes "A" and "B"), which violated the constitutional doctrine on separation of powers; c) In not resolving directly the other important issues raised by the petitioner in its Petition in CA-G.R. No. 08622SP despite the fact that petitioner has demonstrated sufficiently and convincingly that respondent RTC, in issuing the questioned Orders in Special Proceeding No. M-624 (see Annexes "C" and 'D"), committed grave abuse of discretion and/or acted in excess of jurisdiction: 1. In ruling that (a) the description of the things to be seized as stated in the contested search warrant were too general which allegedly render the search warrants null and void; (b) the applications for the contested search warrants actually charged two offenses in contravention of the 2nd paragraph, Section 3, Rule 126 of the Rules of Court; and (c) this case has not become moot and academic, even if the contested search warrants had already been fully implemented with positive results; and 2. In ruling that the petitioner PADS Task Force has not been granted under PD 1936 'judicial or quasi-judicial jurisdiction. 12 We find, upon the foregoing facts, that the essential questions that confront us are- (i) is the Presidential Anti-Dollar Salting Task Force a quasi-judicial body, and one co-equal in rank and standing with the Regional Trial Court, and accordingly, beyond the latter's

jurisdiction; and (ii) may the said presidential body be said to be "such other responsible officer as may be authorized by law" to issue search warrants under the 1973 Constitution questions we take up seriatim.** In submitting that it is a quasi-judicial entity, the petitioner states that it is endowed with "express powers and functions under PD No. 1936, to prosecute foreign exchange violations as defined and punished under PD No. 1883." 13 "By the very nature of its express powers as conferred by the laws," so it is contended, "which are decidedly quasi-judicial or discretionary function, such as to conduct preliminary investigation on the charges of foreign exchange violations, issue search warrants or warrants of arrest, hold departure orders, among others, and depending upon the evidence presented, to dismiss the charges or to file the corresponding information in court of Executive Order No. 934, PD No. 1936 and its Implementing Rules and Regulations effective August 26, 1984), petitioner exercises quasi-judicial power or the power of adjudication ." 14 The Court of Appeals, in its Resolution now assailed, 15 was of the opinion that "[t]he grant of quasi-judicial powers to petitioner did not diminish the regular courts' judicial power of interpretation. The right to interpret a law and, if necessary to declare one unconstitutional, exclusively pertains to the judiciary. In assuming this function, courts do not proceed on the theory that the judiciary is superior to the two other coordinate branches of the government, but solely on the theory that they are required to declare the law in every case which come before them." 16 This Court finds the Appellate Court to be in error, since what the petitioner puts to question is the Regional Trial Court's act of assuming jurisdiction over the private respondent's petition below and its subsequent countermand of the Presidential Anti-Dollar Salting Task Force's orders of search and seizure, for the reason that the presidential body, as an entity (allegedly) coordinate and co-equal with the Regional Trial Court, was (is) not vested with such a jurisdiction. An examination of the Presidential Anti-Dollar Salting Task Force's petition shows indeed its recognition of judicial review (of the acts of Government) as a basic privilege of the courts. Its objection, precisely, is whether it is the Regional Trial Court, or the superior courts, that may undertake such a review. Under the Judiciary Reorganization Act of 1980, 17 the Court of Appeals exercises: (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Court and quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948. 18 xxx xxx xxx Under the present Constitution, with respect to its provisions on Constitutional Commissions, it is provided, in part that: ... Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof. 19 On the other hand, Regional Trial Courts have exclusive original jurisdiction: (6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising judicial or quasi-judicial functions. 20 xxx xxx xxx Likewise: ... The Supreme Court may designate certain branches of the Regional Trial Court to handle exclusively criminal cases, juvenile and domestic relations cases, agrarian case, urban land reform cases which do not fall under the jurisdiction of quasi- judicial bodies and agencies and/or such other special cases as the Supreme Court may determine in the interest of a speedy and efficient administration of justice. 21 xxx xxx xxx

Under our Resolution dated January 11, 1983: 22 ... The appeals to the Intermediate Appellate Court [now, Court of Appeals] from quasi-judicial bodies shall continue to be governed by the provisions of Republic Act No. 5434 insofar as the same is not inconsistent with the provisions of B.P. Blg. 129. The pertinent provisions of Republic Act No. 5434 are as follows: SECTION 1. Appeals from specified agencies. Any provision of existing law or Rule of Court to the contrary notwithstanding, parties aggrieved by a final ruling, award, order, decision, or judgment of the Court of Agrarian Relations; the Secretary of Labor under Section 7 of Republic Act Numbered Six hundred and two, also known as the "Minimum Wage Law"; the Department of Labor under Section 23 of Republic Act Numbered Eight hundred seventy-five, also known as the "Industrial Peace Act"; the Land Registration Commission; the Securities and Exchange Commission; the Social Security Commission; the Civil Aeronautics Board; the Patent Office and the Agricultural Inventions Board, may appeal therefrom to the Court of Appeals, within the period and in the manner herein provided, whether the appeal involves questions of fact, mixed questions of fact and law, or questions of law, or all three kinds of questions. From final judgments or decisions of the Court of Appeals, the aggrieved party may appeal by certiorari to the Supreme Court as provided in Rule 45 of the Rules of Court. 24 Because of subsequent amendments, including the abolition of various special courts, 25 jurisdiction over quasi-judicial bodies has to be, consequently, determined by the corresponding amendatory statutes. Under the Labor Code, decisions and awards of the National Labor Relations Commission are final and executory, but, nevertheless, 'reviewable by this Court through a petition for certiorari and not by way of appeal." 26 Under the Property Registration Decree, decisions of the Commission of Land Registration, en consults, are appealable to the Court of Appeals. 27 The decisions of the Securities and Exchange Commission are likewise appealable to the Appellate Court, 28 and so are decisions of the Social Security Commission.29 As a rule, where legislation provides for an appeal from decisions of certain administrative bodies to the Court of Appeals, it means that such bodies are co-equal with the Regional Trial Courts, in terms of rank and stature, and logically, beyond the control of the latter. As we have observed, the question is whether or not the Presidential Anti-Dollar Salting Task Force is, in the first place, a quasijudicial body, and one whose decisions may not be challenged before the regular courts, other than the higher tribunals the Court of Appeals and this Court. A quasi-judicial body has been defined as "an organ of government other than a court and other than a legislature, which affects the rights of private parties through either adjudication or rule making." 30 The most common types of such bodies have been listed as follows: (1) Agencies created to function in situations wherein the government is offering some gratuity, grant, or special privilege, like the defunct Philippine Veterans Board, Board on Pensions for Veterans, and NARRA, and Philippine Veterans Administration. (2) Agencies set up to function in situations wherein the government is seeking to carry on certain government functions, like the Bureau of Immigration, the Bureau of Internal Revenue, the Board of Special Inquiry and Board of Commissioners, the Civil Service Commission, the Central Bank of the Philippines. (3) Agencies set up to function in situations wherein the government is performing some business service for the public, like the Bureau of Posts, the Postal Savings Bank, Metropolitan Waterworks & Sewerage Authority, Philippine National Railways, the Civil Aeronautics Administration. (4) Agencies set up to function in situations wherein the government is seeking to regulate business affected with public interest, like the Fiber Inspections Board, the Philippine Patent Office, Office of the Insurance Commissioner.

(5) Agencies set up to function in situations wherein the government is seeking under the police power to regulate private business and individuals, like the Securities & Exchange Commission, Board of Food Inspectors, the Board of Review for Moving Pictures, and the Professional Regulation Commission. (6) Agencies set up to function in situations wherein the government is seeking to adjust individual controversies because of some strong social policy involved, such as the National Labor Relations Commission, the Court of Agrarian Relations, the Regional Offices of the Ministry of Labor, the Social Security Commission, Bureau of Labor Standards, Women and Minors Bureau. 31 As may be seen, it is the basic function of these bodies to adjudicate claims and/or to determine rights, and unless its decision are seasonably appealed to the proper reviewing authorities, the same attain finality and become executory. A perusal of the Presidential Anti-Dollar Salting Task Force's organic act, Presidential Decree No. 1936, as amended by Presidential Decree No. 2002, convinces the Court that the Task Force was not meant to exercise quasi-judicial functions, that is, to try and decide claims and execute its judgments. As the President's arm called upon to combat the vice of "dollar salting" or the blackmarketing and salting of foreign exchange, 32 it is tasked alone by the Decree to handle the prosecution of such activities, but nothing more. We quote: SECTION 1. Powers of the Presidential Anti-Dollar Salting Task Force.-The Presidential Anti-Dollar Salting Task Force, hereinafter referred to as Task Force, shall have the following powers and authority: a) Motu proprio or upon complaint, to investigate and prosecute all dollar salting activities, including the overvaluation of imports and the undervaluation of exports; b) To administer oaths, summon persons or issue subpoenas requiring the attendance and testimony of witnesses or the production of such books, papers, contracts, records, statements of accounts, agreements, and other as may be necessary in the conduct of investigation; c) To appoint or designate experts, consultants, state prosecutors or fiscals, investigators and hearing officers to assist the Task Force in the discharge of its duties and responsibilities; gather data, information or documents; conduct hearings, receive evidence, both oral and documentary, in all cases involving violation of foreign exchange laws or regulations; and submit reports containing findings and recommendations for consideration of appropriate authorities; d) To punish direct and indirect contempts with the appropriate penalties therefor under Rule 71 of the Rules of Court; and to adopt such measures and take such actions as may be necessary to implement this Decree. xxx xxx xxx f. After due investigation but prior to the filing of the appropriate criminal charges with the fiscal's office or the courts as the case may be, to impose a fine and/or administrative sanctions as the circumstances warrant, upon any person found committing or to have committed acts constituting blackmarketing or salting abroad of foreign exchange, provided said person voluntarily admits the facts and circumstances constituting the offense and presents proof that the foreign exchange retained abroad has already been brought into the country. Thereafter, no further civil or criminal action may be instituted against said person before any other judicial regulatory or administrative body for violation of Presidential Decree No. 1883. The amount of the fine shall be determined by the Chairman of the Presidential Anti- Dollar Salting Task Force and paid in Pesos taking into consideration the amount of foreign exchange retained abroad, the exchange rate differentials, uncollected taxes and duties thereon, undeclared profits, interest rates and such other relevant factors. The fine shall be paid to the Task Force which shall retain Twenty percent (20 %) thereof. The informer, if any, shall be entitled to Twenty percent (20 %) of the fine. Should there be no informer, the Task Force shall be entitle to retain Forty percent (40 %) of the fine and the balance shall accrue to the general funds of the National government. The amount of the fine to be retained by the Task Force shall form part of its Confidential Fund and be utilized for the operations of the Task Force . 33

The Court sees nothing in the aforequoted provisions (except with respect to the Task Force's powers to issue search warrants) that will reveal a legislative intendment to confer it with quasi-judicial responsibilities relative to offenses punished by Presidential Decree No. 1883. Its undertaking, as we said, is simply, to determine whether or not probable cause exists to warrant the filing of charges with the proper court, meaning to say, to conduct an inquiry preliminary to a judicial recourse, and to recommend action "of appropriate authorities". It is not unlike a fiscal's office that conducts a preliminary investigation to determine whether or not prima facie evidence exists to justify haling the respondent to court, and yet, while it makes that determination, it cannot be said to be acting as a quasi-court. For it is the courts, ultimately, that pass judgment on the accused, not the fiscal. It is not unlike the Presidential Commission on Good Government either, the executive body appointed to investigate and prosecute cases involving "ill-gotten wealth". It had been vested with enormous powers, like the issuance of writs of sequestration, freeze orders, and similar processes, but that did not, on account thereof alone, make it a quasi-judicial entity as defined by recognized authorities. It cannot pronounce judgement of the accused's culpability, the jurisdiction to do which is exclusive upon the Sandiganbayan. 34 If the Presidential Anti-Dollar Salting Task Force is not, hence, a quasi-judicial body, it cannot be said to be co-equal or coordinate with the Regional Trial Court. There is nothing in its enabling statutes that would demonstrate its standing at par with the said court. In that respect, we do not find error in the respondent Court of Appeal's resolution sustaining the assumption of jurisdiction by the court a quo. It will not do to say that the fact that the Presidential Task Force has been empowered to issue warrants of arrest, search, and seizure, makes it, ergo, a "semi-court". Precisely, it is the objection interposed by the private respondent, whether or not it can under the 1973 Charter, issue such kinds of processes. It must be observed that under the present Constitution, the powers of arrest and search are exclusive upon judges. 35 To that extent, the case has become moot and academic. Nevertheless, since the question has been specifically put to the Court, we find it unavoidable to resolve it as the final arbiter of legal controversies, pursuant to the provisions of the 1973 Constitution during whose regime the case was commenced. Since the 1973 Constitution took force and effect and until it was so unceremoniously discarded in 1986, its provisions conferring the power to issue arrest and search warrants upon an officer, other than a judge, by fiat of legislation have been at best controversial. In Lim v. Ponce de Leon, 36 a 1975 decision, this Court ruled that a fiscal has no authority to issue search warrants, but held in the same vein that, by virtue of the responsible officer" clause of the 1973 Bill of Rights, "any lawful officer authorized by law can issue a search warrant or warrant of arrest.37 Authorities, however, have continued to express reservations whether or not fiscals may, by statute, be given such a power. 38 Less than a year later, we promulgated Collector of Customs v. Villaluz, 39 in which we categorically averred: Until now only the judge can issue the warrant of arrest." 40 "No law or presidential decree has been enacted or promulgated vesting the same authority in a particular responsible officer ." 41 Apparently, Villaluz had settled the debate, but the same question persisted following this Courts subsequent rulings upholding the President's alleged emergency arrest powers .42 [Mr. Justice Hugo Gutierrez would hold, however, that a Presidential Commitment Order (PCO) is (was) not a species of "arrest" in its technical sense, and that the (deposed) Chief Executive, in issuing one, does not do so in his capacity as a "responsible officer" under the 1973 Charter, but rather, as Commander-in-Chief of the Armed Forces in times of emergency, or in order to carry out the deportation of undesirable aliens.43 In the distinguished Justice's opinion then, these are acts that can be done without need of judicial intervention because they are not, precisely, judicial but Presidential actions.] In Ponsica v. Ignalaga,44 however, we held that the mayor has been made a "responsible officer' by the Local Government Code, 45 but had ceased to be one with the approval of the 1987 Constitution according judges sole authority to issue arrest and search warrants. But in the same breath, we did not rule the grant under the Code unconstitutional based on the provisions of the former Constitution. We were agreed, though, that the "responsible officer" referred to by the fundamental law should be one capable of approximating "the cold neutrality of an impartial judge." 46 In striking down Presidential Decree No. 1936 the respondent Court relied on American jurisprudence, notably,Katz v. United States, 47 Johnson v. United States, 48 and Coolidge v. New Hampshire 49 in which the American Supreme Court ruled that

prosecutors (like the petitioner) cannot be given such powers because of their incapacity for a "detached scrutiny" 50 of the cases before them. We affirm the Appellate Court. We agree that the Presidential Anti-Dollar Salting Task Force exercises, or was meant to exercise, prosecutorial powers, and on that ground, it cannot be said to be a neutral and detached "judge" to determine the existence of probable cause for purposes of arrest or search. Unlike a magistrate, a prosecutor is naturally interested in the success of his case. Although his office "is to see that justice is done and not necessarily to secure the conviction of the person accused," 51 he stands, invariably, as the accused's adversary and his accuser. To permit him to issue search warrants and indeed, warrants of arrest, is to make him both judge and jury in his own right, when he is neither. That makes, to our mind and to that extent, Presidential Decree No. 1936 as amended by Presidential Decree No. 2002, unconstitutional. It is our ruling, thus, that when the 1973 Constitution spoke of "responsible officer" to whom the authority to issue arrest and search warrants may be delegated by legislation, it did not furnish the legislator with the license to give that authority to whomsoever it pleased. It is to be noted that the Charter itself makes the qualification that the officer himself must be "responsible". We are not saying, of course, that the Presidential Anti-Dollar Salting Task Force (or any similar prosecutor) is or has been irresponsible in discharging its duty. Rather, we take "responsibility", as used by the Constitution, to mean not only skill and competence but more significantly, neutrality and independence comparable to the impartiality presumed of a judicial officer. A prosecutor can in no manner be said to be possessed of the latter qualities. According to the Court of Appeals, the implied exclusion of prosecutors under the 1973 Constitution was founded on the requirements of due process, notably, the assurance to the respondent of an unbiased inquiry of the charges against him prior to the arrest of his person or seizure of his property. We add that the exclusion is also demanded by the principle of separation of powers on which our republican structure rests. Prosecutors exercise essentially an executive function (the petitioner itself is chaired by the Minister, now Secretary, of Trade and Industry), since under the Constitution, the President has pledged to execute the laws. 52 As such, they cannot be made to issue judicial processes without unlawfully impinging the prerogative of the courts. At any rate, Ponsica v. Ignalaga should foreclose all questions on the matter, although the Court hopes that this disposition has clarified a controversy that had generated often bitter debates and bickerings. The Court joins the Government in its campaign against the scourge of "dollar- salting", a pernicious practice that has substantially drained the nation's coffers and has seriously threatened its economy. We recognize the menace it has posed (and continues to pose) unto the very stability of the country, the urgency for tough measures designed to contain if not eradicate it, and foremost, the need for cooperation from the citizenry in an all-out campaign. But while we support the State's efforts, we do so not at the expense of fundamental rights and liberties and constitutional safeguards against arbitrary and unreasonable acts of Government. If in the event that as a result of this ruling, we prove to be an "obstacle" to the vital endeavour of stamping out the blackmarketing of valuable foreign exchange, we do not relish it and certainly, do not mean it. The Constitution simply does not leave us much choice. WHEREFORE, the petition is DISMISSED. No costs. SO ORDERED G.R. No. 156081 October 19, 2005 FERDINAND T. SANTOS, ROBERT JOHN SOBREPEA, and RAFAEL PEREZ DE TAGLE, JR., Petitioners, vs. WILSON GO, Respondent. DECISION QUISUMBING, J.: For our review on certiorari is the Decision dated September 2, 2002 of the Court of Appeals in CA-G.R. SP No. 67388, as well as its Resolution2 dated November 12, 2002, denying petitioners motion for reconsideration. The appellate court dismissed the petition 3 4 for review under Rule 43 of the 1997 Rules of Civil Procedure for being an erroneous mode of appeal from the Resolution of the 5 Secretary of Justice. The Secretary had modified the Resolution of the Office of the City Prosecutor of Pasig City in I.S. No. PSG 0004-10205 and directed the latter to file an information for estafa against petitioners. The petitioners are corporate directors and officers of Fil-Estate Properties, Inc. (FEPI).
1

On October 17, 1995, FEPI allegedly entered into a Project Agreement with Manila Southcoast Development Corporation (MSDC), whereby FEPI undertook to develop several parcels of land in Nasugbu, Batangas allegedly owned by MSDC. Under the terms of the Agreement, FEPI was to convert an approximate area of 1,269 hectares into a first-class residential, commercial, resort, leisure, and recreational complex. The said Project Agreement clothed FEPI with authority to market and sell the subdivision lots to the public. Respondent Wilson Go offered to buy Lot 17, Block 38 from FEPI. Lot 17 measured approximately 1,079 square meters and the purchase price agreed upon was P4,304,000. The Contract to Sell signed by the parties was the standard, printed form prepared by FEPI. Under the terms of said contract of adhesion, Go agreed to pay a downpayment of P1,291,200 and a last installment of P840,000 on the balance due on April 7, 1997. In turn, FEPI would execute a final Deed of Sale in favor of Go and deliver to Go the owner s duplicate copy of Transfer Certificate of Title (TCT) upon complete payment of the purchase price. Go fully complied with the terms of the Contract. FEPI, however, failed to develop the property. Neither did it release the TCT to Go. The latter demanded fulfillment of the terms and conditions of their agreement. FEPI balked. In several letters to its clients, including respondent Go, FEPI explained that the project was temporarily halted due to some claimants who opposed FEPI s application for exclusion of the subject properties from the coverage of the Comprehensive Agrarian Reform Law (CARL). Further, FEPI s hands were tied by a cease and desist order issued by the Department of Agrarian Reform (DAR). Said order was the subject of several appeals now pending before this Court. FEPI assured its clients that it had no intention to abandon the project and would resume developing the properties once the disputes had been settled in its favor. Go was neither satisfied nor assured by FEPI s statements and he made several demands upon FEPI to return his payment of the purchase price in full. FEPI failed to heed his demands. Go then filed a complaint before the Housing and Land Use Regulatory Board (HLURB). He likewise filed a separate Complaint-Affidavit for estafa under Articles 3166 and 3187 of the Revised Penal Code before the Office of the City Prosecutor of Pasig City against petitioners as officers of FEPI. The complaint for estafa averred that the Contract to Sell categorically stated that FEPI was the owner of the property. However, before the HLURB, FEPI denied ownership of the realty. Go alleged that the petitioners committed estafa when they offered the subject property for sale since they knew fully well that the development of the property and issuance of its corresponding title were impossible to accomplish, as the ownership and title thereto had not yet been acquired and registered under the name of FEPI at the time of sale. Thus, FEPI had grossly misrepresented itself as owner at the time of the sale of the subject property to him and when it received from him the full payment, despite being aware that it was not yet the owner. Petitioners challenged the jurisdiction of the City Prosecutor of Pasig City to conduct the preliminary investigation on the ground that the complainant was not from Pasig City, the contract was not executed nor were the payments made in Pasig City. Besides, countered petitioners, none of the elements of estafa under Articles 316 and 318 were present. They averred that FEPI was not the owner of the project but the developer with authority to sell under a joint venture with MSDC, who is the real owner. They further denied that FEPI ever made any written nor oral representation to Go that it is the owner, pointing out that Go failed to positively identify who made such misrepresentation to him nor did Go say where the misrepresentation was made. According to petitioner, there being neither deceit nor misrepresentation, there could be no damage nor prejudice to respondent, and no probable cause exists to indict the petitioners. Petitioners likewise insisted that they could not be held criminally liable for abiding with a cease-anddesist order of the DAR. In his reply, Go stressed that the City Prosecutor of Pasig City had jurisdiction over the case. He argued that the Contract to Sell specifically provided that payment be made at FEPI s office at Pasig City and the demand letters bore the Pasig City address. He averred that FEPI could not disclaim ownership of the project since the contract described FEPI as owner without mentioning MSDC. Additionally, the acts executed by FEPI appearing in the contract were the acts of an owner and not a mere developer. After the preliminary investigation, the City Prosecutor resolved to dismiss the complaint for estafa, thus: Wherefore, the case for estafa, under Articles 316 and 318 of the Revised Penal Code, filed against the respondents Ferdinand Santos, Robert [John] Sobrepea, Federico Campos, Polo Pantaleon and Rafael Perez de Tagle, Jr. is dismissed for insufficiency of evidence.8 The City Prosecutor found no misrepresentation stating that, (1) the Contract to Sell did not mention FEPI as the owner of the property; (2) since no Deed of Sale had been executed by the parties, then petitioners are not yet bound to deliver the certificate of 9 10 title since under both the Contract to Sell and Section 25 of Presidential Decree No. 957, FEPI was bound to deliver the certificate of title only upon the execution of a contract of sale; and (3) the City Prosecutor disavowed any jurisdiction since it is the HLURB, which has exclusive jurisdiction over disputes and controversies involving the sale of lots in commercial subdivision including claims involving refunds under P.D. No. 1344.11

Go appealed the City Prosecutor s Resolution to the Department of Justice (DOJ), which, in turn reversed the City Prosecutor s findings, and held, to wit: WHEREFORE, the questioned resolution is hereby MODIFIED. The City Prosecutor of Pasig City is directed to file an information for estafa defined and penalized under Art. 316, par. 1 of the Revised Penal Code against respondents Ferdinand Santos, Robert [John] Sobrepea, Federico Campos, Polo Pantaleon and Rafael Perez De Tagle, Jr. and report the action taken within ten (10) days from receipt hereof. SO ORDERED.12 The DOJ found that there was a prima facie basis to hold petitioners liable for estafa under Article 316 (1) of the Revised Penal Code, pointing out that the elements of the offense were present as evidenced by the terms of the Contract to Sell. It ruled that under the Contract, the petitioners sold the property to Go despite full knowledge that FEPI was not its owner. The DOJ noted that petitioners did not deny the due execution of the contract and had accepted payments of the purchase price as evidenced by the receipts. Thus, FEPI was exercising acts of ownership when it conveyed the property to respondent Go. Acts to convey, sell, encumber or mortgage real property are acts of strict ownership. Furthermore, nowhere did FEPI mention that it had a joint venture with MSDC, the alleged true owner of the property. Clearly, petitioners committed acts of misrepresentation when FEPI denied ownership after the perfection of the contract and the payment of the purchase price. Since a corporation can only act through its agents or officers, then all the participants in a fraudulent transaction are deemed liable. Accordingly, an Information for estafa was filed against petitioners and Federico Campos and Polo Pantaleon before the MTC of Pasig City. However, the arraignment was deferred since Campos and Pantaleon filed a Motion for Judicial Determination of Probable Cause, which was granted by the trial court. Meanwhile petitioners herein filed with the Court of Appeals, a petition for review docketed as CA-G.R. SP No. 67388. Accordingly, the trial court deferred the arraignment of petitioners until the petition for review was resolved. On September 2, 2002, the appellate court disposed of CA-G.R. SP No. 67388 in this wise: WHEREFORE, foregoing premises considered, the Petition, HAVING NO MERIT, is hereby DENIED DUE COURSE AND ORDERED DISMISSED, with cost to Petitioners. SO ORDERED.13 The appellate court opined that a petition for review pursuant to Rule 43 cannot be availed of as a mode of appeal from the ruling of the Secretary of Justice because the Rule applies only to agencies or officers exercising quasi-judicial functions. The decision to file an information or not is an executive and not a quasi-judicial function. Herein petitioners seasonably moved for reconsideration, but the motion was likewise denied by the Court of Appeals. Hence, this petition based on the following grounds: (1) THE COURT OF APPEALS ERRED IN RULING THAT RULE 43 OF THE 1997 RULES OF CIVIL PROCEDURE CANNOT BE AVAILED OF TO APPEAL THE RESOLUTIONS OF THE SECRETARY OF JUSTICE.14 (2) THE DOJ SECRETARY ERRED WHEN IT FOUND PROBABLE CAUSE AND RESOLVED TO FILE AN INFORMATION FOR ESTAFA UNDER ART. 316, SEC. 1 OF THE REVISED PENAL CODE AGAINST PETITIONERS, CONSIDERING THAT: (A) Petitioners did not pretend that they, or FEPI, were the owners of the subject property; (B) FEPI need not have been the owner at the time the Contract to Sell was furnished to respondent Go; (C) There was no prejudice caused to respondent Go; (D) There is no personal act or omission constituting a crime ascribed to any of the Petitioners, therefore, there can be no probable cause against them; and (E) There was no deceit or even intent to deceive.15 To our mind, the sole issue for resolution is whether a petition for review under Rule 43 is a proper mode of appeal from a resolution of the Secretary of Justice directing the prosecutor to file an information in a criminal case. In the course of this determination, we must also consider whether the conduct of preliminary investigation by the prosecutor is a quasi-judicial function.

Petitioners submit that there is jurisprudence to the effect that Rule 43 covers rulings of the Secretary of Justice since during preliminary investigations, the DOJ s decisions are deemed as "awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions", and its prosecutorial offices are considered quasi-judicial bodies/officers performing quasi-judicial functions. Respondent counters that the herein petition is a dilatory tactic and emphasizes that "injunction will not lie to restrain criminal prosecution." Rule 43 of the 1997 Rules of Civil Procedure clearly shows that it governs appeals to the Court of Appeals from decisions and final orders or resolutions of the Court of Tax Appeals or quasi-judicial agencies in the exercise of their quasi-judicial functions. The 16 Department of Justice is not among the agencies enumerated in Section 1 of Rule 43. Inclusio unius est exclusio alterius. We cannot agree with petitioners submission that a preliminary investigation is a quasi-judicial proceeding, and that the DOJ is a quasi-judicial agency exercising a quasi-judicial function when it reviews the findings of a public prosecutor regarding the presence of probable cause. In Bautista v. Court of Appeals, we held that a preliminary investigation is not a quasi-judicial proceeding, thus: [t]he prosecutor in a preliminary investigation does not determine the guilt or innocence of the accused. He does not exercise adjudication nor rule-making functions. Preliminary investigation is merely inquisitorial, and is often the only means of discovering the persons who may be reasonably charged with a crime and to enable the fiscal to prepare his complaint or information. It is not a trial of the case on the merits and has no purpose except that of determining whether a crime has been committed and whether there is probable cause to believe that the accused is guilty thereof. While the fiscal makes that determination, he cannot be said to be acting as a quasi-court, for it is the courts, ultimately, that pass judgment on the accused, not the fiscal.18 Though some cases19 describe the public prosecutor s power to conduct a preliminary investigation as quasi-judicial in nature, this is true only to the extent that, like quasi-judicial bodies, the prosecutor is an officer of the executive department exercising powers akin to those of a court, and the similarity ends at this point.20 A quasi-judicial body is as an organ of government other than a court and other than a legislature which affects the rights of private parties through either adjudication or rule-making.21 A quasi-judicial agency performs adjudicatory functions such that its awards, determine the rights of parties, and their decisions have the same effect as judgments of a court. Such is not the case when a public prosecutor conducts a preliminary investigation to determine probable cause to file an information against a person charged with a criminal offense, or when the Secretary of Justice is reviewing the former s order or resolutions. Since the DOJ is not a quasi-judicial body and it is not one of those agencies whose decisions, orders or resolutions are appealable to the Court of Appeals under Rule 43, the resolution of the Secretary of Justice finding probable cause to indict petitioners for estafa is, therefore, not appealable to the Court of Appeals via a petition for review under Rule 43. Accordingly, the Court of Appeals correctly dismissed petitioners petition for review. Notwithstanding that theirs is a petition for review properly under Rule 45, petitioners want us to reverse the findings of probable cause by the DOJ after their petition for review under Rule 43 from the court a quo failed. This much we are not inclined to do, for we have no basis to review the DOJ s factual findings and its determination of probable cause. First, Rule 45 is explicit. This mode of appeal to the Supreme Court covers the judgments, orders or resolutions of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or any authorized court and should raise onlypure question of law. The Department of Justice is not a court. Also, in this petition are raised factual matters for our resolution, e.g. the ownership of the subject property, the existence of deceit committed by petitioners on respondent, and petitioners knowledge or direct participation in the Contract to Sell. These are factual issues and are outside the scope of a petition for review on certiorari. The cited questions require evaluation and examination of evidence, which is the province of a full-blown trial on the merits. Second, courts cannot interfere with the discretion of the public prosecutor in evaluating the offense charged. He may dismiss the complaint forthwith, if he finds the charge insufficient in form or substance, or without any ground. Or, he may proceed with the investigation if the complaint in his view is sufficient and in proper form.22 The decision whether to dismiss a complaint or not, is 23 dependent upon the sound discretion of the prosecuting fiscal and, ultimately, that of the Secretary of Justice. Findings of the
17

Secretary of Justice are not subject to review unless made with grave abuse of discretion. In this case, petitioners have not shown sufficient nor convincing reason for us to deviate from prevailing jurisprudence. WHEREFORE, the instant petition is DENIED for lack of merit. The Decision and the Resolution of the Court of Appeals in CA-G.R. SP No. 67388, dated September 2, 2002 and November 12, 2002, respectively, areAFFIRMED.

24

G.R. No. 150270

November 26, 2008

CITY ENGINEER OF BAGUIO and HON. MAURICIO DOMOGAN, petitioners vs. ROLANDO BANIQUED, respondent. DECISION REYES, R.T., J.: OFT-QUOTED in cases involving searches and seizures is the principle that a man's home is his castle. Not even the king would dare desecrate it. In protecting his home, the poorest and most humble citizen or subject may bid defiance to all the powers of the State.1 Indeed, a man is king in his own house. The case before Us views the sanctity of a man's home in a different light. It is about a man's struggle against the attempt of the State to demolish his house. Petitioners Leo Bernardez, Jr. and Mauricio Domogan question by way of appeal under Rule 45 the Decision2 and Resolution3 of the Court of Appeals (CA) which set aside the Order4 of the Regional Trial Court (RTC) dismissing the complaint5 for prohibition with temporary restraining order (TRO)/injunction filed by private respondent Rolando Baniqued. The Facts Generoso Bonifacio, acting as the attorney-in-fact of Purificacion de Joya, Milagros Villar, Minerva Baluyut and Israel de Leon filed a complaint with the Office of the Mayor of Baguio City seeking the demolition of a house built on a parcel of land6 located at Upper Quezon Hill, Baguio City. On May 19, 1999, Domogan, the then city mayor of Baguio City, issued Notice of Demolition No. 55, Series of 1999, against spouses Rolando and Fidela Baniqued. Pertinent parts of the notice read: The investigation and ocular inspection conducted by the City Engineer's Office (memorandum dated 18 February 1998) showed that you built your structures sometime in 1999 without any building permit in violation of P.D. 1096 and possibly R.A. 7279, qualifying your structure structures illegal, thus, subject to demolition. The Anti-Squatting Committee in its Resolution No. 52-4 dated 22 April 1999 has recommended for the demolition of your illegal structures. IN VIEW OF THE FOREGOING, you are hereby notified to voluntarily remove/demolish your illegal structures within seven (7) days from receipt of this notice, otherwise the City Demolition Team will undertake the demolition of your illegal structures at your own expense.7 Aggrieved, Rolando Baniqued filed a complaint for prohibition with TRO/injunction before Branch 60 of the RTC in Baguio City. In his complaint, Baniqued alleged that the intended demolition of his house was done without due process of law and "was arrived at arbitrarily and in a martial-law like fashion." Specifically, Baniqued alleged that he was (1) never given any copy of the complaint of Generoso Bonifacio; (2) "never summoned nor subpoenaed to answer that complaint"; (3) "never allowed to participate in the

investigation and ocular inspection which the City Engineer's Office allegedly conducted, as a consequence of the complaint of Bonifacio, much less to adduce evidence in support of his position"; (4) "never summoned nor subpoenaed to appear before the Anti-Squatting Committee"; and (5) "not given the opportunity to contest the complaint against him, before such complaint was decided and to be carried out by the Defendants."8 Baniqued buttressed his complaint by arguing that Article 536 of the Civil Code should be applied, i.e., there should be a court action and a court order first before his house can be demolished and before he can be ousted from the lot.9 More, under Section 28 of Republic Act 7279, an adequate relocation should be provided first before demolition can be had.10 Too, by virtue of the National Building Code or Presidential Decree (P.D.) No. 1096, the demolition of buildings or structures should only be resorted to in case 11 they are dangerous or ruinous. Otherwise, the remedy is criminal prosecution under Section 213 of P.D. No. 1096. Lastly, the 1991 Local Government Code does not empower the mayor to order the demolition of anything unless the interested party was afforded 12 prior hearing and unless the provisions of law pertaining to demolition are satisfied. Thus, Baniqued prayed for the following reliefs: A. Immediately upon the filing hereof, a temporary restraining order be issued stopping the Defendants, or any other person acting under their orders or authority, from carrying out, or causing to carry out, the demolition of Plaintiff's residential unit at Upper Quezon Hill, Baguio City under Notice of Demolition No. 55; B. After due notice and hearing, a writ of preliminary injunction be issued for the same purpose as to that of the TRO, and, thereafter, for this preliminary writ to be made permanent; C. A writ of prohibition be issued, commanding the Defendants to stop carrying out, or causing to carry out, the demolition of the aforesaid unit of the Plaintiffs.13 On June 7, 1999, the RTC enjoined the carrying out of the demolition of the house of Baniqued. The hearing on his application for preliminary injunction was also set.14 On June 25, 1999, petitioners moved to dismiss15 the complaint of Baniqued on the ground of lack of cause of action because (1) there is nothing to be enjoined "as there is no Demolition Order issued by the City Mayor" and that the Demolition Team "does not demolish on the basis of a mere Notice of Demolition"; (2) he has "no clear legal right to be protected as his structure is illegal, the same having been built on a land he does not own without the consent of the owner thereof and without securing the requisite building permit"; (3) the Notice of Demolition "was issued in accordance with law and in due performance of the duties and functions of defendants, who being public officers, are mandated by law to enforce all pertinent laws against illegal constructions"; and that (4) "[d]efendants do not exercise judicial and quasi-judicial functions. Neither was the issuance of the assailed Notice of Demolition an exercise of a ministerial function. Nor is there any allegation in the complaint that defendants acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction."16 RTC and CA Dispositions On October 15, 1999, the RTC granted the motion of petitioners and dismissed the complaint of Baniqued with the following disposition: WHEREFORE, finding merit in the motion to dismiss filed by the defendant, the same is hereby GRANTED and this case is hereby DISMISSED without pronouncement as to costs. Atty. Melanio Mauricio is hereby cited for contempt of court and is hereby warned that a repetition of his use of improper language whether orally or in any of his pleadings will be dealt with more severely in the future. SO ORDERED.
17

The RTC reasoned that petitioners "are unquestionably members of the executive branch whose functions are neither judicial nor quasi-judicial."18 The RTC also sustained the argument of petitioners that "the act complained of can hardly qualify as ministerial in 19 nature as to put it within the ambit of the rule on prohibition." Lastly, the complaint of Baniqued was procedurally infirm because 20 he failed to exhaust administrative remedies. Baniqued moved for reconsideration21 which was opposed.22 On March 3, 2000, the RTC denied the motion.23

Refusing to give up, Baniqued appealed the decision of the RTC. The CA sustained Baniqued, disposing as follows: IN VIEW OF ALL THE FOREGOING, the instant petition is GRANTED and the appealed Orders dated October 15, 1999 and March 3 2000 are both RECALLED and SET ASIDE and a new one issued DENYING the Motion to Dismiss dated June 25, 1999. After the finality of this judgment, let the entire original records of the case at bench be returned to the court a quo which is reminded to decide the case on the merits and with dispatch. No pronouncement as to costs. SO ORDERED.
24

According to the CA, it may be true that the mayor is an executive official. However, as such, he has also been given the authority to 25 hear controversies involving property rights. In that regard, the Mayor exercises quasi-judicial functions. The CA also held that the allegations in the complaint of Baniqued state a cause of action. The averments in the complaint call for a 26 determination whether court action is needed before Baniqued can be ousted from the questioned lot. Petitioners attempted at a reconsideration27 to no avail. Left with no other recourse, they interposed the present appeal.28 Issues Petitioners impute to the CA the following errors, viz.: 1. THE COURT OF APPEALS GRAVELY ERRED AND ABUSED ITS DISCRETION IN RULING THAT THE ACT OF THE CITY MAYOR IN ISSUING A NOTICE OF DEMOLITION IS A QUASI-JUDICIAL FUNCTION; 2. THE COURT OF APPEALS GRAVELY ERRED AND ABUSED ITS DISCRETION IN RULING THAT THE ACTION OF PROHIBITION FILED BY BANIQUED WITH THE TRIAL COURT IS PROPER UNDER THE CIRCUMSTANCES; 3. THE COURT OF APPEALS GRAVELY ERRED AND ABUSED ITS DISCRETION IN REVERSING THE DECISION OF THE TRIAL COURT.29 (Underscoring supplied) In sum, petitioners claim that Baniqued incorrectly availed of the remedy of prohibition. Our Ruling The petition is unmeritorious. Baniqued correctly availed of the remedy of prohibition. Prohibition or a "writ of prohibition" is that process by which a superior court prevents inferior courts, tribunals, officers, or persons from usurping or exercising a jurisdiction with which they have not been vested by law.30 As its name indicates, the writ is one that commands the person or tribunal to whom it is directed not to do something which he or she is about to do. The writ is also commonly defined as one to prevent a tribunal possessing judicial or quasi-judicial powers from exercising jurisdiction over matters not within its cognizance or exceeding its jurisdiction in matters of 31 which it has cognizance. At common law, prohibition was a remedy used when subordinate courts and inferior tribunals assumed jurisdiction which was not properly theirs. Prohibition, at common law, was a remedy against encroachment of jurisdiction. Its office was to restrain subordinate courts and inferior judicial tribunals from extending their jurisdiction and, in adopting the remedy, the courts have almost universally preserved its original common-law nature, object and function. Thus, as a rule, its proper function is to prevent courts, or other tribunals, officers, or persons from usurping or exercising a jurisdiction with which they are not vested by law, and confine them to the exercise of those powers legally conferred. However, the function of the writ has been extended by some authorities to cover situations where, even though the lower tribunal has jurisdiction, the superior court deems it necessary and advisable to issue the writ to prevent some palpable and irremediable injustice, and, x x x the office of the remedy in some jurisdictions has been enlarged or restricted by constitutional or statutory provisions. While prohibition has been classified as an equitable remedy, it is generally referred to as a common-law remedy or writ; it is a remedy which is in nature legal, although, x x x its issuance is governed by equitable principles.32(Citations omitted)

Prohibition is not a new concept. It is a remedy of ancient origin. It is even said that it is as old as common law itself. The concept originated in conflicts of jurisdiction between royal courts and those of the church.33 In our jurisdiction, the rule on prohibition is enshrined in Section 2, Rule 65 of the Rules on Civil Procedure, to wit: Sec. 2. Petition for prohibition. - When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that the judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as the law and justice require. The petition shall likewise be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto and a sworn certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46. It is very clear that before resorting to the remedy of prohibition, there should be "no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law." Thus, jurisprudence teaches that resort to administrative remedies should be had first before judicial intervention can be availed of. This Court in a long line of cases has consistently held that before a party is allowed to seek the intervention of the court, it is a pre-condition that he should have availed of all the means of administrative processes afforded him. Hence, if a remedy within the administrative machinery can still be resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes within his jurisdiction then such remedy should be exhausted first before court's judicial power can be sought. The premature invocation of court's intervention is fatal to one's cause of action. x x x34 Explaining the reason behind the rule, Mr. Justice Justo Torres, Jr., expounded, thus: x x x This doctrine of exhaustion of administrative remedies was not without its practical and legal reasons, for one thing, availment of administrative remedy entails lesser expenses and provides for a speedier disposition of controversies. It is no less true to state that the courts of justice for reasons of comity and convenience will shy away from a dispute until the system of administrative redress has been completed and complied with so as to give the administrative agency concerned every opportunity to correct its error and to dispose of the case. x x x35 Petitioners are of the view that the complaint of Baniqued for prohibition is fatally defective because he failed to exhaust administrative remedies. If he felt aggrieved by the issuance of the notice of demolition, administrative remedies were readily available to him. For example, he could have easily filed a motion for reinvestigation or reconsideration.36 The argument fails to persuade. The doctrine of exhaustion of administrative remedies is not an iron-clad rule.37 It admits of several exceptions. Jurisprudence is well-settled that the doctrine does not apply in cases (1) when the question raised is purely legal; (2) when the administrative body is in estoppel; (3) when the act complained of is patently illegal; (4) when there is urgent need for judicial intervention; (5) when the claim involved is small; (6) when irreparable damage will be suffered; (7) when there is no other plain, speedy, and adequate remedy; (8) when strong public interest is involved; (9) when the subject of the proceeding is private land; (10) in quo warranto proceedings; and (11) where the facts show that there was violation of due process.38 Here, there was an urgent need for judicial intervention. The filing of a motion for reinvestigation or reconsideration would have been a useless exercise. The notice of demolition is very clear and speaks for itself. City Mayor Domogan already made up his mind that the house of Baniqued was illegally built and was thus subject to demolition. It could reasonably be assumed that a motion for reinvestigation or reconsideration would have also been denied outright. The irreparable damage to Baniqued in case his house was demolished cannot be gainsaid. Petitioners contend, though, that the complaint of Baniqued is premature. They say that what was issued by City Mayor Domogan 39 was only a notice of demolition, and not an order of demolition. In short, petitioners are saying that Baniqued jumped the gun. He

should have waited first for the issuance of a demolition order because no demolition can be carried out in the absence of such order. To Our mind, the distinction between a notice of demolition and an order of demolition is immaterial. What is material is that Baniqued felt threatened with the impending demolition of his house. It would have been too late and illogical if he waited first for his house to be actually demolished, before seeking protection from the courts. Acting in the earliest opportunity and availing of the best remedy available to protect his right was the prudent course of action. Petitioners also argue that the complaint of Baniqued should not prosper because he never alleged that the act complained of was done without or in excess of jurisdiction or with grave abuse of discretion.40To support their stance, they cite Reyes v. Romero41 where this Court denied the petition for prohibition because there was "no allegation whatsoever charging the respondent Judge with lack of jurisdiction or with having committed grave abuse of discretion."42 Put differently, petitioners argue that for a complaint for prohibition to prosper, there should be a specific allegation that the act complained of was done without or in excess of jurisdiction or with grave abuse of discretion. The argument is specious on two grounds. First, Romero is not necessarily applicable to the instant case because it involved a different set of facts. There, a team of PC Rangers raided a house in Pasay City, Rizal, which was dubbed as a Gambling Casino. As a result, twelve persons were charged for violating the gambling law. The case was tried in the branch of the Municipal Trial Court in Pasay presided by Judge Lucio Tianco. The accused were later acquitted for insufficiency of evidence. An off-shoot of the raid was the prosecution of petitioners as maintainers of a gambling den. The case was also assigned to the sala of Judge Tianco. However, as Judge Tianco was on leave, the Secretary of Justice designated Judge Guillermo Romero to preside over said branch. Sometime later, Judge Tianco returned to office and resumed his duties. This, notwithstanding, Judge Romero ordered the continuation of the trial before him. Petitioners then sought the inhibition of Judge Romero in view of the return of Judge Tianco. The motion was denied. The matter was brought directly to this Court on petition for prohibition with preliminary injunction. One of the two issues resolved by the Court was "whether respondent Judge in refusing to inhibit himself from continuing with the trial of the criminal case in question, acted without or in excess of his jurisdiction or with grave abuse of discretion."43 Clearly, the surrounding circumstances in Romero are absent in the case now before Us. They cannot be remotely applied even by analogy. Second, petitioners misconstrued Romero by interpreting it literally. The better interpretation is that the absence of specific allegation that the act complained of was done without or in excess of jurisdiction or with grave abuse of discretion would not automatically cause the dismissal of the complaint for prohibition, provided that a reading of the allegations in the complaint leads to no other conclusion than that the act complained of was, indeed, done without or in excess of jurisdiction. To subscribe to the reasoning of petitioners may lead to an absurd situation. A patently unmeritorious complaint for prohibition may not be given due course just because of an allegation that the act complained of was committed without or in excess of jurisdiction or with grave abuse of discretion. This interpretation is supported by Romero itself. Petitioners overlooked that the case goes on to say that even if there were allegations of grave abuse of discretion, "there can be no abuse of discretion, much less a grave one, for respondent Judge to comply with a valid and legal Administrative Order (No. 183) of the Secretary of Justice."44 The Mayor, although performing executive functions, also exercises quasi-judicial function which may be corrected by prohibition. As a parting argument, petitioners contend that the complaint of Baniqued is outside the scope of the rule on prohibition which covers the proceedings of any "tribunal, corporation, board, officer or person, whether exercising judicial, quasijudicial or ministerial functions." The issuance of the notice of demolition by the City Mayor is never a judicial, ministerial or rulemaking function. It is strictly an act of law enforcement and implementation, which is purely an executive function. Neither is the Office of the City Mayor a quasi-judicial body.45 Again, petitioners are mistaken. We need not belabor so much on this point. We quote with approval the CA observations in this regard, viz.:

Under existing laws, the office of the mayor is given powers not only relative to its function as the executive official of the town. It has also been endowed with authority to hear issues involving property rights of individuals and to come out with an effective order or resolution thereon. In this manner, it exercises quasi-judicial functions. This power is obviously a truism in the matter of issuing demolition notices and/or orders against squatters and illegal occupants through some of its agencies or authorized committees within its respective municipalities or cities. There is no gainsaying that a city mayor is an executive official nor is the matter of issuing demolition notices or orders not a ministerial one. But then, it cannot be denied as well that in determining whether or not a structure is illegal or it should be demolished, property rights are involved thereby needing notices and opportunity to be heard as provided for in the constitutionally guaranteed right of due process. In pursuit of these functions, the city mayor has to exercise quasi-judicial powers. Moreno, in his Philippine Law Dictionary, 3rd Edition, defines quasi-judicial function as applying to the action discretion, etc. of public administrative officers or bodies, who are required to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action, and to exercise discretion of a judicial nature (Midland Insurance Corp. v. Intermediate Appellate Court, 143 SCRA 458 [1986]). Significantly, the Notice of Demolition in issue was the result of the exercise of quasi-judicial power by the Office of the Mayor.46 We also agree with the CA that the complaint of Baniqued states a cause of action. The averments in the complaint "call for a determination of whether or not there is need for a court action or a court litigation to oust plaintiff from the possession of the subject lot, or, it is within the jurisdictional prerogative of the Office of the Mayor to eject [an] unlawful occupant from a private titled land he does not own."47 Lest this Decision be misunderstood, We hasten to clarify that We have not prejudged the merits of the case. Whether or not Baniqued is, indeed, entitled to a writ of prohibition is a matter which the trial court should determine in the first instance without further delay. WHEREFORE, the appealed Decision is AFFIRMED. The case is REMANDED to the trial court for further proceedings. G.R. No. 96681 December 2, 1991 HON. ISIDRO CARIO, in his capacity as Secretary of the Department of Education, Culture & Sports, DR. ERLINDA LOLARGA, in her capacity as Superintendent of City Schools of Manila, petitioners, vs. THE COMMISSION ON HUMAN RIGHTS, GRACIANO BUDOY, JULIETA BABARAN, ELSA IBABAO, HELEN LUPO, AMPARO GONZALES, LUZ DEL CASTILLO, ELSA REYES and APOLINARIO ESBER, respondents.

NARVASA, J.:p The issue raised in the special civil action of certiorari and prohibition at bar, instituted by the Solicitor General, may be formulated as follows: where the relief sought from the Commission on Human Rights by a party in a case consists of the review and reversal or modification of a decision or order issued by a court of justice or government agency or official exercising quasi-judicial functions, may the Commission take cognizance of the case and grant that relief? Stated otherwise, where a particular subject-matter is placed by law within the jurisdiction of a court or other government agency or official for purposes of trial and adjudgment, may the Commission on Human Rights take cognizance of the same subject-matter for the same purposes of hearing and adjudication? The facts narrated in the petition are not denied by the respondents and are hence taken as substantially correct for purposes of ruling on the legal questions posed in the present action. These facts, 1 together with others involved in related cases recently resolved by this Court 2 or otherwise undisputed on the record, are hereunder set forth. 1. On September 17, 1990, a Monday and a class day, some 800 public school teachers, among them members of the Manila Public School Teachers Association (MPSTA) and Alliance of Concerned Teachers (ACT) undertook what they described as "mass concerted actions" to "dramatize and highlight" their plight resulting from the alleged failure of the public authorities to act upon grievances that had time and again been brought to the latter's attention. According to them they had decided to undertake said "mass concerted actions" after the protest rally staged at the DECS premises on September 14, 1990 without disrupting classes as a last call for the government to negotiate the granting of demands had elicited no response from the Secretary of Education. The "mass actions" consisted in staying away from their classes, converging at the Liwasang Bonifacio, gathering in peaceable assemblies, etc.

Through their representatives, the teachers participating in the mass actions were served with an order of the Secretary of Education to return to work in 24 hours or face dismissal, and a memorandum directing the DECS officials concerned to initiate dismissal proceedings against those who did not comply and to hire their replacements. Those directives notwithstanding, the mass actions continued into the week, with more teachers joining in the days that followed. 3 Among those who took part in the "concerted mass actions" were the eight (8) private respondents herein, teachers at the Ramon Magsaysay High School, Manila, who had agreed to support the non-political demands of the MPSTA. 4 2. For failure to heed the return-to-work order, the CHR complainants (private respondents) were administratively charged on the basis of the principal's report and given five (5) days to answer the charges. They were also preventively suspended for ninety (90) days "pursuant to Section 41 of P.D. 807" and temporarily replaced (unmarked CHR Exhibits, Annexes F, G, H). An investigation committee was consequently formed to hear the charges in accordance with P.D. 807. 5 3. In the administrative case docketed as Case No. DECS 90-082 in which CHR complainants Graciano Budoy, Jr., Julieta Babaran, Luz del Castillo, Apolinario Esber were, among others, named respondents, 6 the latter filed separate answers, opted for a formal investigation, and also moved "for suspension of the administrative proceedings pending resolution by . . (the Supreme) Court of their application for issuance of an injunctive writ/temporary restraining order." But when their motion for suspension was denied by Order dated November 8, 1990 of the Investigating Committee, which later also denied their motion for reconsideration orally made at the hearing of November 14, 1990, "the respondents led by their counsel staged a walkout signifying their intent to boycott the entire proceedings." 7 The case eventually resulted in a Decision of Secretary Cario dated December 17, 1990, rendered after evaluation of the evidence as well as the answers, affidavits and documents submitted by the respondents, decreeing dismissal from the service of Apolinario Esber and the suspension for nine (9) months of Babaran, Budoy and del Castillo. 8 4. In the meantime, the "MPSTA filed a petition for certiorari before the Regional Trial Court of Manila against petitioner (Cario), which was dismissed (unmarked CHR Exhibit, Annex I). Later, the MPSTA went to the Supreme Court (on certiorari, in an attempt to nullify said dismissal, grounded on the) alleged violation of the striking teachers" right to due process and peaceable assembly docketed as G.R. No. 95445, supra. The ACT also filed a similar petition before the Supreme Court . . . docketed as G.R. No. 95590." 9 Both petitions in this Court were filed in behalf of the teacher associations, a few named individuals, and "other teachermembers so numerous similarly situated" or "other similarly situated public school teachers too numerous to be impleaded." 5. In the meantime, too, the respondent teachers submitted sworn statements dated September 27, 1990 to the Commission on Human Rights to complain that while they were participating in peaceful mass actions, they suddenly learned of their replacements as teachers, allegedly without notice and consequently for reasons completely unknown to them. 10 6. Their complaints and those of other teachers also "ordered suspended by the . . . (DECS)," all numbering forty-two (42) were docketed as "Striking Teachers CHR Case No. 90775." In connection therewith the Commission scheduled a "dialogue" on October 11, 1990, and sent a subpoena to Secretary Cario requiring his attendance therein. 11 On the day of the "dialogue," although it said that it was "not certain whether he (Sec. Cario) received the subpoena which was served at his office, . . . (the) Commission, with the Chairman presiding, and Commissioners Hesiquio R. Mallilin and Narciso C. Monteiro, proceeded to hear the case;" it heard the complainants' counsel (a) explain that his clients had been "denied due process and suspended without formal notice, and unjustly, since they did not join the mass leave," and (b) expatiate on the grievances which were "the cause of the mass leave of MPSTA teachers, (and) with which causes they (CHR complainants) sympathize." 12 The Commission thereafter issued an Order 13 reciting these facts and making the following disposition: To be properly apprised of the real facts of the case and be accordingly guided in its investigation and resolution of the matter, considering that these forty two teachers are now suspended and deprived of their wages, which they need very badly, Secretary Isidro Cario, of the Department of Education, Culture and Sports, Dr. Erlinda Lolarga, school superintendent of Manila and the Principal of Ramon Magsaysay High School, Manila, are hereby enjoined to appear and enlighten the Commission en banc on October 19, 1990 at 11:00 A.M. and to bring with them any and all documents relevant to the allegations aforestated herein to assist the Commission in this matter. Otherwise, the Commission will resolve the complaint on the basis of complainants' evidence. xxx xxx xxx

7. Through the Office of the Solicitor General, Secretary Cario sought and was granted leave to file a motion to dismiss the case. His motion to dismiss was submitted on November 14, 1990 alleging as grounds therefor, "that the complaint states no cause of action and that the CHR has no jurisdiction over the case." 14 8. Pending determination by the Commission of the motion to dismiss, judgments affecting the "striking teachers" were promulgated in two (2) cases, as aforestated, viz.: a) The Decision dated December l7, 1990 of Education Secretary Cario in Case No. DECS 90-082, decreeing dismissal from the service of Apolinario Esber and the suspension for nine (9) months of Babaran, Budoy and del Castillo; 15 and b) The joint Resolution of this Court dated August 6, 1991 in G.R. Nos. 95445 and 95590 dismissing the petitions "without prejudice to any appeals, if still timely, that the individual petitioners may take to the Civil Service Commission on the matters complained of," 16 and inter alia "ruling that it was prima facie lawful for petitioner Cario to issue return-to-work orders, file administrative charges against recalcitrants, preventively suspend them, and issue decision on those charges." 17 9. In an Order dated December 28, 1990, respondent Commission denied Sec. Cario's motion to dismiss and required him and Superintendent Lolarga "to submit their counter-affidavits within ten (10) days . . . (after which) the Commission shall proceed to hear and resolve the case on the merits with or without respondents counter affidavit." 18 It held that the "striking teachers" "were denied due process of law; . . . they should not have been replaced without a chance to reply to the administrative charges;" there had been a violation of their civil and political rights which the Commission was empowered to investigate; and while expressing its "utmost respect to the Supreme Court . . . the facts before . . . (it) are different from those in the case decided by the Supreme Court" (the reference being unmistakably to this Court's joint Resolution of August 6, 1991 in G.R. Nos. 95445 and 95590, supra). It is to invalidate and set aside this Order of December 28, 1990 that the Solicitor General, in behalf of petitioner Cario, has commenced the present action of certiorari and prohibition. The Commission on Human Rights has made clear its position that it does not feel bound by this Court's joint Resolution in G.R. Nos. 95445 and 95590, supra. It has also made plain its intention "to hear and resolve the case (i.e., Striking Teachers HRC Case No. 90775) on the merits." It intends, in other words, to try and decide or hear and determine, i.e., exercise jurisdiction over the following general issues: 1) whether or not the striking teachers were denied due process, and just cause exists for the imposition of administrative disciplinary sanctions on them by their superiors; and 2) whether or not the grievances which were "the cause of the mass leave of MPSTA teachers, (and) with which causes they (CHR complainants) sympathize," justify their mass action or strike. The Commission evidently intends to itself adjudicate, that is to say, determine with character of finality and definiteness, the same issues which have been passed upon and decided by the Secretary of Education, Culture & Sports, subject to appeal to the Civil Service Commission, this Court having in fact, as aforementioned, declared that the teachers affected may take appeals to the Civil Service Commission on said matters, if still timely. The threshold question is whether or not the Commission on Human Rights has the power under the Constitution to do so; whether or not, like a court of justice, 19 or even a quasi-judicial agency, 20 it has jurisdiction or adjudicatory powers over, or the power to try and decide, or hear and determine, certain specific type of cases, like alleged human rights violations involving civil or political rights. The Court declares the Commission on Human Rights to have no such power; and that it was not meant by the fundamental law to be another court or quasi-judicial agency in this country, or duplicate much less take over the functions of the latter. The most that may be conceded to the Commission in the way of adjudicative power is that it may investigate, i.e., receive evidence and make findings of fact as regards claimed human rights violations involving civil and political rights. But fact finding is not adjudication, and cannot be likened to the judicial function of a court of justice, or even a quasi-judicial agency or official. The function of receiving evidence and ascertaining therefrom the facts of a controversy is not a judicial function, properly speaking. To be considered such, the faculty of receiving evidence and making factual conclusions in a controversy must be accompanied by the

authority of applying the law to those factual conclusions to the end that the controversy may be decided or determined authoritatively, finally and definitively, subject to such appeals or modes of review as may be provided by law. 21 This function, to repeat, the Commission does not have. 22 The proposition is made clear by the constitutional provisions specifying the powers of the Commission on Human Rights. The Commission was created by the 1987 Constitution as an independent office. 23 Upon its constitution, it succeeded and superseded the Presidential Committee on Human Rights existing at the time of the effectivity of the Constitution. 24 Its powers and functions are the following 25 (1) Investigate, on its own or on complaint by any party, all forms of human rights violations involving civil and political rights; (2) Adopt its operational guidelines and rules of procedure, and cite for contempt for violations thereof in accordance with the Rules of Court; (3) Provide appropriate legal measures for the protection of human rights of all persons within the Philippines, as well as Filipinos residing abroad, and provide for preventive measures and legal aid services to the underprivileged whose human rights have been violated or need protection; (4) Exercise visitorial powers over jails, prisons, or detention facilities; (5) Establish a continuing program of research, education, and information to enhance respect for the primacy of human rights; (6) Recommend to the Congress effective measures to promote human rights and to provide for compensation to victims of violations of human rights, or their families; (7) Monitor the Philippine Government's compliance with international treaty obligations on human rights; (8) Grant immunity from prosecution to any person whose testimony or whose possession of documents or other evidence is necessary or convenient to determine the truth in any investigation conducted by it or under its authority; (9) Request the assistance of any department, bureau, office, or agency in the performance of its functions; (10) Appoint its officers and employees in accordance with law; and (11) Perform such other duties and functions as may be provided by law. As should at once be observed, only the first of the enumerated powers and functions bears any resemblance to adjudication or adjudgment. The Constitution clearly and categorically grants to the Commission the power toinvestigate all forms of human rights violations involving civil and political rights. It can exercise that power on its own initiative or on complaint of any person. It may exercise that power pursuant to such rules of procedure as it may adopt and, in cases of violations of said rules, cite for contempt in accordance with the Rules of Court. In the course of any investigation conducted by it or under its authority, it may grant immunity from prosecution to any person whose testimony or whose possession of documents or other evidence is necessary or convenient to determine the truth. It may also request the assistance of any department, bureau, office, or agency in the performance of its functions, in the conduct of its investigation or in extending such remedy as may be required by its findings. 26 But it cannot try and decide cases (or hear and determine causes) as courts of justice, or even quasi-judicial bodies do. To investigate is not to adjudicate or adjudge. Whether in the popular or the technical sense, these terms have well understood and quite distinct meanings. "Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into systematically. "to search or inquire into: . . . to subject to an official probe . . .: to conduct an official inquiry." 27 The purpose of investigation, of course, is to discover, to find out, to learn,

obtain information. Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in the facts inquired into by application of the law to the facts established by the inquiry. The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry or observation. To trace or track; to search into; to examine and inquire into with care and accuracy; to find out by careful inquisition; examination; the taking of evidence; a legal inquiry;" 28 "to inquire; to make an investigation," "investigation" being in turn describe as "(a)n administrative function, the exercise of which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; . . . an inquiry, judicial or otherwise, for the discovery and collection of facts concerning a certain matter or matters." 29 "Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine, resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of the parties to a court case) on the merits of issues raised: . . . to pass judgment on: settle judicially: . . . act as judge." 30 And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: . . . to award or grant judicially in a case of controversy . . . ." 31 In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally. Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide, settle or decree, or to sentence or condemn. . . . Implies a judicial determination of a fact, and the entry of a judgment." 32 Hence it is that the Commission on Human Rights, having merely the power "to investigate," cannot and should not "try and resolve on the merits" (adjudicate) the matters involved in Striking Teachers HRC Case No. 90-775, as it has announced it means to do; and it cannot do so even if there be a claim that in the administrative disciplinary proceedings against the teachers in question, initiated and conducted by the DECS, their human rights, or civil or political rights had been transgressed. More particularly, the Commission has no power to "resolve on the merits" the question of (a) whether or not the mass concerted actions engaged in by the teachers constitute and are prohibited or otherwise restricted by law; (b) whether or not the act of carrying on and taking part in those actions, and the failure of the teachers to discontinue those actions, and return to their classes despite the order to this effect by the Secretary of Education, constitute infractions of relevant rules and regulations warranting administrative disciplinary sanctions, or are justified by the grievances complained of by them; and (c) what where the particular acts done by each individual teacher and what sanctions, if any, may properly be imposed for said acts or omissions. These are matters undoubtedly and clearly within the original jurisdiction of the Secretary of Education, being within the scope of the disciplinary powers granted to him under the Civil Service Law, and also, within the appellate jurisdiction of the Civil Service Commission. Indeed, the Secretary of Education has, as above narrated, already taken cognizance of the issues and resolved them, 33 and it appears that appeals have been seasonably taken by the aggrieved parties to the Civil Service Commission; and even this Court itself has had occasion to pass upon said issues. 34 Now, it is quite obvious that whether or not the conclusions reached by the Secretary of Education in disciplinary cases are correct and are adequately based on substantial evidence; whether or not the proceedings themselves are void or defective in not having accorded the respondents due process; and whether or not the Secretary of Education had in truth committed "human rights violations involving civil and political rights," are matters which may be passed upon and determined through a motion for reconsideration addressed to the Secretary Education himself, and in the event of an adverse verdict, may be reviewed by the Civil Service Commission and eventually the Supreme Court. The Commission on Human Rights simply has no place in this scheme of things. It has no business intruding into the jurisdiction and functions of the Education Secretary or the Civil Service Commission. It has no business going over the same ground traversed by the latter and making its own judgment on the questions involved. This would accord success to what may well have been the complaining teachers' strategy to abort, frustrate or negate the judgment of the Education Secretary in the administrative cases against them which they anticipated would be adverse to them. This cannot be done. It will not be permitted to be done. In any event, the investigation by the Commission on Human Rights would serve no useful purpose. If its investigation should result in conclusions contrary to those reached by Secretary Cario, it would have no power anyway to reverse the Secretary's conclusions. Reversal thereof can only by done by the Civil Service Commission and lastly by this Court. The only thing the Commission can do, if it concludes that Secretary Cario was in error, is to refer the matter to the appropriate Government agency or tribunal for

assistance; that would be the Civil Service Commission. 35 It cannot arrogate unto itself the appellate jurisdiction of the Civil Service Commission. WHEREFORE, the petition is granted; the Order of December 29, 1990 is ANNULLED and SET ASIDE, and the respondent Commission on Human Rights and the Chairman and Members thereof are prohibited "to hear and resolve the case (i.e., Striking Teachers HRC Case No. 90-775) on the merits." SO ORDERED. G.R. No. 114683 January 18, 2000

JESUS C. OCAMPO, petitioner, vs. OFFICE OF THE OMBUDSMAN and MAXIMO ECLIPSE, respondents. BUENA, J.: This petition for certiorari seeks to nullify the Resolutions of the Ombudsman in OMB-Adm-0-92-0020 dated November 18, 1 2 1993 and February 28, 1994 which dismissed petitioner from the service, with forfeiture of benefits and special perpetual disqualification to hold office in the government or any government-owned or controlled corporation, and which denied the motion for reconsideration thereof, respectively. The facts are as follows: Petitioner is the Training Coordinator of NIACONSULT, INC., a subsidiary of the National Irrigation Administration. On March 21, 1988, K.N. Paudel of the Agricultural Development Bank of Nepal (ADBN) Mote a letter to NIACONSULT requesting a training proposal on small-scale community irrigation development.3 On November 17, 1988, petitioner as the training coordinator of the NIACONSULT, sent a letter-proposal requested by ABDN.4 Another letter was sent by petitioner on January 31, 1989 to Dr. Peiter Roeloffs of ADBN confirming the availability of NIACONSULT to conduct the training program and formally requesting advance payment of thirty (30%) percent of the training fee5 in the amount of US $9,600.00 or P204,960.00. NIACONSULT conducted the training program for six Nepalese Junior Engineers from February 6 to March 7, 1989.6 ADBN, thru its representative, Deutsche Gesselschaft Technische Zusummenarbeit (GTZ) Gmbh Technical Cooperation of the Federal Republic of Germany paid to the petitioner the agreed training fee in two installments of P61,488.00 and P143, 472.00.7 On April 1, 1991, NIACONSULT, through its president, Wilfredo S. Tiongco, wrote a letter to petitioner demanding the turn-over of the total training fee paid by ADBN which petitioner personally received.8 Despite receipt of the letter, petitioner failed to remit the said amount prompting NIACONSULT through its president, Maximino Eclipse, to file an administrative case before respondent 9 OMBUDSMAN for serious misconduct and/or fraud or willful breach of trust. Finding enough basis to proceed with the administrative case, the Administrative Adjudication Bureau of the respondent OMBUDSMAN, on February 17, 1992, issued an order10 requiring petitioner to file his counter-affidavit within ten (10) days from receipt with a caveat that failure to file the same would be deemed a waiver of his right to present evidence. Despite notice, petitioner failed to comply with the said order. A year later, or on March 17, 1993, respondent OMBUDSMAN issued another order11 giving petitioner another chance to file his counter-affidavit and controverting evidence. Again, petitioner failed. Thus, on April 14, 1993, private respondent was required to appear before the OMBUDSMAN to present evidence to support its complaint.12 Thereafter, on November 18, 1993, respondent OMBUDSMAN issued the assailed Resolution, the decretal portion of which reads: Withal, for such dishonesty, untrustworthiness, and conduct prejudicial to the service as established by overwhelming evidences, it is respectfully recommended that respondent Jesus C. Ocampo be discharged from the service, with forfeiture

of benefits and special perpetual disqualification to hold office in the government or any government-owned or controlled corporation; without prejudice to any civil action NIACONSULT, Inc., may institute to recover the amount so retained by the respondent. SO ORDERED.13 On February 16, 1994 petitioner moved for reconsideration and to re-open the case claiming that he was denied due process in that the administrative case was resolved on the basis of the complainant's evidences, without affording him the opportunity to file a counter-affidavit and to present his evidence. Petitioner likewise contends that he was not given access to the records of the subject transaction vital to his defense and in the preparation of his counter-affidavit despite his verbal requests to the graft investigator.14 The respondent OMBUDSMAN denied the motion on February 28, 1994.15 Aggrieved, petitioner filed the instant petition basically reiterating his arguments in his motion for reconsideration. We gave due course to the petition and required the parties to submit their respective memoranda. While the case is pending, petitioner filed a Manifestation on May 24, 199716 stating that the criminal complaint for estafa and falsification filed against him based on the same facts or incidents which gave rise to the administrative case, was dismissed by the Regional Trial Court on February 24, 1997. With the dismissal of the criminal case, petitioner manifests that the administrative case can no longer stand on its own and therefore should be dismissed.17 Such manifestation is not well taken. The dismissal of the criminal case will not foreclose administrative action filed against petitioner or give him a clean bill of health in all respects. The Regional Trial Court, in dismissing the criminal complaint, was simply saying that the prosecution was unable to prove the guilt of petitioner beyond reasonable doubt, a condition sine qua non for conviction. The lack or absence of proof beyond reasonable doubt does not mean an absence of any evidence whatsoever for there is another class of evidence which, though insufficient to establish guilt beyond reasonable doubt, is adequate in civil cases; this is preponderance of evidence. Then too, there is the "substantial evidence" rule in administrative proceedings which merely requires such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.18 Thus, considering the difference in the quantum of evidence, as well as the procedure followed and the sanctions imposed in criminal and administrative proceedings, the findings and conclusions in one should not necessarily be binding on the other.19 Going now to the crux of the controversy, petitioner asserts that he was denied the opportunity to be heard. The essence of due process is an opportunity to be heard. One may be heard, not solely by verbal presentation but also, and perhaps even many times more creditably and practicable than oral argument, through pleadings. In administrative proceedings, moreover, technical rules of procedure and evidence are not strictly applied; administrative due process cannot be fully equated to due process in its strict judicial sense.20 Petitioner has been amply accorded the opportunity to be heard. He was required to answer the complaint against him. In fact, petitioner was given considerable length of time to submit his counter-affidavit. It took more than one year from February 17, 1992 before petitioner was considered to have waived his right to file his counter-affidavit and the formal presentation of the complainant's evidence was set. The March 17, 1993 order was issued to give the petitioner a last chance to present his defense, despite the private respondent's objections. But petitioner failed to comply with the second order.1wphi1.nt Thus, petitioner's failure to present evidence is solely of his own making and cannot escape his own remissness by passing the blame on the graft investigator. While the respondent OMBUDSMAN has shown forbearance, petitioner has not displayed corresponding vigilance. He therefore cannot validly claim that his right to due process was violated. We need only to reiterate that a party who chooses not to avail of the opportunity to answer the charges cannot complain of a denial of due process.21 Petitioner's claim that he was not given any notice of the order declaring him to have waived his right to file his counter-affidavit and of allowing the private respondent to present evidence ex-parte is unmeritorious.

The orders of respondent OMBUDSMAN requiring petitioner to submit his counter-affidavit and which was admittedly received by the latter explicitly contain a warning that if no counter-affidavit was filed within the given period, a waiver would be considered and the administrative proceedings shall continue according to the rules. Thus, respondent OMBUDSMAN need not issue another order notifying petitioner that he has waived his right to file a counter-affidavit. In the same way, petitioner need not be notified of the exparte hearing for the reception of private respondent's evidence. As such, he could not have been expected to appear at the exparte hearing. With regard to the petitioner's claim that he made requests for the production of the documents alleged to be material to his defense, the record is bereft of any proof of such requests. If it were true that the graft investigator did not act on such requests, petitioner should have filed the proper motion before the respondent OMBUDSMAN for the production of the documents or to compel the respondent complainant to produce whatever record necessary for his defense. Petitioner did not. It was only after the respondent OMBUDSMAN issued the assailed resolution of November 18, 1993 that he bewailed the alleged failure of respondent's graft investigator to require the production of the records of the subject transaction. The record of this case indisputably shows that petitioner is guilty of dishonesty and conduct prejudicial to the government when he failed to remit the payment of the training program conducted by NIACONSULT. The evidence presented sufficiently established that petitioner received the payments of ADBN through its representative, GTZ, Philippines the amount of US $9,600.00 and that he failed to account this and remit the same to the corporation. All these acts constitute dishonesty and untrustworthiness. WHEREFORE, the petition is hereby DENIED for lack of merit. The assailed Resolutions of the respondent OMBUDSMAN are hereby AFFIRMED. G.R. No. 122226 March 25, 1998 UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner, vs. HON. BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents.

MENDOZA, J.: Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a petition for certification election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc. However, its petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route managers are managerial employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which provides: Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. Petitioner brought this suit challenging the validity of the order dated August 31, 1995, as reiterated in the order dated September 22, 1995, of the Secretary of Labor and Employment. Its petition was dismissed by the Third Division for lack of showing that respondent committed grave abuse of discretion. But petitioner filed a motion for reconsideration, pressing for resolution its contention that the first sentence of Art. 245 of the Labor Code, so far as it declares managerial employees to be ineligible to form, assist or join unions, contravenes Art. III, 8 of the Constitution which provides: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. For this reason, the petition was referred to the Court en banc. The Issues in this Case

Two questions are presented by the petition: (1) whether the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees and (2) whether Art. 245, insofar as it prohibits managerial employees from forming, joining or assisting labor unions, violates Art. III, 8 of the Constitution. In resolving these issues it would be useful to begin by defining who are "managerial employees" and considering the types of "managerial employees." Types of Managerial Employees The term "manager" generally refers to "anyone who is responsible for subordinates and other organizational resources." As a class, managers constitute three levels of a pyramid: Top management
1

Middle Management

First-Line Management (also called Supervisor) ==================== Operatives or Operating Employees FIRST-LINE MANAGERS The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management. First-line managers direct operating employees only; they do not supervise other managers. Examples of first-line managers are the "foreman" or production supervisor in a manufacturing plant, the technical supervisor in a research department, and the clerical supervisor in a large office. First-level managers are often called supervisors. MIDDLE MANAGERS The term middle management can refer to more than one level in an organization. Middle managers direct the activities of other managers and sometimes also those of operating employees. Middle managers' principal responsibilities are to direct the activities that implement their organizations' policies and to balance the demands of their superiors with the capacities of their subordinates. A plant manager in an electronics firm is an example of a middle manager. TOP MANAGERS Composed of a comparatively small group of executives, top management is responsible for the overall management of the organization. It establishes operating policies and guides the organization's interactions with its environment. Typical titles of top managers are "chief executive officer," "president," and "senior vice-president." Actual

titles vary from one organization to another and are not always a reliable guide to membership in the highest management 2 classification. As can be seen from this description, a distinction exists between those who have the authority to devise, implement and control strategic and operational policies (top and middle managers) and those whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an organization (first-level managers/supervisors). What distinguishes them from the rankand-file employees is that they act in the interest of the employer in supervising such rank-and-file employees. "Managerial employees" may therefore be said to fall into two distinct categories: the "managers" per se, who compose the former group described above, and the "supervisors" who form the latter group. Whether they belong to the first or the second category, 3 managers, vis-a-vis employers, are, likewise, employees. The first question is whether route managers are managerial employees or supervisors. Previous Administrative Determinations of the Question Whether Route Managers are Managerial Employees It appears that this question was the subject of two previous determinations by the Secretary of Labor and Employment, in accordance with which this case was decided by the med-arbiter. In Case No. OS-MA-10-318-91, entitled Worker's Alliance Trade Union (WATU) v. Pepsi-Cola Products Philippines, Inc., decided on November 13, 1991, the Secretary of Labor found: We examined carefully the pertinent job descriptions of the subject employees and other documentary evidence on record vis-a-vis paragraph (m), Article 212 of the Labor Code, as amended, and we find that only those employees occupying the position of route manager and accounting manager are managerial employees. The rest i.e. quality control manager, yard/transport manager and warehouse operations manager are supervisory employees. To qualify as managerial employee, there must be a clear showing of the exercise of managerial attributes under paragraph (m), Article 212 of the Labor Code as amended. Designations or titles of positions are not controlling. In the instant case, nothing on record will support the claim that the quality control manager, yard/transport manager and warehouse operations manager are vested with said attributes. The warehouse operations manager, for example, merely assists the plant finance manager in planning, organizing, directing and controlling all activities relative to development and implementation of an effective management control information system at the sale offices. The exercise of authority of the quality control manager, on the other hand, needs the concurrence of the manufacturing manager. As to the route managers and accounting manager, we are convinced that they are managerial employees. Their job descriptions clearly reveal so. On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92. entitled In Re: Petition for Direct Certification and/or Certification Election-Route Managers/Supervisory Employees of Pepsi-Cola Products Phils.Inc., as follows: The issue brought before us is not of first impression. At one time, we had the occasion to rule upon the status of route manager in the same company vis a vis the issue as to whether or not it is supervisory employee or a managerial employee. In the case of Workers Alliance Trade Unions (WATU) vs. Pepsi Cola Products, Phils., Inc. (OS-MA-A-10-318-91 ), 15 November 1991, we ruled that a route manager is a managerial employee within the context of the definition of the law, and hence, ineligible to join, form or assist a union. We have once more passed upon the logic of our Decision aforecited in the light of the issues raised in the instant appeal, as well as the available documentary evidence on hand, and have come to the view that there is no cogent reason to depart from our earlier holding. Route Managers are, by the very nature of their functions and the authority they wield over their subordinates, managerial employees. The prescription found in Art. 4 245 of the Labor Code, as amended therefore, clearly applies to them. Citing our ruling in Nasipit Lumber Co. v. National Labor Relations Commission, however, petitioner argues that these previous administrative determinations do not have the effect of res judicata in this case, because "labor relations proceedings" are "nonlitigious and summary in nature without regard to legal technicalities." 6 Nasipit Lumber Co. involved a clearance to dismiss an employee issued by the Department of Labor. The question was whether in a subsequent proceeding for illegal dismissal, the
5

clearance was res judicata. In holding it was not, this Court made it clear that it was referring to labor relations proceedings of a nonadversary character, thus: The requirement of a clearance to terminate employment was a creation of the Department of labor to carry out the Labor Code provisions on security of tenure and termination of employment. The proceeding subsequent to the filing of an application for clearance to terminate employment was outlined in Book V, Rule XIV of the Rules and Regulations Implementing the Labor Code. The fact that said rule allowed a procedure for the approval of the clearance with or without the opposition of the employee concerned (Secs. 7 & 8), demonstrates the non-litigious and summary nature of the proceeding. The clearance requirement was therefore necessary only as an expeditious shield against arbitrary dismissal without the knowledge and supervision of the Department of Labor. Hence, a duly approved clearance implied that the 7 dismissal was legal or for cause (Sec. 2). But the doctrine of res judicata certainly applies to adversary administrative proceedings. As early as 1956, inBrillantes v. Castro, 8 we sustained the dismissal of an action by a trial court on the basis of a prior administrative determination of the same 9 case by the Wage Administration Service, applying the principle of res judicata. Recently, in Abad v. NLRC we applied the related doctrine of stare decisis in holding that the prior determination that certain jobs at the Atlantic Gulf and Pacific Co., were project employments was binding in another case involving another group of employees of the same company. Indeed, in Nasipit Lumber Co., this Court clarified toward the end of its opinion that "the doctrine of res judicata applies . . . to judicial or quasi 10 judicial proceedings and not to the exercise of administrative powers." Now proceedings for certification election, such as those involved in Case No. OS-M-A-10-318-91 and Case No. OS-A-3-71-92, are quasi judicial in nature and, therefore, decisions rendered in such proceedings can attain finality. 11 Thus, we have in this case an expert's view that the employees concerned are managerial employees within the purview of Art. 212 which provides: (m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. At the very least, the principle of finality of administrative determination compels respect for the finding of the Secretary of Labor that route managers are managerial employees as defined by law in the absence of anything to show that such determination is without substantial evidence to support it. Nonetheless, the Court, concerned that employees who are otherwise supervisors may wittingly or unwittingly be classified as managerial personnel and thus denied the right of self-organization, has decided to review the record of this case. DOLE's Finding that Route Managers are Managerial Employees Supported by Substantial Evidence in the Record The Court now finds that the job evaluation made by the Secretary of Labor is indeed supported by substantial evidence. The nature of the job of route managers is given in a four-page pamphlet, prepared by the company, called "Route Manager Position Description," the pertinent parts of which read: A. BASIC PURPOSE A Manager achieves objectives through others. As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective through the skillful MANAGEMENT OF YOUR JOB AND THE MANAGEMENT OF YOUR PEOPLE. These then are your functions as Pepsi-Cola Route Manager. Within these functions managing your job and managing your people you are accountable to your District Manager for the execution and completion of various tasks and activities which will make it possible for you to achieve your sales objectives.

