G.R. No. L-63558 May 19, 1987

SPOUSES JOSE ABEJO AND AURORA ABEJO, TELEC. TRONIC SYSTEMS, INC., petitioners, vs.HON. RAFAEL DE LA CRUZ, JUDGE OF THE REGIONAL TRIAL COURT (NATIONAL CAPITAL JUDICIAL REGION, BRANCH CLX-PASIG), SPOUSES AGAPITO BRAGA AND VIRGINIA BRAGA, VIRGILIO BRAGA AND NORBERTO BRAGA,respondents.

No. L-68450-51 May 19, 1987

POCKET BELL PHILIPPINES, INC., AGAPITO T. BRAGA, VIRGILIO T. BRAGA, NORBERTO BRAGA, and VIRGINIA BRAGA, petitioners, vs.THE HONORABLE SECURITIES AND EXCHANGE COMMISSION, TELECTRONIC SYSTEMS, INC., JOSE ABEJO, JOSE LUIS SANTIAGO, SIMEON A. MIRAVITE, SR., ANDRES T. VELARDE AND L. QUIDATO BANDOLINO, respondents.

 

TEEHANKEE, C.J.:

These two cases, jointly heard, are jointly herein decided. They involve the question of who, between the Regional Trial Court and the Securities and Exchange Commission (SEC), has original and exclusive jurisdiction over the dispute between the principal stockholders of the corporation Pocket Bell Philippines, Inc. (Pocket Bell), a "tone and voice paging corporation," namely, the spouses Jose Abejo and Aurora Abejo (hereinafter referred to as the Abejos) and the purchaser, Telectronic Systems, Inc. (hereinafter referred to as Telectronics) of their 133,000 minority shareholdings (for P5 million) and of 63,000 shares registered in the name of Virginia Braga and covered by five stock certificates endorsed in blank by her (for P1,674,450.00), and the spouses Agapito Braga and Virginia Braga (hereinafter referred to as the Bragas), erstwhile majority stockholders. With the said purchases, Telectronics would become the majority stockholder, holding 56% of the outstanding stock and voting power of the corporation Pocket Bell.

With the said purchases in 1982, Telectronics requested the corporate secretary of the corporation, Norberto Braga, to register and transfer to its name, and those of its nominees the total 196,000 Pocket Bell shares in the corporation's transfer book, cancel the surrendered certificates of stock and issue the corresponding new certificates of stock in its name and those of its nominees.

Norberto Braga, the corporate secretary and son of the Bragas, refused to register the aforesaid transfer of shares in t e corporate oo s, asserting that the Bragas claim preemptive rights over the 133,000 Abejo shares and that Virginia Braga never transferred her 63,000 shares to Telectronics but had lost the five stock certificates representing those shares.

This triggered off the series of intertwined actions between the protagonists, all centered on the question of jurisdiction over the dispute, which were to culminate in the filing of the two cases at bar.

The Bragas assert that the regular civil court has original and exclusive jurisdiction as against the Securities and Exchange Commission, while the Abejos claim the contrary. A summary of the actions resorted to by the parties follows:

A. ABEJOS ACTIONS IN SEC

1. The Abejos and Telectronics and the latter's nominees, as new majority shareholders, filed SEC Cases Nos. 02379 and 02395 against the Bragas on December 17, 1982 and February 14, 1983, respectively.

2. In SEC Case No. 02379, they prayed for mandamus from the SEC ordering Norberto Braga, as corporate secretary of Pocket Bell to register in their names the transfer and sale of the aforesaid 196,000 Pocket Bell shares (of the Abejos 1 and Virginia Braga 2, cancel the surrendered certificates as duly endorsed and to issue new certificates in their names.

3. In SEC Case No.02395, they prayed for injunction and a temporary restraining order that the SEC enjoin the Bragas from disbursing or disposing funds and assets of Pocket Bell and from performing such other acts pertaining to the functions of corporate officers.

4. Pocket Bell's corporate secretary, Norberto Braga, filed a Motion to Dismiss the mandamus case (SEC Case No. 02379) contending that the SEC has no jurisdiction over the nature of the action since it does not involve an intracorporate controversy between stockholders, the principal petitioners therein, Telectronics, not being a stockholder of record of Pocket Bell.

5. On January 8, 1983, SEC Hearing Officer Joaquin Garaygay denied the motion. On January 14, 1983, the corporate secretary filed a Motion for Reconsideration. On March 21, 1983, SEC Hearing Officer Joaquin Garaygay issued an order granting Braga's motion for reconsideration and dismissed SEC Case No. 02379.

6. On February 11, 1983, the Bragas filed their Motion to Dismiss the injunction case, SEC Case No. 02395. On April 8, 1985, the SEC Director, Eugenio Reyes, acting upon the Abejos'ex-parte motion, created a three-man committee composed of Atty. Emmanuel Sison as Chairman and Attys. Alfredo Oca and Joaquin Garaygay as members, to hear and decide the two SEC cases (Nos. 02379 and 02395).

7. On April 13, 1983, the SEC three-man committee issued an order reconsidering the aforesaid order of March 21, 1983 of the SEC Hearing Officer Garaygay (dismissing the mandamus petition SEC Case No. 02379) and directing corporate secretary Norberto Braga to file his answer to the petitioner therein.

B. BRAGAS' ACTION IN SEC

8. On December 12, 1983, the Bragas filed a petition for certiorari, prohibition and mandamus with the SEC en banc, SEC Case No. EB #049, seeking the dismissal of SEC Cases Nos.' 02379 and 02395 for lack of jurisdiction of the Comn-iission and the setting aside of the various orders issued by the SEC three-man committee in the course of the proceedings in the two SEC cases.

9. On May 15, 1984, the SEC en banc issued an order dismissing the Bragas' petition in SEC Case No. EB#049 for lack of merit and at the same time ordering the SEC Hearing Committee to continue with the hearings of the Abejos and Telectronics SEC Cases Nos. 02379 and 02395, ruhng that the "issue is not the ownership of shares but rather the nonperformance by the Corporate Secretary of the ministerial duty of recording transfers of shares of stock of the corporation of which he is secretary."

10. On May 15, 1984 the Bragas filed a motion for reconsideration but the SEC en banc denied the same on August 9, 1984.

C. BRAGAS' ACTION IN CFI (NOWRTC)

11. On November 25, 1982, following the corporate secretary's refusal to register the transfer of the shares in question, the Bragas filed a complaint against the Abejos and Telectronics in the Court of First Instance of Pasig, Branch 21 (now the Regional Trial Court, Branch 160) docketed as Civil Case No. 48746 for: (a) rescission and annulment of the sale of the shares of stock in Pocket Bell made by the Abejos in favor of Telectronics on the ground that it violated the Bragas' alleged pre-emptive right over the Abej os' shareholdings and an alleged perfected contract with the Abejos to sell the same shares in their (Bragas) favor, (Ist cause of action); plus damages for bad faith; and (b) declaration ofnullity of any transfer, assignment or endorsement of Virginia Bragas' stock certificates for 63,000 shares in Pocket Ben to Telectronics for want of consent and consideration, alleging that said stock certificates, which were intended as security for a loan application and were thus endorsed by her in blank, had been lost (2nd cause of action).

12. On January 4, 1983, the Abejos filed a Motion to Dismiss the complaint on the ground that it is the SEC that is vested under PD 902-A with original and exclusive jurisdiction to hear and decide cases involving, among others, controversies "between and among stockholders" and that the Bragas' suit is such a controversy as the issues involved therein are the stockholders' alleged pre-emptive rights, the validity of the transfer and endorsement of certificates of stock, the election of corporate officers and the management and control of the corporation's operations. The dismissal motion was granted by Presiding Judge G. Pineda on January 14, 1983.

13. On January 24, 1983, the Bragas filed a motion for reconsideration. The Abejos opposed. Meanwhile, respondent Judge Rafael de la Cruz was appointed presiding judge of the court (renamed Regional Trial Court) in place of Judge G. Pineda.

14. On February 14, 1983, respondent Judge de la Cruz issued an order rescinding the January 14, 1983 order and reviving the temporary restraining order previously issued on

December 23, 1982 restraining Telectronics' agents or representatives from enforcing their resolution constituting themselves as the new set of officers of Pocket Bell and from assuming control of the corporation and discharging their functions.

15. On March 2, 1983, the Abejos filed a motion for reconsideration, which motion was duly opposed by the Bragas. On March 11, 1983, respondent Judge denied the motion for reconsideration.

D. ABEJOS' PETITION AT BAR

16. On March 26, 1983, the Abejos, alleging that the acts of respondent Judge in refusing to dismiss the complaint despite clear lack of jurisdiction over the action and in refusing to reconsider his erroneous position were performed without jurisdiction and with grave abuse of discretion, filed their herein Petition for certiorari and Prohibition with Preliminary Injunction. They prayed that the challenged orders of respondent Judge dated February 14, 1983 and March 11, 1983 be set aside for lack of jurisdiction and that he be ordered to permanently desist from further proceedings in Civil Case No. 48746. Respondent judge desisted from further proceedings in the case, dispensing with the need of issuing any restraining order.

E. BRAGAS' PETITION AT BAR

17. On August 29, 1984, the Bragas, alleging in turn that the SEC has no jurisdiction over SEC Cases Nos. 02379 and 02395 and that it acted arbitrarily, whimsically and capriciously in dismissing their petition (in SEC Case No. EB #049) for dismissal of the said cases, filed their herein Petition for certiorari and Prohibition with Preliminary Injunction or TRO. The petitioner seeks the reversal and/or setting aside of the SEC Order dated May 15, 1984 dismissing their petition in said SEC Case No. EB #049 and sustaining its jurisdiction over SEC Cases Nos. 02379 and 02395, filed by the Abejos. On September 24, 1984, this Court issued a temporary restraining order to maintain the status quo and restrained the SEC and/or any of its officers or hearing committees from further proceeding with the hearings in SEC Cases Nos. 02379 and 02395 and from enforcing any and all orders and/or resolutions issued in connection with the said cases.

The cases, having been given due course, were jointly heard by the Court on March 27, 1985 and the parties thereafter filed on April 16, 1985 their respective memoranda in amplification of oral argument on the points of law that were crystalled during the hearing,

The Court rules that the SEC has original and exclusive jurisdiction over the dispute between the principal stockholders of the corporation Pocket Bell, namely, the Abejos and

Telectronics, the purchasers of the 56% majority stock (supra, at page 2) on the one hand, and the Bragas, erstwhile majority stockholders, on the other, and that the SEC, through its en banc Resolution of May 15, 1984 co"ectly ruled in dismissing the Bragas' Petition questioning its jurisdiction, that "the issue is not the ownership of shares but rather the

nonperformance by the Corporate Secretary of the ministerial duty of recording transfers of shares of stock of the Corporation of which he is secretary."

1. The SEC ruling upholding its primary and exclusive jurisdiction over the dispute is correctly premised on, and fully supported by, the applicable provisions of P.D. No. 902-A which reorganized the SEC with additional powers "in line with the government's policy of encouraging investments, both domestic and foreign, and more active publicParticipation in the affairs of private corporations and enterprises through which desirable activities may be pursued for the promotion of economic development; and, to promote a wider and more meaningful equitable distribution of wealth," and accordingly provided that:

SEC. 3. The Commission shall have absolute jurisdiction, supervision and control ouer all corporations, partnerships or associations, who are the grantees of primary franchise and/or a license or permit issued by the government to operate in the Philippines; ...

SEC. 5. In addition to the regulatory and adjudicative functionsof the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

a) Devices or schemes employed by or any acts, of the board of directors, business associations, its officers or partners, amounting to fruud and misrepresentation which may be detrimental to the interest of the public andlor of the stockholder, partners, members of associations or organizations registered with the Commission.

b) Controversies arising out of intracorporate or partnership relations, between and among stockholders, members, or associates; between any andlor all of them and the corporation, partnership or association of which they are stockholders, members or assmiates, respectively; and between such corporation, partnership or assmiation and the state insofar as it concems their individual franchise or right to exist as such entity;

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations. 3

Section 6 further grants the SEC "in order to effectively exercise such jurisdiction," the power, inter alia, "to issue preliminary or permanent injunctions, whether prohibitory or mandatory, in all cases in which it has jurisdiction, and in which cases the pertinent provisions of the Rules of Court shall apply."

2. Basically and indubitably, the dispute at bar, as held by the SEC, is an intracorporate dispute that has arisen between and among the principal stockholders of the corporation Pocket Bell due to the refusal of the corporate secretary, backed up by his parents as erstwhile majority shareholders, to perform his "ministerial duty" to record the transfers of the corporation's controlling (56%) shares of stock, covered by duly endorsed certificates of stock, in favor of Telectronics as the purchaser thereof. mandamus in the SEC to compel the corporate secretary to register the transfers and issue new certificates in favor of Telectronics and its nominees was properly resorted to under Rule XXI, Section 1 of the SEC's New Rules of Procedure, 4 which provides for the filing of such petitions with the SEC. Section 3 of said Rules further authorizes the SEC to "issue orders expediting the proceedings ... and also [to] grant a preliminary injunction for the preservation of the rights of the parties pending such proceedings, "

The claims of the Bragas, which they assert in their complaint in the Regional Trial Court, praying for rescission and annulment of the sale made by the Abejos in favor of Telectronics on the ground that they had an alleged perfected preemptive right over the Abejos' shares as well as for annulment of sale to Telectronics of Virginia Braga's shares covered by street certificates duly endorsed by her in blank, may in no way deprive the SEC of its primary and exclusive jurisdiction to grant or not the writ of mandamus ordering the registration of the shares so transferred. The Bragas' contention that the question of ordering the recording of the transfers ultimately hinges on the question of ownership or right thereto over the shares notwithstanding, the jurisdiction over the dispute is clearly vested in the SEC.