B. PRINCIPAL ACCOUNTABILITIES 1.0 MANAGING YOUR JOB The Route Manager is accountable for the following: 1.1 SALES DEVELOPMENT 1.1.1 Achieve the sales plan. 1.1.2 Achieve all distribution and new account objectives. 1.1.3 Develop new business opportunities thru personal contacts with dealers. 1.1.4 Inspect and ensure that all merchandizing [sic] objectives are achieved in all outlets. 1.1.5 maintain and improve productivity of all cooling equipment and kiosks. 1.1.6 Execute and control all authorized promotions. 1.1.7 Develop and maintain dealer goodwill. 1.1.8 Ensure all accounts comply with company suggested retail pricing. 1.1.9 Study from time to time individual route coverage and productivity for possible adjustments to maximize utilization of resources. 1.2 Administration 1.2.1 Ensure the proper loading of route trucks before check-out and the proper sorting of bottles before check-in. 1.2.2 Ensure the upkeep of all route sales reports and all other related reports and forms required on an accurate and timely basis. 1.2.3 Ensure proper implementation of the various company policies and procedures incl. but not limited to shakedown; route shortage; progressive discipline; sorting; spoilages; credit/collection; accident; attendance. 1.2.4 Ensure collection of receivables and delinquent accounts. 2.0 MANAGING YOUR PEOPLE The Route Manager is accountable for the following: 2.1 Route Sales Team Development 2.1.2 Conduct route rides to train, evaluate and develop all assigned route salesmen and helpers at least 3 days a week, to be supported by

required route ride documents/reports & back check/spot check at least 2 days a week to be supported by required documents/reports. 2.1.2 Conduct sales meetings and morning huddles. Training should focus on the enhancement of effective sales and merchandizing [sic] techniques of the salesmen and helpers. Conduct group training at least 1 hour each week on a designated day and of specific topic. 2.2 Code of Conduct 2.2.1 Maintain the company's reputation through strict adherence to PCPPI's code of conduct and the universal standards of unquestioned business 12 ethics. Earlier in this opinion, reference was made to the distinction between managers per se (top managers and middle managers) and supervisors (first-line managers). That distinction is evident in the work of the route managers which sets them apart from supervisors in general. Unlike supervisors who basically merely direct operating employees in line with set tasks assigned to them, route managers are responsible for the success of the company's main line of business through management of their respective sales teams. Such management necessarily involves the planning, direction, operation and evaluation of their individual teams and areas which the work of supervisors does not entail. The route managers cannot thus possibly be classified as mere supervisors because their work does not only involve, but goes far beyond, the simple direction or supervision of operating employees to accomplish objectives set by those above them. They are not mere functionaries with simple oversight functions but business administrators in their own right. An idea of the role of route managers as managers per se can be gotten from a memo sent by the director of metro sales operations of respondent company to one of the route managers. It reads: 13 03 April 1995 To : CESAR T . REOLADA From : REGGIE M. SANTOS Subj : SALARY INCREASE Effective 01 April 1995, your basic monthly salary of P11,710 will be increased to P12,881 or an increase of 10%. This represents the added managerial responsibilities you will assume due to the recent restructuring and streamlining of Metro Sales Operations brought about by the continuous losses for the last nine (9) months. Let me remind you that for our operations to be profitable, we have to sustain the intensity and momentum that your group and yourself have shown last March. You just have to deliver the desired volume targets, better negotiated concessions, rationalized sustaining deals, eliminate or reduced overdues, improved collections, more cash accounts, controlled operating expenses, etc. Also, based on the agreed set targets, your monthly performance will be closely monitored. You have proven in the past that your capable of achieving your targets thru better planning, managing your group as a fighting team, and thru aggressive selling. I am looking forward to your success and I expect that you just have to exert your doubly best in turning around our operations from a losing to a profitable one! Happy Selling!! (Sgd.) R.M. SANT OS

The plasticized card given to route managers, quoted in the separate opinion of Justice Vitug, although entitled "RM's Job Description," is only a summary of performance standards. It does not show whether route managers are managers per se or supervisors. Obviously, these performance standards have to be related to the specific tasks given to route managers in the four-page "Route Manager Position Description," and, when this is done, the managerial nature of their jobs is fully revealed. Indeed, if any, the card indicates the great latitude and discretion given to route managers from servicing and enhancing company goodwill to supervising and auditing accounts, from trade (new business) development to the discipline, training and monitoring of performance of their respective sales teams, and so forth, if they are to fulfill the company's expectations in the "key result areas." Article 212(m) says that "supervisory employees are those who, in the interest of the employer, effectivelyrecommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment." Thus, their only power is to recommend. Certainly, the route managers in this case more than merely recommend effective management action. They perform operational, human resource, financial and marketing functions for the company, all of which involve the laying down of operating policies for themselves and their teams. For example, with respect to marketing, route managers, in accordance with B.1.1.1 to B.1.1.9 of the Route Managers Job Description, are charged, among other things, with expanding the dealership base of their respective sales areas, maintaining the goodwill of current dealers, and distributing the company's various promotional items as they see fit. It is difficult to see how supervisors can be given such responsibility when this involves not just the routine supervision of operating employees but the protection and expansion of the company's business vis-avis its competitors. While route managers do not appear to have the power to hire and fire people (the evidence shows that they only "recommended" or "endorsed" the taking of disciplinary action against certain employees), this is because this is a function of the Human Resources or Personnel Department of the company. 14 And neither should it be presumed that just because they are given set benchmarks to observe, they are ipso facto supervisors. Adequate control methods (as embodied in such concepts as "Management by Objectives [MBO]" and "performance appraisals") which require a delineation of the functions and responsibilities of managers by means of ready reference cards as here, have long been recognized in management as effective tools for keeping businesses competitive. This brings us to the second question, whether the first sentence of Art. 245 of the Labor Code, prohibiting managerial employees from forming, assisting or joining any labor organization, is constitutional in light of Art. III, 8 of the Constitution which provides: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. As already stated, whether they belong to the first category (managers per se) or the second category (supervisors), managers are employees. Nonetheless, in the United States, as Justice Puno's separate opinion notes, supervisors have no right to form unions. They are excluded from the definition of the term "employee" in 2(3) of the Labor-Management Relations Act of 1947. 15 In the Philippines, the question whether managerial employees have a right of self-organization has arisen with respect to first-level managers or supervisors, as shown by a review of the course of labor legislation in this country. Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws Before the promulgation of the Labor Code in 1974, the field of labor relations was governed by the Industrial Peace Act (R.A. No. 875). In accordance with the general definition above, this law defined "supervisor" as follows: Sec. 2. . . . (k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline other employees, or responsibly to direct them, and to adjust their grievances, or effectively to recommend such acts, if, in connection with the foregoing, the exercise of such authority is not of a merely routinary or clerical nature but requires the use of independent judgment. 16 The right of supervisors to form their own organizations was affirmed:

Sec. 3. Employees' Right to Self-Organization. Employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid and protection. Individuals employed as supervisors shall not be eligible for membership in a labor organization of employees under their supervision but may form separate organizations of their own. 17 For its part, the Supreme Court upheld in several of its decisions the right of supervisors to organize for purposes of labor relations. 18 Although it had a definition of the term "supervisor," the Industrial Peace Act did not define the term "manager." But, using the commonly-understood concept of "manager," as above stated, it is apparent that the law used the term "supervisors" to refer to the sub-group of "managerial employees" known as front-line managers. The other sub-group of "managerial employees," known as managers per se, was not covered. However, in Caltex Filipino Managers and Supervisors Association v. Court of Industrial Relations, 19 the right of all managerial employees to self-organization was upheld as a general proposition, thus: It would be going too far to dismiss summarily the point raised by respondent Company that of the alleged identity of interest between the managerial staff and the employing firm. That should ordinarily be the case, especially so where the dispute is between management and the rank and file. It does not necessarily follow though that what binds the managerial staff to the corporation forecloses the possibility of conflict between them. There could be a real difference between what the welfare of such group requires and the concessions the firm is willing to grant. Their needs might not be attended to then in the absence of any organization of their own. Nor is this to indulge in empty theorizing. The record of respondent Company, even the very case cited by it, is proof enough of their uneasy and troubled relationship. Certainly the impression is difficult to erase that an alien firm failed to manifest sympathy for the claims of its Filipino executives. To predicate under such circumstances that agreement inevitably marks their relationship, ignoring that discord would not be unusual, is to fly in the face of reality. . . . The basic question is whether the managerial personnel can organize. What respondent Company failed to take into account is that the right to self-organization is not merely a statutory creation. It is fortified by our Constitution. All are free to exercise such right unless their purpose is contrary to law. Certainly it would be to attach unorthodoxy to, not to say an emasculation of, the concept of law if managers as such were precluded from organizing. Having done so and having been duly registered, as did occur in this case, their union is entitled to all the rights under Republic Act No. 875. Considering what is denominated as unfair labor practice under Section 4 of such Act and the facts set forth in our decision, there can be only one answer to the objection raised that no unfair labor practice could be committed by respondent Company insofar as managerial personnel is concerned. It is, as is quite obvious, in the negative. 20 Actually, the case involved front-line managers or supervisors only, as the plantilla of employees, quoted in the main opinion, 21 clearly indicates: CAFIMSA members holding the following Supervisory Payroll Position Title are Recognized by the Company Payroll Position Title Assistant to Mgr. Jr. Sales Engineer Retail Development Asst. Staff Asst. 0 Marketing National Acct. Sales

Sales Supervisor Supervisory Assistant Jr. Supervisory Assistant

Credit Assistant Lab. Supvr. Pandacan

Jr. Sales Engineer B Operations Assistant B Field Engineer Sr. Opers. Supvr. MIA A/S

Purchasing Assistant Jr. Construction Engineer Sr. Sales Supervisor Deport Supervisor A Terminal Accountant B Merchandiser Dist. Sales Prom. Supvr. Instr. Merchandising

Asst. Dist. Accountant B Sr. Opers. Supervisor Jr. Sales Engineer A Asst. Bulk Ter. Supt. Sr. Opers. Supvr. Credit Supervisor A Asst. Stores Supvr. A Ref. Supervisory Draftsman Refinery Shift Supvr. B Asst. Supvr. A Operations (Refinery)

Refinery Shift Supvr. B Asst. Lab. Supvr. A (Refinery) St. Process Engineer B (Refinery) Asst. Supvr. A Maintenance (Refinery)

Asst. Supvr. B

Maintenance (Refinery)

Supervisory Accountant (Refinery) Communications Supervisor (Refinery) Finally, also deemed included are all other employees excluded from the rank and file unions but not classified as managerial or otherwise excludable by law or applicable judicial precedents. Right of Self-Organization of Managerial Employees under the Labor Code Thus, the dictum in the Caltex case which allowed at least for the theoretical unionization of top and middle managers by assimilating them with the supervisory group under the broad phrase "managerial personnel," provided the lynchpin for later laws denying the right of self-organization not only to top and middle management employees but to front line managers or supervisors as well. Following the Caltex case, the Labor Code, promulgated in 1974 under martial law, dropped the distinction between the first and second sub-groups of managerial employees. Instead of treating the terms "supervisor" and "manager" separately, the law lumped them together and called them "managerial employees," as follows: Art. 212. Definitions . . . . (k) "Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions. All employees not falling within this definition are considered rank and file employees for purposes of this Book. 22 The definition shows that it is actually a combination of the commonly understood definitions of both groups of managerial employees, grammatically joined by the phrase "and/or." This general definition was perhaps legally necessary at that time for two reasons. First, the 1974 Code denied supervisors their right to self-organize as theretofore guaranteed to them by the Industrial Peace Act. Second, it stood the dictum in the Caltex case on its head by prohibiting all types of managers from forming unions. The explicit general prohibition was contained in the then Art. 246 of the Labor Code. The practical effect of this synthesis of legal concepts was made apparent in the Omnibus Rules Implementing the Labor Code which the Department of Labor promulgated on January 19, 1975. Book V, Rule II, 11 of the Rules provided: Supervisory unions and unions of security guards to cease operation. All existing supervisory unions and unions of security guards shall, upon the effectivity of the Code, cease to operate as such and their registration certificates shall be deemed automatically canceled. However, existing collective agreements with such unions, the life of which extends beyond the date of effectivity of the Code, shall be respected until their expiry date insofar as the economic benefits granted therein are concerned. Members of supervisory unions who do not fall within the definition of managerial employees shall become eligible to join or assist the rank and file labor organization, and if none exists, to form or assist in the forming of such rank and file organization. The determination of who are managerial employees and who are not shall be the subject of negotiation between representatives of the supervisory union and the employer. If no agreement is reached between the parties, either or both of them may bring the issue to the nearest Regional Office for determination. The Department of Labor continued to use the term "supervisory unions" despite the demise of the legal definition of "supervisor" apparently because these were the unions of front line managers which were then allowed as a result of the statutory grant of the right of self-organization under the Industrial Peace Act. Had the Department of Labor seen fit to similarly ban unions of top and middle managers which may have been formed following the dictum in Caltex, it obviously would have done so. Yet it did not, apparently because no such unions of top and middle managers really then existed. Real Intent of the 1986 Constitutional Commission

This was the law as it stood at the time the Constitutional Commission considered the draft of Art. III, 8. Commissioner Lerum sought to amend the draft of what was later to become Art. III, 8 of the present Constitution: MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to insert between the words "people" and "to" the following: WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS. In other words, the section will now read as follows: "The right of the people WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS to form associations, unions, or societies for purposes not contrary to law shall not be abridged." 23 Explaining his proposed amendment, he stated: MR. LERUM. Under the 1935 Bill of Rights, the right to form associations is granted to all persons whether or not they are employed in the government. Under that provision, we allow unions in the government, in government-owned and controlled corporations and in other industries in the private sector, such as the Philippine Government Employees' Association, unions in the GSIS, the SSS, the DBP and other government-owned and controlled corporations. Also, we have unions of supervisory employees and of security guards. But what is tragic about this is that after the 1973 Constitution was approved and in spite of an express recognition of the right to organize in P.D. No. 442, known as the Labor Code, the right of government workers, supervisory employees and security guards to form unions was abolished. And we have been fighting against this abolition. In every tripartite conference attended by the government, management and workers, we have always been insisting on the return of these rights. However, both the government and employers opposed our proposal, so nothing came out of this until this week when we approved a provision which states: Notwithstanding any provision of this article, the right to self-organization shall not be denied to government employees. We are afraid that without any corresponding provision covering the private sector, the security guards, the supervisory employees or majority employees [sic] will still be excluded, and that is the purpose of this amendment. I will be very glad to accept any kind of wording as long as it will amount to absolute recognition of private sector employees, without exception, to organize. THE PRESIDENT. What does the Committee say? FR. BERNAS. Certainly, the sense is very acceptable, but the point raised by Commissioner Rodrigo is well-taken. Perhaps, we can lengthen this a little bit more to read: "The right of the people WHETHER UNEMPLOYED OR EMPLOYED BY STATE OR PRIVATE ESTABLISHMENTS. I want to avoid also the possibility of having this interpreted as applicable only to the employed. MR. DE LOS REYES. Will the proponent accept an amendment to the amendment, Madam President? MR. LERUM. Yes, as long as it will carry the idea that the right of the employees in the private sector is recognized.
24

Lerum thus anchored his proposal on the fact that (1) government employees, supervisory employees, and security guards, who had the right to organize under the Industrial Peace Act, had been denied this right by the Labor Code, and (2) there was a need to reinstate the right of these employees. In consonance with his objective to reinstate the right of government, security, and supervisory employees to organize, Lerum then made his proposal: MR. LERUM. Mr. Presiding Officer, after a consultation with several Members of this Commission, my amendment will now read as follows: "The right of the people INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS to form associations, unions, or societies for purposes not contrary to law shall not be abridged. In proposing that amendment I ask to make of record that I want the following provisions of the Labor Code to be automatically abolished, which read: Art. 245. Security guards and other personnel employed for the protection and security of the person, properties and premises of the employers shall not be eligible for membership in a labor organization.

Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. THE PRESIDING OFFICER (Mr. Bengzon). What does the Committee say? FR. BERNAS. The Committee accepts. THE PRESIDING OFFICER. (Mr. Bengzon) The Committee has accepted the amendment, as amended. Is there any objection? (Silence) The Chair hears none; the amendment, as amended, is approved. 25 The question is what Commissioner Lerum meant in seeking to "automatically abolish" the then Art. 246 of the Labor Code. Did he simply want "any kind of wording as long as it will amount to absolute recognition of private sector employees, without exception, to organize"? 26 Or, did he instead intend to have his words taken in the context of the cause which moved him to propose the amendment in the first place, namely, the denial of the right of supervisory employees to organize, because he said, "We are afraid that without any corresponding provision covering the private sector, security guards, supervisory employees or majority [of] employees will still be excluded, and that is the purpose of this amendment"? 27 It would seem that Commissioner Lerum simply meant to restore the right of supervisory employees to organize. For even though he spoke of the need to "abolish" Art. 246 of the Labor Code which, as already stated, prohibited "managerial employees" in general from forming unions, the fact was that in explaining his proposal, he repeatedly referred to "supervisory employees" whose right under the Industrial Peace Act to organize had been taken away by Art. 246. It is noteworthy that Commissioner Lerum never referred to the then definition of "managerial employees" in Art. 212(m) of the Labor Code which put together, under the broad phrase "managerial employees," top and middle managers and supervisors. Instead, his repeated use of the term "supervisory employees," when such term then was no longer in the statute books, suggests a frame of mind that remained grounded in the language of the Industrial Peace Act. Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all managerial employees to organize, despite the fact that the Industrial Peace Act did not expressly provide for the right of top and middle managers to organize. If Lerum was aware of the Caltex dictum, then his insistence on the use of the term "supervisory employees" could only mean that he was excluding other managerial employees from his proposal. If, on the other hand, he was not aware of the Caltex statement sustaining the right to organize to top and middle managers, then the more should his repeated use of the term "supervisory employees" be taken at face value, as it had been defined in the then Industrial Peace Act. At all events, that the rest of the Commissioners understood his proposal to refer solely to supervisors and not to other managerial employees is clear from the following account of Commissioner Joaquin G. Bernas, who writes: In presenting the modification on the 1935 and 1973 texts, Commissioner Eulogio R. Lerum explained that the modification included three categories of workers: (1) government employees, (2) supervisory employees, and (3) security guards. Lerum made of record the explicit intent to repeal provisions of P.D. 442, the Labor Code. The provisions referred to were: Art. 245. Security guards and other personnel employed for the protection and security of the person, properties and premises of the employers shall not be eligible for membership in a labor organization. Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. 28 Implications of the Lerum Proposal In sum, Lerum's proposal to amend Art. III, 8 of the draft Constitution by including labor unions in the guarantee of organizational right should be taken in the context of statements that his aim was the removal of the statutory ban against security guards and supervisory employees joining labor organizations. The approval by the Constitutional Commission of his proposal can only mean, therefore, that the Commission intended the absolute right to organize of government workers, supervisory employees, and security guards to be constitutionally guaranteed. By implication, no similar absolute constitutional right to organize for labor purposes should be deemed to have been granted to top-level and middle managers. As to them the right of self-organization may be regulated and even abridged conformably to Art. III, 8. Constitutionality of Art. 245

Finally, the question is whether the present ban against managerial employees, as embodied in Art. 245 (which superseded Art. 246) of the Labor Code, is valid. This provision reads: Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. 29 This provision is the result of the amendment of the Labor Code in 1989 by R.A. No. 6715, otherwise known as the Herrera-Veloso Law. Unlike the Industrial Peace Act or the provisions of the Labor Code which it superseded, R.A. No. 6715 provides separate definitions of the terms "managerial" and "supervisory employees," as follows: Art. 212. Definitions. . . . (m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. Although the definition of "supervisory employees" seems to have been unduly restricted to the last phrase of the definition in the Industrial Peace Act, the legal significance given to the phrase "effectively recommends" remains the same. In fact, the distinction between top and middle managers, who set management policy, and front-line supervisors, who are merely responsible for ensuring that such policies are carried out by the rank and file, is articulated in the present definition. 30 When read in relation to this definition in Art. 212(m), it will be seen that Art. 245 faithfully carries out the intent of the Constitutional Commission in framing Art. III, 8 of the fundamental law. Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban against managerial employees forming a union. The right guaranteed in Art. III, 8 is subject to the condition that its exercise should be for purposes "not contrary to law." In the case of Art. 245, there is a rational basis for prohibiting managerial employees from forming or joining labor organizations. As Justice Davide, Jr., himself a constitutional commissioner, said in his ponencia inPhilips Industrial Development, Inc. v. NLRC: 31 In the first place, all these employees, with the exception of the service engineers and the sales force personnel, are confidential employees. Their classification as such is not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as confidential employees. By the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. As such, the rationale behind the ineligibility of managerial employees to form, assist or joint a labor union equally applies to them. In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus: . . . The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership. 32 To be sure, the Court in Philips Industrial was dealing with the right of confidential employees to organize. But the same reason for denying them the right to organize justifies even more the ban on managerial employees from forming unions. After all, those who qualify as top or middle managers are executives who receive from their employers information that not only is confidential but also is not generally available to the public, or to their competitors, or to other employees. It is hardly necessary to point out that to say that the first sentence of Art. 245 is unconstitutional would be to contradict the decision in that case. WHEREFORE, the petition is DISMISSED. SO ORDERED. Narvasa, C.J., Regalado, Romero, Bellosillo, Martinez and Purisima, JJ., concur.

Separate Opinions

DAVIDE, JR., J., concurring and dissenting; I concur with the majority that the "route managers" of private respondent Pepsi-Cola Products Philippines, Inc. are managerial employees. However, I respectfully submit that contrary to the majority's holding, Article 245 of the Labor Code is unconstitutional, as it abridges Section 8, Article III of the Constitution. Section 8, Article III of the 1987 Constitution was taken from Section 7, Article IV of the 1973 Constitution which, in turn, was lifted from Section 6, Article III of the 1935 Constitution. Section 7 of the 1973 Constitution provided as follows: Sec. 7. The right to form associations or societies for purpose not contrary to law shall not be abridged. This Section was adopted in Section 7 of Proposed Resolution No. 486 of the 1986 Constitutional Commission, entitled Resolution to Incorporate in the New Constitution an Article on the Bill of Rights, 1 submitted by the Committee on Citizenship, Bill of Rights, Political Rights and Obligations, and Human Rights, with a modification, however, consisting of the insertion of the word union between the words "associations" and "societies." Thus the proposed Section 7 provided as follows: Sec. 7. The right of the people to form associations, unions, or societies for purposes not contrary to law shall not be abridged (emphasis supplied). Commissioner Joaquin G. Bernas, in his sponsorship speech on the proposed Article on the Bill of Rights, expounded on the nature of the proposed provision, in this wise: Section 7 preserves the old provision not because it is strictly needed but because its removal might be subject to misinterpretation. It reads: xxx xxx xxx It strictly does not prepare the old provision because it adds the word UNION, and in the explanation we received from Commissioner Lerum, the term envisions not just unions in private corporations but also in the government. This preserves our link with the Malolos Constitution as far as the right to form associations or societies for purposes not contrary to law is 2 concerned. During the period of individual amendments, Commissioner Lerum introduced an amendment to the proposed section consisting of the insertion of the clause "WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS, which, after consulting other Commissioners, he modified his proposed amendment to read: "INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS." At that time, the section read: Sec. 7. The right of the people including those employed in the public and private sectors to form associations, unions or societies for purposes not contrary to law shall not be abridged. Pertinently to this dispute Commissioner Lerum's intention that the amendment "automatically abolish" Articles 245 and 246 of the Labor Code. The Committee accepted the amendment, and there having been no objection from the floor, the Lerum amendment was approved, thus: MR. LERUM: . . . In proposing that amendment I ask to make of record that I want the following provisions of the Labor Code to be automatically abolished, which read:

Art. 245. Security guards and other personnel employed for the protection and security of the person, properties and premises of the employers shall not be eligible for membership in a labor organization. Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. THE PRESIDING OFFICER (Mr. Bengzon): What does the Committee say? FR. BERNAS: The Committee accepts. THE PRESIDING OFFICER (Mr. Bengzon): The Committee has accepted the amendment, as amended. Is there any objection? (Silence) The Chair hears none; the amendment, as amended, is approved. 3 The Committee on Style then recommended that commas be placed after the words people and sectors, while Commissioner Lerum 4 likewise moved to place the word unions before the word associations. Section 7, which was subsequently renumbered as Section 8 as presently appearing in the text ratified in the plebiscite of 2 February 1987, then read as follows: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. It is then indubitably clear from the foregoing that the intent of the Constitutional Commission was to abrogate the law prohibiting managerial employees from joining, assisting, or forming unions or labor organizations. In this regard, there is absolutely no need to decipher the intent of the framers of the 1987 Constitution vis-a-vis Article 245 (originally 246) of the Labor Code, there being no ambiguity or vagueness in the wording of the present Section 8, Article III of the 1987 Constitution. The provision is clear and written in simple language; neither were there any confusing debates thereon. More importantly, the purpose of Commissioner Lerum's amendments was unequivocal: he did not merely intend an implied repeal, but an express repeal of the offending article of the Labor Code. The approval of the amendments left no doubt whatsoever, as faithfully disclosed in the Records of the Constitutional Commission, that all employees meaning rank-and-file, supervisory and managerial whether from the public or the private sectors, have the right to form unions for purposes not contrary to law. The Labor Code referred to by Commissioner Lerum was P.D. No. 442, promulgated on 1 May 1974. With the repeal of Article 239 by Executive Order No. 111 issued on 24 December 1986, 5 Article 246 (as mentioned by Commissioner Lerum) became Article 245. Thereafter, R.A. No. 6715 6 amended the new Article 245 (originally Article 246) to read, as follows: Sec. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations 7 of their own. With the abrogation of the former Article 246 of the Labor Code, 8 and the constitutional prohibition against any law prohibiting managerial employees from joining, assisting or forming unions or labor organizations, the first sentence then of the present Article 245 of the Labor Code must be struck down as unconstitutional. 9 However, due to an obvious conflict of interest being closely identified with the interests of management in view of the inherent nature of their functions, duties and responsibilities managerial employees may only be eligible to join, assist or form unions or labor organizations of their own rank, and not those of the supervisory employees nor the rank-and-file employees. In the instant case, the petitioner's name United Pepsi-Cola Supervisory Union (UPSU) indubitably attests that it is a union of supervisory employees. In light of the earlier discussion, the route managers who aremanagerial employees, cannot join or assist UPSU. Accordingly, the Med-Arbiter and public respondent Laguesma committed no error in denying the petition for direct certification or for certification election.

I thus vote to GRANT, IN PART, the instant petition. That portion of the challenged resolution of public respondent holding that since the route managers of private respondent Pepsi-Cola Products Philippines, Inc., are managerial employees, they are "not eligible to assist, join or form a union or any other organization" should be SET ASIDE for being violative of Section 8 of Article III of the Constitution, while that portion thereof denying petitioner's appeal from the Med-Arbiter's decision dismissing the petition for direct certification or for a certification election should be AFFIRMED. PUNO, J., separate concurring; With due respect, it is my submission that Article 245 of the Labor Code was not repealed by section 8, Article III of the 1987 Constitution for reasons discussed below. A. Types of Employees. For purposes of applying the law on labor relations, the Labor Code in Article 212 (m) defines three (3) categories of employees. They are managerial, supervisory and rank-and-file, thus: Art. 212 (m). "Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. "Supervisory employees" are those who, in the interest of the employer, effectively recommended such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. The test of "managerial" or "supervisory" status depends on whether a person possesses authority to act in the interest of his employer and whether such authority is not routinary or clerical in nature but requires the use of independent judgment. 1 The rankand-file employee performs work that is routinary and clerical in nature. The distinction between these employees is significant because supervisory and rank-and-file employees may form, join or assist labor organizations. Managerial employees cannot. B. The Exclusion of Managerial Employees: Its Historical Roots in the United States. The National Labor Relations Act (NLRA), also known as the Wagner Act, enacted by the U.S. Congress in 1935, was the first law that regulated labor relations in the United States and embodied its national labor policy. 2 The purpose of the NLRA was to eliminate obstructions to the free flow of commerce through the practice of collective bargaining. The NLRA also sought to protect the workers' full freedoms of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid and protection. 3 The NLRA established the right of employees to organize, required employers to bargain with employees collectively through employee-elected representatives, gave employees the right to engage in concerted activities for collective bargaining purposes or other mutual aid or protection, and created the National Labor Relations Board (NLRB) as the regulatory agency in labor-management matters. 4 The NLRA was amended in 1947 by the Labor Management Relations Act (LMRA), also known as the Taft-Hartley Act. This Act sought to lessen industrial disputes and placed employers in a more nearly equal position with unions in bargaining and labor relations procedures. 5 The NLRA did not make any special provision for "managerial employees." 6 The privileges and benefits of the Act were conferred on "employees." Labor organizations thus clamored for the inclusion of supervisory personnel in the coverage of the Act on the ground that supervisors were also employees. Although traditionally, supervisors were regarded as part of management, the NLRB was constrained to recognize supervisors as employees under the coverage of the law. Supervisors were then granted collective 7 8 bargaining rights. Nonetheless, the NLRB refused to consider managers as covered by the law. The LMRA took away the collective bargaining rights of supervisors. The sponsors of the amendment feared that their unionization would break down industrial discipline as it would blur the traditional distinction between management and labor. They felt it necessary to deny supervisory personnel the right of collective bargaining to preserve their loyalty to the interests of their 9 employers. Several amendments were later made on the NLRA but the exclusion of managers and supervisors from its coverage was preserved. Until now managers and supervisors are excluded from the law. 10 Their exclusion hinges on the theory that the employer is entitled to the full loyalty of those whom it chooses for positions of responsibility, entailing action on the employers' behalf. A supervisor's and manager's ability to control the work of others would be compromised by his sharing of employee status with them. 11

C. Historical Development in the Philippines. Labor-management relations in the Philippines were first regulated under the Industrial Peace Act 12 which took effect in 1953. Hailed 13 as the Magna Carta of Labor, it was modelled after the NLRA and LMRA of the United States. Most of the basic principles of the 14 NLRA have been carried over to the Industrial Peace Act and the Labor Code. This is significant because we have ruled that where our labor statutes are based on statutes in foreign jurisdiction, the decisions of the high courts in those jurisdictions construing and interpreting the Act are given persuasive effects in the application of Philippine law. 15 The Industrial Peace Act did not carry any provision prohibiting managerial employees from joining labor organizations. Section 3 of said law merely provided: Sec. 3. Employees' Right to Self-Organization. Employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid and protection. Individuals employed as supervisors shall not be eligible for membership in a labor organization of employees under their supervision but may form separate organizations of their own. Significantly, the Industrial Peace Act did not define a manager or managerial employee. It defined a "supervisor" but not a "manager." Thus: Sec. 2. . . . (k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline other employees, or responsibly to direct them, and to adjust their grievances, or effectively to recommend such acts, if, in connection with the foregoing, the exercise of such authority is not of a merely routinary or clerical nature but requires the use of independent judgment. In 1972, we interpreted Section 3 of the Industrial Peace Act to give supervisors the right to join and form labor organizations of their own. 16 Soon we grappled with the right of managers to organize. In a case involving Caltex managers, we recognized their right to organize, viz: It would be going too far to dismiss summarily the point raised by respondent company, that of the alleged identity of interest between the managerial staff and the employing firm. That should ordinarily be the case, especially so where the dispute is between management and the rank-and-file. It does not necessarily follow though that what binds the managerial staff to the corporation forecloses the possibility of conflict between them. There could be a real difference between what the welfare of such group requires and the concessions the firm is willing to grant. Their needs might not be attended to then in the absence of any organization of their own. Nor is this to indulge in empty theorizing. The records of respondent company, even the very case cited by it, is proof enough of their uneasy and troubled relationship. Certainly the impression is 17 difficult to erase that an alien firm failed to manifest sympathy for the claims of its Filipino executives. The Industrial Peace Act was repealed in 1975 by P.D. 442, the Labor Code of the Philippines. The Labor Code changed existing jurisprudence when it prohibited supervisory and managerial employees from joining labor organizations. Supervisory unions were no longer recognized nor allowed to exist and operate as such. 18 We affirmed this statutory change in Bulletin Publishing Corp. v. Sanchez. 19 Similarly, Article 246 of the Labor Code expressly prohibited managerial employees from forming, assisting and joining labor organizations, to wit: Art. 246. Ineligibility of managerial employees to join any labor organization. join, assist or form any labor organization. Managerial employees are not eligible to

In the same Bulletin case, the Court applied Article 246 and held that managerial employees are the very type of employees who, by the nature of their positions and functions, have been decreed disqualified from bargaining with management. This prohibition is based on the rationale that if managerial employees were to belong or be affiliated with a union, the union might not be assured of their loyalty in view of evident conflict of interest or that the union can be company-dominated with the presence of managerial 20 employees in the union membership. In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representative, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves become union members. 21

The prohibition on managerial employees to join, assist or form labor organizations was retained in the Labor Code despite substantial amendments made in 1989 by R.A. 6715, the Herrera-Veloso Law. R.A. 6715 was passed after the effectivity of the 1987 Constitution and this law did not abrogate, much less amend the prohibition on managerial employees to join labor organizations. The express prohibition in Article 246 remained. However, as an addendum to this same Article, R.A. 6715 restored to supervisory employees the right to join labor organizations of their own. 22 Article 246 now reads: Art. 246. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. Article 246 became Article 245 after then Article 244 was repealed by E.O. 111. Article 246 is presently Article 245 of the Labor Code. Indeed, Article 245 of the Labor Code prohibiting managerial employees from joining labor organizations has a social and historical significance in our labor relations law. This significance should be considered in deciphering the intent of the framers of the 1987 Constitution vis-a-vis the said Article. With due respect, I do not subscribe to the view that section 8, Article III of the Constitution abrogated Article 245 of the Labor Code. A textual analysis of section 8, Article III of the Constitution will not justify this conclusion. With due respect, the resort by Mr. Justice Davide to the deliberations of the Constitutional Commission does not suffice. It is generally recognized that debates and other proceedings in a constitutional convention are of limited value and are an unsafe guide to the intent of the people. 23 Judge Cooley has stated that: When the inquiry is directed to ascertaining the mischief designed to be remedied, or the purpose sought to be accomplished by a particular provision, it may be proper to examine the proceedings of the convention which framed the instrument. Where the proceedings clearly point out the purpose of the provision, the aid will be valuable and satisfactory; but where the question is one of abstract meaning, it will be difficult to derive from this source much reliable assistance in interpretation. Every member of such a convention acts upon such motives and reasons as influence him personally, and the motions and debates do not necessarily indicate the purpose of a majority of a convention in adopting a particular clause. It is quite possible for a particular clause to appear so clear and unambiguous to the members of the convention as to require neither discussion nor illustration; and the few remarks made concerning it in the convention might have a plain tendency to lead directly away from the meaning in the minds of the majority. It is equally possible for a part of the members to accept a clause in one sense and a part in another. And even if we were certain we had attained to the meaning of the convention, it is by no means to be allowed a controlling force, especially if that meaning appears not to be the one which the words would most naturally and obviously convey. For as the constitution does not derive its force from the convention which framed, but from the people who ratified it, the intent to be arrived at is that of the people, and it is not to be supposed that they have looked for any dark and abstruse meaning in the words employed, but rather that they have accepted them in the sense most obvious to the common understanding, and ratified the instrument in the belief that was the sense designed to be 24 conveyed. It is for this reason that proceedings of constitutional conventions are less conclusive of the proper construction of the instrument than are legislative proceedings of the proper construction of the statute. 25 In the statutes, it is the intent of the legislature that is being sought, while in constitutions, it is the intent of the people that is being ascertained through the discussions and deliberations of their representatives. 26 The proper interpretation of constitutional provisions depends more on how it was understood by the people adopting it than in the framers' understanding thereof. 27 Thus, debates and proceedings of the constitutional convention are never of binding force. They may be valuable but are not necessarily decisive. 28 They may shed a useful light upon the purpose sought to be accomplished or upon the meaning attached to the words employed. And the courts are free to avail themselves of any light that may be derived from such sources, but they are not bound to adopt it as the sole ground of their decision. 29 Clearly then, a statute cannot be declared void on the sole ground that it is repugnant to a supposed intent or spirit declared in constitutional convention proceedings. D. Freedom of Association

The right of association flows from freedom of expression. absolute. It is subject to certain limitations.

30

Like the right of expression, the exercise of the right of association is not

Article 243 of the Labor Code reiterates the right of association of people in the labor sector. Article 243 provides: Art. 243. Coverage of employees' right to self-organization. All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. Article 243 guarantees the right to self-organization and association to "all persons." This seemingly all-inclusive coverage of "all persons," however, actually admits of exceptions. Article 244 of the Labor Code mandates that all employees in the civil service, i.e, those not employed in government corporations established under the Corporation Code, may only form associations but may not collectively bargain on terms and conditions fixed by law. An employee of a cooperative who is a member and co-owner thereof cannot invoke the right of collective bargaining and 32 33 negotiation vis-a-vis the cooperative. An owner cannot bargain with himself or his co-owners. Employees in foreign embassies or consulates or in foreign international organizations granted international immunities are also excluded from the right to form labor organizations. 34 International organizations are organized mainly as a means for conducting general international business in which the member-states have an interest and the immunities granted them shield their affairs from political pressure or control by the host country and assure the unimpeded performance of their functions. 35 Confidential employees have also been denied the right to form labor-organizations. Confidential employees do not constitute a distinct category for purposes of organizational right. Confidentiality may attach to a managerial or non-managerial position. We have, however, excluded confidential employees from joining labor organizations following the rationale behind the disqualification of managerial employees in Article 245. In the case of National Association of Trade Unions-Republic Planters' Bank Supervisors Chapter v. Torres, 36 we held: In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. It is the same reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Article 245 as if the disqualification of confidential employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act "in the interest of" the employers. It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty-bound to protect. 37 E. The disqualification extends only to labor organizations. It must be noted that Article 245 of the Labor Code deprives managerial employees of their right to join "labor organizations." A labor organization is defined under the Labor Code as: Art. 212 (g). "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with the employer concerning terms and conditions of employment. A labor organization has two broad rights: (1) to bargain collectively and (2) to deal with the employer concerning terms and conditions of employment. To bargain collectively is a right given to a labor organization once it registers itself with the Department of Labor and Employment (DOLE). Dealing with the employer, on the other hand, is a generic description of interaction between employer and employees concerning grievances, wages, work hours and other terms and conditions of employment, even if the 38 employees' group is not registered with the DOLE. Any labor organization which may or may not be a union may deal with the employer. This explains why a workers' Organization does not always have to be a labor union and why employer-employee collective interactions are not always collective bargaining. 39
31

In the instant case, it may be argued that managerial employees' labor organization will merely "deal with the employer concerning terms and conditions of employment" especially when top management is composed of aliens, following the circumstances in the Caltex case. Although the labor organization may exist wholly for the purpose of dealing with the employer concerning terms and conditions of employment, there is no prohibition in the Labor Code for it to become a legitimate labor organization and engage in collective bargaining. Once a labor organization registers with the DOLE and becomes legitimate, it is entitled to the rights accorded under Articles 242 and 263 (b) of the Labor Code. And these include the right to strike and picket. Notably, however, Article 245 does not absolutely disqualify managerial employees from exercising their right of association. What it prohibits is merely the right to join labor organizations. Managerial employees may form associations or organizations so long as they are not labor organizations. The freedom of association guaranteed under the Constitution remains and has not been totally abrogated by Article 245. To declare Article 245 of the Labor Code unconstitutional cuts deep into our existing industrial life and will open the floodgates to unionization at all levels of the industrial hierarchy. Such a ruling will wreak havoc on the existing set-up between management and labor. If all managerial employees will be allowed to unionize, then all who are in the payroll of the company, starting from the president, vice-president, general managers and everyone, with the exception of the directors, may go on strike or picket the employer. 40 Company officers will join forces with the supervisors and rank-and-file. Management and labor will become a solid phalanx with bargaining rights that could be enforced against the owner of the company. 41 The basic opposing forces in the industry will not be management and labor but the operating group on the one hand and the stockholder and bondholder group on the other. The industrial problem defined in the Labor Code comes down to a contest over a fair division of the gross receipts of industry between these two groups. 42 And this will certainly bring ill-effects on our economy. The framers of the Constitution could not have intended a major upheaval of our labor and socio-economic systems. Their intent cannot be made to override substantial policy considerations and create absurd or impossible situations. 43 A constitution must be viewed as a continuously operative charter of government. It must not be interpreted as demanding the impossible or the impracticable; or as effecting the unreasonable or absurd.44 Courts should always endeavour to give such interpretation that would make the constitutional provision and the statute consistent with reason, justice and the public interest. 45 I vote to dismiss the petition. VITUG, J., separate concurring and dissenting; The pivotal issues raised in the case at bar, aptly stated by the Office of the Solicitor General, are: (1) Whether or not public respondent, Undersecretary of the Department of Labor and Employment ("DOLE") Bienvenido E. Laguesma, gravely abused his discretion in categorizing the members of petitioner union to be managerial employees and thus ineligible to form or join labor organizations; and (2) Whether or not the provision of Article 245 of the Labor Code, disqualifying managerial employees from joining, assisting or forming any labor organization, violates Section 8, Article III, of the 1987 Constitution, which expresses that "(t)he right of the people, including those employed in public and private sectors to form unions, associations or societies for purposes not contrary to law shall not be abridged." The case originated from a petition for direct certification or certification election among route managers/supervisory employees of Pepsi-Cola Products Phils., Inc. ("Pepsi"), filed by the United Pepsi-Cola Supervisory Union ("Union"), claiming to be a legitimate labor organization duly registered with the Department of Labor and Employment under Registration Certificate No. NCR-UR-3-1421-95. Pepsi opposed the petition on the thesis that the case was no more than a mere duplication of a previous petition for direct 1 certification filed by the same route managers through the Pepsi-Cola Employees Association (PCEA-Supervisory) which petition had already been denied by Undersecretary Laguesma. The holding reiterated a prior decision in Workers Alliance Trade Unions ("WATU") vs. Pepsi-Cola Products Phils., Inc., 2 that route managers were managerial employees. In its decision, dated 05 May 1995, Med-Arbiter Brigida C. Fadrigon dismissed for lack of merit the petition of the Union, stating that the issue on the proper classification and status of route managers had already been ruled with finality in the previous decisions, aforementioned, rendered by DOLE.

The union appealed the decision. In his resolution of 31 August 1995, Undersecretary Laguesma dismissed the appeal, saying that there was no compelling reason to abandon the ruling in the two old cases theretofore decided by DOLE. In his order of 22 September 1995, Undersecretary Laguesma denied the Union's motion for reconsideration. The Union went to this Court, via a petition for certiorari, assailing the cancellation of its certificate of registration. The Court, after considering the petition and the comments thereon filed by both public and private respondents, as well as the consolidated reply of petitioner, dismissed the case in its resolution of 08 July 1996 on the premise that no grave abuse of discretion had been committed by public respondent. Undaunted, the Union moved, with leave, for the reconsideration of the dismissal of its petition by the Court En Banc. In its resolution of 16 June 1997, the case was referred to the Court En Banc en consulta with the movant's invocation of unconstitutionality of Article 245 of the Labor Code vis-a-vis Section 8, Article III, of the 1987 Constitution. There is merit, in my view, in petitioner's motion for reconsideration but not on constitutional grounds. There are, in the hierarchy of management, those who fall below the level of key officers of an enterprise whose terms and conditions of employment can well be, indeed are not infrequently, provided for in collective bargaining agreements. To this group belong the supervisory employees. The "managerial employees," upon the other hand, and relating the matter particularly to the Labor Code, are those "vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees" as distinguished from the supervisory employees whose duties in these areas are so designed as to verily be implementary to the policies or rules and regulations already outstanding and priorly taken up and passed upon by management. The managerial level is the source, as well as prescribes the compliance, of broad mandates which, in the field of labor relations, are to be carried out through the next rank of employees charged with actually seeing to the specific personnel action required. In fine, the real authority, such as in hiring or firing of employees, comes from management and exercised by means of instructions, given in general terms, by the "managerial employees;" the supervisory employees, although ostensibly holding that power, in truth, however, only act in obedience to the directives handed down to them. The latter unit, unlike the former, cannot be considered the alter ego of the owner of enterprise. The duties and responsibilities of the members of petitioner union, shown by their "job description" below PCPPI RM's JOB DESCRIPTION A. GENERAL/OVERALL OBJECTIVE OF THIS POSITION To contribute to the growth and profitability of PCPPI via well-selected, trained and motivated Route Sales Team who sell, collect and merchandise, following the Pepsi Way, and consistent with Company policies and procedures as well as the corporate vision of Customer Satisfaction. B. SPECIFIC JOB DESCRIPTION: KEY RESULT AREAS STANDARD OR PERFORMANCE SALES VOLUME *100% Vs. NRC Target _____% NTG DISTRIBUTION * Product Availability 70% Pepsi 80% Seven-Up 40% Mirinda

65% Mt. Dew 5% Out of Stock ACCOUNTS RECEIVABLE 65% Current (Incl. Legal & Col.) MANAGEMENT 80:20 Cash to Credit Ratio DSO assigned Std. to Division

by the District ASSET MANAGEMENT 30 cases for ice-coolers 80 cases for electric coolers BLOWAGA on Division Vehicles 60 cases on Rolling/Permanent Kiosks TRADE DEVELOPMENT 100% Buying Customers Based on master list that bought once 5 months payback on concessions 4 CED's/Rte. EXPENSE MANAGEMENT a). 5% Absentism rate Excl. VL b). 280 cases/route/day c). 15% cost-to-sales ratio ROUTE MANAGEMENT 3 Days on RR/Wk Days on BC-SC- Financial & Co. Assets Days on TD 75% Load Factor 18 Productive Calls CUSTOMER SATISFACTION Customer Complaint attended to within the next working day HUMAN RESOURCE 5% Absentism Excl. VL MANAGEMENT (approved) 3 Documented RR/ Week using SLM's Training Log

ADMINISTRATIVE

Complete, timely and accurate

MANAGEMENT reports. PCPPI RM's BASIC DAILY ACTIVITIES A. AT THE SALES OFFICE 1. PRACTICES BLOWAGA ON SERVICE VEHICLE (AT HOME) 2. REPORTS FOR WORK ON OR BEFORE 6:15 A.M. 3. REPORTS IN CLEAN AND NEAT UNIFORM (GOOD GROOMING) 4. DAILY BRIEFING WITH THE DM 5. CONDUCTS SKILLS ENHANCEMENT OR HUDDLES WITH RST's a). ATTENDANCE/GROOMING b). OPERATIONAL DIRECTIONS & PRIORITIES c). ANNOUNCEMENT 6. RM's PRESENCE DURING CHECK-OUT a). SLM PRACTICES BLOWAGA ON ROUTE TRUCK b). PRIVATE COUNSELING WITH RST (AM & PM IF NECESSARY) c). PROPER HANDLING OF SELLING/MDSG. MATERIALS d). YESTERDAY's FINAL SETTLEMENT REVIEW 7. UPDATE REPORTS, MONITORS, DOCUMENTS & TELEPHONE CONMATION 8. ATTENDS TO PRODUCT COMPLAINTS (GFM) 9. CONDUCTS ADMINISTRATIVE INVESTIGATION OR ATTENDS DM's MEETING (on Saturdays) B. FIELD WORK ROUTE RIDE 1. CHECKS SLMS. TRAINING LOG (PROGRESS & DEV'T.) 2. SALESMAN's CPC 3. ROUTE COVERAGE EVALUATION 4. LOAD FACTOR 5. SALESMAN's ROUTING SYSTEM EVALUATION

BC/SC 1. FINANCIAL & ASSET VERIFICATION, CONFIRMATION & AUDIT 2. BACKCHECKS FIRST 5 CUSTOMERS SERVED FOR THE DAY a). MERCHANDISING b). SERVICING c). RM's TERRITORY FAMILIARITY d). KEY ACCOUNTS GOODWILL TRADE DEVELOPMENT 1. PREPARATION PRIOR TO CALL 2. ACTUAL CALL 3. POST CALL ANALYSIS (HOW DID I FARE? WHY? WHAT ACTIONS TO TAKE) 4. FOLLOW-UP ACTION C. AT CLOSE OF DAY 1. MAINTAINS & UPDATES CORRECT & ACCURATE RECORDS & REPORTS 2. RM-SLM DEBRIEFING 3. SLR DISCUSSION (BASED ON A.M. SLR) 4. COORDINATES WITH DM ON PLANS & PROGRAMS 5. PREPARATIONS FOR NEXT DAY's ACTIVITIES
3

convey no more than those that are aptly consigned to the "supervisory" group by the relatively small unit of "managerial" employees. Certain portions of a pamphlet, the so-called "Route Manager Position Description" referred to by Mr. Justice Vicente Mendoza, in his ponencia, hereunder reproduced for easy reference, thus A. BASIC PURPOSE A Manager achieves objectives through others. As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective through the skillful management of your job and the management of your people. These then are your functions as Pepsi-Cola Route Manager. Within these functions managing your job and managing your people you are accountable to your District Manager for the execution and completion of various tasks and activities which will make it possible for you to achieve your sales objectives. B. PRINCIPAL ACCOUNTABILITIES

1.0 MANAGING YOUR JOB The Route Manager is accountable for the following: 1.1 SALES DEVELOPMENT 1.1.1 Achieve the sales plan. 1.1.2 Achieve all distribution and new account objectives. 1.1.3 Develop new business opportunities thru personal contacts with dealers. 1.1.4 Inspect and ensure that all merchandising objectives are achieved in all outlets. 1.1.5 Maintain and improve productivity of all cooling equipment and kiosks. 1.1.6 Execute and control all authorized promotions. 1.1.7 Develop and maintain dealer goodwill. 1.1.8 Ensure all accounts comply with company suggested retail pricing. 1.1.9 Study from time to time individual route coverage and productivity for possible adjustments to maximize utilization of resources. 1.2 Administration 1.2.1 Ensure the proper loading of route trucks before check-out and the proper sorting of bottles before check-in. 1.2.2 Ensure the upkeep of all route sales reports and all other related reports and forms required on an accurate and timely basis. 1.2.3 Ensure proper implementation of the various company policies and procedures include but not limited to shakedown; route shortage; progressive discipline; sorting; spoilages; credit/collection; accident; attendance. 1.2.4 Ensure collection of receivables and delinquent accounts. 2.0 MANAGING YOUR PEOPLE The Route Manager is accountable for the following: 2.1 Route Sales Team Development 2.1.1 Conduct route rides to train, evaluate and develop all assigned route salesmen and helpers at least 3 days a week, to be supported by required route ride documents/reports & back check/spot check at least 2 days a week to be supported by required documents/reports.

2.1.2 Conduct sales meetings and morning huddles. Training should focus on the enhancement of effective sales and merchandising techniques of the salesmen and helpers. Conduct group training at least 1 hour each week on a designated day and of specific topic. 2.2 Code of Conduct 2.2.1 Maintain the company's reputation through strict adherence to PCPPI's code of conduct and the universal standards of unquestioned business ethics. offer nothing at all that can approximate the authority and functions of those who actually and genuinely hold the reins of management. I submit, with due respect, that the members of petitioning union, not really being "managerial employees" in the true sense of the term, are not disqualified from forming or joining labor organizations under Article 245 of the Labor Code. I shall now briefly touch base on the constitutional question raised by the parties on Article 245 of the Labor Code. The Constitution acknowledges "the right of the people, including those employed in the public and private sectors, to form unions, associations or societies for purposes not contrary to law . . . ." 4 Perforce, petitioner claims, that part of Article 245 5 of the Labor Code which states: "Managerial employees are not eligible to join, assist or form any labor organization," being in direct collision with the Constitutional provision, must now be declared abrogated in the law. Frankly, I do not see such a "direct collision." The Constitution did not obviously grant a limitless right "to form unions, associations or societies" for it has clearly seen it fit to subject its exercise to possible legislative judgment such as may be appropriate or, to put it in the language of the Constitution itself, to "purposes not contrary to law." Freedom of association, like freedom of expression, truly occupies a choice position in the hierarchy of constitutional values. Even while the Constitution itself recognizes the State's prerogative to qualify this right, heretofore discussed, any limitation, nevertheless, must still be predicated on the existence of a substantive evil sought to be addressed. 6 Indeed, in the exercise of police power, the State may, by law, prescribe proscriptions, provided reasonable and legitimate of course, against even the most basic rights of individuals. The restriction embodied in Article 245 of the Labor Code is not without proper rationale. Concededly, the prohibition to form labor organizations on the part of managerial employees narrows down their freedom of association. The very nature of managerial functions, however, should preclude those who exercise them from taking a position adverse to the interest they are bound to serve and protect. The mere opportunity to undermine that interest can validly be restrained. To say that the right of managerial employees to form a "labor organization" within the context and ambit of the Labor Code should be deemed totally separable from the right to bargain collectively is not justified by related provisions of the Code. For instance Art. 212. Definitions. 7 ...

(g) "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. xxx xxx xxx (m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinely or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. Art. 263. . . .

(b) Workers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. The maxim "ut res magis quam pereat" requires not merely that a statute should be given such a consequence as to be deemed whole but that each of its express provisions equally should be given the intended effect. I find it hard to believe that the fundamental law could have envisioned the use by managerial employees of coercive means against their own employers over matters entrusted by the latter to the former. Whenever trust and confidence is a major aspect of any relationship, a conflict of interest on the part of the person to whom that trust and confidence is reposed must be avoided and when, unfortunately, it does still arise its containment can rightly be decreed. Article 245 of the Labor Code indeed aligns itself to the Corporation Code, the basic law on by far the most commonly used business vehicle the corporation which prescribes the tenure of office, as well as the duties and functions, including terms of employment (governed in most part by the Articles of Incorporation, the By-laws of the Corporation, or resolutions of the Board of Directors), of corporate officers for both the statutory officers,i.e., the president, the treasurer and the corporate secretary, and the non-statutory officers, i.e., those who occupy positions created by the corporate by-laws who are deemed essential for effective management of the enterprise. I cannot imagine these officers as being legally and morally capable of associating themselves into a labor organization and asserting collective bargaining rights against the very entity in whose behalf they act and are supposed to act. I submit, accordingly, that, firstly, the members of petitioner union or the so-called route managers, being no more than supervisory employees, can lawfully organize themselves into a labor union within the meaning of the Labor Code, and that, secondly, the questioned provision of Article 245 of the Labor Code has not been revoked by the 1987 Constitution. WHEREFORE, I vote, given all the foregoing, for the reversal of the resolution of 31 August 1995, and the order of 22 September 1995, of public respondent. Kapunan, Panganiban and Quisumbing, JJ., concur and dissent.

Separate Opinions DAVIDE, JR., J., concurring and dissenting; I concur with the majority that the "route managers" of private respondent Pepsi-Cola Products Philippines, Inc. are managerial employees. However, I respectfully submit that contrary to the majority's holding, Article 245 of the Labor Code is unconstitutional, as it abridges Section 8, Article III of the Constitution. Section 8, Article III of the 1987 Constitution was taken from Section 7, Article IV of the 1973 Constitution which, in turn, was lifted from Section 6, Article III of the 1935 Constitution. Section 7 of the 1973 Constitution provided as follows: Sec. 7. The right to form associations or societies for purpose not contrary to law shall not be abridged. This Section was adopted in Section 7 of Proposed Resolution No. 486 of the 1986 Constitutional Commission, entitled Resolution to Incorporate in the New Constitution an Article on the Bill of Rights, 1 submitted by the Committee on Citizenship, Bill of Rights, Political Rights and Obligations, and Human Rights, with a modification, however, consisting of the insertion of the word union between the words "associations" and "societies." Thus the proposed Section 7 provided as follows: Sec. 7. The right of the people to form associations, unions, or societies for purposes not contrary to law shall not be abridged (emphasis supplied). Commissioner Joaquin G. Bernas, in his sponsorship speech on the proposed Article on the Bill of Rights, expounded on the nature of the proposed provision, in this wise:

Section 7 preserves the old provision not because it is strictly needed but because its removal might be subject to misinterpretation. It reads: xxx xxx xxx It strictly does not prepare the old provision because it adds the word UNION, and in the explanation we received from Commissioner Lerum, the term envisions not just unions in private corporations but also in the government. This preserves our link with the Malolos Constitution as far as the right to form associations or societies for purposes not contrary to law is concerned. 2 During the period of individual amendments, Commissioner Lerum introduced an amendment to the proposed section consisting of the insertion of the clause "WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS, which, after consulting other Commissioners, he modified his proposed amendment to read: "INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS." At that time, the section read: Sec. 7. The right of the people including those employed in the public and private sectors to form associations, unions or societies for purposes not contrary to law shall not be abridged. Pertinently to this dispute Commissioner Lerum's intention that the amendment "automatically abolish" Articles 245 and 246 of the Labor Code. The Committee accepted the amendment, and there having been no objection from the floor, the Lerum amendment was approved, thus: MR. LERUM: . . . In proposing that amendment I ask to make of record that I want the following provisions of the Labor Code to be automatically abolished, which read: Art. 245. Security guards and other personnel employed for the protection and security of the person, properties and premises of the employers shall not be eligible for membership in a labor organization. Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. THE PRESIDING OFFICER (Mr. Bengzon): What does the Committee say? FR. BERNAS: The Committee accepts. THE PRESIDING OFFICER (Mr. Bengzon): The Committee has accepted the amendment, as amended. Is there any objection? (Silence) The Chair hears none; the amendment, as amended, is approved.
3

The Committee on Style then recommended that commas be placed after the words people and sectors, while Commissioner Lerum 4 likewise moved to place the word unions before the word associations. Section 7, which was subsequently renumbered as Section 8 as presently appearing in the text ratified in the plebiscite of 2 February 1987, then read as follows: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. It is then indubitably clear from the foregoing that the intent of the Constitutional Commission was to abrogate the law prohibiting managerial employees from joining, assisting, or forming unions or labor organizations. In this regard, there is absolutely no need to decipher the intent of the framers of the 1987 Constitution vis-a-vis Article 245 (originally 246) of the Labor Code, there being no ambiguity or vagueness in the wording of the present Section 8, Article III of the 1987 Constitution. The provision is clear and written in simple language; neither were there any confusing debates thereon. More importantly, the purpose of Commissioner Lerum's amendments was unequivocal: he did not merely intend an implied repeal, but an express repeal of the offending article of the Labor Code. The approval of the amendments left no doubt whatsoever, as faithfully disclosed in the Records of the Constitutional

Commission, that all employees meaning rank-and-file, supervisory and managerial have the right to form unions for purposes not contrary to law.

whether from the public or the private sectors,

The Labor Code referred to by Commissioner Lerum was P.D. No. 442, promulgated on 1 May 1974. With the repeal of Article 239 by Executive Order No. 111 issued on 24 December 1986, 5 Article 246 (as mentioned by Commissioner Lerum) became Article 245. Thereafter, R.A. No. 6715 6 amended the new Article 245 (originally Article 246) to read, as follows: Sec. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations 7 of their own. With the abrogation of the former Article 246 of the Labor Code, 8 and the constitutional prohibition against any law prohibiting managerial employees from joining, assisting or forming unions or labor organizations, the first sentence then of the present Article 245 of the Labor Code must be struck down as unconstitutional. 9 However, due to an obvious conflict of interest being closely identified with the interests of management in view of the inherent nature of their functions, duties and responsibilities managerial employees may only be eligible to join, assist or form unions or labor organizations of their own rank, and not those of the supervisory employees nor the rank-and-file employees. In the instant case, the petitioner's name United Pepsi-Cola Supervisory Union (UPSU) indubitably attests that it is a union of supervisory employees. In light of the earlier discussion, the route managers who aremanagerial employees, cannot join or assist UPSU. Accordingly, the Med-Arbiter and public respondent Laguesma committed no error in denying the petition for direct certification or for certification election. I thus vote to GRANT, IN PART, the instant petition. That portion of the challenged resolution of public respondent holding that since the route managers of private respondent Pepsi-Cola Products Philippines, Inc., are managerial employees, they are "not eligible to assist, join or form a union or any other organization" should be SET ASIDE for being violative of Section 8 of Article III of the Constitution, while that portion thereof denying petitioner's appeal from the Med-Arbiter's decision dismissing the petition for direct certification or for a certification election should be AFFIRMED. PUNO, J., separate concurring; With due respect, it is my submission that Article 245 of the Labor Code was not repealed by section 8, Article III of the 1987 Constitution for reasons discussed below. A. Types of Employees. For purposes of applying the law on labor relations, the Labor Code in Article 212 (m) defines three (3) categories of employees. They are managerial, supervisory and rank-and-file, thus: Art. 212 (m). "Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. "Supervisory employees" are those who, in the interest of the employer, effectively recommended such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. The test of "managerial" or "supervisory" status depends on whether a person possesses authority to act in the interest of his employer and whether such authority is not routinary or clerical in nature but requires the use of independent judgment. 1 The rankand-file employee performs work that is routinary and clerical in nature. The distinction between these employees is significant because supervisory and rank-and-file employees may form, join or assist labor organizations. Managerial employees cannot. B. The Exclusion of Managerial Employees: Its Historical Roots in the United States. The National Labor Relations Act (NLRA), also known as the Wagner Act, enacted by the U.S. Congress in 1935, was the first law that regulated labor relations in the United States and embodied its national labor policy. 2 The purpose of the NLRA was to eliminate obstructions to the free flow of commerce through the practice of collective bargaining. The NLRA also sought to protect the workers' full freedoms of association, self-organization, and designation of representatives of their own choosing, for the purpose of

negotiating the terms and conditions of their employment or other mutual aid and protection. The NLRA established the right of employees to organize, required employers to bargain with employees collectively through employee-elected representatives, gave employees the right to engage in concerted activities for collective bargaining purposes or other mutual aid or protection, and created the National Labor Relations Board (NLRB) as the regulatory agency in labor-management matters. 4 The NLRA was amended in 1947 by the Labor Management Relations Act (LMRA), also known as the Taft-Hartley Act. This Act sought to lessen industrial disputes and placed employers in a more nearly equal position with unions in bargaining and labor relations 5 procedures. The NLRA did not make any special provision for "managerial employees." 6 The privileges and benefits of the Act were conferred on "employees." Labor organizations thus clamored for the inclusion of supervisory personnel in the coverage of the Act on the ground that supervisors were also employees. Although traditionally, supervisors were regarded as part of management, the NLRB was constrained to recognize supervisors as employees under the coverage of the law. Supervisors were then granted collective 7 8 bargaining rights. Nonetheless, the NLRB refused to consider managers as covered by the law. The LMRA took away the collective bargaining rights of supervisors. The sponsors of the amendment feared that their unionization would break down industrial discipline as it would blur the traditional distinction between management and labor. They felt it necessary to deny supervisory personnel the right of collective bargaining to preserve their loyalty to the interests of their employers. 9 Several amendments were later made on the NLRA but the exclusion of managers and supervisors from its coverage was preserved. Until now managers and supervisors are excluded from the law. 10 Their exclusion hinges on the theory that the employer is entitled to the full loyalty of those whom it chooses for positions of responsibility, entailing action on the employers' behalf. A supervisor's and manager's ability to control the work of others would be compromised by his sharing of employee status with them. 11 C. Historical Development in the Philippines. Labor-management relations in the Philippines were first regulated under the Industrial Peace Act 12 which took effect in 1953. Hailed as the Magna Carta of Labor, it was modelled after the NLRA and LMRA of the United States. 13 Most of the basic principles of the NLRA have been carried over to the Industrial Peace Act and the Labor Code. 14 This is significant because we have ruled that where our labor statutes are based on statutes in foreign jurisdiction, the decisions of the high courts in those jurisdictions construing and interpreting the Act are given persuasive effects in the application of Philippine law. 15 The Industrial Peace Act did not carry any provision prohibiting managerial employees from joining labor organizations. Section 3 of said law merely provided: Sec. 3. Employees' Right to Self-Organization. Employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid and protection. Individuals employed as supervisors shall not be eligible for membership in a labor organization of employees under their supervision but may form separate organizations of their own. Significantly, the Industrial Peace Act did not define a manager or managerial employee. It defined a "supervisor" but not a "manager." Thus: Sec. 2. . . . (k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline other employees, or responsibly to direct them, and to adjust their grievances, or effectively to recommend such acts, if, in connection with the foregoing, the exercise of such authority is not of a merely routinary or clerical nature but requires the use of independent judgment. In 1972, we interpreted Section 3 of the Industrial Peace Act to give supervisors the right to join and form labor organizations of their 16 own. Soon we grappled with the right of managers to organize. In a case involving Caltex managers, we recognized their right to organize, viz:

It would be going too far to dismiss summarily the point raised by respondent company, that of the alleged identity of interest between the managerial staff and the employing firm. That should ordinarily be the case, especially so where the dispute is between management and the rank-and-file. It does not necessarily follow though that what binds the managerial staff to the corporation forecloses the possibility of conflict between them. There could be a real difference between what the welfare of such group requires and the concessions the firm is willing to grant. Their needs might not be attended to then in the absence of any organization of their own. Nor is this to indulge in empty theorizing. The records of respondent company, even the very case cited by it, is proof enough of their uneasy and troubled relationship. Certainly the impression is 17 difficult to erase that an alien firm failed to manifest sympathy for the claims of its Filipino executives. The Industrial Peace Act was repealed in 1975 by P.D. 442, the Labor Code of the Philippines. The Labor Code changed existing jurisprudence when it prohibited supervisory and managerial employees from joining labor organizations. Supervisory unions were no 18 longer recognized nor allowed to exist and operate as such. We affirmed this statutory change in Bulletin Publishing 19 Corp. v. Sanchez. Similarly, Article 246 of the Labor Code expressly prohibited managerial employees from forming, assisting and joining labor organizations, to wit: Art. 246. Ineligibility of managerial employees to join any labor organization. join, assist or form any labor organization. Managerial employees are not eligible to

In the same Bulletin case, the Court applied Article 246 and held that managerial employees are the very type of employees who, by the nature of their positions and functions, have been decreed disqualified from bargaining with management. This prohibition is based on the rationale that if managerial employees were to belong or be affiliated with a union, the union might not be assured of their loyalty in view of evident conflict of interest or that the union can be company-dominated with the presence of managerial employees in the union membership. 20 In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representative, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves become union members. 21 The prohibition on managerial employees to join, assist or form labor organizations was retained in the Labor Code despite substantial amendments made in 1989 by R.A. 6715, the Herrera-Veloso Law. R.A. 6715 was passed after the effectivity of the 1987 Constitution and this law did not abrogate, much less amend the prohibition on managerial employees to join labor organizations. The express prohibition in Article 246 remained. However, as an addendum to this same Article, R.A. 6715 restored to supervisory employees the right to join labor organizations of their own. 22 Article 246 now reads: Art. 246. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. Article 246 became Article 245 after then Article 244 was repealed by E.O. 111. Article 246 is presently Article 245 of the Labor Code. Indeed, Article 245 of the Labor Code prohibiting managerial employees from joining labor organizations has a social and historical significance in our labor relations law. This significance should be considered in deciphering the intent of the framers of the 1987 Constitution vis-a-vis the said Article. With due respect, I do not subscribe to the view that section 8, Article III of the Constitution abrogated Article 245 of the Labor Code. A textual analysis of section 8, Article III of the Constitution will not justify this conclusion. With due respect, the resort by Mr. Justice Davide to the deliberations of the Constitutional Commission does not suffice. It is generally recognized that debates and other 23 proceedings in a constitutional convention are of limited value and are an unsafe guide to the intent of the people. Judge Cooley has stated that: When the inquiry is directed to ascertaining the mischief designed to be remedied, or the purpose sought to be accomplished by a particular provision, it may be proper to examine the proceedings of the convention which framed the instrument. Where the proceedings clearly point out the purpose of the provision, the aid will be valuable and satisfactory; but where the question is one of abstract meaning, it will be difficult to derive from this source much reliable assistance in interpretation. Every member of such a convention acts upon such motives and reasons as influence him personally, and the motions and debates do not necessarily indicate the purpose of a majority of a convention in adopting a particular clause. It is quite possible for a particular clause to appear so clear and unambiguous to the members of the convention as to require neither discussion nor illustration; and the few remarks made concerning it in the convention might have a plain tendency to

lead directly away from the meaning in the minds of the majority. It is equally possible for a part of the members to accept a clause in one sense and a part in another. And even if we were certain we had attained to the meaning of the convention, it is by no means to be allowed a controlling force, especially if that meaning appears not to be the one which the words would most naturally and obviously convey. For as the constitution does not derive its force from the convention which framed, but from the people who ratified it, the intent to be arrived at is that of the people, and it is not to be supposed that they have looked for any dark and abstruse meaning in the words employed, but rather that they have accepted them in the sense most obvious to the common understanding, and ratified the instrument in the belief that was the sense designed to be 24 conveyed. It is for this reason that proceedings of constitutional conventions are less conclusive of the proper construction of the instrument than are legislative proceedings of the proper construction of the statute. 25 In the statutes, it is the intent of the legislature that is being sought, while in constitutions, it is the intent of the people that is being ascertained through the discussions and deliberations of their representatives. 26 The proper interpretation of constitutional provisions depends more on how it was understood by the 27 people adopting it than in the framers' understanding thereof. Thus, debates and proceedings of the constitutional convention are never of binding force. They may be valuable but are not necessarily decisive. 28 They may shed a useful light upon the purpose sought to be accomplished or upon the meaning attached to the words employed. And the courts are free to avail themselves of any light that may be derived from such sources, but they are not bound to adopt it as the sole ground of their decision. 29 Clearly then, a statute cannot be declared void on the sole ground that it is repugnant to a supposed intent or spirit declared in constitutional convention proceedings. D. Freedom of Association The right of association flows from freedom of expression. 30 Like the right of expression, the exercise of the right of association is not absolute. It is subject to certain limitations. Article 243 of the Labor Code reiterates the right of association of people in the labor sector. Article 243 provides: Art. 243. Coverage of employees' right to self-organization. All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. Article 243 guarantees the right to self-organization and association to "all persons." This seemingly all-inclusive coverage of "all persons," however, actually admits of exceptions. Article 244 of the Labor Code mandates that all employees in the civil service, i.e, those not employed in government corporations established under the Corporation Code, may only form associations but may not collectively bargain on terms and conditions fixed by law. An employee of a cooperative who is a member and co-owner thereof cannot invoke the right of collective bargaining and negotiation vis-a-vis the cooperative. 32 An owner cannot bargain with himself or his co-owners. 33 Employees in foreign embassies or consulates or in foreign international organizations granted international immunities are also excluded from the right to form labor organizations. 34 International organizations are organized mainly as a means for conducting general international business in which the member-states have an interest and the immunities granted them shield their affairs from political pressure or control by the host country and assure the unimpeded performance of their functions. 35 Confidential employees have also been denied the right to form labor-organizations. Confidential employees do not constitute a distinct category for purposes of organizational right. Confidentiality may attach to a managerial or non-managerial position. We have, however, excluded confidential employees from joining labor organizations following the rationale behind the disqualification of managerial employees in Article 245. In the case of National Association of Trade Unions-Republic Planters' Bank Supervisors Chapter v. Torres, 36 we held: In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. It is the same
31

reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Article 245 as if the disqualification of confidential employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act "in the interest of" the employers. It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty-bound to protect. 37 E. The disqualification extends only to labor organizations. It must be noted that Article 245 of the Labor Code deprives managerial employees of their right to join "labor organizations." A labor organization is defined under the Labor Code as: Art. 212 (g). "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with the employer concerning terms and conditions of employment. A labor organization has two broad rights: (1) to bargain collectively and (2) to deal with the employer concerning terms and conditions of employment. To bargain collectively is a right given to a labor organization once it registers itself with the Department of Labor and Employment (DOLE). Dealing with the employer, on the other hand, is a generic description of interaction between employer and employees concerning grievances, wages, work hours and other terms and conditions of employment, even if the employees' group is not registered with the DOLE. 38 Any labor organization which may or may not be a union may deal with the employer. This explains why a workers' Organization does not always have to be a labor union and why employer-employee collective interactions are not always collective bargaining. 39 In the instant case, it may be argued that managerial employees' labor organization will merely "deal with the employer concerning terms and conditions of employment" especially when top management is composed of aliens, following the circumstances in the Caltex case. Although the labor organization may exist wholly for the purpose of dealing with the employer concerning terms and conditions of employment, there is no prohibition in the Labor Code for it to become a legitimate labor organization and engage in collective bargaining. Once a labor organization registers with the DOLE and becomes legitimate, it is entitled to the rights accorded under Articles 242 and 263 (b) of the Labor Code. And these include the right to strike and picket. Notably, however, Article 245 does not absolutely disqualify managerial employees from exercising their right of association. What it prohibits is merely the right to join labor organizations. Managerial employees may form associations or organizations so long as they are not labor organizations. The freedom of association guaranteed under the Constitution remains and has not been totally abrogated by Article 245. To declare Article 245 of the Labor Code unconstitutional cuts deep into our existing industrial life and will open the floodgates to unionization at all levels of the industrial hierarchy. Such a ruling will wreak havoc on the existing set-up between management and labor. If all managerial employees will be allowed to unionize, then all who are in the payroll of the company, starting from the president, vice-president, general managers and everyone, with the exception of the directors, may go on strike or picket the employer. 40 Company officers will join forces with the supervisors and rank-and-file. Management and labor will become a solid phalanx with bargaining rights that could be enforced against the owner of the company. 41 The basic opposing forces in the industry will not be management and labor but the operating group on the one hand and the stockholder and bondholder group on the other. The industrial problem defined in the Labor Code comes down to a contest over a fair division of the gross receipts of industry 42 between these two groups. And this will certainly bring ill-effects on our economy. The framers of the Constitution could not have intended a major upheaval of our labor and socio-economic systems. Their intent cannot be made to override substantial policy considerations and create absurd or impossible situations. 43 A constitution must be viewed as a continuously operative charter of government. It must not be interpreted as demanding the impossible or the impracticable; or as effecting the unreasonable or absurd.44 Courts should always endeavour to give such interpretation that would 45 make the constitutional provision and the statute consistent with reason, justice and the public interest. I vote to dismiss the petition. VITUG, J., separate concurring and dissenting;

The pivotal issues raised in the case at bar, aptly stated by the Office of the Solicitor General, are: (1) Whether or not public respondent, Undersecretary of the Department of Labor and Employment ("DOLE") Bienvenido E. Laguesma, gravely abused his discretion in categorizing the members of petitioner union to be managerial employees and thus ineligible to form or join labor organizations; and (2) Whether or not the provision of Article 245 of the Labor Code, disqualifying managerial employees from joining, assisting or forming any labor organization, violates Section 8, Article III, of the 1987 Constitution, which expresses that "(t)he right of the people, including those employed in public and private sectors to form unions, associations or societies for purposes not contrary to law shall not be abridged." The case originated from a petition for direct certification or certification election among route managers/supervisory employees of Pepsi-Cola Products Phils., Inc. ("Pepsi"), filed by the United Pepsi-Cola Supervisory Union ("Union"), claiming to be a legitimate labor organization duly registered with the Department of Labor and Employment under Registration Certificate No. NCR-UR-3-1421-95. Pepsi opposed the petition on the thesis that the case was no more than a mere duplication of a previous petition for direct 1 certification filed by the same route managers through the Pepsi-Cola Employees Association (PCEA-Supervisory) which petition had already been denied by Undersecretary Laguesma. The holding reiterated a prior decision in Workers Alliance Trade Unions ("WATU") vs. Pepsi-Cola Products Phils., Inc., 2 that route managers were managerial employees. In its decision, dated 05 May 1995, Med-Arbiter Brigida C. Fadrigon dismissed for lack of merit the petition of the Union, stating that the issue on the proper classification and status of route managers had already been ruled with finality in the previous decisions, aforementioned, rendered by DOLE. The union appealed the decision. In his resolution of 31 August 1995, Undersecretary Laguesma dismissed the appeal, saying that there was no compelling reason to abandon the ruling in the two old cases theretofore decided by DOLE. In his order of 22 September 1995, Undersecretary Laguesma denied the Union's motion for reconsideration. The Union went to this Court, via a petition for certiorari, assailing the cancellation of its certificate of registration. The Court, after considering the petition and the comments thereon filed by both public and private respondents, as well as the consolidated reply of petitioner, dismissed the case in its resolution of 08 July 1996 on the premise that no grave abuse of discretion had been committed by public respondent. Undaunted, the Union moved, with leave, for the reconsideration of the dismissal of its petition by the Court En Banc. In its resolution of 16 June 1997, the case was referred to the Court En Banc en consulta with the movant's invocation of unconstitutionality of Article 245 of the Labor Code vis-a-vis Section 8, Article III, of the 1987 Constitution. There is merit, in my view, in petitioner's motion for reconsideration but not on constitutional grounds. There are, in the hierarchy of management, those who fall below the level of key officers of an enterprise whose terms and conditions of employment can well be, indeed are not infrequently, provided for in collective bargaining agreements. To this group belong the supervisory employees. The "managerial employees," upon the other hand, and relating the matter particularly to the Labor Code, are those "vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees" as distinguished from the supervisory employees whose duties in these areas are so designed as to verily be implementary to the policies or rules and regulations already outstanding and priorly taken up and passed upon by management. The managerial level is the source, as well as prescribes the compliance, of broad mandates which, in the field of labor relations, are to be carried out through the next rank of employees charged with actually seeing to the specific personnel action required. In fine, the real authority, such as in hiring or firing of employees, comes from management and exercised by means of instructions, given in general terms, by the "managerial employees;" the supervisory employees, although ostensibly holding that power, in truth, however, only act in obedience to the directives handed down to them. The latter unit, unlike the former, cannot be considered the alter ego of the owner of enterprise. The duties and responsibilities of the members of petitioner union, shown by their "job description" below PCPPI RM's JOB DESCRIPTION

A. GENERAL/OVERALL OBJECTIVE OF THIS POSITION To contribute to the growth and profitability of PCPPI via well-selected, trained and motivated Route Sales Team who sell, collect and merchandise, following the Pepsi Way, and consistent with Company policies and procedures as well as the corporate vision of Customer Satisfaction. B. SPECIFIC JOB DESCRIPTION: KEY RESULT AREAS STANDARD OR PERFORMANCE SALES VOLUME *100% Vs. NRC Target _____% NTG DISTRIBUTION * Product Availability 70% Pepsi 80% Seven-Up 40% Mirinda 65% Mt. Dew 5% Out of Stock ACCOUNTS RECEIVABLE 65% Current (Incl. Legal & Col.) MANAGEMENT 80:20 Cash to Credit Ratio DSO assigned Std. to Division

by the District ASSET MANAGEMENT 30 cases for ice-coolers 80 cases for electric coolers BLOWAGA on Division Vehicles 60 cases on Rolling/Permanent Kiosks TRADE DEVELOPMENT 100% Buying Customers Based on master list that bought once 5 months payback on concessions 4 CED's/Rte. EXPENSE MANAGEMENT a). 5% Absentism rate Excl. VL b). 280 cases/route/day

c). 15% cost-to-sales ratio ROUTE MANAGEMENT 3 Days on RR/Wk Days on BC-SC- Financial & Co. Assets Days on TD 75% Load Factor 18 Productive Calls CUSTOMER SATISFACTION Customer Complaint attended to within the next working day HUMAN RESOURCE 5% Absentism Excl. VL MANAGEMENT (approved) 3 Documented RR/ Week using SLM's Training Log ADMINISTRATIVE Complete, timely and accurate

MANAGEMENT reports. PCPPI RM's BASIC DAILY ACTIVITIES A. AT THE SALES OFFICE 1. PRACTICES BLOWAGA ON SERVICE VEHICLE (AT HOME) 2. REPORTS FOR WORK ON OR BEFORE 6:15 A.M. 3. REPORTS IN CLEAN AND NEAT UNIFORM (GOOD GROOMING) 4. DAILY BRIEFING WITH THE DM 5. CONDUCTS SKILLS ENHANCEMENT OR HUDDLES WITH RST's a). ATTENDANCE/GROOMING b). OPERATIONAL DIRECTIONS & PRIORITIES c). ANNOUNCEMENT 6. RM's PRESENCE DURING CHECK-OUT a). SLM PRACTICES BLOWAGA ON ROUTE TRUCK b). PRIVATE COUNSELING WITH RST (AM & PM IF NECESSARY) c). PROPER HANDLING OF SELLING/MDSG. MATERIALS

d). YESTERDAY's FINAL SETTLEMENT REVIEW 7. UPDATE REPORTS, MONITORS, DOCUMENTS & TELEPHONE CONMATION 8. ATTENDS TO PRODUCT COMPLAINTS (GFM) 9. CONDUCTS ADMINISTRATIVE INVESTIGATION OR ATTENDS DM's MEETING (on Saturdays) B. FIELD WORK ROUTE RIDE 1. CHECKS SLMS. TRAINING LOG (PROGRESS & DEV'T.) 2. SALESMAN's CPC 3. ROUTE COVERAGE EVALUATION 4. LOAD FACTOR 5. SALESMAN's ROUTING SYSTEM EVALUATION BC/SC 1. FINANCIAL & ASSET VERIFICATION, CONFIRMATION & AUDIT 2. BACKCHECKS FIRST 5 CUSTOMERS SERVED FOR THE DAY a). MERCHANDISING b). SERVICING c). RM's TERRITORY FAMILIARITY d). KEY ACCOUNTS GOODWILL TRADE DEVELOPMENT 1. PREPARATION PRIOR TO CALL 2. ACTUAL CALL 3. POST CALL ANALYSIS (HOW DID I FARE? WHY? WHAT ACTIONS TO TAKE) 4. FOLLOW-UP ACTION C. AT CLOSE OF DAY 1. MAINTAINS & UPDATES CORRECT & ACCURATE RECORDS & REPORTS 2. RM-SLM DEBRIEFING 3. SLR DISCUSSION (BASED ON A.M. SLR)

4. COORDINATES WITH DM ON PLANS & PROGRAMS 5. PREPARATIONS FOR NEXT DAY's ACTIVITIES
3

convey no more than those that are aptly consigned to the "supervisory" group by the relatively small unit of "managerial" employees. Certain portions of a pamphlet, the so-called "Route Manager Position Description" referred to by Mr. Justice Vicente Mendoza, in his ponencia, hereunder reproduced for easy reference, thus A. BASIC PURPOSE A Manager achieves objectives through others. As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective through the skillful management of your job and the management of your people. These then are your functions as Pepsi-Cola Route Manager. Within these functions managing your job and managing your people you are accountable to your District Manager for the execution and completion of various tasks and activities which will make it possible for you to achieve your sales objectives. B. PRINCIPAL ACCOUNTABILITIES 1.0 MANAGING YOUR JOB The Route Manager is accountable for the following: 1.1 SALES DEVELOPMENT 1.1.1 Achieve the sales plan. 1.1.2 Achieve all distribution and new account objectives. 1.1.3 Develop new business opportunities thru personal contacts with dealers. 1.1.4 Inspect and ensure that all merchandising objectives are achieved in all outlets. 1.1.5 Maintain and improve productivity of all cooling equipment and kiosks. 1.1.6 Execute and control all authorized promotions. 1.1.7 Develop and maintain dealer goodwill. 1.1.8 Ensure all accounts comply with company suggested retail pricing. 1.1.9 Study from time to time individual route coverage and productivity for possible adjustments to maximize utilization of resources. 1.2 Administration

1.2.1 Ensure the proper loading of route trucks before check-out and the proper sorting of bottles before check-in. 1.2.2 Ensure the upkeep of all route sales reports and all other related reports and forms required on an accurate and timely basis. 1.2.3 Ensure proper implementation of the various company policies and procedures include but not limited to shakedown; route shortage; progressive discipline; sorting; spoilages; credit/collection; accident; attendance. 1.2.4 Ensure collection of receivables and delinquent accounts. 2.0 MANAGING YOUR PEOPLE The Route Manager is accountable for the following: 2.1 Route Sales Team Development 2.1.1 Conduct route rides to train, evaluate and develop all assigned route salesmen and helpers at least 3 days a week, to be supported by required route ride documents/reports & back check/spot check at least 2 days a week to be supported by required documents/reports. 2.1.2 Conduct sales meetings and morning huddles. Training should focus on the enhancement of effective sales and merchandising techniques of the salesmen and helpers. Conduct group training at least 1 hour each week on a designated day and of specific topic. 2.2 Code of Conduct 2.2.1 Maintain the company's reputation through strict adherence to PCPPI's code of conduct and the universal standards of unquestioned business ethics. offer nothing at all that can approximate the authority and functions of those who actually and genuinely hold the reins of management. I submit, with due respect, that the members of petitioning union, not really being "managerial employees" in the true sense of the term, are not disqualified from forming or joining labor organizations under Article 245 of the Labor Code. I shall now briefly touch base on the constitutional question raised by the parties on Article 245 of the Labor Code. The Constitution acknowledges "the right of the people, including those employed in the public and private sectors, to form unions, associations or societies for purposes not contrary to law . . . ." 4 Perforce, petitioner claims, that part of Article 245 5 of the Labor Code which states: "Managerial employees are not eligible to join, assist or form any labor organization," being in direct collision with the Constitutional provision, must now be declared abrogated in the law. Frankly, I do not see such a "direct collision." The Constitution did not obviously grant a limitless right "to form unions, associations or societies" for it has clearly seen it fit to subject its exercise to possible legislative judgment such as may be appropriate or, to put it in the language of the Constitution itself, to "purposes not contrary to law." Freedom of association, like freedom of expression, truly occupies a choice position in the hierarchy of constitutional values. Even while the Constitution itself recognizes the State's prerogative to qualify this right, heretofore discussed, any limitation, nevertheless, must still be predicated on the existence of a substantive evil sought to be addressed. 6 Indeed, in the exercise of police power, the

State may, by law, prescribe proscriptions, provided reasonable and legitimate of course, against even the most basic rights of individuals. The restriction embodied in Article 245 of the Labor Code is not without proper rationale. Concededly, the prohibition to form labor organizations on the part of managerial employees narrows down their freedom of association. The very nature of managerial functions, however, should preclude those who exercise them from taking a position adverse to the interest they are bound to serve and protect. The mere opportunity to undermine that interest can validly be restrained. To say that the right of managerial employees to form a "labor organization" within the context and ambit of the Labor Code should be deemed totally separable from the right to bargain collectively is not justified by related provisions of the Code. For instance Art. 212. Definitions.
7

...

(g) "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. xxx xxx xxx (m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinely or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. Art. 263. . . . (b) Workers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. The maxim "ut res magis quam pereat" requires not merely that a statute should be given such a consequence as to be deemed whole but that each of its express provisions equally should be given the intended effect. I find it hard to believe that the fundamental law could have envisioned the use by managerial employees of coercive means against their own employers over matters entrusted by the latter to the former. Whenever trust and confidence is a major aspect of any relationship, a conflict of interest on the part of the person to whom that trust and confidence is reposed must be avoided and when, unfortunately, it does still arise its containment can rightly be decreed. Article 245 of the Labor Code indeed aligns itself to the Corporation Code, the basic law on by far the most commonly used business vehicle the corporation which prescribes the tenure of office, as well as the duties and functions, including terms of employment (governed in most part by the Articles of Incorporation, the By-laws of the Corporation, or resolutions of the Board of Directors), of corporate officers for both the statutory officers,i.e., the president, the treasurer and the corporate secretary, and the non-statutory officers, i.e., those who occupy positions created by the corporate by-laws who are deemed essential for effective management of the enterprise. I cannot imagine these officers as being legally and morally capable of associating themselves into a labor organization and asserting collective bargaining rights against the very entity in whose behalf they act and are supposed to act. I submit, accordingly, that, firstly, the members of petitioner union or the so-called route managers, being no more than supervisory employees, can lawfully organize themselves into a labor union within the meaning of the Labor Code, and that, secondly, the questioned provision of Article 245 of the Labor Code has not been revoked by the 1987 Constitution. WHEREFORE, I vote, given all the foregoing, for the reversal of the resolution of 31 August 1995, and the order of 22 September 1995, of public respondent.

G.R. No. 131457 November 17, 1998 HON. CARLOS O. FORTICH, PROVINCIAL GOVERNOR OF BUKIDNON, HON, REY B. BAULA, MUNICIPAL MAYOR OF SUMILAO, BIKIDNON, NQSR MANAGEMENT AND DEVELOPMENT CORPORATIONS, respondent, vs. HON. RENATO C. CORONA, DEPUTY EXECUTIVE SECRETARY, HON. ERNESTO D. GARILAO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, respondent. OPINION

MARTINEZ, J.: This pertains to the two (2) separate motions for reconsideration filed by herin respondent and the applicants for intervention, seeking a reversal of our April 24, 1998 Decision nullfying the so-called "win-win" Resolution dated November 7, 1997, issued by the Office of the President in O.P. Case No. 96-C-6424, and denying the applicants Motion For Leave To Intervene. Respondent motion is based on the following grounds: I. THE SO-CALLED WIN-WIN RESOLUTION DATED NOVEMBER 7, 1997 IS NOT A VOID RESOLUTION AS IT SEEKS TO CORRECT AN ERRONEOUS RULING. THE MARCH 9, 1996 DECISION OF THE OFFICE OF THE PRESIDENT COULD NOT AS YET BECOME FINAL AND EXECUTORY AS TO BE BEYOND MODIFICATION. II. THE PROPER REMEDY OF PETITIONERS IS A PETITION FOR REVIEW UNDER RULE 43 AND NOT A PETITION FOR CERTIORARI UNDER RULE 65 OF THE RULES OF COURT. III. THE FILING OF A MOTION FOR RECONSIDERATION IS A CONDITION SINE QUA NON BEFORE A PETITION FOR CERTIORARI MAY BE FILED BECAUSE THE OUESTIONED RESOLUTION IS NOT A PATENTLY ILLEGAL. IV. PETITIONERS ARE GUILTY OF FORUM-SHOPPING BECAUSE ULTIMATELY PETITIONERS SEEK THE SAME RELIEF, WHICH IS TO RESTRAIN THE DEPARTMENT OF AGRARIAN REFORM FROM PLACING THE SUBJECT 144-HECTARE 1 PROPERTY UNDER THE COMPREHENSIVE AGRARIAN REFORM LAW (CARL). For their part, the grounds relied upon by the applicants for intervention are as follows: I. THE INTERVENORS POSSESS A RIGHT TO INTERVENE IN THESE PROCEEDINGS. II. THE MODIFICATION BY THE OFFICE OF THE PRESIDENT (OP) OF ITS 29 MARCH 1996 DECISION, THROUGH THE 7 NOVEMBER 1997 "WIN-WIN" RESOLUTION, WAS NOT ERRONEOUS BUT WAS A VALID EXERCISE OF ITS POWERS AND PROGATIVES. III.

THE "WIN-WIN" RESOLUTION PROPERLY ADDRESSES THE SUBSTANTIAL ISSUES RELATIVE TO THIS CASE. 2 Both movants also ask that their respective motions be resolved by this Court en banc since the issues they raise are, as described by 3 4 the respondents, "novel" or, as characterized by the applicants for intervention, of "transcendental significance." Most specifically, movants are presenting the issue of whether or not the power of the local government units to reclassify lands is subject to the approval of the Department of Agrarian Reform (DAR). The instant motions are being opposed vehemently by herein petitioners. The grounds raised here are were extensively covered and resolved in our challenged Decision. A minute resolution denying the instant motions with finality would have been sufficient, considering that the same follows as a matter of course if warranted under the circumstances as in other equally important cases. However, in view of the wide publicity and media coverage that this case has generated, in addition to the demonstrations staged at the perimeter of this Court, as well as the many letters coming from different sectors of society (the religious and NGO's) and even letters from abroad we deem it necessary to write an extended resolution to again reiterate the basis for our April 24, 1998 Decision, and hopefully write finis to this controversy. To support their request that their motions be referred to the Court en banc, the movants cited the Resolution of this Court dated February 9, 1993, in Bar Matter No. 209, which enumerates the cases that may be resolved en banc, among which are the following: xxx xxx xxx 3. Cases raising novel questions of law; xxx xxx xxx 8. Casesa assigned to a division which in the opinion of at least three (3) members thereof merit the attention of the Court en banc and are acceptable to a majority of the actual membership of the Courten banc; and xxx xxx xxx Regrettably, the issues presented before us by the movants are matters of no extraordinary import to merit the attention of the Court en banc. Specifically, the issue of whether or not the power of the local government units to reclassify lands is subject to the approval of the DAR is no longer novel, this having been decided by this Court in the case of Province of Camarines Sur, et al. vs. Court of Appeals 5 wherein we held that local government units need not obtain the approval of the DAR to convert or reclassify lands from agricultural to non-agricuultural use. The dispositive portion of the Decision in the aforecited case states: WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals is set aside insofar as it (a) nullifies the trial court's order allowing the Province of Camarines Sur to take possession of private respondents' property; (b) orders the trial court to suspend the expropriation proceedings; and (c) requires the Province of Camarines Sur to obtain the approval of the Department of Agrarian Reform to convert or reclassify private respondents' property from agricultural to non-agricultural use. xxx xxx xxx (Emphasis supplied) Moreover, the Decision sought to be reconsidered was arrived at by a unaninous vote of all five (5) members of the Second Division is of the opinion that the matters raised by movants are nothing new and do not deserve the consideration of the Court en banc. Thus, the participation of the full Court in the resolution of movants' motions for reconsideration would be inappropriate. We shall now resolve the respondents' motion for reconsiderations. In our Decision in question, we struck down as void the act of the Office of the President (OP) in reopening the case in O.P. Case No. 96-C-6424 through the issuance of the November 7, 1997 "win-win" Resolution which substantially modified its March 29, 1996 Decision that had long become final and executory, being in gross disregard of the rules and basic legal precept that accord finality to administrative determinations. It will be recalled that the March 29, 1996 OP Decision was declared by the same office as final and executory in its Order dated June 23, 1997 after the respondent DAR's motion for reconsideration of the said decision was denied in the same order for having been filed beyond the 15-day period.

In their instant motion, the respondent contend that the "win-win" Resolution of November 7, 1997 "is not a void resolution as it seeks to correct an erroneous ruling," hence, "(t)he March 29, 1996 decision of the Offce of the President could not as yet become final and executory as to beyond modification. 6 The respondent explained that the DAR's failure to file on time the motion for reconsideration of the March 29, 1996 OP Decision was "excusable" The manner of service of the copy of the March 29, 1996 decisoin also made it imposible for DAR to file its motion for reconsideration on time. The copy was received by the Records Section of the DAR, then referred to the Office of the Secretary and then to the Bureau of Agrarian Legal Assistance. By the time it was forwarded to the litigation office of the DAR, the period to file the motion for reconsideration had already lapsed. Instead of resolving the motion for reconsideration on the merits in the interest of substantial justice, the Office of the President denied the same for having been filed late." 7 (Emphasis supplied) We cannot agree with the respondents' contention that the June 23, 1997 OP Order which denied the DAR's motion for reconsideration of the March 29, 1996 OP Decision for having been filed late was "an erroneous ruling" which had to be corrected by the November 7, 1997 "win-win" Resolution. The said denial of the DAR's motion for reconsideration was in accordance with Section 7 of Administrative Order No. 18, dated February 12, 1987, which, mandates that "decision/resolutions/order of the Office of the President shall, except as otherwise provided for by special laws, become final after the lapse of fifteen (15) days from receipt of a copy thereof . . ., unless a motion for reconsideration thereof is filed within such period. 18 Contrary to the respondents' submission, the late filing by the DAR of its motion for reconsideration of the March 29, 1996 OP Decision is not excusable. The respondents' explanation that the DAR's office procedure after receiving the copy of the March 29, 1996 OP Decision "made it impossible for DAR to file its motion for reconsideration on time" since the said decision had to be referred to the different departments of the DAR, cannot be considered a valid justification. There is nothing wrong with referring the decision to the departments concerned for the preparation of the motion for reconsideration, but in doing so, the DAR must not disregard the reglementary period fixed by law, the rule or regulation. In other words, the DAR must develop a system of procedure that would enable it to comply with the reglementary period for filing the said motion. For, the rules relating to reglementary period should not be made subservient to the internal office procedure of an administrative body. Otherwise, the noble purpose of the rules prescribing a definite period for filing a motion for reconsideration of a decision can easily be circumvented by the mere expediency of claiming a long and ardous process of preparing the said motion involving several departments of the administrative agency. The respondent then faulted the Office of the President when they further stressed that it should have resolved "the (DAR's) motion for reconsideration on the merits in the interest of substantial justice," instead of simply denying the same for having been filed late, 9 adding that "technicalities and procedural lapses" should be "subordinated to the established merits of the case. 10 Respondents thus plead for a relaxation in the application of the rules by overlooking procedural lapses committed by the DAR. We are not persuaded. Procedural rules, we must stress, should be treated with utmost respect and due regard since they are designed to facilitate the adjudication of cases to remedy the worsening problem of delay in the resolution of rival claims and in the administration of justice. The requirement is in pursuance to the bill of rights inscribed in the Constitution which guarantees that "all persons shall have a 11 right to the speedy disposition of their cases before all judicial, quasi-judicial and administrative bodies." The adjudicatory bodies 12 and the parties to a case are thus enjoined to abide strictly by the rules. While it is true that a litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice. 13 There have been some instances wherein this Court allowed a relaxation in the application of the rules, but this flexibility was "never intended to forge a bastion for erring litigants to violate the rules with impunity. 14 A liberal interpretation and application of the rules of procedure can be resorted to only in proper cases and under justifiable causes and circumstances. In the instant case, we cannot grant respondents the relief prayed for since they have not shown a justifiable reason for a relaxation of the rules. As we have discussed eralier, the DAR's late filing of its motion for reconsideration of the March 29, 1996 OP Decision was not justified. Hence, the final and executory character of the said OP Decision can no longer be disturbed, much less substantially modified. Res judicata has set in and the adjudicated thing or affair should forever be put to rest. It is in this case sense that we, in our decision under reconsideration, declared as void and of no binding effect the "win-win" Resolution of November 7,

1997 which substantially modified the March 29, 1996 Decision, the said resolution having been issued in excess of jurisdiction and in arrant violation of the fundamental and time-honored principle of finality to administrative determinations. The movants, however, complain that the case was decided by us on the basis of a "technicality," and, this has been the rallying cry of some newspaper columnists who insists that we resolve this case not on mere "technical" grounds. We do not think so. It must be emphasized that a decision/resolution/order of an administrative body, court or tribunal which is declared void on the ground that the same was rendered without or in excess of jurisdiction, or with grave abuse of discretion, is by no means a mere technicality of law or procedure. It is elementary that jurisdiction of a body, court or tribunal is an essential and mandatory requirement before it can act on a case or controversy. And even if said body, court or tribunal has jurisdiction over a case, but has acted in excess of its jurisdiction or with grave abuse of discretion, such act is still invalid. The decision nullfying the questioned act is an adjudication on the merits. In the instant case, several fatal violation of the law were committed, namely: (1) the DAR filed its motion for reconsideration of the March 29, 1996 OP Decision way beyond the reglemenatary period; (2) after the said motion for reconsideration was denied for having been filed late, the March 29, 1996 Decision was declared final and executory, but the DAR still filed a second motion for 15 reconsideration which is prohibited by the rules; (3) despite this, the second motion for reconsideration was entertained by herein respondent, then Deputy Executive Secretary Renato C. Corona, and on the basis thereof; issued the "win-win" Resolution dated November 7, 1997, substantially modifying the March 29, 1996 Decision which had long become final and executory; (4) the reopening of the same case through the issuance of the November 7, 1997 "win-win" Resolution was in flagrant infringement of the doctrine of res judicata. These grave breaches of the law, rules and settled jurisprudence are clearly substantial, not of technical nature. It should be stressed that when the March 29, 1996 OP Decision was declared final and executory, vested rights were acquired by the herein petitioners, namely, the province of Bukidnon, the municipality of Sumilao, Bukidnon, and the NQSR Management and Development Corporations, and all others who should be benefited by the said decision. Thus, we repeat, the issue here is not a question of technicality but that of substance and merit. In the words of the learned Justice Artemio V. Panganiban in the case of Videogram Regulatory Board vs. Court of Appeals, et al., 16 "(j)ust as a losing party has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his/her case. Another matter which the movants bring to our attention is that when the DAR's Order denying petitioners' application for conversion was first brought by petitioner Carlos O. Fortich to the Office of the President, the appropriate administrative rules were not complied with. We wish to point out that, apparently, movants had the opportunity to question this alleged lapse in procedure but chose not to avail of the same. For the "win-win" Resolution itself never mentioned this supposed procedural lapse as an issue. Here, the issue which has been brought to the fore is the validity of the "win-win" Resolution of November 7, 1997, not that of any other previous proceedings. The movants cannot now question the supposed procedural lapse for the first time before us. It should have been raised and resolved at the first opportunity, that is, at the administrative level. The other grounds raised by respondents in their instant motion for reconsideration concerning the propriety of petitioners' remedy, the absence of a motion for reconsideration of the "win-win" Resolution before resorting to the present petition for certiorari, and forum shopping have already been extensively dealt with in our challenged decision. We need not further elaborate on these grounds except to state that the same lacks merit. With respect to the motion for reconsideration filed by the applicants for intervention, we likewise find the same unmeritorious. The issue of the applicants' right to intervene in this proceedings should be laid to rest. The rule in this jurisdiction is that a party who 17 wishes to intervene must have a "certain right" or "legal interest" in the subject matter of the litigation. Such interest must be 18 "actual, substantial, material, direct and immediate, and not simply contingent and expectant." Here, the applicants for intervention categorically admitted that they were not tenants of petitioner NQSR Management and Development Corporation, but were merely seasonal farmworkers in a pineapple plantation on the subject land which was under lease for ten (10) years to the Philippine Packing 19 Corporation. Respondent, then DAR Secretary Ernesto Garilao, also admitted in this Order of June 7, 1995 that "the subject land is 20 neither tenanted nor validly covered for compulsory acquisition . . .

Under Section 4, Article XIII of the 1987 Constitution, the rights to own directly or collectively the land they till belongs to the farmers and regular farmworkers who are landless, and in the case of other farmworkers, the latter are entitled "to receive a just share of the fruits" of the land. The pertinent portion of the aforecited constitutional provision mandates: Sec. 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. . . . (Emphasis supplied) Commenting on the above-quoted provision, the eminent constitutionalist, Fr. Joaquin G. Bernas, S.J., one of the framers of the 1987 Constitution, declares that under the agrarian reform program the equitable distribution of the land is a right given to landless farmers and regular farmworkers to own the land they till, while the other or seasonal farmworkers are only entitled to a just share of the fruits of the land. 21 Being merely seasonal farmworkers without a right to own, the applicants' motion for intervention must necessarily fail as they have no legal or actual and substantial interest over the subject land. It is noteworthy that even "win-win Resolution of November 7, 1997 which the herein respondents and the applicants for intervention seek to uphold, did not recognize the latter as proper parties to intervene in the case simply because the qualified farmer-beneficiaries have yet to be meticulously determined as ordered in the said resolution. The dispositive portion of the "winwin" Resolution reads: WHEREFORE, premises considered, the decision of the Office of the President, through Executive Secretary Ruben Torres, dated March 29, 1996, is hereby MODIFIED as follows: xxx xxx xxx (3) The Department of Agrarian Reform is hereby directed to carefully and meticulously determine who among the claimants are qualified beneficiaries. xxx xxx xxx We take note of the Memorandum in Intervention filed by 113 farmers on October 10, 1997 without ruling on the propriety or merits thereof since it is unnecessary to pass upon it at this time. SO ORDERED. 22 (Emphasis supplied) These are all that are necessary to dispose of the instant separate motions for reconsideration considering that the crucial issue in the present petition for certiorari is simply the validity of the "win-win" resolution. But even if we tackle the other issues which the movants describe as "substantial," namely: (1) whether the subject land is considered a prime agricultural land with irrigation facility; (2) whether the land has long been covered by a Notice of Compulsory Acquisition (NCA); (3) whether the land is tenanted, and if not, whether the applicants for intervention are qualified to become beneficiaries thereof; and (4) whether the Sangguniang Bayan of Sumilao has the legal authority to reclassify the land into industrial/institutional use, to our mind, the March 29, 1996 OP Decision has thoroughly and properly disposed of the aforementioned issues. We quote the pertinent portions of the said Decision: After a careful evaluation of the petition vis-a-vis the grounds upon which the denial thereof by Secretary Garilao was based, we find that the instant application for conversion by the Municipality of Sumilao, Bukidnon is impressed with merit. To be sure, converting the land in question from agricultural to agro-industrial would open great opportunities for employment and bring about real development in the area towards a sustained economic growth of the municipality. On the other hand, distributing the land to would-be beneficiaries (who are not even tenants, as there are none) does not guarantee such benefits. Nevertheless, on the issue that the land is considered a prime agricultural land with irrigation facility it maybe appropriate to mention that, as claimed by petitioner, while it is true that there is indeed, an irrigation facility in the area, the same merely passes thru the property (as a right of way) to provide water to the ricelands located on the lower portion thereof. The land itself, subject of the instant petition, is not irrigated as the same was, for several years, planted with pineapple by the Philippine Packing Corporation.

On the issue that the land has long been covered by a Notice of Compulsory Acquisition (NCA) and that the existing policy on withdrawal or lifting on areas covered by NCA is not applicable, suffice it to state that the said NCA was declared null and void by the Department of Agrarian Reform Adjudication Board (DARAB) as early as March 1, 1992. Deciding in favor of NQSRMDC, the DARAB correctly pointed out that under Section 8 of R.A. No. 6657, the subject property could not validly be the subject of compulsory acquisition until after the expiration of the lease contract with Del Monte Philippines, a multi-National Company, or until April 1994, and ordered the DAR Regional Office and the Land Bank of the Philippines, both in Butuan City, to desist from pursuing any activity or activities covering petitioner's land. On this score, we take special notice of the fact that the Quisumbing family has already contributed substantially to the land reform of the government, as follows: 300 hectares of rice land in Nueva Ecija in the 70's and another 100 hectares in the nearby Municipality of Impasugong, Bukidnon, ten (10) years ago, for which they have not received "just compensation" up to this time. Neither can the assertion that "there is no clear and tangible compensation package arrangements for the benefiaries" hold water as, in the first place, there are no beneficiaries to speak about, for the land is not tenanted as already stated. Nor can procedural lapses in the manner of identifying/reclassifying the subject property for agro-industrial purposes be allowed to defeat the very purpose of the law granting autonomy to local government units in the management of their local affairs. Stated more simply, the language of Section 20 of R.A. No. 7160, supra, is clear and affords no room for any other interpretation. By unequivocal legal mandate, it grants local governments units autonomy in their local affairs including the power to convert portions of their agricultural lands and provide for the manner of their utilization and disposition to enable them to attain their fullest development as self-reliant communities. WHEREFORE, in pursuance of the spirit and intent of the said legal mandate and in view of the favorable recommendations of the various government agencies abovementioned, the subject Order, dated November 14, 1994 of the Hon. Secretary, Department of Agrarian Reform, is hereby SET ASIDE and the instant application of NQSRMDC/BAIDA is hereby APPROVED. 23 (Emphasis supplied) It is axiomatic that factual findings of administrative agencies which have acquired experties in their field are binding and conclusive on the Court, 24 considering that the Office of the President is presumed to be most competent in matters falling within its domain. The interest of justice is invoked by movants. We are aware of that famous adage of the late. President Ramon Magsaysay that "those who have less in life should have more in law." Our affirmation of the finality of the March 29, 1996 OP Decision is precisely pro-poor considering that more of the impoverised members of society will be benefited by the agro-economic development of the disputed land which the province of Bukidnon and the municipality of Sumilao, Bukidnon intend to undertake. To our mind, the OP Decision of March 29, 1996 was for the eventual benefit of the many, no just of the few. This is clearly shown from the development plan on the subject land as conceived by the petitioners. The said plan is supposed to have the following components as indicated in the OP Decision of March 29, 1996: 1. The Development Academy of Mindanao which constitutes the following: Institute for Continuing Higher Education; Institute for Livelihood Science (Vocational and Technical School); Institute for Agribusiness Research; Museum, Library, Cultural Center, and Mindanao Sports Development Complex which covers an area of 24 hectares; 2. Bukidnon Agro-Industrial Park which consists of corn processing for corn oil, corn starch, various corn products; rice processing for wine, rice-based snacks, exportable rice; cassava processing for starch, alcohol and food delicacies; processing plants, fruits and fruit products such as juices; processing plants for vegetables processed and prepared for market; cold storage and ice plant; cannery system; commercial stores; public market; and abattoir needing about 67 hectares; 3. Forest development which includes open spaces and parks for recreation, horse-back riding, memorial and minizoo estimated to cover 33 hectares; and

4. Support facilities which comprise the construction of a 360-room hotel, restaurants, dormitories and a housing 25 project covering an area of 20 hectares. Expressing full support for the proposed project, the Sangguniang Bayan of Sumilao, Bukidnon, on March 4, 1993, enacted Ordinance No. 24 converting or re-classifying the subjetc 114-hectare land from agricultural to industrial/institutional use with a view of providing an opportunity to attrack investors who can inject new economic vitality, provide more jobs and raise the income of its people. The said project was also supported by the Bukidnon Provincial Board which, on the basis of a Joint Committee Report submitted by its Committee on Laws, Committee on Agrarian Reform and Socio-Economic Committee, approved the said ordinance on February 1, 1994, now docketed as Resolution No. 94-95. Impressed with the proposed project, several government agencies and a private cooperative, including the people of the affected barangay, recommended the same. Again, we quote the pertinent portion of the OP Decision of march 29, 1996; The said NQSRMDC Proposal was, per Certification dated January 4, 1995, adopted by the Department of Trade and Industry, Bukidnon Provincial Office, as one of its flagship projects. The same was likewise favorably recommended by the Provincial Development Council of Bukidnon; the municipal, provincial and regional office of the DAR; the Regional Office (Region X) of the DENR (which issued an Environmental Compliance Certificate on June 5, 1995); the Executive Director, signing "By Authority of PAUL G. DOMINGUEZ," Office of the President Mindanao, the Secretary of DILG; and Undersecretary of DECS Wilfredo D. Clemente. In the same vein, the National Irrigation Administration, Provincial Irrigation Office, Bagontaas Valencia, Bukidnon, thru Mr. Julius S. Maquiling, Chief, Provincial Irrigation Office, interposed NO OBJECTION to the proposed conversion . . . . Also, the Kisolon-San Vicente Irrigators Multi Purpose Cooperative, San Vicente, Sumilao, Bukidnon, interposed no objection to the proposed conversion of the land in question as it will provide more economic benefits to the community in terms of outside investments that will come and employment opportunities that will be generated by the projects to be put up . . . . On the same score, it is represented that during the public consultation held at the Kisolan Elementary School on 18 March 1995 with Director Jose Macalindog of DAR Central Office and DECS Undersecretary Clemente, the people of the affected barangay rallied behind their respective officials in endorsing the project. 26(Emphasis supplied) In this regard, the petitioners gave this assurance: "The proposed project is petitioners' way of helping insure food, shelter and lifetime security of the greater majority of Sumilao's 22,000 people. It is capable of employing thousands of residents, enabling them to earn good income ranging about P40,000.00 to P50,000.00 for each. 27 We express our grave concern with the manner some sectors of society have been trying to influence this Court into resolving this case on the basis of considerations other than the applicable law, rules and settled jurisprudence and the evidence on record. We wish to emphasize that notwithstanding the previous adverse comments by some columnists in the print media, the assailed Decision was arrived at in the pursuit of justice and the rule of law. Finally, for those who refuse to understand, no explanations is possible, but for those who understand, no explanation is necessary. WHEREFORE, the separate motions for reconsideration of the April 24, 1998 Decision of this Court, filed by the respondents and the applicants for intervention, are hereby DENIED with FINALITY. SO ORDERED. Mendoza, J., concur. Melo, J., I join Justice Puno's separate opinion. Puno, J., Please see separate opinion. Melo, Puno, Mendoza and Martinez, JJ., concur.

RESOLUTION After due deliberation on the motions for reconsideration filed by respondents and by movants Paterno Tuminhay,et al., the members of the Court voted as follows: Martinez, J., joined by Mendoza, J., to deny the motions for reconsideration; Puno, J., joined by Melo, J., to grant the motions for reconsideration filed by the respondents and the intervenors and to remand the case to the Court of Appeals for further and appropriate proceedings. As the necessary vote of three (3) members cannot be obtained, the motions for reconsideration are deemed denied and the decision promulgated on April 24, 1998 is AFFIRMED, Melo, J., Acting Chairman, that under Article VIII, Section 4(3) of the Constitution, the ution of the motions for reconsideration should be referred to the En Banc in view of the 2-2 vote. The opinions of Martinez, J. and Puno, J., are hereto attached.

Separate Opinions

PUNO, J., separate opinion; The salient facts are well established. The instant controversy originated from an application for land use conversion filed on December 11, 1993 before the DAR by Mr. Gaudencio Beduya in behalf of the Bukidnon Agro-Industrial Development Association (BAIDA) and petitioner NQSR Management and Development Corporation concerning its 144-hectars land in San Vicente, Sumilao Bukidnon. In and Oder 1 dated November 14, 1994, DAR Secretary Ernesto D. Garilao denied the application for conversion of the land from agricultural to agro-industrial use and ordered its distibution to qualified landless farmers. BAIDA and NQSR Management and Development Corporation filed a motion for reconsideration 2 dated January 9, 1995, which was, however, denied in an Order 3dated June 7, 1995, which was, however, denied in an Order 3 dated June 7, 1995. Thereafter, Bukidnon Governor Carlos O. Fortich sent a letter 4 to President Fidel V. Ramos requesting him to suspend the Garilao Order and to confirm the ordinance enacted by the Sangguniang Bayan of Sumilao converting the subject land from agricultural to insdustrial/institutional land. Acting on the letter, then Executive Secretary Torres reversed the Garilao Order and upheld the power of local government units to convert portions of their agricultural lands into industrial areas. 5 Respondent DAR Secretary Garilao filed a motion for reconsiderations, admittedly tardy, which was denied by then Executive Secretary Torres on the ground that his March 29, 1996 decision had already become final and executory in view of the lapse of the fifteen-day period for filling a motion for reconsideration. A second motion for reconsideration was filed during the pendency of which President Ramos constituted the Presidential Fact-Finding Task Force. On November 7, 1997, Deputy Executive Secretary Corona issued the herein-assailed "win-win" resolution which, pursuant to the recommendations of the task force, substantially modified the Torres decision by awarding one (100) hectares of the Sumilao property to the qualified farmer beneficiaries and allocating only forty four (44) hectares for the establishment of an industrial and commercial zone. In our decison promulgated in Baguio City on April 24, 1998, we annulled the "win-win" resolution on the ground that public respondent Deputy Executive Secretary Renato C. Corona committed grave abuse of discretion in modifying an already final and executory decison of then Executive Secretary Ruben D. Torres. It is undisputed that the Department of Agrarian Reform (DAR) failed 6 to comply with the fifteen-day period for filling a motion for reconsideration. It received the Torres decison on April 10, 1996 but 7 transmitted its for mailing to the Office of the President only on May 23, 1997. The Office of the President received the motion on July 14, 1997. Forthwith, we applied the rule on finality of administrative determinations and upheld the policy of setting an end to litigation as an indispensable aspect of orderly administration of justice. In their motions for reconsideration, respondent and intervenors protest the technical basis of our decision.

I vote to grant their motions for reconsideration and remand the case to the Court of Appeals. First. It is true that procedural rules are necessary to secure just speedy and inexpensive disposition of every action and 8 9 proceeding. Procedure, however, is only a means to an end, and they may be suspended when they subvert the interests of justice. It is sel-evident that the prerogative to suspend procedural rules or to grant an exception in a particular case lies in the authority that promulgated the rules. 10 Rules concerning pleading, practice and procedure in all courts are promulgated by this Court. 11 On the other hand, it is the President as administrative head who is vested by the Administrative Code of 1987 to promulgate rules relating to governmental operations, including administrative procedure. These rules take the form of administrative orders. 12 This power is necessary for the President to discharge his constitutional duty of faithfully executing our law. 13 Under exceptional circumstances, this Court has suspended its rules to prevent miscarriage of justice. In the same breath, we should hold that the President has the power to suspend the effectivity of administrative rules of procedure when they hamper, defeat or in any way undermine the effective enforcement of the laws of the land. Indeed, we already recognize that Congress can suspend its own rules if doing so will enable it to facilitate its task of lawmaking. The three great branches of our government are co-equal and within their own sphere they have the same responsibility to promote the good of our people. There is no reason to withhold the power to suspend rules from the President and grant it alone to the two other branches of government. A closer scrutiny of the records in the instant case reveals that the fifteen-day rule for filling a motion for reconsideration under Section 7 of Administrative Order No. 18 was suspended by the President when he constituted, on October 15, 1997 or some six (6) months after the promulgation of the Torres decision, the Presidential Fact-Finding Task Force to conduct a comprehensive review of the proper land use of the 144-hectare Sumilao property. At that time, then Executive Secretary Torres had already denied the first motion for reconsideration of the DAR on the ground that his March 29, 1997 decision had already become final and executory. This notwithstanding, the President treated the case as still open and stated in his memorandum that the findings of the Presidential Fact-Finding Task Force" will be inputs to the resolution of the case now pending at the Office of the President regarding the said land" (emphasis ours). 15 The President took cognizance of the special circumstances surrounding the tardy filing by the DAR of its motion for reconsideration. The DAR lawyers assigned to the Sumilao case received the Torres decision only, after the lapse of the reglementary fifteen-day period for appeal. The copy of the decision intended for them was passed from one office to another, e.g., the Records Section of the DAR, the Office of the DAR Secretary, the Bureau of Agrarian Legal Assistance, before it finally reached the DAR Litigation Office. It does not appear to be just that DAR will be made to lose a significant case because of bureaucratic lapses. Viewed in this context, we should rule that the President suspended the effectivity of Section 7 of Administrative Order No. 18 and that his exercise of discreation in this regard cannot be assailed as whimsical. I also repectfully submit this act of the President also finds full sanction under the corollary principles of presidential power of control and qualified political agency. This presidential power of control over the executive branch of government extends over all executive officers from Cabinet Secretary to the lowliest clerk and has been held by us, in the landmark case of Mondono vs. Silvosa to mean "the power of [the President] to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former with that of the latter." It is said to be at the very "heart of the meaning of Chief Executive". Equally well accepted, as a corollary rule to the control powers of the President, is the "Doctrine of Qualified Political Agency." As the President cannot be expected to exercise his control powers all the same time and in person, he will have to delegate some of them to his Cabinet members. Under this doctrine, which recognizes the establishment of a single executive, "all executive and administrative organizations are adjuncts of the Executive Department, the heads of the various executives departments are assitants and agents of the Chief Executive, and, except in cases where the Chief Executive is required by the Constitution or law to act in person o[r] the exigencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the Secretaries of such departments, performed and promulgated in the regular course of business, are, unless dissapproved or reprobated by the Chief Executive presumptively the acts of the Chief Executive". . . .

Thus, and in short, "the President's power of control is directly exercised by him over the members of the Cabinet who, in turn, and by his authority, control the bureaus and other offices under their respective jurisdictions in the executive department." 16 By suspending the fifteen-day period for filing a motion for reconsideration and re-opening the Torres decision, the President clearly exercised his control power over an alter-ego within the framework of a constitutional and presidential system of governance. The President's suspension of the fifteen-day rule for filing a motion for reconsideration cannot be characterized as arbitrary. The Sumilao problem raises fundamental issues which conflict between land reform and the industrialization of the countryside, the power of control by the President over his alter-ego vis-a-vis the power of local governments to convert agricultural land to industrial land. The resolution of these issues has far reaching implications on the issues of our land reform program. Indeed, their successful resolution can bring peace or rebellion in our contryside. The President should not be frustrated by an administrative procedural rule that he himself promulgated, from formulating a creative, legal solution to the Sumilao problem. There is no denying the liberal interpretation equally accorded to both administrative and judicial rules in order to promote their object to the extent that technicality be not a bar to the vindication of a legitimate grievance. We have trumpeted the truism that when technicality ceases to be an aid to justice, the courts are justified in excepting from its operation a paricular case. 17 We ought not to deny the same power to the Chief Executive who heads a co-equal branch of government. Second. The petitioners are estopped from assailing the authority of the Office of the President to re-open the Sumilao case and resolve it based on the report of the Presidential Fact-Finding Task Force. Undeniably, petitioners participated in the processes conducted by the task force. Their participation in the administrative proceedings without raising any objection thereto, bars them from raising any jurisdictional infirmity after an adverse decision is rendered against them. 18 Petitioners Carlos O. Fortich and Rey B. Baula, Bukidnon Governor and Sumilao Mayor, respectively, were named members of the task force. 19 The president ordered the task force to confer with the representatives of, among others, the landowner, namely, petitioner NQSR Management and Development Corporation. 20 In a letter dated October 20, 1997 addressed to the President, the counsel for NQSR Management and Development Corporation expressed its reluctance "to comment on the merits and demerits of the (motion for intervention and motion to admit additional evidence filed by the farmer beneficiaries] out of respect of the Regional Trial Court and the Court of Appeals where these cases are presently pending. 21NQSR Management and Development Corporation, however, did not question the authority of the President to constitute the task force despite its express adherence to the declaration made by then Executive Secretary Torres as to the finality of his March 29, 1997 decision. It was confident that its interests would be promoted and protected by Bukidnon Governor Fortich who himself filed the appeal from the order of DAR Secretary Garilao 22and Sumilao Mayor Baula who certified as correct Resolution No. 24 approved by the Sangguniang Bayan of Sumilao on March 4, 1993 converting the 144-hectare property from agricultural to industrial/institutional land. 23But when "win-win" resolution was issued by the Office of the President on November 7, 1997, allowing the conversion into industrial land of only forty four (44) hectares of the 114-hectare Sumilao property and ordering the distribution of the rest to qualified farmer beneficiaries, petitioners were flabbergasted. Mr. Norberto Quisumbing, Jr. could hardly hide his disdain over that resolution in his letter to the provincial agrarian reform officer protesting as absurd and arbitrary the valuation of the 100 hectares at P5.1 million pesos. That resolution was allegedly an "unprecedented turn-around which is most difficult for the discerning public to appreciate 24 The "win-win" resolution being adverse to petitioners, they now assail the authority of the President to modify the Torres decision. Under the above-mentioned circumstances, however, the principle of estoppel applies to effectively bar petitioners from raising the 25 issue of jurisdiction. While lack of jurisdiction of the court or quasi-judicial body may be assailed at any stage, a party's active 26 participation in the proceedings before it will estop him from assailing its lack of jurisdiction. This Court has always frowned upon the undesirable practice of a party submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse. 27 Third. Considering the special circumstances of the case as detailed above, it would better serve the ends of justice to obtain a definitive resolution of the issues raised in the instant petition and remand the same to the Court of Appeals where jurisdiction over this appeal lies. Noteworthy, is the pendency in the Court of Appeals of two more cases involving the Sumilao property: (1) Petition for Certiorari and Prohibition, entitled, "N.Q.S.R. Management & Development Corporation and Bukidnon Agro-Industrial Association, Petitioners, vs. Hon. Ernesto Garilao, Secretary of the Department of Agrarian Reform; Rogelio E. Tamin, DAR Regional Director, Region X; Nicanor Peralta, Provincial Agrarian Reform Officer, Region X; Dolores Apostol, Municipal Agrarian Reform 28 Officer, Sumilao, Bukidnon, Respondent;" and (2) Petition, for Certiorari and Prohibition, entitled, "Rodolfo Buclasan, et al., Petitioners, vs. Hon. Leonardo N. Demecillo, as Judge of RTC, Malaybalay, Bukidnon, Branch IX and NQSR Management and Development Corporation, Respondent. 29

The remand of the instant petition to the Court of Appeals would enable said court to consolidate the same with the two other cases pending there which undoubtedly contemplate of the same factual milieu and raise invariably the same issues as in this petition, leaving no room for further confusion that will surely be wrought by the rendition of conflicting decisions affecting a single controversy. For the above reasons, I vote to grant the motions for reconsideration filed by the respondents and the intervenors who should be allowed to intervene pursuant to sec, 1, Rule 19 and to remand the instant petition to the Court of Appeals for appropriate proceedings. Separate Opinions PUNO, J., separate opinion; The salient facts are well established. The instant controversy originated from an application for land use conversion filed on December 11, 1993 before the DAR by Mr. Gaudencio Beduya in behalf of the Bukidnon Agro-Industrial Development Association (BAIDA) and petitioner NQSR Management and Development Corporation concerning its 144-hectars land in San Vicente, Sumilao Bukidnon. In and Oder 1 dated November 14, 1994, DAR Secretary Ernesto D. Garilao denied the application for conversion of the land from agricultural to agro-industrial use and ordered its distibution to qualified landless farmers. BAIDA and NQSR Management 2 and Development Corporation filed a motion for reconsideration dated January 9, 1995, which was, however, denied in an 3 Order dated June 7, 1995, which was, however, denied in an Order 3 dated June 7, 1995. Thereafter, Bukidnon Governor Carlos O. Fortich sent a letter 4 to President Fidel V. Ramos requesting him to suspend the Garilao Order and to confirm the ordinance enacted by the Sangguniang Bayan of Sumilao converting the subject land from agricultural to insdustrial/institutional land. Acting on the letter, then Executive Secretary Torres reversed the Garilao Order and upheld the power of local government units to convert portions of their agricultural lands into industrial areas. 5 Respondent DAR Secretary Garilao filed a motion for reconsiderations, admittedly tardy, which was denied by then Executive Secretary Torres on the ground that his March 29, 1996 decision had already become final and executory in view of the lapse of the fifteen-day period for filling a motion for reconsideration. A second motion for reconsideration was filed during the pendency of which President Ramos constituted the Presidential Fact-Finding Task Force. On November 7, 1997, Deputy Executive Secretary Corona issued the herein-assailed "win-win" resolution which, pursuant to the recommendations of the task force, substantially modified the Torres decision by awarding one (100) hectares of the Sumilao property to the qualified farmer beneficiaries and allocating only forty four (44) hectares for the establishment of an industrial and commercial zone. In our decison promulgated in Baguio City on April 24, 1998, we annulled the "win-win" resolution on the ground that public respondent Deputy Executive Secretary Renato C. Corona committed grave abuse of discretion in modifying an already final and executory decison of then Executive Secretary Ruben D. Torres. It is undisputed that the Department of Agrarian Reform (DAR) failed to comply with the fifteen-day period for filling a motion for reconsideration. 6 It received the Torres decison on April 10, 1996 but transmitted its for mailing to the Office of the President only on May 23, 1997. 7 The Office of the President received the motion on July 14, 1997. Forthwith, we applied the rule on finality of administrative determinations and upheld the policy of setting an end to litigation as an indispensable aspect of orderly administration of justice. In their motions for reconsideration, respondent and intervenors protest the technical basis of our decision. I vote to grant their motions for reconsideration and remand the case to the Court of Appeals. First. It is true that procedural rules are necessary to secure just speedy and inexpensive disposition of every action and 8 9 proceeding. Procedure, however, is only a means to an end, and they may be suspended when they subvert the interests of justice. It is sel-evident that the prerogative to suspend procedural rules or to grant an exception in a particular case lies in the authority that promulgated the rules. 10 Rules concerning pleading, practice and procedure in all courts are promulgated by this Court. On the other hand, it is the President as administrative head who is vested by the Administrative Code of 1987 to promulgate rules relating to governmental 12 operations, including administrative procedure. These rules take the form of administrative orders. This power is necessary for the 13 President to discharge his constitutional duty of faithfully executing our law. Under exceptional circumstances, this Court has suspended its rules to prevent miscarriage of justice. In the same breath, we should hold that the President has the power to suspend the effectivity of administrative rules of procedure when they hamper, defeat or in any way undermine the effective enforcement of the laws of the land. Indeed, we already recognize that Congress can suspend its own rules if doing so will enable it to facilitate its task of lawmaking. The three great branches of our government are co-equal and within their own sphere they have
11

the same responsibility to promote the good of our people. There is no reason to withhold the power to suspend rules from the President and grant it alone to the two other branches of government. A closer scrutiny of the records in the instant case reveals that the fifteen-day rule for filling a motion for reconsideration under Section 7 of Administrative Order No. 18 was suspended by the President when he constituted, on October 15, 1997 or some six (6) months after the promulgation of the Torres decision, the Presidential Fact-Finding Task Force to conduct a comprehensive review of the proper land use of the 144-hectare Sumilao property. At that time, then Executive Secretary Torres had already denied the first motion for reconsideration of the DAR on the ground that his March 29, 1997 decision had already become final and executory. This notwithstanding, the President treated the case as still open and stated in his memorandum that the findings of the Presidential Fact-Finding Task Force" will be inputs to the resolution of the case now pending at the Office of the President regarding the said land" (emphasis ours). 15 The President took cognizance of the special circumstances surrounding the tardy filing by the DAR of its motion for reconsideration. The DAR lawyers assigned to the Sumilao case received the Torres decision only, after the lapse of the reglementary fifteen-day period for appeal. The copy of the decision intended for them was passed from one office to another, e.g., the Records Section of the DAR, the Office of the DAR Secretary, the Bureau of Agrarian Legal Assistance, before it finally reached the DAR Litigation Office. It does not appear to be just that DAR will be made to lose a significant case because of bureaucratic lapses. Viewed in this context, we should rule that the President suspended the effectivity of Section 7 of Administrative Order No. 18 and that his exercise of discreation in this regard cannot be assailed as whimsical. I also repectfully submit this act of the President also finds full sanction under the corollary principles of presidential power of control and qualified political agency. This presidential power of control over the executive branch of government extends over all executive officers from Cabinet Secretary to the lowliest clerk and has been held by us, in the landmark case of Mondono vs. Silvosa to mean "the power of [the President] to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former with that of the latter." It is said to be at the very "heart of the meaning of Chief Executive". Equally well accepted, as a corollary rule to the control powers of the President, is the "Doctrine of Qualified Political Agency." As the President cannot be expected to exercise his control powers all the same time and in person, he will have to delegate some of them to his Cabinet members. Under this doctrine, which recognizes the establishment of a single executive, "all executive and administrative organizations are adjuncts of the Executive Department, the heads of the various executives departments are assitants and agents of the Chief Executive, and, except in cases where the Chief Executive is required by the Constitution or law to act in person o[r] the exigencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the Secretaries of such departments, performed and promulgated in the regular course of business, are, unless dissapproved or reprobated by the Chief Executive presumptively the acts of the Chief Executive". . . . Thus, and in short, "the President's power of control is directly exercised by him over the members of the Cabinet who, in turn, and by his authority, control the bureaus and other offices under their respective jurisdictions in the executive department." 16 By suspending the fifteen-day period for filing a motion for reconsideration and re-opening the Torres decision, the President clearly exercised his control power over an alter-ego within the framework of a constitutional and presidential system of governance. The President's suspension of the fifteen-day rule for filing a motion for reconsideration cannot be characterized as arbitrary. The Sumilao problem raises fundamental issues which conflict between land reform and the industrialization of the countryside, the power of control by the President over his alter-ego vis-a-vis the power of local governments to convert agricultural land to industrial land. The resolution of these issues has far reaching implications on the issues of our land reform program. Indeed, their successful resolution can bring peace or rebellion in our contryside. The President should not be frustrated by an administrative procedural rule that he himself promulgated, from formulating a creative, legal solution to the Sumilao problem. There is no denying the liberal interpretation equally accorded to both administrative and judicial rules in order to promote their object to the extent that technicality be not a bar to the vindication of a legitimate grievance. We have trumpeted the truism that when technicality

ceases to be an aid to justice, the courts are justified in excepting from its operation a paricular case. same power to the Chief Executive who heads a co-equal branch of government.

17

We ought not to deny the

Second. The petitioners are estopped from assailing the authority of the Office of the President to re-open the Sumilao case and resolve it based on the report of the Presidential Fact-Finding Task Force. Undeniably, petitioners participated in the processes conducted by the task force. Their participation in the administrative proceedings without raising any objection thereto, bars them from raising any jurisdictional infirmity after an adverse decision is rendered against them. 18 Petitioners Carlos O. Fortich and Rey B. Baula, Bukidnon Governor and Sumilao Mayor, respectively, were named members of the task force. 19 The president ordered the task force to confer with the representatives of, among others, the landowner, namely, petitioner NQSR Management and 20 Development Corporation. In a letter dated October 20, 1997 addressed to the President, the counsel for NQSR Management and Development Corporation expressed its reluctance "to comment on the merits and demerits of the (motion for intervention and motion to admit additional evidence filed by the farmer beneficiaries] out of respect of the Regional Trial Court and the Court of Appeals where these cases are presently pending. 21NQSR Management and Development Corporation, however, did not question the authority of the President to constitute the task force despite its express adherence to the declaration made by then Executive Secretary Torres as to the finality of his March 29, 1997 decision. It was confident that its interests would be promoted and 22 protected by Bukidnon Governor Fortich who himself filed the appeal from the order of DAR Secretary Garilao and Sumilao Mayor Baula who certified as correct Resolution No. 24 approved by the Sangguniang Bayan of Sumilao on March 4, 1993 converting the 23 144-hectare property from agricultural to industrial/institutional land. But when "win-win" resolution was issued by the Office of the President on November 7, 1997, allowing the conversion into industrial land of only forty four (44) hectares of the 114-hectare Sumilao property and ordering the distribution of the rest to qualified farmer beneficiaries, petitioners were flabbergasted. Mr. Norberto Quisumbing, Jr. could hardly hide his disdain over that resolution in his letter to the provincial agrarian reform officer protesting as absurd and arbitrary the valuation of the 100 hectares at P5.1 million pesos. That resolution was allegedly an "unprecedented turn-around which is most difficult for the discerning public to appreciate 24 The "win-win" resolution being adverse to petitioners, they now assail the authority of the President to modify the Torres decision. Under the above-mentioned circumstances, however, the principle of estoppel applies to effectively bar petitioners from raising the issue of jurisdiction. 25 While lack of jurisdiction of the court or quasi-judicial body may be assailed at any stage, a party's active participation in the proceedings before it will estop him from assailing its lack of jurisdiction. 26 This Court has always frowned upon the undesirable practice of a party submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse. 27 Third. Considering the special circumstances of the case as detailed above, it would better serve the ends of justice to obtain a definitive resolution of the issues raised in the instant petition and remand the same to the Court of Appeals where jurisdiction over this appeal lies. Noteworthy, is the pendency in the Court of Appeals of two more cases involving the Sumilao property: (1) Petition for Certiorari and Prohibition, entitled, "N.Q.S.R. Management & Development Corporation and Bukidnon Agro-Industrial Association, Petitioners, vs. Hon. Ernesto Garilao, Secretary of the Department of Agrarian Reform; Rogelio E. Tamin, DAR Regional Director, Region X; Nicanor Peralta, Provincial Agrarian Reform Officer, Region X; Dolores Apostol, Municipal Agrarian Reform Officer, Sumilao, Bukidnon, Respondent;" 28 and (2) Petition, for Certiorari and Prohibition, entitled, "Rodolfo Buclasan, et al., Petitioners, vs. Hon. Leonardo N. Demecillo, as Judge of RTC, Malaybalay, Bukidnon, Branch IX and NQSR Management and Development Corporation, Respondent. 29 The remand of the instant petition to the Court of Appeals would enable said court to consolidate the same with the two other cases pending there which undoubtedly contemplate of the same factual milieu and raise invariably the same issues as in this petition, leaving no room for further confusion that will surely be wrought by the rendition of conflicting decisions affecting a single controversy. For the above reasons, I vote to grant the motions for reconsideration filed by the respondents and the intervenors who should be allowed to intervene pursuant to sec, 1, Rule 19 and to remand the instant petition to the Court of Appeals for appropriate proceedings.

JOSE LUIS ANGEL B. OROSA, petitioner, vs. ALBERTO C. ROA, respondent.

DECISION GARCIA, J.: Assailed and sought to be set aside in this petition for review is the Resolution1 dated July 8, 1999 of the Court of Appeals (CA) in CAG.R. SP No. 53190, dismissing the petition for review under Rule 43 of the 1997 Rules of Civil Procedure thereat filed by the herein petitioner from an adverse resolution of the Secretary of Justice. The petition is casts against the following factual backdrop: On November 27, 1996, petitioner, a dentist by profession, filed with the Pasig City Prosecution Office a complaint-affidavit charging respondent Alberto C. Roa, likewise a dentist, with the crime of libel. The complaint, docketed in said office as I.S. No. 96-5442, stemmed from an article entitled "Truth vs. Rumors: Questions against Dr. Orosa" written by respondent and published in the March-April 1996 issue of the Dental Trading Post, a bi-monthly publication of the Dental Exchange Co., Inc. In gist, the article delved into the possibility of a father, who happened to be an examiner in a licensure examination for dentistry where his sons were examinees, manipulating the examinations or the results thereof to enable his children to top the same. In his complaint-affidavit, petitioner alleged that the article in question is defamatory as it besmirched his honor and reputation as a dentist and as the topnotcher in the dental board examinations held in May 1994. Respondent denied the accusation, claiming that the article constitutes a "fair and accurate report on a matter of both public and social concern." He averred that the article in question was not written with malice but with a sincere desire to contribute to the improvement of the integrity of professional examinations. After preliminary investigation, Pasig City Prosecutor Noel Paz issued a Resolution, dismissing petitioner's complaint in this wise: The publication being a bona fide communication on matters of public concern, and made without malice, we find the respondent entitled to the protection of the rule on privileged matters under Article 354 of the Revised Penal Code. Petitioner appealed to the Department of Justice (DOJ). Acting on the appeal, Chief State Prosecutor Jovencito Zuo issued a Resolution (Zuo Resolution), setting aside the findings of the City Prosecutor and directing the latter to file an Information for libel against respondent. Accordingly, in the Regional Trial Court (RTC) of Pasig City, an Information for libel was filed against respondent, thereat docketed as Criminal Case No. 114517. Adversely affected, respondent appealed to the Secretary of Justice. On October 28, 1998, then Justice Secretary Serafin Cuevas reversed the Zuo Resolution and directed the City Prosecutor of Pasig to withdraw the Information earlier filed with the RTC. In compliance therewith, a "Motion to Withdraw Information" was accordingly filed in court by the Pasig City Prosecution Office. Petitioner seasonably moved for a reconsideration but his motion was denied by the Secretary of Justice in his Resolution of May 12, 1999. Therefrom, petitioner went to the CA on a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, docketed as CAG.R. No. SP No. 53190. As stated at the outset hereof, the CA, in the herein assailed Resolution dated July 8, 1999, dismissed petitioner's petition for review. Partly says the CA in its dismissal Resolution: The Pasig City Prosecution Office and the Department of Justice are not among the quasi-judicial agencies included in Section 1 of Rule 43 whose final orders or resolutions are subject to review by the Court of Appeals. The Supreme Court in its Resolution En Banc dated April 8, 1997, approving the 1997 Rules of Civil Procedure in Bar Matter No. 803, did not include final orders or resolutions issued by these agencies as appealable under Rule 43. The Court of Appeals is therefore not at liberty to supply the omissions in the Rule, that would constitute an encroachment on the rule making power of the Supreme Court.3
2

With his motion for reconsideration having been denied by the CA in its subsequent Resolution of October 14, 1999, petitioner is now with this Court on his submission that the appellate court erred: I XXX IN HOLDING THAT THE RESOLUTIONS OF THE DEPARTMENT OF JUSTICE ARE NOT REVIEWABLE BY IT UNDER RULE 43 OF THE 1997 RULES OF CIVIL PROCEDURE. II XXX IN FINDING THE PETITION IN CA G.R. SP NO. 53190 [WAS] PREMATURELY FILED. III XXX IN HOLDING THAT THE RESOLUTIONS OF THE DEPARTMENT OF JUSTICE ASSAILED IN CA G.R. SP NO. 53190 ARE NOT REVIEWABLE UNDER RULE 65 (sic) OF THE 1997 RULES OF CIVIL PROCEDURE SINCE THESE RESOLUTIONS WERE ISSUED BY THE SECRETARY OF JUSTICE IN THE EXERCISE OF HIS POWER OF CONTROL AND SUPERVISION OVER PROSECUTORS. IV XXX IN NOT RESOLVING THE PETITION IN CA G.R. SP NO. 53190 ON THE MERITS. V XXX IN NOT REVERSING THE ASSAILED RESOLUTION OF THE DEPARTMENT OF JUSTICE IN CA G.R. SP NO. 53190 ON THE FOLLOWING GROUNDS: a. RESPONDENT'S APPEAL FROM THE RESOLUTION OF THE DEPARTMENT OF JUSTICE, THROUGH THE CHIEF STATE PROSECUTOR, DATED JANUARY 22, 1998, WAS FATALLY DEFECTIVE. b. RESPONDENT'S ARTICLE WAS DEFAMATORY. c. MALICE ATTENDED THE PUBLICATION OF RESPONDENT'S ARTICLE. d. RESPONDENT'S ARTICLE WAS NOT PROTECTED BY THE MANTLE OF PRIVILEGED MATTER. As the Court sees it, the petition commends for its consideration the issue of whether or not a petition for review under Rule 43 of the 1997 Rules of Civil Procedure is a proper mode of appeal from a resolution of the Secretary of Justice directing the prosecutor to withdraw an information in a criminal case. It is petitioner's thesis that Rule 43 was intended to apply to all quasi-judicial agencies exercising quasi-judicial functions. Upon this premise, petitioner submits that resolutions of the DOJ in the exercise of its quasi-judicial functions are properly appealable to the CA via a petition for review under Rule 43, adding that the quasi-judicial bodies enumerated under said Rule are not exclusive. Petitioner's above posture, while valid to a point, will not carry the day for him. Rule 43 governs all appeals from the Court of Tax Appeals and quasi-judicial bodies to the CA. Section 1 thereof provides: Section 1. Scope. This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals, and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasijudicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service and Insurance System, Employees' Compensation Commission, Agricultural Inventions Board,

Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. As may be noted, the DOJ is not among the agencies expressly enumerated under Section 1 of Rule 43, albeit any suggestion that it does not perform quasi-judicial functions may have to be rejected. However, its absence from the list of agencies mentioned thereunder does not, by this fact alone, already imply its exclusion from the coverage of said Rule. This is because said Section 1 uses the phrase "among these agencies," thereby implying that the enumeration made is not exclusive of the agencies therein listed. There is compelling reason to believe, however, that the exclusion of the DOJ from the list is deliberate, being in consonance with the constitutional power of control4 lodged in the President over executive departments, bureaus and offices. This power of control, which even Congress cannot limit, let alone withdraw, means the power of the Chief Executive to review, alter, modify, nullify, or set aside what a subordinate, e.g., members of the Cabinet and heads of line agencies, had done in the performance of their duties and to substitute the judgment of the former for that of the latter.5 Being thus under the control of the President, the Secretary of Justice, or, to be precise, his decision is subject to review of the former. In fine, recourse from the decision of the Secretary of Justice should be to the President, instead of the CA, under the established principle of exhaustion of administrative remedies. The thrust of the rule on exhaustion of administrative remedies is that if an appeal or remedy obtains or is available within the administrative machinery, this should be resorted to before resort can be made to the courts.6 Immediate recourse to the court would be premature and precipitate; 7 subject to defined exception, a case is susceptible of dismissal for lack of cause of action should a party fail to exhaust administrative remedies.8 Notably, Section 1, supra, of Rule 43 includes the Office of the President in the agencies named therein, thereby accentuating the fact that appeals from rulings of department heads must first be taken to and resolved by that office before any appellate recourse may be resorted to. Given the above perspective, the question of whether or not a preliminary investigation is a quasi-judicial proceeding, as petitioner posits, or whether or not the Secretary of Justice performs quasi-judicial functions when he reviews the findings of a state or city prosecutor is of little moment. The Court wishes, however, to draw attention to what it said in Santos v. Go9 where the Court, citing Bautista v. Court of Appeals,10 stated: [t]he prosecutor in a preliminary investigation does not determine the guilt or innocence of the accused. He does not exercise adjudication nor rule-making functions. Preliminary investigation is merely inquisitorial, and is often the only means of discovering the persons who may be reasonably charged with a crime and to enable the fiscal [prosecutor] to prepare his complaint or information. It is not a trial of the case on the merits and has no purpose except that of determining whether a crime has been committed and whether there is probable cause to believe that the accused is guilty thereof. While the fiscal [prosecutor] makes that determination, he cannot be said to be acting as a quasi-court, for it is the courts, ultimately that pass judgment on the accused, not the fiscal [prosecutor]. (Words in bracket ours) While now perhaps anti-climactic to delve into, the ensuing holdings of the appellate court are worth quoting: The petition is premature. The Information charging respondent with the crime of libel, docketed as Criminal Case No. 114517, is now with Branch 155 of the Regional Trial Court in Pasig City. Thus understood, the said trial court has now the control of the case. The remedy of petitioner is to reiterate the reasons or grounds alleged in his present petition by way of an appropriate opposition to the Pasig City Prosecution Office's "Motion to Withdraw Information" dated November 5, 1998, filed in compliance with the assailed directive of the Secretary of Justice. Having control of the case, the trial court can look into the claim of petitioner. This will enable the trial court to rule on the matter first without the precipitate 11 intervention of this Court. In other words, this is a prerequisite to the elevation of the case to this Court. In view of the foregoing disquisition, the Court deems it unnecessary to address the other issues raised in the petition. WHEREFORE, the instant petition is DENIED and the assailed resolution of the Court of Appeals is AFFIRMED. SO ORDERED.

G.R. No. 141897

September 24, 2001

METRO CONSTRUCTION, INC., petitioner, vs. CHATHAM PROPERTIES, INC., respondent. DAVIDE, JR., C.J.: The core issue in this case is whether under existing law and rules the Court of Appeals can also review findings of facts of the Construction Industry Arbitration Commission (CIAC). Respondent Chatham Properties, Inc. (CHATHAM) and petitioner Metro Construction, Inc. (MCI) entered into a contract for the construction of a multi-storey building known as the Chatham House located at the corner of Herrera and Valero Streets, Salcedo Village, Makati City, Metro Manila. In April 1998, MCI sought to collect from CHATHAM a sum of money for unpaid progress billings and other charges and instituted a request for adjudication of its claims with the CIAC. The case was docketed as CIAC Case No. 1098. The arbitral tribunal was composed of Joven B. Joaquin as Chairman, and Beda G. Fajardo and Loreto C. Aquino as members. The preliminary conference before the CIAC started in June 1998 and was concluded a month after with the signing of the Terms of Reference (TOR) of the Case.1 The hearings immediately started with the presentation of MCI's witnesses, namely: Ms. Ma. Suzette S. Nucum, Chief Accountant; Ms. Isabela Redito, Office Engineer; Mr. John Romulo, Field Manager; and Dr. John Y. Lai, President. CHATHAM's witnesses were: Engr. Ruperto Kapunan III, Managing Director of RK Development and Construction Co., Inc. (RKDCCI), which was the Construction Manager firm hired by CHATHAM to oversee the construction work of the Chatham House; Engr. Alex Bautista, Area Manager of RKDCCI; Mr. Avelino M. Mercado, CHATHAM's Project Manager; and Engr. Jose T. Infante. In the meantime, the TOR was amended and finalized on 19 August 1998.2 The facts, as admitted by the parties before the CIAC and incorporated in the original TOR, are as follows: 1. On 21 April 1994, the parties formally entered into a . . . contract for the construction of the "Chatham House" . . . for the contract price of price of P50,000,000.00 inclusive of value-added tax, subject to adjustments in accordance with Article 9 of the contract. Construction of the project, however, commenced on 15 April 1994 upon the release by CHATHAM of the down payment 2. On 12 July 1994, a Supplemental Contract was executed by and between the parties whereby CHATHAM authorized MCI to procure in behalf of the former materials, equipment, tools, fixtures, refurbishing, furniture, and accessories necessary for the completion of the project. 3. Under Section I.04 of the Supplemental Contract, the total amount of procurement and transportation cost[s] and expenses which may be reimbursed by MCI from CHATHAM shall not exceed the amount of P75, 000,000.00. 4. In the course of the construction, Change Orders No. 1, 4, 8A, 11, 12 and 13 were implemented, payment of which were recommended by x x x RKDCCI and approved by one of CHATHAM's Project Managers, Romulo F. Sugay. 5. On 15 September 1995, CHATHAM through its Project Manager, Romulo F. Sugay, agreed to give P20,000 per floor for five (5) floors, or a total of P100,000.00 as bonus/incentive pay to MCI's construction workers for the completion of each floor on schedule. CHATHAM reimbursed MCI the amount of P60,000.00 corresponding to bonuses advanced to its workers by the latter for the 14th, 16th, and 17th floors. 6. CHATHAM's payments to MCI totaled P104,875,792.37, representing payments for portions of MCI's progress billings and x x x additional charges. The parties then stipulated on the following issues, again, as set forth in the TOR: 1. Is MCI entitled to its claims for unpaid progress billings amounting to P21,062,339.76?

2. Were the approved Change Orders 1, 4, 8a, 11, 12 and 13 fully paid by CHATHAM? If not, is MCI entitled to its claim for the unpaid balance? 3. Is CHATHAM liable for Change Orders 7a, 7b, 10, 14, 15, 16, 17, 19 and 20? 4. Were the CHB works from the 8th to the 31st floors part of the original contract or in the nature of extra/additional works? Is CHATHAM liable for the same? If so, how much? 5. Is MCI entitled to an additional reimbursement of P40,000.00 for bonuses granted to workers as an incentive for the early completion of each floor? 6. Were the deductions in the amount of P1,393,458.84 made by CHATHAM in MCI's progress billing reasonable? 7. Is MCI's claim of P1,646,502.00 for labor escalation valid? 8. Is MCI entitled to payment of attendance fee? To what extent and how much? 9. Did MCI fail to complete and/or deliver the project within the approved completion period? If so, is MCI liable for liquidated damages and how much? 10. Whether or not CHATHAM is entitled to claim x x x actual damages? If so, to what extent and how much? 11. Whether or not CHATHAM is entitled to x x x additional counterclaims as follows: 11.1. Core testing expenses and penalty for concrete strength failure P3,630,587.38. 11.2. Expenses to rectify structural steel works for the foundation P1,331,139.74. 11.3. Cost of additional materials (concrete & rebars) supplied by CPI P5,761,457.91. 12. Are the parties entitled to their respective claims for attorney's fees and cost of litigation? If so, how much?3 In the resolution of these issues, the CIAC discovered significant data, which were not evident or explicit in the documents and records but otherwise revealed or elicited during the hearings, which the CIAC deemed material and relevant to the complete adjudication of the case. In its decision of 19 October 1998, 4 the CIAC made the following findings and conclusions: It was established during the hearing that the contract was awarded to MCI through negotiation as no bidding was conducted, x x x It was also revealed that two agreements were entered into, one is labeled Construction Contract for the total fixed amount of P50,000,000.00 and the other a Supplemental Contract for an amount not to exceed P75,000,000.00. The latter is supposed to cover the procurement of materials for the project. The Construction Contract provides for monthly progress billings and payments based on actual accomplishments of the various phases of work. The Supplemental Contract provides for; reimbursement of [the] total amount of procurement and transportation costs and expenses, upon MCI's presentation of suppliers' invoices/receipts. However, from testimonies of witnesses from both parties, it was revealed that the two distinct manner(s) of payment to MCI was set aside. The earlier attempt by CHATHAM to prove that MCI was remiss in submitting suppliers' invoices and/or receipts in support of its billings against the Supplemental Contract was in fact later on abandoned when CHATHAM's witness Mercado admitted that the matter of adherence to the payment provision of the Supplemental Contract is a 'nonissue.' This was borne out by the fact that progress billings and payments under both contracts were made on the basis of percentage of project completion. Both documentary and testimonial evidence prove that, effectively, the construction contract and supplemental contract is but one agreement for a lump sum contract amount of P125,000,000.00. xxx xxx xxx

There was also the admitted fact that the contract was negotiated and awarded in the absence of a complete construction plan. In any case, in support of the total contract amount of P125 million, is a Cost Breakdown (Exh. 17-L), where the estimated quantities of owner furnished materials (OFM) are indicated. It is however, understood that these quantities are estimates, based on (an) incomplete set of construction plans. It is likewise understood that except for the OFM, all the other costs in the Cost Breakdown form the basis for the lump-sum agreement under the contract, subject to adjustment only if there are any significant changes in the contract plans. RKDCCI in its letter to MCI dated 15 Feb. 1995 (Exh. 4), informed MCI that it was confirming the agreement allegedly accepted by Dr. Lai that the Building Committee will take over the management of the construction operations (of the project) albeit under certain conditions. Specifically, the take over was for an interim period and will extend only after concreting of up to basement level 5 or up to 30 May 1995 whichever is later. The letter also stated that the Building Committee . . . will be responsible for management and direction including management of MCI engineers at the site, sequencing of work, additional labor, additional equipment and management of the yard and staging area. The letter, however, emphasized that the intent is not a take over of the contract or take over of the entire work and in fact, it was mentioned that MCI will still be responsible for earth anchoring and steel fabrication work. CHATHAM claims that the interim take-over was necessitated by MCI's delay in the progress of its work, due allegedly to MCI's lack of manpower and equipment. During the hearings of this case, this claim of MCI's lack of manpower, necessary equipment, qualified engineers and inefficient construction management was testified to by both Mr. Mercado [of CHATHAM] and Engr. Kapunan of RKDCCI. CHATHAM's witnesses, however, testified that in spite of these alleged deficiencies, MCI was nevertheless allowed to continue to take full control of the operations. When asked why termination of the contract was not resorted to if truly, MCI was not performing its contracted obligations, witnesses Mercado and Kapunan cited "special relations" between the owner of MCI (Dr. John Lai) and the president of CHATHAM (Mr. Lamberto Ocampo) as the reason. On the other hand, Dr. Lai contends that, as explained in his letter to CHATHAM dated 17 February 1995, (Exh. 4-A) MCI's work was on schedule. During the hearings, Dr. Lai also insisted that beginning 15 February 1995, MCI was relieved of full control of the construction operations, that it was relegated to (be) a mere supplier of labor, materials and equipment, and that the alleged interim takeover actually extended through the completion of the project. Dr. Lai cited CHATHAM's purchases of materials, fielding labor force and sub-contracting works allegedly for the project without his knowledge and consent as proof that CHATHAM had taken full control of the project. To the above allegation of MCI that CHATHAM went ahead and procured materials, hired labor and entered into subcontract agreements with the intention of eventually charging the costs thereof to MCI, witness Mercado countered, that CHATHAM has the right to do this under the provisions of Article 27 of the contract, dealing with 'Recision, Cancellation, Termination of Contract.' By way of responding to the various counterclaims of CHATHAM, MCI referred to a letter of the former addressed to MCI dated 18 January 1997 (Exhibit E-1) the first paragraph of which reads as follows: After evaluating all the documents issued and received from both Chatham Properties Inc. and Metro Construction, Inc., the Building Committee of Chatham Properties, Inc. evaluated them. The Building Committee finds the total receivable of Metro Construction is in the amount of EIGHT MILLION PESOS (P8,000,000.00) only. When queried by the Tribunal if the said amount already took into account the costs and expenses, (Chatham) claims to have incurred for the account of MCI, Mr. Mercado answered in the affirmative. When queried further how the amount was arrived at, Mr. Mercado replied that it was the sum the Building Committee figured it was willing to pay MCI simply to close the issue. Mr. Mercado even added that while MCI is not actually entitled to this amount, it was out of a friendship" that CHATHAM offered this sum to MCI as final settlement under the contract. It is with the above attendant circumstances that this Tribunal will be guided in the resolution of issues brought before it for adjudication. From what this Tribunal finds as peculiar circumstances surrounding the contracting and implementation of the CHATHAM House Project. it arrived at the following fundamental conclusions:

1. That indeed 'special friendly relations' were present between the parties in this case, although decisions by either party on any particular issue were made not purely on the basis of such special relations. For example, this Tribunal believes that, contrary to the allegation of (CHATHAM's) witnesses, the decision not to terminate the contract was not due to the admitted 'special relations' only, but also due to the greater problems the project would be faced with by terminating the MCI contract and mobilizing another contractor. 2. That while there was no official termination of the contract, the manner by which CHATHAM had taken upon themselves the procurement of materials, the fielding of labor, the control over MCI's engineers, and the subcontracting of various phases of work on its own, is considered by this Tribunal as implied termination of the contract. The idea of allowing MCI to remain on the project in spite of what CHATHAM claims. (to be) MCI's shortcomings, and MCI's agreement to stay on the project under conditions set by CHATHAM, is believed a matter of mutual benefit to both parties. 3. That CHATHAM's invoking its rights under the provisions of Article 27 of the construction contract is believed out of place, as it failed to observe the required antecedent acts before it can exercise its prerogative under the said contract provision. 4. That there is no reason to believe, either party was in any way guilty of bad faith in acting as it did on certain relevant matters. However, this Tribunal is of the belief that due perhaps to the eagerness on the part particularly of CHATHAM's representatives to take such steps it considered necessary to insure completion of the project within the period desired by CHATHAM, it deviated from some generally accepted procedures in the construction industry in dealing with MCI. One example was not giving MCI the opportunity to rectify some of what CHATHAM considered as construction deficiencies and instead engaging the services of other parties to undertake the corrective works and later on charging the costs thereof to MCI. In addition to the above conclusions resulting from what this Tribunal considered peculiar of circumstances surrounding the implementation of the project that were revealed during the proceedings of this case, this Tribunal finds the necessity of establishing a cut-off date with regard to the fiscal liability of one party towards the other. Mr. Avelino Mercado of CHATHAM presented a list of what he claims as its Payments to MCI (Exhibit 7) summarized as follows: a. Down payment (Paid in two equal trances b. Cash Advance for Mobilization c. Payments of Progress Billings up to Billing No. 19 d. Other Payments (Mar 1994 to Apr. 1996) e. Advances on MCI Payrolls (April 1996 to March 1997) Total P 20,000,000.00 800,000.00 71,081,183.44 5,474,419.67 8,196,755.51 P 104,752,358.42

The records of this case show that the last progress payment to MCI was in January 1996 representing payment of Progress Billing No. 19 for the period ending 31 December 1995. The percentage of completion claimed then by MCI was 80.02%, the amount evaluated and eventually paid to MCI was the equivalent of 77.15% work accomplishment. No further progress payments were made thereafter, other than for advances to cover MCI payrolls from April 1996 to March 1997 in the amount of P8,196,755.51 and for various advances and payments of approved change orders in the amount of P5,474,419.67. In the meantime, up to Billing No. 23 for the period ending 30 April 1996, MCI billed CHATHAM a total accomplishment of 95.29%. This billing was however, evaluated by CHATHAM, and in its letter to MCI dated 27 May 1996 (Exhibit E) it confirmed that MCI's remaining balance of work stands at P7,374,201.15 as of 23 May 1996. This amount, percentage-wise, equals roughly 5.88% of the contract amount as testified to by Engr. Jose Infante. (Exhibit 22-B). Therefore, what was computed as MCI's work accomplishment as of 23 May 1996 was 94.12% and it is this evaluation which this Tribunal believes MCI is entitled to as of said date.

Applying this percentage of completion of 94.12% to the P125,000,000.00 contract amount gives a total accomplishment equivalent to P117,650,000.00 as of 23 May 1996. Add to this amount the sum of P5,353,091.08 representing the total of approved Change Orders as of 31 December 1995 gives a total MCI accomplishment of P123,003,091.08, as CHATHAM saw it. Of this amount, CHATHAM admitted having paid MCI the total sum of P104,752,358.42 only (Exhibit 7) up to March 15, 1997, leaving a balance of P18,250,732.66. It should be noted that of the total payment of P104,752,358.42, the sum of P5,750,000.00 was paid after May 1996 so that as of 25 May 1996, CHATHAM's total payment to MCI was P99,002,358.42. Effectively, therefore, the amount due MCI as of 23 May 1996 amounted to P24,005,732.66 computed as follows: Total accomplishment as of 23 May 1996 at 94.12% Add approved change orders Total Less payments up to 23 May 1996 Balance due MCI as of 23 May 1996 P 117, 655, 000.00 5,353,091.08 P 123,008,091.08 99,002,358.42 P 24,005,732.66

Of the above balance of P24,005,732.66 as of 23 May 1996, the only payments made by CHATHAM to MCI is the sum of P5,750,000.00 from June 1996 onwards, allegedly to cover MCI payrolls. It is of course noted that CHATHAM's suspension of further payments to MCI was because it had been undertaking on its own, the further procurement of materials and subcontracting of various phases of works on the project. In consideration of the above facts, this Tribunal's conclusion that there was in fact an implied take over of the project is further confirmed. Furthermore, this Tribunal additionally concludes that the cut-off date for purposes of delineating the financial obligations of the parties between them should be 23 May 1996, the date when CHATHAM evaluated MCI's accomplishment at 94.10% but nevertheless suspended all further progress payments to MCI. MCI presented further documentary evidence (Exhibit E-6) the subject of which is a PUNCHLISTING-CIVIL STRUCTURAL." In this particular document which bears the signatures of representatives of both MCI and RKDCCI, MCI tried to prove that as of 30 August 1996 it had actually attained 99.16% work accomplishment. While it may be true that as of that date the project had reached 99.16% completion, there is no incontrovertible evidence showing that MCI was responsible for such accomplishment. This was in fact actually testified to by Engr. Alex Bautista of RKDCCI, when he said that it was an evaluation of the project's completion stage, not necessarily MCI's work accomplishment. This Tribunal therefore stands firm on its conclusion that MCI's accomplishment is only up to the extent of 94.10%.5 With those findings, the CIAC disposed of the specific money claims by either granting or reducing them. On Issue No. 9, i.e., whether CHATHAM failed to complete and/or deliver the project within the approved completion period and, if so, whether CHATHAM is liable for liquidated damages and how much, the CIAC ruled in this wise: This Tribunal holds that the provision of the contract insofar as the Overall Schedule is concerned cannot justifiably be applied in the instant case in view of the implied take-over of the Chatham House project by CHATHAM. Accordingly, this Tribunal finds no necessity to resolve whether or not MCI complete[d] and/or deliver[ed] the project within the approved completion period. In fact, Mr. Mercado testified that it was CHATHAM who ultimately completed the project, with assistance of the construction managers. In any case, this Tribunal finds merit in RKDCCI's claim that MCI was in delay in the concreting milestone and that [it] is liable for liquidated damages therefor. This, notwithstanding MCI's invoking that Chatham is estopped from claiming liquidated damages after it failed to deduct the alleged liquidated damages from MCI's progress billings. This Tribunal holds that such failure to deduct, which CHATHAM claims it did in order not to hamper progress of work in the project, is an option which [it] may or may not exercise. However, this Tribunal finds that CHATHAM's Exh. 11-A where the liquidated damages on delays in concreting milestone was applied is not consistent with [its] own Exhibit 3-I. This Tribunal notes that in Exh. 11-A, CHATHAM included a projected delay of 85 days for the Helipad Concreting works, while no such projected delay was included in Exh. 3-I as it should be.

This Tribunal holds that Exh. 3-I showing a delay of 294 days in concreting milestones should rightfully be used in computing liquidated damages. Accordingly, this Tribunal holds that MCI is liable for liquidated damages in the amount of P3,062,498.78 as follows: 1/4 x 1/3[(1/10 x P125,000,000.00) 1%] x 294 = P3,062,498.78.6 The CIAC then decreed: Accordingly, as presented below, all the amounts due MCI are first listed and added up and the total payment is deducted therefrom. The admitted total payment figure as reflected in the Terms of Reference is the amount applied instead of the total reflected in CHATHAM's Summary of Payments which incidentally reflected a lesser amount. From the 'Balance Due MCI' the 'Amounts CPI is Held Entitled To' is deducted and the 'Net Amount Due MCI' is arrived at. A. AMOUNTS HELD CPI IS ENTITLED TO: A.1. From the original contract: 94.12% of P125,000,000.00 A.2. Approved Change Orders A.3 Pending Change Orders A.4 CHB Works A.5 Workers Bonus A.6 Disputed Deductions A.7 Labor Escalation A.8 Attendance Fee Total Less: Total payments - Item 11-6 of TOR Balance Due MCI B. AMOUNTS HELD CPI IS ENTITLED TO: B.1. liquidated Damages B.2. Actual Damages B.3. Penalties B.4. Cash Payments in Behalf of MCI Total Amount Due CPI C. NET AMOUNT DUE MCI (A minus B) P3,062,498.78 335,994.50 1,778,285.44 2,214,715.68 7,391,494.40 P16,126,922.91 P117,650,000.00 5,353,091.08 1,648,560.46 1,248,654.71 -0909,484.70 1,076,256.00 508,162.73 P128,394,209.68 104,875,792.37 P 23,518,417.31

WHEREFORE, judgment is hereby rendered in favor of the Claimant [MCI] directing Respondent [CHATHAM] to pay Claimant [MCI] the net sum of SIXTEEN MILLION ONE HUNDRED TWENTY SIX THOUSAND NINE HUNDRED TWENTY TWO & 91/100 (16,126,922.91) PESOS. SO ORDERED.7 Impugning the decision of the CIAC, CHATHAM instituted a petition for review with the Court of Appeals, which was docketed as CAG.R. SP No. 49429. In its petition, CHATHAM alleged that: The Arbitral Tribunal grossly erred in failing to indicate specific reference to the evidence presented or to the transcript of stenographic notes in arriving at its questioned Decision, in violation of the cardinal rule under Section 1, Rule 36 of the Revised Rules of Civil Procedure that a judgment must state clearly and definitely the facts and the law on which it is based. The Tribunal's conclusions are grounded entirely on speculations, surmises and conjectures.

The Arbitral Tribunal grossly erred in failing to consider the evidence presented by CHATHAM and the testimony of its witnesses. The Arbitral Tribunal gravely abused its discretion in considering arbitrarily that there was an implied takeover contrary to the facts and evidence submitted. The Arbitral Tribunal committed grave error and gross misapprehension of facts in holding that CHATHAM is not entitled to liquidated damages despite failure of MCI to meet the over-all schedule of completion. The Arbitral Tribunal manifestly erred in holding that MCI is entitled to its claim for unpaid progress billings. The Arbitral Tribunal committed gross and reversible error in equating the percentage of MCI's work accomplishment with the entire work in place, despite evidence to the contrary. The Arbitral Tribunal gravely erred in making 23 May 1996 as the cut-off date for purposes of delineating the financial obligations of the parties. The Arbitral Tribunal erred in denying CHATHAM its claim for actual damages pursuant to Article 27.8 of the Construction Contract. The facts set forth in CHATHAM's Answer with Compulsory Counterclaim as well as its documentary and testamentary evidence were not overturned or controverted by any contrary evidence.8 In its decision of 30 September 1999, 9 the Court of Appeals simplified the assigned errors into one core issue, namely, the "propriety" of the CIAC's factual findings and conclusions. In upholding the decision of the CIAC, the Court of Appeals confirmed the jurisprudential principle that absent any showing of arbitrariness, the CIAC's findings as an administrative agency and quasi judicial body should not only be accorded great respect but also given the stamp of finality. However, the Court of Appeals found exception in the CIAC's disquisition of Issue No.9on the matter of liquidated damages. The Court of Appeals disagreed with the CIAC's finding that there was an implied takeover by CHATHAM of the project and that it was unnecessary for the CIAC to rule on whether MCI completed and/or delivered the project within the approved completion schedule of the project since CHATHAM failed to observe the antecedent acts required for the termination of the contract, as set forth in the Construction Agreement. The Court of Appeals ascertained that the evidence overwhelmingly proved that there was no takeover by CHATHAM and that MCI exercised complete control, authority and responsibility over the construction. In support of this conclusion, the appellate court pointed to the following evidentiary bases:10 1. Testimony of CHATHAM's Engr. Kapunan that the interim takeover for the works on the basement was triggered by lack 11 of manpower and delays as early as February 1995, as evidenced by their assessment and that the interim takeover was only with respect to the direction or management of the field operations and was limited only to works on the basement and intended to assist MCI to catch up with the schedule of completion, since at that time the project was very much delayed; thereafter, the MCI was back in full control of the project.12 2. Testimony of Engr. Bautista that the takeover was only partial and temporary and limited to the management portion on the basement only and that MCI was always in control of the project.13 3. Testimony of Engr. Infante that MCI personnel were constantly present in the project and the "intervention" (not 14 takeover) by CHATHAM was justified to ensure completion of the project on time. 4. Documentary exhibits evincing the nature and extent of MCI's work during the takeover period which belied its claims that it was not in control of the project because of the takeover thus: Exhibit "4" Letter dated 15 February 1995 of Engr. Kapunan of RKDCCI to John Lai of MCI stating that the takeover of directions or management of the field operations is interim, i.e. while the takeover is effective immediately it will extend only after concreting Level B-1 or approximately until 30 May 1995 which ever is later.

Exhibit "4-A" Letter dated 17 February 1995 written by Dr. Lai of MCI to Engr. Kapunan in response to the latter's 15 February 1995 letter stating that "[Also we were assured that we will not be responsible for any errors or accidents that may occur during this INTERIM period," indicating that Dr. Lai was very much aware of the interim period. Exhibit "4-C" Letter dated 18 February 1995 written by Engr. Ben C. Ruiz of RKDCCI to Dr. Lai containing the reasons for the takeover. Exhibit "8A" Letter dated 5 September 1995 written by Dr. E.G. Tabujara to Dr. Lai/Romy Laron (Project Manager of MCI) requesting for an engineer of MCI to accompany the inspector of RKDCCI to witness batching procedures. By so doing, Dr. E.G. Tabujara acknowledged that Dr. Lai was in control of the project. Exhibit "8" Letter dated 4 September 1995 by Engr. Romulo R Sugay to Dr. Lai offering an incentive to the workers of MCI to exert (their) best effort for topping off by the end of December; another clear indication that Dr. Lai was in control of the project. Exhibit "4-D" Letter dated 4 January 1996 indicating that Mr. H.T. Go offered Dr Lai an incentive of P1,800,000 on the condition that MCI meets the new schedule/milestones. MCI's acceptance of the incentive offer likewise shows that MCI was in control of the Project. Exhibits "5," "3-1," "3-M," "3-N," "3-W-1," 3-X," "3-Y," and "3-Z" among others containing reminders to MCI of its duties and shortcomings, likewise attest to the fact that MCI was in control (of) and responsible for the Project, although markedly deficient. Exhibits "5," "5-A," "5-B," "5-C," "5-D," "5-E," "5-F," "5-O," "C-7," and "E-9" evidencing that MCI continued to manage other works on the project even during the time of the interim takeover of the basement works, as seen in the series of communications between CHATHAM or RKDCCI and MCI within the period beginning February 1995 to 30 May 1995. 5. Respondent's Request for Adjudication, Annex G, Records, Folder No. 6 which incorporated Change Order No. 12, among others, dated 28 August 1995, recommended by the RKDCCI and accepted by Dr. Lai, and which request for an extension of 25 days readily showed that even after 30 May 1995, after the close of the supposed takeover period, MCI was still the contractor in complete control of the project for it would not have otherwise accepted the said change order if it (were) no longer the Contractor of the project due to the termination of the Construction agreement as of said date on account of the alleged takeover. 6. Exhibits "3-J," "3-M," "3-Q," "3-R," "3-V," "3- W-1," "3-W-2," "5-F," "5-1," "6," "12-II," "12-JJ," "12-MM," and "12-NN" tending to prove that RKDCCI monitored the work from start to finish and had zealously pointed out to MCI the defects or improper execution of the construction works, and gave MCI all the opportunity to rectify the construction deficiencies and complete the works of the project. The Court of Appeals concluded that the interim takeover was necessitated by CHATHAM's insistence to meet its own turnover dates with the buyers of the project's units. Thus, CHATHAM was constrained to hire subcontractors with sufficient manpower and supervision and incur various expenses to facilitate the completion of the project and/or assist MCI in making up for its delay. The Court of Appeals then considered it imperative to determine whether MCI failed to complete the project on time for which it may be held liable for liquidated damages based on the delays in the overall schedule of completion pursuant to Art. 13.5 of the Construction Agreement, to wit: 13.5. Over-All Schedule For not meeting the final completion date of the PROJECT, the OWNER will deduct from the Contract Sum or amounts due the CONTRACTOR, the amount equivalent to 1/10 of 1% of the Contract Sum for every calendar day of delay, provided, however, that the maximum penalty should not exceed 25% of the fee payable to the CONTRACTOR as stipulated in the Bill of Quantities. Penalties from concreting milestones shall be deducted from the penalty of Over-All Schedule.15 The Court of Appeals disposed of the controversy in this wise:

As is extant from the records, the completion date of the Project under the Construction Contract or under the revised construction schedule was never met by reason of [MCI's] lack of manpower, necessary equipment, qualified engineers and inefficient management of construction works on the Project. Thus, under the Contract (Exhibit '1'), [MCI] had 780 days, or until 22 January 1996, from starting date, or April 12, 1994, to finish the project. The completion date, however, was not followed and was revised as early as December 17, 1994, extending the milestone dates up to March 15, 1996 (Exhibits '3G' and '3-H'). As of December 25, 1995, the number of days delayed was already 294 days. Thus, on February 22, 1996, the contract milestones were again revised, inclusive of 53 days extension, to May 23, 1996 (Exhibits '3-I' and '3-O'). The May 23, 1996 turnover milestone nor the July 22, 1996 turnover of the whole project were neither met (Exhibits '3-P', '3-R', '3-S' and '3-T' but [CHATHAM] was again constrained to allow [MCI] to continue working on the Project to complete the balance of the works (Exhibit 'M'). And all throughout the construction of the Project, [CHATHAM] had to assist [MCI] along the way to expedite the execution and completion of the Project (Exhibits '3-K' and '3-V'). From the foregoing disquisitions, it is clear that [MCI] is liable for liquidated damages, as per Article 13.5 of the Construction Contract, for its failure to complete the project within the period stipulated in the Construction Contract and even despite an extension of 53 days from the original schedule or of the overall schedule of completion. [MCI] should therefore pay [CHATHAM] the amount of liquidated damages equivalent to P24,125,000.00 for 193 days of delay in the overall schedule of completion counted from overall completion date on July 22, 1996 up to the date of completion on February 15, 1997, as stated in the Certificate of Occupancy, computed as follows, to wit: 1/10[1%(P125,000,000.00)] per day x 193 days = [1/10 (P1,250,000.00)] per day x 193 days = P125,000.00 per day x 193 days = P24,125,000.00 IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered partially granting [CHATHAM's] claim for liquidated damages. The Tribunal's Decision dated 19 October 1998 is hereby AFFIRMED with the modification on [MCI's] liability for liquidated damages in the amount of P24,125,000.00. Thus, A. AMOUNT [MCI] IS ENTITLED TO: A.1. From the original contract: 94.12% of P125,000,000.00 A.2 Approved Change Orders A.3 Pending Change Orders A.4 CHB Works A.5 Workers Bonus A.6 Disputed Deductions A.7 Labor Escalation A.8 Attendance Fee Total Less: Total payments-item 11-6 of TOR Balance Due Respondent B. AMOUNTS [CHATHAM] IS ENTITLED TO: B.1. liquidated Damages B.2. Actual Damages B.3. Penalties B.4. Cash Payments in behalf of MCI Total Amount Due CPI P24,125,000.00 335,994.50 1,778,285.44 I2,214,715.68 P28,453,995.62 117,650,000.00 5,353,091.08 1,648,560.46 1,248,654.71 -0909,484.70 076,256.00 508,162.73 P128,394,209.68 104,875,792.37 P23,518,417.31

C. NET AMOUNT DUE [CHATHAM] (B minus A) Correspondingly, Respondent [MCI] is hereby directed to pay the Petitioner [CHATHAM] the net sum of FOUR MILLION 16 NINE HUNDRED THIRTY-FIVE THOUSAND FIVE HUNDRED SEVENTY-EIGHT & 31/100 (P4,935,578.31) PESOS. MCI promptly filed on 25 October 1999 a motion for reconsideration. In its Resolution of 4 February 2000, the Court of Appeals denied MCI's motion for reconsideration for lack of merit, as well as CHATHAM's Motion to Lift Garnishment and Levy Pending Appeal, filed on 13 October 1999, for being premature.17 Thus, MCI filed the instant petition for review to challenge the decision of the Court of Appeals. MCI alleges that the Court of Appeals erred in reviewing and reversing the CIAC's factual findings, that there was an implied takeover by CHATHAM of the project, and that MCI was not in delay in the overall schedule. In so doing, the Court of Appeals contravened Section 19 of Executive Order (E.O.) No. 1008,18 which limits the review of an Arbitral Award to only questions of law, thus: SECTION 19. Finality of Awards The arbitral award shall be binding upon the parties. It shall be final and inappealable (sic), except on questions of law which shall be appealable to the Supreme Court. MCI then asserts that as signatories to the contract, it and CHATHAM complied with this legal provision when they included as part of their TOR the stipulation that "[t]he decision of the Arbitral Tribunal shall be final and non-appealable except on questions of law." Accordingly, the binding character of this provision upon the parties is conclusive and final. MCI also contends that while it may be argued that recent (1) issuances by the Supreme Court, specifically, Circular No. 1-91, which eventually became Revised Administrative Circular No. 1-95; (2) legislation in particular, Republic Act No. 7902, which amended Batas Pambansa Blg. 129; and (3) amendments to the Rules on Civil Procedure, modifying E.O. No. 1008 in the sense that "questions of facts, of law, or mixed questions of facts and law may be the subject of an appeal of the CIAC's decision to the Court of Appeals," it is still E.O. No. 1008 which remains to be the fundamental and substantive law that endows parties to an arbitral controversy the right to appeal. Hence, the provisions on appeal of E.O. No. 1008 should be controlling, i.e., only questions of law should be entertained. Therefore, the only effect of these rules on E.O. No. 1008 is the transfer of the appeal forum from the Supreme Court to the Court of Appeals. MCI further asserts that, even assuming that the CIAC's findings of facts are reviewable on appeal, the Court of Appeals gravely abused its discretion when it accepted "hook, line and sinker" CHATHAM's contention that MCI was in delay, and ignored competent, clear and substantial evidence that prove the contrary, and that CHATHAM is not entitled to liquidated damages. For its part, CHATHAM avers that the evolution on the rules governing appeals from judgments, decisions, resolutions, orders or awards of the CIAC convincingly discloses that E.O. No. 1008 has already been superseded. With the power of the Supreme Court to promulgate rules concerning the protection and enforcement of constitutional rights, pleadings, practice, and procedure in all courts, its issuances and amendments to the Rules on Civil Procedure, not to mention R A. No. 7902, as enacted by Congress, effectively modified E.O. No. 1008. Accordingly, the judgments, awards, decisions, resolutions, orders or awards of the CIAC are now appealable to the Court of Appeals on questions of facts, mixed questions of facts and law, and questions of law, and no longer with the Supreme Court on exclusively questions of law. Further, the TOR cannot limit the expanded jurisdiction of the Court of Appeals based on the latest rules. Thus, the Court of Appeals did not err in reviewing the factual findings of the CIAC. CHATHAM also contends that, even if the Court of Appeals can only review questions of law, said court did not err in rendering the questioned decision as the conclusions therein, drawn as they were from factual determinations, can be considered questions of law. . Finally, CHATHAM asseverates that the Court of Appeals did not commit grave abuse of discretion in reversing the CIAC's ascertainment on the implied take-over and liquidated damages. This Court shall now resolve the primary issue raised in this case. EO. No. 1008 vest upon the CIAC original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract, 19 or after the abandonment or breach thereof. By express provision of Section 19 thereof, the arbitral award of the CIAC is final and unappealable, except on questions of law, which are appealable to the Supreme Court.