3. The very complaint of the Bragas for annulment of the sales and transfers as filed by them in the regular court questions the validity of the transfer and endorsement of the certificates of stock, claiming alleged pre-emptive rights in the case of the Abejos' shares and alleged loss of thio certificates and lack of consent and consideration in the case of Virginia Braga's shares. Such dispute c learly involve's controversies "between and among stockholders, " as to the Abej os' right to sell and dispose of their shares to Telectronics, the validity of the latter's acquisition of Virginia Braga's shares, who between the Bragas and the Abejos' transferee should be recognized as the controlling shareholders of the corporation, with the right to elect the corporate officers and the management and control of its operations. Such a dispute and case clearly fag within the original and exclusive jurisdiction of the SEC to decide, under Section 5 of P.D. 902-A, above-quoted. The restraining order issued by the Regional Trial Court restraining Telectronics agents and representatives from enforcing their resolution constituting themselves as the new set of officers of Pocket Bell and from assuming control of the corporation and discharging their functions patently encroached upon the SEC's exclusive jurisdiction over such specialized corporate controversies calling for its special competence. As stressed by the Solicitor General on behalf of the SEC, the Court has held that "Nowhere does the law [PD 902-A] empower any Court of First Instance [now Regional Trial Court] to interfere with the orders of the Commission,"5 and consequently "any ruling by the trial court on the issue of ownership of the shares of stock is not binding on the Commission 6for want of jurisdiction.

4. The dispute therefore clearly falls within the general classification of cases within the SEC's original and exclusive jurisdiction to hear and decide, under the aforequoted governing section 5 of the law. Insofar as the Bragas and their corporate secretary's refusal on behalf of the corporation Pocket Bell to record the transfer of the 56% majority shares to Telectronics may be deemed a device or scheme amounting to fraud and misrepresentation emplolyed by them to keep themselves in control of the corporation to the detriment of Telectronics (as buyer and substantial investor in the corporate stock) and the Abejos (as substantial stockholders-sellers), the case falls under paragraph (a). The dispute is likewise an intra-corporate controversy between and among the majority and minority stockholders as to the transfer and disposition of the controlling shares of the corporation, failing under paragraph (b). As stressed by the Court in DMRC Enterprises v. Este del Sol Mountain Reserve, Inc, 7 Considering the announced policy of PD 902-A, the expanded jurisdiction of the respondent Securities and Exchange Commission under said decree extends exclusively to matters arising from contracts involving investments in private corporations, partnerships and associations." The dispute also concerns the fundamental issue ofwhether the Bragas or Telectronics have the right to elect the corporate directors and officers and manage its business and operations, which falls under paragraph (c).

5. Most of the cases that have come to this Court involve those under paragraph (b), i.e. whether the controversy is an intra-corporate one, arising "between and among stockholders" or "between any or allof them and the corporation." The parties have focused their arguments on this question. The Bragas' contention in his field must likewise fail. In Philex Mining Corp. v. Reyes, 8 the Court spelled out that"'an intra-corporate controversy is one which arises between a stockholder and the corporation. There is no distinction, qualification, nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between stockholders and corporations. The issue of whether or not a corporation is bound to replace a stockholder's lost certificate of stock is a matter purely between a stockholder and the corporation. It is a typical intra-corporate dispute. The quqsjion of damage's raised is merely incidental to that main issue. The Court rejected the stockholders' theory of excluding his complaint (for replacement of a lost stock [dividend] certificate which he claimed to have never received) from the classification of intra-corporate controversies as one that "does not square with the intent of the law, which is to segregate from the general jurisdiction of regular Courts controversies involving corporations and their stockholders and to bring them to the SEC for exclusive resolution, in much the same way that labor disputes are now brought to the Ministry-of Labor and Employment (MOLE) and the National Labor Relations Commission (NLRC), and not to the Courts."

(a) The Bragas contend that Telectronics, as buyertransferee of the 56% majority shares is not a registered stockholder, because they, through their son the corporate secretary, appear to have refused to perform "the ministerial duty of recording transfers of shares of stock of the corporation of which he is the secretary," and that the dispute is therefore, not an intracorporate one. This contention begs the question which must properly be resolved by the SEC, but which they would prevent by their own act,

through their son, of blocking the due recording of the transfer and cannot be sanctioned. It can be seen from their very complaint in the regular courts that they with their two sons constituting the plaintiffs are all stockholders while the defendants are the Abejos who are also stockholders whose sale of the shares to Telectronics they would annul.

(b) There can be no question that the dispute between the Abejos and the Bragas as to the sale and transfer of the former's shares to Telectronics for P5 million is an intracorporate one under section 5 (b), prescinding from the applicability of section 5 (a) and (c), (supra, par. 4) lt is the SEC which must resolve the Bragas' claim in their own complaint in the court case filed by them of an alleged pre-emptive right to buy the Abejos' shares by virtue of "on-going negotiations," which they may submit as their defense to the mandamus petition to register the sale of the shares to Telectronics. But asserting such preemptive rights and asking that the same be enforced is a far cry from the Bragas' claim that "the case relates to questions of ownership" over the shares in question. 9 (Not to mention, as pointed out by the Abejos, that the corporation is not a close corporation, and no restriction over the free transferability of the shares appears in the Articles of Incorporation, as well as in the by-laws 10 and the certificates of stock themselves, as required by law for the enforcement of such restriction. See Go Soc & Sons, etc. v. IAC, G.R. No. 72342, Resolution of February 19, 1987.)

(c) The dispute between the Bragas and Telectronics as to the sale and transfer for P1,674,450.00 of Virginia Braga's 63.000 shares covered by Street certificates duly endorsed in blank by her is within the special competence and jurisdiction of the SEC, dealing as it does with the free transferability of corporate shares, particularly street certificates," as guaranteed by the Corporation Code and its proclaimed policy of encouraging foreign and domestic investments in Philippine private corpora. tions and more active public participation therein for the Promotion of economic development. Here again, Virginia Braga's claim of loss of her street certificates11 or theft thereof (denounced by Telectronics as 11 perjurious" 12 ) must be pleaded by her as a defense against Telectronics'petition for mandamus and recognition now as the controlling stockholder of the corporation in the light of the joint affidavit of Geneml Cerefino S. Carreon of the National Telecommunications Commission and private respondent Jose Luis Santiago of Telectronics narrating the facts and circumstances of how the former sold and delivered to Telectronics on behalf of his compadres, the Bragas, Virginia Braga's street certificates for 63,000 shares equivalent to 18% of the corporation's outstanding stock and received the cash price thereof. 13 But as to the sale and transfer of the Abejos' shares, the Bragas cannot oust the SEC of its original and exclusive jurisdiction to hear and decide the case, by blocking through the corporate secretary, their son, the due recording of the transfer and sale of the shares in question and claiming that Telectronics is not a stockholder of the corporation – which is

the very issue that the SEC is called upon to resolve. As the SEC maintains, "There is no requirement that a stockholder of a corporation must be a registered one in order that,the Securities and Exchange Commission may take cognizance of a suit seeking to enforce his rights as such stockholder." 14 This is because the SEC by express mandate has "absolute jurisdiction, supervision and control over all corporations" and is called upon to enforce the provisions of the Corporation Code, among which is the stock purchaser's right to secure the corresponding certificate in his name under the provisions of Section 63 of the Code. Needless to say, any problem encountered in securing the certificates of stock representing the investment made by the buyer must be expeditiously dealt with through administrative mandamus proceedings with the SEC, rather than through the usual tedious regular court procedure. Furthermore, as stated in the SEC order of April 13, 1983, notice given to the corporation of the sale of the shares and presentation of the certificates for transfer is ,equivalent to registration: "Whether the refusal of the (corporation) to effect the same is ivalid or not is still subject to the outcome of the hearing on the merits of the case. 15

6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative commissions and boards the power to resolve specialized disputes in the field of labor (as in corporations, public transportation and public utilities) ruled that Congress in requiring the Industrial Court's intervention in the resolution of labor-management controversies likely to cause strikes or lockouts meant such jurisdiction to be exclusive, although it did not so expressly state in the law. The Court held that under the "sense-making and expeditious doctrine of primary jurisdiction ... the courts cannot or will n6t determine a controversy involving a question which is within the jurisdiction of an administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience, and seruices of the administratiue tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply uith the purposes of the regulatory statute administered " 16

In this era of clogged court dockets, the need for specialized administrative boards or commissions with the special knowledge, experience and capability to hear and determine promptly disputes on technical matters or essentially factual matters, subject to judicial review in case of grave abuse of discretion, has become well nigh indispensable. Thus, in 1984, the Court noted that "between the power lodged in an administrative body and a court, the unmistakable trend has been to refer it to the former. 'Increasingly, this Court has been committed to the view that unless the law speaks clearly and unequivocably, the choice should fall on [an administrative agency.]' "17 The Court in the earlier case of Ebon vs. De Guzman 18 noted that the lawmaking authority, in restoring to the labor arbiters and the NLRC their jurisdiction to award all kinds of damages in labor cases, as against the previous P.D. amendment splitting their jurisdiction with the regular courts, "evidently ... had second thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction to award damages in labor cases because that setup would mean duplicity of suits, splitting the cause of action and possible conflicting findings and conclusions by two tribunals on one and the same claim."

7. Thus, the Corporation Code (B.P. No. 178) enacted on May 1, 1980 specifically vests the SEC with the Rule-making power in the discharge of its task of implementing the provisions of the Code and particularly charges it with the duty of preventing fraud and abuses on the part of controlling stockholders, directors and officers, as follows:

SEC. 143. Rule-making power of the Securities and Exchange Commission. — The Securities and Exchange Commission shall have the power and authority to implement the provisions of this Code, and to promulgate rules and regulations reasonably necessary to enable it to perform its duties hereunder, particularly in the prevention of fraud and abuses on the part of the controlling stockholders, members, directors, trustees or officers. (Emphasis supplied)

The dispute between the contending parties for control of thecorporation manifestly fans within the primary and exclusive jurisdiction of the SEC in whom the law has reserved such jurisdiction as an administrative agency of special competence to deal promptly and expeditiously therewith.

As the Court stressed in Union Glass & Container Corp. v. SEC, 19"This grant of jurisdiction [in Section 51 must be viewed in the light of the nature and functions of the SEC under the law. Section 3 of PD No. 902-A confers upon the latter 'absolute jurisdiction, supervision, and control over all corporations, partnerships or associations, who are grantees of primary franchise and/or license or permit issued by the government to operate in the Philippines ... The principal function of the SEC is the supervision and control over corporations, partnerships and associations with the end in view that investment in these entities may be encouraged and protected, and their activities pursued for the promotion of economic development.

"It is in aid of this office that the adjudicative power of the SEC must be exercised. Thus the law explicitly specified and delin-dted its jurisdiction to matters intrinsically connected with the regulation of corporations, partnerships and associations and those dealing with the internal affairs of such corporations, partnerships or associations.

"Otherwise stated, in order that the SEC can take cognizance of a case, the controversy must pertain to any of the following relationships: [al between the corporation, partnership or association and the public; [b] between the corporation, partnership or association and its stockholders, partners, members, or officers; [c] between the corporation, partnership or association and the state in so far as its franchise, permit or license to operate is concerned; and Id] among the stockholders, partners or associates themselves." 20

Parenthetically, the cited case of Union Glass illustrates by way of contrast what disputes do not fall within the special jurisdiction of the SEC. In this case, the SEC had properly assumed jurisdiction over the dissenting stockholders' com. Plaint against the corporation Pioneer Glass questioning its dacion en pago of its glass plant and all its assets in favor of the DBP which was clearly an intra-corporate controversy dealing with its internal affairs. But the Court held that the SEC had no jurisdiction over petitioner Union Glass Corp.,

imPle,aded as third party purchaser of the plant from DBP in the action to annul the dacion en pago. The Court held that such action for recovery of the glass plant could be brought by the dissenting stockholder to the regular courts only if and when the SE C rendered final judgment annulling the dacion en pago and furthermore subject to Union Glass' defenses as a third party buyer in good faith. Similarly, in the DMRCcase, therein petitioner's,tomplaint for collection of the amounts due to it as payment of rentals for the lease of its heavy equipment in the form mainly of cash and part in shares of stock of the debtor-defendant corporation was held to be not covered by the SEC's exclusive jurisdiction over intracorporate disputes, since "to pass upon a money claim under a lease contract would be beyond the competence Of the Securities and Exchange Commission and to separate the claim for money from the claim for shares of stock would be splitting a single cause of action resulting in a multiplicity of suitS." 21 Such an action for collection of a debt does not involve enforcement Of rights and obligations under the Corporation Code nor the in. temal or intracorporate affairs of the debtor corporation. But in aR disputes affecting and dealing With the interests of the corporation and its stockholders, following the trend and clear legislative intent of entmsting all disputes of a specialized nature to administrative agencies possessing. the requisite competence, special knowledge, experience and services and facilities to expeditiously resolve them and determine the essential facts including technical and intricate matters, as in labor and public utilities rates disputes, the SEC has been given "the original and exclusive jurisdiction to hear anddecide" them (under section 5 of P.D. 902-A) "in addition to [its] regulatory and adjudicative functions" (under Section 3, vesting in it "absolute jurisdiction, supervision and control over all corporations" and the Rule-making power granted it in Section 143 of the Corporation Code,supra). As stressed by the Court in the Philex case, supra, "(T)here is no distinction, qualification, nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between stockholders and corporations."