The parties, however, disagree on whether the subsequent Supreme Court issuances on appellate procedure and R.A. No. 7902 removed from the Supreme Court its appellate jurisdiction in Section 19 of E.O. No. 1008 and vested the same in the Court of Appeals, and whether appeals from CISC awards are no longer confined to questions of law. On 27 February 1991, this Court issued Circular No. 1-91, which prescribes the Rules Governing Appeals to the Court of Appeals from Final Orders or Decisions of the Court of Tax Appeals and Quasi-Judicial Agencies. Pertinent portions thereof read as follows: 1. Scope. These rules shall apply to appeals from final orders or decisions of the Court of Tax Appeals. They shall also apply to appeals from final orders or decisions of any quasi-judicial agency from which an appeal is now allowed by statute to the Court of Appeals or the Supreme Court. Among these agencies are the Securities and Exchange Commission, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Secretary of Agrarian Reform and Special Agrarian Courts under RA. No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission and Philippine Atomic Energy Commission. 2. Cases not Covered. These rules shall not apply to decisions and interlocutory orders of the National Labor Relations Commission or the Secretary of Labor and Employment under the Labor Code of the Philippines, the Central Board of Assessment Appeals, and other quasi-judicial agencies from which no appeal to the courts is prescribed or allowed by statute. 3. Who may appeal and where to appeal. The appeal of a party affected by a final order, decision, or judgment of the Court of Tax Appeals or a quasi judicial agency shall be taken to the Court of Appeals within the period and in the manner herein provided, whether the appeal involves questions of fact or of law or mixed questions of fact and law. From final judgments or decisions of the Court of Appeals, the aggrieved party may appeal by certiorari to the Supreme Court as provided in Rule 45 of the Rules of Court. Subsequently, on 23 February 1995, RA. No. 7902 was enacted. It expanded the jurisdiction of the Court of Appeals and amended for that purpose Section 9 of B.P. Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980.20 Section 9(3) thereof reads: SECTION 9. Jurisdiction. xxx xxx xxx The Court of Appeals shall exercise:

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948. The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. x x x Then this Court issued Administrative Circular No. 1-95,21 which revised Circular No. 1-91. Relevant portions of the former reads as follows: 1. Scope. These rules shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of any quasi-judicial agency from which an appeal is authorized to be taken to the Court of Appeals or the Supreme Court. Among these agencies are the Securities and Exchange Commission, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunication Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees

Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, and Construction Industry Arbitration Commission. SECTION 2. Cases Not Covered. These rules shall not apply to judgments or final orders issued under the Labor Code of the Philippines, Central Board of Assessment Appeals, and by other quasi-judicial agencies from which no appeal to the court is prescribed or allowed. SECTION 3. Where to Appeal. An appeal under these rules may be taken to the Court of Appeals within the period and in the manner herein provided, whether the appeal involves questions of fact, of law, or mixed questions of fact and law. Thereafter, this Court promulgated the 1997 Rules on Civil Procedure. Sections 1, 2 and 3 of Rule 43 thereof provides: SECTION 1. Scope. This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasijudicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. SECTION 2. Cases Not Covered. Philippines. This Rule shall not apply to judgments or final orders issued under the Labor Code of the

SECTION 3. Were to Appeal. An appeal under this Rule may be taken to the Court of Appeals within the period and in the manner herein provided, whether the appeal involves question of fact, of law, or mixed questions of fact and law. Through Circular No. 1-91, the Supreme Court intended to establish a uniform procedure for the review of the final orders or decisions of the Court of Tax Appeals and other quasi judicial agencies provided that an appeal therefrom is then allowed under existing statutes to either the Court of Appeals or the Supreme Court. The Circular designated the Court of Appeals as the reviewing body to resolve questions of fact or of law or mixed questions of fact and law. It is clear that Circular No. 1-91 covers the CIAC. In the first place, it is a quasi judicial agency. A quasi-judicial agency or body has been defined as an organ of government other than a court and other than a legislature, which affects the rights of private parties through either adjudication or rule-making.22 The very definition of an administrative agency includes its being vested with quasi judicial powers. The ever increasing variety of powers and functions given to administrative agencies recognizes the need for the active intervention of administrative agencies in matters calling for technical knowledge and speed in countless controversies which 23 cannot possibly be handled by regular courts. The CIAC's primary function is that of a quasi-judicial agency, which is to adjudicate claims and/or determine rights in accordance with procedures set forth in E.O. No. 1008. In the second place, the language of Section 1 of Circular No. 1-91 emphasizes the obvious inclusion of the CIAC even if it is not named in the enumeration of quasi-judicial agencies. The introductory words "[a] among these agencies are" preceding the enumeration of specific quasi-judicial agencies only highlight the fact that the list is not exclusive or conclusive. Further, the overture stresses and acknowledges the existence of other quasi-judicial agencies not included in the enumeration but should be deemed included. In addition, the CIAC is obviously excluded in the catalogue of cases not covered by the Circular and mentioned in Section 2 thereof for the reason that at the time the Circular took effect, E.O. No. 1008 allows appeals to the Supreme Court on questions of law. In sum, under Circular No. 1-91, appeals from the arbitral awards of the CIAC may be brought to the Court of Appeals, and not to the Supreme Court alone. The grounds for the appeal are likewise broadened to include appeals on questions of facts and appeals involving mixed questions of fact and law. The jurisdiction of the Court of Appeals over appeals from final orders or decisions of the CIAC is further fortified by the amendments to B.P. Blg. 129, as introduced by RA. No. 7902. With the amendments, the Court of Appeals is vested with appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except "those within the appellate jurisdiction of the Supreme Court in accordance with

the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948." While, again, the CIAC was not specifically named in said provision, its inclusion therein is irrefutable. The CIAC was not expressly covered in the exclusion. Further, it is a quasi-judicial agency or instrumentality. The decision inLuzon Development Bank v. Luzon Development Bank Employees24 sheds light on the matter, thus: Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be considered as a quasi-judicial agency, board or commission, still both he and the panel are comprehended within the concept of a 'quasijudicial instrumentality.' It may even be stated that it was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry Arbitration Commission, that the broader term 'instrumentalities' was purposely included in [Section 9 of B.P. Blg. 129 as amended by RA. No. 7902]. An instrumentality' is anything used as a means or agency. Thus, the terms governmental 'agency' or 'instrumentality' are synonymous in the sense that either of them is a means by which a government acts, or by which a certain government act or function is performed. The word 'instrumentality,' with respect to a state, contemplates an authority to which the state delegates governmental power for the performance of a state function. Any remaining doubt on the procedural mutation of the provisions on appeal in E.O. No. 1008, vis-a-vis Circular No. 1-91 and R A. No. 7902, was completely removed with the issuance by the Supreme Court of Revised Administrative Circular No. 1-95 and the 1997 Rules of Civil Procedure. Both categorically include the CIAC in the enumeration of quasi-judicial agencies comprehended therein. Section 3 of the former and Section 3, Rule 43 of the latter, explicitly expand the issues that may be raised in an appeal from quasi judicial agencies or instrumentalities to the Court of Appeals within the period and in the manner therein provided. Indisputably, the review of the CIAC award may involve either questions of fact, of law, or of fact and law. In view of all the foregoing, we reject MCI's submission that Circular No. 1-91, B.P. Blg. 129, as amended by RA. 7902, Revised Administrative Circular 1-95, and Rule 43 of the 1997 Rules of Civil Procedure failed to efficaciously modify the provision on appeals in E.O. No. 1008. We further discard MCI's claim that these amendments have the effect of merely changing the forum for appeal from the Supreme Court to the Court of Appeals. There is no controversy on the principle that the right to appeal is statutory. However, the mode or manner by which this right may be exercised is a question of procedure which may be altered and modified provided that vested rights are not impaired. The Supreme Court is bestowed by the Constitution with the power and prerogative, inter alia, to promulgate rules concerning pleadings, practice and procedure in all courts, as well as to review rules of procedure of special courts and quasi-judicial bodies, which, however, shall remain in force until disapproved by the Supreme Court.25 This power is constitutionally enshrined to enhance the independence of the Supreme Court.26 The right to appeal from judgments, awards, or final orders of the CIAC is granted in E.O. No. 1008. The procedure for the exercise or application of this right was initially outlined in E.O. No. 1008. While R. A. No. 7902 and circulars subsequently issued by the Supreme Court and its amendments to the 1997 Rules on Procedure effectively modified the manner by which the right to appeal ought to be exercised, nothing in these changes impaired vested rights. The new rules do not take away the right to appeal allowed 27 in E.O. No. 1008. They only prescribe a new procedure to enforce the right. No litigant has a vested right in a particular remedy, which may be changed by substitution without impairing vested rights; hence, he can have none in rules of procedure which relate 28 to remedy." The foregoing discussion renders academic MCI's assertion on the binding effect of its stipulation with CHATHAM in the TOR that the decision of the CIAC shall be final and non-appealable except on questions of law. The agreement merely adopted Section 19 of E.O. No. 1008, which, as shown above, had been modified. The TOR, any contract or agreement of the parties cannot amend, modify, limit, restrict or circumscribe legal remedies or the jurisdiction of courts. Rules of procedure are matters of public order and interest and unless the rules themselves so allow, they 29 cannot be altered, changed or regulated by agreements between or stipulations of the parties for their singular convenience. Having resolved the existence of the authority of the Court of Appeals to review the decisions, awards, or final orders of the CIAC, 30 the Court shall now determine whether the Court of Appeals erred in rendering the questioned decision of September 1999.

Settled is the general rule that the findings of facts of the Court of Appeals are binding on us. There are recognized exceptions to the rule, such as when the findings are contrary to those of the trial court 30 as in this case. Hence, we have to take a closer reexamination of this case. The CIAC is certain that the evidence overwhelmingly tended to prove that the manner by which CHATHAM took charge in the procurement of materials, fielding of labor, control of MCI engineers and the subcontracting of various phases of the work, constituted an implied takeover of the project. The CIAC then concludes that the cut-off date for delineating the fiscal liabilities of the parties is 23 May 1996 when CHATHAM evaluated MCI's work accomplishment at 94.12% and then suspended all further progress payments to MCI. For these reasons, the CIAC found it trifling to determine whether MCI was in delay based on the Overall Schedule. However, the CIAC discovered that MCI was in delay for 294 days in the concreting milestone and held the latter liable for liquidated damages in the amount of P3,062,498.78. The Court of Appeals made a contrary conclusion and declared that MCI was in delay for 193 days based on the overall schedule of completion of the project and should incur liquidated damages in the amount of P24,125,000.00. It is undisputed that the CIAC and the Court of Appeals found MCI liable for liquidated damages but on different premises. Based on the CIAC's assessment, MCI's responsibility was anchored on its delay in the concreting milestone, while the Court of Appeal's evaluation concentrated on MCI's delay in completing the project based on the overall schedule of work. The variance in the evaluation spells a staggering difference in the party who should ultimately be held liable and the net amount involved. A study of the final computation of the net amount due in both the final disquisition of the CIAC and the Court of Appeals shows that all the other figures therein are constant, save for the amount of liquidated damages for which MCI should be accountable. If this Court concurs with the CIAC's conclusions, MCI's responsibility for liquidated damages is, as already stated, P3,062,498.78. Setting this off against CHATHAM's overall fiscal accountability would bring the latter's total liability to MCI to P16,126,922.91. If the Court of Appeals is correct, MCI would be held liable for a much higher P24,125,000 liquidated damages. Setting this off against CHATHAM's monetary responsibilities, MCI would still have to pay CHATHAM P4,935,578.31. After painstakingly combing through the voluminous records, we affirm the findings of the CIAC. The evidence taken as a whole or in their totality reveals that there was an implied takeover by CHATHAM on the completion of the project. The evidence that appears to accentuate the Court of Appeals' decision ironically bolstered the CIAC's conclusion. The testimonies of Engr. Kapunan, Engr. Bautista, Dr. Lai, and the letter of Engr. Ruiz,31acknowledging the "temporary takeover" by CHATHAM of the project, underscore the palpable fact that there was indeed a takeover. We confer particular credit to Dr. Lai's testimony that as of 15 February 1995, MCI was relieved of full control of the construction operations, that it was relegated to a mere supplier of labor, materials and equipment, and that the alleged interim takeover actually extended through the completion of the project. Even CHATHAM admits the takeover but sugarcoated the same with words like "interim" did "charging the costs to MCI." With these glaring admissions, we can even consider that the takeover was not implied but blatant. Exhibits "4," "4-A," "4-C," "8A," "8," "4-D," '43," "3-I," "3-M," "3- N," "3-W-1," "3-X," "3-Y," "3-Z," "5,""5-A," "5-B," "5-C," "5-D," "5-E," 32 "5-F," "5-O," "C-7," "E-9," etc., relied upon by the Court of Appeals when considered by themselves and singly, seemingly and initially evince MCI's control over the project. However, they eventually lose evidentiary puissance to support the Court of Appeals' conclusion when reckoned against the totality of the evidence that CHATHAM took charge of the completion of the project, particularly, the fact that CHATHAM suspended all progress billing payments to MCI. The continued presence and participation of MCI in the project was, as found by the CIAC, a matter of mutual benefit to and convenience of the parties. WHEREFORE, IN VIEW OF ALL THE FOREGOING, the assailed 30 September 1999 decision of the Court of Appeals in CA-G.R SP No. 49429 is hereby PARTIALLY MODIFIED by setting aside the order directing Metro Construction, Inc. to pay Chatham Properties, Inc. the amount of P4,935,578.31. The arbitral award of the Construction Industry Arbitration Commission in CIAC Case 10-98, promulgated on 19 October 1998, directing Chatham Properties, Inc. to pay Metro Construction, Inc. the sum of SIXTEEN MILLION ONE HUNDRED TWENTY-SIX THOUSAND NINE HUNDRED TWENTY-TWO & 91/100 (P16,126,922.91) PESOS, is accordingly REINSTATED. No pronouncement as to costs. SO ORDERED.

G.R. No. 164785

April 29, 2009

ELISEO F. SORIANO, Petitioner, vs. MA. CONSOLIZA P. LAGUARDIA, in her capacity as Chairperson of the Movie and Television Review and Classification Board, MOVIE AND TELEVISION REVIEW AND CLASSIFICATION BOARD, JESSIE L. GALAPON, ANABEL M. DELA CRUZ, MANUEL M. HERNANDEZ, JOSE L. LOPEZ, CRISANTO SORIANO, BERNABE S. YARIA, JR., MICHAEL M. SANDOVAL, and ROLDAN A. GAVINO, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 165636 April 29, 2009

ELISEO F. SORIANO Petitioner, vs. MOVIE AND TELEVISION REVIEW AND CLASSIFICATION BOARD, ZOSIMO G. ALEGRE, JACKIE AQUINO-GAVINO, NOEL R. DEL PRADO, EMMANUEL BORLAZA, JOSE E. ROMERO IV, and FLORIMONDO C. ROUS, in their capacity as members of the Hearing and Adjudication Committee of the MTRCB, JESSIE L. GALAPON, ANABEL M. DELA CRUZ, MANUEL M. HERNANDEZ, JOSE L. LOPEZ, CRISANTO SORIANO, BERNABE S. YARIA, JR., MICHAEL M. SANDOVAL, and ROLDAN A. GAVINO, in their capacity as complainants before the MTRCB Respondents. DECISION VELASCO, JR., J.: In these two petitions for certiorari and prohibition under Rule 65, petitioner Eliseo F. Soriano seeks to nullify and set aside an order and a decision of the Movie and Television Review and Classification Board (MTRCB) in connection with certain utterances he made in his television show, Ang Dating Daan. Facts of the Case On August 10, 2004, at around 10:00 p.m., petitioner, as host of the program Ang Dating Daan, aired on UNTV 37, made the following remarks: Lehitimong anak ng demonyo; sinungaling; Gago ka talaga Michael, masahol ka pa sa putang babae o di ba. Yung putang babae ang gumagana lang doon yung ibaba, [dito] kay Michael ang gumagana ang itaas, o di ba! O, masahol pa sa putang babae yan. Sabi ng lola ko masahol pa sa putang babae yan. 1 Sobra ang kasinungalingan ng mga demonyong ito. x x x Two days after, before the MTRCB, separate but almost identical affidavit-complaints were lodged by Jessie L. Galapon and seven 2 other private respondents, all members of the Iglesia ni Cristo (INC), against petitioner in connection with the above broadcast. Respondent Michael M. Sandoval, who felt directly alluded to in petitioner s remark, was then a minister of INC and a regular host of 3 the TV program Ang Tamang Daan. Forthwith, the MTRCB sent petitioner a notice of the hearing on August 16, 2004 in relation to the alleged use of some cuss words in the August 10, 2004 episode of Ang Dating Daan.4 After a preliminary conference in which petitioner appeared, the MTRCB, by Order of August 16, 2004, preventively suspended the showing of Ang Dating Daan program for 20 days, in accordance with Section 3(d) of Presidential Decree No. (PD) 1986, creating the MTRCB, in relation to Sec. 3, Chapter XIII of the 2004 Implementing Rules and Regulations (IRR) of PD 1986 and Sec. 7, Rule VII of the 5 MTRCB Rules of Procedure. The same order also set the case for preliminary investigation. The following day, petitioner sought reconsideration of the preventive suspension order, praying that Chairperson Consoliza P. Laguardia and two other members of the adjudication board recuse themselves from hearing the case.6 Two days after, however, 7 petitioner sought to withdraw his motion for reconsideration, followed by the filing with this Court of a petition for certiorari and 8 prohibition, docketed as G.R. No. 164785, to nullify the preventive suspension order thus issued.

On September 27, 2004, in Adm. Case No. 01-04, the MTRCB issued a decision, disposing as follows: WHEREFORE, in view of all the foregoing, a Decision is hereby rendered, finding respondent Soriano liable for his utterances and thereby imposing on him a penalty of three (3) months suspension from his program, "Ang Dating Daan". Co-respondents Joselito Mallari, Luzviminda Cruz and UNTV Channel 37 and its owner, PBC, are hereby exonerated for lack of evidence. SO ORDERED.
9

Petitioner then filed this petition for certiorari and prohibition with prayer for injunctive relief, docketed as G.R. No. 165636. In a Resolution dated April 4, 2005, the Court consolidated G.R. No. 164785 with G.R. No. 165636. In G.R. No. 164785, petitioner raises the following issues: THE ORDER OF PREVENTIVE SUSPENSION PROMULGATED BY RESPONDENT [MTRCB] DATED 16 AUGUST 2004 AGAINST THE TELEVISION PROGRAM ANG DATING DAAN x x x IS NULL AND VOID FOR BEING ISSUED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION (A) BY REASON THAT THE [IRR] IS INVALID INSOFAR AS IT PROVIDES FOR THE ISSUANCE OF PREVENTIVE SUSPENSION ORDERS; (B) BY REASON OF LACK OF DUE HEARING IN THE CASE AT BENCH; (C) FOR BEING VIOLATIVE OF EQUAL PROTECTION UNDER THE LAW; (D) FOR BEING VIOLATIVE OF FREEDOM OF RELIGION; AND (E) FOR BEING VIOLATIVE OF FREEDOM OF SPEECH AND EXPRESSION.10 In G.R. No. 165636, petitioner relies on the following grounds: SECTION 3(C) OF [PD] 1986, IS PATENTLY UNCONSTITUTIONAL AND ENACTED WITHOUT OR IN EXCESS OF JURISDICTION x x x CONSIDERING THAT: I SECTION 3(C) OF [PD] 1986, AS APPLIED TO PETITIONER, UNDULY INFRINGES ON THE CONSTITUTIONAL GUARANTEE OF FREEDOM OF RELIGION, SPEECH, AND EXPRESSION AS IT PARTAKES OF THE NATURE OF A SUBSEQUENT PUNISHMENT CURTAILING THE SAME; CONSEQUENTLY, THE IMPLEMENTING RULES AND REGULATIONS, RULES OF PROCEDURE, AND OFFICIAL ACTS OF THE MTRCB PURSUANT THERETO, I.E. DECISION DATED 27 SEPTEMBER 2004 AND ORDER DATED 19 OCTOBER 2004, ARE LIKEWISE CONSTITUTIONALLY INFIRM AS APPLIED IN THE CASE AT BENCH; II SECTION 3(C) OF [PD] 1986, AS APPLIED TO PETITIONER, UNDULY INFRINGES ON THE CONSTITUTIONAL GUARANTEE OF DUE PROCESS OF LAW AND EQUAL PROTECTION UNDER THE LAW; CONSEQUENTLY, THE [IRR], RULES OF PROCEDURE, AND OFFICIAL ACTS OF THE MTRCB PURSUANT THERETO, I.E., DECISION DATED 27 SEPTEMBER 2004 AND ORDER DATED 19 OCTOBER 2004, ARE LIKEWISE CONSTITUTIONALLY INFIRM AS APPLIED IN THE CASE AT BENCH; AND III [PD] 1986 IS NOT COMPLETE IN ITSELF AND DOES NOT PROVIDE FOR A SUFFICIENT STANDARD FOR ITS IMPLEMENTATION THEREBY RESULTING IN AN UNDUE DELEGATION OF LEGISLATIVE POWER BY REASON THAT IT DOES NOT PROVIDE FOR THE PENALTIES FOR VIOLATIONS OF ITS PROVISIONS. CONSEQUENTLY, THE [IRR], RULES OF PROCEDURE, AND OFFICIAL ACTS OF THE MTRCB PURSUANT

THERETO, I.E. DECISION DATED 27 SEPTEMBER 2004 AND ORDER DATED 19 OCTOBER 2004, ARE LIKEWISE CONSTITUTIONALLY 11 INFIRM AS APPLIED IN THE CASE AT BENCH G.R. No. 164785 We shall first dispose of the issues in G.R. No. 164785, regarding the assailed order of preventive suspension, although its implementability had already been overtaken and veritably been rendered moot by the equally assailed September 27, 2004 decision. It is petitioner s threshold posture that the preventive suspension imposed against him and the relevant IRR provision authorizing it are invalid inasmuch as PD 1986 does not expressly authorize the MTRCB to issue preventive suspension. Petitioner s contention is untenable. Administrative agencies have powers and functions which may be administrative, investigatory, regulatory, quasi-legislative, or 12 quasi-judicial, or a mix of the five, as may be conferred by the Constitution or by statute. They have in fine only such powers or 13 authority as are granted or delegated, expressly or impliedly, by law. And in determining whether an agency has certain powers, the inquiry should be from the law itself. But once ascertained as existing, the authority given should be liberally construed.14 A perusal of the MTRCB s basic mandate under PD 1986 reveals the possession by the agency of the authority, albeit impliedly, to issue the challenged order of preventive suspension. And this authority stems naturally from, and is necessary for the exercise of, its power of regulation and supervision. Sec. 3 of PD 1986 pertinently provides the following: Section 3. Powers and Functions. The BOARD shall have the following functions, powers and duties: xxxx c) To approve or disapprove, delete objectionable portions from and/or prohibit the x x x production, x x x exhibition and/or television broadcast of the motion pictures, television programs and publicity materials subject of the preceding paragraph, which, in the judgment of the board applying contemporary Filipino cultural values as standard, are objectionable for being immoral, indecent, contrary to law and/or good customs, injurious to the prestige of the Republic of the Philippines or its people, or with a dangerous tendency to encourage the commission of violence or of wrong or crime such as but not limited to: xxxx vi) Those which are libelous or defamatory to the good name and reputation of any person, whether living or dead; xxxx (d) To supervise, regulate, and grant, deny or cancel, permits for the x x x production, copying, distribution, sale, lease, exhibition, and/or television broadcast of all motion pictures, television programs and publicity materials, to the end that no such pictures, programs and materials as are determined by the BOARD to be objectionable in accordance with paragraph (c) hereof shall be x x x produced, copied, reproduced, distributed, sold, leased, exhibited and/or broadcast by television; xxxx k) To exercise such powers and functions as may be necessary or incidental to the attainment of the purposes and objectives of this Act x x x. (Emphasis added.) The issuance of a preventive suspension comes well within the scope of the MTRCB s authority and functions expressly set forth in PD 1986, more particularly under its Sec. 3(d), as quoted above, which empowers the MTRCB to "supervise, regulate, and grant, deny or cancel, permits for the x x x exhibition, and/or television broadcast of all motion pictures, television programs and publicity materials, to the end that no such pictures, programs and materials as are determined by the BOARD to be objectionable in accordance with paragraph (c) hereof shall be x x x exhibited and/or broadcast by television."

Surely, the power to issue preventive suspension forms part of the MTRCB s express regulatory and supervisory statutory mandate and its investigatory and disciplinary authority subsumed in or implied from such mandate. Any other construal would render its power to regulate, supervise, or discipline illusory. Preventive suspension, it ought to be noted, is not a penalty by itself, being merely a preliminary step in an administrative investigation.15 And the power to discipline and impose penalties, if granted, carries with it the power to investigate administrative complaints and, during such investigation, to preventively suspend the person subject of the complaint.16 To reiterate, preventive suspension authority of the MTRCB springs from its powers conferred under PD 1986. The MTRCB did not, as petitioner insinuates, empower itself to impose preventive suspension through the medium of the IRR of PD 1986. It is true that the matter of imposing preventive suspension is embodied only in the IRR of PD 1986. Sec. 3, Chapter XIII of the IRR provides: Sec. 3. PREVENTION SUSPENSION ORDER. Any time during the pendency of the case, and in order to prevent or stop further violations or for the interest and welfare of the public, the Chairman of the Board may issue a Preventive Suspension Order mandating the preventive x x x suspension of the permit/permits involved, and/or closure of the x x x television network, cable TV station x x x provided that the temporary/preventive order thus issued shall have a life of not more than twenty (20) days from the date of issuance. But the mere absence of a provision on preventive suspension in PD 1986, without more, would not work to deprive the MTRCB a basic disciplinary tool, such as preventive suspension. Recall that the MTRCB is expressly empowered by statute to regulate and supervise television programs to obviate the exhibition or broadcast of, among others, indecent or immoral materials and to impose sanctions for violations and, corollarily, to prevent further violations as it investigates. Contrary to petitioner s assertion, the aforequoted Sec. 3 of the IRR neither amended PD 1986 nor extended the effect of the law. Neither did the MTRCB, by imposing the assailed preventive suspension, outrun its authority under the law. Far from it. The preventive suspension was actually done in furtherance of the law, imposed pursuant, to repeat, to the MTRCB s duty of regulating or supervising television programs, pending a determination of whether or not there has actually been a violation. In the final analysis, Sec. 3, Chapter XIII of the 2004 IRR merely formalized a power which PD 1986 bestowed, albeit impliedly, on MTRCB. Sec. 3(c) and (d) of PD 1986 finds application to the present case, sufficient to authorize the MTRCB s assailed action. Petitioner s restrictive reading of PD 1986, limiting the MTRCB to functions within the literal confines of the law, would give the agency little leeway to operate, stifling and rendering it inutile, when Sec. 3(k) of PD 1986 clearly intends to grant the MTRCB a wide room for flexibility in its operation. Sec. 3(k), we reiterate, provides, "To exercise such powers and functions as may be necessary or incidental to the attainment of the purposes and objectives of this Act x x x." Indeed, the power to impose preventive suspension is one of the implied powers of MTRCB. As distinguished from express powers, implied powers are those that can be inferred or are implicit in the wordings or conferred by necessary or fair implication of the enabling act.17 As we held in Angara v. Electoral Commission, when a general grant of power is conferred or a duty enjoined, every particular power necessary for the exercise of one or the performance of the other is also conferred by necessary implication.18 Clearly, the power to impose preventive suspension pending investigation is one of the implied or inherent powers of MTRCB. We cannot agree with petitioner s assertion that the aforequoted IRR provision on preventive suspension is applicable only to motion pictures and publicity materials. The scope of the MTRCB s authority extends beyond motion pictures. What the acronym MTRCB stands for would suggest as much. And while the law makes specific reference to the closure of a television network, the suspension of a television program is a far less punitive measure that can be undertaken, with the purpose of stopping further violations of PD 1986. Again, the MTRCB would regretfully be rendered ineffective should it be subject to the restrictions petitioner envisages. Just as untenable is petitioner s argument on the nullity of the preventive suspension order on the ground of lack of hearing. As it were, the MTRCB handed out the assailed order after petitioner, in response to a written notice, appeared before that Board for a hearing on private respondents complaint. No less than petitioner admitted that the order was issued after the adjournment of the hearing,19 proving that he had already appeared before the MTRCB. Under Sec. 3, Chapter XIII of the IRR of PD 1986, preventive suspension shall issue "[a]ny time during the pendency of the case." In this particular case, it was done after MTRCB duly apprised petitioner of his having possibly violated PD 198620 and of administrative complaints that had been filed against him for such 21 violation. At any event, that preventive suspension can validly be meted out even without a hearing.22

Petitioner next faults the MTRCB for denying him his right to the equal protection of the law, arguing that, owing to the preventive suspension order, he was unable to answer the criticisms coming from the INC ministers. Petitioner s position does not persuade. The equal protection clause demands that "all persons subject to legislation should be treated alike, under like circumstances and conditions both in the privileges conferred and liabilities imposed."23 It guards against undue favor and individual privilege as well as hostile discrimination.24Surely, petitioner cannot, under the premises, place himself in the same shoes as the INC ministers, who, for one, are not facing administrative complaints before the MTRCB. For another, he offers no proof that the said ministers, in their TV programs, use language similar to that which he used in his own, necessitating the MTRCB s disciplinary action. If the immediate result of the preventive suspension order is that petitioner remains temporarily gagged and is unable to answer his critics, this does not become a deprivation of the equal protection guarantee. The Court need not belabor the fact that the circumstances of petitioner, as host of Ang Dating Daan, on one hand, and the INC ministers, as hosts of Ang Tamang Daan, on the other, are, within the purview of this case, simply too different to even consider whether or not there is a prima facie indication of oppressive inequality. Petitioner next injects the notion of religious freedom, submitting that what he uttered was religious speech, adding that words like "putang babae" were said in exercise of his religious freedom. The argument has no merit. The Court is at a loss to understand how petitioner s utterances in question can come within the pale of Sec. 5, Article III of the 1987 Constitution on religious freedom. The section reads as follows: No law shall be made respecting the establishment of a religion, or prohibiting the free exercise thereof. The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights. There is nothing in petitioner s statements subject of the complaints expressing any particular religious belief, nothing furthering his avowed evangelical mission. The fact that he came out with his statements in a televised bible exposition program does not automatically accord them the character of a religious discourse. Plain and simple insults directed at another person cannot be elevated to the status of religious speech. Even petitioner s attempts to place his words in context show that he was moved by anger and the need to seek retribution, not by any religious conviction. His claim, assuming its veracity, that some INC ministers distorted his statements respecting amounts Ang Dating Daan owed to a TV station does not convert the foul language used in retaliation as religious speech. We cannot accept that petitioner made his statements in defense of his reputation and religion, as they constitute no intelligible defense or refutation of the alleged lies being spread by a rival religious group. They simply illustrate that petitioner had descended to the level of name-calling and foul-language discourse. Petitioner could have chosen to contradict and disprove his detractors, but opted for the low road. Petitioner, as a final point in G.R. No. 164785, would have the Court nullify the 20-day preventive suspension order, being, as insisted, an unconstitutional abridgement of the freedom of speech and expression and an impermissible prior restraint. The main issue tendered respecting the adverted violation and the arguments holding such issue dovetails with those challenging the threemonth suspension imposed under the assailed September 27, 2004 MTRCB decision subject of review under G.R. No. 165636. Both overlapping issues and arguments shall be jointly addressed. G.R. No. 165636 Petitioner urges the striking down of the decision suspending him from hosting Ang Dating Daan for three months on the main ground that the decision violates, apart from his religious freedom, his freedom of speech and expression guaranteed under Sec. 4, Art. III of the Constitution, which reads: No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievance. He would also have the Court declare PD 1986, its Sec. 3(c) in particular, unconstitutional for reasons articulated in this petition. We are not persuaded as shall be explained shortly. But first, we restate certain general concepts and principles underlying the freedom of speech and expression.

It is settled that expressions by means of newspapers, radio, television, and motion pictures come within the broad protection of the free speech and expression clause.25 Each method though, because of its dissimilar presence in the lives of people and accessibility to children, tends to present its own problems in the area of free speech protection, with broadcast media, of all forms of communication, enjoying a lesser degree of protection.26 Just as settled is the rule that restrictions, be it in the form of prior restraint, e.g., judicial injunction against publication or threat of cancellation of license/franchise, or subsequent liability, whether in libel and damage suits, prosecution for sedition, or contempt proceedings, are anathema to the freedom of expression. Prior restraint means official government restrictions on the press or other forms of expression in advance of actual publication or dissemination.27 The freedom of expression, as with the other freedoms encased in the Bill of Rights, is, however, not absolute. It may be regulated to some extent to serve important public interests, some forms of speech not being protected. As has been held, the limits of the freedom of expression are reached when the expression touches upon matters of essentially private concern.28 In the oft-quoted expression of Justice Holmes, the constitutional guarantee "obviously was not intended to give immunity for every possible use of language."29 From Lucas v. Royo comes this line: "[T]he freedom to express one s sentiments and belief does not grant one the license to vilify in public the honor and integrity of another. Any sentiments must be expressed within the proper forum and with proper regard for the rights of others."30 Indeed, as noted in Chaplinsky v. State of New Hampshire, "there are certain well-defined and narrowly limited classes of speech that are harmful, the prevention and punishment of which has never been thought to raise any Constitutional problems." In net effect, some forms of speech are not protected by the Constitution, meaning that restrictions on unprotected speech may be decreed without running afoul of the freedom of speech clause.32 A speech would fall under the unprotected type if the utterances involved are "no essential part of any exposition of ideas, and are of such slight social value as a step of truth that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality."33 Being of little or no value, there is, in dealing with or regulating them, no imperative call for the application of the clear and present danger rule or the balancing-ofinterest test, they being essentially modes of weighing competing values,34 or, with like effect, determining which of the clashing interests should be advanced. Petitioner asserts that his utterance in question is a protected form of speech. The Court rules otherwise. It has been established in this jurisdiction that unprotected speech or low-value expression refers to libelous statements, obscenity or pornography, false or misleading advertisement, insulting or "fighting words", i.e., those which by their very utterance inflict injury or tend to incite an immediate breach of peace and expression endangering national security. The Court finds that petitioner s statement can be treated as obscene, at least with respect to the average child. Hence, it is, in that context, unprotected speech. In Fernando v. Court of Appeals, the Court expressed difficulty in formulating a definition of obscenity that would apply to all cases, but nonetheless stated the ensuing observations on the matter: There is no perfect definition of "obscenity" but the latest word is that of Miller v. California which established basic guidelines, to wit: (a) whether to the average person, applying contemporary standards would find the work, taken as a whole, appeals to the prurient interest; (b) whether the work depicts or describes, in a patently offensive way, sexual conduct specifically defined by the applicable state law; and (c) whether the work, taken as a whole, lacks serious literary, artistic, political, or scientific value. But, it would be a serious misreading of Miller to conclude that the trier of facts has the unbridled discretion in determining what is "patently offensive." x x x What remains clear is that obscenity is an issue proper for judicial determination and should be treated on 35 a case to case basis and on the judge s sound discretion. Following the contextual lessons of the cited case of Miller v. California,36 a patently offensive utterance would come within the pale of the term obscenity should it appeal to the prurient interest of an average listener applying contemporary standards. A cursory examination of the utterances complained of and the circumstances of the case reveal that to an average adult, the utterances "Gago ka talaga x x x, masahol ka pa sa putang babae x x x. Yung putang babae ang gumagana lang doon yung ibaba, [dito] kay Michael ang gumagana ang itaas, o di ba!" may not constitute obscene but merely indecent utterances. They can be viewed as figures of speech or merely a play on words. In the context they were used, they may not appeal to the prurient interests of an adult. The problem with the challenged statements is that they were uttered in a TV program that is rated "G" or for general viewership, and in a time slot that would likely reach even the eyes and ears of children. While adults may have understood that the terms thus used were not to be taken literally, children could hardly be expected to have the same discernment. Without parental guidance, the unbridled use of such language as that of petitioner in a television broadcast could corrupt impressionable young minds. The term "putang babae" means "a female prostitute," a term wholly inappropriate for children, who could look it up in a dictionary and just get the literal meaning, missing the context within which it was used.
31

Petitioner further used the terms, "ang gumagana lang doon yung ibaba," making reference to the female sexual organ and how a female prostitute uses it in her trade, then stating that Sandoval was worse than that by using his mouth in a similar manner. Children could be motivated by curiosity and ask the meaning of what petitioner said, also without placing the phrase in context. They may be inquisitive as to why Sandoval is different from a female prostitute and the reasons for the dissimilarity. And upon learning the meanings of the words used, young minds, without the guidance of an adult, may, from their end, view this kind of indecent speech as obscene, if they take these words literally and use them in their own speech or form their own ideas on the matter. In this particular case, where children had the opportunity to hear petitioner s words, when speaking of the average person in the test for obscenity, we are speaking of the average child, not the average adult. The average child may not have the adult s grasp of figures of speech, and may lack the understanding that language may be colorful, and words may convey more than the literal meaning. Undeniably the subject speech is very suggestive of a female sexual organ and its function as such. In this sense, we find petitioner s utterances obscene and not entitled to protection under the umbrella of freedom of speech. Even if we concede that petitioner s remarks are not obscene but merely indecent speech, still the Court rules that petitioner cannot avail himself of the constitutional protection of free speech. Said statements were made in a medium easily accessible to children. With respect to the young minds, said utterances are to be treated as unprotected speech. No doubt what petitioner said constitutes indecent or offensive utterances. But while a jurisprudential pattern involving certain offensive utterances conveyed in different mediums has emerged, this case is veritably one of first impression, it being the first time that indecent speech communicated via television and the applicable norm for its regulation are, in this jurisdiction, made the focal point. Federal Communications Commission (FCC) v. Pacifica Foundation,37 a 1978 American landmark case cited in Eastern Broadcasting Corporation v. Dans, Jr.38and Chavez v. Gonzales,39 is a rich source of persuasive lessons. Foremost of these relates to indecent speech without prurient appeal component coming under the category of protected speech depending on the context within which it was made, irresistibly suggesting that, within a particular context, such indecent speech may validly be categorized as unprotected, ergo, susceptible to restriction. In FCC, seven of what were considered "filthy" words40 earlier recorded in a monologue by a satiric humorist later aired in the afternoon over a radio station owned by Pacifica Foundation. Upon the complaint of a man who heard the pre-recorded monologue while driving with his son, FCC declared the language used as "patently offensive" and "indecent" under a prohibiting law, though not necessarily obscene. FCC added, however, that its declaratory order was issued in a "special factual context," referring, in gist, to an afternoon radio broadcast when children were undoubtedly in the audience. Acting on the question of whether the FCC could regulate the subject utterance, the US Supreme Court ruled in the affirmative, owing to two special features of the broadcast medium, to wit: (1) radio is a pervasive medium and (2) broadcasting is uniquely accessible to children. The US Court, however, hastened to add that the monologue would be protected speech in other contexts, albeit it did not expound and identify a compelling state interest in putting FCC s content-based regulatory action under scrutiny. The Court in Chavez41 elucidated on the distinction between regulation or restriction of protected speech that is content-based and that which is content-neutral. A content-based restraint is aimed at the contents or idea of the expression, whereas a contentneutral restraint intends to regulate the time, place, and manner of the expression under well-defined standards tailored to serve a compelling state interest, without restraint on the message of the expression. Courts subject content-based restraint to strict scrutiny. With the view we take of the case, the suspension MTRCB imposed under the premises was, in one perspective, permissible restriction. We make this disposition against the backdrop of the following interplaying factors: First, the indecent speech was made 42 via television, a pervasive medium that, to borrow from Gonzales v. Kalaw Katigbak, easily "reaches every home where there is a set [and where] [c]hildren will likely be among the avid viewers of the programs therein shown"; second, the broadcast was aired at the time of the day when there was a reasonable risk that children might be in the audience; and third, petitioner uttered his speech on a "G" or "for general patronage" rated program. Under Sec. 2(A) of Chapter IV of the IRR of the MTRCB, a show for general patronage is "[s]uitable for all ages," meaning that the "material for television x x x in the judgment of the BOARD, does not contain anything unsuitable for children and minors, and may be viewed without adult guidance or supervision." The words petitioner used were, by any civilized norm, clearly not suitable for children. Where a language is categorized as indecent, as in petitioner s utterances on a general-patronage rated TV program, it may be readily proscribed as unprotected speech. A view has been advanced that unprotected speech refers only to pornography, false or misleading advertisement, advocacy of imminent lawless action, and expression endangering national security. But this list is not, as some members of the Court would submit, exclusive or carved in stone. Without going into specifics, it may be stated without fear of contradiction that US decisional law goes beyond the aforesaid general exceptions. As the Court has been impelled to recognize exceptions to the rule against censorship in the past, this particular case constitutes yet another exception, another instance of unprotected speech, created by
43 44

the necessity of protecting the welfare of our children. As unprotected speech, petitioner s utterances can be subjected to restraint or regulation. Despite the settled ruling in FCC which has remained undisturbed since 1978, petitioner asserts that his utterances must present a clear and present danger of bringing about a substantive evil the State has a right and duty to prevent and such danger must be grave and imminent.45 Petitioner s invocation of the clear and present danger doctrine, arguably the most permissive of speech tests, would not avail him any relief, for the application of said test is uncalled for under the premises. The doctrine, first formulated by Justice Holmes, accords protection for utterances so that the printed or spoken words may not be subject to prior restraint or subsequent punishment unless its expression creates a clear and present danger of bringing about a substantial evil which the government has the power to prohibit.46 Under the doctrine, freedom of speech and of press is susceptible of restriction when and only when necessary to prevent grave and immediate danger to interests which the government may lawfully protect. As it were, said doctrine evolved in the context of prosecutions for rebellion and other crimes involving the overthrow of government.47 It was originally designed to determine the latitude which should be given to speech that espouses anti-government action, or to have serious and substantial deleterious consequences on the security and public order of the community.48 The clear and present danger rule has been applied to this jurisdiction.49 As a standard of limitation on free speech and press, however, the clear and present danger test is not a magic incantation that wipes out all problems and does away with analysis and judgment in the testing of the legitimacy of claims to free speech and which compels a court to release a defendant from liability the moment the doctrine is invoked, absent proof of imminent catastrophic disaster.50 As we observed in Eastern Broadcasting Corporation, the clear and present danger test "does not lend itself to a simplistic and all embracing interpretation applicable to all utterances in all forums."51 To be sure, the clear and present danger doctrine is not the only test which has been applied by the courts. Generally, said doctrine is applied to cases involving the overthrow of the government and even other evils which do not clearly undermine national security. Since not all evils can be measured in terms of "proximity and degree" the Court, however, in several cases Ayer Productions v. Capulong52 and Gonzales v. COMELEC,53 applied the balancing of interests test. Former Chief Justice Fred Ruiz Castro, in Gonzales v. COMELEC, elucidated in his Separate Opinion that "where the legislation under constitutional attack interferes with the freedom of speech and assembly in a more generalized way and where the effect of the speech and assembly in terms of the probability of realization of a specific danger is not susceptible even of impressionistic calculation,"54 then the "balancing of interests" test can be applied. The Court explained also in Gonzales v. COMELEC the "balancing of interests" test: When particular conduct is regulated in the interest of public order, and the regulation results in an indirect, conditional, partial abridgment of speech, the duty of the courts is to determine which of the two conflicting interests demands the greater protection under the particular circumstances presented. x x x We must, therefore, undertake the "delicate and difficult task x x x to weigh the circumstances and to appraise the substantiality of the reasons advanced in support of the regulation of the free enjoyment of rights x x x. In enunciating standard premised on a judicial balancing of the conflicting social values and individual interests competing for ascendancy in legislation which restricts expression, the court in Douds laid the basis for what has been called the "balancing-ofinterests" test which has found application in more recent decisions of the U.S. Supreme Court. Briefly stated, the "balancing" test requires a court to take conscious and detailed consideration of the interplay of interests observable in a given situation or type of situation. xxxx Although the urgency of the public interest sought to be secured by Congressional power restricting the individual s freedom, and the social importance and value of the freedom so restricted, "are to be judged in the concrete, not on the basis of abstractions," a wide range of factors are necessarily relevant in ascertaining the point or line of equilibrium. Among these are (a) the social value and importance of the specific aspect of the particular freedom restricted by the legislation; (b) the specific thrust of the restriction, i.e., whether the restriction is direct or indirect, whether or not the persons affected are few; (c) the value and importance of the public interest sought to be secured by the legislation the reference here is to the nature and gravity of the evil which Congress seeks to prevent; (d) whether the specific restriction decreed by Congress is reasonably appropriate and necessary for the protection of such public interest; and (e) whether the necessary safeguarding of the public interest involved may be achieved by some other 55 measure less restrictive of the protected freedom.

This balancing of interest test, to borrow from Professor Kauper, rests on the theory that it is the court s function in a case before it when it finds public interests served by legislation, on the one hand, and the free expression clause affected by it, on the other, to balance one against the other and arrive at a judgment where the greater weight shall be placed. If, on balance, it appears that the public interest served by restrictive legislation is of such nature that it outweighs the abridgment of freedom, then the court will find the legislation valid. In short, the balance-of-interests theory rests on the basis that constitutional freedoms are not absolute, not even those stated in the free speech and expression clause, and that they may be abridged to some extent to serve appropriate and important interests.57 To the mind of the Court, the balancing of interest doctrine is the more appropriate test to follow. In the case at bar, petitioner used indecent and obscene language and a three (3)-month suspension was slapped on him for breach of MTRCB rules. In this setting, the assertion by petitioner of his enjoyment of his freedom of speech is ranged against the duty of the government to protect and promote the development and welfare of the youth. After a careful examination of the factual milieu and the arguments raised by petitioner in support of his claim to free speech, the Court rules that the government s interest to protect and promote the interests and welfare of the children adequately buttresses the reasonable curtailment and valid restraint on petitioner s prayer to continue as program host of Ang Dating Daan during the suspension period. No doubt, one of the fundamental and most vital rights granted to citizens of a State is the freedom of speech or expression, for without the enjoyment of such right, a free, stable, effective, and progressive democratic state would be difficult to attain. Arrayed against the freedom of speech is the right of the youth to their moral, spiritual, intellectual, and social being which the State is constitutionally tasked to promote and protect. Moreover, the State is also mandated to recognize and support the vital role of the youth in nation building as laid down in Sec. 13, Art. II of the 1987 Constitution. The Constitution has, therefore, imposed the sacred obligation and responsibility on the State to provide protection to the youth against illegal or improper activities which may prejudice their general well-being. The Article on youth, approved on second reading by the Constitutional Commission, explained that the State shall "extend social protection to minors against all forms of neglect, cruelty, exploitation, immorality, and practices which may foster racial, religious or other forms of discrimination."58 Indisputably, the State has a compelling interest in extending social protection to minors against all forms of neglect, exploitation, and immorality which may pollute innocent minds. It has a compelling interest in helping parents, through regulatory mechanisms, protect their children s minds from exposure to undesirable materials and corrupting experiences. The Constitution, no less, in fact enjoins the State, as earlier indicated, to promote and protect the physical, moral, spiritual, intellectual, and social well-being of the youth to better prepare them fulfill their role in the field of nation-building.59 In the same way, the State is mandated to support parents in the rearing of the youth for civic efficiency and the development of moral character.60 Petitioner s offensive and obscene language uttered in a television broadcast, without doubt, was easily accessible to the children. His statements could have exposed children to a language that is unacceptable in everyday use. As such, the welfare of children and the State s mandate to protect and care for them, as parens patriae,61constitute a substantial and compelling government interest in regulating petitioner s utterances in TV broadcast as provided in PD 1986. FCC explains the duty of the government to act as parens patriae to protect the children who, because of age or interest capacity, are susceptible of being corrupted or prejudiced by offensive language, thus: [B]roadcasting is uniquely accessible to children, even those too young to read. Although Cohen s written message, ["Fuck the Draft"], might have been incomprehensible to a first grader, Pacifica s broadcast could have enlarged a child s vocabulary in an instant. Other forms of offensive expression may be withheld from the young without restricting the expression at its source. Bookstores and motion picture theaters, for example, may be prohibited from making indecent material available to children. We held in Ginsberg v. New York that the government s interest in the "well-being of its youth" and in supporting "parents claim to authority in their own household" justified the regulation of otherwise protected expression. The ease with which children may obtain access to broadcast material, coupled with the concerns recognized in Ginsberg, amply justify special treatment of indecent broadcasting. Moreover, Gonzales v. Kalaw Katigbak likewise stressed the duty of the State to attend to the welfare of the young: x x x It is the consensus of this Court that where television is concerned, a less liberal approach calls for observance. This is so because unlike motion pictures where the patrons have to pay their way, television reaches every home where there is a set. Children then will likely will be among the avid viewers of the programs therein shown. As was observed by Circuit Court of Appeals

56

Judge Jerome Frank, it is hardly the concern of the law to deal with the sexual fantasies of the adult population. It cannot be denied 62 though that the State as parens patriae is called upon to manifest an attitude of caring for the welfare of the young. The compelling need to protect the young impels us to sustain the regulatory action MTRCB took in the narrow confines of the case. To reiterate, FCC justified the restraint on the TV broadcast grounded on the following considerations: (1) the use of television with its unique accessibility to children, as a medium of broadcast of a patently offensive speech; (2) the time of broadcast; and (3) the "G" rating of the Ang Dating Daan program. And in agreeing with MTRCB, the court takes stock of and cites with approval the following excerpts from FCC: It is appropriate, in conclusion, to emphasize the narrowness of our holding. This case does not involve a two-way radio conversation between a cab driver and a dispatcher, or a telecast of an Elizabethan comedy. We have not decided that an occasional expletive in either setting would justify any sanction. x x x The [FFC s] decision rested entirely on a nuisance rationale under which context is all important. The concept requires consideration of a host of variables. The time of day was emphasized by the [FFC]. The content of the program in which the language is used will affect the composition of the audience x x x. As Mr. Justice Sutherland wrote a nuisance may be merely a right thing in the wrong place, like a pig in the parlor instead of the barnyard. We simply hold that when the [FCC] finds that a pig has entered the parlor, the exercise of its regulatory power does not depend on proof that the pig is obscene. (Citation omitted.) There can be no quibbling that the remarks in question petitioner uttered on prime-time television are blatantly indecent if not outright obscene. It is the kind of speech that PD 1986 proscribes necessitating the exercise by MTRCB of statutory disciplinary powers. It is the kind of speech that the State has the inherent prerogative, nay duty, to regulate and prevent should such action served and further compelling state interests. One who utters indecent, insulting, or offensive words on television when unsuspecting children are in the audience is, in the graphic language of FCC, a "pig in the parlor." Public interest would be served if the "pig" is reasonably restrained or even removed from the "parlor." Ergo, petitioner s offensive and indecent language can be subjected to prior restraint. Petitioner theorizes that the three (3)-month suspension is either prior restraint or subsequent punishment that, however, includes prior restraint, albeit indirectly. After a review of the facts, the Court finds that what MTRCB imposed on petitioner is an administrative sanction or subsequent punishment for his offensive and obscene language in Ang Dating Daan. To clarify, statutes imposing prior restraints on speech are generally illegal and presumed unconstitutional breaches of the freedom of speech. The exceptions to prior restraint are movies, television, and radio broadcast censorship in view of its access to numerous people, including the young who must be insulated from the prejudicial effects of unprotected speech. PD 1986 was passed creating the Board of Review for Motion Pictures and Television (now MTRCB) and which requires prior permit or license before showing a motion picture or broadcasting a TV program. The Board can classify movies and television programs and can cancel permits for exhibition of films or television broadcast.lavvphi1.net The power of MTRCB to regulate and even impose some prior restraint on radio and television shows, even religious programs, was upheld in Iglesia Ni Cristo v. Court of Appeals. Speaking through Chief Justice Reynato S. Puno, the Court wrote: We thus reject petitioner s postulate that its religious program is per se beyond review by the respondent Board. Its public broadcast on TV of its religious program brings it out of the bosom of internal belief. Television is a medium that reaches even the eyes and ears of children. The Court iterates the rule that the exercise of religious freedom can be regulated by the State when it will bring about the clear and present danger of some substantive evil which the State is duty bound to prevent, i.e., serious detriment to the more overriding interest of public health, public morals, or public welfare. x x x xxxx While the thesis has a lot to commend itself, we are not ready to hold that [PD 1986] is unconstitutional for Congress to grant an administrative body quasi-judicial power to preview and classify TV programs and enforce its decision subject to review by our courts. As far back as 1921, we upheld this setup in Sotto vs. Ruiz, viz: "The use of the mails by private persons is in the nature of a privilege which can be regulated in order to avoid its abuse. Persons possess no absolute right to put into the mail anything they please, regardless of its character."63

Bernas adds: Under the decree a movie classification board is made the arbiter of what movies and television programs or parts of either are fit for public consumption. It decides what movies are "immoral, indecent, contrary to law and/or good customs, injurious to the prestige of the Republic of the Philippines or its people," and what "tend to incite subversion, insurrection, rebellion or sedition," or "tend to undermine the faith and confidence of the people in their government and/or duly constituted authorities," etc. Moreover, its decisions are executory unless stopped by a court.64 Moreover, in MTRCB v. ABS-CBN Broadcasting Corporation, it was held that the power of review and prior approval of MTRCB extends to all television programs and is valid despite the freedom of speech guaranteed by the Constitution. Thus, all broadcast networks are regulated by the MTRCB since they are required to get a permit before they air their television programs. Consequently, their right to enjoy their freedom of speech is subject to that requirement. As lucidly explained by Justice Dante O. Tinga, government regulations through the MTRCB became "a necessary evil" with the government taking the role of assigning bandwidth to individual broadcasters. The stations explicitly agreed to this regulatory scheme; otherwise, chaos would result in the television broadcast industry as competing broadcasters will interfere or co-opt each other s signals. In this scheme, station owners and broadcasters in effect waived their right to the full enjoyment of their right to freedom of speech in radio and television programs and impliedly agreed that said right may be subject to prior restraint denial of permit or subsequent punishment, like suspension or cancellation of permit, among others. The three (3) months suspension in this case is not a prior restraint on the right of petitioner to continue with the broadcast of Ang Dating Daan as a permit was already issued to him by MTRCB for such broadcast. Rather, the suspension is in the form of permissible administrative sanction or subsequent punishment for the offensive and obscene remarks he uttered on the evening of August 10, 2004 in his television program, Ang Dating Daan. It is a sanction that the MTRCB may validly impose under its charter without running afoul of the free speech clause. And the imposition is separate and distinct from the criminal action the Board may take pursuant to Sec. 3(i) of PD 1986 and the remedies that may be availed of by the aggrieved private party under the provisions on libel or tort, if applicable. As FCC teaches, the imposition of sanctions on broadcasters who indulge in profane or indecent broadcasting does not constitute forbidden censorship. Lest it be overlooked, the sanction imposed is not per se for petitioner s exercise of his freedom of speech via television, but for the indecent contents of his utterances in a "G" rated TV program. More importantly, petitioner is deemed to have yielded his right to his full enjoyment of his freedom of speech to regulation under PD 1986 and its IRR as television station owners, program producers, and hosts have impliedly accepted the power of MTRCB to regulate the broadcast industry. Neither can petitioner s virtual inability to speak in his program during the period of suspension be plausibly treated as prior restraint on future speech. For viewed in its proper perspective, the suspension is in the nature of an intermediate penalty for uttering an unprotected form of speech. It is definitely a lesser punishment than the permissible cancellation of exhibition or broadcast permit or license. In fine, the suspension meted was simply part of the duties of the MTRCB in the enforcement and administration of the law which it is tasked to implement. Viewed in its proper context, the suspension sought to penalize past speech made on prime-time "G" rated TV program; it does not bar future speech of petitioner in other television programs; it is a permissible subsequent administrative sanction; it should not be confused with a prior restraint on speech. While not on all fours, the Court, in MTRCB,66 sustained the power of the MTRCB to penalize a broadcast company for exhibiting/airing a pre-taped TV episode without Board authorization in violation of Sec. 7 of PD 1986. Any simplistic suggestion, however, that the MTRCB would be crossing the limits of its authority were it to regulate and even restrain the prime-time television broadcast of indecent or obscene speech in a "G" rated program is not acceptable. As made clear in Eastern Broadcasting Corporation, "the freedom of television and radio broadcasting is somewhat lesser in scope than the freedom accorded to newspaper and print media." The MTRCB, as a regulatory agency, must have the wherewithal to enforce its mandate, which would not be effective if its punitive actions would be limited to mere fines. Television broadcasts should be subject to some form of regulation, considering the ease with which they can be accessed, and violations of the regulations must be met with appropriate and proportional disciplinary action. The suspension of a violating television program would be a sufficient punishment and serve as a deterrent for those responsible. The prevention of the broadcast of petitioner s television program is justified, and does not constitute prohibited prior restraint. It behooves the Court to respond to the needs of the changing times, and craft jurisprudence to reflect these times. Petitioner, in questioning the three-month suspension, also tags as unconstitutional the very law creating the MTRCB, arguing that PD 1986, as applied to him, infringes also upon his freedom of religion. The Court has earlier adequately explained why petitioner s undue reliance on the religious freedom cannot lend justification, let alone an exempting dimension to his licentious utterances in
65

his program. The Court sees no need to address anew the repetitive arguments on religious freedom. As earlier discussed in the disposition of the petition in G.R. No. 164785, what was uttered was in no way a religious speech. Parenthetically, petitioner s attempt to characterize his speech as a legitimate defense of his religion fails miserably. He tries to place his words in perspective, arguing evidently as an afterthought that this was his method of refuting the alleged distortion of his statements by the INC hosts of Ang Tamang Daan. But on the night he uttered them in his television program, the word simply came out as profane language, without any warning or guidance for undiscerning ears. As to petitioner s other argument about having been denied due process and equal protection of the law, suffice it to state that we have at length debunked similar arguments in G.R. No. 164785. There is no need to further delve into the fact that petitioner was afforded due process when he attended the hearing of the MTRCB, and that he was unable to demonstrate that he was unjustly discriminated against in the MTRCB proceedings. Finally, petitioner argues that there has been undue delegation of legislative power, as PD 1986 does not provide for the range of imposable penalties that may be applied with respect to violations of the provisions of the law. The argument is without merit. In Edu v. Ericta, the Court discussed the matter of undue delegation of legislative power in the following wise: It is a fundamental principle flowing from the doctrine of separation of powers that Congress may not delegate its legislative power to the two other branches of the government, subject to the exception that local governments may over local affairs participate in its exercise. What cannot be delegated is the authority under the Constitution to make laws and to alter and repeal them; the test is the completeness of the statute in all its term and provisions when it leaves the hands of the legislature. To determine whether or not there is an undue delegation of legislative power, the inquiry must be directed to the scope and definiteness of the measure enacted. The legislature does not abdicate its functions when it describes what job must be done, who is to do it, and what is the scope of his authority. For a complex economy, that may indeed be the only way in which the legislative process can go forward. A distinction has rightfully been made between delegation of power to make laws which necessarily involves a discretion as to what it shall be, which constitutionally may not be done, and delegation of authority or discretion as to its execution to be exercised under and in pursuance of the law, to which no valid objection can be made. The Constitution is thus not to be regarded as denying the legislature the necessary resources of flexibility and practicability. To avoid the taint of unlawful delegation, there must be a standard, which implies at the very least that the legislature itself determines matters of principle and lays down fundamental policy. Otherwise, the charge of complete abdication may be hard to repel. A standard thus defines legislative policy, marks its limits, maps out its boundaries and specifies the public agency to apply it. It indicates the circumstances under which the legislative command is to be effected. It is the criterion by which legislative purpose may be carried out. Thereafter, the executive or administrative office designated may in pursuance of the above guidelines promulgate supplemental rules and regulations.67 Based on the foregoing pronouncements and analyzing the law in question, petitioner s protestation about undue delegation of legislative power for the sole reason that PD 1986 does not provide for a range of penalties for violation of the law is untenable. His thesis is that MTRCB, in promulgating the IRR of PD 1986, prescribing a schedule of penalties for violation of the provisions of the decree, went beyond the terms of the law. Petitioner s posture is flawed by the erroneous assumptions holding it together, the first assumption being that PD 1986 does not prescribe the imposition of, or authorize the MTRCB to impose, penalties for violators of PD 1986. As earlier indicated, however, the MTRCB, by express and direct conferment of power and functions, is charged with supervising and regulating, granting, denying, or canceling permits for the exhibition and/or television broadcast of all motion pictures, television programs, and publicity materials to the end that no such objectionable pictures, programs, and materials shall be exhibited and/or broadcast by television. Complementing this provision is Sec. 3(k) of the decree authorizing the MTRCB "to exercise such powers and functions as may be necessary or incidental to the attainment of the purpose and objectives of [the law]." As earlier explained, the investiture of supervisory, regulatory, and disciplinary power would surely be a meaningless grant if it did not carry with it the power to penalize the supervised or the regulated as may be proportionate to the offense committed, charged, and proved. As the Court said in Chavez v. National Housing Authority: x x x [W]hen a general grant of power is conferred or duty enjoined, every particular power necessary for the exercise of the one or the performance of the other is also conferred. x x x [W]hen the statute does not specify the particular method to be followed or

used by a government agency in the exercise of the power vested in it by law, said agency has the authority to adopt any reasonable 68 method to carry out its function. Given the foregoing perspective, it stands to reason that the power of the MTRCB to regulate and supervise the exhibition of TV programs carries with it or necessarily implies the authority to take effective punitive action for violation of the law sought to be enforced. And would it not be logical too to say that the power to deny or cancel a permit for the exhibition of a TV program or broadcast necessarily includes the lesser power to suspend? The MTRCB promulgated the IRR of PD 1986 in accordance with Sec. 3(a) which, for reference, provides that agency with the power "[to] promulgate such rules and regulations as are necessary or proper for the implementation of this Act, and the accomplishment of its purposes and objectives x x x." And Chapter XIII, Sec. 1 of the IRR providing: Section 1. VIOLATIONS AND ADMINISTRATIVE SANCTIONS. Without prejudice to the immediate filing of the appropriate criminal action and the immediate seizure of the pertinent articles pursuant to Section 13, any violation of PD 1986 and its Implementing Rules and Regulations governing motion pictures, television programs, and related promotional materials shall be penalized with suspension or cancellation of permits and/or licenses issued by the Board and/or with the imposition of fines and other administrative penalty/penalties. The Board recognizes the existing Table of Administrative Penalties attached without prejudice to the power of the Board to amend it when the need arises. In the meantime the existing revised Table of Administrative Penalties shall be enforced. (Emphasis added.) This is, in the final analysis, no more than a measure to specifically implement the aforequoted provisions of Sec. 3(d) and (k). Contrary to what petitioner implies, the IRR does not expand the mandate of the MTRCB under the law or partake of the nature of an unauthorized administrative legislation. The MTRCB cannot shirk its responsibility to regulate the public airwaves and employ such means as it can as a guardian of the public. In Sec. 3(c), one can already find the permissible actions of the MTRCB, along with the standards to be applied to determine whether there have been statutory breaches. The MTRCB may evaluate motion pictures, television programs, and publicity materials "applying contemporary Filipino cultural values as standard," and, from there, determine whether these audio and video materials "are objectionable for being immoral, indecent, contrary to law and/or good customs, [etc.] x x x" and apply the sanctions it deems proper. The lawmaking body cannot possibly provide for all the details in the enforcement of a particular statute.69 The grant of the rule-making power to administrative agencies is a relaxation of the principle of separation of powers and is an exception to the nondelegation of legislative powers.70 Administrative regulations or "subordinate legislation" calculated to promote the public interest are necessary because of "the growing complexity of modern life, the multiplication of the subjects of governmental regulations, and the increased difficulty of administering the law."71 Allowing the MTRCB some reasonable elbow-room in its operations and, in the exercise of its statutory disciplinary functions, according it ample latitude in fixing, by way of an appropriate issuance, administrative penalties with due regard for the severity of the offense and attending mitigating or aggravating circumstances, as the case may be, would be consistent with its mandate to effectively and efficiently regulate the movie and television industry. But even as we uphold the power of the MTRCB to review and impose sanctions for violations of PD 1986, its decision to suspend petitioner must be modified, for nowhere in that issuance, particularly the power-defining Sec. 3 nor in the MTRCB Schedule of Administrative Penalties effective January 1, 1999 is the Board empowered to suspend the program host or even to prevent certain people from appearing in television programs. The MTRCB, to be sure, may prohibit the broadcast of such television programs or cancel permits for exhibition, but it may not suspend television personalities, for such would be beyond its jurisdiction. The MTRCB cannot extend its exercise of regulation beyond what the law provides. Only persons, offenses, and penalties clearly falling clearly within the letter and spirit of PD 1986 will be considered to be within the decree s penal or disciplinary operation. And when it exists, the reasonable doubt must be resolved in favor of the person charged with violating the statute and for whom the penalty is sought. Thus, the MTRCB s decision in Administrative Case No. 01-04 dated September 27, 2004 and the subsequent order issued pursuant to said decision must be modified. The suspension should cover only the television program on which petitioner appeared and uttered the offensive and obscene language, which sanction is what the law and the facts obtaining call for. In ending, what petitioner obviously advocates is an unrestricted speech paradigm in which absolute permissiveness is the norm. Petitioner s flawed belief that he may simply utter gutter profanity on television without adverse consequences, under the guise of free speech, does not lend itself to acceptance in this jurisdiction. We repeat: freedoms of speech and expression are not absolute freedoms. To say "any act that restrains speech should be greeted with furrowed brows" is not to say that any act that restrains or regulates speech or expression is per se invalid. This only recognizes the importance of freedoms of speech and expression, and indicates the necessity to carefully scrutinize acts that may restrain or regulate speech.

WHEREFORE, the decision of the MTRCB in Adm. Case No. 01-04 dated September 27, 2004 is hereby AFFIRMED with the MODIFICATION of limiting the suspension to the program Ang Dating Daan. As thus modified, the fallo of the MTRCB shall read as follows: WHEREFORE, in view of all the foregoing, a Decision is hereby rendered, imposing a penalty of THREE (3) MONTHS SUSPENSION on the television program, Ang Dating Daan, subject of the instant petition. Co-respondents Joselito Mallari, Luzviminda Cruz, and UNTV Channel 37 and its owner, PBC, are hereby exonerated for lack of evidence. Costs against petitioner. SO ORDERED. G.R. No. 151344 September 26, 2006

EMELITA A. DORAN, petitioner, vs. EXECUTIVE JUDGE JIMMY HENRY F. LUCZON, JR., Regional Trial Court, Branch 1, Tuguegarao City, Cagayan, and JUDGE SALVADOR B. CAMPOS, Municipal Circuit Trial Court, Amulung-Iguig, Cagayan,respondents. DECISION SANDOVAL-GUTIERREZ, J.: Before us for resolution is the Petition for Certiorari1 (with prayer for a writ of preliminary prohibitory injunction) assailing the Resolutions dated December 10, 2001 and January 7, 2002 issued by Executive Judge Jimmy Henry F. Luczon, Jr. of the Regional Trial Court, Branch 1, Tuguegarao City, in OCA IPI No. 99-766-MTJ, entitled "Emelita A. Doran v. Judge Salvador B. Campos, MCTC, Amulung-Iguig, Cagayan." The facts are: Emelita A. Doran, petitioner, is a court stenographer detailed with the Municipal Circuit Trial Court, Amulung-Iguig, Cagayan presided by Judge Salvador B. Campos, respondent. On August 17, 1999, petitioner filed with the Office of the Court Administrator (OCA) an affidavit-complaint charging respondent Judge Campos with grave misconduct, docketed as Administrative Matter OCA IPI No. 99-766-MTJ. Petitioner alleged that respondent committed the following acts: (1) scandal-mongering; (2) certifying as correct the June 1999 Daily Time Record of Geraldson F. Trinidad, court aide, despite knowing that the latter was absent during the first three weeks of that month as he was then harvesting palay in respondent's rice land; (3) utilizing Geraldson as overseer of his rice land; (4) causing the preparation of a "facsimile of a logbook" containing false entries and substituting the same in place of the genuine logbook to favor his favorite employees, particularly Geraldson; (5) disregarding a preliminary examination conducted in a case, yet finding that no probable cause exists and, thereafter, conducting another preliminary examination whereby he answered his own questions; (6) accepting bribes from litigants; and (7) habitual absenteeism.2 In his counter-affidavit dated October 8, 1999, respondent denied petitioner's allegations. He submitted the logbook of the court employees' attendance, as well as the affidavits of Petronilo Capili, clerk of court, Rizalina Aquino, stenographic reporter, Servando Bangayan, farmer-overseer, Geraldson Trinidad and Raquel Arimas, court stenographer. Upon recommendation by then Court Administrator Alfredo I. Benipayo, we referred the administrative matter to Executive Judge Jimmy Henry F. Luczon, Jr., Regional Trial Court (RTC), Tuguegarao City, for investigation, report, and recommendation within sixty (60) days from receipt of the records. After the petitioner had completed the presentation of her evidence, respondent, through counsel, asked the opinion of Investigating Judge Luczon whether it is procedurally permissible for him to file a demurrer to evidence or a motion to dismiss. Judge Luczon answered in the affirmative with the advice that counsel must first seek leave of court.

Accordingly, respondent filed a Motion and Manifestation praying that he be allowed to file a demurrer to evidence since petitioner failed to substantiate the allegations in her complaint. Petitioner opposed the motion arguing that such pleading is not permitted since the administrative proceeding is investigative in nature. She cited Section 5, Rule 139-B (Disbarment and Discipline of Attorneys) of the Rules of Court which provides: SEC. 5. Service or dismissal. If the complaint appears to be meritorious, the Investigator shall direct that a copy thereof be served upon the respondent, requiring him to answer the same within fifteen (15) days from the date of service. If the complaint does not merit action, of if the answer shows to the satisfaction of the Investigator that the complaint is not meritorious, the same may be dismissed by the Board of Governors upon his recommendation. A copy of the resolution of dismissal shall be furnished the complainant and the Supreme Court which may review the case motu proprio or upon timely appeal of the complainant filed within 15 days from notice of the dismissal of the complaint. No investigation shall be interrupted or terminated by reason of the desistance, settlement, compromise, restitution, withdrawal of the charges, or failure of the complainant to prosecute the same. In his Resolution dated December 10, 2001, Investigating Judge Luczon allowed respondent to file his demurrer to evidence and petitioner to file her opposition thereto. Forthwith, petitioner filed a Motion for Reconsideration, but it was denied in a Resolution dated January 7, 2002 holding that Rule 139-B applies only to disbarment cases or other disciplinary actions against lawyers; and that there is no prohibition against the filing of a demurrer to evidence in an administrative case. On January 24, 2002, petitioner, in an unusual move, challenged Judge Luczon's ruling before this Court via the instant Petition for Certiorari with prayer for the issuance of a writ of preliminary prohibitory injunction. She alleged that the Investigating Judge, in allowing respondent to file a demurrer to evidence, committed grave abuse of discretion. In his comment,6 respondent countered that during the presentation of petitioner's evidence, he "was able to illicit admissions from complainant and her witness which readily refute the charges against him"; that the purpose of allowing the filing of a demurrer to evidence or motion to dismiss is to hasten the proceedings; that it is a waste of time and effort for him to still adduce evidence since the same will have no bearing at all in the outcome of a baseless complaint; and that it is a well-settled principle of law that complainant must rely on the strength of her own evidence. Going back to Administrative Matter OCA IPI No. 99-766-MTJ, in view of the filing of the instant petition, we issued a Resolution on June 18, 2003 re-assigning this case to Judge Vilma T. Pauig, same RTC, for the continuation of the investigation and for her to submit her report and recommendation. In the course of the investigation, respondent did not present any testimonial evidence. He just submitted his counter-affidavit and the supporting affidavits of Petronilo Capili, Rizalina Aquino, Geraldson Trinidad, Raquel Arimas and Servando Bangayan. Thereafter, Judge Pauig submitted to the OCA her report and recommendation. On July 11, 2005, on the basis of the recommendation of then Court Administrator Presbitero J. Velasco, Jr. in his Memorandum dated June 8, 2005, we issued a Resolution dismissing petitioner's complaint against respondent judge for insufficiency of evidence. In light of these events, the instant petition for certiorari has become moot and academic. A case becomes moot when there is no 8 more actual controversy between the parties or no useful purpose can be served in passing upon the merits of the case. Here, the issue of whether grave abuse of discretion attended the issuance of the assailed Resolutions issued by Executive Judge Luczon has 9 ceased. However, there is a need to emphasize the inappropriateness of petitioner's present recourse assailing the acts of an Investigating Judge mandated by this Court to conduct an investigation of an administrative complaint and submit his report and recommendation thereon. In order that a special civil action of certiorari may be invoked, the petition must be directed against any tribunal, board or officer "exercising judicial or quasi-judicial functions," which "acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law."10
7 5 4

It is thus important to determine what are considered judicial or quasi-judicial acts. It is the nature of the act to be performed, rather than of the office, board or body which performs it, that determines whether or not it is exercising a judicial or quasi-judicial 11 function. Judicial or quasi-judicial function involves the determination of what the law is, and what the legal rights of the contending parties are, with respect to the matter in controversyand, on the basis thereof and the facts obtaining, the adjudication of their respective rights.12 In other words, the tribunal, board or officer exercising judicial or quasi-judicial function must be clothed with power and authority to pass judgment or render a decision on the controversy construing and applying the laws to that end.13 Where an administrative body or officer does not exercise judicial or quasi-judicial power, certiorari does not lie.14 What is assailed here is the ruling made by Investigating Judge Luczon allowing respondent to file a demurrer to evidence or motion to dismiss after the petitioner had completed the presentation of her evidence in support of her affidavit-complaint. Judge Luczon was designated by this Court merely to investigate and, thereafter, submit a report and the appropriate recommendation relative 15 to the said complaint. Simply stated, his function is merely investigative and recommendatory in nature. He has no power to pronounce judgment on the controversy as such function belongs only to this Court pursuant to its power of supervision and control over court personnel and officers. His designation as investigator, therefore, does not involve the exercise of judicial orquasijudicial power. Hence, his act/s may not be challenged in a petition for certiorari under Rule 65. An Investigating Judge who allows the filing of a motion to dismiss does not commit any irregularity provided he does not make a determination of its merits but merely notes the motion and considers it in his report and recommendation. In Office of the Court 16 Administrator v. Matas, we stressed the limited authority of an Investigating Justice or Judge in disciplinary proceedings against judges, thus: "x x x, the investigating Justice or Judge designated by the Court to conduct an investigation, submit a report, and make the appropriate recommendation does not have an authority to grant or deny a motion to dismiss the case. His authority is not co-extensive with the power or authority of his office. In this case, the investigating Justice should not have denied respondent Torres' motion to dismiss. Even if the reason for the denial were correct, he should have merely noted the motion and considered it in his report and recommendation, which the Court had suggested in the referral to him of the motion. WHEREFORE, we DISMISS the instant petition. Costs against petitioner. SO ORDERED. G.R. No. 164242 November 28, 2008

DESTILERIA LIMTUACO & CO., INC. and CONVOY MARKETING CORPORATION,petitioners, vs. ADVERTISING BOARD OF THE PHILIPPINES, respondent. DECISION AUSTRIA-MARTINEZ, J.: The present dispute focuses mainly on the power of the Advertising Board of the Philippines (AdBoard) to require its clearance prior to commercial advertising and to impose sanctions on its members who broadcast advertisements without its clearance. AdBoard is an umbrella non-stock, non-profit corporation created in 19741 composed of several national organizations in the advertising industry, including: Advertising Suppliers Association of the Philippines (ASAP), Association of Accredited Advertising Agencies Philippines (4As),Cinema Advertising Association of the Philippines (CAAP), Independent Blocktimers Association of the Philippines (IBA),Kapisanan ng mga Brodkaster ng Pilipinas (KBP), Outer Advertising Association of the Philippines (OAAP), the Marketing & Opinion Research Society of the Philippines (MORES), Philippine Association of National Advertisers (PANA) and the Print Media Organization (PRIMO). Destileria Limtuaco & Co., Inc. (Destileria) was formerly a member of PANA. In January 2004, Destileria and Convoy Marketing Corporation (Convoy), through its advertising agency, SLG Advertising (SLG), a member of the 4As, applied with the AdBoard for a clearance of the airing of a radio advertisement entitled, "Ginagabi (Nakatikim ka na ba ng Kinse Anyos)."

AdBoard issued a clearance for said advertisement. Not long after the ad started airing, AdBoard was swept with complaints from the public. This prompted AdBoard to ask SLG for a replacement but there was no response. With the continued complaints from the public, AdBoard, this time, asked SLG to withdraw its advertisement, to no avail. Thus, AdBoard decided to recall the clearance previously issued, effective immediately.2 Said decision to recall was conveyed to SLG and AdBoard's members-organizations.3 Petitioners protested the AdBoard's decision, after which, they filed a Complaint which was later on amended, for Dissolution of Corporation, Damages and Application for Preliminary Injunction with prayer for a Temporary Restraining Order with the Regional Trial Court (RTC) of Makati, docketed as Civil Case No. 04-277.4 The Amended Complaint sought the revocation/cancellation of AdBoard's registration and its dissolution on the grounds, inter alia, that it was usurping the functions of the Department of Trade and Industry (DTI) and the Movie and Television Review and Classification Board (MTRCB) by misrepresenting that it has the power to screen, review and approve all radio and television advertisements. Petitioners seek the nullity of AdBoard's "Code of Ethics for Advertising" and "ACRC Manual of Procedures for Screening and Filing of Complaints and Appeals."5 On May 20, 2004, AdBoard issued ACRC Circular No. 2004-02, reminding its members-organizations of Article VIII of the ACRC Manual of Procedures, which prohibits the airing of materials not duly screened by it. Petitioners then filed with the Ombudsman a complaint for misconduct and conduct prejudicial to the best interest of the service against AdBoard's officers. On July 16, 2004, petitioners filed the present petition for writ of prohibition and preliminary injunction under Rule 65 of the Rules of Court. Petitioners argue that their right to advertise is a constitutionally protected right, as well as a property right. Petitioners believe that requiring a clearance from AdBoard before advertisements can be aired amounts to a deprivation of property without due process of law. They also argue that AdBoard's regulation is an exercise of police power which must be subject to constitutional proscriptions. On the other hand, AdBoard seeks the dismissal of the petition for failure to observe the rule on hierarchy of courts and for failure to comply with certain requirements for the filing of the petition, namely: statement of material dates, attachment of certified true copy of ACRC Circular No. 2004-02, and defect in the certification of non-forum shopping. As to the merits of petitioners' arguments, AdBoard counters that it derives its authority from the voluntary submission of its members to its jurisdiction. According to AdBoard, there is no law that prohibits it from assuming self-regulatory functions or from issuing clearances prior to advertising. The petition is bereft of merit. First of all, the petition filed in this case is one for prohibition, i.e., to command AdBoard to desist from requiring petitioners to 6 secure a clearance and imposing sanctions on any agency that will air, broadcast or publish petitioners' ads without such clearance. Under Section 2, Rule 65 of the Rules of Court, for petitioners to be entitled to such recourse, it must establish the following requisites: (a) it must be directed against a tribunal, corporation, board or person exercising functions, judicial, quasi-judicial or ministerial; (b) the tribunal, corporation, board or person has acted without or in excess of its/his jurisdiction, or with grave abuse of discretion; and (c) there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law.7 A respondent is said to be exercising judicial function by which he has the power to determine what the law is and what the legal rights of the parties are, and then undertakes to determine these questions and adjudicate upon the rights of the parties. Quasijudicial function is a term which applies to the action and discretion of public administrative officers or bodies, which are required to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from them as a basis for their official action and to exercise discretion of a judicial nature. Ministerial function is one which an officer or tribunal performs in the context of a given set of facts, in a prescribed manner and without regard for the exercise of his/its own judgment upon the propriety or 8 impropriety of the act done. The acts sought to be prohibited in this case are not the acts of a tribunal, board, officer, or person exercising judicial, quasi-judicial, or ministerial functions.9 What is at contest here is the power and authority of a private organization, composed of several members-organizations, which power and authority were vested to it by its own members. Obviously, prohibition will not lie in this

case. The definition and purpose of a writ of prohibition excludes the use of the writ against any person or group of persons acting in 10 a purely private capacity, and the writ will not be issued against private individuals or corporations so acting. Moreover, it appears that petitioners already filed Civil Case No. 04-277, wherein they sought the revocation/cancellation of AdBoard's registration and dissolution and the nullity of AdBoard's Code of Ethics for Advertising and ACRC Manual of Procedures for Screening and Filing of Complaints and Appeals (ACRC Manual), with the RTC. Although dubbed differently, the present petition is obviously an attempt on petitioners' part to have AdBoard's authority challenged in yet another forum. This is a clear act of forum shopping on petitioners' part. Forum shopping has been defined as the "institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition" or "the act of a party against whom an adverse judgment has been rendered in one forum, of seeking another (and possibly favorable) opinion in another forum other than by 11 appeal or the special civil action of certiorari." The test in determining the presence of forum shopping is whether in the two or more cases pending, there is identity of: (a) parties; (b) rights or causes of action; and (c) reliefs sought,12 such that any judgment rendered in the other action will, regardless of which party is successful, amount to res adjudicata in the action under consideration: all the requisites, in fine, of auter action pendant.13 Civil Case No. 04-277 and the present petition both involve the same parties. The petitioners in this case are Destileria Limtuaco & Co., Inc. and Convoy Marketing Corp., while the respondent is AdBoard. On the other hand, the plaintiffs in Civil Case No. 04-277 also are petitioners, while the defendant is still AdBoard, only with the addition of Oscar T. Valenzuela, who is the Executive Director of AdBoard. Both cases also raise practically the same basic causes of action/issues and seek the same relief. The test to determine whether the causes of action are identical is to ascertain whether the same evidence will sustain both actions, or whether there is an identity in the facts essential to the maintenance of the two actions. If the same facts or evidence would sustain both, the two actions are considered the same, and a judgment in the first case is a bar to the subsequent action.14 The principle applies even if the reliefs sought in the two cases may be different.15 Otherwise, a party could easily escape the operation of res judicata by changing the form of the action or the relief sought.16 There is identity in the causes of action in Civil Case No. 04-277 and the present petition for prohibition inasmuch as there is identity in the facts and evidence essential to the resolution of the identical issue raised in these cases. Both cases were instituted after AdBoard recalled the clearance for petitioners'Ginagabi advertisement, and its members refused to air the same. Also, the main issue raised in the present petition and one of the issues raised in Civil Case No. 04-277 refer to AdBoard's authority and the legality of the AdBoard Code of Ethics and ACRC Manual. The determination of this issue in either case would clearly amount to res judicata in regard to the other. Consequently, the present petition should be dismissed. WHEREFORE, the petition is DISMISSEDfor lack of merit. SO ORDERED.