It only remains now to deal with the Order dated April 15, 1983 (Annex H, Petition) 22 of the SEC's three-member Hearing Conunittee granting Telectronics' motion for creation of a receivership or management committee with the ample powers therein enumerated for the preservation pendente lite of the corporation's assets and in discharge of its "power and duty to preserve the rights of the parties, the stockholders, the public availing of the corporation's services and the rights of creditors," as well as "for reasons of equity and justice ... (and) to prevent possible paralization of corporate business." The said Order has not been implemented notwithstanding its having been upheld per the SEC en banc's Order of May 15, 1984 (Annex "V", Petition) dismissing for lack of merit the petition for certiorari, prohibition and mandamus with prayer for restraining order or injunction filed by the Bragas seeking the disbandment of the Hearing Committee and the setting aside of its Orders, and its Resolution of August 9, 1984, denying reconsideration (Annex "X", Petition), due to the Bragas' filing of the petition at bar.

Prescinding from the great concern of damage and prejudice expressed by Telectronics due to the Bragas having remained in control of the corporation and having allegedly committed acts of gross mismanagement and misapplication of funds, the Court finds that under the facts and circumstances of record, it is but fair and just that the SEC's order

creating a receivership committee be implemented forthwith, in accordance with its terms, as follows:

The three-man receivership committee shall be composed of a representative from the commission, in the person of the Director, Examiners and Appraisers Department or his designated representative, and a representative from the petitioners and a representative of the respondent.

The petitioners and respondent are therefore directed to sub. mit to the Commission the name of their designated representative within three (3) days from receipt of this order. The Conunission shall appoint the other representatives if either or both parties fafl to comply with the requirement within the stated time.

ACCORDINGLY, judgment is hereby rendered:

(a) Granting the petition in G.R. No. 63558, annulling the challenged Orders of respondent Judge clated February 14, 1983 and March i 1, 1983 (Annexes "L" and "P" of the Abejos' petition) and prohibiting respondent Judge from further proceeding in Civil Case No. 48746 filed in his Court other than to dismiss the same for lack or jurisdiction over the subject-matter;

(b) Dismissing the petition in G.R. Nos. 68450-51 and lifting the temporary restraining order issued on September 24, 1984, effective immediately upon promulgation hereof,

(c) Directing the SEC through its Hearing Committee to proceed immediately with hearing and resolving the pending mandamus petition for recording in the corporate books the transfer to Telectronics and its nominees of the majority (56%) shares of stock of the corporation Pocket Bell pertaining to the Abejos and Virginia Braga and all related issues, taking into consideration, without need of resubmittal to it, the pleadings, annexes and exhibits filed by the contending parties in the cases at bar; and

(d) Likewise directing the SEC through its Hearing Committee to proceed immediately with the implementation of its receivership or management committee Order of April 15, 1983 in SEC Case No. 2379 and for the purpose, the contending parties are ordered to submit to said Hearing Committee the name of their designated representatives in the receivership/management committee within three (3) days from receipt of this decision, on pain of forfeiture of such right in case of failure to comply herewith, as provided in the said Order; and ordering theBragas to perform only caretaker acts in the corporation pending the organization of such receivership/management committee and assumption of its functions.

This decision shall be immediately executory upon its promulgation.

SO ORDERED.

Yap, Narvasa, Melencio-Herrera, Cruz, Feliciano, Gancayco and Sarmiento, 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.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

This is a petition for certiorari[1] 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.

On April 21, 1998, petitioners Antonio 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 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 Doña Pilar Gonzaga Elementary School and Mrs. Bolantes; Mrs. Diaz, Principal, Nueve de Febrero 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 Elementary 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 ‘SHA LALA LALA’.

4.   Some of the participants wore T-shirts with the name of candidate “Benhur" Abalos, Jr.," printed in over-sized 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 Director[4] of the Law Department of the COMELEC conducted a preliminary investigation.   All the private respondents filed separate counter-affidavits[5] with prayer to dismiss the complaint.

On November 26, 1998, the Director of the Law Department submitted his findings to the COMELEC En Banc recommending that the complaint be dismissed for insufficiency of evidence.

On December 1, 1998, the COMELEC En Banc issued the assailed Resolution No. 98-3208[6] 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 the respondents.”[7]

On February 09, 1999, petitioners, without first submitting a motion for reconsideration, filed the instant petition with this Court. 

They alleged therein that the COMELEC En Banc, in issuing Resolution No. 98-3208 dated December 1, 1998, acted "with apparent grave abuse of discretion."[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:

x x x

d)         motion for reconsideration of an en banc ruling, resolution, order or decision except 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 the said motion is to give the COMELEC an opportunity to correct the error imputed to it.[11] 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.[13] 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.

x x x.”  (Emphasis ours)

Petitioners' complaint expressly states that no supporting affidavits were submitted by the complaining witnesses[14] 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.

G.R. No. 88550 April 18, 1990

INDUSTRIAL ENTERPRISES, INC., petitioner, vs.THE HON. COURT OF APPEALS, MARINDUQUE MINING & INDUSTRIAL CORPORATION, THE HON. GERONIMO VELASCO in his capacity as Minister of Energy and PHILIPPINE NATIONAL BANK, respondents.

Manuel M. Antonio and Dante Cortez for petitioner.

Pelaez, Adriano & Gregorio for respondent MMIC.

The Chief Legal Counsel for respondent PNB.

 

MELENCIO-HERRERA, J.:

This petition seeks the review and reversal of the Decision of respondent Court of Appeals in CA-G.R. CV No. 12660, 1 which ruled adversely against petitioner herein.

Petitioner Industrial Enterprises Inc. (IEI) was granted a coal operating contract by the Government through the Bureau of Energy Development (BED) for the exploration of two coal blocks in Eastern Samar. Subsequently, IEI also applied with the then Ministry of Energy for another coal operating contract for the exploration of three additional coal blocks which, together with the original two blocks, comprised the so-called "Giporlos Area."

IEI was later on advised that in line with the objective of rationalizing the country's over-all coal supply-demand balance . . . the logical coal operator in the area should be the Marinduque Mining and Industrial Corporation (MMIC), which was already developing the coal deposit in another area (Bagacay Area) and that the Bagacay and Giporlos Areas should be awarded to MMIC (Rollo, p. 37). Thus, IEI and MMIC executed a Memorandum of Agreement whereby IEI assigned and transferred to MMIC all its rights and interests in the two coal blocks which are the subject of IEI's coal operating contract.

Subsequently, however, IEI filed an action for rescission of the Memorandum of Agreement with damages against MMIC and the then Minister of Energy Geronimo Velasco before the Regional Trial Court of Makati, Branch 150, 2 alleging that MMIC took possession of the subject coal blocks even before the Memorandum of Agreement was finalized and approved by the BED; that MMIC discontinued work thereon; that MMIC failed to apply for a coal operating contract for the adjacent coal blocks; and that MMIC failed and refused to pay the reimbursements agreed upon and to assume IEI's loan obligation as provided in the Memorandum of Agreement (Rollo, p. 38). IEI also prayed that the Energy Minister be ordered to approve the return of the coal operating contract from

MMIC to petitioner, with a written confirmation that said contract is valid and effective, and, in due course, to convert said contract from an exploration agreement to a development/production or exploitation contract in IEI's favor.

Respondent, Philippine National Bank (PNB), was later impleaded as co-defendant in an Amended Complaint when the latter with the Development Bank of the Philippines effected extra-judicial foreclosures on certain mortgages, particularly the Mortgage Trust Agreement, dated 13 July 1981, constituted in its favor by MMIC after the latter defaulted in its obligation totalling around P22 million as of 15 July 1984. The Court of Appeals eventually dismissed the case against the PNB (Resolution, 21 September 1989).

Strangely enough, Mr. Jesus S. Cabarrus is the President of both IEI and MMIC.

In a summary judgment, the Trial Court ordered the rescission of the Memorandum of Agreement, declared the continued efficacy of the coal operating contract in favor of IEI; ordered the reversion of the two coal blocks covered by the coal operating contract; ordered BED to issue its written affirmation of the coal operating contract and to expeditiously cause the conversion thereof from exploration to development in favor of IEI; directed BED to give due course to IEI's application for a coal operating contract; directed BED to give due course to IEI's application for three more coal blocks; and ordered the payment of damages and rehabilitation expenses (Rollo, pp. 9-10).

In reversing the Trial Court, the Court of Appeals held that the rendition of the summary judgment was not proper since there were genuine issues in controversy between the parties, and more importantly, that the Trial Court had no jurisdiction over the action considering that, under Presidential Decree No. 1206, it is the BED that has the power to decide controversies relative to the exploration, exploitation and development of coal blocks (Rollo, pp. 43-44).

Hence, this petition, to which we resolved to give due course and to decide.

Incidentally, the records disclose that during the pendency of the appeal before the Appellate Court, the suit against the then Minister of Energy was dismissed and that, in the meantime, IEI had applied with the BED for the development of certain coal blocks.

The decisive issue in this case is whether or not the civil court has jurisdiction to hear and decide the suit for rescission of the Memorandum of Agreement concerning a coal operating contract over coal blocks. A corollary question is whether or not respondent Court of Appeals erred in holding that it is the Bureau of Energy Development (BED) which has jurisdiction over said action and not the civil court.

While the action filed by IEI sought the rescission of what appears to be an ordinary civil contract cognizable by a civil court, the fact is that the Memorandum of Agreement sought to be rescinded is derived from a coal-operating contract and is inextricably tied up with the right to develop coal-bearing lands and the determination of whether or not the reversion of the coal operating contract over the subject coal blocks to IEI would be in line with the integrated national program for coal-development and with the objective of rationalizing the country's over-all coal-supply-demand balance, IEI's cause of action was not merely the rescission of a contract but the reversion or return

to it of the operation of the coal blocks. Thus it was that in its Decision ordering the rescission of the Agreement, the Trial Court, inter alia,declared the continued efficacy of the coal-operating contract in IEI's favor and directed the BED to give due course to IEI's application for three (3) IEI more coal blocks. These are matters properly falling within the domain of the BED.

For the BED, as the successor to the Energy Development Board (abolished by Sec. 11, P.D. No. 1206, dated 6 October 1977) is tasked with the function of establishing a comprehensive and integrated national program for the exploration, exploitation, and development and extraction of fossil fuels, such as the country's coal resources; adopting a coal development program; regulating all activities relative thereto; and undertaking by itself or through service contracts such exploitation and development, all in the interest of an effective and coordinated development of extracted resources.

Thus, the pertinent sections of P.D. No. 1206 provide:

Sec. 6. Bureau of Energy Development. There is created in the Department a Bureau of Energy Development, hereinafter referred to in this Section as the Bureau, which shall have the following powers and functions, among others:

a. Administer a national program for the encouragement, guidance, and whenever necessary, regulation of such business activity relative to the exploration, exploitation, development, and extraction of fossil fuels such as petroleum, coal, . . .

The decisions, orders, resolutions or actions of the Bureau may be appealed to the Secretary whose decisions are final and executory unless appealed to the President. (Emphasis supplied.)

That law further provides that the powers and functions of the defunct Energy Development Board relative to the implementation of P.D. No. 972 on coal exploration and development have been transferred to the BED, provided that coal operating contracts including the transfer or assignment of interest in said contracts, shall require the approval of the Secretary (Minister) of Energy (Sec. 12, P.D. No. 1206).

Sec. 12. . . . the powers and functions transferred to the Bureau of Energy Development are:

xxx xxx xxx

ii. The following powers and functions of the Energy Development Board under PD No. 910 . . .

(1) Undertake by itself or through other arrangements, such as service contracts, the active exploration, exploitation, development, and extraction of energy resources . . .

(2) Regulate all activities relative to the exploration, exploitation, development, and extraction of fossil and nuclear fuels . . .

(P.D. No. 1206) (Emphasis supplied.)

P.D. No. 972 also provides:

Sec. 8. Each coal operating contract herein authorized shall . . . be executed by the Energy Development Board.

Considering the foregoing statutory provisions, the jurisdiction of the BED, in the first instance, to pass upon any question involving the Memorandum of Agreement between IEI and MMIC, revolving as its does around a coal operating contract, should be sustained.

In recent years, it has been the jurisprudential trend to apply the doctrine of primary jurisdiction in many cases involving matters that demand the special competence of administrative agencies. It may occur that the Court has jurisdiction to take cognizance of a particular case, which means that the matter involved is also judicial in character. However, if the case is such that its determination requires the expertise, specialized skills and knowledge of the proper administrative bodies because technical matters or intricate questions of facts are involved, then relief must first be obtained in an administrative proceeding before a remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court. This is the doctrine of primary jurisdiction. 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" (United States v. Western Pacific Railroad Co., 352 U.S. 59, Emphasis supplied).

Clearly, the doctrine of primary jurisdiction finds application in this case since the question of what coal areas should be exploited and developed and which entity should be granted coal operating contracts over said areas involves a technical determination by the BED as the administrative agency in possession of the specialized expertise to act on the matter. The Trial Court does not have the competence to decide matters concerning activities relative to the exploration, exploitation, development and extraction of mineral resources like coal. These issues preclude an initial judicial determination. It behooves the courts to stand aside even when apparently they have statutory power to proceed in recognition of the primary jurisdiction of an administrative agency.

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 (Antipolo Realty Corp. vs. National Housing Authority, 153 SCRA 399, at 407).

The application of the doctrine of primary jurisdiction, however, does not call for the dismissal of the case below. It need only be suspended until after the matters within the competence of the BED are threshed out and determined. Thereby, the principal purpose behind the doctrine of primary jurisdiction is salutarily served.

Uniformity and consistency in the regulation of business entrusted to an administrative agency are secured, and the limited function of review by the judiciary are more rationally exercised, by preliminary resort, for ascertaining and interpreting the circumstances underlying legal issues, to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure (Far East Conference v. United States, 342 U.S. 570).

With the foregoing conclusion arrived at, the question as to the propriety of the summary judgment rendered by the Trial Court becomes unnecessary to resolve.

WHEREFORE, the Court Resolved to DENY the petition. No costs.

SO ORDERED.

Paras, Padilla, Sar

G.R. Nos. 98395-102449 June 19, 1995

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs.CIVIL SERVICE COMMISSION and DR. MANUEL BARADERO,respondents.

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs.CIVIL SERVICE COMMISSION and MATILDE S. BELO,respondents.

 

KAPUNAN, J.:

In our decision dated October 28, 1994 we held that government service rendered on a per diem basis is not creditable in computing the length of service for retirement purposes. Thus, we reversed the questioned resolutions and orders of the Civil Service Commission (CSC) requiring the Government Service Insurance System (GSIS) to consider creditable the services of private respondents on a per diem basis.

However, private respondent Matilde S. Belo in G.R. No 102449 filed a motion for reconsideration dated 17 November 1994, of this Court 's decision of October 28, 1994. She insists that the services rendered by her as Vice Governor of Capiz, between December 31, 1975 to January 1, 1979, be considered as creditable for purposes of retirement. The Government Service Insurance System likewise filed a motion for reconsideration on November 22, 1984 in behalf of both private respondents Belo and Dr. Manuel Baradero on essentially the same grounds. We shall deal with both motions together.

Central to the averments on the aforestated motions for reconsideration is the question of whether or not regular service in government on a per diem basis, without any other form of compensation or emolument, is compensation within the contemplation of the term "service with compensation" under the Government Service Insurance Act of 1987.

After a careful consideration of the arguments in both motions, we are compelled to reconsider our decision.

While what respondents Belo and Baradero received were denominated as "per diem," the amounts received were actually in the nature of a compensation or pay. What should therefore be considered as controlling in both cases would be the nature of remuneration, not the label attached to it.

Respondent Belo held the position of Vice-Governor of Capiz continuously between January 5, 1972 up to

February 1, 1988. From January 25, 1972 up to December 31, 1979, she held office by virtue of an election and was paid a fixed salary. 1 From December 31, 1979 up to February 1, 1988, she held the position of Vice Governor of Capiz in a holdover capacity, broken down into two periods: 2

1. A period in which she was paid on a per diem basis from December 31, 1976 to December 31, 1979; and

2. A period in which she was paid a fixed salary — from January 1, 1980 to February 1,1988.

In its June 7, 1989 Resolution 3 on the matter, CSC held that the services rendered for the first holdover period between January 31, 1976 to January 1, 1979 was creditable for purposes of retirement. CSC noted that during the entire holdover period, respondent Belo actually served on a full time basis as Vice Governor and was on call 24 hours a day. Disagreeing with the CSC's insistence that the period in which respondent Belo was paid on a per diem basis should be credited in computing the number of years of creditable service to the government, GSIS subsequently filed a petition for certiorari before this court, questioning the orders of the CSC. Agreeing that per diemswere not compensation within the meaning of Section 1(c) of R.A. 1573 which amended Section 1(c) of C.A. No. 186 (Government Service Insurance Act), we granted the petitions in G.R. Nos. 98395 and 102449, 4 and reversed the CSC Orders and Resolutions in question.

A review of the circumstances surrounding payment to respondent Belo of the per diems in question convinces us that her motion is meritorious. We are convinced that the "per diem" she received was actually paid for in the performance of her duties as Vice-Governor of Capiz in a holdover capacity not as the per diem referred to by section 1(c) of R.A. No 1573 which amended Section 1(c) of C.A. No. 186 (Government Insurance Service Act). A closer look at the aforecited provision, moreover,

reveals a legislative intent to make a clear distinction between salary, pay or compensation, on one hand, and other incidental allowances, including per diems on the other. Section 1(c) provides:

(c) Salary, pay or compensation shall be construed as to exclude all bonuses, per diems, allowances and overtime pay, or salary, pay or compensation given to the base pay of the position or rank as fixed by law or regulations. 5

Since it is generally held that an allowance for expenses incident to the discharge of an office is not a salary of office, 6 it follows that if the remuneration received by a public official in the performance of his duties does not constitute a mere "allowance for expenses" but appears to be his actual base pay, then no amount of categorizing the salary as base pay, a "per diem" would take the allowances received by petitioner from the term service with compensation for the purpose of computing the number of years of service in government. Furthermore, it would grossly violate the law's intent to reward the public servant's years of dedicated service to government for us to gloss over the circumstances surrounding the payment of the said remunerations to the petitioner in taking a purely mechanical approach to the problem by accepting an attached label at face value.

In G.R. No. 98395, the period disputed was served by respondent Baradero as a member of the Sangguniang Bayan of the Municipality of La Castellana, Negros Occidental between January 1, 1976 to October 10, 1978 where he was likewise paid on a per diem basis. It is not disputed that during this period, respondent Baradero rendered full services to the government as a member of the Sangguniang Bayan. In fact, on the basis of its earlier resolution on the case of respondent Belo, the Civil Service Commission recognized the period in which

respondent Baradero served as a member of the Sangguniang Bayan as creditable for retirement purposes instead of allowing his petition for extension of service in order to complete the 15 year period of service required for the purpose of qualifying for retirement benefits. 7

In the sense in which the phrase "per diem" is used under the Government Service Insurance Law, a per diem is a daily allowance given for each day an officer or employee of government is away from his home base. 8 This is its traditional meaning: its usual signification is as a reimbursement for extra expenses incurred by the public official in the performance of his duties. 9 Under this definition the per diem intended to cover the cost of lodging and subsistence of officers and employees when the latter are on duty outside of their permanent station. 10

On the other hand, a per diem could rightfully be considered a compensation or remuneration attached to an office. 11 Under the circumstances obtaining in the case of respondent Belo the per diemsreceived by her during the period that she acted in holdover capacity obviously were in the nature of compensation or remuneration for her services as Vice Governor of the Province of Capiz, rather than as a reimbursement for incidental expenses incurred while away from her home base. In connection with this, it is important to lay stress to the following facts:

1. Petitioner rendered service to the government continuously from January 25, 1972 to February 1, 1988 as Vice Governor of the Province of Capiz. During a portion of the holdover-period, i.e., from December 31, 1976 to January 11 1979, payment for her services to the government was through per diems for every regular or special session of the Sangguniang Panlalawigan attended. 12

2. The CSC noted that: "[F]ormer Vice Governor Belo was on a full time basis when she served . . . on a hold-over capacity. . . As such provincial official she is (sic) legally and factually on call by the provincial people and the province more than eight hours a day, or at any time of the day beyond the prescribed working hours.

3. She received no other forms of remuneration during the disputed period. 13

The same could be said of the services rendered by respondent Baradero, who, before and after the period in question had an unblemished record of service to the government as a member of the army and as a medical officer of the Philippine Medicare Commission. The disputed period was served on a full-time basis regardless of the denomination given to the compensation received by him.

What ought to be controlling in the cases at bench therefore, should be the nature of the remuneration rather than the label attached to it. While there is no dispute that the law excepting per diems from the definition of compensation is clear and requires no interpretation, however, since the term per diem may be construed either as compensation or as allowance, it would be necessary for us to inquire whether the term per diem in the GSIS Law refers to one or the other signification. As explained above, it is plainly obvious that per diem as compensation, is not what the law contemplates. The clear intent of the Government Insurance Law was to exclude those extra incidental expenses or incurred on a daily basis covered by the traditional definition of the term per diem. An important fact missed from our earlier decision was that, while respondent Belo was paid on a per diem basis during her first holdover period as Vice Governor she was subsequently paid a fixed salary, which apparently rectified an otherwise anomalous situation. The services rendered by respondent Belo having been continuous, the disputed period should be credited for purposes of retirement.

On the other hand, respondent Baradero was willing to serve two additional years of service to government in order to complete the 15 year period required by our retirement laws. The Civil Service Commission felt this was unnecessary and denied the same on the ground that the period served on a per diem basis, was, like the disputed period in the Belo case, creditable. 14

The distinctions between salary and per diem made hereinabove were in fact adverted to in our original decision dated October 28, 1994. In explaining the allowance of service rendered on a per diem basis in the case of Inocencio vs. Ferrer of the Social Security System, we noted with approval the Government Service Insurance System's explanation that the per diem service which was credited for purposes of retirement was Commissioner Ferrer's full time service as Hearing Officer not his per diem service for attendance at Board Meetings. Even then, we indirectly noted the difference between per diem paid as compensation for services rendered on a full time basis and per diem as allowance for incidental expenses. Respondent Belo asserts, with reason, that the per diems paid to her, while reckoned on the basis of attendance in Board Meetings, were for her full time services as Vice Governor of the Province of Capiz. In fact, the same service, albeit still on a holdover basis, was eventually paid with a fixed salary.

Retirement benefits given to government employees in effect reward them for giving the best years of their lives to the service of their country. This is especially true with those in government service occupying positions of leadership or positions requiring management skills because the years they devote to government service could be spent more profitably in lucrative appointments in the private sector. In exchange for their selfless dedication to government service, they enjoy security of tenure and are ensured of a reasonable amount of support after they leave the government. The basis for the provision of retirement benefits is, therefore, service to government. While a government insurance system rationalizes the management of funds necessary to keep this system of retirement support afloat and is partly dependent on contributions made by the thousands of members of the system, the fact that these contributions are minimal when compared to the amount of retirement benefits actually received shows that such contributions, while necessary, are not absolutely determinative in drawing up criteria for those who would qualify as recipients of the retirement benefit system.

It cannot be convincingly asserted that petitioners could not avail themselves of the benefits of the policy because no deductions were made from their salaries during the disputed periods when they were paid on a per diem basis. In respondent Belo's case, before and afterthat short interregnum, she was paid a fixed salary. She was not duly informed that short period was not to be credited in computing the length of her service for retirement purposes. She assumed in all good faith that she continued to be covered by the GSIS insurance benefits considering that in fact and in practice the deductions are virtually mandatorily made from all government employees on an essentially involuntary basis. Similarly, had respondent Baradero been informed of the need to pay the required deductions for the purpose of qualifying for retirement benefits, he would have willingly paid the required sums. In a sense, the contract made between the GSIS and the government employee is done on a take-it-or-leave-it basis, that is, it is a virtual contract of adhesion which gives the employee no choice but to involuntarily accede to the deductions made from their oftentimes meager salaries. If the GSIS did not deduct, it was by its own choice: contributions were exacted from petitioner before andafter the disputed period. To assert that petitioners would have been entitled to benefits had they opted for optional deductions at that point misses the principal fact in issue here, which is the question as to whether or not the disputed periods should be credited as service with compensation for the purposes of retirement.

Moreover, the source of GSIS benefits is not in essence merely contractual; rather, it is a social legislation as clearly indicated in the "whereas" of Presidential Decree No. 1146, to wit:

WHEREAS, provisions of existing laws that have prejudiced, rather than benefited, the government employee; restricted, rather than broadened, his benefits, prolonged, rather than facilitated the payment of benefits, must now yield to his paramount welfare;

WHEREAS, the social security and insurance benefits of government employees must be continuously re-examined and improved to assure comprehensive and integrated social security and insurance programs that will provide benefits responsive to their needs and those of their dependents in the event of sickness, disability, death, retirement, and other contingencies; and to serve as a fitting reward for dedicated public service;

WHEREAS, in the light existing economic conditions affecting the welfare of government employees there is a need to expand and improve the social security and insurance programs administered by the Government Service Insurance Systems, specifically, among others, by increasing pension benefits, expanding disability benefits, introducing survivorship benefits, introducing sickness income

benefits, and eventually extending the compulsory coverage of these programs to all government employees regardless of employment status.