G.R. No. 179830

December 3, 2009

LINTANG BEDOL, Petitioner, vs. COMMISSION ON ELECTIONS, Respondent. DECISION LEONARDO-DE CASTRO, J.:

Challenged in this petition for certiorari are the twin Resolutions issued by the respondent Commission on Elections (COMELEC) En Banc in the case entitled "In the Matter of the Charge of Contempt of the Commission Against Election Supervisor Lintang Bedol." 1 The first Resolution dated August 7, 2007, held petitioner guilty of contempt of the COMELEC and meted out to him the penalty of six (6) months imprisonment and a fine ofP1,000.00. The second Resolution2 dated August 31, 2007, denied petitioner s motion for reconsideration. The facts as stated by the COMELEC follow: On May 14, 2007, the National and Local elections were held under the auspices of this Commission. As Chair of the Provincial Board of Canvassers (PBOC) for the province of Maguindanao, the respondent [petitioner] discharged his official functions and was able to ensure the PBOC s performance of its ministerial duty to canvass the Certificates of Canvass coming from the twenty two (22) city and municipalities in the province. At that time, respondent [petitioner] also was charged with the burdensome and gargantuan duty of being the concurrent Provincial Elections Supervisor for the Province of Shariff Kabunsuan a neighboring province of Maguindanao. Respondent [petitioner] Bedol failed to attend the scheduled canvassing of the Provincial Certificates of Canvass (PCOC) of Maguindanao of which he is the Provincial Election Supervisor which was slated on May 22, 2007. On May 25, 2007, respondent appeared before the Commission, en banc sitting as the National Board of Canvassers (NBOC) for the election of senators to submit the provincial certificate of canvass for Maguindanao, pursuant to his functions as Provincial Elections Supervisor and chair of the PBOC for Maguindanao. Due to certain observations on the provincial certificates of canvass by certain parties, canvassing of the certificate was held in abeyance and respondent was queried on the alleged fraud which attended the conduct of elections in his area. He was already informed of the resetting of the canvassing for May 30, 2007, but failed to appear despite prior knowledge. On June 4, 2007, Celia B. Romero, Director II, ERSD & Concurrent Chief of the Records and Statistics Division of the COMELEC issued a certification that as of even date, the canvassing documents for all municipalities of the province of Maguindanao in connection with the May 14, 2007 elections were not transmitted by the Provincial Election Supervisor of said province nor the respective Board of Canvassers. The Commission and not just the NBOC, in the exercise of its investigatory powers to determine existing controversies created the Task Force Maguindanao, headed by Commissioner Nicodemo Ferrer, which was tasked to conduct a fact-finding investigation on the conduct of elections and certificates of canvass from the city and municipalities in Maguindanao. Respondent [petitioner] appeared before the Task Force during its June 11, 2007 fact finding activity and responded to the queries from the chair. It was during this hearing that respondent [petitioner] Bedol explained that, while in his custody and possession, the election paraphernalia were stolen sometime on May 29, 2007, or some fifteen (15) days after the elections. This was the first time such an excuse was given by the respondent [petitioner] and no written report was ever filed with the Commission regarding the alleged loss.1avvphi1 Respondent [petitioner] Bedol was duly informed to be present in the next scheduled investigative proceedings set for June 14, 2007 as the Task Force wanted to delve deeper into the alleged loss by propounding additional questions to Atty. Bedol during the next scheduled proceedings, such as why he still had in his possession said documents which should have already been turned over to the Commission, why he did not report to the COMELEC or to the police authorities the purported theft, and other pertinent questions. However, despite actual notice in open session, Atty. Bedol failed to appear, giving the impression that respondent [petitioner] Bedol does not give importance to this whole exercise and ignores the negative impact his attitude has on this Commission. Also respondent [petitioner] failed and refused to submit a written explanation of his absences which he undertook to submit on June 13, 2007, but was only received by this Commission belatedly on July 03, 2007. On June 26, 2007, [petitioner] came out on national newspapers, in an exclusive interview with the Inquirer and GMA-7, with a gleaming 45 caliber pistol strapped to his side, and in clear defiance of the Commission posted the challenge by saying that those that are saying that there was cheating in Maguindanao, file a case against me tomorrow, the next day. They should file a case now and I will answer their accusations. (Words in brackets ours)

On June 27, 2007, the COMELEC through Task Force Maguindanao head, Commissioner Nicodemo T. Ferrer, issued a Contempt 3 Charge and Show Cause Order against petitioner citing various violations of the COMELEC Rules of Procedure, viz: You are hereby formally charged of contempt of this Commission for having committed during the period between May 14, 2007, and June 26, 2007, acts in violation of specific paragraphs of Section 2, Rule 29 of the COMELEC Rules of Procedure, as follows: 1. (a) Your (PES Bedol s) failure to attend the scheduled canvassing of the Provincial Certificates of Canvass (PCOC) of Maguindanao of which he (sic) is (sic) the Provincial Election Supervisor on May 22, 2007; (b) your failure to attend the reset schedule of the canvassing on May 30, 2007, despite knowledge thereof when you attended the previously scheduled but again reset canvassing of said PCOCs on May 25, 2007; (c) your failure to attend the continuation of hearing of the Task Force Maguindanao on June 14, 2007, despite notice to him in open session in the hearing held on June 11, 2007, and personal service to you of a subpoena which you duly signed on the same date; and your failure/refusal to submit your written explanation of your said absences which you undertook to submit on June 13, 2007 all of these failures on your part are violations of paragraphs (b) and (f) of Section 2, Rule 29 of COMELEC Rules of Procedure. 2. Your unlawful assumption of custody in your office in Maguinadanao of the municipal certificates of canvass (MCOC) and other accountable election documents of all the municipalities of Maguinadanao used in the last elections of 2007, but which should have been delivered to the Commission on Elections in its main office in Intramuros, Manila, and your admission that said accountable documents were lost from your said custody these constitute violations of paragraphs (a), (c) and (d), section 2, Rule 29 of said Rules. 3. Your pronouncements in the media flaunting [disrespect to] the authority of the COMELEC over you, challenging the institution to file a case against you in court as it is only in court that you are ready to face your accuser are violations of paragraphs (a) and (d), Section 2, Rule 29 of said Rules. 4. Your regaling the media (interviews in national television channels, newspapers and radios) with your boast of possession of an armory of long firearms and side arms, displaying in public for all to see in your front-page colored portrait in a national broadsheet and during a television interview a shiny pistol tucked in a holster at your waist in a combative mode (sic) these are clear violations of paragraphs (a) and (d), Section 2, Rule 29 of said Rules. (Words in brackets ours) Through the foregoing June 27, 2007 Order, petitioner was directed to appear before the COMELEC En Banc on July 3, 2007 at 10:00 o clock in the morning to personally explain why he should not be held in contempt for the above-mentioned offenses. On July 2, 2007, petitioner was arrested by members of the Philippine National Police on the basis of an Order of Arrest4 issued on June 29, 2007 by the COMELEC after petitioner repeatedly failed to appear during the fact-finding proceedings before Task Force Maguindanao. During the July 3, 2007 hearing, petitioner questioned the COMELEC s legal basis for issuing the warrant of arrest and its assumption of jurisdiction over the contempt charges. Upon petitioner s motion, he was granted a period of ten (10) days within which to file the necessary pleading adducing his arguments and supporting authorities. The continuation of the hearing was set on July 17, 2007. On July 17, 2007, which was beyond the ten-day period he requested, petitioner submitted an Explanation Ad Cautelam with Urgent Manifestation, containing the following averments: 1. Respondent [petitioner] urgently manifests that he is making a special appearance as he assails the jurisdiction of the Honorable Commission and its capacity to prosecute the present case in an impartial and fair manner. 2. Respondent [petitioner] questions the issuance of a warrant of arrest against him. He can not be validly arrested or rearrested as a witness who is being compelled to testify in a hearing before the Honorable Commission. 3. Respondent [petitioner] has not committed any contemptuous acts against the Commission. He has not committed those acts charged against him by the Commission motu proprio. (Words in brackets ours.) During the hearing on July 17, 2007, petitioner reiterated his objection to the jurisdiction of the COMELEC over the contempt charges due to the absence of a complaint lodged with the COMELEC by any private party. Petitioner s objection was treated as a motion to dismiss for lack of jurisdiction, which was denied forthwith by the COMELEC. Petitioner was then required to present evidence which he refused to do. Various exhibits were then marked and presented to the COMELEC. However, the latter allowed

petitioner to file a Memorandum within a period of ten (10) days and gave him the opportunity to attach thereto his documentary and other evidence. On July 31, 2007, petitioner again belatedly filed his Memorandum maintaining his objection to the jurisdiction of the COMELEC to initiate the contempt proceedings on ground that the COMELEC, sitting en banc as the National Board of Canvassers for the election of senators, was performing its administrative and not its quasi-judicial functions. Petitioner argued that the COMELEC, in that capacity, could not punish him for contempt. On August 7, 2007, the COMELEC En Banc rendered the first assailed Resolution, the dispositive part of which reads: WHEREFORE, considering all the foregoing, respondent Atty. Lintang Bedol is hereby found guilty of Contempt of the Commission for the following acts and omissions: 1. (a) The failure to attend the scheduled canvassing of the Provincial Certificates of Canvass (PCOC) of Maguindanao of which he is the Provincial Election Supervisor on May 22, 2007 (b) failure to attend the reset schedule of the canvassing on May 30, 2007, despite knowledge thereof when Respondent Bedol attended the previously scheduled but again reset canvassing on May 25, 2007 (c) failure to attend the continuation of hearing of the Task Force Maguindanao on June 14, 2007, despite notice to Respondent in open session in the hearing held on June 11, 2007, and personal service to him of the subpoena which he duly signed on the same date; the failure/refusal to submit written explanation of respondent s absences which he undertook to submit on June 13, 2007 --- all of these failures are violations of paragraphs (b) and (f) of Section 2, Rule 29 of COMELEC Rules of Procedure. 2. The unlawful assumption of custody in the Respondent s office in Maguindanao of the Municipal Certificates of Canvass (MCOC) and other accountable election documents of all the municipalities of Maguindanao used in the last elections of 2007, but which should have been delivered to the Commission on Elections in its main office in Intramuros, Manila, and Respondent s plain admission that said accountable documents were lost from his said custody --- these constitute violations of paragraphs (a), (c) and (d), Section 2, Rule 29 of said Rules.lavvphil 3. The respondent s pronouncements in media flaunting disrespect to the authority of the COMELEC over him, challenging the institution to file a case against him in court as it is supposedly only in court that Respondent Bedol was ready to face his accuser are violations of paragraphs (a) and (d), Section 2, Rule 29 of said Rules. 4. Regaling the public through the media (interviews in national television channels, newspapers and radios) with boast of possession of an armory of long firearms and side arms, displaying in public, for all to see in his front-page colored portrait in a national broadsheet and during a television interview, a shiny pistol tucked in a holster at your waist in a combative mode (sic) --- these are clear violations of paragraphs (a) and (d), Section 2, Rule 29 of said Rules. All the foregoing constitute an exhibition of contumacious acts showing disrespect for the institution, of which respondent is even a ranking official, which is clearly contemptuous of this Commission, for which Respondent Lintang Bedol is hereby sentenced to suffer the penalty of imprisonment of six (6) months and to pay a fine of One Thousand Pesos (P1,000.00). The Legal Department of the Comelec is hereby directed to investigate and determine whether or not any election offense or crime under the Revised Penal Code has been committed by respondent Lintang Bedol and to initiate the filing of the necessary charge/s therefor. SO ORDERED. Aggrieved, petitioner filed a motion for reconsideration which was denied by the COMELEC in the other assailed Resolution dated August 31, 2007. Hence, petitioner filed before the Court the instant petition for certiorari raising the following issues: I WHETHER OR NOT THE COMMISSION ON ELECTIONS HAS JURISDICTION TO INITIATE OR PROSECUTE THE CONTEMPT PROCEEDINGS AGAINST THE PETITIONER.
5

II WHETHER OR NOT THE COMMISSSION HAS ALREADY PREJUDGED THE CASE AGAINST THE PETITIONER IN VIOLATION OF HIS DUE PROCESS RIGHTS III WHETHER OR NOT THE FINDINGS OF THE COMMISSION ON ELECTIONS, ASSUMING IT HAS JURISDICTION TO PUNISH FOR CONTEMPT, ARE SUPPORTED BY SUBSTANTIAL, CREDIBLE AND COMPETENT EVIDENCE. We dismiss the petition. The main thrust of petitioner s argument is that the COMELEC exceeded its jurisdiction in initiating the contempt proceedings when it was performing its administrative and not its quasi-judicial functions as the National Board of Canvassers for the election of senators. According to petitioner, the COMELEC may only punish contemptuous acts while exercising its quasi-judicial functions. The COMELEC possesses the power to conduct investigations as an adjunct to its constitutional duty to enforce and administer all election laws, by virtue of the explicit provisions of paragraph 6, Section 2, Article IX of the 1987 Constitution, which reads: Article IX-C, Section 2. xxx (6) xxx; investigate and, where appropriate, prosecute cases of violations of election laws, including acts or omissions constituting election frauds, offenses, and malpractices. The above-quoted provision should be construed broadly to give effect to the COMELEC s constitutional mandate as enunciated in Loong v. Commission on Elections,6 which held: xxx. Section 2(1) of Article IX(C) of the Constitution gives the COMELEC the broad power "to enforce and administer all laws and regulations relative to the conduct of an election, plebiscite, initiative, referendum and recall." Undoubtedly, the text and intent of this provision is to give COMELEC all the necessary and incidental powers for it to achieve the objective of holding free, orderly, honest, peaceful, and credible elections. Congruent to this intent, this Court has not been niggardly in defining the parameters of powers of COMELEC in the conduct of our elections. The powers and functions of the COMELEC, conferred upon it by the 1987 Constitution and the Omnibus Election Code, may be classified into administrative, quasi-legislative, and quasi-judicial. The quasi-judicial power of the COMELEC embraces the power to resolve controversies arising from the enforcement of election laws, and to be the sole judge of all pre-proclamation controversies; and of all contests relating to the elections, returns, and qualifications. Its quasi-legislative power refers to the issuance of rules and regulations to implement the election laws and to exercise such legislative functions as may expressly be delegated to it by Congress. Its administrative function refers to the enforcement and administration of election laws. In the exercise of such power, the Constitution (Section 6, Article IX-A) and the Omnibus Election Code (Section 52 [c]) authorize the COMELEC to issue rules and regulations to implement the provisions of the 1987 Constitution and the Omnibus Election Code.7 The quasi-judicial or administrative adjudicatory power is the power to hear and determine questions of fact to which the legislative policy is to apply, and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law. The Court, in Dole Philippines Inc. v. Esteva,8 described quasi-judicial power in the following manner, viz: Quasi-judicial or administrative adjudicatory power on the other hand is the power of the administrative agency to adjudicate the rights of persons before it. It is the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law. The administrative body exercises its quasi-judicial power when it performs in a judicial manner an act which is essentially of an executive or administrative nature, where the power to act in such manner is incidental to or reasonably necessary for the performance of the executive or administrative duty entrusted to it. In carrying out their quasi-judicial functions the administrative officers or bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature. Since rights of specific persons are affected, it is elementary that in the proper exercise of quasi-judicial power due process must be observed in the conduct of the proceedings. [Emphasis ours.]

The Creation of Task Force Maguindanao was impelled by the allegations of fraud and irregularities attending the conduct of elections in the province of Maguindanao and the non-transmittal of the canvassing documents for all municipalities of said province. Task Force Maguindanao s fact-finding investigation to probe into the veracity of the alleged fraud that marred the elections in said province; and consequently, to determine whether the certificates of canvass were genuine or spurious, and whether an election offense had possibly been committed could by no means be classified as a purely ministerial or administrative function. The COMELEC, through the Task Force Maguindanao, was exercising its quasi-judicial power in pursuit of the truth behind the allegations of massive fraud during the elections in Maguindanao. To achieve its objective, the Task Force conducted hearings and required the attendance of the parties concerned and their counsels to give them the opportunity to argue and support their respective positions. The effectiveness of the quasi judicial power vested by law on a government institution hinges on its authority to compel 9 attendance of the parties and/or their witnesses at the hearings or proceedings. As enunciated in Arnault v. Nazareno Experience has shown that mere requests for such information are often unavailing, and also that information which is volunteered is not always accurate or complete; so some means of compulsion is essential to obtain what is needed. In the same vein, to withhold from the COMELEC the power to punish individuals who refuse to appear during a fact-finding investigation, despite a previous notice and order to attend, would render nugatory the COMELEC s investigative power, which is an essential incident to its constitutional mandate to secure the conduct of honest and credible elections. In this case, the purpose of the investigation was however derailed when petitioner obstinately refused to appear during said hearings and to answer questions regarding the various election documents which, he claimed, were stolen while they were in his possession and custody. Undoubtedly, the COMELEC could punish petitioner for such contumacious refusal to attend the Task Force hearings. Even assuming arguendo that the COMELEC was acting as a board of canvassers at that time it required petitioner to appear before it, the Court had the occasion to rule that the powers of the board of canvassers are not purely ministerial. The board exercises quasi-judicial functions, such as the function and duty to determine whether the papers transmitted to them are genuine election returns signed by the proper officers.10 When the results of the elections in the province of Maguindanao were being canvassed, counsels for various candidates posited numerous questions on the certificates of canvass brought before the COMELEC. The COMELEC asked petitioner to appear before it in order to shed light on the issue of whether the election documents coming from Maguindanao were spurious or not. When petitioner unjustifiably refused to appear, COMELEC undeniably acted within the bounds of its jurisdiction when it issued the assailed resolutions. In Santiago, Jr. v. Bautista,11 the Court held: xxx. The exercise of judicial functions may involve the performance of legislative or administrative duties, and the performance of and administrative or ministerial duties, may, in a measure, involve the exercise of judicial functions. It may be said generally that the exercise of judicial functions is to determine what the law is, and what the legal rights of parties are, with respect to a matter in controversy; and whenever an officer is clothed with that authority, and undertakes to determine those questions, he acts judicially. On the procedure adopted by the COMELEC in proceeding with the indirect contempt charges against petitioner, Section 52 (e), Article VII of the Omnibus Election Code pertinently provides: Section 52. Powers and functions of the Commission on Elections. xxx (e) Punish contempts provided for in the Rules of Court in the same procedure and with the same penalties provided therin. Any violation of any final and executory decision, order or ruling of the Commission shall constitute contempt thereof. [Emphasis ours.] The aforecited provision of law is implemented by Rule 29 of COMELEC s Rules of Procedure, Section 2 of which states: Rule 29 Contempt

Sec. 1. xxx Sec. 2. Indirect Contempt. After charge in writing has been filed with the Commission or Division, as the case may be, and an opportunity given to the respondent to be heard by himself or counsel, a person guilty of the following acts may be punished for indirect contempt: (a) Misbehavior of the responsible officer of the Commission in the performance of his official duties or in his official transactions; (b) Disobedience of or resistance to a lawful writ, process, order, judgment or command of the Commission or any of its Divisions, or injunction or restraining order granted by it; (c) Any abuse of or any inlawful interference with the process or proceedings of the Commission or any of its Divisions not constituting direct contempt under Section 1 of this Rules; (d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice by the Commission or any of its Divisions; (e) Assuming to be an attorney and acting as such without authority; and (f) Failure to obey a subpoena duly served. SEC. 3 Penalty for Indirect Contempt. If adjudged guilty, the accused may be punished by a fine not exceeding one thousand (P1,000.00) pesos or imprisonment for not more than six (6) months, or both, at the discretion of the Commission or Division. The language of the Omnibus Election Code and the COMELEC Rules of Procedure is broad enough to allow the initiation of indirect contempt proceedings by the COMELEC motu proprio. Furthermore, the above-quoted provision of Section 52(e), Article VII of the Omnibus Election Code explicitly adopts the procedure and penalties provided by the Rules of Court. Under Section 4, Rule 71, said proceedings may be initiated motu proprio by the COMELEC, viz: SEC. 4. How proceedings commenced. Proceedings for indirect contempt may be initiated motu proprio by the court against which the contempt was committed by an order or any other formal charge requiring the respondent to show cause why he should not be punished for contempt. In all other cases, charges for indirect contempt shall be commenced by a verified petition with supporting particulars and certified true copies of documents or papers involved therein, and upon full compliance with the requirements for filing initiatory pleadings for civil actions in the court concerned. If the contempt charges arose out of or are related to a principal action pending in the court, the petition for contempt shall allege that fact but said petition shall be docketed, heard and decided separately, unless the court in its discretion orders the consolidation of the contempt charge and the principal action for joint hearing and decision. Hence, the COMELEC properly assumed jurisdiction over the indirect contempt proceedings which were initiated by its Task Force Maguindanao, through a Contempt Charge and Show Cause Order, notwithstanding the absence of any complaint filed by a private party. We turn now to petitioner s claim that the COMELEC pre-judged the case against him, and that its findings were not supported by evidence. His claim deserves scant consideration. The fact that the indirect contempt charges against petitioner were initiated motu proprio by the COMELEC did not by itself prove that it had already prejudged the case against him. As borne out by the records, the COMELEC gave petitioner several opportunities to explain his side and to present evidence to defend himself. All of petitioner s belatedly filed pleadings were admitted and taken into consideration before the COMELEC issued the assailed Resolution finding petitioner guilty of indirect contempt. The COMELEC complied with the aforementioned Section 4, Rule 71 of the Rules of Court and with the requirements set by Rule 29 of the COMELEC Rules of Procedure, when it issued the Contempt Charge and Show Cause Order against petitioner directing him to appear before it and explain why he should not be held in contempt.

Petitioner claims that the challenged Resolution finding him guilty of indirect contempt was based merely on hearsay, surmises, speculations and conjectures, and not on competent and substantial evidence. He contends that there is no convincing evidence that he deliberately refused to heed the summonses of the COMELEC or that he was sufficiently notified of the investigative hearings. He further argues that the loss of the election documents should not even be automatically ascribed to him. We are not persuaded. Petitioner was found guilty of contempt on four (4) grounds. First, he repeatedly failed to attend, despite notice of the 12 scheduled canvassing of the Provincial Certificates of Canvass, the hearing of the Task Force Maguindanao; and refused to submit his explanation for such absences, which he had undertaken to submit, in violation of paragraphs (b) and (f) of Section 2, Rule 29 of the COMELEC Rules of Procedure. Petitioner was duly notified of the scheduled hearings. It was his official responsibility to be present during the scheduled hearing to shed light on the allegedly stolen election documents but he failed to do so without offering any valid justification for his nonappearance. Second, he unlawfully assumed custody of accountable election documents, which were lost while in his possession, and consequently failed to deliver the same, in violation of paragraphs (a), (c) and (d) Section 2, Rule 29 of same Rules. Petitioner admitted that the subject certificate of canvass and other election documents were lost while in his custody. Petitioner himself admitted during the hearing held on June 11, 2007 that the documents were stolen sometime on May 29, 2007. Apart from the said loss of the vital election documents, his liability stemmed from the fact that he illegally retained custody and possession of said documents more than two weeks after the elections. The COMELEC viewed such act as a contemptuous interference with its normal functions. Third and fourth, he publicly displayed disrespect for the authority of the COMELEC through the media (interviews on national television channels, and in newspapers and radios) by flaunting an armory of long firearms and side arms in public, and posing for the front page of a national broadsheet, with a shiny pistol tucked in a holster, in violation of paragraphs (a) and (d), Section 2, Rule 29 of same Rules. Petitioner questions the probative value of the newspaper clippings published in the Philippine Daily Inquirer on June 26, 2007 which showed a photo of him with a firearm tucked to his side and his supposed exclusive interview. He claims that said newspaper clippings are mere hearsay, which are of no evidentiary value. True, there were instances when the Court rejected newspaper articles as hearsay, when such articles are offered to prove their contents without any other competent and credible evidence to corroborate them. However, in Estrada v. Desierto, et al.,13 the Court held that not all hearsay evidence is inadmissible and how over time, exceptions to the hearsay rule have emerged. Hearsay evidence may be admitted by the courts on grounds of "relevance, trustworthiness and necessity."14 When certain facts are within 15 judicial notice of the Court, newspaper accounts "only buttressed these facts as facts." Another exception to the hearsay rule is the doctrine of independently relevant statements, where only the fact that such statements were made is relevant, and the truth or falsity thereof is immaterial. The hearsay rule does not apply; hence, the statements are admissible as evidence. Evidence as to the making of such statement is not secondary but primary, for the statement itself may constitute a fact in issue or be circumstantially relevant as to the existence of such a fact.16 Here, the newspaper clippings were introduced to prove that petitioner deliberately defied or challenged the authority of the COMELEC. As ratiocinated by the COMELEC in the challenged Resolution of August 7, 2007, it was not the mere content of the articles that was in issue, but petitioner s conduct when he allowed himself to be interviewed in the manner and circumstances, adverted to in the COMELEC Resolution, on a pending controversy which was still brewing in the COMELEC. While petitioner claimed that he was misquoted, he denied neither the said interview nor his picture splashed on the newspaper with a firearm holstered at his side but simply relied on his objection to the hearsay nature of the newspaper clippings. It should be stressed that petitioner was no ordinary witness or respondent. He was under the administrative supervision of the COMELEC17 and it was incumbent upon him to demonstrate to the COMELEC that he had faithfully discharged his duties as dictated by law. His evasiveness and refusal to present his evidence as well as his reliance on technicalities to justify such refusal in the face of the allegations of fraud or anomalies and newspaper publication mentioned to the Contempt Charge and Show Cause Order amounted to an implied admission of the charges leveled against him.

All told, petitioner brought this predicament upon himself when he opted to dispense with the presentation of his evidence during the scheduled hearings and to explain his non-appearance at the hearings of Task Force Maguindanao and the loss of the certificates of canvass and other election documents. WHEREFORE, the petition is hereby DISMISSED and the prayer for a Temporary Restraining Order and/or a Writ of Preliminary Injunction is hereby DENIED. No costs. SO ORDERED.

G.R. No. L-19052

December 29, 1962

MANUEL F. CABAL, petitioner, vs. HON. RUPERTO KAPUNAN, JR., and THE CITY FISCAL OF MANILA, respondents. Francisco Carreon for petitioner. Assistant City Fiscal Manuel T. Reyes for respondent City of Manila. CONCEPCION, J.: This is an original petition for certiorari and prohibition with preliminary injunction, to restrain the Hon. Ruperto Kapunan, Jr., as Judge of the Court of First Instance of Manila, from further proceeding in Criminal Case No. 60111 of said court, and to set aside an order of said respondent, as well as the whole proceedings in said criminal case. . On or about August 1961, Col. Jose C. Maristela of the Philippine Army filed with the Secretary of Nation Defense a letter-complaint charging petitioner Manuel Cabal, then Chief of Staff of the Armed Forces of the Philippines, with "graft, corrupt practices, unexplained wealth, conduct unbecoming of an officer and gentleman dictatorial tendencies, giving false statements of his as sets and liabilities in 1958 and other equally reprehensible acts". On September 6, 1961, the President of the Philippines created a committee of five (5) members, consisting of former Justice Marceliana R. Montemayor, as Chairman, former Justices Buenaventura Ocampo and Sotero Cabahug, and Generals Basilio J. Valdez and Guillermo B. Francisco, to investigate the charge of unexplained wealth contained in said letter-complaint and submit its report and recommendations as soon as possible. At the beginning of the investigation, on September 15, 1961, the Committee, upon request of complainant Col. Maristela, or considered petitioner herein to take the witness stand and be sworn to as witness for Maristela, in support of his aforementioned charge of unexplained wealth. Thereupon, petitioner objected, personally and through counsel, to said request of Col. Maristela and to the aforementioned order of the Committee, invoking his constitutional right against self-incrimination. The Committee insisted that petitioner take the witness stand and be sworn to, subject to his right to refuse to answer such questions as may be incriminatory. This notwithstanding, petitioner respectfully refused to be sworn to as a witness to take the witness stand. Hence, in a communication dated September 18, 1961, the Committee referred the matter to respondent City Fiscal of Manila, for such action as he may deem proper. On September 28, 1961, the City Fiscal filed with the Court of First Instance of Manila a "charge" reading as follows: The undersigned hereby charges Manuel F. Cabal with contempt under section 580 of the Revised Administrative Code in relation to sections I and 7, Rule 64 of the Rules of Court, committed as follows: That on or about September 15, 1961, in the investigation conducted at the U.P. Little Theater:, Padre Faura, Manila, by the Presidential Committee, which was created by the President of the Republic of the Philippines in accordance with law to investigate the charges of alleged acquisition by respondent of unexplained wealth and composed of Justice Marceliano Montemayor, as Chairman, and Justices Buenaventura Ocampo and Sotero Cabahug and Generals Basilio Valdez and Guillermo Francisco, as members, with the power, among others, to compel the attendance of witnesses and take their testimony under oath, respondent who was personally present at the time before the Committee in compliance with a subpoena duly issued to him, did then and there willfully, unlawfully, and contumaciously, without any justifiable cause or reason refusal and fail and still refuses and fails to obey the lawful order of the Committee to take the witness stand, be sworn and testify as witness in said investigation, in utter disregard of the lawful authority of the Committee and thereby obstructing and degrading the proceedings before said body.

Wherefore, it is respectfully prayed that respondent be summarily adjudged guilty of contempt of the Presidential Committee and accordingly disciplined as in contempt of court imprisonment until such time as he shall obey the subject order of said committee. This charge, docketed as Criminal Case No. 60111 of said court, was assigned to Branch XVIII thereof, presided over by respondent Judge. On October 2, 1961, the latter issued an order requiring petitioner to show cause and/or answer the charge filed against him within ten (10) days. Soon thereafter, or on October 4, 1961, petitioner filed with respondent Judge a motion to quash the charge and/or order to show cause, upon the ground: (1) that the City Fiscal has neither authority nor personality to file said char and the same is null and void, for, if criminal, the charge has been filed without a preliminary investigation, and, civil, the City Fiscal may not file it, his authority in respect of civil cases being limited to representing the City of Manila; (2) that the facts charged constitute no offense for section 580 of the Revised Administrative Code, upon which the charge is based, violates due process, in that it is vague and uncertain as regards the offense therein defined and the fine imposable therefor and that it fail to specify whether said offense shall be treated also contempt of an inferior court or of a superior court (3) that more than one offense is charged, for the contempt imputed to petitioner is sought to be punished as contempt of an inferior court, as contempt of a superior court an as contempt under section 7 of Rule 64 of the Rules Court; (4) that the Committee had no power to order an require petitioner to take the witness stand and be sworn to, upon the request of Col. Maristela, as witness for the latter, inasmuch as said order violates petitioner's constitutional right against self-incrimination. By resolution dated October 14, 1961. respondent Judge denied said motion to quash. Thereupon, or on October 20, 1961, petitioner began the present action for the purpose adverted to above, alleging that, unless restrained by this court, respondent Judge may summarily punish him for contempt, and that such action would not be appealable. In their answer, respondents herein allege, inter alia, that the investigation being conducted by the Committee above referred to is administrative, not criminal, in nature; that the legal provision relied upon by petitioner in relation to preliminary investigations (Section '08-C, Republic Act No. 409, as amended by Republic Act No. 1201) is inapplicable to contempt proceedings; that, under section 580 of the Revised Administrative Code. contempt against an administrative officer is to be dealt with as contempt of a superior court; that petitioner herein is charged with only one offense; and that, tinder the constitutional guarantee against selfincrimination, petitioner herein may refuse, not to take the witness stand, but to answer incriminatory questions. At the outset, it is not disputed that the accused in a criminal case may refuse, not only to answer incriminatory questions, but, also, to take the witness stand (3 Wharton's Criminal Evidence, pp. 1959-1960; 98 C.J.S., p. 264). Hence, the issue before us boils down to whether or not the proceedings before the aforementioned Committee is civil or criminal in character. In this connection, it should be noted that, although said Committee was created to investigate the administrative charge of unexplained wealth, there seems to be no question that Col. Maristela does not seek the removal of petitioner herein as Chief of Staff of the Armed Forces of the Philippines. As a matter of fact he no longer holds such office. It seems, likewise conceded that the purpose of the charge against petitioner is to apply the provisions of Republic Act No. 1379, as amended, otherwise known as the Anti-Graft Law, which authorizes the forfeiture to the State of property of a public officer or employee which is manifestly out of proportion to his salary as such public officer or employee and his other lawful income and the income from legitimately acquired property. Such for forfeiture has been held, however, to partake of the nature of a penalty. In a strict signification, a forfeiture is a divestiture property without compensation, in consequence of a default an offense, and the term is used in such a sense in this article. A forfeiture, as thus defined, is imposed by way of punishment not by the mere convention of the parties, but by the lawmaking power, to insure a prescribed course of conduct. It is a method deemed necessary by the legislature to restrain thecommission of an offense and to aid in the prevention of such a offense. The effect of such a forfeiture is to transfer the title to the specific thing from the owner to the sovereign power (23 Am. Jur. 599) (Emphasis ours.) In Black's Law Dictionary a "forfeiture" is defined to be "the incurring of a liability to pay a definite sum of money as the consequence of violating the provisions of some statute or refusal to comply with some requirement of law." It may be said to be a penalty imposed for misconduct or breach of duty. (Com. vs. French, 114 S.W. 255.) As a consequence, proceedings for forfeiture of proper are deemed criminal or penal, and, hence, the exemption of defendants in criminal case from the obligation to be witnesses against themselves are applicable thereto. Generally speaking, informations for the forfeiture of goods that seek no judgment of fine or imprisonment against any person are deemed to be civil proceedings in rem. Such proceedings are criminal in nature to the extent that where the

person using the res illegally is the owner or rightful possessor of it, the forfeiture proceeding is in the nature of a punishment. They have been held to be so far in the nature criminal proceedings that a general verdict on several count in an information is upheld if one count is good.According to the authorities such proceedings, where the owner of the property appears, are so far considered as quasi-criminal proceeding as to relieve the owner from being a witness against himself and to prevent the compulsory production of his books and papers. ... (23 Am. Jur. 612; emphasis ours.) Although the contrary view formerly obtained, the late decisions are to the effect that suits for forfeitures incurred by the commission of offenses against the law are so far of quasi-criminal nature as to be within the reason of criminal proceedings for all purposes of ... that portion of the Fifth Amendment which declares that no person shall be compelled in any criminal case to be a witness against himself. .... It has frequently been held upon constitutional grounds under the various State Constitution, that a witness or party called as witness cannot be made to testify against himself as to matters which would subject his property to forfeiture. At early common law no person could be compelled to testify against himself or to answer any question which would have had a tendency to expose his property to a forfeiture or to form a link in a chain of evidence for that purpose, as well as to incriminate him. Under this common-law doctrine of protection against compulsory disclosures which would tend to subject the witness to forfeiture, such protection was claimed and availed of in some early American cases without placing the basis of the protection upon constitutional grounds. (23 Am. Jur., 616; emphasis ours.) Proceedings for forfeitures are generally considered to be civil and in the nature of proceedings in rem. The statute providing that no judgment or other proceedings in civil cases shall be arrested or reversed for any defect or want of form is applicable to them. In some aspects, however, suits for penalties and forfeitures are of quasi-criminal nature and within the reason of criminal proceedings for all the purposes of ... that portion of the Fifth Amendment which declares, that no person shall be compelled in any criminal case to be a witness against himself. The proceeding is one against the owner, as well as against the goods; for it is his breach of the laws which has to be proved to establish the forfeiture and his property is sought to be forfeited. (15 Am. Jur., Sec. 104, p. 368; emphasis ours.)lawphil.net The rule protecting a person from being compelled to furnish evidence which would incriminate him existsnot only when he is liable criminally to prosecution and punishment, but also when his answer would tend to expose him to a ... forfeiture .... (58 Am. Jur., See. 43, p. 48; emphasis ours.) As already observed, the various constitutions provide that no person shall be compelled in any criminal case to be a witness against himself. This prohibition against compelling a person to take the stand as a witness against himself applied only to criminal, quasi-criminal, and penal proceedings, including a proceeding civil in form for forfeiture of property by reason of the commission of an offense, but not a proceeding in which the penalty recoverable is civil or remedial in nature, .... (58 Am. Jur., Sec. 44, p. 49: emphasis ours.) The privilege of a witness not to incriminate himself is not infringed by merely asking the witness a question which he refuses to answer. The privilege is simply an option of refusal, and not a prohibition of inquiry. A question is not improper merely because the answer may tend to incriminate but, where a witness exercises his constitutional right not to answer, a question by counsel as to whether the reason for refusing to answer is because the answer may tend to incriminate the witness is improper. The possibility that the examination of the witness will be pursued to the extent of requiring self-incrimination will not justify the refusal to answer questions. However, where the position of the witness is virtually that of an accused on trial, it would appear that he may invoke the privilege in support of a blanket refusal to answer any and all questions. (C.J.S., p. 252; emphasis ours.) A person may not be compelled to testify in an action against him for a penalty or to answer any question as a witness which would subject him to a penalty or forfeiture, where the penalty or forfeiture is imposed as a vindication of the public justice of the state. In general, both at common law and under a constitution provision against compulsory self-incrimination, a person may not be compelled to answer any question as a witness which would subject him to a penalty orforfeiture, or testify in action against him for a penalty. The privilege applies where the penalty or forfeiture recoverable, or is imposed in vindication of the public justice the state as a statutory fine or penalty, or a fine or penalty for violation of a municipal ordinance, even though the action or

proceeding for its enforcement is not brought in a criminal court but is prosecuted through the modes of procedure applicable to ordinary civil remedy. (98 C. J. S., pp. 275-6.) Thus, in Boyd vs. U.S. (116 U.S. 616, 29 L. ed. 746), it was held that the information, in a proceeding to declaration a forfeiture of certain property because of the evasion of a certain revenue law, "though technically a civil proceeding is in substance and effect a criminal one", and that suits for penalties and forfeitures are within the reason criminal proceedings for the purposes of that portion the Fifth Amendment of the Constitution of the U.S. which declares that no person shall be compelled in a criminal case to be a witness against himself. Similarly, a proceeding for the removal of an officer was held, in Thurston vs. Clark (107 Cal. 285, 40 pp. 435, 437), to be in substance criminal, for said portion of the Fifth Amendment applies "to all cases in which the action prosecution is not to establish, recover or redress private and civil rights, but to try and punish persons charged with the commission of public offenses" and "a criminal case is a action, suit or cause instituted to punish an infraction the criminal laws, and, with this object in view, it matters not in what form a statute may clothe it; it is still a criminal case ...". This view was, in effect confirmed in Lees vs. U.S. (37 L. ed. 1150-1151). Hence, the Lawyer Reports Annotated (Vol. 29, p. 8), after an extensive examination of pertinent cases, concludes that said constitutional provision applies whenever the proceeding is not "purely remedial", or intended "as a redress for a privategrievance", but primarily to punish "a violation of duty or a public wrong and to deter others from offending in likewise manner. ...". We are unmindful of the doctrine laid down in Almeda vs. Perez, L-18428 (August 30, 1962) in which the theory that, after the filing of respondents' answer to a petition for forfeiture under Republic Act No. 1379, said petition may not be amended as to substance pursuant to our rules of criminal procedure, was rejected by this Court upon the ground that said forfeiture proceeding in civil in nature. This doctrine refers, however, to the purely proceduralaspect of said proceeding, and has no bearing the substantial rights of the respondents therein, particularly their constitutional right against self-incrimination. WHEREFORE, the writ prayed for is granted and respondent Judge hereby enjoined permanently from proceeding further in Criminal Case No. 60111 of the Court of First Instance of Manila. It is so ordered.

CABAL G.R. No. L-25018 May 26, 1969

ARSENIO PASCUAL, JR., petitioner-appellee, vs. BOARD OF MEDICAL EXAMINERS, respondent-appellant, SALVADOR GATBONTON and ENRIQUETA GATBONTON, intervenorsappellants. Conrado B. Enriquez for petitioner-appellee. Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and Solicitor Pedro A. Ramirez for respondent-appellant. Bausa, Ampil and Suarez for intervenors-appellants. FERNANDO, J.: The broad, all-embracing sweep of the self-incrimination clause,1 whenever appropriately invoked, has been accorded due recognition by this Court ever since the adoption of the Constitution.2 Bermudez v. Castillo,3decided in 1937, was quite categorical. As we there stated: "This Court is of the opinion that in order that the constitutional provision under consideration may prove to be a real protection and not a dead letter, it must be given a liberal and broad interpretation favorable to the person invoking it." As phrased by Justice Laurel in his concurring opinion: "The provision, as doubtless it was designed, would be construed with the 4 utmost liberality in favor of the right of the individual intended to be served." Even more relevant, considering the precise point at issue, is the recent case of Cabal v. Kapunan, where it was held that a respondent in an administrative proceeding under the Anti-Graft Law 6 cannot be required to take the witness stand at the instance of the complainant. So it must be in this case, where petitioner was sustained by the lower court in his plea that he could not be
5

compelled to be the first witness of the complainants, he being the party proceeded against in an administrative charge for malpractice. That was a correct decision; we affirm it on appeal. Arsenio Pascual, Jr., petitioner-appellee, filed on February 1, 1965 with the Court of First Instance of Manila an action for prohibition with prayer for preliminary injunction against the Board of Medical Examiners, now respondent-appellant. It was alleged therein that at the initial hearing of an administrative case7 for alleged immorality, counsel for complainants announced that he would present as his first witness herein petitioner-appellee, who was the respondent in such malpractice charge. Thereupon, petitioner-appellee, through counsel, made of record his objection, relying on the constitutional right to be exempt from being a witness against himself. Respondent-appellant, the Board of Examiners, took note of such a plea, at the same time stating that at the next scheduled hearing, on February 12, 1965, petitioner-appellee would be called upon to testify as such witness, unless in the meantime he could secure a restraining order from a competent authority. Petitioner-appellee then alleged that in thus ruling to compel him to take the witness stand, the Board of Examiners was guilty, at the very least, of grave abuse of discretion for failure to respect the constitutional right against self-incrimination, the administrative proceeding against him, which could result in forfeiture or loss of a privilege, being quasi-criminal in character. With his assertion that he was entitled to the relief demanded consisting of perpetually restraining the respondent Board from compelling him to testify as witness for his adversary and his readiness or his willingness to put a bond, he prayed for a writ of preliminary injunction and after a hearing or trial, for a writ of prohibition. On February 9, 1965, the lower court ordered that a writ of preliminary injunction issue against the respondent Board commanding it to refrain from hearing or further proceeding with such an administrative case, to await the judicial disposition of the matter upon petitioner-appellee posting a bond in the amount of P500.00. The answer of respondent Board, while admitting the facts stressed that it could call petitioner-appellee to the witness stand and interrogate him, the right against self-incrimination being available only when a question calling for an incriminating answer is asked of a witness. It further elaborated the matter in the affirmative defenses interposed, stating that petitioner-appellee's remedy is to object once he is in the witness stand, for respondent "a pl ain, speedy and adequate remedy in the ordinary course of law," precluding the issuance of the relief sought. Respondent Board, therefore, denied that it acted with grave abuse of discretion. There was a motion for intervention by Salvador Gatbonton and Enriqueta Gatbonton, the complainants in the administrative case for malpractice against petitioner-appellee, asking that they be allowed to file an answer as intervenors. Such a motion was granted and an answer in intervention was duly filed by them on March 23, 1965 sustaining the power of respondent Board, which for them is limited to compelling the witness to take the stand, to be distinguished, in their opinion, from the power to compel a witness to incriminate himself. They likewise alleged that the right against self-incrimination cannot be availed of in an administrative hearing. A decision was rendered by the lower court on August 2, 1965, finding the claim of petitioner-appellee to be well-founded and prohibiting respondent Board "from compelling the petitioner to act and testify as a witness for the complainant in said investigation without his consent and against himself." Hence this appeal both by respondent Board and intervenors, the Gatbontons. As noted at the outset, we find for the petitioner-appellee. 1. We affirm the lower court decision on appeal as it does manifest fealty to the principle announced by us in Cabal v. Kapunan. 8 In that proceeding for certiorari and prohibition to annul an order of Judge Kapunan, it appeared that an administrative 9 charge for unexplained wealth having been filed against petitioner under the Anti-Graft Act, the complainant requested the investigating committee that petitioner be ordered to take the witness stand, which request was granted. Upon petitioner's refusal to be sworn as such witness, a charge for contempt was filed against him in the sala of respondent Judge. He filed a motion to quash and upon its denial, he initiated this proceeding. We found for the petitioner in accordance with the well-settled principle that "the accused in a criminal case may refuse, not only to answer incriminatory questions, but, also, to take the witness stand." It was noted in the opinion penned by the present Chief Justice that while the matter referred to an a administrative charge of unexplained wealth, with the Anti-Graft Act authorizing the forfeiture of whatever property a public officer or employee may acquire, manifestly out proportion to his salary and his other lawful income, there is clearly the imposition of a penalty. The proceeding for forfeiture while administrative in character thus possesses a criminal or penal aspect. The case before us is not dissimilar; petitioner would be similarly disadvantaged. He could suffer not the forfeiture of property but the revocation of his license as a medical practitioner, for some an even greater deprivation.

To the argument that Cabal v. Kapunan could thus distinguished, it suffices to refer to an American Supreme Court opinion highly persuasive in character. 10 In the language of Justice Douglas: "We conclude ... that the Self-Incrimination Clause of the Fifth Amendment has been absorbed in the Fourteenth, that it extends its protection to lawyers as well as to other individuals, and that it should not be watered down by imposing the dishonor of disbarment and the deprivation of a livelihood as a price for asserting it." We reiterate that such a principle is equally applicable to a proceeding that could possibly result in the loss of the privilege to practice the medical profession. 2. The appeal apparently proceeds on the mistaken assumption by respondent Board and intervenors-appellants that the constitutional guarantee against self-incrimination should be limited to allowing a witness to object to questions the answers to which could lead to a penal liability being subsequently incurred. It is true that one aspect of such a right, to follow the language of another American decision, 11 is the protection against "any disclosures which the witness may reasonably apprehend could be used in a criminal prosecution or which could lead to other evidence that might be so used." If that were all there is then it becomes diluted.lawphi1.et The constitutional guarantee protects as well the right to silence. As far back as 1905, we had occasion to declare: "The accused has a perfect right to remain silent and his silence cannot be used as a presumption of his guilt." 12 Only last year, in Chavez v. Court of Appeals, 13 speaking through Justice Sanchez, we reaffirmed the doctrine anew that it is the right of a defendant "to forego testimony, to remain silent, unless he chooses to take the witness stand with undiluted, unfettered exercise of his own free genuine will." Why it should be thus is not difficult to discern. The constitutional guarantee, along with other rights granted an accused, stands for a belief that while crime should not go unpunished and that the truth must be revealed, such desirable objectives should not be accomplished according to means or methods offensive to the high sense of respect accorded the human personality. More and more in line with the democratic creed, the deference accorded an individual even those suspected of the most heinous crimes is given due weight. To quote from Chief Justice Warren, "the constitutional foundation underlying the privilege is the respect a government ... must accord to the dignity and integrity of its citizens." 14 It is likewise of interest to note that while earlier decisions stressed the principle of humanity on which this right is predicated, precluding as it does all resort to force or compulsion, whether physical or mental, current judicial opinion places equal emphasis on its identification with the right to privacy. Thus according to Justice Douglas: "The Fifth Amendment in its Self-Incrimination clause enables the citizen to create a zone of privacy which government may not force to surrender to his detriment." 15 So also with the observation of the late Judge Frank who spoke of "a right to a private enclave where he may lead a private life. That right is the hallmark of our democracy." 16 In the light of the above, it could thus clearly appear that no possible objection could be legitimately raised against the correctness of the decision now on appeal. We hold that in an administrative hearing against a medical practitioner for alleged malpractice, respondent Board of Medical Examiners cannot, consistently with the self-incrimination clause, compel the person proceeded against to take the witness stand without his consent. WHEREFORE, the decision of the lower court of August 2, 1965 is affirmed. Without pronouncement as to costs.

G.R. No. 117565 November 18, 1997 ARSENIO P. LUMIQUED (deceased), Regional Director, DAR CAR, Represented by his Heirs, Francisca A. Lumiqued, May A. Lumiqued, Arlene A. Lumiqued and Richard A. Lumiqued, petitioners, vs. Honorable APOLONIO G. EXEVEA, ERDOLFO V. BALAJADIA and FELIX T. CABADING, ALL Members of Investigating Committee, created by DOJ Order No. 145 on May 30, 1992; HON. FRANKLIN M. DRILON, SECRETARY OF JUSTICE, HON. ANTONIO T. CARPIO, CHIEF Presidential Legal Adviser/Counsel; and HON. LEONARDO A. QUISUMBING, Senior Deputy Executive Secretary of the Office of the President, and JEANNETTE OBAR-ZAMUDIO, Private Respondent, respondents.

ROMERO, J.:

Does the due process clause encompass the right to be assisted by counsel during an administrative inquiry? Arsenio P. Lumiqued was the Regional Director of the Department of Agrarian Reform Cordillera Autonomous Region (DAR-CAR) until President Fidel V. Ramos dismissed him from that position pursuant to Administrative Order No. 52 dated May 12, 1993. In view of Lumiqued's death on May 19, 1994, his heirs instituted this petition for certiorari and mandamus, questioning such order. The dismissal was the aftermath of three complaints filed by DAR-CAR Regional Cashier and private respondent Jeannette ObarZamudio with the Board of Discipline of the DAR. The first affidavit-complaint dated November 16, 1989, 1 charged Lumiqued with malversation through falsification of official documents. From May to September 1989, Lumiqued allegedly committed at least 93 counts of falsification by padding gasoline receipts. He even submitted a vulcanizing shop receipt worth P550.00 for gasoline bought from the shop, and another receipt for P660.00 for a single vulcanizing job. With the use of falsified receipts, Lumiqued claimed and was reimbursed the sum of P44,172.46. Private respondent added that Lumiqued seldom made field trips and preferred to stay in the office, making it impossible for him to consume the nearly 120 liters of gasoline he claimed everyday. In her second affidavit-complaint dated November 22, 1989, 2 private respondent accused Lumiqued with violation of Commission on Audit (COA) rules and regulations, alleging that during the months of April, May, July, August, September and October, 1989, he made unliquidated cash advances in the total amount of P116,000.00. Lumiqued purportedly defrauded the government "by deliberately concealing his unliquidated cash advances through the falsification of accounting entries in order not to reflect on 'Cash advances of other officials' under code 8-70-600 of accounting rules." The third affidavit-complaint dated December 15, 1989, 3 charged Lumiqued with oppression and harassment. According to private respondent, her two previous complaints prompted Lumiqued to retaliate by relieving her from her post as Regional Cashier without just cause. The three affidavit-complaints were referred in due course to the Department of Justice (DOJ) for appropriate action. On May 20, 1992, Acting Justice Secretary Eduardo G. Montenegro issued Department Order No. 145 creating a committee to investigate the complaints against Lumiqued. The order appointed Regional State Prosecutor Apolinario Exevea as committee chairman with City Prosecutor Erdolfo Balajadia and Provincial Prosecutor Felix Cabading as members. They were mandated to conduct an investigation within thirty days from receipt of the order, and to submit their report and recommendation within fifteen days from its conclusion. The investigating committee accordingly issued a subpoena directing Lumiqued to submit his counter-affidavit on or before June 17, 1992. Lumiqued, however, filed instead an urgent motion to defer submission of his counter-affidavit pending actual receipt of two of private respondent's complaints. The committee granted the motion and gave him a five-day extension. In his counter-affidavit dated June 23, 1992, 4 Lumiqued alleged, inter alia, that the cases were filed against him to extort money from innocent public servants like him, and were initiated by private respondent in connivance with a certain Benedict Ballug of Tarlac and a certain Benigno Aquino III. He claimed that the apparent weakness of the charge was bolstered by private respondent's execution of an affidavit of desistance. 5 Lumiqued admitted that his average daily gasoline consumption was 108.45 liters. He submitted, however, that such consumption was warranted as it was the aggregate consumption of the five service vehicles issued under his name and intended for the use of the Office of the Regional Director of the DAR. He added that the receipts which were issued beyond his region were made in the course of his travels to Ifugao Province, the DAR Central Office in Diliman, Quezon City, and Laguna, where he attended a seminar. Because these receipts were merely turned over to him by drivers for reimbursement, it was not his obligation but that of auditors and accountants to determine whether they were falsified. He affixed his signature on the receipts only to signify that the same were validly issued by the establishments concerned in order that official transactions of the DAR-CAR could be carried out. Explaining why a vulcanizing shop issued a gasoline receipt, Lumiqued said that he and his companions were cruising along Santa Fe, Nueva Vizcaya on their way to Ifugao when their service vehicle ran out of gas. Since it was almost midnight, they sought the help of the owner of a vulcanizing shop who readily furnished them with the gasoline they needed. The vulcanizing shop issued its own receipt so that they could reimburse the cost of the gasoline. Domingo Lucero, the owner of said vulcanizing shop, corroborated this explanation in an affidavit dated June 25, 1990. 6 With respect to the accusation that he sought reimbursement in the amount of P660.00 for one vulcanizing job, Lumiqued submitted that the amount was actually only P6.60. Any error committed in posting the amount in the books of the Regional Office was not his personal error or accountability.

To refute private respondent's allegation that he violated COA rules and regulations in incurring unliquidated cash advances in the amount of P116,000.00, Lumiqued presented a certification 7 of DAR-CAR Administrative Officer Deogracias F. Almora that he had no outstanding cash advances on record as of December 31, 1989. In disputing the charges of oppression and harassment against him, Lumiqued contended that private respondent was not terminated from the service but was merely relieved of her duties due to her prolonged absences. While admitting that private respondent filed the required applications for leave of absence, Lumiqued claimed that the exigency of the service necessitated disapproval of her application for leave of absence. He allegedly rejected her second application for leave of absence in view of her failure to file the same immediately with the head office or upon her return to work. He also asserted that no medical certificate supported her application for leave of absence. In the same counter-affidavit, Lumiqued also claimed that private respondent was corrupt and dishonest because a COA examination revealed that her cash accountabilities from June 22 to November 23, 1989, were short by P30,406.87. Although private respondent immediately returned the amount on January 18, 1990, the day following the completion of the cash examination, Lumiqued asserted that she should be relieved from her duties and assigned to jobs that would not require handling of cash and money matters. Committee hearings on the complaints were conducted on July 3 and 10, 1992, but Lumiqued was not assisted by counsel. On the second hearing date, he moved for its resetting to July 17, 1992, to enable him to employ the services of counsel. The committee granted the motion, but neither Lumiqued nor his counsel appeared on the date he himself had chosen, so the committee deemed the case submitted for resolution. On August 12, 1992, Lumiqued filed an urgent motion for additional hearing, 8 alleging that he suffered a stroke on July 10, 1992. The motion was forwarded to the Office of the State Prosecutor apparently because the investigation had already been terminated. In an order dated September 7, 1992, 9 State Prosecutor Zoila C. Montero denied the motion, viz: The medical certificate given show(s) that respondent was discharged from the Sacred Heart Hospital on July 17, 1992, the date of the hearing, which date was upon the request of respondent (Lumiqued). The records do not disclose that respondent advised the Investigating committee of his confinement and inability to attend despite his discharge, either by himself or thru counsel. The records likewise do not show that efforts were exerted to notify the Committee of respondent's condition on any reasonable date after July 17, 1992. It is herein noted that as early as June 23, 1992, respondent was already being assisted by counsel. Moreover an evaluation of the counter-affidavit submitted reveal(s) the sufficiency, completeness and thoroughness of the counter-affidavit together with the documentary evidence annexed thereto, such that a judicious determination of the case based on the pleadings submitted is already possible. Moreover, considering that the complaint-affidavit was filed as far back as November 16, 1989 yet, justice can not be delayed much longer. Following the conclusion of the hearings, the investigating committee rendered a report dated July 31, 1992, 10finding Lumiqued liable for all the charges against him. It made the following findings: After a thorough evaluation of the evidences (sic) submitted by the parties, this committee finds the evidence submitted by the complainant sufficient to establish the guilt of the respondent for Gross Dishonesty and Grave Misconduct. That most of the gasoline receipts used by the respondent in claiming for the reimbursement of his gasoline expenses were falsified is clearly established by the 15 Certified Xerox Copies of the duplicate receipts (Annexes G1 to G-15) and the certifications issued by the different gasoline stations where the respondent purchased gasoline. Annexes "G-1" to "G-15" show that the actual average purchase made by the respondent is about 8.46 liters only at a purchase price of P50.00, in contrast to the receipts used by the respondent which reflects an average of 108.45 liters at a purchase price of P550.00. Here, the greed of the respondent is made manifest by his act of claiming reimbursements of more than 10 times the value of what he actually spends. While only 15 of the gasoline receipts were ascertained to have been falsified, the motive, the pattern and the scheme employed by the respondent in defrauding the government has, nevertheless, been established.

That the gasoline receipts have been falsified was not rebutted by the respondent. In fact, he had in effect admitted that he had been claiming for the payment of an average consumption of 108.45 liters/day by justifying that this was being used by the 4 vehicles issued to his office. Besides he also admitted having signed the receipts. Respondent's act in defrauding the government of a considerable sum of money by falsifying receipts constitutes not only Dishonesty of a high degree but also a criminal offense for Malversation through Falsification of Official Documents. This committee likewise finds that the respondent have (sic) unliquidated cash advances in the year 1989 which is in violation of established office and auditing rules. His cash advances totaling to about P116,000.00 were properly documented. The requests for obligation of allotments and the vouchers covering the amounts were all signed by him. The mere certification issued by the Administrative Officer of the DAR-CAR cannot therefore rebut these concrete evidences (sic). On the third complaint, this committee likewise believes that the respondent's act in relieving the complainant of her functions as a Regional Cashier on December 1, 1989 was an act of harassment. It is noted that this was done barely two weeks after the complainant filed charges against her (sic). The recommendation of Jose G. Medina of the Commission on Audit came only on May 11, 1990 or almost six months after the respondent's order relieving the complainant was issued. His act in harassing a subordinate employee in retaliation to a complaint she filed constitute(s) Gross Misconduct on the part of the respondent who is a head of office. The affidavits of Joseph In-uyay and Josefina Guting are of no help to the respondent. In fact, this only show(s) that he is capable of giving bribes if only to have the cases against him dismissed. He could not have given a certain Benigno Aquino III the sum of P10,000.00 for any other purpose. Accordingly, the investigating committee recommended Lumiqued's dismissal or removal from office, without prejudice to the filing of the appropriate criminal charges against him. Acting on the report and recommendation, former Justice Secretary Franklin M. Drilon adopted the same in his Memorandum to President Fidel V. Ramos dated October 22, 1992. He added that the filing of the affidavit of desistance 11 would not prevent the issuance of a resolution on the matter considering that what was at stake was not only "the violation of complainant's (herein private respondent's) personal rights" but also "the competence and fitness of the respondent (Lumiqued) to remain in public office." He opined that, in fact, the evidence on record could call for "a punitive action against the respondent on the initiative of the DAR." On December 17, 1992, Lumiqued filed a motion for reconsideration of "the findings of the Committee" with the DOJ. 12 Undersecretary Ramon S. Esguerra indorsed the motion to the investigating committee. 13 In a letter dated April 1, 1993, the three-member investigating committee informed Undersecretary Esguerra that the committee "had no more authority to act on the same (motion for reconsideration) considering that the matter has already been forwarded to the Office of the President" and that their authority under Department Order No. 145 ceased when they transmitted their report to the DOJ. 14 Concurring with this view, Undersecretary Esguerra informed Lumiqued that the investigating committee could no longer act on his motion for reconsideration. He added that the motion was also prematurely filed because the Office of the President (OP) had 15 yet to act on Secretary Drilon's recommendation. On May 12, 1993, President Fidel V. Ramos himself issued Administrative Order No. 52 (A.O. No. 52), 16 finding Lumiqued administratively liable for dishonesty in the alteration of fifteen gasoline receipts, and dismissing him from the service, with forfeiture of his retirement and other benefits. Thus: That the receipts were merely turned over to him by his drivers and that the auditor and accountant of the DARCAR should be the ones to be held liable is untenable. The receipts in question were signed by respondent for the purpose of attesting that those receipts were validly issued by the commercial establishments and were properly disbursed and used in the official business for which it was intended. This Office is not about to shift the blame for all these to the drivers employed by the DAR-CAR as respondent would want us to do.

The OP, however, found that the charges of oppression and harassment, as well as that of incurring unliquidated cash advances, were not satisfactorily established. In a "petition for appeal" addressed to President Ramos, Lumiqued prayed that A.O. No. 52 be reconsidered and that he be reinstated to his former position "with all the benefits accorded to him by law and existing rules and regulations." This petition was basically premised on the affidavit dated May 27, 1993, of a certain Dwight L. Lumiqued, a former driver of the DAR-CAR, who confessed to having authored the falsification of gasoline receipts and attested to petitioner Lumiqued's being an "honest man" who 18 had no "premonition" that the receipts he (Dwight) turned over to him were "altered." Treating the "petition for appeal" as a motion for reconsideration of A.O. No. 52, the OP, through Senior Deputy Executive Secretary Leonardo A. Quisumbing, denied the same on August 31, 1993. Undaunted, Lumiqued filed a second motion for reconsideration, alleging, among other things, that he was denied the constitutional right to counsel during the hearing. 19 On May 19, 1994, 20 however, before his motion could be resolved, Lumiqued died. On 21 September 28, 1994, Secretary Quisumbing denied the second motion for reconsideration for lack of merit. Hence, the instant petition for certiorari and mandamus praying for the reversal of the Report and Recommendation of the Investigating Committee, the October 22, 1992, Memorandum of then Justice Secretary Drilon, A.O. No. 52 issued by President Ramos, and the orders of Secretary Quisumbing. In a nutshell, it prays for the "payment of retirement benefits and other benefits accorded to deceased Arsenio Lumiqued by law, payable to his heirs; and the backwages from the period he was dismissed from service up to the time of his death on May 19, 1994." 22 Petitioners fault the investigating committee for its failure to inform Lumiqued of his right to counsel during the hearing. They maintain that his right to counsel could not be waived unless the waiver was in writing and in the presence of counsel. They assert that the committee should have suspended the hearing and granted Lumiqued a reasonable time within which to secure a counsel of his own. If suspension was not possible, the committee should have appointed a counsel de oficio to assist him. These arguments are untenable and misplaced. The right to counsel, which cannot be waived unless the waiver is in writing and in the presence of counsel, is a right afforded a suspect or an accused during custodial investigation. 23 It is not an absolute right and may, thus, be invoked or rejected in a criminal proceeding and, with more reason, in an administrative inquiry. In the case at bar, petitioners invoke the right of an accused in criminal proceedings to have competent and independent counsel of his own choice. Lumiqued, however, was not accused of any crime in the proceedings below. The investigation conducted by the committee created by Department Order No. 145 was for the purpose of determining if he could be held administratively liable under the law for the complaints filed against him. The order issued by Acting Secretary of Justice Montenegro states thus: In the interest of the public service and pursuant to the provisions of existing laws, a Committee to conduct the formal investigation of the administrative complaint for oppression, dishonesty, disgraceful and immoral conduct, being notoriously undesirable and conduct prejudicial to the best interest of the service against Mr. ARSENIO P. LUMIQUED, Regional Director, Department of Agrarian Reform, Cordillera Autonomous Region, is hereby created . . . 24 As such, the hearing conducted by the investigating committee was not part of a criminal prosecution. This was even made more pronounced when, after finding Lumiqued administratively liable, it hinted at the filing of a criminal case for malversation through falsification of public documents in its report and recommendation. Petitioners' misconception on the nature of the investigation 25 conducted against Lumiqued appears to have been engendered by the fact that the DOJ conducted it. While it is true that under the Administrative Code of 1987, the DOJ shall "administer the criminal justice system in accordance with the accepted processes thereof consisting in the investigation of the crimes, prosecution of offenders and administration of the correctional system, 26 conducting criminal investigations is not its sole function. By its power to "perform such other functions as may be provided by law," 27 prosecutors may be called upon to conduct administrative investigations. Accordingly, the investigating committee created by Department Order No. 145 was duty-bound to conduct the administrative investigation in accordance with the rules therefor. While investigations conducted by an administrative body may at times be akin to a criminal proceeding, the fact remains that under existing laws, a party in an administrative inquiry may or may not be assisted by counsel, irrespective of the nature of the charges and of the respondent's capacity to represent himself, and no duty rests on such a body to furnish the person being investigated 28 with counsel. In an administrative proceeding such as the one that transpired below, a respondent (such as Lumiqued) has
17

the option of engaging the services of counsel or not. This is clear from the provisions of Section 32, Article VII of Republic Act No. 2260 29 (otherwise known as the Civil Service Act) and Section 39, paragraph 2, Rule XIV (on Discipline) of the Omnibus Rules 30 Implementing Book V of Executive Order No. 292 (otherwise known as the Administrative Code of 1987). Excerpts from the transcript of stenographic notes of the hearings attended by Lumiqued 31 clearly show that he was confident of his capacity and so opted to represent himself . Thus, the right to counsel is not imperative in administrative investigations because such inquiries are conducted merely to determine whether there are facts that merit disciplinary measures against erring public officers and employees, with the purpose of maintaining the dignity of government service. Furthermore, petitioners' reliance on Resolution No. 94-0521 of the Civil Service Commission on the Uniform Procedure in the Conduct of Administrative Investigation stating that a respondent in an administrative complaint must be "informed of his right to the assistance of a counsel of his choice," 32 is inappropriate. In the first place, this resolution is applicable only to cases brought 33 before the Civil Service Commission. Secondly, said resolution, which is dated January 25, 1994, took effect fifteen days following its publication in a newspaper of general circulation, 34 much later than the July 1992 hearings of the investigating committee created by Department Order No. 145. Thirdly, the same committee was not remiss in the matter of reminding Lumiqued of his right to counsel. Thus, at the July 3, 1992, hearing, Lumiqued was repeatedly appraised of his option to secure the services of counsel: RSP EXEVEA: This is an administrative case against Director Lumiqued. Director Lumiqued is present. The complainant is present, Janet Obar-Zamudio. Complainant has just been furnished with a copy of the counter-affidavit of the respondent. Do you have a counsel, Director? DIR. LUMIQUED: I did not bring anybody, Sir, because when I went to see him, he told me, Sir, that he has already set a hearing, morning and afternoon today. RSP EXEVEA: So, we will proceed with the hearing even without your counsel? You are willing to proceed with the hearing even without your counsel? DIR. LUMIQUED: Yes, I am confident. . . CP BALAJADIA: You are confident that you will be able to represent yourself? DIR. LUMIQUED: That is my concern. 35 (Emphasis supplied) In the course of private respondent's damaging testimony, the investigating committee once again reminded Lumiqued of his need for a counsel. Thus: CP BALAJADIA: Q. (To Director Lumiqued) You really wish to go through with this even without your counsel? DIRECTOR LUMIQUED: A. I think so, Sir. CP BALAJADIA:

Let us make it of record that we have been warning you to proceed with the assistance of counsel but you said that you can take care of yourself so we have no other alternative but to proceed. 36 (Emphasis supplied). Thereafter, the following colloquies transpired: CP BALAJADIA: We will suspend in the meantime that we are waiting for the supplemental affidavit you are going to present to us. Do you have any request from the panel of investigators, Director Lumiqued? DIRECTOR LUMIQUED: I was not able to bring a lawyer since the lawyer I requested to assist me and was the one who prepared my counter-affidavit is already engaged for a hearing and according to him he is engaged for the whole month of July. RSP EXEVEA: We cannot wait . . . CP BALAJADIA: Why don't you engage the services of another counsel. The charges against you are quite serious. We are not saying you are guilty already. We are just apprehensive that you will go through this investigation without a counsel. We would like you to be protected legally in the course of this investigation. Why don't you get the services of another counsel. There are plenty here in Baguio ... DIRECTOR LUMIQUED: I will try to see, Sir . . . CP BALAJADIA: Please select your date now, we are only given one month to finish the investigation, Director Lumiqued. RSP EXEVEA: We will not entertain any postponement. With or without counsel, we will proceed. CP BALAJADIA: Madam Witness, will you please submit the document which we asked for and Director Lumiqued, if you have other witnesses, please bring them but reduce their testimonies in affidavit form so that we can expedite with the proceedings. 37 At the hearing scheduled for July 10, 1992, Lumiqued still did not avail of the services of counsel. Pertinent excerpts from said hearing follow: FISCAL BALAJADIA:

I notice also Mr. Chairman that the respondent is not being represented by a counsel. The last time he was asked to invite his lawyer in this investigation. May we know if he has a lawyer to represent him in this investigation? DIR. LUMIQUED: There is none Sir because when I went to my lawyer, he told me that he had set a case also at 9:30 in the other court and he told me if there is a possibility of having this case postponed anytime next week, probably Wednesday so we will have good time (sic) of presenting the affidavit. FISCAL BALAJADIA: Are you moving for a postponement Director? May I throw this to the panel. The charges in this case are quite serious and he should be given a chance to the assistance of a counsel/lawyer. RSP EXEVEA: And is (sic) appearing that the supplemental-affidavit has been furnished him only now and this has several documents attached to it so I think we could grant him one last postponement considering that he has already asked for an extension. DIR. LUMIQUED: Furthermore Sir, I am now being bothered by my heart ailment. 38 The hearing was reset to July 17, 1992, the date when Lumiqued was released from the hospital. Prior to said date, however, Lumiqued did not inform the committee of his confinement. Consequently because the hearing could not push through on said date, and Lumiqued had already submitted his counter-affidavit, the committee decided to wind up the proceedings. This did not mean, however, that Lumiqued was short-changed in his right to due process. Lumiqued, a Regional Director of a major department in the executive branch of the government, graduated from the University of the Philippines (Los Baos) with the degree of Bachelor of Science major in Agriculture, was a recipient of various scholarships and grants, and underwent training seminars both here and abroad. 39 Hence, he could have defended himself if need be, without the help of counsel, if truth were on his side. This, apparently, was the thought he entertained during the hearings he was able to attend. In his statement, "That is my concern," one could detect that it had been uttered testily, if not exasperatedly, because of the doubt or skepticism implicit in the question, "You are confident that you will be able to represent yourself?" despite his having positively asserted earlier, "Yes, I am confident." He was obviously convinced that he could ably represent himself. Beyond repeatedly reminding him that he could avail himself of counsel and as often receiving the reply that he is confident of his ability to defend himself, the investigating committee could not do more. One can lead a horse to water but cannot make him drink. The right to counsel is not indispensable to due process unless required by the Constitution or the law. In Nera v.Auditor General, 40 the Court said: . . . There is nothing in the Constitution that says that a party in a non-criminal proceeding is entitled to be represented by counsel and that, without such representation, he shall not be bound by such proceedings. The assistance of lawyers; while desirable, is not indispensable. The legal profession was not engrafted in the due process clause such that without the participation of its members, the safeguard is deemed ignored or violated. The ordinary citizen is not that helpless that he cannot validly act at all except only with a lawyer at his side. In administrative proceedings, the essence of due process is simply the opportunity to explain one's side. One may be heard, not solely by verbal presentation but also, and perhaps even much more creditably as it is more practicable than oral arguments, through pleadings. 41 An actual hearing is not always an indispensable aspect of due process. 42 As long as a party was given the opportunity to defend his interests in due course; he cannot be said to have been denied due process of law, for this opportunity to be heard is the very essence of due process.43 Moreover, this constitutional mandate is deemed satisfied if a person is granted an 44 opportunity to seek reconsideration of the action or ruling complained of. Lumiqued's appeal and his subsequent filing of motions for reconsideration cured whatever irregularity attended the proceedings conducted by the committee. 45

The constitutional provision on due process safeguards life, liberty and property. In the early case of Cornejo v.Gabriel and Provincial Board of 47 Rizal the Court held that a public office is not property within the sense of the constitutional guarantee of due process of law for it is a public trust or agency. This jurisprudential pronouncement has been enshrined in the 1987 Constitution under Article XI, Section 1, on accountability of public officers, as follows: Sec. 1. Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives. When the dispute concerns one's constitutional right to security of tenure, however, public office is deemed analogous to property in a limited sense; hence, the right to due process could rightfully be invoked. Nonetheless, the right to security of tenure is not absolute. Of equal weight is the countervailing mandate of the Constitution that all public officers and employees must serve with responsibility, integrity, loyalty and efficiency. 48 In this case, it has been clearly shown that Lumiqued did not live up to this constitutional precept. The committee's findings pinning culpability for the charges of dishonesty and grave misconduct upon Lumiqued were not, as shown above, fraught with procedural mischief. Its conclusions were founded on the evidence presented and evaluated as facts. Wellsettled in our jurisdiction is the doctrine that findings of fact of administrative agencies must be respected as long as they are supported by substantial evidence, even if such evidence is not overwhelming or preponderant. 49 The quantum of proof necessary for a finding of guilt in administrative cases is only substantial evidence or such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. 50 Consequently, the adoption by Secretary Drilon and the OP of the committee's recommendation of dismissal may not in any way be deemed tainted with arbitrariness amounting to grave abuse of discretion. Government officials are presumed to perform their functions with regularity. Strong evidence is not necessary to rebut that presumption, 51 which petitioners have not successfully disputed in the instant case. Dishonesty is a grave offense penalized by dismissal under Section 23 of Rule XIV of the Omnibus Rules Implementing Book V of the Administrative Code of 1987. Under Section 9 of the same Rule, the penalty of dismissal carries with it "cancellation of eligibility, forfeiture of leave credits and retirement benefits, and the disqualification for reemployment in the government service." The instant petition, which is aimed primarily at the "payment of retirement benefits and other benefits," plus back wages from the time of Lumiqued's dismissal until his demise, must, therefore, fail. WHEREFORE, the instant petition for certiorari and mandamus is hereby DISMISSED and Administrative Order no. 52 of the Office of the President is AFFIRMED. Costs against petitioners. SO ORDERED. Regalado, Davide, Jr., Bellosillo, Melo, Puno, Vitug Kapunan, Mendoza, Francisco and Panganiban, JJ., concur. Narvasa, C.J., is on leave.

46

EXHAUSTION OF ADMINISTRATIVE REMEDIES

G.R. No. 131442

July 10, 2003

BANGUS FRY FISHERFOLK, DIWATA MAGBUHOS, ANGELITA BINAY, ELMA GARCIA, VIRGILIO PANGUIO, ARSENIO CASTILLO, ARIEL PANGUIO, ANTONIO PANGUIO, ANTONIO BUNQUIN, GENEROSO BUNQUIN, CHARLIE DIMAYACYAC, RENATO PANGUIO, ATILANO BUNQUIN, CARLOS CHAVEZ, JUAN DIMAYACYAC, FILEMON BUNQUIN, MARIO MAGBUHOS, MAURO MAGBUHOS, NORA MAGBUHOS, JEOVILYN, GENALYN and JORVAN QUIMUEL, minors, represented by their parents FELICIANA and SABINO QUIMUEL, MARICAR MAGBUHOS, minor, represented by her parents CARMELITA and ANTONIO MAGBUHOS, MARLO BINAY, minor, represented by his parents EFRENITA and CHARLITO BINAY, and the BANGUS, BANGUS FRY and other MARINE LIFE OF MINOLO

COVE, petitioners, vs. THE HONORABLE ENRICO LANZANAS as Judge of the Regional Trial Court of Manila, Branch VII, THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES Region IV, represented by its Regional Executive Director and its Regional Director for Environment, THE NATIONAL POWER CORPORATION, ORIENTAL MINDORO ELECTRIC COOPERATIVE, PROVINCIAL GOVERNMENT OF ORIENTAL MINDORO, herein represented by GOVERNOR RODOLFO VALENCIA, PUERTO GALERA MAYOR GREGORIO DELGADO, VICE MAYOR ARISTEO ATIENZA, and MEMBERS OF THE SANGGUNIANG BAYAN OF PUERTO GALERA, JUAN ASCAN, JR., RAFAEL ROMEY, CENON SALCEDO, JERRY DALISAY, SIMON BALITAAN, RENATO CATAQUIS, MARCELINO BANAAG, DANIEL ENRIQUEZ, AMELYN MARCO, GABRIEL ILAGAN, MUNICIPAL ENGINEER RODEL RUBIO, and MUNICIPAL PLANNING and DEVELOPMENT COORDINATOR WILHELMINA LINESES, respondents. CARPIO, J.: The Case This is a petition for review of the Order dated 7 November 1997 of the Regional Trial Court of Manila, Branch 7 ("Manila RTC"), dismissing petitioners' complaint for lack of cause of action and lack of jurisdiction. The Facts On 30 June 1997, Regional Executive Director Antonio G. Principe ("RED Principe") of Region IV, Department of Environment and Natural Resources ("DENR"), issued an Environmental Clearance Certificate ("ECC") in favor of respondent National Power Corporation ("NAPOCOR"). The ECC authorized NAPOCOR to construct a temporary mooring facility in Minolo Cove, Sitio Minolo, Barangay San Isidro, Puerto Galera, Oriental Mindoro. The Sangguniang Bayan of Puerto Galera has declared Minolo Cove, a mangrove area and breeding ground for bangus fry, an eco-tourist zone.3 The mooring facility would serve as the temporary docking site of NAPOCOR's power barge, which, due to turbulent waters at its former mooring site in Calapan, Oriental Mindoro, required relocation to a safer site like Minolo Cove. The 14.4 megawatts power barge would provide the main source of power for the entire province of Oriental Mindoro pending the construction of a land-based power plant in Calapan, Oriental Mindoro. The ECC for the mooring facility was valid for two years counted from its date of issuance or until 30 June 1999.4 Petitioners, claiming to be fisherfolks from Minolo, San Isidro, Puerto Galera,5 sought reconsideration of the ECC issuance. RED Principe, however, denied petitioners' plea on 15 July 1997. On 21 July 1997, petitioners filed a complaint with the Regional Trial Court of Manila, Branch 7, for the cancellation of the ECC and for the issuance of a writ of injunction to stop the construction of the mooring facility. Impleaded as defendants were the following: (1) NAPOCOR, (2) RED Principe, (3) DENR Region IV Technical Director for Environment Oscar Dominguez, (4) Oriental Mindoro Electric Cooperative ("ORMECO"), which is engaged in the distribution of electricity in Oriental Mindoro, and (5) certain officials of Puerto Galera.6 Petitioners subsequently amended their complaint to include as additional defendants the elective officials of Oriental Mindoro represented by then Governor Rodolfo G. Valencia. Petitioners further prayed for the demolition of mooring structures that respondents had already built. On 28 July 1997, prior to the filing of the amended complaint, the trial court issued a 20-day temporary restraining order enjoining the construction of the mooring facility. However, the trial court lifted the same on 6 August 1997 on NAPOCOR's manifestation that the provincial government of Oriental Mindoro was the one undertaking the construction of the mooring facility.7 On 28 August 1997, before filing their answers, respondents ORMECO and the provincial officials of Oriental Mindoro moved to dismiss the complaint. These respondents claimed that petitioners failed to exhaust administrative remedies, rendering the complaint without cause of action. They also asserted that the Manila RTC has no jurisdiction to enjoin the construction of the mooring facility in Oriental Mindoro, which lies outside the Manila RTC's territorial jurisdiction. Petitioners opposed the motion on the ground that there was no need to exhaust administrative remedies. They argued that the issuance of the ECC was in patent violation of Presidential Decree No. 1605, 8 Sections 26 and 27 of Republic Act No. 7160,9 and the provisions of DENR Department Administrative Order No. 96-37 ("DAO 96-37") on the documentation of ECC applications. Petitioners also claimed that the implementation of the ECC was in patent violation of its terms. In its order of 7 November 1997, the trial court granted the motion and dismissed petitioners' complaint.
1 2

Hence, this petition. The Ruling of the Trial Court The trial court's order dismissing the complaint reads in part: After careful evaluation and analysis, this Court finds the Motion to Dismiss tenable and meritorious. Petitioners have clearly failed to exhaust all administrative remedies before taking this legal action in Court x x x. It is x x x worth mentioning that the decision of the Regional Director may still be x x x elevated to the Office of the Secretary of the DENR to fully comply with the process of exhaustion of administrative remedies. And well settled is the rule in our jurisdiction that before bringing an action in or resorting to the Courts of Justice, all remedies of administrative character affecting or determinative of the controversy at that level should first be exhausted by the aggrieved party (Pestanas vs. Dyogi, L-25786, February 27, 1978). And petitioners' failure to exhaust administrative remedies renders his [sic] petition dismissible (Chia vs. Acting Collector of Customs, 177 SCRA 755). And a dismissal on the ground of failure to exhaust administrative remedies is tantamount to a dismissal based on lack of cause of action (Baguiro vs. Basa, Jr., 214 SCRA 437; Pineda vs. CFI of Davao, 111 Phil. 643; Sarabia vs. Secretary of Agriculture & Natural Resources, L-16002, May 23, 1961; Gone, et al. vs. District Engineer, et. al., L-22782, August 29, 1975; Abe-Abe, et al. vs. Manta, et. al., L-4827, May 31, 1979) although it does not affect the jurisdiction of the court over the subject matter (Mun. of La Trinidad, et al. vs. CFI of Baguio-Benguet, et al., L-33889, June 28, 1983). Moreover, this Court finds the Opposition of the Petitioners highly untenable and bereft of merits that the controverted act in question is patently illegal and there was an immediate need for judicial intervention. The ECC in question was issued by the Regional Office of the DENR which has jurisdiction and authority over the same . . .. And corollary to this, the issue as to whether or not the Minolo Cove is within the enclosed coves and waters embraced by Puerto Galera bay and protected by Medio island is a clear question of fact which the DENR may appropriately resolve before resorting to [the] Court[s]. This Court is likewise aware and cognizant of its territorial jurisdiction in the enforcement of Writ of Injunction. That truly, [a] writ of injunction can only be enforced within [the] territorial jurisdiction of this Court but not for acts which are being or about to be committed outside its territorial jurisdiction. Thus, inPhilippine National Bank vs. Pineda, 197 SCRA 1, the Honorable Supreme Court ruled: "Regional Trial Courts can only enforce their writs of injunction within their respective designated territories. Furthermore, we find the issuance of the preliminary injunction directed against the Provincial Sheriff of Negros Occidental a jurisdictional paux [sic] pas (from Black Dictionary means jurisdictional falsity) as the Courts of First Instance now Regional Trial Court[s], can only enforce their writs of injunction within their respective designated territories. And finally, this Court is not unmindful of the relevant and square application in the case at bar of Presidential Decree No. 1818, Executive Order No. 380 dated November 27, 1989, and Circular No. 2-91 of the Supreme Court that the National Power Corporation (NPC) is a public utility, created under special legislation, engaged in the generation and distribution of electric power and energy. The mooring site of NPC in Puerto Galera, Oriental Mindoro is one of its infrastructure projects falling within the mantle of Executive Order No. 380, November 27, 1989 x x x. And as held by the Supreme Court in the case of National Power Corporation vs. Honorable Abraham P. Vera, et al., 170 SCRA 721, courts are without jurisdiction to issue injunctive writs against [the] National Power Corporation. The latter enjoys the protective mantle of P.D. 1818, (Circular No. 2-91). xxx xxx xxx

Injunction in this case is not a mere ancillary [sic] writ but the main action itself together with the Annulment of the Environmental Clearance Certificate (ECC). Even assuming arguendo that the court [can] annul the ECC how can the latter enforce the same against the Provincial Government of Oriental Mindoro which was impleaded by the petitioners as a necessary party together with the Oriental Mindoro Electric Cooperative and the government officials of Puerto Galera, Oriental Mindoro, whose acts and functions are being performed outside the territorial jurisdiction of this court? x x x Indisputably, the injunction and annulment of ECC as prayed for in the petition are inseparable x x x.