The situation as far as private respondents and the GSIS are concerned could be rectified by deducting a reasonable amount corresponding to the contributions which should have been deducted during the period from the amount of retirement benefits accruing to them. It would be grossly inequitable — as it would violate the spirit of the government retirement and insurance laws — to permanently penalize both respondents Belo and Baradero by ignoring the fact of actual period of service to government with compensation, and deny them the retirement privileges that they, for their unselfish service to the government justly deserve. Under the peculiar circumstances of the case at bench, the demand for equity prompts us to regard spirit not letter, and intent, not form, in according substantial justice to both respondents, where the law, through its inflexible rules might prove inadequate.

WHEREFORE, the instant motion is hereby GRANTED, our decision dated October 28, 1994 RECONSIDERED and the questioned resolutions and orders of the CSC requiring GSIS to consider creditable the services of private respondents on a per diem basis AFFIRMED.

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Regalado, Puno, Vitug, Mendoza and Francisco, JJ., concur.

Davide, Jr., concurs in the result.

Bellosillo, J., took no part.

 

 

 

Separate Opinions

 

QUIASON, J., dissenting:

Respondents Civil Service Commission (CSC) and Matilde S. Belo moved for the reconsideration of our Decision dated October 28, 1994.

The CSC argued that services rendered on a per diem basis may be creditable for retirement purposes, for it is the nature of the service rendered and not the manner of compensation which shall prevail in the determination of creditable government service. It also contended that it has the power to determine creditable government service for retirement purposes, and that the function of petitioner Government Service Insurance System (GSIS) is limited to computing the amount of retirement benefits due the government employee (G.R. No. 98395, Rollo, p. 111).

On her part, respondent Belo emphasized that as former Vice-Governor and Governor of Capiz, she rendered full time service to the electorate but was paid per diem as compensation. She invoked that

the case of Commissioner Inocencio V. Ferrer be similarly applied to her case (G.R. No. 102449, Rollo, p. 109). In her supplemental motion for reconsideration, respondent Belo further alleged that in theFerrer case, the GSIS resolved to consider the period when Commissioner Ferrer was receiving per diem as compensation as creditable for retirement purposes.

The issues raised in the motion for reconsideration are: (1) whether the GSIS is the proper government agency to determine what service is creditable for retirement purposes; and (2) whether full time service rendered by a government employee receiving per diem as compensation is creditable for retirement purposes.

We deem it wise to raise a third issue: whether said employee may avail of retirement benefits notwithstanding his failure to make contributions to the GSIS for the duration he was receiving per diemas compensation.

We affirm our ruling that it is the GSIS which has the power to determine what service is creditable for retirement purposes. Presidential Decree No. 1146 (Government Service Insurance Act of 1987) vests such power in the GSIS. It must be emphasized that P.D. No. 1146 is a special law which prevails over Executive Order No. 292 (Administrative Code of 1987).

We can concede that the nomenclature given to the basic salary paid a government employee is not controlling in determining the service that is creditable for retirement purpose and what is important is that the pay is given for full time work.

Petitioner Belo cannot invoke the case of Commissioner Ferrer because what the GSIS considered as creditable service was his full-time work as hearing officer of the Social Security Commission, and not as Commissioner.

Prior to Republic Act No. 7160, otherwise known as the Local Government Code of 1991, local government units were not compulsorily covered by the Government Insurance Act (R.A. No. 186). However, R.A. No. 1573 amending R.A. No. 186, allowed the optional coverage under the government insurance system, provided that:

(1) the employee notifies the System in writing; (2) the employee complies with the requirements of the System and that he is in government service when the insurance takes effect; and (3) after his admission, the employee shall be eligible to either life or retirement insurance benefits, or to both, for which the rates of the premiums or contributions shall be paid by him, including the share otherwise payable by his employer (Sec. 4[b]).

Anent the third issue, it must be borne in mind that the obligation to pay premiums is equally essential as the period of services rendered.

In the case of respondent Belo, she never became a member of the GSIS during her term as Vice-Governor and Governor of Capiz, nor did she contribute to the System. It must be emphasized that she then had the option of continuing her membership when she started working for the local government unit by complying with the requirements of Section 4(b) of R.A. No. 1573. However, she failed to exercise such option.

The GSIS is only obligated to grant retirement benefits to its members. Such obligation exists where there is a contract of life or retirement insurance between the GSIS and the government employee. This contract is evidenced by the GSIS policy issued when the government employee's admission is

approved. In certain cases, the contract of insurance between them is compulsory, for which reason both employer and employee are required to make contributions to the GSIS. Contributions of the government employee are made possible through salary deduction.

Premiums payable by the members are the lifeblood of the retirement scheme. These premiums are actuarially computed and any attempt to do away with them has an unsettling effect on the entire system.

It would now be unjust for respondent Belo to compel the GSIS to grant her retirement benefits when she never remitted the employer's and her share of contributions for the period December 31, 1976 to January 1, 1979. To countenance such argument would result in an inequitable situation where the GSIS is exposed to a risk without the benefit of receiving any contribution or premium. The GSIS was never intended to be a charitable institution for government retirees. It is only fair that the GSIS be entitled to the payment of premiums as soon as it is exposed to the risk insured against, whether it be a life or annuity insurance (cf. The Insurance Code, Sec. 77).

The most liberal application that can be given to the ruling of the GSIS with respect to services paid on per diem basis is to limit it to cases where the retiree has paid the corresponding retirement premiums during said period.

I vote to deny the motion for reconsideration.

Melo and Romero, JJ., concur.

 

 

Separate Opinions

QUIASON, J., dissenting:

Respondents Civil Service Commission (CSC) and Matilde S. Belo moved for the reconsideration of our Decision dated October 28, 1994.

The CSC argued that services rendered on a per diem basis may be creditable for retirement purposes, for it is the nature of the service rendered and not the manner of compensation which shall prevail in the determination of creditable government service. It also contended that it has the power to determine creditable government service for retirement purposes, and that the function of petitioner Government Service Insurance System (GSIS) is limited to computing the amount of retirement benefits due the government employee (G.R. No. 98395, Rollo, p. 111).

On her part, respondent Belo emphasized that as former Vice-Governor and Governor of Capiz, she rendered full time service to the electorate but was paid per diem as compensation. She invoked that the case of Commissioner Inocencio V. Ferrer be similarly applied to her case (G.R. No. 102449, Rollo, p. 109). In her supplemental motion for reconsideration, respondent Belo further alleged that in theFerrer case, the GSIS resolved to consider the period when Commissioner Ferrer was receiving per diem as compensation as creditable for retirement purposes.

The issues raised in the motion for reconsideration are: (1) whether the GSIS is the proper government agency to determine what service is creditable for retirement purposes; and (2) whether full time service rendered by a government employee receiving per diem as compensation is creditable for retirement purposes.

We deem it wise to raise a third issue: whether said employee may avail of retirement benefits notwithstanding his failure to make contributions to the GSIS for the duration he was receiving per diemas compensation.

We affirm our ruling that it is the GSIS which has the power to determine what service is creditable for retirement purposes. Presidential Decree No. 1146 (Government Service Insurance Act of 1987) vests such power in the GSIS. It must be emphasized that P.D. No. 1146 is a special law which prevails over Executive Order No. 292 (Administrative Code of 1987).

We can concede that the nomenclature given to the basic salary paid a government employee is not controlling in determining the service that is creditable for retirement purpose and what is important is that the pay is given for full time work.

Petitioner Belo cannot invoke the case of Commissioner Ferrer because what the GSIS considered as creditable service was his full-time work as hearing officer of the Social Security Commission, and not as Commissioner.

Prior to Republic Act No. 7160, otherwise known as the Local Government Code of 1991, local government units were not compulsorily covered by the Government Insurance Act (R.A. No. 186). However, R.A. No. 1573 amending R.A. No. 186, allowed the optional coverage under the government insurance system, provided that:

(1) the employee notifies the System in writing; (2) the employee complies with the requirements of the System and that he is in government service when the insurance takes effect; and (3) after his admission, the employee shall be eligible to either life or retirement insurance benefits, or to both, for which the rates of the premiums or contributions shall be paid by him, including the share otherwise payable by his employer (Sec. 4[b]).

Anent the third issue, it must be borne in mind that the obligation to pay premiums is equally essential as the period of services rendered.

In the case of respondent Belo, she never became a member of the GSIS during her term as Vice-Governor and Governor of Capiz, nor did she contribute to the System. It must be emphasized that she then had the option of continuing her membership when she started working for the local government unit by complying with the requirements of Section 4(b) of R.A. No. 1573. However, she failed to exercise such option.

The GSIS is only obligated to grant retirement benefits to its members. Such obligation exists where there is a contract of life or retirement insurance between the GSIS and the government employee. This contract is evidenced by the GSIS policy issued when the government employee's admission is approved. In certain cases, the contract of insurance between them is compulsory, for which reason both employer and employee are required to make contributions to the GSIS. Contributions of the government employee are made possible through salary deduction.

Premiums payable by the members are the lifeblood of the retirement scheme. These premiums are actuarially computed and any attempt to do away with them has an unsettling effect on the entire system.

It would now be unjust for respondent Belo to compel the GSIS to grant her retirement benefits when she never remitted the employer's and her share of contributions for the period December 31, 1976 to January 1, 1979. To countenance such argument would result in an inequitable situation where the GSIS is exposed to a risk without the benefit of receiving any contribution or premium. The GSIS was never intended to be a charitable institution for government retirees. It is only fair that the GSIS be entitled to the payment of premiums as soon as it is exposed to the risk insured against, whether it be a life or annuity insurance (cf. The Insurance Code, Sec. 77).

The most liberal application that can be given to the ruling of the GSIS with respect to services paid on per diem basis is to limit it to cases where the retiree has paid the corresponding retirement premiums during said period.

I vote to deny the motion for reconsideration.

Melo and Romero, JJ., concur.

[G.R. No. 111107.  January 10, 1997]

LEONARDO A. PAAT, in his capacity as Officer-in-Charge (OIC), Regional Executive Director (RED), Region 2 and JOVITO LAYUGAN, JR., in his capacity as Community Environment and Natural Resources Officer (CENRO), both of the Department of Environment and Natural Resources (DENR), petitioners, vs. COURT OF APPEALS, HON. RICARDO A. BACULI in his capacity as Presiding Judge of Branch 2, Regional Trial Court at Tuguegarao, Cagayan, and SPOUSES BIENVENIDO and VICTORIA DE GUZMAN, respondents.

D E C I S I O N

TORRES, JR., J.:

Without violating the principle of exhaustion of administrative remedies, may an action for replevin prosper to recover a movable property which is the subject matter of an administrative forfeiture proceeding in the Department of Environment and Natural Resources pursuant to Section 68-A of P. D. 705, as amended, entitled The Revised Forestry Code of the Philippines?

Are the Secretary of DENR and his representatives empowered to confiscate and forfeit conveyances used in transporting illegal forest products in favor of the government?

These are two fundamental questions presented before us for our resolution.

The controversy on hand had its incipiency on May 19, 1989 when the truck of private respondent Victoria de Guzman while on its way to Bulacan from San Jose, Baggao, Cagayan, was seized by the Department of Environment and Natural Resources (DENR, for brevity) personnel in Aritao, Nueva Vizcaya because the driver could not produce the required documents for the forest products found concealed in the truck.  Petitioner Jovito Layugan, the Community Environment and Natural Resources Officer (CENRO) in Aritao, Cagayan, issued on May 23, 1989 an order of confiscation of the truck and gave the owner thereof fifteen (15) days within which to submit an explanation why the truck should not be forfeited.  Private respondents, however, failed to submit the required explanation.  On June 22, 1989,[1] Regional Executive Director Rogelio Baggayan of DENR sustained  petitioner Layugan’s action of confiscation and  ordered the  forfeiture of the truck invoking  Section 68-A of Presidential Decree No. 705 as amended by Executive Order No. 277.  Private respondents filed a letter of reconsideration dated June 28, 1989 of the June 22, 1989 order of Executive Director Baggayan, which was, however, denied in a subsequent order of July 12, 1989.[2] Subsequently, the case was brought by the petitioners to the Secretary of DENR pursuant to private respondents’ statement in their letter dated June 28, 1989 that in case their letter for reconsideration would be denied then “this letter should be considered as an appeal to the Secretary.”[3] Pending resolution however of the appeal, a suit for replevin, docketed as Civil Case 4031, was filed by the private respondents against petitioner Layugan and Executive Director Baggayan[4] with the Regional Trial Court, Branch 2 of Cagayan,[5] which issued a writ ordering the return of the truck to private respondents.[6] Petitioner Layugan and Executive Director Baggayan filed a motion to dismiss with the trial court contending, inter alia, that private respondents had no cause of action for their failure to exhaust administrative remedies. The trial court denied the motion to dismiss in an order dated December 28, 1989.[7] Their motion for reconsideration having been likewise denied, a petition for certiorari was filed by the petitioners with the respondent Court of Appeals which sustained the trial court’s order ruling that the question involved is purely a legal question. [8]Hence, this present petition,[9] with prayer for temporary restraining order and/or preliminary injunction, seeking to reverse the decision of the respondent Court of Appeals

was filed by the petitioners on September 9, 1993.  By virtue of the Resolution dated September 27, 1993,[10] the prayer for the issuance of temporary restraining order of petitioners was granted by this Court.