The conclusion, therefore, is inescapable that petitioners have failed to exhaust all the available administrative remedies 10 and this Court has no jurisdiction to issue the injunctive writ prayed for in the Amended [Complaint]. The Issue The issue is whether the trial court erred in dismissing petitioners' complaint for lack of cause action and lack of jurisdiction. The Ruling of the Court The petition has no merit. Jurisdiction of the Manila RTC over the Case Jurisdiction over the subject matter of a case is conferred by law. Such jurisdiction is determined by the allegations in the complaint, irrespective of whether the plaintiff is entitled to all or some of the reliefs sought.11 A perusal of the allegations in the complaint shows that petitioners' principal cause of action is the alleged illegality of the issuance of the ECC. The violation of laws on environmental protection and on local government participation in the implementation of environmentally critical projects is an issue that involves the validity of NAPOCOR's ECC. If the ECC is void, then as a necessary consequence, NAPOCOR or the provincial government of Oriental Mindoro could not construct the mooring facility. The subsidiary issue of non-compliance with pertinent local ordinances in the construction of the mooring facility becomes immaterial for purposes of granting petitioners' main prayer, which is the annulment of the ECC. Thus, if the court has jurisdiction to determine the validity of the issuance of the ECC, then it has jurisdiction to hear and decide petitioners' complaint. Petitioners' complaint is one that is not capable of pecuniary estimation. It falls within the exclusive and original jurisdiction of the Regional Trial Courts under Section 19(1) of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691. The question of whether petitioners should file their complaint in the Regional Trial Court of Manila or Oriental Mindoro then becomes a matter of venue, to be determined by the residence of the parties.12 Petitioners' main prayer is the annulment of the ECC. The principal respondent, DENR Region IV, has its main office at the L & S Building, Roxas Boulevard, Manila. Regional Executive Director Principe of the DENR Region IV, who issued the ECC, holds office there. Plainly, the principal respondent resides in Manila, which is within the territorial jurisdiction of the Manila RTC. Thus, petitioners filed their complaint in the proper venue. On the other hand, the jurisdiction of Regional Trial Courts to issue injunctive writs is limited to acts committed or about to be committed within their judicial region.13 Moreover, Presidential Decree No. 1818 ("PD No. 1818") prohibited14 courts from issuing injunctive writs against government infrastructure projects like the mooring facility in the present case. Republic Act No. 8975 ("RA No. 8975"), which took effect on 26 November 2000, superseded PD No. 1818 and delineates more clearly the coverage of the prohibition, reserves the power to issue such writs exclusively with this Court, and provides penalties for its violation.15 Obviously, neither the Manila RTC nor the Oriental Mindoro RTC can issue an injunctive writ to stop the construction of the mooring facility. Only this Court can do so under PD No. 1818 and later under RA No. 8975. Thus, the question of whether the Manila RTC has jurisdiction over the complaint considering that its injunctive writ is not enforceable in Oriental Mindoro is academic. Clearly, the Manila RTC has jurisdiction to determine the validity of the issuance of the ECC, although it could not issue an injunctive writ against the DENR or NAPOCOR. However, since the construction of the mooring facility could not proceed without a valid ECC, the validity of the ECC remains the determinative issue in resolving petitioners' complaint. Exhaustion of Administrative Remedies The settled rule is before a party may seek the intervention of the courts, he should first avail of all the means afforded by administrative processes. Hence, if a remedy within the administrative machinery is still available, with a procedure prescribed pursuant to law for an administrative officer to decide the controversy, a party should first exhaust such remedy before resorting to the courts. The premature invocation of a court's intervention renders the complaint without cause of action and dismissible on such ground.16

RED Principe of the DENR Region IV Office issued the ECC based on (1) Presidential Decree No. 1586 ("PD No. 1586") and its implementing rules establishing the Environmental Impact Statement System, (2) DAO 96-3717 and (3) the Procedural Manual of 18 DAO 96-37. Section 4 of PD No. 1586 requires a proponent of an environmentally critical project, or a project located within an environmentally critical area as declared by the President, to secure an ECC prior to the project's operation.19 NAPOCOR thus secured the ECC because the mooring facility in Minolo Cove, while not an environmentally critical project, is located within an 20 environmentally critical area under Presidential Proclamation No. 2146, issued on 14 December 1981. The rules on administrative appeals from rulings of the DENR Regional Directors on the implementation of PD No. 1586 are found in Article VI of DAO 96-37, which provides: SECTION 1.0. Appeal to the Office of the Secretary. Any party aggrieved by the final decision of the RED may, within 15 days from receipt of such decision, file an appeal with the Office of the Secretary. The decision of the Secretary shall be immediately executory. SECTION 2.0. Grounds for Appeal. The grounds for appeal shall be limited to grave abuse of discretion and serious errors in the findings of fact which would cause grave or irreparable injury to the aggrieved party. Frivolous appeals shall not be countenanced. SECTION 3.0. Who May Appeal. The proponent or any stakeholder, including but not limited to, the LGUs concerned and affected communities, may file an appeal. The DENR Procedural Manual for DAO 96-37 explains these provisions thus: Final decisions of the RED may be appealed. These decisions include those relating to the issuance or non-issuance of an ECC, and the imposition of fines and penalties. By inference, the decision of the Secretary on the issuance or non-issuance of the ECC may also be appealed based on this provision. Resort to courts prior to availing of this remedy would make the appellant's action dismissible on the ground of non-exhaustion of administrative remedies. The right to appeal must be exercised within 15 days from receipt by the aggrieved party of such decision. Failure to file such appeal within the requisite period will result in the finality of the RED's or Secretary's decision(s), which can no longer be disturbed. An appeal shall not stay the effectivity of the RED's decision, unless the Secretary directs otherwise. The right to appeal does not prevent the aggrieved party from first resorting to the filing of a motion for reconsideration with the RED, to give the RED an opportunity to re-evaluate his decision. (Emphasis added) Instead of following the foregoing procedure, petitioners bypassed the DENR Secretary and immediately filed their complaint with the Manila RTC, depriving the DENR Secretary the opportunity to review the decision of his subordinate, RED Principe. Under the Procedural Manual for DAO 96-37 and applicable jurisprudence, petitioners' omission renders their complaint dismissible for lack of cause of action.21 Consequently, the Manila RTC did not err in dismissing petitioners' complaint for lack of cause of action. On the Alleged Patent Illegality of the ECC Petitioners nevertheless contend that they are exempt from filing an appeal with the DENR Secretary because the issuance of the ECC was in patent violation of existing laws and regulations. These are (1) Section 1 of Presidential Decree No. 1605, as amended, (2) Sections 26 and 27 of Republic Act No. 7160 (Local Government Code of 1991), and (3) the provisions of DAO 96-37 on the documentary requirements for the zoning permit and social acceptability of the mooring facility. Petitioners' contention is without merit. While the patent illegality of an act exempts a party from complying with the rule on 22 exhaustion Of administrative remedies, this does not apply in the present case. Presidential Decree No. 1605 Presidential Decree No. 1605 ("PD No. 1605"),23 as amended by Presidential Decrees Nos. 1605-A and 1805, declares as ecologically threatened zone "the coves and waters embraced by Puerto Galera Bay as protected by Medio Island." This decree provides in part:

Section 1. Any provision of law to the contrary notwithstanding, the construction of marinas, hotels, restaurants, other commercial structures; commercial or semi-commercial wharfs [sic]; commercial docking within the enclosed coves of Puerto Galera; the destruction of its mangrove stands; the devastation of its corals and coastline by large barges, motorboats, tugboat propellers, and any form of destruction by other human activities are hereby prohibited. Section 2. x x x No permit for the construction of any wharf, marina, hotel, restaurants and other commercial structures in Puerto Galera shall be issued without prior approval of the Office of the President upon the recommendation of the Philippine Tourism Authority. (Emphasis supplied) NAPOCOR claims that since Minolo Cove lies outside of "Puerto Galera Bay as protected by Medio Island", PD No. 1605 does not apply to this case. However, petitioners assert that Minolo Cove is one of the "enclosed coves of Puerto Galera"25 and thus protected under PD No. 1605. This is a question of fact that the DENR Secretary should have first resolved. In any event, there is no dispute that NAPOCOR will use the mooring facility for its power barge that will supply 14.4 megawatts of electricity to the entire province of Oriental Mindoro, including Puerto Galera. The mooring facility is obviously a government-owned public infrastructure intended to serve a basic need of the people of Oriental Mindoro. The mooring facility is not a "commercial structure; commercial or semi-commercial wharf or commercial docking" as contemplated in Section 1 of PD No. 1605. Therefore, the issuance of the ECC does not violate PD No. 1605 which applies only to commercial structures like wharves, marinas, hotels and restaurants. Sections 26 and 27 of RA No. 7160 Congress introduced Sections 26 and 27 in the Local Government Code to emphasize the legislative concern "for the maintenance of a sound ecology and clean environment."26 These provisions require every national government agency or government-owned and controlled corporation to hold prior consultations with the local government unit concerned and to secure the prior approval of its sanggunian before implementing "any project or program that may cause pollution, climatic change, depletion of non-renewable resources, loss of cropland, rangeland, or forest cover and extinction of animal or plant species." Sections 26 and 27 respectively provide: Section 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. It shall be the duty of every national agency or government-owned or controlled corporation authorized or involved in the planning and implementation of any project or program that may cause pollution, climatic change, depletion of non-renewable resources, loss of crop land, rangeland, or forest cover and extinction of animal or plant species, to consult with the local government units, non-governmental organizations, and other sectors concerned and explain the goals and objectives of the project or program, its impact upon the people and the community in terms of environmental or ecological balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof. Section 27. Prior Consultations Required. No project or program shall be implemented by government authorities unless the consultations mentioned in Section . . . 26 hereof are complied with, and prior approval of the sanggunian concerned is obtained: Provided, That occupants in areas where such projects are to be implemented shall not be evicted unless appropriate relocation sites have been provided, in accordance with the provisions of the Constitution. In Lina, Jr. v. Pao,27 the Court interpreted these provisions in this manner: Section 27 of the Code should be read in conjunction with Section 26 thereof x x x. Thus, the projects and programs mentioned in Section 27 should be interpreted to mean projects and programs whose effects are among those enumerated in Sections 26 and 27, to wit, those that: (1) may cause pollution; (2) may bring about climatic change; (3) may cause the depletion of non-renewable resources; (4) may result in loss of crop land, rangeland, or forest cover; (5) may eradicate certain animal or plant species; and (6) other projects or programs that may call for the eviction of a particular group of people residing in the locality where these will be implemented. Again, Sections 26 and 27 do not apply to this case because as petitioners admit,28 the mooring facility itself is not environmentally critical and hence does not belong to any of the six types of projects mentioned in the law. There is no statutory requirement for the concerned sanggunian to approve the construction of the mooring facility. It is another matter if the operation of the power barge is at issue. As an environmentally critical project that causes pollution, the operation of the power barge needs the prior approval of
24

the concerned sanggunian. However, what is before this Court is only the construction of the mooring facility, not the operation of the power barge. Thus, the issuance of the ECC does not violate Sections 26 and 27 of RA No. 7160. Documentary Requirements for ECC Applications Under DAO 96-37, an ECC applicant for a project located within an environmentally critical area is required to submit an Initial Environment Examination, which must contain a brief description of the environmental setting and a documentation of the consultative process undertaken, when appropriate.29 As part of the description of the environmental setting, the ECC applicant must submit a certificate of locational clearance or zoning certificate. Petitioners further contend that NAPOCOR, in applying for the ECC, did not submit to the DENR Region IV Office the documents proving the holding of consultations and the issuance of a locational clearance or zoning certificate. Petitioners assert that this omission renders the issuance of the ECC patently illegal. The contention is also without merit. While such documents are part of the submissions required from a project proponent, their mere absence does not render the issuance of the ECC patently illegal. To justify non-exhaustion of administrative remedies due to the patent illegality of the ECC, the public officer must have issued the ECC "[without any] semblance of compliance, or even an attempt to comply, with the pertinent laws; when manifestly, the officer has acted without jurisdiction or has exceeded his jurisdiction, or has committed a grave abuse of discretion; or when his act is clearly and obviously devoid of any color of authority."30 RED Principe, as chief of DENR Region IV, is the officer duly authorized under DAO 96-3731 to issue ECCs for projects located within environmentally critical areas. RED Principe issued the ECC on the recommendation of Amelia Supetran, the Director of the Environmental Management Bureau. Thus, RED Principe acted with full authority pursuant to DENR regulations. Moreover, the legal presumption is that he acted with the requisite authority.32 This clothes RED Principe's acts with presumptive validity and negates any claim that his actions are patently illegal or that he gravely abused his discretion. While petitioners may present proof to the contrary, they must do so before the proper administrative forum before resorting to judicial remedies. On the Alleged Non-Compliance with the Terms of the ECC Lastly, petitioners claim that they are justified in immediately seeking judicial recourse because NAPOCOR is guilty of violating the conditions of the ECC, which requires it to secure a separate ECC for the operation of the power barge. The ECC also mandates NAPOCOR to secure the usual local government permits, like zoning and building permits, from the municipal government of Puerto Galera. The contention is similarly without merit. The fact that NAPOCOR's ECC is subject to cancellation for non-compliance with its conditions does not justify petitioners' conduct in ignoring the procedure prescribed in DAO 96-37 on appeals from the decision of the DENR Executive Director. Petitioners vigorously insist that NAPOCOR should comply with the requirements of consultation and locational clearance prescribed in DAO 96-37. Ironically, petitioners themselves refuse to abide with the procedure for filing complaints and appealing decisions laid down in DAO 96-37. DAO 96-37 provides for a separate administrative proceeding to address complaints for the cancellation of an ECC. Under Article IX of DAO 96-37, complaints to nullify an ECC must undergo an administrative investigation, after which the hearing officer will submit his report to the EMB Director or the Regional Executive Director, who will then render his decision. The aggrieved party may file an appeal to the DENR Secretary, who has authority to issue cease and desist orders. Article IX also classifies the types of violations covered under DAO 96-37, including projects operating without an ECC or violating the conditions of the ECC. This is the applicable procedure to address petitioners' complaint on NAPOCOR's alleged violations and not the filing of the instant case in court. A Final Word The Court commends petitioners for their courageous efforts to safeguard and maintain the ecological balance of Minolo Cove. This Court recognizes the utmost importance of protecting the environment.33 Indeed, we have called for the vigorous prosecution of 34 violators of environmental laws. Legal actions to achieve this end, however, must be done in accordance with established rules of procedure that were intended, in the first place, to achieve orderly and efficient administration of justice. WHEREFORE, we DENY the petition for lack of merit. SO ORDERED.

Davide, Jr., C .J ., Vitug, Ynares-Santiago and Azcuna, JJ ., concur.

G.R. No. 137266

December 5, 2001

ANTONIO M. BERNARDO, ERNESTO A. DOMINGO, JR. and JESUS C. CRUZ, petitioners, vs. BENJAMIN S. ABALOS, SR., BENJAMIN "BENHUR" D. ABALOS, JR., DR. EDEN C. DIAZ, ROMEO F. ZAPANTA, ARCADIO S. DE VERA and THE COMMISSION ON ELECTIONS, respondents. SANDOVAL-GUTIERREZ, J.: This is a petition for certiorari1 seeking the nullification of Resolution No. 98-3208 of the Commission on Elections (COMELEC) En Banc promulgated on December 1, 1998 dismissing the complaint for vote buying filed by petitioners against respondents.1wphi1.nt On April 21, 1998, petitioners Antonio M. Bernardo M. Bernardo, Ernesto A. Domingo, Jr. and Jesus C. Cruz filed with the COMELEC a criminal complaint against respondents Benjamin S. Abalos, Sr., Benjamin C. Abalos, Jr., Dr. Eden C. Diaz, Romeo Zapanta and Arcadio de Vera for vote buying in violation of Section 261, paragraphs (a), (b) and (j) of the Omnibus Election Code (OEC), in relation to Section 28 of Republic Act 6646 and Section 68 of the OEC. The complaint, docketed as E.O. Case No. 98-110,2 alleged that: 1. On April 14, 1998 (Tuesday), respondent Mandaluyong City Mayor Benjamin S. Abalos, Sr., and his son respondent Benjamin "Benhur" C. Abalos, Jr., candidate for City Mayor of the same city in the May 11, 1998 elections, conspiring with respondents Dr. Eden C. Diaz, Schools Division Superintendent, Romeo F. Zapanta, Assistant Schools Division Superintendent, and Arcadio de Vera, President, Mandaluyong Federation of Public School Teachers, sponsored, arranged and conducted an all-expense-free transportation, food and drinks affair for the Mandaluyong City public school teachers, registered voters of said city, at the Tayabas Bay Beach Resort, Sariaya, Quezon Province. 2. Among the identified public school teachers present, brought in around twelve (12) buses, were Corazon Mayoya, principal of Highway Hills Elementary School, her Assistant Principal of Highway Hills Elementary School, her Assistant Principal and Mr. Dante del Remigio; Mrs. Diaz Principal of Mandaluyong City High School and Mr. Alvia; Mrs. Parillo, Andres Bonifacio Elementary School; Mrs. Gregoria Ignacio, Principal of Doa Pilar Gonzaga Elementary School; Ms. Magsalin, Principal of Mandaluyong Science High School and Mrs. Rita Bondayril; Mrs. De Vera, Fabella Elementary School; Ms. Anselmo, Principal of Isaac Lopez Elementary School and Mrs. Fayton; Mrs. Sylvia Liwanag, District Supervisor, District II, Mrs. Nalaonan, Principal of Amado T. Reyes Elementary School; Mrs. Teresita Vicencio, Mandaluyong City Elemtary School; Officers of the Mandaluyong Federation of Public School Teachers namely; Mrs. Erlinda Ilagan, Treasurer; Ms. Nancy de Leon, Auditor; Ms. Fortunata Gondran, PRO; Mr. Nenito Pumariga, Business Manager; Mr. Jose Guerrero, Sgt.-at-arms; and Board Members Ms. Virginia Carillo, Ms. Wilma Fernandez, Mr Arturo Morales and Mr. Teddy Angeles. 3. During the whole-day affair, the background music loudly and repeatedly played over the sound system was the political jingle advertisement of Mandaluyong City candidate for Mayor, Benjamin "Benhur" Abalos, Jr., sang to the tune of the song 'SHALALA LALA'. 4. Some of the participants wore T-shirts with the name of candidate "Benhur" Abalos, Jr., printed in oversized colored letters. 5. Mayor Benjamin Abalos, Sr. delivered a speech wherein he offered and promised the Mandaluyong City public school teachers and employees a "hazard" pay of P1,000.00, and increasing their allowances from P1,500.00 to P2,000.00 for food, or with a total of P3,000.00 which they will get by the end of the month. 6. The offers and promises to said public school teachers, who are members of the Board of Election Inspectors of Mandaluyong City and registered voters thereat, were made a few weeks before the election to induce or unduly influence the said teachers and the public in general (the other guests) to vote for the candidacy of Benjamin "Benhur" Abalos, Jr.,

7. The offers and promises of Mayor Abalos, Sr., and the enthusiastic acceptance of said monetary increase of allowances by the public school teachers and employees of Mandaluyong City, is a violation of Section 261 pars. (a), (b) and (j) of the Omnibus Election Code against vote-buying and vote-selling.3 The Director4 of the Law Department of the COMELEC conducted a preliminary investigation. All the private respondents filed separate counter-affidavits5 with prayer to dismiss the complaint. On November 26, 1998, the Director of the Law Department submitted his findings to the COMELEC En Bancrecommending that the complaint be dismissed for insufficiency of evidence. On December 1, 1998, the COMELEC En Banc issued the assailed Resolution No. 98-32086 dismissing the complaint "for insufficiency of evidence to establish a prima facie case," "Considering that this complaint, being criminal in nature, must have all its allegations supported by direct, strong, convincing and indubitable evidence; and that the submitted evidence of the complainant are mere self-serving statements and uncorroborated audio and visual recordings and a photograph; and considering further that the evidence of the respondents have more probative value and believable than the evidence of said complainants; and that the burden of proof lies with the complainants and not with respondents."7 On February 09, 1999, petitioners, without first submitting a motion for reconsideration, filed the instant petition with this Court. They alleged thereon that the COMELEC En Banc, in issuing Resolution No. 98-3208 dated December 1, 1998, acted "with apparent grave abuse of dicretion."8 The petition must fail. Petitioners did not exhaust all the remedies available to them at the COMELEC level. Specifically, they did not seek a reconsideration of the assailed COMELEC En Banc Resolution as required by Section 1, Rule 13 of the 1993 COMELEC Rules of Procedure, thus: "Section 1. What Pleadings are not Allowed. - The following pleadings are not allowed: xxx d) motion for reconsideration of an en banc ruling, resolution, order or decisionexcept in election offense cases; x x x." (Emphasis ours) It is not disputed that petitioners' complaint before the COMELEC involves an election offense. But in this petition, they conveniently kept silent why they directly elevated to this Court the questioned Resolution without first filing a motion for reconsideration with the COMELEC En Banc. It was only after the respondents had filed their comment on the petition and called this Court's attention to petitioners' failure to comply with Section 1 of Rule 13 that they, in their Consolidated Reply, advanced the excuse that they "deemed it best not seek any further dilatory motion for reconsideration' , even if allowed by Sec. 1 (d) of COMELEC Rule 13."9 Petitioners' failure to file the required motion for reconsideration utterly disregarded the COMELEC Rules intended "to achieve an orderly, just, expeditious and inexpensive determination and disposition of every action and proceeding brought before the Commission."10 Contrary to petitioners' statement that a resort to a motion for reconsideration is "dilatory, " it bears stressing that the purpose of 11 the said motion is to give the COMELEC an opportunity to correct the error imputed to it. If the error is immediately corrected by way of a motion for reconsideration, then it is the most expeditious and inexpensive recourse. But if the COMELEC refuses to correct a patently erroneous act, then it commits a grave abuse of discretion justifying a recourse by the aggrieved party to a petition for certiorari. A petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, can only be resorted to if "there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law."12 Having failed to file the required motion for

reconsideration of the challenged Resolution, petitioners' instant petition is certainly premature. Significantly, they have not raised any plausible reason for their direct recourse to this Court. In its assailed Resolution, the COMELEC cited a valid reason for dismissing petitioners' complaint against private respondents for vote buying. The COMELEC found that the evidence of the respondents have "more probative value and believable than the evidence of the complainants;" and that the evidence submitted by petitioners are "mere self-serving statements and uncorroborated audio and visual recording and a photograph." Moreover, Section 28 of Republic Act 6646 provides: "SEC. 28. Prosecution of Vote-buying and Vote-selling. - The representation of a complaint for violations of paragraph (a) or (b) of Section 261 of Batas Pambansa Blg. 881 supported by affidavits of complaining witnesses attesting to the offer or promise by or of the voter's acceptance of money or other consideration from the relatives, leaders or sympathizers of candidate, shall be sufficient basis for an investigation to be immediately conducted by the Commission, directly or through its duly authorized legal officers, under Section 68 or Section 265 of said Batas Pambansa Blg. 881.1wphi1.nt x x x." (Emphasis ours) Petitioners' complaint expressly states that no supporting affidavits were submitted by the complaining witness14 to sustain their charge of vote buying. Suffice it to state that the absence of such supporting affidavits shows the frailty of petitioners' complaint. Indeed, it is vulnerable to dismissal. WHEREFORE, the instant petition is DISMISSED. SO ORDERED.

13

G.R. No. 110526 February 10, 1998 ASSOCIATION OF PHILIPPINE COCONUT DESICCATORS, petitioner, vs. PHILIPPINE COCONUT AUTHORITY, respondent.

MENDOZA, J.: At issue in this case is the validity of a resolution, dated March 24, 1993, of the Philippine Coconut Authority in which it declares that it will no longer require those wishing to engage in coconut processing to apply to it for a license or permit as a condition for engaging in such business. Petitioner Association of Philippine Coconut Desiccators (hereafter referred to as APCD) brought this suit forcertiorari and mandamus against respondent Philippine Coconut Authority (PCA) to invalidate the latter's Board Resolution No. 018-93 and the certificates of registration issued under it on the ground that the resolution in question is beyond the power of the PCA to adopt, and to compel said administrative agency to comply instead with the mandatory provisions of statutes regulating the desiccated coconut industry, in particular, and the coconut industry, in general. As disclosed by the parties' pleadings, the facts are as follows: On November 5, 1992, seven desiccated coconut processing companies belonging to the APCD brought suit in the Regional Trial Court, National Capital Judicial Region in Makati, Metro Manila, to enjoin the PCA from issuing permits to certain applicants for the establishment of new desiccated coconut processing plants. Petitioner alleged that the issuance of licenses to the applicants would violate PCA's Administrative Order No. 02, series of 1991, as the applicants were seeking permits to operate in areas considered 1 "congested" under the administrative order.

On November 6, 1992, the trial court issued a temporary restraining order and, on November 25, 1992, a writ of preliminary injunction, enjoining the PCA from processing and issuing licenses to Primex Products, Inc., Coco Manila, Superstar (Candelaria) and Superstar (Davao) upon the posting of a bond in the amount of P100,000.00.2 Subsequently and while the case was pending in the Regional Trial Court, the Governing Board of the PCA issued on March 24, 1993 Resolution No. 018-93, providing for the withdrawal of the Philippine Coconut Authority from all regulation of the coconut product processing industry. While it continues the registration of coconut product processors, the registration would be limited to the "monitoring" of their volumes of production and administration of quality standards. The full text of the resolution reads: RESOLUTION NO. 018-93 POLICY DECLARATION DEREGULATING THE ESTABLISHMENT OF NEW COCONUT PROCESSING PLANTS WHEREAS, it is the policy of the State to promote free enterprise unhampered by protective regulations and unnecessary bureaucratic red tapes; WHEREAS, the deregulation of certain sectors of the coconut industry, such as marketing of coconut oils pursuant to Presidential Decree No. 1960, the lifting of export and commodity clearances under Executive Order No. 1016, and relaxation of regulated capacity for the desiccated coconut sector pursuant to Presidential Memorandum of February 11, 1988, has become a centerpiece of the present dispensation; WHEREAS, the issuance of permits or licenses prior to business operation is a form of regulation which is not provided in the charter of nor included among the powers of the PCA; WHEREAS, the Governing Board of PCA has determined to follow and further support the deregulation policy and effort of the government to promote free enterprise; NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA shall no longer require any coconut oil mill, coconut oil refinery, coconut desiccator, coconut product processor/factory, coconut fiber plant or any similar coconut processing plant to apply with PCA and the latter shall no longer issue any form of license or permit as condition prior to establishment or operation of such mills or plants; RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges. ADOPTED this 24th day of March 1993, at Quezon City. 3 The PCA then proceeded to issue "certificates of registration" to those wishing to operate desiccated coconut processing plants, prompting petitioner to appeal to the Office of the President of the Philippines on April 26, 1993 not to approve the resolution in question. Despite follow-up letters sent on May 25 and June 2, 1993, petitioner received no reply from the Office of the President. The "certificates of registration" issued in the meantime by the PCA has enabled a number of new coconut mills to operate. Hence this petition. Petitioner alleges: I RESPONDENT PCA'S BOARD RESOLUTION NO. 018-93 IS NULL AND VOID FOR BEING AN UNDUE EXERCISE OF LEGISLATIVE POWER BY AN ADMINISTRATIVE BODY. II ASIDE FROM BEING ULTRA-VIRES, BOARD RESOLUTION NO. 018-93 IS WITHOUT ANY BASIS, ARBITRARY, UNREASONABLE AND THEREFORE IN VIOLATION OF SUBSTANTIVE DUE PROCESS OF LAW.

III IN PASSING BOARD RESOLUTION NO. 018-93, RESPONDENT PCA VIOLATED THE PROCEDURAL DUE PROCESS REQUIREMENT OF CONSULTATION PROVIDED IN PRESIDENTIAL DECREE NO. 1644, EXECUTIVE ORDER NO. 826 AND PCA ADMINISTRATIVE ORDER NO. 002, SERIES OF 1991. On the other hand, in addition to answering petitioner's arguments, respondent PCA alleges that this petition should be denied on the ground that petitioner has a pending appeal before the Office of the President. Respondent accuses petitioner of forumshopping in filing this petition and of failing to exhaust available administrative remedies before coming to this Court. Respondent anchors its argument on the general rule that one who brings an action under Rule 65 must show that one has no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law. I. The rule of requiring exhaustion of administrative remedies before a party may seek judicial review, so strenuously urged by the Solicitor General on behalf of respondent, has obviously no application here. The resolution in question was issued by the PCA in the exercise of its rule-making or legislative power. However, only judicial review of decisions of administrative agencies made in the exercise of their quasi-judicial function is subject to the exhaustion doctrine. The exhaustion doctrine stands as a bar to an action which is not yet complete 4 and it is clear, in the case at bar, that after its promulgation the resolution of the PCA abandoning regulation of the desiccated coconut industry became effective. To be sure, the PCA is under the direct supervision of the President of the Philippines but there is nothing in P.D. No. 232, P.D. No. 961, P.D. No. 1468 and P.D. No. 1644 defining the powers and functions of the PCA which requires rules and regulations issued by it to be approved by the President before they become effective. In any event, although the APCD has appealed the resolution in question to the Office of the President, considering the fact that two months after they had sent their first letter on April 26, 1993 they still had to hear from the President's office, meanwhile respondent PCA was issuing certificates of registration indiscriminately to new coconut millers, we hold that petitioner was justified in filing this case on June 25, 1993. 5 Indeed, after writing the Office of the President on April 26, 1993 6 petitioner sent inquiries to that office not once, but twice, on May 26, 1993 7 and on June 2, 1993, 8 but petitioner did not receive any reply. II. We now turn to the merit of the present petition. The Philippine Coconut Authority was originally created by P.D. 232 on June 30, 1973, to take over the powers and functions of the Coconut Coordinating Council, the Philippine Coconut Administration and the Philippine Coconut Research Institute. On June 11, 1978, by P.D. No. 1468, it was made "an independent public corporation . . . directly reporting to, and supervised by, the President of the Philippines," 9 and charged with carrying out the State's policy "to promote the rapid integrated development and growth of the coconut and other palm oil industry in all its aspects and to ensure 10 that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." through a regulatory 11 scheme set up by law. Through this scheme, the government, on August 28, 1982, temporarily prohibited the opening of new coconut processing plants and, four months later, phased out some of the existing ones in view of overproduction in the coconut industry which resulted in cut-throat competition, underselling and smuggling of poor quality products and ultimately in the decline of the export performance of coconut-based commodities. The establishment of new plants could be authorized only upon determination by the PCA of the existence of certain economic conditions and the approval of the President of the Philippines. Thus, Executive Order No. 826, dated August 28, 1982, provided: Sec. 1. Prohibition. Except as herein provided, no government agency or instrumentality shall hereafter authorize, approve or grant any permit or license for the establishment or operation of new desiccated coconut processing plants, including the importation of machinery or equipment for the purpose. In the event of a need to establish a new plant, or expand the capacity, relocate or upgrade the efficiencies of any existing desiccated plant, the Philippine Coconut Authority may, upon proper determination of such need and evaluation of the condition relating to: a. the existing market demand; b. the production capacity prevailing in the country or locality; c. the level and flow of raw materials; and

d. other circumstances which may affect the growth or viability of the industry concerned, authorize or grant the application for, the establishment or expansion of capacity, relocation or upgrading of efficiencies of such desiccated coconut processing plant, subject to the approval of the President. On December 6, 1982, a phase-out of some of the existing plants was ordered by the government after finding that "a mere freeze in the present capacity of existing plants will not afford a viable solution to the problem considering that the total available limited market is not adequate to support all the existing processing plants, making it imperative to reduce the number of existing processing plants." 12 Accordingly, it was ordered: 13 Sec. 1. The Philippine Coconut Authority is hereby ordered to take such action as may be necessary to reduce the number of existing desiccated coconut processing plants to a level which will insure the survival of the remaining plants. The Authority is hereby directed to determine which of the existing processing plants should be phased out and to enter into appropriate contracts with such plants for the above purpose. It was only on October 23, 1987 when the PCA adopted Resolution No. 058-87, authorizing the establishment and operation of additional DCN plants, in view of the increased demand for desiccated coconut products in the world's markets, particularly in Germany, the Netherlands and Australia. Even then, the opening of new plants was made subject to "such implementing guidelines to be set forth by the Authority" and "subject to the final approval of the President." The guidelines promulgated by the PCA, as embodied in Administrative Order No. 002, series of 1991, inter aliaauthorized the opening of new plants in "non-congested areas only as declared by the PCA" and subject to compliance by applicants with "all procedures and requirements for registration under Administrative Order No. 003, series of 1981 and this Order." In addition, as the opening of new plants was premised on the increased global demand for desiccated coconut products, the new entrants were required to submit sworn statements of the names and addresses of prospective foreign buyers. This form of "deregulation" was approved by President Aquino in her memorandum, dated February 11, 1988, to the PCA. Affirming the regulatory scheme, the President stated in her memorandum: It appears that pursuant to Executive Order No. 826 providing measures for the protection of the Desiccated Coconut Industry, the Philippine Coconut Authority evaluated the conditions relating to: (a) the existing market demands; (b) the production capacity prevailing in the country or locality; (c) the level and flow of raw materials; and (d) other circumstances which may affect the growth or viability of the industry concerned and that the result of such evaluation favored the expansion of production and market of desiccated coconut products. In view hereof and the favorable recommendation of the Secretary of Agriculture, the deregulation of the Desiccated Coconut Industry as recommended in Resolution No. 058-87 adopted by the PCA Governing Board on October 28, 1987 (sic) is hereby approved. 14 These measures the restriction in 1982 on entry into the field, the reduction the same year of the number of the existing coconut mills and then the lifting of the restrictions in 1987 were adopted within the framework of regulation as established by law "to promote the rapid integrated development and growth of the coconut and other palm oil industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." 15 Contrary to the assertion in the dissent, the power given to the Philippine Coconut Authority and before it to the Philippine Coconut Administration "to formulate and adopt a general program of development for the coconut and other palm oils industry" 16 is not a roving commission to adopt any program deemed necessary to promote the development of the coconut and other palm oils industry, but one to be exercised in the context of this regulatory structure. In plain disregard of this legislative purpose, the PCA adopted on March 24, 1993 the questioned resolution which allows not only the indiscriminate opening of new coconut processing plants but the virtual dismantling of the regulatory infrastructure whereby, forsaking controls theretofore placed in its keeping, the PCA limits its function to the innocuous one of "monitoring" compliance by coconut millers with quality standards and volumes of production. In effect, the PCA would simply be compiling statistical data on these matters, but in case of violations of standards there would be nothing much it would do. The field would be left without an umpire who would retire to the bleachers to become a mere spectator. As the PCA provided in its Resolution No. 018-93: NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that, henceforth, PCA shall no longer require any coconut oil mill, coconut oil refinery, coconut desiccator, coconut product processor/factory, coconut fiber plant or any similar

coconut processing plant to apply with PCA and the latter shall no longer issue any form of license or permit as condition prior to establishment or operation of such mills or plants; RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges. The issue is not whether the PCA has the power to adopt this resolution to carry out its mandate under the law "to promote the accelerated growth and development of the coconut and other palm oil industry." 17 The issue rather is whether it can renounce the power to regulate implicit in the law creating it for that is what the resolution in question actually is. Under Art. II, 3(a) of the Revised Coconut Code (P.D. No. 1468), the role of the PCA is "To formulate and adopt a general program of development for the coconut and other palm oil industry in all its aspects." By limiting the purpose of registration to merely "monitoring volumes of production [and] administration of quality standards" of coconut processing plants, the PCA in effect abdicates its role and leaves it almost completely to market forces how the coconut industry will develop. Art. II, 3 of P.D. No. 1468 further requires the PCA: (h) To regulate the marketing and the exportation of copra and its by-products by establishing standards for domestic trade and export and, thereafter, to conduct an inspection of all copra and its by-products proposed for export to determine if they conform to the standards established; Instead of determining the qualifications of market players and preventing the entry into the field of those who are unfit, the PCA now relies entirely on competition with all its wastefulness and inefficiency to do the weeding out, in its naive belief in survival of the fittest. The result can very well be a repeat of 1982 when free enterprise degenerated into a "free-for-all," resulting in cutthroat competition, underselling, the production of inferior products and the like, which badly affected the foreign trade performance of the coconut industry. Indeed, by repudiating its role in the regulatory scheme, the PCA has put at risk other statutory provisions, particularly those of P.D. No. 1644, to wit: Sec. 1. The Philippine Coconut Authority shall have full power and authority to regulate the marketing and export of copra, coconut oil and their by-products, in furtherance of the steps being taken to rationalize the coconut oil milling industry. Sec. 2. In the exercise of its powers under Section 1 hereof, the Philippine Coconut Authority may initiate and implement such measures as may be necessary to attain the rationalization of the coconut oil milling industry, including, but not limited to, the following measures: (a) Imposition of floor and/or ceiling prices for all exports of copra, coconut oil and their by-products; (b) Prescription of quality standards; (c) Establishment of maximum quantities for particular periods and particular markets; (d) Inspection and survey of export shipments through an independent international superintendent or surveyor. In the exercise of its powers hereunder, the Philippine Coconut Authority shall consult with, and be guided by, the recommendation of the coconut farmers, through corporations owned or controlled by them through the Coconut Industry Investment Fund and the private corporation authorized to be organized under Letter of Instructions No. 926. and the Revised Coconut Code (P.D. No. 1468), Art. II, 3, to wit: (m) Except in respect of entities owned or controlled by the Government or by the coconut farmers under Sections 9 and 10, Article III hereof, the Authority shall have full power and authority to regulate the production, distribution and utilization of all subsidized coconut-based products, and to require the submission of such reports or documents as may be

deemed necessary by the Authority to ascertain whether the levy payments and/or subsidy claims are due and correct and whether the subsidized products are distributed among, and utilized by, the consumers authorized by the Authority. The dissent seems to be saying that in the same way that restrictions on entry into the field were imposed in 1982 and then relaxed in 1987, they can be totally lifted now without prejudice to reimposing them in the future should it become necessary to do so. There is really no renunciation of the power to regulate, it is claimed. Trimming down of PCA's function to registration is not an abdication of the power to regulate but is regulation itself. But how can this be done when, under Resolution No. 018-93, the PCA no longer requires a license as condition for the establishment or operation of a plant? If a number of processing firms go to areas which are already congested, the PCA cannot stop them from doing so. If there is overproduction, the PCA cannot order a cut back in their production. This is because the licensing system is the mechanism for regulation. Without it the PCA will not be able to regulate coconut plants or mills. In the first "whereas" clause of the questioned resolution as set out above, the PCA invokes a policy of free enterprise that is "unhampered by protective regulations and unnecessary bureaucratic red tape" as justification for abolishing the licensing system. There can be no quarrel with the elimination of "unnecessary red tape." That is within the power of the PCA to do and indeed it should eliminate red tape. Its success in doing so will be applauded. But free enterprise does not call for removal of "protective regulations." Our Constitutions, beginning with the 1935 document, have repudiated laissez-faire as an economic principle. 18Although the present Constitution enshrines free enterprise as a policy, 19 it nonetheless reserves to the government the power to intervene whenever necessary to promote the general welfare. This is clear from the following provisions of Art. XII of the Constitution which, so far as pertinent, state: Sec. 6. . . . Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands. Sec. 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed. (Emphasis added). At all events, any change in policy must be made by the legislative department of the government. The regulatory system has been set up by law. It is beyond the power of an administrative agency to dismantle it. Indeed, petitioner charges the PCA of seeking to render moot a case filed by some of its members questioning the grant of licenses to certain parties by adopting the resolution in question. It is alleged that members of petitioner complained to the court that the PCA had authorized the establishment and operation of new plants in areas which were already crowded, in violation of its Administrative Order No. 002, series of 1991. In response, the Regional Trial Court issued a writ of preliminary injunction, enjoining the PCA from issuing licenses to the private respondent in that case. These allegations of petitioner have not been denied here. It would thus seem that instead of defending its decision to allow new entrants into the field against petitioner's claim that the PCA decision violated the guidelines in Administrative Order No. 002, series of 1991, the PCA adopted the resolution in question to render the case moot. In so doing, the PCA abdicated its function of regulation and left the field to untrammeled competition that is likely to resurrect the evils of cut-throat competition, underselling and overproduction which in 1982 required the temporary closing of the field to new players in order to save the industry. The PCA cannot rely on the memorandum of then President Aquino for authority to adopt the resolution in question. As already stated, what President Aquino approved in 1988 was the establishment and operation of new DCN plants subject to the guidelines to be drawn by the PCA. 20 In the first place, she could not have intended to amend the several laws already mentioned, which set up the regulatory system, by a mere memoranda to the PCA. In the second place, even if that had been her intention, her act would be without effect considering that, when she issued the memorandum in question on February 11, 1988, she was no longer vested with 21 legislative authority. WHEREFORE, the petition is GRANTED. PCA Resolution No. 018-93 and all certificates of registration issued under it are hereby declared NULL and VOID for having been issued in excess of the power of the Philippine Coconut Authority to adopt or issue. SO ORDERED.

Corona v. Court of Appeals, G.R. No. 97356, 30 September 1992

ANGELITA MORCAL, Petitioner,

G.R. No. 166753 Present: Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, Carpio, and Azcuna, JJ. Promulgated: November 29, 2005

- versus -

ANTONIO LAVIA, TERESITA LAVIA and the DIRECTOR OF LANDS, Respondents.

x--------------------------------------------------x RESOLUTION QUISUMBING, J.:

For review on certiorari are the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. CV No. 75402, which affirmed
[3] [4] the Decision of the Regional Trial Court of Mauban, Quezon, Branch 64. The trial court Decision sustained the Orders issued by

Regional Office No. IV of the Department of Environment and Natural Resources in DENR IV Case No. 5441 CENRO Case No. 91-02.

The case involves a parcel of unregistered land with an area of 4,840 square meters, situated at Barangay Cagsiay 1, Mauban Quezon, identified only as Lot No. 2056-Cad-245.

Petitioner Angelita Morcal, with her sister Ildefonsa Morcal and other members of their family occupied, cleared and planted seasonal crops on the land up to the time it was declared as public land on May 14, 1941. Thereafter, their family declared the land for taxation purposes and began planting coconut and other fruit bearing trees.

Having been in possession of the said land for almost forty (40) years, petitioner filed Free Patent Application No. (IV-3) 14661 in 1976. However, on September 11, 1990, private respondents Antonio Lavia (now deceased) and Teresita Lavia protested the free patent application.

On August 10, 1993, Regional Office No. IV of the DENR decreed in its first assailed Order: WHEREFORE, premises considered, the F.P.A. No. (IV-3) 14661 of Angelita Morcal is hereby, as it is ordered, AMENDED to cover only one-half of the lot applied for particularly the southern portion thereof, as recommended by Land Management Officer III Dan August S. Noche, after which the same shall be given further due course now in the name of Angelita and Ildefonsa Morcal, unless the latter executes a deed of transfer in favor of Angelita Morcal. The F.P.A. No. 8-1917 filed by the Heirs of Petra Morcal is hereby as it is ordered rejected and whatever amount paid on account thereof is forfeited in favor of the Government. The Spouses Antonio and Teresita Lavia are directed to file the appropriate public land application covering the other half of the lot in question particularly the northern portion thereof. SO ORDERED.[5]

In its second assailed Order, the DENR Regional Office denied for lack of merit petitioner s motion for reconsideration of the afore-quoted Order. Petitioner then filed with the Regional Trial Court a civil action to nullify the two Orders of the DENR Regional Office.

The trial court, however, dismissed petitioner s civil action, thus: WHEREFORE, premises considered, the foregoing civil action is hereby ordered DISMISSED. Accordingly, the subject orders of the Regional Executive Director for Region IV of the Department of Environment and Natural Resources, dated 10 August 1993 and 25 January 1994, are correspondingly SUSTAINED. SO ORDERED.[6]

Petitioner appealed to the Court of Appeals. In its assailed Decision, the appellate court ruled: WHEREFORE, premises considered, the instant appeal is hereby DISMISSED, and the appealed decision, dated March 26, 2002 of the Regional Trial Court of Mauban, Quezon is hereby AFFIRMED. SO ORDERED.[7]

Petitioner s motion for reconsideration was also denied in the assailed Resolution of the Court of Appeals. Petitioner then elevated the matter to this Court.

In the instant petition, petitioner raises the following as issues: 1. 2. 3. Whether or not the courts of justice can validly take cognizance over the issues in this case. Whether or not the principle of exhaustion of administrative remedies applies to the instant case. Whether or not the trial court was in error in dismissing the case without any pronouncement as to the rights of the parties over the land in suit. Whether or not the petitioner is entitled to the lot in suit.[8]

4.

Petitioner contends the trial court is vested with the power to rule on the substantial rights of the parties in this case. She insists the issue of jurisdiction has been settled when the trial court issued an Order denying the Motion to Dismiss filed by respondents. Petitioner alleges the principle of exhaustion of administrative remedies does not apply because there is urgent need for judicial intervention and because what is involved is a small piece of agricultural land, all of 2,420 square meters. She adds she has lost trust in the DENR as a body, which she believes would not reverse itself.

However, private respondent Teresita Lavia counters that petitioner s failure to pursue and exhaust the proper administrative remedies was fatal to her cause. She maintains that the Regional Executive Director of the DENR did not commit any palpable error or grave abuse of discretion. Likewise, private respondent contests petitioner s claim that the disputed land is very small; she alleges that the same is valued at a considerable amount, over a million pesos.

We find the petition bereft of merit.

The doctrine of exhaustion of administrative remedies requires that resort be first made to the administrative authorities in cases falling under their jurisdiction to allow them to carry out their functions and discharge their responsibilities within the specialized areas of their competence. This is because the administrative agency concerned is in the best position to correct any previous error committed in its forum.
[9]

There are exceptions, however, to the applicability of the doctrine. Among the established exceptions are: 1) 2) 3) 4) 5) when the question raised is purely legal; when the administrative body is in estoppel; when the act complained of is patently illegal; when there is urgent need for judicial intervention; when the claim involved is small;

6) when irreparable damage will be suffered; 7) when there is no other plain, speedy and adequate remedy; 8) when strong public interest is involved; 9) when the subject of the controversy is private land; and 10) in quo warranto proceedings.[10]

In this case, however, none of the foregoing exceptions may be availed of. Contrary to petitioner s assertion, we see no urgent need for judicial intervention. Note that the case arose from the protest filed by respondents against petitioner s free patent application for the subject unregistered agricultural land. Clearly, the matter comes within the exclusive primary jurisdiction of the DENR in the exercise of its quasi-judicial powers. The impugned Orders of the DENR Regional Office are subject to review by the DENR Head Office. Petitioner cannot circumvent this procedure by simply invoking a supposed loss of faith in the said agency.

Neither are we prepared to sustain petitioner s claim that exhaustion of administrative remedies need not be complied with on the ground that the value of the disputed parcel of land is allegedly insignificant. Records show that the land in question consists of 2,420 square meters, no doubt a sizable parcel of land, regardless of its agricultural nature and the fact that it is located in a remote area; and its value of over a million pesos is certainly substantial and not insignificant.

In sum, we are convinced that no reversible error was committed by the Court of Appeals when it sustained the trial court s dismissal of petitioner s complaint seeking to nullify the questioned DENR Orders for petitioner s failure to exhaust the proper administrative remedies.

WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision and Resolution of the Court of Appeals in CAG.R. CV No. 75402 are AFFIRMED. Costs against petitioner.

[G.R. No. 95694. October 9, 1997]

VICENTE VILLLAFLOR, substituted by his heirs, petitioner, vs. COURT OF APPEALS and NASIPIT LUMBER CO., INC., respondents.

DECISION PANGANIBAN ,J.: In this rather factually complicated case, the Court reiterates the binding force and effect of findings of specialized administrative agencies as well as those of trial courts when affirmed by the Court of Appeals; rejects petitioner s theory of simulation of contracts; and passes upon the qualifications of private respondent corporation to acquire disposable public agricultural lands prior to the effectivity of the 1973 Constitution.

The Case Before us is a petition for review on certiorari seeking the reversal of the Decision[1] of the Court of Appeals, dated September 27, 1990, in C.A. G.R. CV No. 09062, affirming the dismissal by the trial court of Petitioner Vicente Villaflor s complaint against Private Respondent Nasipit Lumber Co., Inc. The disposition of both the trial and the appellate courts are quoted in the statement of facts below.

The Facts The facts of this case, as narrated in detail by Respondent Court of Appeals, are as follows:[2] The evidence, testimonial and documentary, presented during the trial show that on January 16, 1940, Cirilo Piencenaves, in a Deed of Absolute Sale (exh. A), sold to [petitioner], a parcel of agricultural land containing an area of 50 hectares,[3] more or less, and particularly described and bounded as follows: A certain parcel of agricultural land planted to abaca with visible concrete monuments marking the boundaries and bounded on the NORTH by Public Land now Private Deeds on the East by Serafin Villaflor, on the SOUTH by Public Land; and on the West by land claimed by H. Patete, containing an area of 60 hectares more or less, now under Tax Dec. 29451 in the (sic) of said Vicente Villaflor, the whole parcel of which this particular parcel is only a part, is assessed at P22,550.00 under the above said Tax Dec. Number. This deed states: That the above described land was sold to the said VICENTE VILLAFLOR, xxx on June 22, 1937, but no formal document was then executed, and since then until the present time, the said Vicente Villaflor has been in possession and occupation of (the same); (and) That the above described property was before the sale, of my exclusive property having inherited from my long dead parents and my ownership to it and that of my [sic] lasted for more than fifty (50) years, possessing and occupying same peacefully, publicly and continuously without interruption for that length of time. Also on January 16, 1940, Claudio Otero, in a Deed of Absolute Sale (exh. C) sold to Villaflor a parcel of agricultural land, containing an area of 24 hectares, more or less, and particularly described and bounded as follows: A certain land planted to corn with visible concrete measurements marking the boundaries and bounded on the North by Public Land and Tungao Creek; on the East by Agusan River; on the South by Serafin Villaflor and Cirilo Piencenaves; and on the West by land of Fermin Bacobo containing an area of 24 hectares more or less, under Tax Declaration No. 29451 in the name already of Vicente Villaflor, the whole parcel of which this particular land is only a part, is assessed at P22,550.00 under the above said Tax Declaration No. 29451. This deed states: That the above described land was sold to the said VICENTE VILLAFLOR, xxx on June 22, 1937, but no sound document was then executed, however since then and until the present time, the said Vicente Villaflor has been in open and continuous possession and occupation of said land; (and)

That the above described land was before the sale, my own exclusive property, being inherited from my deceased parents, and my ownership to it and that of my predecessors lasted more than fifty (50) years, possessing and occupying the same, peacefully, openly and continuously without interruption for that length of time. Likewise on January 16, 1940, Hermogenes Patete, in a Deed of Absolute Sale (exh. D), sold to Villaflor, a parcel of agricultural land, containing an area of 20 hectares, more or less, and particularly described and bounded as follows: A certain parcel of agricultural land planted to abaca and corn with visible concrete monuments marking the boundaries and bounded on the North by Public Land area-private Road; on the East by land claimed by Cirilo Piencenaves; on the South by Public Land containing an area of 20 hectares more or less, now under Tax Declaration No. 29451 in the name of Vicente Villaflor the whole parcel of which this particular parcel, is assessed at P22,550.00 for purposes of taxation under the above said Tax Declaration No. 29451. This deed states: xxx (O)n June 22, 1937 but the formal document was then executed, and since then until the present time, the said VICENTE VILLAFLOR has been in continuous and open possession and occupation of the same; (and) That the above described property was before the sale, my own and exclusive property, being inherited from my deceased parents and my ownership to it and that of my predecessors lasted more than fifty (50) years, possessing and occupying same, peacefully, openly and continuously without interruption for that length of time. On February 15, 1940, Fermin Bocobo, in a Deed of Absolute Sale (exh. B), sold to Villaflor, a parcel of agricultural land, containing an area of 18 hectares, more or less, and particularly described and bounded as follows: A certain parcel of agricultural land planted with abaca with visible part marking the corners and bounded on the North by the corners and bounded on the North by Public Land; on the East by Cirilo Piencenaves; on the South by Hermogenes Patete and West by Public Land, containing an area of 18 hectares more or less now under Tax Declaration No. 29451 in the name of Vicente Villaflor. The whole parcel of which this particular parcel is only a part is assessed as P22,550.00 for purposes of taxation under the above said Tax Declaration Number (Deed of Absolute Sale executed by Fermin Bocobo date Feb. 15, 1940). This document was annotated in Registry of Deeds on February 16, 1940). This deed states: That the above described property was before the sale of my own exclusive property, being inherited from my deceased parents, and my ownership to it and that of my predecessors lasted more than fifty (50) years, possessing and occupying the same peacefully, openly and continuously without interruption for that length of time. On November 8, 1946, Villaflor, in a Lease Agreement (exh. Q),[4] leased to Nasipit Lumber Co., Inc. a parcel of land, containing an area of two (2) hectares, together with all the improvements existing thereon, for a period of five (5) years from June 1, 1946 at a rental ofP200.00 per annum to cover the annual rental of house and building sites for thirty three (33) houses or buildings. This [5] agreement also provides: 3. During the term of this lease, the Lessee is authorized and empowered to build and construct additional houses in addition to the 33 houses or buildings mentioned in the next preceding paragraph, provided however, that for every additional house or building constructed the Lessee shall pay unto the Lessor an amount of fifty centavos (50) per month for every house or building. The Lessee is empowered and authorized by the Lessor to sublot (sic) the premises hereby leased or assign the same or any portion of the land hereby leased to any person, firm and corporation; (and) 4. The Lessee is hereby authorized to make any construction and/or improvement on the premises hereby leased as he may deem necessary and proper thereon, provided however, that any and all such improvements shall become the property of the Lessor upon the termination of this lease without obligation on the part of the latter to reimburse the Lessee for expenses incurred in the construction of the same. Villaflor claimed having discovered that after the execution of the lease agreement, that Nasipit Lumber in bad faith x x x surreptitiously grabbed and occupied a big portion of plaintiff s property x x x ; that after a confrontation with the corporate s (sic) field manager, the latter, in a letter dated December 3, 1973 (exh. R),[6] stated recalling having made some sort of agreement for the

occupancy (of the property at Acacia, San Mateo), but I no longer recall the details and I had forgotten whether or not we did occupy your land. But if, as you say, we did occupy it, then (he is ) sure that the company is obligated to pay the rental. On July 7, 1948, in an Agreement to Sell (exh. 2), Villaflor conveyed to Nasipit Lumber, two (2) parcels of land xxx described as [7] follows: PARCEL ONE Bounded on the North by Public Land and Tungao Creek; on the East by Agusan River and Serafin Villaflor; on the South by Public Land, on the West by Public Land. Improvements thereon consist of abaca, fruit trees, coconuts and thirty houses of mixed materials belonging to the Nasipit Lumber Company. Divided into Lot Nos. 5412, 5413, 5488, 5490, 5491, 5492, 5850, 5849, 5860, 5855, 5851, 5854, 5855, 5859, 5858, 5857, 5853, and 5852. Boundaries of this parcel of land are marked by concrete monuments of the Bureau of Lands. Containing an area of 112,000 hectares. Assessed at P17,160.00 according to Tax Declaration No. V-315 dated April 14, 1946. PARCEL TWO Bounded on the North by Pagudasan Creek; on the East by Agusan River; on the South by Tungao Creek; on the West by Public Land. Containing an area of 48,000 hectares more or less. Divided into Lot Nos. 5411, 5410, 5409, and 5399. Improvements 100 coconut trees, productive, and 300 cacao trees. Boundaries of said land are marked by concrete monuments of the Bureau pf (sic) Lands. Assessed value -- P6,290.00 according to Tax No. 317, April 14, 1946. This Agreement to Sell provides: 3. That beginning today, the Party of the Second Part shall continue to occupy the property not anymore in concept of lessee but as prospective owners, it being the sense of the parties hereto that the Party of the Second Part shall not in any manner be under any obligation to make any compensation to the Party of the First Part, for the use, and occupation of the property herein before described in such concept of prospective owner, and it likewise being the sense of the parties hereto to terminate as they do hereby terminate, effective on the date of this present instrument, the Contract of Lease, otherwise known as Doc. No. 420, Page No. 36, Book No. II, Series of 1946 of Notary Public Gabriel R. Banaag, of the Province of Agusan. 4. That the Party of the Second Part has bound as it does hereby bind itself, its executors and administrators, to pay unto the party of the First Part the sum of Five Thousand Pesos (P5,000.00), Philippine Currency, upon presentation by the latter to the former of satisfactory evidence that: (a) The Bureau of Lands will not have any objection to the obtainment by the Party of the First Part of a Certificate of Torrens Title in his favor, either thru ordinary land registration proceedings or thru administrative means procedure. (b) That there is no other private claimant to the properties hereinbefore described. 5. That the Party of the First Part has bound as he does hereby bind to undertake immediately after the execution of these presents to secure and obtain, or cause to be secured and obtained, a Certificate of Torrens Title in his favor over the properties described on Page (One) hereof, and after obtainment of such Certificate of Torrens Title, the said Party of the First Part shall execute a (D)eed of Absolute Sale unto and in favor of the Party of the Second Part, its executors, administrators and assigns, it being the sense of the parties that the Party of the Second Part upon delivery to it of such deed of absolute sale, shall pay unto the Party of the First Part in cash, the sum of Twelve Thousand (P12,000.00) Pesos in Philippine Currency, provided, however, that the Party of the First Part, shall be reimbursed by the Party of the Second Part with one half of the expenses incurred by the Party of the First Part for survey and attorney s fees; and other incidental expenses not exceeding P300.00. On December 2, 1948, Villaflor filed Sales Application No. V-807[8] (exh. 1) with the Bureau of Lands, Manila, to purchase under the provisions of Chapter V, XI or IX of Commonwealth Act. No. 141 (The Public Lands Act), as amended, the tract of public lands x x x and described as follows: North by Public Land; East by Agusan River and Serafin Villaflor; South by Public Land and West by public land (Lot Nos. 5379, 5489, 5412, 5490, 5491, 5492, 5849, 5850, 5851, 5413, 5488, 5489, 5852, 5853, 5854, 5855, 5856, 5857, 5858, 5859 and 5860 x x x containing an area of 140 hectares xxx. Paragraph 6 of the Application, states: I understand that this application conveys no right to occupy the land prior to its approval, and I recognized (sic) that the land covered by the same is of public domain and any and all rights I may have with respect thereto by virtue of continuous occupation and cultivation are hereby relinquished to the Government. [9] (exh. 1-D)

On December 7, 1948, Villaflor and Nasipit Lumber executed an Agreement (exh 3).[10] This contract provides: 1. That the First Party is the possessor since 1930 of two (2) parcels of land situated in sitio Tungao, Barrio of San Mateo, Municipality of Butuan, Province of Agusan; 2. That the first parcel of land abovementioned and described in Plan PLS-97 filed in the office of the Bureau of Lands is made up of Lots Nos. 5412, 5413, 5488, 5490, 5491, 5492, 5849, 5850, 5851, 5852, 5853, 5854, 5855, 5856, 5857, 5858, 5859 and 5860 and the second parcel of land is made of Lots Nos. 5399, 5409, 5410 and 5411; 3. That on July 7, 1948, a contract of Agreement to Sell was executed between the contracting parties herein, covering the said two parcels of land, copy of said Agreement to Sell is hereto attached marked as Annex A and made an integral part of this document. The parties hereto agree that the said Agreement to Sell be maintained in full force and effect with all its terms and conditions of this present agreement and in no way be considered as modified. 4. That paragraph 4 of the Contract of Agreement to Sell, marked as annex, A stipulates as follows:

Par. 4. That the Party of the Second Part has bound as it does hereby bind itself, its executors and administrators, to pay unto the Party of the First Part of the sum of FIVE THOUSAND PESOS (P5,000.00) Philippine Currency, upon presentation by the latter to the former of satisfactory evidence that: a) The Bureau of Lands will have any objection to the obtainment by Party of the First Part of a favor, either thru ordinary land registration proceedings or thru administrative means and procedure. b) That there is no other private claimant to the properties hereinabove described. That the First Party has on December 2, 1948, submitted to the Bureau of Lands, a Sales Application for the twenty-two (22) lots comprising the two abovementioned parcels of land, the said Sales Application was registered in the said Bureau under No. V-807; 6. That in reply to the request made by the First Party to the Bureau of Lands, in connection with the Sales Application No. V807, the latter informed the former that action on his request will be expedited, as per letter of the Chief, Public Land Division, dated December 2, 1948, copy of which is hereto attached marked as annex B and made an integral part of this agreement: 7. That for and in consideration of the premises above stated and the amount of TWENTY FOUR THOUSAND (P24,000.00) PESOS that the Second Party shall pay to the First Party, by these presents, the First Party hereby sells, transfers and conveys unto the Second Party, its successors and assigns, his right, interest and participation under an(d) by virtue of the Sales Application No. V807, which he has or may have in the lots mentioned in said Sales Application No. V-807; 8. That the amount of TWENTY FOUR THOUSAND (P24,000.00) PESOS, shall be paid by the Second Party to the First Party, as follows: a) The amount of SEVEN THOUSAND (P7,000.00) PESOS, has already been paid by the Second Party to the First Party upon the execution of the Agreement to Sell, on July 7, 1948; b) The amount of FIVE THOUSAND (P5,000.00) PESOS shall be paid upon the signing of this present agreement; and c) The balance of TWELVE THOUSAND (P12,000.00) PESOS, shall be paid upon the execution by the First Party of the Absolute Deed of Sale of the two parcels of land in question in favor of the Second Party, and upon delivery to the Second Party of the Certificate of Ownership of the said two parcels of land. 9. It is specially understood that the mortgage constituted by the First Party in favor of the Second Party, as stated in the said contract of Agreement to Sell dated July 7, 1948, shall cover not only the amount of SEVEN THOUSAND (P7,000.00) PESOS as specified in said document, but shall also cover the amount of FIVE THOUSAND (P5,000.00) PESOS to be paid as stipulated in paragraph 8, sub-paragraph (b) of this present agreement, if the First Party should fail to comply with the obligations as provided for in paragraphs 2, 4, and 5 of the Agreement to Sell;

10. It is further agreed that the First Party obligates himself to sign, execute and deliver to and in favor of the Second Party, its successors and assigns, at anytime upon demand by the Second Party such other instruments as may be necessary in order to give full effect to this present agreement; In the Report dated December 31, 1949 by the public land inspector, District Land Office, Bureau of Lands, in Butuan, the report contains an Indorsement of the aforesaid District Land Officer recommending rejection of the Sales Application of Villaflor for having leased the property to another even before he had acquired transmissible rights thereto. In a letter of Villaflor dated January 23, 1950, addressed to the Bureau of Lands, he informed the Bureau Director that he was already occupying the property when the Bureau s Agusan River Valley Subdivision Project was inaugurated, that the property was formerly claimed as private properties (sic), and that therefore, the property was segregated or excluded from disposition because of the claim of private ownership. In a letter of Nasipit Lumber dated February 22, 1950 (exh. X)[11] addressed to the Director of Lands, the corporation informed the Bureau that it recognized Villaflor as the real owner, claimant and occupant of the land; that since June 1946, Villaflor leased two (2) hectares inside the land to the company; that it has no other interest on the land; and that the Sales Application of Villaflor should be given favorable consideration. xxx xxx xxx

On July 24, 1950, the scheduled date of auction of the property covered by the Sales Application, Nasipit Lumber offered the highest bid of P41.00 per hectare, but since an applicant under CA 141, is allowed to equal the bid of the highest bidder, Villaflor tendered an equal bid, deposited the equivalent of 10% of the bid price and then paid the assessment in full. xxx xxx xxx

On August 16, 1950, Villaflor executed a document, denominated as a Deed of Relinquishment of Rights (exh. N),[12] pertinent portion of which reads: 5. That in view of my present business in Manila, and my change in residence from Butuan, Agusan to the City of Manila, I cannot, therefore, develope (sic) or cultivate the land applied for as projected before; 6. That the Nasipit Lumber Company, Inc., a corporation duly organized xxx is very much interested in acquiring the land covered by the aforecited application xxx; 7. That I believe the said company is qualified to acquire public land, and has the means to develop (sic) the above-mentioned land; xxx xxx xxx

WHEREFORE, and in consideration of the amount of FIVE THOUSAND PESOS (P5,000.00) to be reimbursed to me by the aforementioned Nasipit Lumber Company, Inc., after its receipt of the order of award, the said amount representing part of the purchase price of the land aforesaid, the value of the improvements I introduced thereon, and the expenses incurred in the publication of the Notice of Sale, I, the applicant, Vicente J. Villaflor, hereby voluntarily renounce and relinquish whatever rights to, and interests I have in the land covered by my above-mentioned application in favor of the Nasipit Lumber Company, Inc. Also on August 16, 1950, Nasipit Lumber filed a Sales Application over the two (2) parcels of land, covering an area of 140 hectares, more or less. This application was also numbered V-807 (exh. Y). On August 17, 1950 the Director of Lands issued an Order of Award [13] in favor of Nasipit Lumber Company, Inc., pertinent portion of which reads: 4. That at the auction sale of the land held on July 24, 1950 the highest bid received was that of Nasipit Lumber Company, Inc. which offered P41.00 per hectare or P5,740.00 for the whole tract, which bid was equaled by applicant Vicente J. Villaflor, who deposited the amount of P574.00 under Official Receipt No. B-1373826 dated July 24, 1950 which is equivalent to 10% of the bid. Subsequently, the said xxx Villaflor paid the amount of P5,160.00 in full payment of the purchase price of the above-mentioned land and for some reasons stated in an instrument of relinquishment dated August 16, 1950, he (Vicente J. Villaflor) relinquished his rights to and interest in the said land in favor of the Nasipit Lumber Company, Inc. who filed the corresponding application therefore.

In view of the foregoing, and it appearing that the proceedings had xxx were in accordance with law and in [sic] existing regulations, the land covered thereby is hereby awarded to Nasipit Lumber Company, Inc. at P41.00 per hectare or P5,740.00 for the whole tract. This application should be entered in the record of this Office as Sales Entry No. V-407. It is Villaflor s claim that he only learned of the Order of Award on January 16, 1974, or after his arrival to the Philippines, coming from Indonesia, where he stayed for more than ten (10) years; that he went to Butuan City in the latter part of 1973 upon the call of his brother Serafin Villaflor, who was then sick and learned that Nasipit Lumber (had) failed and refused to pay the agreed rentals, although his brother was able to collect during the early years; and that Serafin died three days after his (Vicente s) arrival, and so no accounting of the rentals could be made; that on November 27, 1973, Villaflor wrote a letter to Mr. G.E.C. Mears of Nasipit Lumber, reminding him of their verbal agreement in 1955 xxx that Mr. Mears in a Reply dated December 3, 1973, appears to have referred the matter to Mr. Noriega, the corporate general manager, but the new set of corporate officers refused to recognize (Villaflor s) claim, for Mr. Florencio Tamesis, the general manager of Nasipit Lumber, in a letter dated February 19, 1974, denied Villaflor s itemized claim dated January 5, 1974 (exh. V) to be without valid and legal basis. In that 5th January, 1974 letter, Villaflor claimed the total amount of P427,000.00 x x x. In a formal protest dated January 31, 1974[14] which Villaflor filed with the Bureau of Lands, he protested the Sales Application of Nasipit Lumber, claiming that the company has not paid him P5,000.00 as provided in the Deed of Relinquishment of Rights dated August 16, 1950. xxx xxx xxx

x x x (T)hat in a Decision dated August 8, 1977 (exh. 8), the Director of Lands found that the payment of the amount of P5,000.00 in the Deed xxx and the consideration in the Agreement to Sell were duly proven, and ordered the dismissal of Villaflor s protest and gave due course to the Sales Application of Nasipit Lumber. Pertinent portion of the Decision penned by Director of Lands, Ramon Casanova, in the Matter of SP No. V-807 (C-V-407) xxx reads: xxx xxx xxx

During the proceedings, Villaflor presented another claim entirely different from his previous claim -- this time, for recovery of rentals in arrears arising from a supposed contract of lease by Villaflor as lessor in favor of Nasipit as lessee, and indemnity for damages supposedly caused improvements on his other property xxx in the staggering amount of Seventeen Million (P17,000,000.00) Pesos. Earlier, he had also demanded from NASIPIT xxx (P427,000.00) xxx also as indemnity for damages to improvements supposedly caused by NASIPIT on his other real property as well as for reimbursement of realty taxes allegedly paid by him thereon. xxx xxx xxx

It would seem that xxx Villaflor has sought to inject so many collaterals, if not extraneous claims, into this case. It is the considered opinion of this Office that any claim not within the sphere or scope of its adjudicatory authority as an administrative as well as quasijudicial body or any issue which seeks to delve into the merits of incidents clearly outside of the administrative competence of this Office to decide may not be entertained. There is no merit in the contention of Villaflor that owing to Nasipit s failure to pay the amount of xxx (P5,000.00) xxx (assuming that Nasipit had failed) the deed of relinquishment became null and void for lack of consideration. xxxx. xxx xxx xxx

x x x The records clearly show, however, that since the execution of the deed of relinquishment xxx Villaflor has always considered and recognized NASIPIT as having the juridical personality to acquire public lands for agricultural purposes. xxxx. xxx xxx xxx

Even this Office had not failed to recognize the juridical personality of NASIPIT to apply for the purchase of public lands xxx when it awarded to it the land so relinquished by Villaflor (Order of Award dated August 17, 1950) and accepted its application therefor. At any rate, the question whether an applicant is qualified to apply for the acquisition of public lands is a matter between the applicant

and this Office to decide and which a third party like Villaflor has no personality to question beyond merely calling the attention of this Office thereto. xxx xxx xxx

Villaflor offered no evidence to support his claim of non-payment beyond his own self-serving assertions and expressions that he had not been paid said amount. As protestant in this case, he has the affirmative of the issue. He is obliged to prove his allegations, otherwise his action will fail. For, it is a well settled principle ( ) that if plaintiff upon whom rests the burden of proving his cause of action fails to show in a satisfactory manner the facts upon which he bases his claim, the defendant is under no obligation to prove his exceptions or special defenses (Belen vs. Belen, 13 Phil. 202; Mendoza vs. Fulgencio, 8 Phil. 243). xxx xxx xxx

Consequently, Villaflor s claim that he had not been paid must perforce fail. On the other hand, there are strong and compelling reasons to presume that Villaflor had already been paid the amount of Five Thousand (P5,000.00) Pesos. First, xxx What is surprising, however, is not so much his claims consisting of gigantic amounts as his having forgotten to adduce evidence to prove his claim of non-payment of the Five Thousand (P5,000.00) Pesos during the investigation proceedings when he had all the time and opportunity to do so. xxx The fact that he did not adduce or even attempt to adduce evidence in support thereof shows either that he had no evidence to offer xxx that NASIPIT had already paid him in fact. What is worse is that Villaflor did not even bother to command payment, orally or in writing, of the Five Thousand (P5,000.00) Pesos which was supposed to be due him since August 17, 1950, the date when the order of award was issued to Nasipit, and when his cause of action to recover payment had accrued. The fact that he only made a command (sic) for payment on January 31, 1974, when he filed his protest or twenty-four (24) years later is immediately nugatory of his claim for non-payment. But Villaflor maintains that he had no knowledge or notice that the order of award had already been issued to NASIPIT as he had gone to Indonesia and he had been absent from the Philippines during all those twenty-four (24) years. This of course taxes credulity. xxx. Second, it should be understood that the condition that NASIPIT should reimburse Villaflor the amount of Five Thousand (P5,000.00) Pesos upon its receipt of the order of award was fulfilled as said award was issued to NASIPIT on August 17, 1950. The said deed of relinquishment was prepared and notarized in Manila with Villaflor and NASIPIT signing the instrument also in Manila on August 16, 1950 (p.77, (sic)). The following day or barely a day after that, or on August 17, 1950, the order of award was issued by this Office to NASIPIT also in Manila. Now, considering that Villaflor is presumed to be more assiduous in following up with the Bureau of Lands the expeditious issuance of the order of award as the payment of the Five Thousand (P5,000.00) Pesos (consideration) would depend on the issuance of said order to award NASIPIT, would it not be reasonable to believe that Villaflor was at hand when the award was issued to NASIPIT on August 17, 1950, or barely a day which (sic) he executed the deed of relinquishment on August 16, 1950, in Manila? xxx. Third, on the other hand, NASIPIT has in his possession a sort of order upon itself -- (the deed of relinquishment wherein he (sic) obligated itself to reimburse or pay Villaflor the xxx consideration of the relinquishment upon its receipt of the order of award) for the payment of the aforesaid amount the moment the order of award is issued to it. It is reasonable to presume that NASIPIT has paid the Five Thousand (P5,000.00) Pesos to Villaflor. A person in possession of an order on himself for the payment of money, or the delivery of anything, has paid the money or delivered the thing accordingly. (Section 5(k) B-131-Revised Rules of Court. It should be noted that NASIPIT did not produce direct evidence as proof of its payment of the Five Thousand (P5,000.00) Pesos to Villaflor. Nasipit s explanation on this point is found satisfactory. x x x (I)t was virtually impossible for NASIPIT, after the lapse of the intervening 24 years, to be able to cope up with all the records necessary to show that the consideration for the deed of relinquishment had been fully paid. To expect NASIPIT to keep intact all records pertinent to the transaction for the whole quarter of a century would be to require what even the law does not. Indeed, even the applicable law itself (Sec. 337, National Internal Revenue Code) requires that all records of corporations be preserved for only a maximum of five years.

NASIPIT may well have added that at any rate while there are transactions where the proper evidence is impossible or extremely difficult to produce after the lapse of time xxx the law creates presumptions of regularity in favor of such transactions (20 Am. Jur. 232) so that when the basic fact is established in an action the existence of the presumed fact must be assumed by force of law. (Rule 13, Uniform Rules of Evidence; 9 Wigmore, Sec. 2491). Anent Villaflor s claim that the 140-hectare land relinquished and awarded to NASIPIT is his private property, little (need) be said. xxxx The tracks of land referred to therein are not identical to the lands awarded to NASIPIT. Even in the assumption that the lands mentioned in the deeds of transfer are the same as the 140-hectare area awarded to NASIPIT, their purchase by Villaflor (or) the latter s occupation of the same did not change the character of the land from that of public land to a private property. The provision of the law is specific that public lands can only be acquired in the manner provided for therein and not otherwise (Sec. 11, C.A. No. 141, as amended). The records show that Villaflor had applied for the purchase of the lands in question with this Office (Sales Application No. V-807) on December 2, 1948. xxxx There is a condition in the sales application signed by Villaflor to the effect that he recognizes that the land covered by the same is of public domain and any and all rights he may have with respect thereto by virtue of continuous occupation and cultivation are relinquished to the Government (paragraph 6, Sales Application No. V-807 xxx) of which Villaflor is very much aware. It also appears that Villaflor had paid for the publication fees appurtenant to the sale of the land. He participated in the public auction where he was declared the successful bidder. He had fully paid the purchase prive (sic) thereof (sic). It would be a (sic) height of absurdity for Villaflor to be buying that which is owned by him if his claim of private ownership thereof is to be believed. The most that can be said is that his possession was merely that of a sales applicant to when it had not been awarded because he relinquished his interest therein in favor of NASIPIT who (sic) filed a sales application therefor. xxx xxx xxx

x x x During the investigation proceedings, Villaflor presented as his Exhibit (sic) (which NASIPIT adopted as its own exhibit and had it marked in evidence as Exhibit 1 ) a duly notarized agreement to Sell dated July 7, 1948, by virtue of which Villaflor undertook to sell to Nasipit the tracts of land mentioned therein, for a consideration of Twenty-Four Thousand (P24,000.00) Pesos. Said tracts of land have been verified to be identical to the parcels of land formerly applied for by Villaflor and which the latter had relinquished in favor of NASIPIT under a deed of relinquishment executed by him on August 16, 1950. In another document executed on December 7, 1948 xxx Villaflor as FIRST PARTY and NASIPIT as SECOND PARTY confirmed the Agreement to Sell of July 7, 1948, which was maintained in full force and effect with all its terms and conditions x x x (Exh. 38-A ); and that for and in consideration of xxx TWENTY FOUR THOUSAND (P24,000.00) PESOS that the Second Party shall pay to the First Party xxx the First Party hereby sells, transfers and conveys unto the Second Party xxx his right interest and participation under and by virtue of the Sales Application No. V-807 and, in its paragraph 8, it made stipulations as to when part of the said consideration xxx was paid and when the balance was to be paid, to wit: a) the amount of SEVEN THOUSAND xxx PESOS has already been paid by the Second Party to the First Party upon the execution of the Agreement to Sell, on July 17, 1948; b) the amount of FIVE THOUSAND xxx PESOS shall be paid upon the signing of this present agreement; and c) the amount of TWELVE THOUSAND xxx PESOS, shall be paid upon the execution by the First Party of the Absolute Sale of the Two parcels of land in question in favor of the Second Party of the Certificate of Ownership of the said two parcels of land. (Exh. 38-B). (Emphasis ours) It is thus clear from this subsequent document marked Exhibit 38 ANALCO that of the consideration of the Agreement to Sell dated July7, 1948, involving the 140-hectare area relinquished by Villaflor in favor of NASIPIT, in the amount of Twenty-Four Thousand (P24,000.00) Pesos: (1) the amount of Seven Thousand (P7,000.00) Pesos was already paid upon the execution of the Agreement to Sell on July 7, 1948, receipt of which incidentally was admitted by Villaflor in the document of December 7, 1948; (2) the amount of Five Thousand (P5,000.00) Pesos was paid when said document was signed by Vicente J. Villaflor as the First Party and Nasipit thru its President, as the Second Party, on December 7, 1948; and (3) the balance of Twelve Thousand (P12,000.00) Pesos to be paid upon the execution by the First Party of the Absolute Deed of Sale of the two parcels of land in favor of the Second Party, and upon delivery to the Second Party of the Certificate of Ownership of the said two parcels of land.

Villaflor contends that NASIPIT could not have paid Villaflor the balance of Twelve Thousand (P12,000.00) Pesos x x x consideration in the Agreement to Sell will only be paid to applicant-assignor (referring to Villaflor) upon obtaining a Torrens Title in his favor over the 140-hectare of land applied for and upon execution by him of a Deed of Absolute Sale in favor of Nasipit Lumber Company, Inc. x x x. Inasmuch as applicant-assignor was not able to obtain a Torrens Title over the land in question he could not execute an absolute Deed of (sic) Nasipit Lumber Co., Inc. Hence, the Agreement to Sell was not carried out and no Twelve Thousand (P12,000.00) Pesos was overpaid either to the applicant-assignor, much less to Howard J. Nell Company. (See MEMORANDUM FOR THE APPLICANTASSIGNOR, dated January 5, 1977). xxx. xxx Villaflor did not adduce evidence in support of his claim that he had not been paid the xxx (P12,000.00) xxx consideration of the Agreement to Sell dated July 7, 1948 (Exh. 38 NALCO ) beyond his mere uncorroborated assertions. On the other hand, there is strong evidence to show that said Twelve Thousand (P12,000.00) Pesos had been paid by (private respondent) to Edward J. Nell Company by virtue of the Deed of Assignment of Credit executed by Villaflor (Exh. 41 NALCO ) for the credit of the latter. Atty. Gabriel Banaag, resident counsel of NASIPIT who is in a position to know the facts, testified for NASIPIT. He described that it was he who notarized the Agreement to Sell (Exh. F ); that he knew about the execution of the document of December 7, 1948 (Exh. 38 ) confirming the said Agreement to Sell having been previously consulted thereon by Jose Fernandez, who signed said document on behalf of NASIPIT xxx that subsequently, in January 1949, Villaflor executed a Deed of Assignment of credit in favor of Edward J. Nell Company (Exh. 41 NALCO ) whereby Villaflor ceded to the latter his receivable for NASIPIT corresponding to the remaining balance in the amount of Twelve Thousand xxx Pesos of the total consideration xxx stipulated in both the Agreement to Sell (Exh. F ) and the document dated December 7, 1948 (Exh. 39 ); xxx. He further testified that the said assignment of credit was communicated to (private respondent) under cover letter dated January 24, 1949 (Exh. 41-A ) and not long thereafter, by virtue of the said assignment of credit, (private respondent) paid the balance of Twelve Thousand xxx due to Villaflor to Edward J. Nell Company xxx. Atty. Banaag s aforesaid testimony stand unrebutted; hence, must be given full weight and credit. xxx Villaflor and his counsel were present when Atty. Banaag s foregoing testimony was given. Yet, Villaflor did not demur, nor did he rebut the same, despite having been accorded full opportunity to do so. xxx xxx xxx

Having found that both the Five Thousand xxx consideration of the deed of Relinquishment xxx and that the remaining balance of xxx (P12,000.00) to complete the Twenty-Four Thousand (P24,000.00) Pesos consideration of both the Agreement to Sell dated July 7, 1948, and the document, dated December 7, 1948, executed by the former in favor of the latter, have been paid Villaflor the issue on prescription and laches becomes academic and needs no further discussion. But more than all the questions thus far raised and resolved is the question whether a sales patent can be issued to NASIPIT for the 140-hectare area awarded to it in the light of Section 11, Article XIV of the new Constitution which provides in its pertinent portion to wit: x x x No private corporation or association may hold alienable land of the public domain except by lease not to exceed one thousand hectares in area xxx. The Secretary of Justice had previous occasion to rule on this point in his opinion No. 140, s. 1974. Said the Honorable Justice Secretary: On the second question, (referring to the questions when may a public land be considered to have been acquired by purchase before the effectivity of the new Constitution posed by the Director of Lands in his query on the effect on pending applications for the issuance of sales patent in the light of Section 11, Art. XIV of the New Constitution aforecited), you refer to this Office s Opinion No. 64 series of 1973 in which I stated: On the other hand, with respect to sales applications ready for issuance of sales patent, it is my opinion that where the applicant had, before the Constitution took effect, fully complied with all this obligations under the Public Land Act in order to entitle him to a Sales patent, there would be no legal or equitable justification for refusing to issue or release the sales patent. With respect to the point as to when the Sales applicant has complied with all the terms and conditions which would entitle him to a sales patent, the herein above Secretary of Justice went on: That as to when the applicant has complied with all the terms and conditions which would entitle him to a patent is a questioned (sic) fact which your office would be in the best position to determine. However, relating this to the procedure for the processing of

applications mentioned above, I think that as the applicant has fulfilled the construction/cultivation requirements and has fully paid the purchase price, he should be deemed to have acquired by purchase the particular tract of land and (sic) the area (sic) in the provision in question of the new constitution would not apply. From the decision of the Director of Lands, Villaflor filed a Motion for Reconsideration which was considered as an Appeal M.N.R. Case 4341, to the Ministry of Natural Resources. On June 6, 1979, the Minister of Natural Resources rendered a Decision (exh. 9),[15] dismissing the appeal and affirming the decision of the Director of Lands, pertinent portions of which reads: After a careful study of the records and the arguments of the parties, we believe that the appeal is not well taken. Firstly, the area in dispute is not the private property of appellant. The evidence adduced by appellant to establish his claim of ownership over the subject area consists of deeds of absolute sale executed in his favor on January 16, and February 15, 1940, by four (4) different persons, namely, Cirilo Piencenaves, Fermin Balobo, Claudio Otero and Hermogenes Patete. However, an examination of the technical descriptions of the tracts of land subject of the deeds of sale will disclose that said parcels are not identical to, and do not tally with, the area in controversy. It is a basic assumption of our policy that lands of whatever classification belong to the state. Unless alienated in accordance with law, it retains its rights over the same as dominus, (Santiago vs. de los Santos, L-20241, November 22, 1974, 61 SCRA 152). For, it is well-settled that no public land can be acquired by private persons without any grant, express or implied from the government. It is indispensable then that there be showing of title from the state or any other mode of acquisition recognized by law. (Lee Hong Hok, et al. vs. David, et al., L-30389, December 27, 1972, 48 SCRA 379.) It is well-settled that all lands remain part of the public domain unless severed therefrom by state grant or unless alienated in accordance with law. We, therefore, believe that the aforesaid deeds of sale do not constitute clear and convincing evidence to establish that the contested area is of private ownership. Hence, the property must be held to be public domain. There being no evidence whatever that the property in question was ever acquired by the applicants or their ancestors either by composition title from the Spanish Government or by possessory information title or by any other means for the acquisition of public lands, the property must be held to be public domain. (Lee Hong Hok, et al., vs. David , et al., L-30389 December 27, 1972, 48 SCRA 378-379 citing Heirs of Datu Pendatun vs. Director of Lands; see also Director of Lands vs. Reyes, L-27594, November 28, 1975, 68 SCRA 177). Be that as it may, appellant, by filing a sales application over the controverted land, acknowledged unequivocably [sic] that the same is not his private property. As such sales applicant, appellant manifestly acknowledged that he does not own the land and that the same is a public land under the administration of the Bureau of Lands, to which the application was submitted, xxx All of its acts prior thereof, including its real estate tax declarations, characterized its possessions of the land as that of a sales applicant and consequently, as one who expects to buy it, but has not as yet done so, and is not, therefore, its owner. (Palawan Agricultural and Industrial Co., Inc. vs. Director of Lands, L-25914, March 21, 1972, 44 SCRA 20, 21). Secondly, appellant s alleged failure to pay the consideration stipulated in the deed of relinquishment neither converts said deed into one without a cause or consideration nor ipso facto rescinds the same. Appellant, though, has the right to demand payment with legal interest for the delay or to demand rescission. xxx xxx xxx

However, appellant s cause of action, either for specific performance or rescission of contract, with damages, lies within the jurisdiction of civil courts, not with administrative bodies. xxx xxx xxx

Lastly, appellee has acquired a vested right to the subject area and, therefore, is deemed not affected by the new constitutional provision that no private corporation may hold alienable land of the public domain except by lease. xxx xxx xxx

Implementing the aforesaid Opinion No. 64 of the Secretary of Justice, the then Secretary of Agriculture and Natural Resources issued a memorandum, dated February 18, 1974, which pertinently reads as follows: In the implementation of the foregoing opinion, sales application of private individuals covering areas in excess of 24 hectares and those of corporations, associations, or partnership which fall under any of the following categories shall be given due course and issued patents, to wit: 1. Sales application for fishponds and for agricultural purposes (SFA, SA and IGPSA) wherein prior to January 17, 1973; a. the land covered thereby was awarded; b. cultivation requirements of law were complied with as shown by investigation reports submitted prior to January 17, 1973; c. land was surveyed and survey returns already submitted to the Director of Lands for verification and approval; and d. purchase price was fully paid. From the records, it is evident that the aforestated requisites have been complied with by appellee long before January 17, 1973, the effectivity of the New Constitution. To restate, the disputed area was awarded to appellee on August 17, 1950, the purchase price was fully paid on July 26, 1951, the cultivation requirements were complied with as per investigation report dated December 31, 1949, and the land was surveyed under Pls-97. On July 6, 1978, petitioner filed a complaint[16] in the trial court for Declaration of Nullity of Contract (Deed of Relinquishment of Rights), Recovery of Possession (of two parcels of land subject of the contract), and Damages at about the same time that he appealed the decision of the Minister of Natural Resources to the Office of the President. On January 28, 1983, petitioner died. The trial court ordered his widow, Lourdes D. Villaflor, to be substituted as petitioner. After trial in due course, the then Court of First Instance of Agusan del Norte and Butuan City, Branch III,[17]dismissed the complaint on the grounds that: (1) petitioner admitted the due execution and genuineness of the contract and was estopped from proving its nullity, (2) the verbal lease agreements were unenforceable under Article 1403 (2)(e) of the Civil Code, and (3) his causes of action were barred by extinctive prescription and/or laches. It ruled that there was prescription and/or laches because the alleged verbal lease ended in 1966, but the action was filed only on January 6, 1978. The six-year period within which to file an action on an oral contract per Article 1145 (1) of the Civil Code expired in 1972. The decretal portion[18] of the trial court s decision reads: WHEREFORE, the foregoing premises duly considered, judgment is hereby rendered in favor of the defendant and against the plaintiff. Consequently, this case is hereby ordered DISMISSED. The defendant is hereby declared the lawful actual physical possessor-occupant and having a better right of possession over the two (2) parcels of land in litigation described in par. 1.2 of the complaint as Parcel I and Parcel II, containing a total area of One Hundred Sixty (160) hectares, and was then the subject of the Sales Application No. V-807 of the plaintiff (Exhibits 1, 1-A, 1-B, pp. 421 to 421-A, Record), and now of the Sales Application No. 807, Entry No. V-407 of the defendant Nasipit Lumber Company (Exhibit Y, pp. 357-358, Record). The Agreements to Sell Real Rights, Exhibits 2 to 2-C, 3 to 3-B, and the Deed of Relinquishment of Rights, Exhibits N to N-1, over the two parcels of land in litigation are hereby declared binding between the plaintiff and the defendant, their successors and assigns. Double the costs against the plaintiff.