Invoking the doctrine of exhaustion of administrative remedies, petitioners aver that the trial court could not legally entertain the suit for replevin because the truck was under administrative seizure proceedings pursuant to Section 68-A of P.D. 705, as amended by E.O. 277. Private respondents, on the other hand, would seek to avoid the operation of this principle asserting that the instant case falls within the exception of the doctrine upon the justification that (1) due process was violated because they were not given the chance to be heard, and (2) the seizure and forfeiture was unlawful on the grounds:  (a) that the Secretary of DENR and his representatives have no authority to confiscate and forfeit conveyances utilized in transporting illegal forest products, and (b) that the truck as admitted by petitioners was not used in the commission of the crime.

Upon a thorough and delicate scrutiny of the records and relevant jurisprudence on the matter, we are of the opinion that the plea of petitioners for reversal is in order.

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. [11]Accordingly, absent any finding of waiver or estoppel the case is susceptible of dismissal for lack of cause of action. [12] 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.  However, we are not amiss to reiterate that the principle of exhaustion of administrative remedies as tested by a battery of cases is not an ironclad rule. This doctrine  is a relative one and its flexibility is called upon by the  peculiarity and uniqueness of the factual and circumstantial settings of a case.  Hence, it is disregarded (1) when there is a violation of due process,[13] (2) when the issue involved is

purely a legal question,[14] (3) when the administrative action is patently illegal amounting to lack or excess of jurisdiction, [15] (4) when there is estoppel on the part of the administrative agency concerned,[16] (5) when there is irreparable injury,[17] (6) when the respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of the latter,[18] (7) when to require exhaustion of administrative remedies would be unreasonable,[19] (8) when it would amount to a nullification of a claim, [20] (9) when the subject matter is a private land in land case proceedings,[21] (10) when the rule does not provide a plain, speedy and adequate remedy, and (11) when there are circumstances indicating the urgency of judicial intervention.[22]

In the case at bar, there is no question  that the controversy was pending before the Secretary of DENR when it was forwarded to him following the denial by the petitioners of the motion for reconsideration of private respondents through the order of July 12, 1989.  In their letter of reconsideration dated June 28, 1989,[23] private respondents clearly recognize the presence of an administrative forum to which they seek to avail, as they did avail, in the resolution of their case.  The letter, reads, thus:

“xxx

If this motion for reconsideration does not merit your favorable action, then this letter should be considered as an appeal to the Secretary.”[24]

It was easy to perceive then that the private respondents looked up to the Secretary for the review and disposition  of their case.  By appealing to him, they acknowledged the existence of an adequate and plain remedy still available and open to them in the ordinary course of the law. Thus, they cannot now, without violating the principle of exhaustion of administrative remedies, seek court’s intervention by filing an action for replevin for the grant of their relief during the pendency of an administrative proceedings.

Moreover, it is important to point out that the enforcement of forestry laws, rules and regulations and the protection, development and management of forest lands fall within the primary and special responsibilities of the Department of Environment and Natural Resources. By the very nature of its function, the DENR should be given a free hand unperturbed by judicial intrusion to determine a controversy which is well within its jurisdiction.  The assumption by the trial court, therefore, of the replevin suit filed by private respondents constitutes an unjustified encroachment  into the domain of the administrative agency’s prerogative. The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a

controversy the jurisdiction over which is initially lodged with an administrative body of special competence.[25] In Felipe Ismael, Jr. and Co. vs. Deputy Executive Secretary,[26] which was reiterated in the recent case of Concerned Officials of MWSS vs. Vasquez,[27] this Court held:

“Thus, while the administration grapples with the complex and multifarious problems caused by unbriddled exploitation of these resources, the judiciary will stand clear. A long line of cases establish the basic rule that the courts will not interfere in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities coming under the special technical knowledge and training of such agencies.”

To  sustain the claim of private respondents would in effect bring the instant controversy beyond the pale of the principle of exhaustion of administrative remedies and fall within the ambit of excepted cases heretofore stated.  However, considering the circumstances prevailing in this case,  we can not but rule out these assertions of private respondents to be without merit.  First, they argued that there was violation of due process because they did not receive the May 23, 1989 order of confiscation of petitioner Layugan. This contention has no leg to stand on. Due process does not necessarily mean or require a hearing, but simply an opportunity or right to be heard.[28] One may be heard , not solely by verbal presentation but also, and perhaps many times more creditably and practicable than oral argument, through pleadings.[29] In administrative proceedings moreover, technical rules of procedure and evidence are not strictly applied; administrative process cannot be fully equated with due process in its strict judicial sense. [30] Indeed, deprivation of due process cannot be successfully invoked where a party was given the chance to be heard on his motion for reconsideration, [31] as in the instant case, when private respondents were undisputedly given the opportunity to present their side when they filed a letter of reconsideration dated June 28, 1989 which was, however, denied in an order of July 12, 1989 of Executive Director Baggayan. In Navarro III vs. Damasco,[32] we ruled that :

“The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. A formal or trial type hearing is not at all times and in all instances essential. The requirements are satisfied when the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand. What is frowned upon is the absolute lack of notice or hearing.”

Second, private respondents imputed the patent illegality of seizure and forfeiture of the truck  because the administrative officers of the DENR allegedly have no power to perform these acts under the law. They insisted that only the court is authorized to confiscate and forfeit conveyances used in transporting illegal forest products as can be gleaned from the second paragraph of Section 68 of P.D. 705, as amended by E.O. 277. The pertinent provision reads as follows:

“SECTION 68. xxx

xxx

The court shall further order the confiscation in favor of the government of the timber or any forest products cut, gathered, collected, removed, or possessed, as well as the machinery, equipments, implements and tools illegaly [sic] used in the area where the timber or forest products are found.” (Underline ours)

A reading, however, of the law persuades us not to go along with private respondents’ thinking not only because the aforequoted provision apparently does not mention nor include “conveyances” that can be the subject of confiscation by the courts, but to a large extent, due to the fact that private respondents’ interpretation of the subject provision unduly restricts the clear intention of the  law and inevitably reduces the other provision of Section  68-A , which is quoted herein below:

“SECTION 68-A. Administrative Authority of the Department or His Duly Authorized Representative To Order Confiscation. In all cases of violation of this Code or other forest laws, rules and regulations, theDepartment Head or his duly authorized representative, may order the confiscation of any forest products illegally cut, gathered, removed, or possessed or abandoned, and all conveyances used either by land, water or air in the commission of the offense and to dispose of the same in accordance with pertinent laws, regulations and policies on the matter.” (Underline ours)

It is, thus, clear from the foregoing provision that the Secretary and his duly authorized representatives are given the authority to confiscate and forfeit any  conveyances utilized in violating the Code or other forest laws, rules and regulations. The phrase “to dispose of the same” is broad enough to cover  the act of forfeiting   conveyances in favor of the government. The only limitation is that it should be made “in accordance with pertinent laws, regulations or policies on the matter.”  In the construction of statutes, it must be read in such a way as to give effect to the purpose projected in the statute.

[33]Statutes should be construed in the light of the object to be achieved and the evil or mischief to be suppressed, and they should be given such construction as will advance the object, suppress the mischief, and secure the benefits intended.[34] In this wise, the observation of the Solicitor General is significant, thus:

“But precisely because of the need to make forestry laws ‘more responsive to present situations and realities’ and in view of the ‘urgency to conserve the remaining resources of the country,’ that the government opted to add Section 68-A. This amendatory provision is an administrative remedy totally separate and distinct from criminal proceedings. More than anything else, it is intended to supplant the inadequacies that characterize enforcement of forestry laws through criminal actions. The preamble of EO 277-the law that added Section 68-A to PD 705-is most revealing:

‘WHEREAS, there is an urgency to conserve the remaining forest resources of the country for the benefit and welfare of the present and future generations of Filipinos;

WHEREAS, our forest resources may be effectively conserved and protected through the vigilant enforcement and implementation of our forestry laws, rules and regulations;

WHEREAS, the implementation of our forestry laws suffers from technical difficulties, due to certain inadequacies in the penal provisions of the Revised Forestry Code of the Philippines; and

WHEREAS, to overcome this difficulties, there is a need to penalize certain acts more responsive to present situations and realities;’

It is interesting to note that Section 68-A is a new provision authorizing the DENR to confiscate, not only ‘conveyances,’ but forest products as well. On the other hand, confiscation of forest products by the ‘court’ in a criminal action has long been provided for in Section 68. If as private respondents insist, the power on confiscation cannot be exercised except only through the court under Section 68, then Section 68-A would have no purpose at all. Simply put, Section 68-A would not have provided any solution to the problem perceived in EO 277, supra.”[35]

Private respondents, likewise, contend that the seizure was illegal because the petitioners themselves admitted in the Order dated July 12, 1989 of Executive Director Baggayan  that the truck of private respondents was not used in the commission of the crime. This order, a copy of which was given to and received by the counsel of private respondents, reads in part , viz. :

“xxx while it is true that the truck of your client was not used by her in the commission of the crime, we uphold your claim that the truck owner is not liable for the crime and in no case could a criminal case be filed against her as provided under Article 309 and 310 of the Revised Penal Code. xxx”[36]

We observed that private respondents misread the content of the aforestated order and obviously misinterpreted the intention of petitioners. What is  contemplated by the petitioners when they stated that the truck "was not used in the commission of the crime" is that it was not used in the commission of the crime of theft, hence, in no case can a criminal action be filed against the owner thereof for violation of Article 309 and 310 of the Revised Penal Code. Petitioners did not eliminate the possibility that the truck was being used in the commission of another crime, that is, the breach of Section 68 of P.D.705 as amended by E.O. 277.  In the same order of July 12, 1989, petitioners pointed out:

“xxx However, under Section 68 of P.D.705 as amended and further amended by Executive Order No.277 specifically provides for the confiscation of the conveyance used in the transport of forest products not covered by the required legal documents. She may not have been involved in the cutting and gathering of the product in question but the fact that she accepted the goods for a fee or fare the same is therefor liable. xxx”[37]

Private respondents, however, contended that there is no crime defined and punishable under Section 68 other than qualified theft, so that, when petitioners admitted in the July 12, 1989 order that private respondents could not be charged for theft as provided for under Articles 309 and 310 of the Revised Penal Code, then necessarily private respondents could not have committed an act constituting a crime under Section 68.  We disagree.  For clarity, the provision of Section 68 of P.D. 705 before its amendment by E.O. 277 and the provision of Section 1 of E.O. No.277 amending the aforementioned Section 68 are reproduced herein, thus:

“SECTION 68. Cutting, gathering and/or collecting timber or other products without license. - Any person who shall cut , gather , collect , or remove timber or other forest products from any forest land, or timber from alienable and disposable public lands, or from private lands, without any authority under a license agreement, lease, license or permit, shall be  guilty of qualified theft as defined and punished under Articles 309 and 310 of the Revised Penal Code xxx.” (Underscoring ours; Section 68, P.D.705 before its amendment by   E.O.277 )

“SECTION 1. Section 68 of Presidential Decree No.705, as amended, is hereby amended to read as follows:

‘Section 68. Cutting, gathering and/or collecting timber or other forest products without license. -Any person who shall cut, gather, collect, remove timber or other forest products from any forest land, or timber from alienable or disposable public land, or from private land, without any authority, or possess timber or other forest products without the legal documents as required under existing forest laws and regulations, shall be punished with the penalties imposed under Articles 309 and 310 of the Revised Penal Code xxx."  (Underscoring ours; Section 1, E.O No. 277 amending Section 68, P.D. 705 as amended)

With the introduction of Executive Order No. 277 amending Section 68 of P.D. 705, the act of cutting, gathering, collecting, removing, or possessing forest products without authority constitutes a distinct offense independent now from the crime of theft under Articles 309 and 310 of the Revised Penal Code, but the penalty to be imposed is that provided for under Article 309 and 310 of the Revised Penal Code. This is  clear from the language of Executive Order No. 277 when it eliminated the phrase “ shall be guilty of qualified theft as defined and punished under Articles 309 and 310 of the Revised Penal Code ” and inserted the words “ shall be punished with the penalties imposed under Article 309 and 310 of the Revised Penal Code ”. When the statute is clear and explicit, there is hardly  room for any extended court ratiocination or rationalization of the law.[38]

From the foregoing disquisition, it is clear that a suit for replevin can not be sustained against the petitioners for the subject truck taken and retained by them for administrative forfeiture proceedings in pursuant to Section 68-A of the P. D. 705, as amended. Dismissal of the replevin suit for lack of cause of action in view of the private respondents’ failure to exhaust administrative remedies should have been the proper course of action by the lower court instead of assuming jurisdiction over the case and consequently issuing the writ ordering the return of the truck. Exhaustion of the remedies in the administrative forum, being a condition precedent prior to one’s recourse to the courts and more importantly, being an element of private respondents’ right of action, is too significant to be waylaid by the lower court.