The heirs of petitioner appealed to Respondent Court of Appeals which, however, rendered judgment against petitioner via the assailed Decision dated September 27, 1990 finding petitioner s prayers -- (1) for the declaration of nullity of the deed of relinquishment, (2) for the eviction of private respondent from the property and (3) for the declaration of petitioner s heirs as owners to be without basis. The decretal portion[20] of the assailed 49-page, single-spaced Decision curtly reads: WHEREFORE, the Decision appealed from, is hereby AFFIRMED, with costs against plaintiff-appellants. Not satisfied, petitioner s heirs filed the instant 57-page petition for review dated December 7, 1990. In a Resolution dated June 23, 1991, the Court denied this petition for being late. On reconsideration -- upon plea of counsel that petitioners were poor and that a full decision on the merits should be rendered -- the Court reinstated the petition and required comment from private respondent. Eventually, the petition was granted due course and the parties thus filed their respective memoranda.

[19]

The Issues Petitioner, through his heirs, attributes the following errors to the Court of Appeals: I. Are the findings of the Court of Appeals conclusive and binding upon the Supreme Court? II. Are the findings of the Court of Appeals fortified by the similar findings made by the Director of Lands and the Minister of Natural Resources (as well as by the Office of the President)? III. Was there forum shopping? IV. Are the findings of facts of the Court of Appeals and the trial court supported by the evidence and the law? V. Are the findings of the Court of Appeals supported by the very terms of the contracts which were under consideration by the said court? VI. Did the Court of Appeals, in construing the subject contracts, consider the contemporaneous and subsequent act of the parties pursuant to article 1371 of the Civil Code? VII. Did the Court of Appeals consider the fact and the unrefuted claim of Villaflor that he never knew of the award in favor of Nasipit? VIII. Did the Court of Appeals correctly apply the rules on evidence in its findings that Villaflor was paid the P5,000.00 consideration because Villaflor did not adduce any proof that he was not paid? IX. Is the Court of Appeals conclusion that the contract is not simulated or fictitious simply because it is genuine and duly executed by the parties, supported by logic or the law? X. May the prestations in a contract agreeing to transfer certain rights constitute estoppel when this very contract is the subject of an action for annulment on the ground that it is fictitious? XI. Is the Court of Appeals conclusion that the lease agreement between Villaflor is verbal and therefore, unenforceable supported by the evidence and the law? After a review of the various submissions of the parties, particularly those of petitioner, this Court believes and holds that the issues can be condensed into three as follows: (1) Did the Court of Appeals err in adopting or relying on the factual findings of the Bureau of Lands, especially those affirmed by the Minister (now Secretary) of Natural Resources and the trial court?

(2) Did the Court of Appeals err in upholding the validity of the contracts to sell and the deed of relinquishment? Otherwise stated, did the Court of Appeals err in finding the deed of relinquishment of rights and the contracts to sell valid, and not simulated or fictitious? (3) Is the private respondent qualified to acquire title over the disputed property?

The Court s Ruling The petition is bereft of merit. It basically questions the sufficiency of the evidence relied upon by the Court of Appeals, alleging that public respondent s factual findings were based on speculations, surmises and conjectures. Petitioner insists that a review of those findings is in order because they were allegedly (1) rooted, not on specific evidence, but on conclusions and inferences of the Director of Lands which were, in turn, based on misapprehension of the applicable law on simulated contracts; (2) arrived at whimsically -- totally ignoring the substantial and admitted fact that petitioner was not notified of the award in favor of private respondent; and (3) grounded on errors and misapprehensions, particularly those relating to the identity of the disputed area.

First Issue: Primary Jurisdiction of the Director of Lands and Finality of Factual Findings of the Court of Appeals Underlying the rulings of the trial and appellate courts is the doctrine of primary jurisdiction; i.e., courts cannot and will not resolve a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact.[21] In recent years, it has been the jurisprudential trend to apply this doctrine to cases involving matters that demand the special competence of administrative agencies even if the question involved is also judicial in character. It applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative body for its view. [22] In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot arrogate unto itself the authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence.[23] In Machete vs. Court of Appeals, the Court upheld the primary jurisdiction of the Department of Agrarian Reform [24] Adjudicatory Board (DARAB) in an agrarian dispute over the payment of back rentals under a leasehold contract. In Concerned [25] Officials of the Metropolitan Waterworks and Sewerage System vs. Vasquez, the Court recognized that the MWSS was in the best position to evaluate and to decide which bid for a waterworks project was compatible with its development plan. The rationale underlying the doctrine of primary jurisdiction finds application in this case, since the questions on the identity of the land in dispute and the factual qualification of private respondent as an awardee of a sales application require a technical determination by the Bureau of Lands as the administrative agency with the expertise to determine such matters. Because these issues preclude prior judicial determination, it behooves the courts to stand aside even when they apparently have statutory power to proceed, in recognition of the primary jurisdiction of the administrative agency.[26] One thrust of the multiplication of administrative agencies is that the interpretation of contracts and the determination of private rights thereunder is no longer a uniquely judicial function, exercisable only by our regular courts [27] Petitioner initiated his action with a protest before the Bureau of Lands and followed it through in the Ministry of Natural Resources and thereafter in the Office of the President. Consistent with the doctrine of primary jurisdiction, the trial and the appellate courts had reason to rely on the findings of these specialized administrative bodies. The primary jurisdiction of the director of lands and the minister of natural resources over the issues regarding the identity of the disputed land and the qualification of an awardee of a sales patent is established by Sections 3 and 4 of Commonwealth Act No. 141, also known as the Public Land Act: Section 3. The Secretary of Agriculture and Commerce (now Secretary of Natural Resources) shall be the executive officer charged with carrying out the provisions of this Act through the Director of Lands, who shall act under his immediate control.

Section 4. Subject to said control, the Director of Lands shall have direct executive control of the survey, classification, lease, sale or any other form of concession or disposition and management of the lands of the public domain, and his decision as to questions of fact shall be conclusive when approved by the Secretary of Agriculture and Commerce. Thus, the Director of Lands, in his decision, said:[28] x x x It is merely whether or not Villaflor has been paid the Five Thousand (P5,000.00) Pesos stipulated consideration of the deed of relinquishment made by him without touching on the nature of the deed of relinquishment. The administration and disposition of public lands is primarily vested in the Director of Lands and ultimately with the Secretary of Agriculture and Natural Resources (now Secretary of Natural Resources), and to this end-Our Supreme Court has recognized that the Director of Lands is a quasi-judicial officer who passes on issues of mixed facts and law (Ortua vs. Bingson Encarnacion, 59 Phil 440). Sections 3 and 4 of the Public Land Law thus mean that the Secretary of Agriculture and Natural Resources shall be the final arbiter on questions of fact in public land conflicts (Heirs of Varela vs. Aquino, 71 Phil 69; Julian vs. Apostol, 52 Phil 442). The ruling of this Office in its order dated September 10, 1975, is worth reiterating, thus: x x x it is our opinion that in the exercise of his power of executive control, administrative disposition and allegation of public land, the Director of Lands should entertain the protest of Villaflor and conduct formal investigation xxx to determine the following points: (a) whether or not the Nasipit Lumber Company, Inc. paid or reimbursed to Villaflor the consideration of the rights in the amount of P5,000.00 and what evidence the company has to prove payment, the relinquishment of rights being part of the administrative process in the disposition of the land in question xxx. xxxx Besides, the authority of the Director of Lands to pass upon and determine questions considered inherent in or essential to the efficient exercise of his powers like the incident at issue, i.e. , whether Villaflor had been paid or not, is conceded by law. Reliance by the trial and the appellate courts on the factual findings of the Director of Lands and the Minister of Natural Resources is not misplaced. By reason of the special knowledge and expertise of said administrative agencies over matters falling under their jurisdiction, they are in a better position to pass judgment thereon; thus, their findings of fact in that regard are generally accorded great respect, if not finality,[29] by the courts.[30] The findings of fact of an administrative agency must be respected as long as they are supported by substantial evidence, even if such evidence might not be overwhelming or even preponderant. It is not the task of an appellate court to weigh once more the evidence submitted before the administrative body and to substitute its own judgment for that of the administrative agency in respect of sufficiency of evidence.[31] However, the rule that factual findings of an administrative agency are accorded respect and even finality by courts admits of exceptions. This is true also in assessing factual findings of lower courts.[32] It is incumbent on the petitioner to show that the resolution of the factual issues by the administrative agency and/or by the trial court falls under any of the exceptions. Otherwise, this Court will not disturb such findings.[33] We mention and quote extensively from the rulings of the Bureau of Lands and the Minister of Natural Resources because the points, questions and issues raised by petitioner before the trial court, the appellate court and now before this Court are basically the same as those brought up before the aforesaid specialized administrative agencies. As held by the Court of Appeals:[34] We find that the contentious points raised by appellant in this action, are substantially the same matters he raised in BL Claim No. 873 (N). In both actions, he claimed private ownership over the land in question, assailed the validity and effectiveness of the Deed of Relinquishment of Rights he executed in August 16, 1950, that he had not been paid the P5,000.00 consideration, the value of the improvements he introduced on the land and other expenses incurred by him. In this instance, both the principle of primary jurisdiction of administrative agencies and the doctrine of finality of factual findings of the trial courts, particularly when affirmed by the Court of Appeals as in this case, militate against petitioner s cause. Indeed, petitioner has not given us sufficient reason to deviate from them.

Land in Dispute Is Public Land

Petitioner argues that even if the technical description in the deeds of sale and those in the sales application were not identical, the area in dispute remains his private property. He alleges that the deeds did not contain any technical description, as they were executed prior to the survey conducted by the Bureau of Lands; thus, the properties sold were merely described by reference to natural boundaries. His private ownership thereof was also allegedly attested to by private respondent s former field manager in the latter s February 22, 1950 letter, which contained an admission that the land leased by private respondent was covered by the sales application. This contention is specious. The lack of technical description did not prove that the finding of the Director of Lands lacked substantial evidence. Here, the issue is not so much whether the subject land is identical with the property purchased by petitioner. The issue, rather, is whether the land covered by the sales application is private or public land. In his sales application, petitioner expressly admitted that said property was public land. This is formidable evidence as it amounts to an admission against interest. In the exercise of his primary jurisdiction over the issue, Director of Lands Casanova ruled that the land was public:[35] x x x Even (o)n the assumption that the lands mentioned in the deeds of transfer are the same as the 140-hectare area awarded to Nasipit, their purchase by Villaflor (or) the latter s occupation of the same did not change the character of the land from that of public land to a private property. The provision of the law is specific that public lands can only be acquired in the manner provided for therein and not otherwise (Sec. 11, C.A. No. 141, as amended). The records show that Villaflor had applied for the purchase of lands in question with this Office (Sales Application No. V-807) on December 2, 1948. xxx There is a condition in the sales application xxx to the effect that he recognizes that the land covered by the same is of public domain and any and all rights he may have with respect thereto by virtue of continuous occupation and cultivation are relinquished to the Government (paragraph 6, Sales Application No. V-807 of Vicente J. Villaflor, p. 21, carpeta) of which Villaflor is very much aware. It also appears that Villaflor had paid for the publication fees appurtenant to the sale of the land. He participated in the public auction where he was declared the successful bidder. He had fully paid the purchase prive (sic) thereor (sic). It would be a (sic) height of absurdity for Villaflor to be buying that which is owned by him if his claim of private ownership thereof is to be believed. xxx. This finding was affirmed by the Minister of Natural Resources:[36] Firstly, the area in dispute is not the private property of appellant (herein petitioner). The evidence adduced by (petitioner) to establish his claim of ownership over the subject area consists of deeds of absolute sale executed in his favor xxx. However, an examination of the technical descriptions of the tracts of land subject of the deeds of sale will disclose that said parcels are not identical to, and do not tally with, the area in controversy. It is a basic assumption of our policy that lands of whatever classification belong to the state. Unless alienated in accordance with law, it retains its rights over the same as dominus. (Santiago vs. de los Santos, L-20241, November 22, 1974, 61 SCRA 152). For it is well-settled that no public land can be acquired by private persons without any grant, express or implied from the government. It is indispensable then that there be showing of title from the state or any other mode of acquisition recognized by law. (Lee Hong Hok, et al. vs. David, et al., L-30389, December 27, 1972, 48 SCRA 379). xxx xxx We, therefore, believe that the aforesaid deeds of sale do not constitute clear and convincing evidence to establish that the contested area is of private ownership. Hence, the property must be held to be public domain. There being no evidence whatever that the property in question was ever acquired by the applicants or their ancestors either by composition title from the Spanish Government or by possessory information title or by any other means for the acquisition of public lands, the property must be held to be public domain. Be that as it may, [petitioner], by filing a sales application over the controverted land, acknowledged unequivocably [sic] that the same is not his private property. xxx xxx

As such sales applicant manifestly acknowledged that he does not own the land and that the same is a public land under the administration of the Bureau of Lands, to which the application was submitted, xxx All of its acts prior thereof, including its real estate tax declarations, characterized its possessions of the land as that of a sales applicant . And consequently, as one who expects to buy it, but has not as yet done so, and is not, therefore, its owner. (Palawan Agricultural and Industrial Co., Inc. vs. Director of Lands, L-25914, March 21, 1972, 44 SCRA 15). Clearly, this issue falls under the primary jurisdiction of the Director of Lands because its resolution requires survey, classification, xxx disposition and management of the lands of the public domain. It follows that his rulings deserve great respect. As petitioner failed to show that this factual finding of the Director of Lands was unsupported by substantial evidence, it assumes finality. Thus, both the trial and the appellate courts correctly relied on such finding.[37] We can do no less.

Second Issue: No Simulation of Contracts Proven Petitioner insists that contrary to Article 1371[38] of the Civil Code, Respondent Court erroneously ignored the contemporaneous and subsequent acts of the parties; hence, it failed to ascertain their true intentions. However, the rule on the interpretation of contracts that was alluded to by petitioner is used in affirming, not negating, their validity. Thus, Article [39] 1373, which is a conjunct of Article 1371, provides that, if the instrument is susceptible of two or more interpretations, the interpretation which will make it valid and effectual should be adopted. In this light, it is not difficult to understand that the legal basis urged by petitioner does not support his allegation that the contracts to sell and the deed of relinquishment are simulated and fictitious. Properly understood, such rules on interpretation even negate petitioner s thesis. But let us indulge the petitioner awhile and determine whether the cited contemporaneous and subsequent acts of the parties support his allegation of simulation. Petitioner asserts that the relinquishment of rights and the agreements to sell were simulated because, first, the language and terms of said contracts negated private respondent s acquisition of ownership of the land in issue; and second, contemporaneous and subsequent communications between him and private respondent allegedly showed that the latter admitted that petitioner owned and occupied the two parcels; i.e., that private respondent was not applying for said parcels but was interested only in the two hectares it had leased, and that private respondent supported petitioner s application for a patent. Petitioner explains that the Agreement to Sell dated December 7, 1948 did not and could not transfer ownership because paragraph 8 (c) thereof stipulates that the balance of twelve thousand pesos (P12,000.00) shall be paid upon the execution by the First Party [petitioner] of the Absolute Deed of Sale of the two parcels of land in question in favor of the Second Party, and upon delivery to the Second Party [private respondent] of the Certificate of Ownership of the said two parcels of land. The mortgage provisions in paragraphs 6 and 7 of the agreement state that the P7,000.00 and P5,000.00 were earnest money or a loan with antichresis by the free occupancy and use given to Nasipit of the 140 hectares of land not anymore as a lessee. If the agreement to sell transferred ownership to Nasipit, then why was it necessary to require petitioner, in a second agreement, to mortgage his property in the event of nonfulfillment of the prestations in the first agreement? True, the agreement to sell did not absolutely transfer ownership of the land to private respondent. This fact, however, does not show that the agreement was simulated. Petitioner s delivery of the Certificate of Ownership and execution of the deed of absolute sale were suspensive conditions, which gave rise to a corresponding obligation on the part of the private respondent, i.e., the payment of the last installment of the consideration mentioned in the December 7, 1948 Agreement. Such conditions did not affect the perfection of the contract or prove simulation. Neither did the mortgage. Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for the purpose of deception, the appearance of a juridical act which does not exist or is different from that which was really executed.[40] Such an intention is not apparent in the agreements. The intent to sell, on the other hand, is as clear as daylight. Petitioner alleges further that the deed of relinquishment of right did not give full effect to the two agreements to sell, because the preliminary clauses of the deed allegedly served only to give private respondent an interest in the property as a future owner thereof and to enable respondent to follow up petitioner s sales application. We disagree. Such an intention is not indicated in the deed. On the contrary, a real and factual sale is evident in paragraph 6 thereof, which states: That the Nasipit Lumber Co., Inc., xxx is very much interested in acquiring the land covered by the aforecited application to be used for purposes of mechanized farming and the penultimate paragraph stating: xxx VICENTE J. VILLAFLOR, hereby voluntarily renounce and relinquish whatever rights to, and interests I have in the land covered by my above-mentioned application in favor of the Nasipit Lumber Co., Inc.

We also hold that no simulation is shown either in the letter, dated December 3, 1973, of the former field manager of private respondent, George Mear. A pertinent portion of the letter reads: (a)s regards your property at Acacia, San Mateo, I recall that we made some sort of agreement for the occupancy, but I no longer recall the details and I had forgotten whether or not we actually did occupy your land. But if, as you say, we did occupy it, then I am sure that the Company is obligated to pay a rental. The letter did not contain any express admission that private respondent was still leasing the land from petitioner as of that date. According to Mear, he could no longer recall the details of his agreement with petitioner. This cannot be read as evidence of the simulation of either the deed of relinquishment or the agreements to sell. It is evidence merely of an honest lack of recollection. Petitioner also alleges that he continued to pay realty taxes on the land even after the execution of said contracts. This is immaterial because payment of realty taxes does not necessarily prove ownership, much less simulation of said contracts.[41]

Nonpayment of the Consideration Did Not Prove Simulation Petitioner insists that nonpayment of the consideration in the contracts proves their simulation. We disagree. Nonpayment, at most, gives him only the right to sue for collection. Generally, in a contract of sale, payment of the price is a resolutory condition and the remedy of the seller is to exact fulfillment or, in case of a substantial breach, to rescind the contract under Article 1191 of the Civil Code.[42] However, failure to pay is not even a breach, but merely an event which prevents the vendor s obligation to convey title from acquiring binding force.[43] Petitioner also argues that Respondent Court violated evidentiary rules in upholding the ruling of the Director of Lands that petitioner did not present evidence to show private respondent s failure to pay him. We disagree. Prior to the amendment of the rules on evidence on March 14, 1989, Section 1, Rule 131, states that each party must prove his or her own affirmative allegations.[44] Thus, the burden of proof in any cause rested upon the party who, as determined by the pleadings or the nature of [45] the case, asserts the affirmative of an issue and remains there until the termination of the action. Although nonpayment is a negative fact which need not be proved, the party seeking payment is still required to prove the existence of the debt and the fact that it is already due.[46] Petitioner showed the existence of the obligation with the presentation of the contracts, but did not present any evidence that he demanded payment from private respondent. The demand letters dated January 2 and 5, 1974 (Exhs. J and U ), adduced in evidence by petitioner, were for the payment of back rentals, damages to improvements and reimbursement of acquisition costs and realty taxes, not payment arising from the contract to sell. Thus, we cannot fault Respondent Court for adopting the finding of the Director of Lands that petitioner offered no evidence to support his claim of nonpayment beyond his own self-serving assertions, as he did not even demand payment, orally or in writing, of the five thousand (P5,000.00) pesos which was supposed to be due him since August 17, 1950, the date when the order of award was issued to Nasipit, and when his cause of action to recover payment had accrued. Nonpayment of the consideration in the contracts to sell or the deed of relinquishment was raised for the first time in the protest filed with the Bureau of Lands on January 31, 1974. But this protest letter was not the demand letter required by law. Petitioner alleges that the assignment of credit and the letter of the former field manager of private respondent are contemporaneous and subsequent acts revealing the nonpayment of the consideration. He maintains that the P12,000.00 credit assigned pertains to the P5,000.00 and P7,000.00 initial payments in the December 7, 1948 Agreement, because the balance of P12,000.00 was not yet due and accruing. This is consistent, he argues, with the representation that private respondent was not interested in filing a sales application over the land in issue and that Nasipit was instead supporting petitioner s application [47] thereto in Mear s letter to the Director of Lands dated February 22, 1950 (Exh. X ). This argument is too strained to be acceptable. The assignment of credit did not establish the nondelivery of these initial payments of the total consideration. First, the assignment of credit happened on January 19, 1949, or a month after the signing of the December 7, 1948 Agreement and almost six months after the July 7, 1948 Agreement to Sell. Second, it does not overcome the recitation in the Agreement of December 7, 1948: xxx a) The amount of SEVEN THOUSAND (P7,000.00) PESOS has already been paid by the Second Party to the First Party upon the execution of the Agreement to Sell, on July 7, 1948; b) The amount of FIVE THOUSAND (P5,000.00) PESOS shall be paid upon the signing of this present agreement; xxx. Aside from these facts, the Director of Lands found evidence of greater weight showing that payment was actually made:[48]

x x x (T)here is strong evidence to show that said xxx (P12,000.00) had been paid by NASIPIT to Edward J. Nell Company by virtue of the Deed of Assignment of Credit executed by Villaflor (Exh. 41 NALCO ) for the credit of the latter. Atty. Gabriel Banaag, resident counsel of NASIPIT xxx declared that it was he who notarized the Agreement to Sell (Exh. F ); xxxx that subsequently, in January 1949, Villaflor executed a Deed of Assignment of credit in favor of Edward J. Nell Company (Exh. 41 NALCO ) whereby Villaflor ceded to the latter his receivable for NASIPIT corresponding to the remaining balance in the amount of xxx (P12,000.00) xxx of the total consideration xxxx; He further testified that the said assignment xxx was communicated to NASIPIT under cover letter dated January 24, 1949 (Exh. 41-A ) and not long thereafter, by virtue of the said assignment of credit, NASIPIT paid the balance xxx to Edward J. Nell Company (p. 58, bid). Atty. Banaag s aforesaid testimony stand unrebutted; hence, must be given full weight and credit. xxx xxx xxx.

The Director of Lands also found that there had been payment of the consideration in the relinquishment of rights:[49] On the other hand, there are strong and compelling reasons to presume that Villaflor had already been paid the amount of Five Thousand (P5,000.00) Pesos. First, x x x What is surprising, however, is not so much his claims consisting of gigantic amounts as his having forgotten to adduce evidence to prove his claim of non-payment of the Five Thousand (P5,000.00) Pesos during the investigation proceedings when he had all the time and opportunity to do so. xxxx The fact that he did not adduce or even attempt to adduce evidence in support thereof shows either that he had no evidence to offer of that NASIPIT had already paid him in fact. What is worse is that Villaflor did not even bother to command payment, orally or in writing, of the Five Thousand (P5,000.00) Pesos which was supposed to be due him since August 17, 1950, the date when the order of award was issued to Nasipit, and when his cause of action to recover payment had accrued. The fact that he only made a command for payment on January 31, 1974, when he filed his protest or twenty-four (24) years later is immediately nugatory of his claim for non-payment. But Villaflor maintains that he had no knowledge or notice that the order of award had already been issued to NASIPIT as he had gone to Indonesia and he had been absent from the Philippines during all those twenty-four (24) years. This of course taxes credulity.xxxx x x x It is more in keeping with the ordinary course of things that he should have acquired information as to what was transpiring in his affairs in Manila x x x. Second, it should be understood that the condition that NASIPIT should reimburse Villaflor the amount of Five Thousand (P5,000.00) Pesos upon its receipt of the order of award was fulfilled as said award was issued to NASIPIT on August 17, 1950. The said deed of relinquishment was prepared and notarized in Manila with Villaflor and NASIPIT signing the instrument also in Manila. Now, considering that Villaflor is presumed to be more assiduous in following up with the Bureau of Lands the expeditious issuance of the order of award as the (consideration) would depend on the issuance of said order to award NASIPIT, would it not be reasonable to believe that Villaflor was at hand when the award was issued to NASIPIT on August 17, 1950, or barely a day which he executed the deed of relinquishment on August 16, 1950, in Manila? xxxx. Third, on the other hand, NASIPIT has in his possession a sort of order upon itself -- (the deed of relinquishment wherein he(sic) obligated itself to reimburse or pay Villaflor the xxx consideration of the relinquishment upon its receipt of the order of award) for the payment of the aforesaid amount the moment the order of award is issued to it. It is reasonable to presume that NASIPIT has paid the (consideration) to Villaflor. xxx xxx xxx

x x x (I)t was virtually impossible for NASIPIT, after the lapse of the intervening 24 years, to be able to cope up with all the records necessary to show that the consideration for the deed of relinquishment had been fully paid. To expect NASIPIT to keep intact all records pertinent to the transaction for the whole quarter of a century would be to require what even the law does not. Indeed, even the applicable law itself (Sec. 337, National Internal Revenue Code) requires that all records of corporations be preserved for only a maximum of five years. NASIPIT may well have added that at any rate while there are transactions where the proper evidence is impossible or extremely difficult to produce after the lapse of time xxx the law creates presumptions of regularity in favor of such transactions (20 Am. Jur.

232) so that when the basic fact is established in an action the existence of the presumed fact must be assumed by force of law. (Rule 13, Uniform Rules of Evidence; 9 Wigmore, Sec. 2491). The Court also notes that Mear s letter of February 22, 1950 was sent six months prior to the execution of the deed of relinquishment of right. At the time of its writing, private respondent had not perfected its ownership of the land to be able to qualify as a sales applicant. Besides, although he was a party to the July 7, 1948 Agreement to Sell, Mear was not a signatory to the Deed of Relinquishment or to the December 7, 1948 Agreement to Sell. Thus, he cannot be expected to know the existence of and the amendments to the later contracts. These circumstances explain the mistaken representations, not misrepresentations, in said letter.

Lack of Notice of the Award Petitioner insists that private respondent suppressed evidence, pointing to his not having been notified of the Order of Award dated August 17, 1950.[50] At the bottom of page 2 of the order, petitioner was not listed as one of the parties who were to be furnished a copy by Director of Lands Jose P. Dans. Petitioner also posits that Public Land Inspector Sulpicio A. Taeza irregularly received the copies for both private respondent and the city treasurer of Butuan City. The lack of notice for petitioner can be easily explained. Plainly, petitioner was not entitled to said notice of award from the Director of Lands, because by then, he had already relinquished his rights to the disputed land in favor of private respondent. In the heading of the order, he was referred to as sales applicant-assignor. In paragraph number 4, the order stated that, on August 16, 1950, he relinquished his rights to the land subject of the award to private respondent. From such date, the sales application was considered to be a matter between the Bureau of Lands and private respondent only. Considering these facts, the failure to give petitioner a copy of the notice of the award cannot be considered as suppression of evidence.[51] Furthermore, this order was in fact available to petitioner and had been referred to by [52] him since January 31, 1974 when he filed his protest with the Bureau of Lands.

Third Issue: Private Respondent Qualified for an Award of Public Land Petitioner asserts that private respondent was legally disqualified from acquiring the parcels of land in question because it was not authorized by its charter to acquire disposable public agricultural lands under Sections 121, 122 and 123 of the Public Land Act, prior to its amendment by P.D. No. 763. We disagree. The requirements for a sales application under the Public Land Act are: (1) the possession of the qualifications required by said Act (under Section 29) and (2) the lack of the disqualifications mentioned therein (under Sections 121, 122, and 123). However, the transfer of ownership via the two agreements dated July 7 and December 7, 1948 and the relinquishment of rights, being private contracts, were binding only between petitioner and private respondent. The Public Land Act finds no relevance because the disputed land was covered by said Act only after the issuance of the order of award in favor of private respondent. Thus, the possession of any disqualification by private respondent under said Act is immaterial to the private contracts between the parties thereto. (We are not, however, suggesting a departure from the rule that laws are deemed written in contracts.) Consideration of said provisions of the Act will further show their inapplicability to these contracts. Section 121 of the Act pertains to acquisitions of public land by a corporation from a grantee, but petitioner never became a grantee of the disputed land. On the other hand, private respondent itself was the direct grantee. Sections 122 and 123 disqualify corporations, which are not authorized by their charter, from acquiring public land; the records do not show that private respondent was not so authorized under its charter. Also, the determination by the Director of Lands and the Minister of Natural Resources of the qualification of private respondent to become an awardee or grantee under the Act is persuasive on Respondent Court. In Espinosa vs. Makalintal,[53] the Court ruled that, by law, the powers of the Secretary of Agriculture and Natural Resources regarding the disposition of public lands -including the approval, rejection, and reinstatement of applications are of executive and administrative nature. (Such powers, however, do not include the judicial power to decide controversies arising from disagreements in civil or contractual relations between the litigants.) Consequently, the determination of whether private respondent is qualified to become an awardee of public land under C.A. 141 by sales application is included therein. All told, the only disqualification that can be imputed to private respondent is the prohibition in the 1973 Constitution against the holding of alienable lands of the public domain by corporations.[54] However, this Court earlier settled the matter, ruling that said constitutional prohibition had no retroactive effect and could not prevail over a vested right to the land. In Ayog vs. Cusi, Jr.,[55] this Court declared:

We hold that the said constitutional prohibition has no retroactive application to the sales application of Bian Development Co., Inc. because it had already acquired a vested right to the land applied for at the time the 1973 Constitution took effect. That vested right has to be respected. It could not be abrogated by the new Constitution. Section 2, Article XIII of the 1935 Constitution allows private corporations to purchase public agricultural lands not exceeding one thousand and twenty-four hectares. Petitioner s prohibition action is barred by the doctrine of vested rights in constitutional law. A right is vested when the right to enjoyment has become the property of some particular person or persons as a present interest. (16 C.J.S. 1173). It is the privilege to enjoy property legally vested, to enforce contracts, and enjoy the rights of property conferred by existing law (12 C.J. 955, Note 46, No. 6) or some right or interest in property which has become fixed and established and is no longer open to doubt or controversy (Downs vs. Blount, 170 Fed. 15, 20, cited in Balboa vs. Farrales, 51 Phil. 498, 502). The due process clause prohibits the annihilation of vested rights. A state may not impair vested rights by legislative enactment, by the enactment or by the subsequent repeal of a municipal ordinance, or by a change in the constitution of the State, except in a legitimate exercise of the police power (16 C.J.S. 1177-78). It has been observed that, generally, the term vested right expresses the concept of present fixed interest, which in right reason and natural justice should be protected against arbitrary State action, or an innately just an imperative right which an enlightened free society, sensitive to inherent and irrefragable individual rights, cannot deny (16 C.J.S. 1174, Note 71, No. 5, citing Pennsylvania Greyhound Lines, Inc. vs. Rosenthal, 192 Atl. 2nd 587). Secretary of Justice Abad Santos in his 1973 opinion ruled that where the applicant, before the Constitution took effect, had fully complied with all his obligations under the Public Land Act in order to entitle him to a sales patent, there would seem to be no legal or equitable justification for refusing to issue or release the sales patent (p. 254, Rollo). In Opinion No. 140, series of 1974, he held that as soon as the applicant had fulfilled the construction or cultivation requirements and has fully paid the purchase price, he should be deemed to have acquired by purchase the particular tract of land and to him the area limitation in the new Constitution would not apply. In Opinion No. 185, series of 1976, Secretary Abad Santos held that where the cultivation requirements were fulfilled before the new Constitution took effect but the full payment of the price was completed after January 17, 1973, the applicant was, nevertheless, entitled to a sales patent (p. 256, Rollo). Such a contemporaneous construction of the constitutional prohibition by a high executive official carries great weight and should be accorded much respect. It is a correct interpretation of section 11 of Article XIV. In the instant case, it is incontestable that prior to the effectivity of the 1973 Constitution the right of the corporation to purchase the land in question had become fixed and established and was no longer open to doubt or controversy. Its compliance with the requirements of the Public Land Law for the issuance of a patent had the effect of segregating the said land from the public domain. The corporation s right to obtain a patent for that land is protected by law. It cannot be deprived of that right without due process (Director of Lands vs. CA, 123 Phil. 919). The Minister of Natural Resources ruled, and we agree, that private respondent was similarly qualified to become an awardee of the disputed land because its rights to it vested prior to the effectivity of the 1973 Constitution:[56] Lastly, appellee has acquired a vested right to the subject area and, therefore, is deemed not affected by the new constitutional provision that no private corporation may hold alienable land of the public domain except by lease. It may be recalled that the Secretary of Justice in his Opinion No. 64, series of 1973, had declared, to wit: On the other hand, with respect to sales application ready for issuance of sales patent, it is my opinion that where the applicant had, before, the constitution took effect, fully complied with all his obligations under the Public Land act in order to entitle him to sales patent, there would seem to be not legal or equitable justification for refusing to issue or release the sales patent.

Implementing the aforesaid Opinion No. 64 xxx, the then Secretary of Agriculture and Natural Resources issued a memorandum, dated February 18, 1974, which pertinently reads as follows: In the implementation of the foregoing opinion, sales application of private individuals covering areas in excess of 24 hectares and those of corporations, associations, or partnership which fall under any of the following categories shall be given due course and issued patents, to wit: Sales application for fishponds and for agricultural purposes (SFA, SA and IGPSA) wherein prior to January 17, 1973, a. the land covered thereby was awarded; b. cultivation requirements of law were complied with as shown by investigation reports submitted prior to January 17, 1973; c. land was surveyed and survey returns already submitted to the Director of Lands for verification and approval; and d. purchase price was fully paid. From the records, it is evident that the aforestated requisites have been complied with by appellee long before January 17, 1973, the effectivity of the New Constitution. To restate, the disputed area was awarded to appellee on August 17, 1950, the purchase price was fully paid on July 26, 1951, the cultivation requirements were complied with as per investigation report dated December 31, 1949, and the land was surveyed under Pls-97. The same finding was earlier made by the Director of Lands:[57] It is further contended by Villaflor that Nasipit has no juridical personality to apply for the purchase of public lands for agricultural purposes. The records clearly show, however, that since the execution of the deed of relinquishment of August 16, 1950, in favor of Nasipit, Villaflor has always considered and recognized Nasipit as having the juridical personality to acquire public lands for agricultural purposes. In the deed of relinquishment xxx, it is stated: 6. That the Nasipit Lumber Co., Inc., a corporation duly organized in accordance with the laws of the Philippines, x x x. Even this Office had not failed to recognize the juridical personality of Nasipit to apply for the purchase of public lands xxx when it awarded to it the land so relinquished by Villaflor (Order of Award dated August 17, 1950) and accepted its application therefor. At any rate, the question whether an applicant is qualified to apply for the acquisition of public lands is a matter between the applicant and this Office to decide and which a third party like Villaflor has no personality to question beyond merely calling the attention of this Office thereto. Needless to say, we also agree that the November 8, 1946 Lease Agreement between petitioner and private respondent had been terminated by the agreements to sell and the relinquishment of rights. By the time the verbal leases were allegedly made in 1951 and 1955,[58] the disputed land had already been acquired and awarded to private respondent. In any event, petitioner s cause of action on these alleged lease agreements prescribed long before he filed Civil Case No. 2072-III, as correctly found by the trial and [59] appellate courts. Thus, it is no longer important, in this case, to pass upon the issue of whether or not amendments to a lease contract can be proven by parol evidence. The same holds true as regards the issue of forum-shopping. All in all, petitioner has not provided us sufficient reason to disturb the cogent findings of the Director of Lands, the Minister of Natural Resources, the trial court and the Court of Appeals. WHEREFORE, the petition is hereby DISMISSED.

G.R. No. 182065

October 27, 2009

EVELYN ONGSUCO and ANTONIA SALAYA, Petitioners, vs. HON. MARIANO M. MALONES, both in his private and official capacity as Mayor of the Municipality of Maasin, Iloilo, Respondent. DECISION CHICO-NAZARIO, J.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision1 dated 28 November 2006, 2 rendered by the Court of Appeals in CA-G.R. SP No. 86182, which affirmed the Decision dated 15 July 2003, of the Regional Trial Court (RTC), Branch 39, of Iloilo City, in Civil Case No. 25843, dismissing the special civil action for Mandamus/Prohibition with Prayer for Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, filed by petitioners Evelyn Ongsuco and Antonia Salaya against respondent Mayor Mariano Malones of the Municipality of Maasin, Iloilo. Petitioners are stall holders at the Maasin Public Market, which had just been newly renovated. In a letter dated 6 August 1998, the Office of the Municipal Mayor informed petitioners of a meeting scheduled on 11 August 1998 concerning the municipal public market. Revenue measures were discussed during the said meeting, including the increase in the rentals for the market stalls and the imposition of "goodwill fees" in the amount of P20,000.00,4payable every month. On 17 August 1998, the Sangguniang Bayan of Maasin approved Municipal Ordinance No. 98-01, entitled "The Municipal Revised Revenue Code." The Code contained a provision for increased rentals for the stalls and the imposition of goodwill fees in the amount of P20,000.00 and P15,000.00 for stalls located on the first and second floors of the municipal public market, respectively. The same Code authorized respondent to enter into lease contracts over the said market stalls,5 and incorporated a standard contract of lease for the stall holders at the municipal public market. Only a month later, on 18 September 1998, the Sangguniang Bayan of Maasin approved Resolution No. 68, series of 1998,6 moving to have the meeting dated 11 August 1998 declared inoperative as a public hearing, because majority of the persons affected by the imposition of the goodwill fee failed to agree to the said measure. However, Resolution No. 68, series of 1998, of the Sangguniang Bayan of Maasin was vetoed by respondent on 30 September 1998.7 After Municipal Ordinance No. 98-01 was approved on 17 August 1998, another purported public hearing was held on 22 January 1999.8 On 9 June 1999, respondent wrote a letter to petitioners informing them that they were occupying stalls in the newly renovated municipal public market without any lease contract, as a consequence of which, the stalls were considered vacant and open for qualified and interested applicants.9 This prompted petitioners, together with other similarly situated stall holders at the municipal public market,10 to file before the RTC on 25 June 1999 a Petition for Prohibition/Mandamus, with Prayer for Issuance of Temporary Restraining Order and/or Writ of 11 Preliminary Injunction, against respondent. The Petition was docketed as Civil Case No. 25843. Petitioners alleged that they were bona fide occupants of the stalls at the municipal public market, who had been religiously paying the monthly rentals for the stalls they occupied. Petitioners argued that public hearing was mandatory in the imposition of goodwill fees. Section 186 of the Local Government Code of 1991 provides that an ordinance levying taxes, fees, or charges shall not be enacted without any prior hearing conducted for the purpose. Municipal Ordinance No. 98-01, imposing goodwill fees, is invalid on the ground that the conferences held on 11 August 1998 and 22 January 1999 could not be considered public hearings. According to Article 277(b)(3) of the Implementing Rules and Regulations of the Local Government Code: (3) The notice or notices shall specify the date or dates and venue of the public hearing or hearings. The initial public hearing shall be held not earlier than ten (10) days from the sending out of the notice or notices, or the last day of publication, or date of posting thereof, whichever is later. (Emphasis ours.) The letter from the Office of the Municipal Mayor was sent to stall holders on 6 August 1998, informing the latter of the meeting to be held, as was in fact held, on 11 August 1998, only five days after notice.12
3

Hence, petitioners prayed that respondent be enjoined from imposing the goodwill fees pending the determination of the reasonableness thereof, and from barring petitioners from occupying the stalls at the municipal public market and continuing with the operation of their businesses. Respondent, in answer, maintained that Municipal Ordinance No. 98-01 is valid. He reasoned that Municipal Ordinance No. 98-01 imposed goodwill fees to raise income to pay for the loan obtained by the Municipality of Maasin for the renovation of its public market. Said ordinance is not per se a tax or revenue measure, but involves the operation and management of an economic enterprise of the Municipality of Maasin as a local government unit; thus, there was no mandatory requirement to hold a public hearing for the enactment thereof. And, even granting that a public hearing was required, respondent insisted that public hearings take place on 11 August 1998 and 22 January 1999. Respondent further averred that petitioners were illegally occupying the market stalls, and the only way petitioners could legitimize their occupancy of said market stalls would be to execute lease contracts with the Municipality of Maasin. While respondent admitted that petitioners had been paying rentals for their market stalls in the amount ofP45.00 per month prior to the renovation of the municipal public market, respondent asserted that no rentals were paid or collected from petitioners ever since the renovation began. Respondent sought from the RTC an award for moral damages in the amount of not less than P500,000.00, for the social humiliation and hurt feelings he suffered by reason of the unjustified filing by petitioners of Civil Case No. 25843; and an order for petitioners to vacate the renovated market stalls and pay reasonable rentals from the date they began to occupy said stalls until they vacate the same. 13 The RTC subsequently rendered a Decision14 on 15 July 2003 dismissing the Petition in Civil Case No. 25843. The RTC found that petitioners could not avail themselves of the remedy of mandamus or prohibition. It reasoned that mandamus would not lie in this case where petitioners failed to show a clear legal right to the use of the market stalls without paying the goodwill fees imposed by the municipal government. Prohibition likewise would not apply to the present case where respondent s acts, sought to be enjoined, did not involve the exercise of judicial or quasi-judicial functions. The RTC also dismissed the Petition in Civil Case No. 25843 on the ground of non-exhaustion of administrative remedies. Petitioners failure to question the legality of Municipal Ordinance No. 98-01 before the Secretary of Justice, as provided under Section 187 of the Local Government Code,15 rendered the Petition raising the very same issue before the RTC premature. The dispositive part of the RTC Decision dated 15 July 2003 reads: WHEREFORE, in view of all the foregoing, and finding the petition without merit, the same is, as it is hereby ordered, dismissed. 16 On 12 August 2003, petitioners and their co-plaintiffs filed a Motion for Reconsideration.17 The RTC denied petitioners Motion for 18 Reconsideration in a Resolution dated 18 June 2004. While Civil Case No. 25843 was pending, respondent filed before the 12th Municipal Circuit Trial Court (MCTC) of Cabatuan-Maasin, Iloilo City a case in behalf of the Municipality of Maasin against petitioner Evelyn Ongsuco, entitled Municipality of Maasin v. Ongsuco, a Complaint for Unlawful Detainer with Damages, docketed as MCTC Civil Case No. 257. On 18 June 2002, the MCTC decided in favor of the Municipality of Maasin and ordered petitioner Ongsuco to vacate the market stalls she occupied, Stall No. 103 and Stall No. 1-04, and to pay monthly rentals in the amount of P350.00 for each stall from October 2001 until she vacates the 19 said market stalls. On appeal, Branch 36 of the RTC of Maasin, Iloilo City, promulgated a Decision, dated 29 April 2003, in a case docketed as Civil Case No. 02-27229 affirming the decision of the MCTC. A Writ of Execution was issued by the MCTC on 8 December 20 2003. Petitioners, in their appeal before the Court of Appeals, docketed as CA-G.R. SP No. 86182, challenged the dismissal of their Petition for Prohibition/Mandamus docketed as Civil Case No. 25843 by the RTC. Petitioners explained that they did appeal the enactment of Municipal Ordinance No. 98-01 before the Department of Justice, but their appeal was not acted upon because of their failure to attach a copy of said municipal ordinance. Petitioners claimed that one of their fellow stall holders, Ritchelle Mondejar, wrote a letter to the Officer-in-Charge (OIC), Municipal Treasurer of Maasin, requesting a copy of Municipal Ordinance No. 98-01, but 21 received no reply. In its Decision dated 28 November 2006 in CA-G.R. SP No. 86182, the Court of Appeals again ruled in respondent s favor.

The Court of Appeals declared that the "goodwill fee" was a form of revenue measure, which the Municipality of Maasin was empowered to impose under Section 186 of the Local Government Code. Petitioners failed to establish any grave abuse of discretion committed by respondent in enforcing goodwill fees. The Court of Appeals additionally held that even if respondent acted in grave abuse of discretion, petitioners resort to a petition for prohibition was improper, since respondent s acts in question herein did not involve the exercise of judicial, quasi-judicial, or ministerial functions, as required under Section 2, Rule 65 of the Rules of Court. Also, the filing by petitioners of the Petition for Prohibition/Mandamus before the RTC was premature, as they failed to exhaust administrative remedies prior thereto. The appellate court did not give any weight to petitioners assertion that they filed an appeal challenging the legality of Municipal Ordinance No. 98-01 before the Secretary of Justice, as no proof was presented to support the same. In the end, the Court of Appeals decreed: WHEREFORE, in view of the foregoing, this Court finds the instant appeal bereft of merit. The assailed decision dated July 15, 2003 as 22 well as the subsequent resolution dated 18 June 2004 are hereby AFFIRMED and the instant appeal is hereby DISMISSED. Petitioners filed a Motion for Reconsideration23 of the foregoing Decision, but it was denied by the Court of Appeals in a Resolution24 dated 8 February 2008. Hence, the present Petition, where petitioners raise the following issues: I WHETHER OR NOT THE PETITIONERS HAVE EXHAUSTED ADMINISTRATIVE REMEDIES BEFORE FILING THE INSTANT CASE IN COURT; II WHETHER OR NOT EXHAUSTION OF ADMINISTRATIVE REMEDIES IS APPLICABLE IN THIS CASE; AND III WHETHER OR NOT THE APPELLEE MARIANO MALONES WHO WAS THEN THE MUNICIPAL MAYOR OF MAASIN, ILOILO HAS COMMITTED GRAVE ABUSE OF DISCRETION.25 After a close scrutiny of the circumstances that gave rise to this case, the Court determines that there is no need for petitioners to exhaust administrative remedies before resorting to the courts. The findings of both the RTC and the Court of Appeals that petitioners Petition for Prohibition/Mandamus in Civil Case No. 25843 was premature is anchored on Section 187 of the Local Government Code, which reads: Section 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings. The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. (Emphasis ours.) It is true that the general rule is that before a party is allowed to seek the intervention of the court, he or she should have availed himself or herself of all the means of administrative processes afforded him or her. Hence, if resort to a remedy within the administrative machinery can still be made by giving the administrative officer concerned every opportunity to decide on a matter that comes within his or her jurisdiction, then such remedy should be exhausted first before the court s judicial power can be sought. The premature invocation of the intervention of the court is fatal to one s cause of action. The doctrine of exhaustion of

administrative remedies is based on practical and legal reasons. The availment of administrative remedy entails lesser expenses and provides for a speedier disposition of controversies. Furthermore, the courts of justice, for reasons of comity and convenience, will shy away from a dispute until the system of administrative redress has been completed and complied with, so as to give the administrative agency concerned every opportunity to correct its error and dispose of the case. However, there are several exceptions to this rule. 26 The rule on the exhaustion of administrative remedies is intended to preclude a court from arrogating unto itself the authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence. Thus, a case where the issue raised is a purely legal question, well within the competence; and the jurisdiction of the court and not the 27 administrative agency, would clearly constitute an exception. Resolving questions of law, which involve the interpretation and application of laws, constitutes essentially an exercise of judicial power that is exclusively allocated to the Supreme Court and such lower courts the Legislature may establish. 28 In this case, the parties are not disputing any factual matter on which they still need to present evidence. The sole issue petitioners raised before the RTC in Civil Case No. 25843 was whether Municipal Ordinance No. 98-01 was valid and enforceable despite the absence, prior to its enactment, of a public hearing held in accordance with Article 276 of the Implementing Rules and Regulations of the Local Government Code. This is undoubtedly a pure question of law, within the competence and jurisdiction of the RTC to resolve. Paragraph 2(a) of Section 5, Article VIII of the Constitution, expressly establishes the appellate jurisdiction of this Court, and impliedly recognizes the original jurisdiction of lower courts over cases involving the constitutionality or validity of an ordinance: Section 5. The Supreme Court shall have the following powers: xxxx (2) Review, revise, reverse, modify or affirm on appeal or certiorari, as the law or the Rules of Court may provide, final judgments and orders of lower courts in: (a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. (Emphases ours.) In J.M. Tuason and Co., Inc. v. Court of Appeals,29 Ynot v. Intermediate Appellate Court,30 and Commissioner of Internal Revenue v. Santos,31 the Court has affirmed the jurisdiction of the RTC to resolve questions of constitutionality and validity of laws (deemed to include local ordinances) in the first instance, without deciding questions which pertain to legislative policy. Although not raised in the Petition at bar, the Court is compelled to discuss another procedural issue, specifically, the declaration by the RTC, and affirmed by the Court of Appeals, that petitioners availed themselves of the wrong remedy in filing a Petition for Prohibition/Mandamus before the RTC. Sections 2 and 3, Rule 65 of the Rules of the Rules of Court lay down under what circumstances petitions for prohibition and mandamus may be filed, to wit: SEC. 2. Petition for prohibition. When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may require. SEC. 3. Petition for mandamus. When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent. (Emphases ours.)

In a petition for prohibition against any tribunal, corporation, board, or person -- whether exercising judicial, quasi-judicial, or ministerial functions -- who has acted without or in excess of jurisdiction or with grave abuse of discretion, the petitioner prays that judgment be rendered, commanding the respondent to desist from further proceeding in the action or matter specified in the petition.32 On the other hand, the remedy of mandamus lies to compel performance of a ministerial duty.33 The petitioner for such a writ should have a well-defined, clear and certain legal right to the performance of the act, and it must be the clear and imperative 34 duty of respondent to do the act required to be done. In this case, petitioners primary intention is to prevent respondent from implementing Municipal Ordinance No. 98-01, i.e., by collecting the goodwill fees from petitioners and barring them from occupying the stalls at the municipal public market. Obviously, the writ petitioners seek is more in the nature of prohibition (commanding desistance), rather than mandamus (compelling performance). For a writ of prohibition, the requisites are: (1) the impugned act must be that of a "tribunal, corporation, board, officer, or person, whether exercising judicial, quasi-judicial or ministerial functions"; and (2) there is no plain, speedy, and adequate remedy in the ordinary course of law."35 The exercise of judicial function consists of the power to determine what the law is and what the legal rights of the parties are, and then to adjudicate upon the rights of the parties. The term quasi-judicial function applies to the action and discretion of public administrative officers or bodies that are required to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from them as a basis for their official action and to exercise discretion of a judicial nature. In implementing Municipal Ordinance No. 98-01, respondent is not called upon to adjudicate the rights of contending parties or to exercise, in any manner, discretion of a judicial nature. A ministerial function is one that an officer or tribunal performs in the context of a given set of facts, in a prescribed manner and without regard for the exercise of his or its own judgment, upon the propriety or impropriety of the act done.36 The Court holds that respondent herein is performing a ministerial function. It bears to emphasize that Municipal Ordinance No. 98-01 enjoys the presumption of validity, unless declared otherwise. Respondent has the duty to carry out the provisions of the ordinance under Section 444 of the Local Government Code: Section 444. The Chief Executive: Powers, Duties, Functions and Compensation. (a) The Municipal mayor, as the chief executive of the municipal government, shall exercise such powers and perform such duties and functions as provided by this Code and other laws. (b) For efficient, effective and economical governance the purpose of which is the general welfare of the municipality and its inhabitants pursuant to Section 16 of this Code, the Municipal mayor shall: xxxx (2) Enforce all laws and ordinances relative to the governance of the municipality and the exercise of its corporate powers provided for under Section 22 of this Code, implement all approved policies, programs, projects, services and activities of the municipality x x x. xxxx (3) Initiate and maximize the generation of resources and revenues, and apply the same to the implementation of development plans, program objectives sand priorities as provided for under Section 18 of this Code, particularly those resources and revenues programmed for agro-industrial development and country-wide growth and progress, and relative thereto, shall: xxxx (iii) Ensure that all taxes and other revenues of the municipality are collected, and that municipal funds are applied in accordance with law or ordinance to the payment of expenses and settlement of obligations of the municipality; x x x. (Emphasis ours.)

Municipal Ordinance No. 98-01 imposes increased rentals and goodwill fees on stall holders at the renovated municipal public market, leaving respondent, or the municipal treasurer acting as his alter ego, no discretion on whether or not to collect the said rentals and fees from the stall holders, or whether or to collect the same in the amounts fixed by the ordinance. The Court further notes that respondent already deemed petitioners stalls at the municipal public market vacated. Without such stalls, petitioners would be unable to conduct their businesses, thus, depriving them of their means of livelihood. It is imperative on petitioners part to have the implementation of Municipal Ordinance No. 98-01 by respondent stopped the soonest. As this Court has established in its previous discussion, there is no more need for petitioners to exhaust administrative remedies, considering that the fundamental issue between them and respondent is one of law, over which the courts have competence and jurisdiction. There is no other plain, speedy, and adequate remedy for petitioners in the ordinary course of law, except to seek from the courts the issuance of a writ of prohibition commanding respondent to desist from continuing to implement what is allegedly an invalid ordinance.1 a vv p h i 1 This brings the Court to the substantive issue in this Petition on the validity of Municipal Ordinance N. 98-01. Respondent maintains that the imposition of goodwill fees upon stall holders at the municipal public market is not a revenue measure that requires a prior public hearing. Rentals and other consideration for occupancy of the stalls at the municipal public market are not matters of taxation. Respondent s argument is specious. Article 219 of the Local Government Code provides that a local government unit exercising its power to impose taxes, fees and charges should comply with the requirements set in Rule XXX, entitled "Local Government Taxation": Article 219. Power to Create Sources of Revenue. Consistent with the basic policy of local autonomy, each LGU shall exercise its power to create its own sources of revenue and to levy taxes, fees, or charges, subject to the provisions of this Rule. Such taxes, fees, or charges shall accrue exclusively to the LGU. (Emphasis ours.) Article 221(g) of the Local Government Code of 1991 defines "charges" as: Article 221. Definition of Terms. xxxx (g) Charges refer to pecuniary liability, as rents or fees against persons or property. (Emphasis ours.) Evidently, the revenues of a local government unit do not consist of taxes alone, but also other fees and charges. And rentals and goodwill fees, imposed by Municipal Ordinance No. 98-01 for the occupancy of the stalls at the municipal public market, fall under the definition of charges. For the valid enactment of ordinances imposing charges, certain legal requisites must be met. Section 186 of the Local Government Code identifies such requisites as follows: Section 186. Power to Levy Other Taxes, Fees or Charges. Local government units may exercise the power to levy taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxed under the provisions of the National Internal Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national policy: Provided, further, That the ordinance levying such taxes, fees or charges shall not be enacted without any prior public hearing conducted for the purpose. (Emphasis ours.) Section 277 of the Implementing Rules and Regulations of the Local Government Code establishes in detail the procedure for the enactment of such an ordinance, relevant provisions of which are reproduced below: Section 277. Publication of Tax Ordinance and Revenue Measures. x x x. xxxx

(b) The conduct of public hearings shall be governed by the following procedure: xxxx (2) In addition to the requirement for publication or posting, the sanggunian concerned shall cause the sending of written notices of the proposed ordinance, enclosing a copy thereof, to the interested or affected parties operating or doing business within the territorial jurisdiction of the LGU concerned. (3) The notice or notices shall specify the date or dates and venue of the public hearing or hearings. The initial public hearing shall be held not earlier than ten (10) days from the sending out of the notice or notices, or the last day of publication, or date of posting thereof, whichever is later; xxxx (c) No tax ordinance or revenue measure shall be enacted or approved in the absence of a public hearing duly conducted in the manner provided under this Article. (Emphases ours.) It is categorical, therefore, that a public hearing be held prior to the enactment of an ordinance levying taxes, fees, or charges; and that such public hearing be conducted as provided under Section 277 of the Implementing Rules and Regulations of the Local Government Code. There is no dispute herein that the notices sent to petitioners and other stall holders at the municipal public market were sent out on 6 August 1998, informing them of the supposed "public hearing" to be held on 11 August 1998. Even assuming that petitioners received their notice also on 6 August 1998, the "public hearing" was already scheduled, and actually conducted, only five days later, on 11 August 1998. This contravenes Article 277(b)(3) of the Implementing Rules and Regulations of the Local Government Code which requires that the public hearing be held no less than ten days from the time the notices were sent out, posted, or published. When the Sangguniang Bayan of Maasin sought to correct this procedural defect through Resolution No. 68, series of 1998, dated 18 September 1998, respondent vetoed the said resolution. Although the Sangguniang Bayan may have had the power to override respondent s veto,37 it no longer did so. The defect in the enactment of Municipal Ordinance No. 98 was not cured when another public hearing was held on 22 January 1999, after the questioned ordinance was passed by the Sangguniang Bayan and approved by respondent on 17 August 1998. Section 186 of the Local Government Code prescribes that the public hearing be held prior to the enactment by a local government unit of an ordinance levying taxes, fees, and charges. Since no public hearing had been duly conducted prior to the enactment of Municipal Ordinance No. 98-01, said ordinance is void and cannot be given any effect. Consequently, a void and ineffective ordinance could not have conferred upon respondent the jurisdiction to order petitioners stalls at the municipal public market vacant. IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision dated 28 November 2006 of the Court of Appeals in CA-G.R. SP No. 86182 is REVERSED and SET ASIDE. Municipal Ordinance No. 98-01 is DECLARED void and ineffective, and a writ of prohibition is ISSUED commanding the Mayor of the Municipality of Maasin, Iloilo, to permanently desist from enforcing the said ordinance. Petitioners are also DECLARED as lawful occupants of the market stalls they occupied at the time they filed the Petition for Mandamus/Prohibition docketed as Civil Case No. 25843. In the event that they were deprived of possession of the said market stalls, petitioners are entitled to recover possession of these stalls. SO ORDERED. G.R. No. 166134 June 29, 2010

ANGELES CITY, Petitioner, vs. ANGELES CITY ELECTRIC CORPORATION and REGIONAL TRIAL COURT BRANCH 57, ANGELES CITY,Respondents. DECISION

DEL CASTILLO, J.: The prohibition on the issuance of a writ of injunction to enjoin the collection of taxes applies only to national internal revenue taxes, and not to local taxes. This Petition1 for Certiorari under Rule 65 of the Rules of Court seeks to set aside the Writ of Preliminary Injunction issued by the Regional Trial Court (RTC) of Angeles City, Branch 57, in Civil Case No. 11401, enjoining Angeles City and its City Treasurer from levying, seizing, disposing and selling at public auction the properties owned by Angeles Electric Corporation (AEC). Factual Antecedents On June 18, 1964, AEC was granted a legislative franchise under Republic Act No. (RA) 40792 to construct, maintain and operate an electric light, heat, and power system for the purpose of generating and distributing electric light, heat and power for sale in Angeles City, Pampanga. Pursuant to Section 3-A thereof,3 AEC s payment of franchise tax for gross earnings from electric current sold was in lieu of all taxes, fees and assessments. On September 11, 1974, Presidential Decree No. (PD) 551 reduced the franchise tax of electric franchise holders. Section 1 of PD 551 provided that: SECTION 1. Any provision of law or local ordinance to the contrary notwithstanding, the franchise tax payable by all grantees of franchises to generate, distribute and sell electric current for light, heat and power shall be two percent (2%) of their gross receipts received from the sale of electric current and from transactions incident to the generation, distribution and sale of electric current. Such franchise tax shall be payable to the Commissioner of Internal Revenue or his duly authorized representative on or before the twentieth day of the month following the end of each calendar quarter or month as may be provided in the respective franchise or pertinent municipal regulation and shall, any provision of the Local Tax Code or any other law to the contrary notwithstanding, be in lieu of all taxes and assessments of whatever nature imposed by any national or local authority on earnings, receipts, income and privilege of generation, distribution and sale of electric current. On January 1, 1992, RA 7160 or the Local Government Code (LGC) of 1991 was passed into law, conferring upon provinces and cities the power, among others, to impose tax on businesses enjoying franchise.4 In accordance with the LGC, the Sangguniang Panlungsod of Angeles City enacted on December 23, 1993 Tax Ordinance No. 33, S-93, otherwise known as the Revised Revenue Code of Angeles City (RRCAC). On February 7, 1994, a petition seeking the reduction of the tax rates and a review of the provisions of the RRCAC was filed with the Sangguniang Panlungsod by Metro Angeles Chamber of Commerce and Industry Inc. (MACCI) of which AEC is a member. There being no action taken by the Sangguniang Panlungsod on the matter, MACCI elevated the petition5 to the Department of Finance, which referred the same to the Bureau of Local Government Finance (BLGF). In the petition, MACCI alleged that the RRCAC is oppressive, excessive, unjust and confiscatory; that it was published only once, simultaneously on January 22, 1994; and that no 6 public hearings were conducted prior to its enactment. Acting on the petition, the BLGF issued a First Indorsement to the City Treasurer of Angeles City, instructing the latter to make representations with the Sangguniang Panlungsod for the appropriate amendment of the RRCAC in order to ensure compliance with the provisions of the LGC, and to make a report on the action taken within five days. Thereafter, starting July 1995, AEC has been paying the local franchise tax to the Office of the City Treasurer on a quarterly basis, in addition to the national franchise tax it pays every quarter to the Bureau of Internal Revenue (BIR). Proceedings before the City Treasurer On January 22, 2004, the City Treasurer issued a Notice of Assessment7 to AEC for payment of business tax, license fee and other charges for the period 1993 to 2004 in the total amount of P94,861,194.10. Within the period prescribed by law, AEC protested the assessment claiming that: (a) pursuant to RA 4079, it is exempt from paying local business tax; (b) since it is already paying franchise tax on business, the payment of business tax would result in double taxation;

(c) the period to assess had prescribed because under the LGC, taxes and fees can only be assessed and collected within five (5) years from the date they become due; and (d) the assessment and collection of taxes under the RRCAC cannot be made retroactive to 1993 or prior to its effectivity.8 On February 17, 2004, the City Treasurer denied the protest for lack of merit and requested AEC to settle its tax liabilities. Proceedings before the RTC Aggrieved, AEC appealed the denial of its protest to the RTC of Angeles City via a Petition for Declaratory Relief,10 docketed as Civil Case No. 11401. On April 5, 2004, the City Treasurer levied on the real properties of AEC.11 A Notice of Auction Sale12 was published and posted announcing that a public auction of the levied properties of AEC would be held on May 7, 2004. This prompted AEC to file with the RTC, where the petition for declaratory relief was pending, an Urgent Motion for Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction13 to enjoin Angeles City and its City Treasurer from levying, annotating the levy, seizing, confiscating, garnishing, selling and disposing at public auction the properties of AEC. Meanwhile, in response to the petition for declaratory relief filed by AEC, Angeles City and its City Treasurer filed an Answer with Counterclaim14 to which AEC filed a Reply.15 After due notice and hearing, the RTC issued a Temporary Restraining Order (TRO)16 on May 4, 2004, followed by an Order17 dated May 24, 2004 granting the issuance of a Writ of Preliminary Injunction, conditioned upon the filing of a bond in the amount of P10,000,000.00. Upon AEC s posting of the required bond, the RTC issued a Writ of Preliminary Injunction on May 28, 2004,18 which was amended on May 31, 2004 due to some clerical errors.19 On August 5, 2004, Angeles City and its City Treasurer filed a "Motion for Dissolution of Preliminary Injunction and Motion for Reconsideration of the Order dated May 24, 2004,"20 which was opposed by AEC.21 Finding no compelling reason to disturb and reconsider its previous findings, the RTC denied the joint motion on October 14, 2004.22 Issue Being a special civil action for certiorari, the issue in the instant case is limited to the determination of whether the RTC gravely abused its discretion in issuing the writ of preliminary injunction enjoining Angeles City and its City Treasurer from levying, selling, and disposing the properties of AEC. All other matters pertaining to the validity of the tax assessment and AEC s tax exemption must therefore be left for the determination of the RTC where the main case is pending decision. Petitioner s Arguments Petitioner s main argument is that the collection of taxes cannot be enjoined by the RTC, citing Valley Trading Co., Inc. v. Court of 23 First Instance of Isabela, Branch II, wherein the lower court s denial of a motion for the issuance of a writ of preliminary injunction to enjoin the collection of a local tax was upheld. Petitioner further reasons that since the levy and auction of the properties of a delinquent taxpayer are proper and lawful acts specifically allowed by the LGC, these cannot be the subject of an injunctive writ. Petitioner likewise insists that AEC must first pay the tax before it can protest the assessment. Finally, petitioner contends that the tax exemption claimed by AEC has no legal basis because RA 4079 has been expressly repealed by the LGC. Private respondent s Arguments Private respondent AEC on the other hand asserts that there was no grave abuse of discretion on the part of the RTC in issuing the writ of preliminary injunction because it was issued after due notice and hearing, and was necessary to prevent the petition from becoming moot. In addition, AEC claims that the issuance of the writ of injunction was proper since the tax assessment issued by the 24 City Treasurer is not yet final, having been seasonably appealed pursuant to Section 195 of the LGC. AEC likewise points out that following the case of Pantoja v. David,25 proceedings to invalidate a warrant of distraint and levy to restrain the collection of taxes do not violate the prohibition against injunction to restrain the collection of taxes because the proceedings are directed at the right of
9

the City Treasurer to collect the tax by distraint or levy. As to its tax liability, AEC maintains that it is exempt from paying local business tax. In any case, AEC counters that the issue of whether it is liable to pay the assessed local business tax is a factual issue that should be determined by the RTC and not by the Supreme Court via a petition for certiorari under Rule 65 of the Rules of Court. Our Ruling We find the petition bereft of merit. The LGC does not specifically prohibit an injunction enjoining the collection of taxes A principle deeply embedded in our jurisprudence is that taxes being the lifeblood of the government should be collected promptly,26 without unnecessary hindrance27 or delay.28 In line with this principle, the National Internal Revenue Code of 1997 (NIRC) expressly provides that no court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by the code.29 An exception to this rule obtains only when in the opinion of the Court of Tax Appeals (CTA) the collection thereof may jeopardize the interest of the government and/or the taxpayer.30 The situation, however, is different in the case of the collection of local taxes as there is no express provision in the LGC prohibiting courts from issuing an injunction to restrain local governments from collecting taxes. Thus, in the case of Valley Trading Co., Inc. v. Court of First Instance of Isabela, Branch II, cited by the petitioner, we ruled that: Unlike the National Internal Revenue Code, the Local Tax Code31 does not contain any specific provision prohibiting courts from enjoining the collection of local taxes. Such statutory lapse or intent, however it may be viewed, may have allowed preliminary injunction where local taxes are involved but cannot negate the procedural rules and requirements under Rule 58.32 In light of the foregoing, petitioner s reliance on the above-cited case to support its view that the collection of taxes cannot be enjoined is misplaced. The lower court s denial of the motion for the issuance of a writ of preliminary injunction to enjoin the collection of the local tax was upheld in that case, not because courts are prohibited from granting such injunction, but because the circumstances required for the issuance of writ of injunction were not present. Nevertheless, it must be emphasized that although there is no express prohibition in the LGC, injunctions enjoining the collection of local taxes are frowned upon. Courts therefore should exercise extreme caution in issuing such injunctions. No grave abuse of discretion was committed by the RTC Section 3, Rule 58, of the Rules of Court lays down the requirements for the issuance of a writ of preliminary injunction, viz: (a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the acts complained of, or in the performance of an act or acts, either for a limited period or perpetually; (b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or (c) That a party, court, or agency or a person is doing, threatening, or attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual. Two requisites must exist to warrant the issuance of a writ of preliminary injunction, namely: (1) the existence of a clear and unmistakable right that must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious damage.33 In issuing the injunction, the RTC ratiocinated that: It is very evident on record that petitioner34 resorted and filed an urgent motion for issuance of a temporary restraining order and preliminary injunction to stop the scheduled auction sale only when a warrant of levy was issued and published in the newspaper setting the auction sale of petitioner s property by the City Treasurer, merely few weeks after the petition for declaratory relief has been filed, because if the respondent will not be restrained, it will render this petition moot and academic. To the mind of the Court,

since there is no other plain, speedy and adequate remedy available to the petitioner in the ordinary course of law except this application for a temporary restraining order and/or writ of preliminary injunction to stop the auction sale and/or to enjoin and/or restrain respondents from levying, annotating the levy, seizing, confiscating, garnishing, selling and disposing at public auction the properties of petitioner, or otherwise exercising other administrative remedies against the petitioner and its properties, this alone justifies the move of the petitioner in seeking the injunctive reliefs sought for. Petitioner in its petition is questioning the assessment or the ruling of the City Treasurer on the business tax and fees, and not the local ordinance concerned. This being the case, the Court opines that notice is not required to the Solicitor General since what is involved is just a violation of a private right involving the right of ownership and possession of petitioner s properties. Petitioner, therefore, need not comply with Section 4, Rule 63 requiring such notice to the Office of the Solicitor General. The Court is fully aware of the Supreme Court pronouncement that injunction is not proper to restrain the collection of taxes. The issue here as of the moment is the restraining of the respondent from pursuing its auction sale of the petitioner s properties. The right of ownership and possession of the petitioner over the properties subject of the auction sale is at stake. Respondents assert that not one of the witnesses presented by the petitioner have proven what kind of right has been violated by the respondent, but merely mentioned of an injury which is only a scenario based on speculation because of petitioner s claim that electric power may be disrupted. Engr. Abordo s testimony reveals and even his Affidavit Exhibit "S" showed that if the auction sale will push thru, petitioner will not only lose control and operation of its facility, but its employees will also be denied access to equipments vital to petitioner s operations, and since only the petitioner has the capability to operate Petersville sub station, there will be a massive power failure or blackout which will adversely affect business and economy, if not lives and properties in Angeles City and surrounding communities. Petitioner, thru its witnesses, in the hearing of the temporary restraining order, presented sufficient and convincing evidence proving irreparable damages and injury which were already elaborated in the temporary restraining order although the same may be realized only if the auction sale will proceed. And unless prevented, restrained, and enjoined, grave and irreparable damage will be suffered not only by the petitioner but all its electric consumers in Angeles, Clark, Dau and Bacolor, Pampanga. The purpose of injunction is to prevent injury and damage from being incurred, otherwise, it will render any judgment in this case ineffectual. "As an extraordinary remedy, injunction is calculated to preserve or maintain the status quo of things and is generally availed of to prevent actual or threatened acts, until the merits of the case can be heard" (Cagayan de Oro City Landless Res. Assn. Inc. vs. CA, 254 SCRA 220) It appearing that the two essential requisites of an injunction have been satisfied, as there exists a right on the part of the petitioner to be protected, its right[s] of ownership and possession of the properties subject of the auction sale, and that the acts (conducting an auction sale) against which the injunction is to be directed, are violative of the said rights of the petitioner, the Court has no other recourse but to grant the prayer for the issuance of a writ of preliminary injunction considering that if the respondent will not be restrained from doing the acts complained of, it will preempt the Court from properly adjudicating on the merits the various issues between the parties, and will render moot and academic the proceedings before this court.35 As a rule, the issuance of a preliminary injunction rests entirely within the discretion of the court taking cognizance of the case and will not be interfered with, except where there is grave abuse of discretion committed by the court.36 For grave abuse of discretion to prosper as a ground for certiorari, it must be demonstrated that the lower court or tribunal has exercised its power in an arbitrary and despotic manner, by reason of passion or personal hostility, and it must be patent and gross as would amount to an evasion or to a unilateral refusal to perform the duty enjoined or to act in contemplation of law.37 In other words, mere abuse of discretion is not enough.381avvph!1 Guided by the foregoing, we find no grave abuse of discretion on the part of the RTC in issuing the writ of injunction. Petitioner, who 39 has the burden to prove grave abuse of discretion, failed to show that the RTC acted arbitrarily and capriciously in granting the injunction. Neither was petitioner able to prove that the injunction was issued without any factual or legal justification. In assailing the injunction, petitioner primarily relied on the prohibition on the issuance of a writ of injunction to restrain the collection of taxes. But as we have already said, there is no such prohibition in the case of local taxes. Records also show that before issuing the injunction, the RTC conducted a hearing where both parties were given the opportunity to present their arguments. During the

hearing, AEC was able to show that it had a clear and unmistakable legal right over the properties to be levied and that it would sustain serious damage if these properties, which are vital to its operations, would be sold at public auction. As we see it then, the writ of injunction was properly issued. A final note. While we are mindful that the damage to a taxpayer s property rights generally takes a back seat to the paramount need of the State for funds to sustain governmental functions,40 this rule finds no application in the instant case where the disputed tax assessment is not yet due and demandable. Considering that AEC was able to appeal the denial of its protest within the period prescribed under Section 195 of the LGC, the collection of business taxes41 through levy at this time is, to our mind, hasty, if not premature.42 The issues of tax exemption, double taxation, prescription and the alleged retroactive application of the RRCAC, raised in the protest of AEC now pending with the RTC, must first be resolved before the properties of AEC can be levied. In the meantime, AEC s rights of ownership and possession must be respected. WHEREFORE, the petition is hereby DISMISSED. SO ORDERED.

JUDICIAL REVIEW

G.R. No. 127371

April 25, 2002

PHILIPPINE SINTER CORPORATION and PHIVIDEC INDUSTRIAL AUTHORITY, petitioners, vs. CAGAYAN ELECTRIC POWER and LIGHT CO., INC., respondent. SANDOVAL-GUTIERREZ, J.: Before this Court is a petition for review questioning the Decision of the Court of Appeals dated July 23, 1996 in CA-G.R. SP No. 36943, "Cagayan Electric Power and Light Co., Inc. vs. Hon. Cesar M. Ybaez, et al." which reversed the decision of the Regional Trial Court of Cagayan de Oro City, Branch 17, in Civil Case No. 94-186 for injunction. The antecedents are: On January 21, 1987, President Corazon C. Aquino and her Cabinet approved a Cabinet Reform Policy for the power sector and issued a Cabinet Memorandum, Item No. 2 of which provides: "Continue direct connection for industries authorized under the BOI-NPC Memorandum of Understanding of 12 January 1981, until such time as the appropriate regulatory board determines that direct connection of industry to NPC is no longer necessary in the franchise area of the specific utility or cooperative. Determination shall be based in the utility or cooperatives meeting the standards of financial and technical capability with satisfactory guarantees of non-prejudice to industry to be set in consultation with NPC and relevant government agencies and reviewed periodically by the regulatory board." (emphasis ours) Pursuant to such Cabinet Memorandum, respondent Cagayan Electric Power and Light, Co. (CEPALCO), grantee of a legislative 3 franchise to distribute electric power to the municipalities of Villanueva, Jasaan and Tagoloan, and the city of Cagayan de Oro, all of the province of Misamis Oriental, filed with the Energy Regulatory Board (ERB) a petition entitled "In Re: Petition for Implementation
1 2

of Cabinet Policy Reforms in the Power Sector," docketed as ERB Case No. 89-430. The petition sought the "discontinuation of all 4 existing direct supply of power by the National Power Corporation (NPC, now NAPOCOR) within CEPALCO's franchise area." The ERB issued a notice of public hearing which was published in the newspapers and posted in the affected areas. It likewise furnished NAPOCOR and the Board of Investments (BOI) copies of the petition and directed them to submit their comments. After hearing, the ERB rendered a decision5 granting the petition, the dispositive portion reads: "WHEREFORE, in view of the foregoing premises, where the petitioner has been proven to be capable of distributing power to its industrial consumers and having passed the secondary considerations with a passing mark of 85%, judgment is hereby rendered granting relief prayed for. Accordingly, it is hereby declared that all direct connection of industries to NPC within the franchise area of CEPALCO is no longer necessary. Therefore, all existing NPC (now NAPOCOR) direct supply of power to industrial consumers within the franchise area of CEPALCO is hereby ordered to be discontinued. x x x."6 NAPOCOR filed a motion for reconsideration, which the ERB denied. Thereafter, NAPOCOR filed a petition for review with the Court of Appeals. On October 9, 1992, the Court of Appeals dismissed the petition, holding that the motion for reconsideration filed by NAPOCOR with the ERB was out of time and therefore, the assailed decision became final and executory and could no longer be subject of a petition for review.1wphi1.nt On a petition for review on certiorari,7 this Court affirmed the Resolution of the Court of Appeals. Judgment was entered on September 22, 1993, thus rendering final the decision of the ERB.8 To implement the decision in ERB Case No. 89-430, CEPALCO wrote Philippine Sinter Corporation (PSC), petitioner, and advised the latter of its desire "to have the power supply of PSC, directly taken from NPC (NAPOCOR), disconnected, cut and transferred" to CEPALCO.9 PSC is an entity operating its business within the PHIVIDEC10 Industrial Estate (located in the Municipalities of Tagoloan and Villanueva, Misamis Oriental, covered by CEPALCO's franchise). The Estate is managed and operated by the PHIVIDEC Industrial Authority (PIA).11 PSC refused CEPALCO's request, citing its contract for power supply with NAPOCOR effective until July 26, 1996. To restrain the execution of the ERB Decision, PSC and PIA filed a complaint for injunction against CEPALCO with the Regional Trial Court of Cagayan de Oro City, Branch 17, docketed as Civil Case No. 94-186. They alleged,inter alia, that there exists no legal basis to cut-off PSC's power supply with NAPOCOR and substitute the latter with CEPALCO since: (a) there is a subsisting contract between PSC and NAPOCOR; (b) the ERB decision is not binding on PSC since it was not impleaded as a party to the case; and (c) PSC is operating within the PHIVIDEC Industrial Estate, a franchise area of PIA, not CEPALCO, pursuant to Sec. 4 (1) of P.D. 538. Moreover, the execution of the ERB decision would cause PSC a 2% increase in its electrical bills. On April 11, 1994, the trial court rendered judgment12 in favor of PSC and PIA, thus: "WHEREFORE, premises considered, judgment is hereby rendered, by preponderance of evidence, in favor of plaintiffs PSC and PIA and against defendant CEPALCO and the petition for injunction should be, as it is hereby, GRANTED. Accordingly, the defendant CEPALCO, its agents and/or representative, and all those acting in its behalf, are hereby ordered to refrain, cease and desist from cutting and disconnecting and/or causing to be cut and disconnected the direct electric power supply of the plaintiff PSC from the NPC and from transferring the same to defendant CEPALCO, now and until July 26, 1996, when the contract between plaintiff PSC and the NPC for direct power supply shall have expired. The counter-claim filed by defendant CEPALCO is DISMISSED. No pronouncement as to costs. SO ORDERED."
13

CEPALCO filed a motion for reconsideration but was denied by the trial court in its order dated December 13, 1994. Aggrieved, 14 CEPALCO appealed to the Court of Appeals. On July 23, 1996, the Court of Appeals rendered its decision, the dispositive portion of which reads: "WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby GRANTED. The assailed Decision dated April 11, 1994 and the Order dated December 13, 1994 are SET ASIDE. The writ of preliminary injunction earlier issued is DISSOLVED. No pronouncement as to costs. SO ORDERED."15

PSC and PIA filed a motion for reconsideration, which was denied in a Resolution dated December 2, 1996. Hence the instant petition. Petitioners submit the following issues for our resolution: I. THE DECISION OF THE ERB IS CONTRARY TO THE CABINET POLICY REFORM. II. THE ERB DECISION INVOLVED ADJUDICATION OF RIGHTS TO THE PREJUDICE OF PETITIONERS PIA AND PSC. III. THE CABINET POLICY REFORM CANNOT AMEND THE CHARTER OF PIA, PD 538, AS AMENDED. IV. PETITIONERS PIA AND PSC WERE NOT NOTIFIED BY CEPALCO OF ITS PETITION WITH THE ERB. V. CIVIL CASE NO. 91-383 ENTITLED PHIVIDEC INDUSTRIAL AUTHORITY VS. CEPALCO BEFORE BRANCH 17, REGIONAL TRIAL COURT OF CAGAYAN DE ORO CITY REINFORCES THE ISSUE THAT THE ERB DECISION MUST NECESSARILY BE ENJOINED FROM BEING ENFORCED AGAINST PIA AND PSC. VI. THE ERB DECISION IS NOT FINAL AND EXECUTORY.17 Petitioners contend that the ERB decision is contrary to the Cabinet Policy Reform since PIA, one of the relevant government agencies referred to in the Cabinet Memorandum, was not consulted, much less notified by the ERB before it rendered its decision; that since PIA is not a party in ERB Case No. 89-430, then the decision therein does not bind it; that P.D. 538 (the charter of PIA) excluded the municipalities of Tagoloan and Villanueva, Misamis Oriental, from the franchise area of CEPALCO and transferred the same to PIA; and that the ERB decision is not final and executory since the same is subject to periodic review under the Cabinet Memorandum. For its part, respondent CEPALCO maintains that the ERB decision shows that it has met the requirements of the Cabinet Policy Reforms on financial and technical capability of the utility or cooperative. Anent petitioners' argument that the ERB decision does not bind them for lack of personal notice, respondent explains that such notice is not required since the proceedings in the ERB are in rem. Besides, the only issue in the ERB case is whether or not CEPALCO has met the standards mandated by the Cabinet Policy Reforms. Lastly, respondent contends that what is subject to periodic review under the Cabinet Memorandum is only the capability standards. This is not the first time that a controversy arose involving the franchise of CEPALCO vis--vis the authority of NAPOCOR to supply power directly. In National Power Corporation vs. Court of Appeals,18 this Court held that CEPALCO is the lawful provider of the increased power supply to the Philippine Packing Corporation under PD 4019 promulgated on November 7, 1972. The Court ruled that distribution of electric power, whether an increase in existing voltage or a new and separate electric service, shall be undertaken by cooperatives, private utilities (such as CEPALCO), local governments and other entities duly authorized subject to state regulation. Subsequently, this Court, in Cagayan Electric Power and Light Company, Inc. vs. National Power Corporation, sustained the decision of the trial court ordering NAPOCOR to permanently desist from continuing the direct supply, sale and delivery of electricity to Ferrochrome Philippines, Inc., an industry operating its business within the PHIVIDEC Industrial Estate, Tagoloan, Misamis Oriental, because it violates the right of CEPALCO under its legislative franchise. The Court stressed that the statutory authority (PD 395) given to NAPOCOR with respect to sale of energy in bulk directly to BOI-registered enterprises should always be subordinate to the "totalelectrification-of-the-entire-country-on-an-area-coverage-basis policy" enunciated in P.D. No. 40. In National Power Corporation vs. Court of Appeals,21 this Court struck down as irregular the determination by the NAPOCOR on whether or not it should supply power directly to the PIA or the industries within the PHIVIDEC Industrial Estate-Misamis Oriental (PIE-MO); and held that such authority pertains exclusively to the ERB which was transferred to the Department of Energy (DOE) pursuant to Republic Act No. 7638. Consequently, the Court remanded the case to the DOE to determine whether it is CEPALCO or the NAPOCOR, through the PIA, which should supply electric power to the industries in the PIE-MO. In the present case, the only issue for our determination is whether or not injunction lies against the final and executory judgment of the ERB.
20

16

We rule in the negative. In Bachrach Corporation vs. Court of Appeals, this Court, through Mr. Justice Jose C. Vitug, pertinently held: "The rule indeed is, and has almost invariably been, that after a judgment has gained finality, it becomes the ministerial duty of the court to order its execution. No court, perforce, should interfere by injunction or otherwise to restrain such execution. The rule, however, concededly admits of exceptions; hence, when facts and circumstances later transpire that would render execution inequitable or unjust, the interested party may ask a competent court to stay its execution or prevent its enforcement. So, also, a change in the situation of the parties can warrant an injunctive relief." Clearly, an injunction to stay a final and executory decision is unavailing except only after a showing that facts and circumstances exist which would render execution unjust or inequitable, or that a change in the situation of the parties occurred. Here, no such exception exists as shown by the facts earlier narrated. To disturb the final and executory decision of the ERB in an injunction suit is to brazenly disregard the rule on finality of judgments. InCamarines Norte Electric Cooperative, Inc. vs. Torres,23 we underscored the importance of this principle, thus: "We have stated before, and reiterate it now, that administrative decisions must end sometime, as fully as public policy demands that finality be written on judicial controversies. Public interest requires that proceedings already terminated should not be altered at every step, for the rule of non quieta movereprescribes that what had already been terminated should not be disturbed. A disregard of this principle does not commend itself to sound public policy." Corollarily, Section 10 of Executive Order No. 172 (the law creating the ERB) provides that a review of its decisions or orders is lodged in the Supreme Court.24 Settled is the rule that where the law provides for an appeal from the decisions of administrative bodies to the Supreme Court or the Court of Appeals, it means that such bodies are co-equal with the Regional Trial Courts in terms of rank and stature, and logically, beyond the control of the latter.25 Hence, the trial court, being co-equal with the ERB, cannot interfere with the decision of the latter. It bears stressing that this doctrine of non-interference of trial courts with co-equal administrative bodies is intended to ensure judicial stability in the administration of justice whereby the judgment of a court of competent jurisdiction may not be opened, modified or vacated by any court of concurrent jurisdiction.26 Granting that the ERB decision has not attained finality, or that the ERB is not co-equal with the RTC, still injunction will not lie. As a rule, to justify the injunctive relief prayed for, the movant must show: (1) the existence of a right in esse or the existence of a right to be protected; and (2) the act against which injunction is to be directed is a violation of such right.27 In the case at bar, petitioners failed to show any clear legal right which would be violated if the power supply of PSC from the NAPOCOR is disconnected and transferred to CEPALCO. If it were true that PSC has the exclusive right to operate and maintain electric light within the municipalities of Tagoloan and Villanueva pursuant to its charter (PD 538), then this Court would have made such pronouncement in National Power Corporation vs. Court of Appeals.28 Exclusivity of any public franchise has not been favored by this Court such that in most, if not all, grants by the government to private corporations, the interpretation of rights, privileges or franchises is taken against the grantee.29 More importantly, the Constitution prohibits monopoly of franchise.30Another significant fact which militates against the claim of PIA is that it previously allowed CEPALCO to distribute electric power to industries operating within the PHIVIDEC Industrial Estate. This, to our mind, sufficiently indicates PIA's recognition of CEPALCO's franchise. Indeed, it is unimaginable that an implementation of a long-standing government policy which had been sustained by this Court31 can be stalled by an injunctive writ. Likewise, petitioners' assertion that the ERB decision contradicts the Cabinet Reform Policy is misplaced. On the contrary, we find the decision to be in accord with the policy that direct connection with the NAPOCOR is no longer necessary when a cooperative or utility, such as CEPALCO, operating within a franchise proves to be capable of distributing power to the industries therein. In this regard, it is apt to reiterate the pronouncement of this Court inCagayan Electric Power and Light Company, Inc. vs. National Power Corporation:32 "It is likewise worthy of note that the defunct Power Development Council, in implementing P.D. 395, promulgated on January 28, 1977 PDC Resolution No. 77-01-02, which in part reads: '1) At any given service area, priority should be given to the authorized cooperative or franchise holder in the right to supply the power requirement of existing or prospective industrial enterprises (whether BOI-registered or not) that are located or plan to locate within the franchise area or coop service area as shall be determined by the Board of Power or National Electrification Administration whichever the case may be.'
22

The statutory authority given to respondent-appellant NPC in respect of sales of energy in bulk direct to BOI registered enterprises should always be subordinate to the "total-electrification-of-the-entire-country-on-an-area-coverage-basis policy" enunciated in P.D. No. 40. Thus, in NPC vs. CEPALCO, supra, this Court held: 'x x x The law on the matter is clear. PD 40 promulgated on 7 November 1973 expressly provides that the generation of electric power shall be undertaken solely by the NPC. However, Section 3 of the same decree also provides that the distribution of electric power shall be undertaken by cooperatives, private utilities (such as CEPALCO), local governments and other entities duly authorized, subject to state regulation. x x x.'" (emphasis ours) WHEREFORE, the petition is DENIED. The challenged Decision of the Court of Appeals in CA-G.R. SP No. 36943 is hereby AFFIRMED. SO ORDERED.