It is worth stressing at this point, that a suit for replevin is founded solely on the claim that the defendant wrongfully withholds the property sought to be recovered. It lies to recover possession of personal chattels that are unlawfully detained.[39] “To detain” is defined as to mean “to hold or keep in custody,”[40] and it has been held that there is tortuous taking whenever there is

an unlawful meddling with the property,  or an exercise or claim of dominion over it, without any pretense of authority or right; this, without manual seizing of the property is sufficient.[41] Under the Rules of Court, it is indispensable in replevin proceedings, that the plaintiff must show by his own affidavit that he is entitled to the possession of property, that the property is wrongfully detained by the defendant, alleging the cause of detention, that the same has not been taken for tax assessment, or seized under execution, or attachment, or if so seized, that it is exempt from such seizure, and the actual value of the property.[42] Private respondents miserably failed to convince this Court that a wrongful detention of the subject truck obtains in the instant case.  It should be noted that the truck was seized by the petitioners because it was transporting forest products with out the required permit of the DENR in manifest contravention of Section 68 of  P.D. 705 as amended by E.O 277.  Section 68-A of P.D. 705, as amended, unquestionably warrants the confiscation as well as the disposition by the Secretary of DENR or his duly authorized representatives of the conveyances used in violating the provision of forestry laws. Evidently, the continued possession or detention of the truck by the petitioners for administrative forfeiture proceeding is legally permissible, hence , no wrongful detention exists in the case at bar.

Moreover, the suit for replevin is never intended as a procedural tool to question the orders of confiscation and forfeiture issued by the DENR in pursuance to the authority given under P.D.705, as amended. Section 8 of the said law is explicit that actions taken by the Director of the Bureau of Forest Development concerning the enforcement of the provisions of the said law are subject to  review by the Secretary of DENR and that courts may not review the decisions of the Secretary except through a special civil action for certiorari or prohibition. It reads :

SECTION  8 .  REVIEW -  All actions and decisions of the Director are subject to review, motu propio or upon appeal of any person aggrieved thereby, by the Department Head whose decision shall be final and executory after the lapse of thirty (30) days from the receipt of the aggrieved party of said decision, unless appealed to the President in accordance with Executive Order No. 19, Series of 1966. The Decision of the Department Head may not be reviewed by the courts except through a special civil action for certiorari or prohibition.

WHEREFORE, the Petition is GRANTED; the Decision of the respondent Court of Appeals dated October 16, 1991 and its Resolution dated July 14, 1992 are hereby SET ASIDE AND REVERSED; the Restraining Order promulgated on September 27, 1993 is hereby made permanent; and the

Secretary of DENR is directed to resolve the controversy with utmost dispatch.

SO ORDERED.

Regalado, (Chairman), Romero, Puno, and Mendoza, JJ., concur.

G.R. No. 74930 February 13, 1989

RICARDO VALMONTE, OSWALDO CARBONELL, DOY DEL CASTILLO, ROLANDO BARTOLOME, LEO OBLIGAR, JUN GUTIERREZ, REYNALDO BAGATSING, JUN "NINOY" ALBA, PERCY LAPID, ROMMEL CORRO and ROLANDO FADUL,petitioners, vs.FELICIANO BELMONTE, JR., respondent.

Ricardo C. Valmonte for and in his own behalf and his co-petitioners.

The Solicitor General for respondent.

 

CORTES, J.:

Petitioners in this special civil action for mandamus with preliminary injunction invoke their right to information and pray that respondent be directed:

 

(a) to furnish petitioners the list of the names of the Batasang Pambansa members belonging to the UNIDO and PDP-Laban who were able to secure clean loans immediately before the February 7 election thru the intercession/marginal note of the then First Lady Imelda Marcos; and/or

(b) to furnish petitioners with certified true copies of the documents evidencing their respective loans; and/or

(c) to allow petitioners access to the public records for the subject information. (Petition, pp. 4-5; paragraphing supplied.]

The controversy arose when petitioner Valmonte wrote respondent Belmonte the following letter:

June 4, 1986

Hon. Feliciano BelmonteGSIS General ManagerArroceros, Manila

Sir:

As a lawyer, member of the media and plain citizen of our Republic, I am requesting that I be furnished with the list of names of the opposition members of (the) Batasang Pambansa who were able to secure a clean loan of P2 million each on guarranty (sic) of Mrs. Imelda Marcos. We understand that OIC Mel Lopez of Manila was one of those aforesaid MPs. Likewise, may we be furnished with the certified true copies of the documents evidencing their loan. Expenses in connection herewith shall be borne by us.

If we could not secure the above documents could we have access to them?

We are premising the above request on the following provision of the Freedom Constitution of the present regime.

The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to official acts, transactions or decisions, shall be afforded the citizen subject to such limitation as may be provided by law. (Art. IV, Sec. 6).

We trust that within five (5) days from receipt hereof we will receive your favorable response on the matter.

Very truly yours,

(Sgd.) RICARDO C. VALMONTE

[Rollo, p. 7.]

To the aforesaid letter, the Deputy General Counsel of the GSIS replied:

June 17, 1986

Atty. Ricardo C. Valmonte108 E. Benin StreetCaloocan City

Dear Compañero:

Possibly because he must have thought that it contained serious legal implications, President & General Manager Feliciano Belmonte, Jr. referred to me for study and reply your letter to him of June 4, 1986 requesting a list of the opposition members of Batasang Pambansa who were able to secure a clean loan of P2 million each on guaranty of Mrs. Imelda Marcos.

My opinion in this regard is that a confidential relationship exists between the GSIS and all those who borrow from it, whoever they may be; that the GSIS has a duty to

its customers to preserve this confidentiality; and that it would not be proper for the GSIS to breach this confidentiality unless so ordered by the courts.

As a violation of this confidentiality may mar the image of the GSIS as a reputable financial institution, I regret very much that at this time we cannot respond positively to your request.

Very truly yours,

(Sgd.) MEYNARDO A. TIRODeputy General Counsel[Rollo, p. 40.]

On June 20, 1986, apparently not having yet received the reply of the Government Service and Insurance System (GSIS) Deputy General Counsel, petitioner Valmonte wrote respondent another letter, saying that for failure to receive a reply, "(W)e are now considering ourselves free to do whatever action necessary within the premises to pursue our desired objective in pursuance of public interest." [Rollo, p. 8.]

On June 26, 1986, Valmonte, joined by the other petitioners, filed the instant suit.

On July 19, 1986, the Daily Express carried a news item reporting that 137 former members of the defunct interim and regular Batasang Pambansa, including ten (10) opposition members, were granted housing loans by the GSIS [Rollo, p. 41.]

Separate comments were filed by respondent Belmonte and the Solicitor General. After petitioners filed a consolidated reply, the petition was given due course and the parties were required to file their memoranda. The parties having complied, the case was deemed submitted for decision.

In his comment respondent raises procedural objections to the issuance of a writ of mandamus, among which is that petitioners have failed to exhaust administrative remedies.

Respondent claims that actions of the GSIS General Manager are reviewable by the Board of Trustees of the GSIS. Petitioners, however, did not seek relief from the GSIS Board of Trustees. It is therefore asserted that since administrative remedies were not exhausted, then petitioners have no cause of action.

To this objection, petitioners claim that they have raised a purely legal issue, viz., whether or not they are entitled to the documents sought, by virtue of their constitutional right to information. Hence, it is argued that this case falls under one of the exceptions to the principle of exhaustion of administrative remedies.

Among the settled principles in administrative law is that before a party can be allowed to resort to the courts, he is expected to have exhausted all means of administrative redress available under the law. The courts for reasons of law, comity and convenience will not entertain a case unless the available administrative remedies have been resorted to and the appropriate authorities have been given opportunity to act and correct the errors committed in the administrative forum. However, the principle of exhaustion of administrative remedies is subject to settled exceptions, among which is when only a question of law is involved [Pascual v. Provincial Board, 106 Phil. 466 (1959); Aguilar v. Valencia, et al., G.R. No. L-30396, July 30, 1971, 40 SCRA 210; Malabanan v. Ramento, G.R. No. L-2270, May 21, 1984, 129 SCRA 359.] The issue raised by petitioners, which requires the

interpretation of the scope of the constitutional right to information, is one which can be passed upon by the regular courts more competently than the GSIS or its Board of Trustees, involving as it does a purely legal question. Thus, the exception of this case from the application of the general rule on exhaustion of administrative remedies is warranted. Having disposed of this procedural issue, We now address ourselves to the issue of whether or not mandamus hes to compel respondent to perform the acts sought by petitioners to be done, in pursuance of their right to information.

We shall deal first with the second and third alternative acts sought to be done, both of which involve the issue of whether or not petitioners are entitled to access to the documents evidencing loans granted by the GSIS.

This is not the first time that the Court is confronted with a controversy directly involving the constitutional right to information. InTañada v. Tuvera, G.R. No. 63915, April 24,1985, 136 SCRA 27 and in the recent case of Legaspi v. Civil Service Commission, G.R. No. 72119, May 29, 1987,150 SCRA 530, the Court upheld the people's constitutional right to be informed of matters of public interest and ordered the government agencies concerned to act as prayed for by the petitioners.

The pertinent provision under the 1987 Constitution is Art. 111, Sec. 7 which states:

The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.

The right of access to information was also recognized in the 1973 Constitution, Art. IV Sec. 6 of which provided:

The right of the people to information on 'matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, shall be afforded the citizen subject to such limitations as may be provided by law.

An informed citizenry with access to the diverse currents in political, moral and artistic thought and data relative to them, and the free exchange of ideas and discussion of issues thereon, is vital to the democratic government envisioned under our Constitution. The cornerstone of this republican system of government is delegation of power by the people to the State. In this system, governmental agencies and institutions operate within the limits of the authority conferred by the people. Denied access to information on the inner workings of government, the citizenry can become prey to the whims and caprices of those to whom the power had been delegated. The postulate of public office as a public trust, institutionalized in the Constitution (in Art. XI, Sec. 1) to protect the people from abuse of governmental power, would certainly be were empty words if access to such information of public concern is denied, except under limitations prescribed by implementing legislation adopted pursuant to the Constitution.

Petitioners are practitioners in media. As such, they have both the right to gather and the obligation to check the accuracy of information the disseminate. For them, the freedom of the press and of speech is not only critical, but vital to the exercise of their professions. The right of access to information ensures that these freedoms are not rendered nugatory by the government's monopolizing pertinent information. For an essential element of these freedoms is to keep open a continuing dialogue or process of communication between the government and the people. It is in the interest of the State that the channels for free political discussion be maintained to the end that

the government may perceive and be responsive to the people's will. Yet, this open dialogue can be effective only to the extent that the citizenry is informed and thus able to formulate its will intelligently. Only when the participants in the discussion are aware of the issues and have access to information relating thereto can such bear fruit.

The right to information is an essential premise of a meaningful right to speech and expression. But this is not to say that the right to information is merely an adjunct of and therefore restricted in application by the exercise of the freedoms of speech and of the press. Far from it. The right to information goes hand-in-hand with the constitutional policies of full public disclosure * and honesty in the public service. ** It is meant to enhance the widening role of the citizenry in governmental decision-making as well as in checking abuse in government.

Yet, like all the constitutional guarantees, the right to information is not absolute. As stated in Legaspi, the people's right to information is limited to "matters of public concern," and is further "subject to such limitations as may be provided by law." Similarly, the State's policy of full disclosure is limited to "transactions involving public interest," and is "subject to reasonable conditions prescribed by law."

Hence, before mandamus may issue, it must be clear that the information sought is of "public interest" or "public concern," and is not exempted by law from the operation of the constitutional guarantee [Legazpi v. Civil Service Commission, supra, at p. 542.]

The Court has always grappled with the meanings of the terms "public interest" and "public concern". As observed in Legazpi:

In determining whether or not a particular information is of public concern there is no rigid test which can be applied. "Public concern" like "public interest" is a term that eludes exact definition. Both terms embrace a broad spectrum of subjects which the public may want to know, either because these directly affect their lives, or simply because such matters naturally arouse the interest of an ordinary citezen. In the final analysis, it is for the courts to determine on a case by case basis whether the matter at issue is of interest or importance, as it relates to or affects the public. [Ibid. at p. 541]

In the Tañada case the public concern deemed covered by the constitutional right to information was the need for adequate notice to the public of the various laws which are to regulate the actions and conduct of citezens. In Legaspi, it was the "legitimate concern of citezensof ensure that government positions requiring civil service eligibility are occupied only by persons who are eligibles" [Supra at p. 539.]

The information sought by petitioners in this case is the truth of reports that certain Members of the Batasang Pambansa belonging to the opposition were able to secure "clean" loans from the GSIS immediately before the February 7, 1986 election through the intercession of th eformer First Lady, Mrs. Imelda Marcos.