.R. No. 137473

August 2, 2001

ESTELITO V. REMOLONA, petitioner, vs. CIVIL SERVICE COMMISSION, respondent. PUNO, J.: The present petition seeks to review and set aside the Decision rendered by the Court of Appeals dated July 31, 19981 upholding the decision of the Civil Service Commission which ordered the dismissal of petitioner Estelito V. Remolona (Remolona) from the government service for dishonesty, and the Resolution dated February 5, 19992denying petitioner's motion for reconsideration. Records show that petitioner Estelito V. Remolona is the Postmaster at the Postal Office Service in Infanta, Quezon, while his wife Nery Remolona is a teacher at the Kiborosa Elementary School. In a letter3 dated January 3, 1991, Francisco R. America, District Supervisor of the Department of Education, Culture & Sports at Infanta, Quezon, inquired from the Civil Service Commission (CSC) as to the status of the civil service eligibility of Mrs. Remolona who purportedly got a rating of 81.25% as per Report of Rating issued by the National Board for Teachers.4 Mr. America likewise disclosed that he received information that Mrs. Remolona was campaigning for a fee of P8,000.00 per examinee for a passing mark in the teacher's board examinations. -On February 11, 1991, then CSC Chairman Patricia A. Sto. Tomas issued an Order directing CSC Region IV Director Bella Amilhasan to conduct an investigation on Mrs. Remolona's eligibility, after verification from the Register of Eligibles in the Office for Central Personnel Records revealed "that Remolona's name is not in the list of passing and failing examinees, and that the list of examinees for December 10, 1989 does not include the name of Remolona. Furthermore, Examination No. 061285 as indicated in her report of 5 rating belongs to a certain Marlou C. Madelo, who took the examination in Cagayan de Oro and got a rating of 65.00%." During the preliminary investigation conducted by Jaime G. Pasion, Director II, Civil Service Field Office, Lucena City, Quezon, only petitioner Remolona appeared. He signed a written statement of facts6 regarding the issuance of the questioned Report of Rating of Mrs. Remolona, which is summarized in the Memorandum7 submitted by Director Pasion as follows: "3.1 That sometime in the first week of September, 1990, while riding in a Kapalaran Transit Bus from Sta. Cruz, Laguna on his way to San Pablo City, he met one Atty. Hadji Salupadin (this is how it sounded) who happened to be sitting beside him;

3.2 That a conversation broke out between them until he was able to confide his problem to Atty. Salupadin about his wife having difficulty in acquiring an eligibility; 3.3 That Atty. Salupadin who represented himself as working at the Batasan, offered his help for a fee of P3,000.00; 3.4 That the following day they met at the Batasan where he gave the amount of P2,000.00, requirements, application form and picture of his wife; 3.5 That the following week, Thursday, at around 1:00 P.M., they met again at the Batasan where he handed to Atty. Salupadin the amount of P1,000.00 plus P500.00 bonus who in turn handed to him the Report of Rating of one Nery C. Remolona with a passing grade, then they parted; 3.6 That sometime in the last week of September, he showed the Report of Rating to the District Supervisor, Francisco America who informed her (sic) that there was no vacancy; 3.7 That he went to Lucena City and complained to Dr. Magsino in writing . . . that Mr. America is asking for money in exchange for the appointment of his wife but failed to make good his promise. He attached the corroborating affidavits of Mesdames Carmelinda Pradillada and Rosemarie P. Romantico and Nery C. Remolona x x x; 3.8 That from 1986 to 1988, Mr. America was able to get six (6) checks at P2,600.00 each plus bonus of Nery C. Remolona; 3.9 That Mr. America got mad at them. And when he felt that Mr. America would verify the authenticity of his wife's Report of Rating, he burned the original." Furthermore, Remolona admitted that he was responsible in acquiring the alleged fake eligibility, that his wife has no knowledge thereof, and that he did it because he wanted them to be together. Based on the foregoing, Director Pasion recommended the filing of the appropriate administrative action against Remolona but absolved Mrs. Nery Remolona from any liability since it has not been shown that she willfully participated in the commission of the offense. Consequently, a Formal Charge dated April 6, 1993 was filed against petitioner Remolona, Nery C. Remolona, and Atty. Hadji Salupadin for possession of fake eligibility, falsification and dishonesty.8 A formal hearing ensued wherein the parties presented their respective evidence. Thereafter, CSC Regional Director Bella A. Amilhasan issued a Memorandum dated February 14, 19959 recommending that the spouses Estelito and Nery Remolona be found guilty as charged and be meted the corresponding penalty. Said recommendation was adopted by the CSG which issued Resolution No. 95-2908 on April 20, 1995, finding the spouses Estelito and Nery Remolona guilty of dishonesty and imposing the penalty of dismissal and all its accessory penalties. The case against Atty. Hadji Salupadin was held in abeyance pending proof of his identity.10In its Resolution No. 96551011 dated August 27, 1996, the CSC, acting on the motion for reconsideration filed by the spouses Remolona, absolved Nery Remolona from liability and held that: "Further, a review of the records and of the arguments presented fails to persuade this Commission to reconsider its earlier resolution insofar as Estelito Remolona's culpability is concerned. The evidence is substantial enough to effect his conviction. His act of securing a fake eligibility for his wife is proved by substantial evidence. However, in the case of Nery Remolona, the Commission finds her innocent of the offense charged, for there is no evidence to show that she has used the fake eligibility to support an appointment or promotion. In fact, Nery Remolona did not indicate in her Personal Data Sheet that she possesses any eligibility. It must be pointed out that it was her husband who unilaterally worked to secure a fake eligibility for her. WHEREFORE, the instant Motion for Reconsideration is hereby denied insofar as respondent Estelito Remolona is concerned. However, Resolution No. 95-2908 is modified in the sense that respondent Nery Remolona is exonerated of the charges. Accordingly, Nery Remolona is automatically reinstated to her former position as Teacher with back salaries and other benefits." On appeal, the Court of Appeals rendered its questioned decision dismissing the petition for review filed by herein petitioner Remolona. His motion for reconsideration and/or new trial was likewise denied. Hence, this petition for review.

Petitioner submits that the Court of Appeals erred: "1. in denying petitioner's motion for new trial; 2. in holding that petitioner is liable for dishonesty; and 3. in sustaining the dismissal of the petitioner for an offense not work connected in relation to his official position in the government service." The main issue posed for resolution is whether a civil service employee can be dismissed from the government service for an offense which is not work-related or which is not connected with the performance of his official duty. Remolona likewise imputes a violation of his right to due process during the preliminary investigation because he was not assisted by counsel. He claims that the extrajudicial admission allegedly signed by him is inadmissible because he was merely made to sign a blank form. He also avers that his motion for new trial should be granted on the ground that the transcript of stenographic notes taken during the hearing of the case before the Regional Office of the CSC was not forwarded to the Court of Appeals. Finally, he pleads that the penalty of dismissal with forfeiture of all benefits is too harsh considering the nature of the offense for which he was convicted, the length of his service in government, that this is his first offense, and the fact that no damage was caused to the government. The submission of Remolona that his alleged extra-judicial confession is inadmissible because he was not assisted by counsel during the investigation as required under Section 12 paragraphs 1 and 3, Article III of the 1987 Constitution deserves scant consideration. The right to counsel under Section 12 of the Bill of Rights is meant to protect a suspect in a criminal case under custodial investigation. Custodial investigation is the stage where the police investigation is no longer a general inquiry into an unsolved crime but has begun to focus on a particular suspect who had been taken into custody by the police to carry out a process of interrogation that lends itself to elicit incriminating statements. It is when questions are initiated by law enforcement officers after a person has been taken into custody or otherwise deprived of his freedom of action in any significant way. The right to counsel attaches only upon the start of such investigation. Therefore, the exclusionary rule under paragraph (2), Section 12 of the Bill of Rights applies only to admissions made in a criminal investigation but not to those made in an administrative investigation.12 While investigations conducted by an administrative body may at times be akin to a criminal proceeding, the fact remains that under existing laws, a party in an administrative inquiry may or may not be assisted by counsel, irrespective of the nature of the charges and of the respondent's capacity to represent himself, and no duty rests on such body to furnish the person being investigated with counsel. In an administrative proceeding, a respondent has the option of engaging the services of counsel or not. This is clear from the provisions of Section 32, Article VII of Republic Act No. 2260 (otherwise known as the Civil Service Act) and Section 39, paragraph 2, Rule XIV (on discipline) of the Omnibus Rules Implementing Book V of Executive Order No. 292 (otherwise known as the Administrative Code of 1987). Thus, the right to counsel is not always imperative in administrative investigations because such inquiries are conducted merely to determine whether there are facts that merit disciplinary measure against erring public officers and employees, with the purpose of maintaining the dignity of government service. As such, the hearing conducted by the investigating authority is not part of a criminal prosecution.13 In the case at bar, Remolona was not accused of any crime in the investigation conducted by the CSC field office. The investigation was conducted for the purpose of ascertaining the facts and whether there is a prima facie evidence sufficient to form a belief that an offense cognizable by the CSC has been committed and that Remolona is probably guilty thereof and should be administratively charged. Perforce, the admissions made by Remolona during such investigation may be used as evidence to justify his dismissal. The contention of Remolona that he never executed an extra-judicial admission and that he merely signed a blank form cannot be given credence. Remolona occupies a high position in government as Postmaster at Infanta, Quezon and, as such, he is expected to be circumspect in his actions specially where he is being administratively charged with a grave offense which carries the penalty of dismissal from service. Remolona insists that his dismissal is a violation of his right to due process under Section 2(3), Article XI (B) of the Constitution which provides that "no officer or employee in the Civil Service shall be removed or suspended except for cause." Although the offense of dishonesty is punishable under the Civil Service law, Remolona opines that such act must have been committed in the performance of his function and duty as Postmaster. Considering that the charge of dishonesty involves the falsification of the certificate of rating of his wife Nery Remolona, the same has no bearing on his office and hence, he is deemed not to have been dismissed for cause. This proposition is untenable.

It cannot be denied that dishonesty is considered a grave offense punishable by dismissal for the first offense under Section 23, Rule XIV of the Rules Implementing Book V of Executive Order No. 292. And the rule is that dishonesty, in order to warrant dismissal, need not be committed in the course of the performance of duty by the person charged. The rationale for the rule is that if a government officer or employee is dishonest or is guilty of oppression or grave misconduct, even if said defects of character are not connected with his office, they affect his right to continue in office. The Government cannot tolerate in its service a dishonest official, even if he performs his duties correctly and well, because by reason of his government position, he is given more and ample opportunity to commit acts of dishonesty against his fellow men, even against offices and entities of the government other than the office where he is employed; and by reason of his office, he enjoys and possesses a certain influence and power which renders the victims of his grave misconduct, oppression and dishonesty less disposed and prepared to resist and to counteract his evil acts and actuations. The private life of an employee cannot be segregated from his public life. Dishonesty inevitably reflects on the fitness of 14 the officer or employee to continue in office and the discipline and morale of the service. The principle is that when an officer or employee is disciplined, the object sought is not the punishment of such officer or employee 15 but the improvement of the public service and the preservation of the public's faith and confidence in the government. The general rule is that where the findings of the administrative body are amply supported by substantial evidence, such findings are accorded not only respect but also finality, and are binding on this Court.16 It is not for the reviewing court to weigh the conflicting evidence, determine the credibility of witnesses, or otherwise substitute its own judgment for that of the administrative agency on 17 the sufficiency of evidence. Thus, when confronted with conflicting versions of factual matters, it is for the administrative agency concerned in the exercise of discretion to determine which party deserves credence on the basis of the evidence received.18 The rule, therefore, is that courts of justice will not generally interfere with purely administrative matters which are addressed to the sound discretion of government agencies unless there is a clear showing that the latter acted arbitrarily or with grave abuse of discretion or when they have acted in a capricious and whimsical manner such that their action may amount to an excess of jurisdiction.19 We have carefully scrutinized the records of the case below and we find no compelling reason to deviate from the findings of the CSC and the Court of Appeals. The written admission of Remolona is replete with details that could have been known only to him. No ill-motive or bad faith was ever imputed to Director Pasion who conducted the investigation. The presumption that official duty has been regularly performed remains unrebutted. The transmittal of the transcript of stenographic notes taken during the formal hearing before the CSC is entirely a matter of discretion on the part of the Court of Appeals. Revised Administrative Circular No. 1-95 of this Court clearly states that in resolving appeals from quasi-judicial agencies, it is within the discretion of the Court of Appeals to have the original records of the proceedings under review transmitted to it.20 Verily, the Court of Appeals decided the merits of the case on the bases of the uncontroverted facts and admissions contained in the pleadings filed by the parties. We likewise find no merit in the contention of Remolona that the penalty of dismissal is too harsh considering that there was no damage caused to the government since the certificate of rating was never used to get an appointment for his wife, Nery Remolona. Although no pecuniary damage was incurred by the government, there was still falsification of an official document that constitutes gross dishonesty which cannot be countenanced, considering that he was an accountable officer and occupied a sensitive position.21 The Code of Conduct and Ethical Standards for Public Officials and Employees enunciates the State policy of promoting a 22 high standard of ethics and utmost responsibility in the public service. WHEREFORE, the decision appealed from is hereby AFFIRMED in toto. SO ORDERED.

G.R. No. 140128

June 6, 2001

ARNOLD P. MOLLANEDA, petitioner, vs. LEONIDA C. UMACOB, respondent.

SANDOVAL-GUTIERREZ, J.: Before us is a petition for review on certiorari of the (a) Decision1 dated May 14, 1999 of the Court of Appeals in CA-G.R. SP No. 2 48902 affirming in toto Resolution No. 973277 of the Civil Service Commission; and (b) Resolution dated August 26, 1999 of the said court denying the motion for reconsideration of its Decision. The case stemmed from the affidavit-complaint for sexual harassment filed by Leonida Umacob (respondent) against Arnold Mollaneda (petitioner) with the Civil Service Commission - Regional Office XI, Davao City (CSC-RO XI) in September 1994 alleging: "That sometime on September 7, 1994 at around 7:30 o'clock more or less, in the morning, while inside the office of Mr. Rolando P. Suase, Admin Officer 2 of Davao City Schools, located at the Division Office Building, along Palma Gil St., Davao City, to follow-up my request for transfer from my present assignment to either Buhangin District or Bangoy District, Davao City, Mr. Rolando P. Suase was not around and it was school Division Superintendent, Mr. Arnold P. Mollaneda who was seated at his (Rolando's) table, as at the time, the office of Mr. Arnold Mollaneda just adjacent was being cleaned by a janitor. That immediately I approached him and seated opposite to him and handed to him my letter of recommendation from DECS Regional Director, Region XI, Dr. Ramon Y. Alba, recommending my possible transfer and after reading the same advised her to return next week as there is no available item and that he will think about it. However, I insisted that he will give me a note to fix the time and date of our next meeting and or appointment at his office. At this instance, he handed me a piece of paper with his prepared signature and requested me to write my name on it, after which, he took it back from me and assured me to grant my request and at the same time, he made some notations on the same piece of paper below my name, indicating my possible transfer to Buhangin or Bangoy District of which I thanked him for the accomodation. At this point, he stood up, bringing along with him the paper so that I also stood up. However, before I could get outside the office, he then handed to me the said piece of paper and advised me to give it to a certain May Pescadero, personnel clerk, for the making/cutting of the order of transfer. All of a sudden he hugged and embraced me, then he kissed my nose and lip in a torrid manner. That I tried to resist but he forcibly held my neck so that he was able to kiss me in an easy way. That - not contented, he then mashed my left breast. He did the malicious act for several times, afterwhich he warned me not to tell anybody what he did to me inside the office. That as a result of the very unfortunate incident, I was so shocked, that I was not able to speak or talk or confess to my husband what our School Superintendent did to me. Likewise, I also informed one Venus Mariano, also DECS employee, who advised me to stay and remain calm. However, I decided to report the matter to San Pedro Patrol Station."3 (Emphasis supplied) Respondent furnished the Department of Education, Culture and Sports - Regional Office XI, Davao City (DECS-RO XI) a copy of her affidavit-complaint. Thus, on September 30, 1994, Regional Director Susana Cabahug issued an order4 directing the formation of a committee to conduct an investigation of respondent's complaint against petitioner. On October 4, 1994, petitioner filed with the CSC-RO XI his answer to the affidavit-complaint denying the allegations therein and alleging that there are "material contradictions," in respondent's version of the incident, thus: "1) On the date of the alleged happening of the incident, she was with her husband who was just outside the Office of Mr. Mollaneda according to witness Security Guard Raul Moncada, but she did not report the incident to her husband, nor did she register any complaint on that date September 7, 1994; She reported the alleged acts of lasciviousness complained of to the police only the following day, September 8, 1994, at about 3:45 P.M. as shown by the extract of the entry of the police blotter attached to her AFFIDAVIT-COMPLAINT in this case. 2) In her report to the police as shown by the said police blotter, she said that "While at the office of Mr. Arnold Mollaneda, Division Superintendent DECS XI, she was requested by the latter to transfer in the office of Mr. Rolando Suase as the janitor/security guard was cleaning the room of the respondent." And her version as published in The Mindanao Daily Mirror in the issue of September 10, 1994 (see ANNEX C of the complaint of Mollaneda to the City Prosecution Office). "Omacob said Mollaneda in a written note told her to transfer to

the room of a certain Rolando Suase since the janitor will clean his room. But before she could move to the other room Mollaneda allegedly hugged, kissed and mashed her breast and told her not to tell it to anybody." 3) In her instant Affidavit-Complaint, she again says "while inside the Office of Mr. Rolando P. Suase x x x to follow-up my request for transfer x x x Mr. Suase was not around and it was Schools Division Superintendent, Mr. Arnold P. Mollaneda who was seated at his (Rolando) table, as at that time, the Office of Mr. Arnold P. Mollaneda just adjacent was being cleaned by a janitor x x x." It was inside the office of Mr. Suase that she was given a note on her request for transfer by Mr. Mollaneda to be given to May Pescadero when "At this point, he stood up bringing along with him the paper so that I also stood-up, however, before I could get outside the office, he then handed to me the said piece of paper and advised me to give it to a certain May Pescadero, personnel clerk for the making/cutting of the order of transfer and at the same time all of a sudden, he hug and embraced me, then he kissed my nose and lips in a torrid manner. That I tried to resist but he forcibly held my neck so that he was able to kiss me in an easy way. That not contented, he then mashed my left breast, which he did the malicious act for several times, afterwhich he warned me not to tell anybody what he did to me inside the 5 office." In the present petition, petitioner alleged his own version of the incident,6 thus: "Petitioner, in his sworn statement, stated that on September 7, 1994, he had interviewed or conferred with about three (3) persons already who were applying for new teaching positions or for transfers when Respondent came to HIS OFFICE. When it was her turn to be interviewed, petitioner told her that she could not be transferred immediately because the Division only had very few vacant items and the same were already given to earlier applicants. Nevertheless, she was told to wait while he searched for a new vacant item. Petitioner gave the Respondent a note for her to give to the Acting Personnel Officer Mildred "May" Pescadero so that Respondent may be included in the list of teachers applying for transfer. Upon reading the note, however, the Respondent angrily told him why could she not be immediately accommodated when she had the written recommendation of Dir. Ramon Alba. She told Petitioner that asking her to wait was unfair because there were other applicants from Marilog district who were transferred and one of them who was slated to be transferred was Mrs. Daylinda Bacoy. Petitioner explained to the Respondent that Mrs. Bacoy suffered an injury when she fell off the horse she was riding on when she went to her school in Kiopao Elementary School. Petitioner scolded the Respondent for her insubordinate attitude toward him. She was counting so much on the recommendation of Dir. Ramon Alba who was Petitioner's superior, and could not believe that no positive action was made by Petitioner on the basis of said recommendation. In going OUT OF THE OFFICE OF PETITIONER, she was heard to have murmured that Petitioner would regret his act of discrimination. There was no act of sexual harassment that occurred during the relatively brief conversation between the herein parties. The witnesses, whose affidavits were attached to the Affidavit of Mr. Mollaneda, all swore to the fact that they saw what transpired between Petitioner and the Respondent and that there was no act of sexual harassment that occurred. Moreover, they swore to the fact that the interview took place inside Mr. Mollaneda's office as the both parties were seen through a glass panel separating Petitioner's office and the anteroom." Meanwhile, pending resolution by the CSC-RO XI of respondent's complaint, the DECS investigating committee recommended to the 7 DECS Regional Director "the dropping of the case" for lack of merit. On June 5, 1995, the CSC-RO XI issued a resolution charging petitioner with grave misconduct, oppression, abuse of authority and 8 conduct prejudicial to the best interest of the service. The said office found there was a prima facie case against him and eventually elevated to the Civil Service Commission (Commission) the records of the case. Thereafter, the Commission designated Atty. Anacleto Buena to hear and receive the evidence in the case. A formal hearing was conducted in Davao City. Both parties were assisted by counsel. On July 7, 1997, the Commission issued Resolution No. 973277 finding petitioner guilty of grave misconduct and conduct grossly prejudicial to the best interest of the service. He was meted the penalty of dismissal from the government service with all its accessory penalties.9 Forthwith, petitioner filed a motion for reconsideration but was denied in Resolution No. 981761.10

Feeling aggrieved, petitioner filed with the Court of Appeals a petition for review alleging: "first, that the Commission erred in finding him guilty x x x notwithstanding the fact that he was denied his right to due process; and second, that the Commission erred in giving weight to the hearsay testimonies of the witnesses for respondent."11 On May 14, 1999, the Court of Appeals rendered its Decision12 affirming in toto Resolution No. 973277 of the Commission. The appellate court held: "It is a time-honored rule that the matter of assigning values to the testimony of witnesses is best performed by the trial courts, tribunals, or administrative bodies or agencies exercising quasi-judicial powers. Unlike appellate courts, they can weigh such testimony in clear observance of the demeanor, conduct and attitude of the witnesses at the trial or hearing. Thus, absent any showing that they have overlooked facts of substance and value that if considered might affect the result, their findings must be given weight and respect. In the present case, nothing significant has been shown to convince this Court that the Commission acted with bias or ignored something of substance that could have, in any degree, warranted an exoneration of petitioner from the charges hurled against him. It bears mentioning that respondent victim is a public school teacher. If she is not motivated by the truth, she would not have subjected herself to the rigors of a hearing before the Commission and airing in public matters that affect her honor. It is hard to conceive that respondent would reveal and admit the shameful and humiliating experience she had undergone if it were not true. In any case, the fact that petitioner could not proffer any explanation as to why respondent and the prosecution witnesses would falsely testify against him logically proves that no improper motive impelled them to accuse the former of such serious offense as sexual harassment. xxx xxx xxx

Petitioner, in the present case, may not successfully plead violation of his right to due process as he, in fact, participated at the pre-trial, agreed to matters therein taken up, attended the hearing, and lengthily cross-examined the prosecution witnesses. Anent petitioner's contention that the decision of the Commission was in conflict with newspaper reports of a decision dismissing the case against him for insufficiency of evidence, suffice it to state that what the movant considers as a decision is merely a newspaper report. Newspaper accounts and clippings are hearsay and have no evidentiary value. (People vs. Aguel, 97 SCRA 795)."13 Rebuffed in his bid for reconsideration of the Court of Appeals Decision, petitioner filed the instant petition, and as grounds therefor alleges: "I THE RELIANCE OF THE COURT OF APPEALS ON THE THEORY THAT FINDINGS OF QUASI-JUDICIAL AGENCIES ARE GIVEN CONSIDERABLE WEIGHT, IS MISPLACED IN VIEW OF THE PERTINENT FACTS OF THE CASE. II A SIMILAR ADMINISTRATIVE CASE WAS INSTITUTED IN AND INVESTIGATED BY THE D.E.C.S. AND A RESOLUTION WAS RENDERED DISMISSING THE CASE AGAINST PETITIONER. III THE TESTIMONIES OF THE WITNESSES FOR THE PETITIONER WERE ALL EYE-WITNESSES TO THE ACTUAL INCIDENT, WHICH CAST 14 DOUBT ON THE CREDIBILITY OF THE RESPONDENT'S TESTIMONY." Petitioner contends that the oft-cited rule - the matter of assigning values to the testimony of witnesses is best performed by the x x x administrative bodies or agencies exercising quasi-judicial powers - finds no application in the present case. According to petitioner, the failure of the CSC Commissioners to "personally observe the demeanor, conduct and attitude of the witnesses" and

their reliance solely on Atty. Buena's recommendation and notes should have discouraged the Court of Appeals from giving weight to the findings of the Commission. Petitioner also argues that respondent engaged in forum shopping by filing her affidavitcomplaint with the DECS-RO XI and CSC-RO XI; and that the Court of Appeals should have considered in his favor the DECS-RO XI's resolution dismissing the administrative case against him. Finally, petitioner insists that the Court of Appeals erroneously gave credence to the "hearsay" testimonies of Melencio Umacob, respondent's husband, and Venus Mariano, secretary of the Assistant Division Superintendent of the Davao City Schools. These witnesses testified that respondent narrated to them the events concerning the sexual harassment committed against her by petitioner. For her part, respondent reiterates the ruling of the Court of Appeals that in reviewing administrative cases, the appellate court is traditionally sanctioned to subscribe to the findings of the lower court or administrative body or agency since it is in a better position to determine the credibility of witnesses. As to the alleged "act of forum-shopping," petitioner claims that in pursuing redress of her grievances, she sought refuge both in the court and in the Commission for she believed they are the proper fora for her criminal and administrative complaints. And lastly, respondent counters that the Commission did not err in giving more credence to the testimonies of her witnesses, stressing that petitioner's witnesses are biased, they being his subordinates. During the pendency of this case in this Court, petitioner submitted the decision of the Municipal Trial Court, Branch 5, Davao City, acquitting him of the crime of acts of lasciviousness which arose from the same incident involved in the present administrative case. The petition is bereft of merit. In assailing the Decision of the Court of Appeals, petitioner is actually urging us not to give credence to the factual findings of the Commission on the ground that the Commissioners did not personally hear the case. The fact that the Commission assigned Atty. Buena to hear and receive evidence does not render its factual findings unworthy of credence. In laying down the precedent that the matter of assigning values to the testimony of witnesses is best performed by trial courts or administrative bodies rather than by appellate courts, this Court merely recognizes that the trial court or the administrative body as a trier of facts is in a better position to assess the demeanor of the witnesses and the credibility of their testimonies as they were within its proximal view during the hearing or investigation. At any rate, it cannot be gainsaid that the term "administrative body or agency" includes the subordinate officials upon whose hand the body or agency delegates a portion of its authority. Included therein are the hearing officers through whose eyes and ears the administrative body or agency observes the demeanor, conduct and attitude of the witnesses and listens to their testimonies.15 It must be emphasized that the appointment of competent officers to hear and receive evidence is commonly resorted to by administrative bodies or agencies in the interest of an orderly and efficient disposition of administrative cases. This Court, in American Tobacco Company v. Director of Patents,16 ruled: "Thus, it is well-settled that while the power to decide resides solely in the administrative agency vested by law, this does not preclude a delegation of the power to hold a hearing on the basis of which the decision of the administrative agency will be made." The rule that requires an administrative officer to exercise his own judgment and discretion does not preclude him from utilizing, as a matter of practical administrative procedure, the aid of subordinates to investigate and report to him the facts, on the basis of which the officer makes his decisions. It is sufficient that the judgment and discretion finally exercised are those of the officer authorized by law. Neither does due process of law nor the requirements of fair hearing require that the actual taking of testimony be before the same officer who will make the decision in the case. As long as a party is not deprived of his right to present his own case and submit evidence in support thereof, and the decision is supported by the evidence in the record, there is no question that the requirements of due process and fair trial are fully met. In short, there is no abnegation of responsibility on the part of the officer concerned as the actual decision remains with and is made by said officer. It is, however, required that to "give the substance of a hearing, which is for the purpose of making determinations upon evidence the officer who makes the determinations must consider and appraise the evidence 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."

Under our jurisprudence, an administrative agency may employ other persons, such as a hearing officer, examiner or investigator, to receive evidence, conduct hearing and make reports on the basis of which the agency shall render its decision. Such a procedure is a practical necessity. Corollarily, in a catena of cases, this Court laid down the cardinal requirements of due process in administrative proceedings, one of which is that "the tribunal or body or any of its judges must act on its or his own independent consideration of the law and facts of the controversy, and not simply accept the views of a subordinate."17 Thus, it is logical to say that this mandate was rendered precisely to ensure that in cases where the hearing or reception of evidence is assigned to a subordinate, the body or agency shall not merely rely on his recommendation but instead shall personally weigh and assess the evidence which the said subordinate has gathered. In the case at bar, it is evident that the Commission itself evaluated in detail the evidence of both parties as reported by Atty. Buena. In fact, in laying down its conclusion, it made constant reference to the testimonies of the parties and of their witnesses and to the documentary evidence presented. It must be addressed that, the Commission's act of delegating the authority to hear and receive evidence to Atty. Buena is not without legal basis. Section 47, Book V of Executive Order No. 292 (otherwise known as the Administrative Code of 1987) provides that the Commission may deputize any department or agency or official or group of officials to conduct an investigation on the complaint filed by a private citizen against a government official or employee. The results of the investigation shall be submitted to the Commission with recommendation as to the penalty to be imposed or other action to be taken. Going further, petitioner complains that he was not furnished a copy of Atty. Buena's notes and recommendation. The Court cannot 18 empathize with him. In Ruiz v. Drilon, we unequivocally held that a respondent in an administrative case is not entitled to be informed of the findings and recommendation of any investigating committee created to inquire into the charges filed against him. He is entitled only to the administrative decision based on substantial evidence made of record and a reasonable opportunity to meet the charges and the evidence presented against him during the hearing.19 Besides, Atty. Buena's findings and recommendation are internal communications between him and the Commission and, therefore, confidential. In Pefianco v. Moral,20 this Court held: "Respondent's (Moral) counsel is reminded that the Report of the DECS Investigating Committee is not an integral part of the Decision itself x x x [t]he report is an internal communication between the Investigating Committee and the DECS Secretary, and therefore, confidential until the latter had already read and used the same in making his own determination of the facts and applicable law of the case, to be expressed in the Decision he may make. The Report remains an internal and confidential matter to be used as part - although not controlling - of the basis for the decision. Only when the party adversely affected by the decision has filed and perfected an appeal to the Civil Service Commission may all the records of the case, including the aforesaid Report be forwarded to the CSC. In the latter appellate tribunal, the respondent's counsel may be allowed to read and/or be given a copy of the Report to enable the appellant to file an intelligent and exhaustive appellant's Brief Memorandum." Petitioner's second argument requires no lengthy discussion. First, he did not raise the issue of forum-shopping before the Commission.21 It bears emphasis that respondent merely furnished the DECS-RO XI a copy of her affidavit-complaint. And second, we surveyed the records and there is nothing therein which supports petitioner's claim that the DECS-RO XI dismissed respondent's affidavit-complaint. The resolution22 of the DECS mainly recommended to the Regional Director of the DECS-RO XI the dropping of the case. A recommendatory resolution does not have the effect of actually disposing of a case. Its function is merely to advise the disciplining authority of what action should be taken or what penalty should be imposed. It is not controlling and the disciplining authority may or may not conform with the recommended action. On petitioner's assertion that the testimony of respondent's witnesses are hearsay and, therefore, inadmissible in evidence, we are constrained to hold a different view. A reading of the testimonies of Umacob and Mariano shows that they were not presented to prove the truth of respondent's accusations against petitioner, but only to establish the fact that respondent narrated to them what transpired between her and petitioner. While it is true that the testimony of a witness regarding a statement made by another person, if intended to establish the truth of the facts asserted in the statement, is clearly hearsay evidence, it is otherwise if the purpose of placing the statement in the record is merely to establish the fact that the statement was made.23 Regardless of the truth or falsity of a statement, when the fact that it has been made is relevant, the hearsay rule does not apply and the statement may be shown. As a matter of fact, evidence as to the making of the statement is not secondary but primary, for the statement itself may 24 constitute a fact in issue, or be circumstantially relevant as to the existence of such a fact. Significantly, respondent herself and her witnesses were present during the hearing of the case. Hence, petitioner was given the opportunity to cross-examine them. The real basis for the exclusion of hearsay evidence lies in the fact that a hearsay testimony is not subject to the tests which can ordinarily be applied for the ascertainment of the truth of testimony, since the declarant is not present and available for cross-examination.25

Lastly, petitioner cannot find solace in the dismissal of the criminal case against him. Long-ingrained in our jurisprudence is the rule that the dismissal of a criminal case against an accused who is a respondent in an administrative case on the ground of insufficiency of evidence does not foreclose the administrative proceeding against him or give him a clean bill of health in all respects. In dismissing the case, the court is simply saying that the prosecution was unable to prove the guilt of the respondent beyond reasonable doubt, a condition sine qua non for conviction because of the presumption of innocence which the Constitution guarantees an accused.26However, in administrative proceedings, the quantum of proof required is only substantial 27 evidence. Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.28 After a more incisive scrutiny of the records, we are convinced that petitioner's culpability has been proven by substantial evidence. Respondent's testimony was found by the Commission to be "natural, straightforward, spontaneous and convincing."29 Unlike petitioner's testimony, that of respondent is replete with details consistent with human nature. Clearly, the dismissal of the criminal case against petitioner by the Municipal Trial Court, Branch 5, Davao City cannot bind this Court in the 30 disposition of the instant administrative case. In sum, we find no reason to reverse the decision of the Court of Appeals. While it is unfotunate that petitioner will lose his job because of a moment's indiscretion, this Court shall not flinch in imposing upon him the severe penalty of dismissal. As Schools Division Superintendent, petitioner is bound by a high standard of work ethics. By succumbing to his moral perversity, he failed to live up to such standard. Indeed, he provided a justifiable ground for his dismissal from the service. WHEREFORE, the appealed decision of the Court of Appeals is hereby AFFIRMED. No costs. SO ORDERED.

G.R. No. 122363

April 29, 2003

VICTOR G. VALENCIA, petitioner, vs. COURT OF APPEALS, HON. TEOFISTO T. GUINGONA, JR., as Executive Secretary, HON. ERNESTO GARILAO, Secretary of Agrarian Reform, CRISOSTOMO M. CORPIN, Regional Director, DAR Region VII, SANTOS GARGAYA, JULIANO MAGDAYAO, CRESCENCIANO FRIAS, FEDERICO JARE, ROSENDO LOBRESCO, ERNESTO LOBRESCO, FELICIANO LOBRESCO, CATALINO MANTAC, VICTORIANO MONTE-FALCON, FRANCISCO OBANG, AMBROSIO SEMILLANO, ROGELIO TAMAYO and EDILBERTO LOBRESCO,respondents. BELLOSILLO, J.: THE tenancy crisis in the Philippines is not just of recent vintage. History is replete with instances where tenant-farmers, relegated to a life of perpetual bondage, have rushed onto the battlefield with hopes of freedom from imminent thralldom, aptly described by Professor Harold J. Laski as the normal life of the poor - their perpetual fear of the morrow, their haunting sense of impending disaster, their fitful search for beauty that perpetually eludes them. Every administration that took over the reins of government saw the gravity of this problem. Thus, each offered to the tenant-tillers its own version of the appropriate legislation for their emancipation. The Agricultural Tenancy Act of 1954 (R. A. No. 1199), the initial attempt of President Magsaysay at agrarian reform, was conceived as a remedial legislation to uplift the social and economic status of tenants. It was insinuated in the legislative deliberations that several provisions therein operated to deprive the landowner of his right to contract and his right to property without due process of law. But, it was also argued, this involved societal values and the agricultural tenancy act was meant to remedy an existing social evil. Hence, all tenancy laws that followed thereafter were crafted along this line. This case is now being scrutinized and tested against the bedrock of legal and equitable safeguards to achieve a truly successful and balanced agrarian reform initiative. For more than a quarter of a century petitioner Victor G. Valencia, a government retiree, sought justice through administrative and judicial channels to regain possession of his two (2) parcels of land which he claims to have been unjustly withheld from him by persons claiming to be tenants with the ostensible complicity of government officials implementing the agrarian reform program. In the meantime his appeal for fairness and justice was denied him through procedural infirmities. We are now asked to probe into his lonely plight with a reminder that it is our solemn duty to dispense equal justice to the rich and the poor.

We have repeatedly stressed that social justice - or any justice for that matter - is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for justice must always be served for the poor and the rich alike according to the mandate of the law.1 The property in dispute involves two (2) parcels of land situated at Barangay Linothangan, Canlaon City, Negros Oriental, covered by TCT No. H-T-137 with an area of 23.7279 hectares, and by Homestead Application No. HA-231601 with Final Proof and Tax Declaration No. 0515 with an area of 6.4397 hectares. On 7 May 1957 Victor G. Valencia acquired the first parcel covered by TCT No. H-T-137 from a certain Bonifacio Supnet. The only tenant of the property at that time was a certain Digoy Besario who was succeeded by his son Jesus Besario. On 2 July 1961 Valencia and Jesus Besario terminated their landlord-tenant relationship through a public instrument voluntarily executed by them, thus reverting the actual physical possession of the property to petitioner Valencia. On 22 October 1962 Valencia entered into a ten (10)-year civil law lease agreement over his two (2) parcels of land with a certain Glicerio Henson. Before the ten (10)-year lease expired, apparently without objection from Henson, Valencia leased the property for five (5) years to Fr. Andres Flores under a civil law lease concept beginning 21 August 1970 or until 30 June 1975 after which the lease was cancelled and inscribed as Entry No. 1578 in TCT No. H-T-137. The lease agreement between Valencia and Fr. Flores was subject to a prohibition against subleasing or encumbering the land without Valencia's written consent. This was admitted by the parties as reflected in the DAR Investigation Report and Recommendations.2 The prohibition against subleasing or encumbering of the land apparently included the prohibition against installing a leasehold tenant thereon. Incidentally, it may be mentioned that in the prior lease agreement with Henson no such prohibition was stipulated. During the period of his lease, Henson instituted Crescenciano Frias and Marciano Frias to work on the property, although only Crescenciano Frias apparently remained in the land while Marciano Frias must have abandoned his cause if any, as he was not impleaded in this case; neither did he appear on record to have been issued a CLT in his name. During the lease of Fr. Andres Flores, he designated Francisco Obang (as overseer), Rogelio Tamayo, Federico Jare, Feliciano Lobresco, Melchor Moncada, Rosendo Lobresco, Victoriano Montefalcon, Santos Gargaya, Catalino Mantac, Herodita Semillano, Ernesto Lobresco, Natividad Lobresco and Alfredo Demerin, along with Crescenciano and Marciano Frias, to cultivate the land. These farmhands shared their produce with Fr. Flores. Subsequently, Francisco Obang, Santos Gargaya, Crescenciano Frias, Federico Jare, Rosendo Lobresco, Juliano Magdayao, Ernesto Lobresco, Feliciano Lobresco, Catalino Mantac, Victoriano Montefalcon, Ambrosio Semillano, Rogelio Tamayo and Edilberto Lobresco, became recipients of CLTs and are collectively referred to herein as private respondents. When the lease agreement between Valencia and Fr. Flores expired on 30 June 1975, Valencia demanded that private respondents vacate the premises. Instead of complying with the demand, they refused and continued cultivating the land despite the demand for them to vacate. Valencia wanted to regain possession of his property so he could work it by administration, having in fact appointed Bernie Bautista as overseer until petitioner could retire from the government service. In his initial step in his long and agonizing journey, Valencia filed a letter of protest with the Minister of Agrarian Reform to take back the actual possession of his property that was subject of the civil law lease agreement. On 20 March 1976 his letter was referred to the DAR Regional Office in Cebu City. Meanwhile, without the knowledge much less consent of Valencia, private respondents applied for Certificates of Land Transfer (CLTs) under the Operation Land Transfer (OLT) Program pursuant to Presidential Decree No. 27 claiming they were bona fide tenants of the property. On 10 December 1985, while the investigation was being conducted by the DAR pursuant to petitioner's letter of protest of 20 March 1976, but before it could be terminated, the DAR issued the questioned CLTs to private respondents. The DAR Team Office in Canlaon City pursuant to the Operation Land Transfer Program under Pres. Decree No. 27 and Letter of Instruction No. 474 3 identified the following persons as farmer-beneficiaries: NAME A. TAX DEC. No. 0515 CLT NO. LOT NO. AREA (hectares)

1. Santos Gargaya 2. Juliano Magdayao

0-071160 a) 0-071161 b) 0-071163 c) 0-071166 d) 0-071175

0111 0122 0114 0117 0124 0115 0120 0121 0135 0129 0132 0133 0134 0113 0136 0118 0116 0125 0126 0139 0122 Total Area

0.3300 ha. 0.3350 ha. 0.2550 ha. 0.4825 ha. 0.3140 ha. 0.8890 ha. 0.4600 ha. 0.2500 ha. 0.2335 ha. 1.0325 ha. 0.8900 ha. 0.8400 ha. 0.3400 ha. 0.0425 ha. 0.1800 ha. 1.200 has. 0.0340 ha. 0.1135 ha. 0.0340 ha. 0.3400 ha 1.2040 has. 10.1055 has

B. TCT No. HT-137 3. Crescenciano Frias 4. Federico Jare 5. Rosendo Lobresco 6. Ernesto Lobresco 7. Feliciano Lobresco 8. Catalino Mantac 9. Victoriano Montefalcon 10. Francisco Obang 11. Ambrosio Semillano 0-071164 a) 0-71171 b) 0-71172 a) 0-071189 b) 0-071182 a) 0-071185 b) 0-71187 0-071188 0-071162 0-071190 0-071168 a) 0-071165 b) 0-071176 c) 0-071177 12. Rogelio Tamayo 13. Edilberto Lobresco 0-071194 0-071173

In view of the issuance of CLTs to private respondents, petitioner Valencia filed a second letter of protest and requested an investigation and subsequent cancellation of the CLTs. In February 1988 petitioner Valencia and Catalino Mantac, one of private respondents, entered into a leasehold contract undertaking to have a profit-sharing agreement. No other respondent entered into any agreement or tenancy contract, whether written or verbal, with Valencia, Henson or Fr. Flores. On 6 and 8 July 1988 an administrative investigation was conducted by the DAR Hearing Officer, Atty. Vilmo Ampong. This was done more than twelve (12) years after the initial letter of protest was filed on 20 March 1976. After an on-site investigation and inspection of the Valencia property, Atty. Ampong, in his Investigation Report and Recommendations dated 7 December 1988 found that: (a) Bernie Bautista, without any authority from protestant Valencia, obtained and/or received shares of the palay produced every harvest from private respondents starting 1975 to 1983 with his wife Hazel issuing the corresponding receipts; (b) Since the time Bautista and spouse obtained and/or received the owner's shares of the produce from private respondents not a single cavan nor its equivalent in cash was turned over or remitted to Valencia; (c) Private respondents stopped giving the landowner's shares to Bautista and his wife when they already refused to issue receipts, and so from then on private respondents appropriated to themselves all the landowner's shares; (d) While enjoying the possession, cultivation and utilization of the two (2) parcels of land, some of the private respondents sublet their farmholdings for financial considerations and turned them over to the sublessees for 4 specified periods; (e) The DAR Team Office in Canlaon City had the landholding included in the Final Survey of 1983 notwithstanding 5 Valencia's pending protest contesting the issuance of the CLTs; and, (f) Sometime in February 1988 Valencia and Catalino Mantac 6 entered into a leasehold contract over a 0.0425 hectare of the 23.7279 hectares covered by TCT No. H-T-137. Atty. Vilmo Ampong also found that the right of private respondents to the land ceased upon the termination of the lease contracts, except as regards respondent Catalino Mantac with whom petitioner Valencia entered into a tenancy agreement. Atty. Ampong further confirmed that Valencia did not receive anything from private respondents as consideration for tilling his land. Consequently,

Atty. Ampong recommended that the CLTs issued to private respondents be cancelled and the final survey conducted on the landholding of Valencia set aside. On 24 August 1989 the DAR Regional Office in Cebu City, in DARRO Adm. Case No. VII-117-89, notwithstanding the Investigation Report and Recommendations of its DAR Team Office, dismissed Valencia's protest and held that private respondents had the right to continue on the land until otherwise ordered by the court.7 Valencia moved for reconsideration but on 12 July 1991 the motion was denied. This setback of Valencia prompted him to appeal to the Office of the President under authority of DAR Memo. Circ. No. 3, series of 1994, arguing that the Secretary of Agrarian Reform8 erred in considering private respondents as tenants and in not recognizing petitioner's right of retention under R. A. No. 6657 otherwise known as The Comprehensive Agrarian Reform Law. On 8 October 1993 Executive Secretary Teofisto Guingona, Jr., by authority of the President, affirmed the order of the DAR of 12 July 1991 subject to the modification that the area acquired by petitioner Valencia as homestead be excluded from the coverage of P. D. No. 27. Valencia then brought his case to the Court of Appeals contending that the Executive Secretary erred in recognizing private respondents as tenants and disallowing him and his seven (7) "compulsory heirs" from exercising their right of retention under R. A. No. 6657. However, in a decision promulgated on 27 July 1995 the Court of Appeals dismissed the case on a technical ground, i.e., that his appeal was filed out of time.9 The appellate court ruled that petitioner should have filed with it a petition for review within fifteen (15) days from receipt of the order of the DAR Secretary pursuant to Sec. 54 of R. A. No. 6657 and Supreme Court Adm. Circ. No. 1-95, instead of elevating the case to the Office of the President pursuant to DAR Memo. Circ. No. 3, series of 1994. Hence, according to the Court of Appeals, the petition of Valencia was filed out of time. On 22 September 1995 petitioner's motion for reconsideration was denied. In its Resolution the Court of Appeals, citing Shell Philippines, Inc. v. Central Bank,10 held that in case of discrepancy between the basic law and a rule or regulation issued to implement the law, the basic law prevails because the rule or regulation cannot go beyond the terms and provisions of the basic law.11 Thus, DAR Memo. Circ. No. 3, series of 1994, according to the Court of Appeals, cannot be considered valid and effective since it runs counter to Sec. 54 of R. A. No. 6657 which provides for an appeal from any decision, order, award or ruling by the DAR to the Court of Appeals.12 Likewise, the appellate court held that the doctrine of exhaustion of administrative remedies does not apply in the present case where the respondent is a Department Secretary whose acts, as alter ego of the President, bear the implied approval of the latter.13 Valencia filed this Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision of the Court of Appeals in CA-G.R. SP No. 32669 dated 27 July 1995 as well as its Resolution denying his Motion for Reconsideration of 22 September 1995. Petitioner contends that DAR Memo. Circ. No. 3, series of 1994, is valid not being contrary to law and jurisprudence, and should be accorded respect being the Agrarian Reform Secretary's construction of the law that his Department administers and implements. Public respondents, on the other hand, aver that Secs. 15 and 20 of Book VII of E. O. No. 292 which are cited as the legal bases of DAR Memo. Circ. No. 3 refer to the procedure for administrative appeals from an agency to the Department Head which in this case is the DAR through its Secretary. They argue that there is no provision for appeal to the Office of the President since in the administrative structure the Secretary of Agrarian Reform is the alter ego of the President. They contend that Sec. 23 of Book VII cites the finality of the decision of the appellate agency without providing for a further appeal, and that Sec. 25 provides for judicial 14 15 review from an agency decision, as they point to Sec. 54 of R. A. No. 6657 and SC Adm. Circ. No. 1-95. We agree with petitioner. Interpreting and harmonizing laws with laws is the best method of interpretation.Interpretare et concordare leges legibus est optimus interpretandi modus.16 This manner of construction would provide a complete, consistent and intelligible system to secure the rights of all persons affected by different legislative and quasi-legislative acts. Where two (2) rules on the same subject, or on related subjects, are apparently in conflict with each other, they are to be reconciled by construction, so far as may be, on any fair and reasonable hypothesis. Validity and legal effect should therefore be given to both, if this can be done without destroying the evident intent and meaning of the later act. Every statute should receive such a construction as will harmonize it with the pre-existing body of laws. Harmonizing DAR Memo. Circ. No. 3, series of 1994, with SC Adm. Circ. No. 1-95 and Sec. 54 of R. A. No. 6657 would be consistent with promoting the ends of substantial justice for all parties seeking the protective mantle of the law. To reconcile and harmonize

them, due consideration must be given to the purpose for which each was promulgated. The purpose of DAR Memo. Circ. No. 3, series of 1994, is to provide a mode of appeal for matters not falling within the jurisdictional ambit of the Department of Agrarian Reform Adjudication Board (DARAB) under R. A. No. 6657 and correct technical errors of the administrative agency. In such exceptional cases, the Department Secretary has established a mode of appeal from the Department of Agrarian Reform to the Office of the President as a plain, speedy, adequate and inexpensive remedy in the ordinary course of law. This would enable the Office of the President, through the Executive Secretary, to review technical matters within the expertise of the administrative machinery before judicial review can be resorted to by way of an appeal to the Court of Appeals under Rule 43 of the 1997 Rules on Civil Procedure. On the other hand, the purpose of SC Adm. Circ. No. 1-95, now embodied in Rule 43 of the 1997 Rules of Civil Procedure, is to invoke the constitutional power of judicial review over quasi-judicial agencies, such as the Department of Agrarian Reform under R. A. No. 6657 and the Office of the President in other cases by providing for an appeal to the Court of Appeals. Section 54 of R. A. No. 6657 is consistent with SC Adm. Circ. No. 1-95 and Rule 43 in that it establishes a mode of appeal from the DARAB to the Court of Appeals. In Angara v. Electoral Commission this Court upheld the promulgation of the rules of procedure of the Commission since they were necessary to the proper exercise of its express power to hear and decide election contests involving members of the legislature, 17 18 although not specifically granted by the Constitution or statute. We ruled x x x the creation of the Electoral Commission carried with it ex necesitate rei the power regulative in character to limit the time within which protests intrusted to its cognizance should be filed. It is a settled rule of construction that where a general power is conferred or duty enjoined, every particular power necessary for the exercise of the one or the performance of the other is also conferred (Cooley, Constitutional Limitations, 8th ed., Vol. I, pp. 138, 139). In the absence of any further constitutional provision relating to the procedure to be followed in filing protests before the Electoral Commission, therefore, the incidental power to promulgate such rules necessary for the proper exercise of its exclusive power x x x must be deemed by necessary implication to have been lodged also in the Electoral Commission (emphasis supplied). Thus, the power of the Department Secretary to promulgate internal rules of administrative procedure is lodged in him by necessary implication as part of his express power to "promulgate rules and regulations necessary to carry out department objectives, policies, functions, plans, programs and projects."19 Is an appeal to the Office of the President from the Department Secretary pursuant to DAR Memo. Circ. No. 3, series of 1994, proper under the doctrine of exhaustion of administrative remedies? Petitioner contends that an appeal to the Office of the President from the Secretary of Agrarian Reform is proper under the doctrine of exhaustion of administrative remedies. On the other hand, it is the contention of public respondent, the Office of the Solicitor General, that an exception to this well-settled principle is the doctrine of qualified political agency. Where the respondent is a Department Secretary, whose acts as an alter ego of the President bear the implied or assumed approval of the latter, unless the President actually disapproves them, administrative remedies have already been exhausted. Recourse to the court may be made at that point, according to private respondents, a view that was sustained by the Court of Appeals. In this case, the appellate court ruled that the appeal before it was filed beyond the reglementary period as petitioner appealed to the Office of the President, and not to the Court of Appeals, where it should have been brought. In Tan v. Director of Forestry this Court ruled that even if the respondent was a Department Secretary, an appeal to the President was proper where the law expressly provided for exhaustion.20 As a valid exercise of the Secretary's rule-making power to issue internal rules of procedure, DAR Memo. Circ. No. 3, series of 1994, expressly provides for an appeal to the Office of the President. Thus, petitioner Valencia filed on 24 November 1993 a timely appeal by way of a petition for review under Rule 43 to the Court of Appeals from the decision of the Office of the President, which was received on 11 November 1993, well within the fifteen (15)-day reglementary period. An administrative decision must first be appealed to administrative superiors up to the highest level before it may be elevated to a court of justice for review. The power of judicial review may therefore be exercised only if an appeal is first made by the highest administrative body in the hierarchy of the executive branch of government. In Calo v. Fuertes this Court held that an administrative appeal to the President was the final step in the administrative process and 21 thus a condition precedent to a judicial appeal. Hence, an appeal to the Office of the President from the decision of the Department Secretary in an administrative case is the last step that an aggrieved party should take in the administrative hierarchy, as it is a plain, speedy and adequate remedy available to the petitioner.

Indeed, certain procedural technicalities have beclouded this case from the outset such that the substantive issue regarding the true nature of the relationship between petitioner and private respondents was not addressed by the Court of Appeals, hence, the raison d'tre of the case. It must necessarily be discussed if this Court were to resolve with finality the protracted conflict that has lasted over twenty-five (25) years. We are resolving the question at this point to bring this case once and for all to a just, fair and equitable conclusion. Where there are clear errors of law this Court must exercise its constitutional power of judicial review to correct such errors. The substantive issue to be resolved may be expressed in this manner: Can a contract of civil law lease prohibit a civil law lessee from employing a tenant on the land subject matter of the lease agreement? Otherwise stated, can petitioner's civil law lessee, Fr. Flores, install tenants on the subject premises without express authority to do so under Art. 1649 of the Civil Code, more so when the lessee is expressly prohibited from doing so, as in the instant case? Contrary to the impression of private respondents, Sec. 6 of R. A. No. 3844, as amended, does not automatically authorize a civil law lessee to employ a tenant without the consent of the landowner. The lessee must be so specifically authorized. For the right to hire a tenant is basically a personal right of a landowner, except as may be provided by law. But certainly nowhere in Sec. 6 does it say that a civil law lessee of a landholding is automatically authorized to install a tenant thereon. A different interpretation would create a perverse and absurd situation where a person who wants to be a tenant, and taking advantage of this perceived ambiguity in the law, asks a third person to become a civil law lessee of the landowner. Incredibly, this tenant would technically have a better right over the property than the landowner himself. This tenant would then gain security of tenure, and eventually become owner of the land by operation of law. This is most unfair to the hapless and unsuspecting landowner who entered into a civil law lease agreement in good faith only to realize later on that he can no longer regain possession of his property due to the installation of a tenant by the civil law lessee. On the other hand, under the express provision of Art. 1649 of the Civil Code, the lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary. In the case before us, not only is there no stipulation to the contrary; the lessee is expressly prohibited from subleasing or encumbering the land, which includes installing a leasehold tenant thereon since the right to do so is an attribute of ownership. Plainly stated therefore, a contract of civil law lease can prohibit a civil law lessee from employing a tenant on the land subject matter of the lease agreement. An extensive and correct discussion of the statutory interpretation of Sec. 6 of R. A. No. 3844, as amended, is provided by the minority view in Bernas v. Court of Appeals.22 When Sec. 6 provides that the agricultural leasehold relations shall be limited to the person who furnishes the landholding, either as owner, civil law lessee, usufructuary, or legal possessor, and the person who personally cultivates the same, it assumes that there is already an existing agricultural leasehold relation, i.e., a tenant or agricultural lessee already works the land. The epigraph of Sec. 6 merely states who are "Parties to Agricultural Leasehold Relations," which assumes that there is already a leasehold tenant on the land; not until then. This is precisely what we are still asked to determine in the instant proceedings. To better understand Sec. 6, let us refer to its precursor, Sec. 8 of R. A. No. 1199, as amended.23 Again, Sec. 8 of R. A. No. 1199 assumes the existence of a tenancy relation. As its epigraph suggests, it is a "Limitation of Relation," and the purpose is merely to limit the tenancy "to the person who furnishes the land, either as owner, lessee, usufructuary, or legal possessor, and to the person who actually works the land himself with the aid of labor available from within his immediate farm household." Once the tenancy relation is established, the parties to that relation are limited to the persons therein stated. Obviously, inherent in the right of landholders to install a tenant is their authority to do so; otherwise, without such authority, civil law lessees as landholders cannot install a tenant on the landholding. Neither Sec. 6 of R. A. No. 3844 nor Sec. 8 of R. A. No. 1199 automatically authorizes the persons named therein to employ a tenant on the landholding. According to Mr. Justice Guillermo S. Santos and CAR Executive Judge Artemio C. Macalino, respected authorities on agrarian reform, the reason for Sec. 6 of R. A. No. 3844 and Sec. 8 of R. A. No. 1199 in limiting the relationship to the lessee and the lessor is to "discourage absenteeism on the part of the lessor and the custom of co-tenancy" under which "the tenant (lessee) employs another to do the farm work for him, although it is he with whom the landholder (lessor) deals directly. Thus, under this practice, the one who actually works the land gets the short end of the bargain, for the nominal or 'capitalist' lessee hugs for himself a major portion of the harvest."24 This breeds exploitation, discontent and confusion x x x x The kasugpong, kasapi, or katulong also works at the pleasure of the nominal tenant.25 When the new law, therefore, limited tenancy relation to the landholder and the person who actually works the land himself with the aid of labor available from within his immediate farm household, it eliminated the nominal tenant or middleman from the picture.26 Another noted authority on land reform, Dean Jeremias U. Montemayor, explains the rationale for Sec. 8 of R. A. No. 1199, the precursor of Sec. 6 of R. A. No. 3844:
27

Since the law establishes a special relationship in tenancy with important consequences, it properly pinpoints the persons to whom said relationship shall apply. The spirit of the law is to prevent both landholder absenteeism and tenant absenteeism. Thus, it would seem that the discretionary powers and important duties of the landholder, like the choice of crop or seed, cannot be left to the will or capacity of an agent or overseer, just as the cultivation of the land cannot be entrusted by the tenant to some other people. Tenancy relationship has been held to be of a personal character.28 Section 6 as already stated simply enumerates who are the parties to an existing contract of agricultural tenancy, which presupposes that a tenancy already exists. It does not state that those who furnish the landholding, i.e., either as owner, civil law lessee, usufructuary, or legal possessor, are automatically authorized to employ a tenant on the landholding. The reason is obvious. The civil lease agreement may be restrictive. Even the owner himself may not be free to install a tenant, as when his ownership or possession is encumbered or is subject to a lien or condition that he should not employ a tenant thereon. This contemplates a situation where the property may be intended for some other specific purpose allowed by law, such as, its conversion into an industrial estate or a residential subdivision. Under Lastimoza v. Blanco, private respondents in that case could not be lawful tenants of the landowner for the reason that the civil law lessees, after failing to return the landholding to the landowner, already became deforciants. A deforciant cannot install a lawful tenant who is entitled to security of tenure. Attention may be invited to settled jurisprudence that the existence of an agricultural leasehold relationship is not terminated by changes of ownership in case of sale, or transfer of legal possession as in lease.30 This, again, assumes that tenancy already exists. In the case at bar, no such relationship was ever created between the civil law lessees and private respondents, and subsequently, between Valencia and private respondents except Catalino Mantac. With respect to the lease agreement between Valencia and Fr. Flores, the lessee did not have any authority to sublease Valencia's property due to the prohibition in their lease agreement. It is likewise in clear and unambiguous terms that the lease agreement was only for a limited duration with no extension.31 In Ponce v. Guevarra32 and Joya v. Pareja33 the agricultural leasehold relations were preserved because the "legal possessors therein were clearly clothed with legal authority or capacity to install tenants." But even assuming that they were not so authorized as in the Ponce case where the civil law lessee was expressly barred from installing a tenant under their contract of lease, the subsequent actions of the landowners in extending the lifetime of the lease, or in negotiating for better terms with the tenants, placed the landowners in estoppel to contest the agricultural leasehold relations. Consequently, the tenants in those cases may be categorized as tenants de jure enjoying tenurial security guaranteed by the Agricultural Tenancy Law, now by the Agricultural Land Reform Code, as amended. This is not the case before us. It must be noted that Valencia never extended the term of the civil law lease, nor did he negotiate with respondents for "better terms" upon the expiration of the lease. He wanted precisely to recover possession of the property upon the expiration of the contract on 30 June 1975, except from Mantac with whom he already entered into a tenancy contract as herein before stated. Valencia appointed an overseer to prepare for his eventual takeover and to cultivate the property through labor administration after his long years in the government service. Verily, the intention of Valencia after the expiration of the lease contract was for him to cultivate the land by administration, or by himself, and not to surrender possession, much less ownership, to the private respondents. There may be apprehensions that should Sec. 6 of R. A. No. 3844 be construed as not to vest the civil law lessee or legal possessor with automatic authority to install tenants, it would in effect open the floodgates to their ejectment on the mere pretext that the civil law lessee or legal possessor was not so authorized by the landowner. This is more imagined than real. In the very recent case of Ganzon v. Court of Appeals, decided 30 July 2002, this Court resolved the 34 issue of whether the private respondents should be considered agricultural tenants of the petitioner. The Court ruled that the respondents were not instituted as agricultural lessees but as civil law lessees of the land. This was evident from the contract of lease executed by the parties. The respondents were neither "impliedly" instituted as tenants nor designated as agricultural lessees by reason alone of the acquiescence by petitioner to the continued possession of the property. The Department of Agrarian Reform in Ganzon made the factual determination that the agreement entered into between Florisco Banhaw (one of the respondents) and Carolina L. Ganzon (petitioner) was a civil law lease. However, there was no evidence to prove that the other defendants in that case allegedly instituted as tenants were sharing or paying rentals to Florisco Banhaw or to the landowner. The DAR held that mere allegation without the corresponding receipts would not sufficiently establish a tenancy relationship especially since there was an express prohibition in the civil law lease contract from subleasing the subject land to any other person.35
29

From the foregoing discussion, it is reasonable to conclude that a civil law lessee cannot automatically institutetenants on the property under to Sec. 6 of R. A. No. 3844. The correct view that must necessarily be adopted is that the civil law lessee, although a legal possessor, may not install tenants on the property unless expressly authorized by the lessor. And if a prohibition exists or is stipulated in the contract of lease the occupants of the property are merely civil law sublessees whose rights terminate upon the expiration of the civil law lease agreement. In the present case, the Decision of the Secretary of Agrarian Reform, as modified by the Office of the President through the Executive Secretary, held that private respondents were deemed leasehold tenants. They anchored their proposition on Sec. 6 of R. A. No. 3844, as amended, otherwise known as The Agricultural Land Reform Code, which states that since the civil law lessees had a valid contract with Valencia, the sublessees wereautomatically deemed his tenants by operation of law. This conclusion espoused by the Secretary of Agrarian Reform is arbitrary and unfounded. The following essential requisites must 36 concur in order to establish a tenancy relationship: (a) the parties being landowner and tenant; (b) the subject matter is agricultural land; (c) there is consent by the landowner; (d) the purpose is agricultural production; (e) there is personal cultivation by the tenant; and, (f) there is sharing of harvests between the parties. An allegation that an agricultural tenant tilled the land in question does not make the case an agrarian dispute.37Claims that one is a tenant do not automatically give rise to security of 38 tenure. The elements of tenancy must first be proved in order to entitle the claimant to security of tenure. A tenancy relationship cannot be presumed. There must be evidence to prove this allegation. Hence, a perusal of the records and documents is in order to determine whether there is substantial evidence to prove the allegation that a tenancy relationship does exist between petitioner and private respondents. The principal factor in determining whether a tenancy relationship exists is intent. Tenancy is not a purely factual relationship dependent on what the alleged tenant does upon the land. It is also a legal relationship. The intent of the parties, the understanding when the farmer is installed, and their written agreements, provided these are complied with and are not contrary to law, are even more important.39 In Caballes v. DAR40 the Court held that all these requisites must concur in order to create a tenancy relationship. The absence of one does not make an occupant or a cultivator thereof or a planter thereon a de jure tenant. This is so because unless a person has established his status as a de jure tenant he is not entitled to security of tenure nor is he covered by the Land Reform Program of the Government under existing tenancy laws.41 The security of tenure guaranteed by our tenancy laws may be invoked only by tenants de jure, not by those who are not true and lawful tenants.42 In Berenguer, Jr. v. Court of Appeals this Court ruled that the respondents' self-serving statements regarding their tenancy relations could not establish the claimed relationship.43 The fact alone of working on another's landholding does not raise a presumption of the existence of agricultural tenancy.44 Substantial evidence does not only entail the presence of a mere scintilla of evidence in order that the fact of sharing can be established; there must be concrete evidence on record adequate enough to prove the element of sharing.45 Bejasa v. Court of Appeals similarly ruled that to prove sharing of harvests, a receipt or any other evidence must be presented as self-serving statements are deemed inadequate.46 In the present case, it is not disputed that the relationship between Valencia and Henson, and subsequently, Valencia and Fr. Flores, partook of a civil law lease. Henson and later Fr. Flores were not instituted as agricultural lessees but as civil law lessees. As a finding of fact, the Secretary of Agrarian Reform held that a written civil law lease contract between Valencia and Fr. Flores was on file which contained in clear and precise terms the stipulation prohibiting the subleasing or encumbering of his parcels of land without the 47 written consent of Valencia. The Secretary even went as far as stating for the record that such stipulation barring the subletting of 48 the property was violated by Fr. Flores when he subleased the subject parcels of land to private respondents. The findings of fact by the DAR Hearing Officer, Atty. Ampong, in his Investigation Report and Recommendationsdated 7 December 1988 concerning the admission by private respondents that they never turned over the rentals or harvests to Valencia and, instead, to his overseer who was not authorized to receive any payments, must be deemed conclusive.49 As to the civil law lease between Valencia and Fr. Flores, the prohibition against subletting the property without the written consent of Valencia must be upheld. Thus, there is no tenurial security for private respondents designated by the civil law lessee, except for the oft-mentioned Catalino Mantac.

Furthermore, it must be noted that private respondents Ernesto Lobresco and Francisco Obang sublet the land to third persons. Even assuming arguendo then that they were tenants, although installed without authority, the act of subletting to third persons extinguished the agricultural leasehold relations of Ernesto Lobresco and Francisco Obang as it constituted an abandonment of the landholding due to absence of personal cultivation. Since private respondents with the exception of Catalino Mantac cannot be deemed tenants in contemplation of law, they are therefore not entitled to Certificates of Land Transfer (CLTs) under the Operation Land Transfer (OLT) Program pursuant to Pres. Decree No. 27 and L.O.I. No. 474. All other persons found in the land in question are considered unlawful occupants of the property unless otherwise authorized by the landowner to possess the same in a lawful capacity. Even as we uphold time and again the existence and validity of implied agricultural tenancy agreements, we encourage the forging of written documents to prevent ambiguity as to the terms set by both parties and for them to express their intent in clear language. This would minimize and even prevent the "shotgun approach" to tenancy relations imposed by some officials of the Government without complying with the essential requisites of tenancy as provided by law. Agreements must be entered freely and voluntarily by the parties concerned without the influence of third parties, much less the Government, making representations for either side. An express tenancy agreement would facilitate the aims of the agricultural tenancy laws and promote social justice for both landowner and tenant. With respect to the retention limits of land ownership by Valencia and his "direct descendants," the Comprehensive Agrarian Reform Law allows landowners whose lands have been covered by Pres. Decree No. 27 to keep the area originally retained by them provided the original homestead grantees who still own the original homestead at the time of the approval of Rep. Act No. 6657 shall retain the same areas as long as they continue to cultivate the homestead.50 The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the landowner, as a general rule.51 However, the factual determination of whether Valencia and his "direct descendants" have complied with Sec. 6 of Rep. Act No. 6657 should be addressed by the Department of Agrarian Reform. Ascertaining if petitioner and his "direct descendants" are within the seven (7)-hectare retention limit provided by Pres. Decree No. 27 requires the technical expertise of the administrative agency concerned. It is appalling to note that it took over twelve (12) years for the Agrarian Reform Team 202 of the Canlaon City Office of the DAR to act on a simple matter calling for a preliminary determination of tenancy status, in spite of a telegram sent on 30 March 1976 by the Secretary of Agrarian Reform directing the Team Leader of A.R.T. 202 to investigate and submit a report on the landholding of petitioner Valencia.52 This is truly a travesty of great magnitude and a clear-cut case of undue delay and administrative injustice, for the rights of the landowner must equally be protected just as passionately as the rights of the tenant-tiller, especially so that in the meantime he has been deprived of the actual possession of his property which he envisioned to cultivate himself after retiring from the government service; worse, he was not paid his landholder's shares in the harvests, and there is no telling when, if ever, he will ever be paid by private respondents who claim to be his "tenants." Executive or administrative justice must always be dispensed with an even hand, regardless of a person's economic station in life. WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 32669 dated 27 July 1995 and its Resolution dated 22 September 1995 denying the Motion for Reconsideration are REVERSED and SET ASIDE, and a new one is entered as follows: 1. The area acquired by petitioner Victor G. Valencia under his Homestead Application No. HA-231601 with Final Proof and Tax Declaration No. 0515 is EXCLUDED from the coverage of Pres. Decree No. 27, hence, must be retained by him; 2. The Certificates of Land Transfer (CLTs) issued to private respondents Santos Gargaya (CLT No. 0-071160), Juliano Magdayao (CLTs Nos. 0-071161, 0-071163, 0-071166 & 0-071175), Crescenciano Frias (CLT No. 0-071164), Federico Jare (CLTs Nos. 0-071171 & 0071172), Rosendo Lobresco (CLTs Nos. 0-071189 & 0-071182), Ernesto Lobresco (CLTs Nos. 0-071185 & 0-071187), Feliciano Lobresco (CLT No. 0-071188), Victoriano Montefalcon (CLT No. 0-071190), Francisco Obang (CLT No. 0-071168), Ambrosio Semillano (CLTs Nos. 0-071165, 0-071176 & 0-071177), Rogelio Tamayo (CLT No. 0-071194) and Edilberto Lobresco (CLT No. 0-071173) are CANCELLED and NULLIFIED for having been issued without factual and legal basis; 3. The agricultural leasehold of respondent Catalino Mantac (CLT No. 0-071162) covering an area of 0.0425 hectare subject of tenancy agreement with petitioner Victor G. Valencia is maintained and respected; 4. All unlawful occupants of the property under TCT No. H-T-137 and Homestead Application No. HA-231601 with Final Proof, and Tax Declaration No. 0515 including but not limited to the private respondents mentioned in par. 2 hereof are ORDERED to

IMMEDIATELY VACATE and RETURN peacefully to the lawful owner, petitioner Victor G. Valencia, the parcels of land respectively possessed or occupied by them. No pronouncement as to costs. SO ORDERED.

G.R. No. 172700

July 23, 2010

OFFICE OF THE OMBUDSMAN, Petitioner, vs. ROLSON RODRIGUEZ, Respondent. DECISION CARPIO, J.: The Case This is a petition for review1 of the 8 May 2006 Decision2 of the Court of Appeals in CA-G.R. SP No. 00528 setting aside for lack of jurisdiction the 21 September 2004 Decision3 of the Ombudsman (Visayas) in OMB-V-A-03-0511-H. The Antecedent Facts On 26 August 2003, the Ombudsman in Visayas received a complaint4 for abuse of authority, dishonesty, oppression, misconduct in office, and neglect of duty against Rolson Rodriguez, punong barangay in Brgy. Sto. Rosario, Binalbagan, Negros Occidental. On 1 September 2003, the sangguniang bayan of Binalbagan, Negros Occidental, through vice-mayor Jose G. Yulo, received a similar complaint5 against Rodriguez for abuse of authority, dishonesty, oppression, misconduct in office, and neglect of duty. In its 8 September 2003 notice,6 the municipal vice-mayor required Rodriguez to submit his answer within 15 days from receipt of the notice. On 23 September 2003, Rodriguez filed a motion to dismiss7 the case filed in thesangguniang bayan on the ground that the allegations in the complaint were without factual basis and did not constitute any violation of law. In a compliance8 dated 22 October 2003, Rodriguez alleged complainants violated the rule against forum shopping. Meanwhile, in its 10 September 2003 order,9 the Ombudsman required Rodriguez to file his answer. Rodriguez filed on 24 October 2003 a motion to dismiss10 the case filed in the Ombudsman on the grounds of litis pendentiaand forum shopping. He alleged that the sangguniang bayan had already acquired jurisdiction over his person as early as 8 September 2003. The municipal vice-mayor set the case for hearing on 3 October 2003.11 Since complainants had no counsel, the hearing was reset to a later date. When the case was called again for hearing, complainants counsel manifested that complainants would like to withdraw the administrative complaint filed in the sangguniang bayan. On 29 October 2003, complainants filed a motion12 to withdraw the complaint lodged in the sangguniang bayan on theground that they wanted to prioritize the complaint filed in the 13 Ombudsman. Rodriguez filed a comment praying that the complaint be dismissed on the ground of forum shopping, not on the 14 ground complainants stated. In their opposition, complainants admitted they violated the rule against forum shopping and claimed 15 they filed the complaint in the sangguniang bayan without the assistance of counsel. In his 4 November 2003 Resolution, the municipal vice-mayor dismissed the case filed in the sangguniang bayan. In its 29 January 2004 order,16 the Ombudsman directed both parties to file their respective verified position papers. Rodriguez moved for reconsideration of the order citing the pendency of his motion to dismiss.17 In its 11 March 2004 order,18 the Ombudsman stated that a motion to dismiss was a prohibited pleading under Section 5 (g) Rule III of Administrative Order No. 17. The Ombudsman reiterated its order for Rodriguez to file his position paper. In his position paper, Rodriguez insisted that the sangguniang bayan still continued to exercise jurisdiction over the complaint filed against him. He claimed he had not received any resolution or decision dismissing the complaint filed in the sangguniang bayan. In

reply, complainants maintained there was no more complaint pending in thesangguniang bayan since the latter had granted their motion to withdraw the complaint. In a rejoinder,20 Rodriguez averred that the sangguniang bayan resolution dismissing the case filed against him was not valid because only the vice-mayor signed it. The Ruling of the Ombudsman In its 21 September 2004 Decision, the Ombudsman found Rodriguez guilty of dishonesty and oppression. It imposed on Rodriguez the penalty of dismissal from the service with forfeiture of all benefits, disqualification to hold public office, and forfeiture of civil 22 23 service eligibilities. Rodriguez filed a motion for reconsideration. In its 12 January 2005 Order, the Ombudsman denied the 24 motion for reconsideration. In its 8 March 2005 Order, the Ombudsman directed the mayor of Binalbagan, Negros Occidental to implement the penalty of dismissal against Rodriguez. Rodriguez filed in the Court of Appeals a petition for review with prayer for the issuance of a temporary restraining order. The Ruling of the Court of Appeals In its 8 May 2006 Decision,25 the Court of Appeals set aside for lack of jurisdiction the Decision of the Ombudsman and directed the sangguniang bayan to proceed with the hearing on the administrative case. The appellate court reasoned that the sangguniang bayan had acquired primary jurisdiction over the person of Rodriguez to the exclusion of the Ombudsman. The Court of Appeals relied on Section 4, Rule 46 of the Rules of Court, to wit: Sec. 4. Jurisdiction over person of respondent, how acquired. The court shall acquire jurisdiction over the person of the respondent by the service on him of its order or resolution indicating its initial action on the petition or by his voluntary submission to such jurisdiction. The appellate court noted that the sangguniang bayan served on Rodriguez a notice, requiring the latter to file an answer, on 8 September 2003 while the Ombudsman did so two days later or on 10 September 2003. Petitioner Ombudsman contends that upon the filing of a complaint before a body vested with jurisdiction, that body has taken cognizance of the complaint. Petitioner cites Black s Law Dictionary in defining what "to take cognizance" means to wit, "to acknowledge or exercise jurisdiction." Petitioner points out it had taken cognizance of the complaint against Rodriguez before a similar complaint was filed in the sangguniang bayan against the same respondent. Petitioner maintains summons or notices do not operate to vest in the disciplining body jurisdiction over the person of the respondent in an administrative case. Petitioner concludes that consistent with the rule on concurrent jurisdiction, the Ombudsman s exercise of jurisdiction should be to the exclusion of thesangguniang bayan. Private respondent Rolson Rodriguez counters that when a competent body has acquired jurisdiction over a complaint and the person of the respondent, other bodies are excluded from exercising jurisdiction over the same complaint. He cites Article 124 of the Implementing Rules and Regulations of Republic Act No. 7160,26 which provides that an elective official may be removed from office by order of the proper court or the disciplining authority whichever first acquires jurisdiction to the exclusion of the other. Private respondent insists thesangguniang bayan first acquired jurisdiction over the complaint and his person. He argues jurisdiction over the person of a respondent in an administrative complaint is acquired by the service of summons or other compulsory processes. Private respondent stresses complainants violated the rule against forum shopping when they filed identical complaints in two disciplining authorities exercising concurrent jurisdiction. The Issues The issues submitted for resolution are (1) whether complainants violated the rule against forum shopping when they filed in the Ombudsman and the sangguniang bayan identical complaints against Rodriguez; and (2) whether it was the sangguniang bayan or the Ombudsman that first acquired jurisdiction. The Court s Ruling The petition has merit. Paragraph 1, Section 13 of Article XI of the Constitution provides:
21

19

Sec. 13. The Ombudsman shall have the following powers, functions, and duties: (1) Investigate on its own, or on complaint by any person, any act or omission of any public official, employee, office, or agency, when such act or omission appears to be illegal, unjust, improper, or inefficient. Section 15 of Republic Act No. 6770, otherwise known as the Ombudsman Act of 1989, states: Sec. 15. Powers, Functions, and Duties. The Ombudsman shall have the following powers, functions, and duties: (1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper, or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of this primary jurisdiction, it may take over, at any stage, from any investigatory agency of Government, the investigations of such cases. The primary jurisdiction of the Ombudsman to investigate any act or omission of a public officer or employee applies only in cases cognizable by the Sandiganbayan. In cases cognizable by regular courts, the Ombudsman has concurrent jurisdiction with other investigative agencies of government.27 Republic Act No. 8249, otherwise known as An Act Further Defining the Jurisdiction of the Sandiganbayan, limits the cases that are cognizable by the Sandiganbayan to public officials occupying positions corresponding to salary grade 27 and higher. TheSandiganbayan has no jurisdiction over private respondent who, as punong barangay, is occupying a position corresponding to salary grade 14 under Republic Act No. 6758, otherwise known as the Compensation and Position Classification Act of 1989.28 Under Republic Act No. 7160, otherwise known as the Local Government Code, the sangguniang panlungsod orsangguniang bayan has disciplinary authority over any elective barangay official, to wit: SEC. 61. Form and Filing of Administrative Complaints. A verified complaint against any erring elective official shall be prepared as follows: xxxx (c) A complaint against any elective barangay official shall be filed before the sangguniang panlungsod orsangguniang bayan concerned whose decision shall be final and executory. Clearly, the Ombudsman has concurrent jurisdiction with the sangguniang bayan over administrative cases against elective barangay officials occupying positions below salary grade 27, such as private respondent in this case. The facts in the present case are analogous to those in Laxina, Sr. v. Ombudsman,29 which likewise involved identical administrative complaints filed in both the Ombudsman and the sangguniang panlungsod against apunong barangay for grave misconduct. The Court held therein that the rule against forum shopping applied only to judicial cases or proceedings, not to administrative 30 cases. Thus, even if complainants filed in the Ombudsman and the sangguniang bayan identical complaints against private respondent, they did not violate the rule against forum shopping because their complaint was in the nature of an administrative case.1avvphi1 In administrative cases involving the concurrent jurisdiction of two or more disciplining authorities, the body in which the complaint is filed first, and which opts to take cognizance of the case, acquires jurisdiction to the exclusion of other tribunals exercising concurrent jurisdiction.31 In this case, since the complaint was filed first in the Ombudsman, and the Ombudsman opted to assume jurisdiction over the complaint, the Ombudsman s exercise of jurisdiction is to the exclusion of the sangguniang bayan exercising concurrent jurisdiction. It is a hornbook rule that jurisdiction is a matter of law. Jurisdiction, once acquired, is not lost upon the instance of the parties but 32 continues until the case is terminated. When herein complainants first filed the complaint in the Ombudsman, jurisdiction was already vested on the latter. Jurisdiction could no longer be transferred to thesangguniang bayan by virtue of a subsequent complaint filed by the same complainants. As a final note, under Section 60 of the Local Government Code, the sangguniang bayan has no power to remove an elective barangay official. Apart from the Ombudsman, only a proper court may do so.33 Unlike thesangguniang bayan, the powers

of the Ombudsman are not merely recommendatory. The Ombudsman is clothed with authority to directly remove an erring public 35 official other than members of Congress and the Judiciary who may be removed only by impeachment. WHEREFORE, we GRANT the petition. We SET ASIDE the 8 May 2006 Decision of the Court of Appeals in CA-G.R. SP No. 00528. We AFFIRM the 21 September 2004 Decision of the Ombudsman (Visayas) in OMB-V-A-03-0511-H. No pronouncement as to costs. SO ORDERED.

34