The GSIS is a trustee of contributions from the government and its employees and the administrator of various insurance programs for the benefit of the latter. Undeniably, its funds assume a public character. More particularly, Secs. 5(b) and 46 of P.D. 1146, as amended (the Revised Government Service Insurance Act of 1977), provide for annual appropriations to pay the contributions, premiums, interest and other amounts payable to GSIS by the government, as employer, as well as the obligations which the Republic of the Philippines assumes or guarantees to pay. Considering the nature of its funds, the GSIS is expected to manage its resources with utmost prudence and in strict compliance with the pertinent laws or rules and regulations. Thus, one of the reasons that prompted the revision of the old GSIS law (C.A. No. 186, as amended) was the necessity "to preserve at all times the actuarial solvency of the funds administered by the System" [Second Whereas Clause, P.D. No. 1146.] Consequently, as respondent himself admits, the GSIS "is not supposed to grant 'clean loans.'" [Comment, p. 8.] It is therefore the legitimate concern of the public to ensure that these funds are managed properly with the end in view of maximizing the benefits that accrue to the insured government employees. Moreover, the supposed borrowers were Members of the defunct Batasang Pambansa who themselves appropriated funds for the GSIS and were therefore expected to be the first to see to it that the GSIS performed its tasks with the greatest degree of fidelity and that an its transactions were above board.

In sum, the public nature of the loanable funds of the GSIS and the public office held by the alleged borrowers make the information sought clearly a matter of public interest and concern.

A second requisite must be met before the right to information may be enforced through mandamus proceedings, viz., that the information sought must not be among those excluded by law.

Respondent maintains that a confidential relationship exists between the GSIS and its borrowers. It is argued that a policy of confidentiality restricts the indiscriminate dissemination of information.

Yet, respondent has failed to cite any law granting the GSIS the privilege of confidentiality as regards the documents subject of this petition. His position is apparently based merely on considerations of policy. The judiciary does not settle policy issues. The Court can only declare what the law is, and not what the law should be. Under our system of government, policy issues are within the domain of the political branches of the government, and of the people themselves as the repository of all State power.

Respondent however contends that in view of the right to privacy which is equally protected by the Constitution and by existing laws, the documents evidencing loan transactions of the GSIS must be deemed outside the ambit of the right to information.

There can be no doubt that right to privacy is constitutionally protected. In the landmark case of Morfe v. Mutuc [130 Phil. 415 (1968), 22 SCRA 424], this Court, speaking through then Mr. Justice Fernando, stated:

... The right to privacy as such is accorded recognition independently of its identification with liberty; in itself, it is fully deserving of constitutional protection. The language of Prof. Emerson is particularly apt: "The concept of limited government has always included the idea that governmental powers stop short of certain intrusions into the personal life of the citizen. This is indeed one of the basic

distinctions between absolute and limited government. UItimate and pervasive control of the individual, in all aspects of his life, is the hallmark of the absolute. state, In contrast, a system of limited government safeguards a private sector, which belongs to the individual, firmly distinguishing it from the public sector, which the state can control. Protection of this private sector — protection, in other words, of the dignity and integrity of the individual — has become increasingly important as modem society has developed. All the forces of technological age — industrialization, urbanization, and organization — operate to narrow the area of privacy and facilitate intrusion into it. In modern terms, the capacity to maintain and support this enclave of private life marks the difference between a democratic and a totalitarian society." [at pp. 444-445.]

When the information requested from the government intrudes into the privacy of a citizen, a potential conflict between the rights to information and to privacy may arise. However, the competing interests of these rights need not be resolved in this case. Apparent from the above-quoted statement of the Court in Morfe is that the right to privacy belongs to the individual in his private capacity, and not to public and governmental agencies like the GSIS. Moreover, the right cannot be invoked by juridical entities like the GSIS. As held in the case of Vassar College v. Loose Wills Biscuit Co. [197 F. 982 (1912)], a corporation has no right of privacy in its name since the entire basis of the right to privacy is an injury to the feelings and sensibilities of the party and a corporation would have no such ground for relief.

Neither can the GSIS through its General Manager, the respondent, invoke the right to privacy of its borrowers. The right is purely personal in nature [Cf. Atkinson v. John Doherty & Co., 121 Mich 372, 80 N.W. 285, 46 L.RA. 219 (1899); Schuyler v. Curtis, 147 N.Y. 434, 42 N.E. 22, 31 L.R.A. 286 (1895)), and hence may be invoked only by the person whose privacy is claimed to be violated.

It may be observed, however, that in the instant case, the concerned borrowers themselves may not succeed if they choose to invoke their right to privacy, considering the public offices they were holding at the time the loans were alleged to have been granted. It cannot be denied that because of the interest they generate and their newsworthiness, public figures, most especially those holding responsible positions in government, enjoy a more limited right to privacy as compared to ordinary individuals, their actions being subject to closer public scrutiny [Cf. Ayer Productions Pty. Ltd. v. Capulong, G.R. Nos. 82380 and 82398, April 29, 1988; See also Cohen v. Marx, 211 P. 2d 321 (1949).]

Respondent next asserts that the documents evidencing the loan transactions of the GSIS are private in nature and hence, are not covered by the Constitutional right to information on matters of public concern which guarantees "(a)ccess to official records, and to documents, and papers pertaining to official acts, transactions, or decisions" only.

It is argued that the records of the GSIS, a government corporation performing proprietary functions, are outside the coverage of the people's right of access to official records.

It is further contended that since the loan function of the GSIS is merely incidental to its insurance function, then its loan transactions are not covered by the constitutional policy of full public disclosure and the right to information which is applicable only to "official" transactions.

First of all, the "constituent — ministrant" dichotomy characterizing government function has long been repudiated. In ACCFA v. Confederation of Unions and Government Corporations and Offices(G.R. Nos. L-21484 and L-23605, November 29, 1969, 30 SCRA 6441, the Court said that

the government, whether carrying out its sovereign attributes or running some business, discharges the same function of service to the people.

Consequently, that the GSIS, in granting the loans, was exercising a proprietary function would not justify the exclusion of the transactions from the coverage and scope of the right to information.

Moreover, the intent of the members of the Constitutional Commission of 1986, to include government-owned and controlled corporations and transactions entered into by them within the coverage of the State policy of fun public disclosure is manifest from the records of the proceedings:

xxx xxx xxx

THE PRESIDING OFFICER (Mr. Colayco).

Commissioner Suarez is recognized.

MR. SUAREZ. Thank you. May I ask the Gentleman a few question?

MR. OPLE. Very gladly.

MR. SUAREZ. Thank you.

When we declare a "policy of full public disclosure of all its transactions" — referring to the transactions of the State — and when we say the "State" which I suppose would include all of the various agencies, departments, ministries and instrumentalities of the government....

MR. OPLE. Yes, and individual public officers, Mr. Presiding Officer.

MR. SUAREZ. Including government-owned and controlled corporations.

MR. OPLE. That is correct, Mr. Presiding Officer.

MR. SUAREZ. And when we say "transactions" which should be distinguished from contracts, agreements, or treaties or whatever, does the Gentleman refer to the steps leading to the consummation of the contract, or does he refer to the contract itself?

MR. OPLE. The "transactions" used here I suppose is generic and, therefore, it can cover both steps leading to a contract, and already a consummated contract, Mr. Presiding Officer.

MR. SUAREZ. This contemplates inclusion of negotiations leading to the consummation of the transaction.

MR. OPLE. Yes, subject only to reasonable safeguards on the national interest.

MR. SUAREZ. Thank you. [V Record of the Constitutional Commission 24-25.] (Emphasis supplied.)

Considering the intent of the framers of the Constitution which, though not binding upon the Court, are nevertheless persuasive, and considering further that government-owned and controlled corporations, whether performing proprietary or governmental functions are accountable to the people, the Court is convinced that transactions entered into by the GSIS, a government-controlled corporation created by special legislation are within the ambit of the people's right to be informed pursuant to the constitutional policy of transparency in government dealings.

In fine, petitioners are entitled to access to the documents evidencing loans granted by the GSIS, subject to reasonable regulations that the latter may promulgate relating to the manner and hours of examination, to the end that damage to or loss of the records may be avoided, that undue interference with the duties of the custodian of the records may be prevented and that the right of other persons entitled to inspect the records may be insured [Legaspi v. Civil Service Commission, supra at p. 538, quoting Subido v. Ozaeta, 80 Phil. 383, 387.] The petition, as to the second and third alternative acts sought to be done by petitioners, is meritorious.

However, the same cannot be said with regard to the first act sought by petitioners, i.e., "to furnish petitioners the list of the names of the Batasang Pambansa members belonging to the UNIDO and PDP-Laban who were able to secure clean loans immediately before the February 7 election thru the intercession/marginal note of the then First Lady Imelda Marcos."

Although citizens are afforded the right to information and, pursuant thereto, are entitled to "access to official records," the Constitution does not accord them a right to compel custodians of official records to prepare lists, abstracts, summaries and the like in their desire to acquire information on matters of public concern.

It must be stressed that it is essential for a writ of mandamus to issue that the applicant has a well-defined, clear and certain legal right to the thing demanded and that it is the imperative duty of defendant to perform the act required. The corresponding duty of the respondent to perform the required act must be clear and specific [Lemi v. Valencia, G.R. No. L-20768, November 29,1968,126 SCRA 203; Ocampo v. Subido, G.R. No. L-28344, August 27, 1976, 72 SCRA 443.] The request of the petitioners fails to meet this standard, there being no duty on the part of respondent to prepare the list requested.

WHEREFORE, the instant petition is hereby granted and respondent General Manager of the Government Service Insurance System is ORDERED to allow petitioners access to documents and records evidencing loans granted to Members of the former Batasang Pambansa, as petitioners may specify, subject to reasonable regulations as to the time and manner of inspection, not incompatible with this decision, as the GSIS may deem necessary.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Griño-Aquino, Medialdea and Regalado, JJ., concur.

[A.M. No. RTJ-01-1651.  September 4, 2001]

PROSECUTOR LEO C. TABAO, Regional Chairman, Special Task Force on Environment and Natural Resources (STF-ENR) of Region 8, Tacloban City, complainant, vs. JUDGE FRISCO T. LILAGAN, Presiding Judge, Regional Trial Court, Leyte, Branch 34, and SHERIFF IV LEONARDO V. AGUILAR, Office of the Clerk of Court, Regional Trial Court, Tacloban City,respondents.

D E C I S I O N

QUISUMBING, J.:

This is an administrative complaint filed by Atty. Leo C. Tabao, Assistant City Prosecutor of Tacloban, in his capacity as Regional Chairman of the Region 8 Special Task Force on Environment and Natural Resources, against (1) Judge Frisco T. Lilagan, presiding judge of the Leyte Regional Trial Court, Branch 34, for gross ignorance of the law, gross abuse of judicial authority, and willful disobedience to settled jurisprudence; and (2) Sheriff IV Leonardo V. Aguilar of the Leyte RTC, Office of the Clerk of Court, for gross irregularity in the performance of official duties, giving unwarranted benefits to a private individual, violation of Section 1(b) and (c) of P.D. No. 1829, and conduct prejudicial to the best interest of the service.

The records of this case reveal the following facts.

On February 24, 1998, a water craft registered under the name M/L Hadija, from Bongao, Tawi-tawi, was docked at the port area of Tacloban City with a load of around 100 tons of tanbark.  Due to previous irregular and illegal shipments of tanbark from Bongao, agents of the National Bureau of Investigation in Region 8 (NBI-EVRO #8) decided to verify the shipment’s accompanying documents as the M/L Hadija was unloading its cargo to its consignee, a certain Robert Hernandez.

The NBI agents found the documents irregular and incomplete, and consequently they ordered the unloading of the cargo stopped.  The tanbark, the boat M/L Hadija, and three cargo trucks were seized and impounded.

On March 5, 1998, NBI-EVRO #8 Regional Director Carlos S. Caabay filed a criminal complaint for violation of Section 68 (now Section 78) of P.D. No. 705, [1] the Forestry Reform Code of the Philippines (as amended), against the captain and crew of the M/L Hadija, Robert Hernandez, Tandico Chion, Alejandro K. Bautista, and Marcial A. Dalimot.  Bautista was a forester while Dalimot was a Community Environment and Natural Resources Officer (CENRO) of the Department of Environment and Natural Resources (DENR) office in Tacloban City.  Bautista and Dalimot were, thus, also charged with violation of Section 3(e) of R.A. No. 3019 or the Anti-Graft and Corrupt Practices Act,[2] along with Habi A. Alih and Khonrad V. Mohammad of the CENRO-Bongao, Tawi-tawi.  The complaint was docketed as I.S. No. 98-296 at the Prosecutor’s Office of Tacloban City.

In an order dated March 6, 1998,[3] complainant directed the seizure by the DENR of the M/L Hadija, its cargo, and the three trucks pending preliminary investigation of the case.  DENR thus took possession of the aforesaid items on March 10, 1998, with notice to the consignee Robert Hernandez and the NBI Regional Director.

On March 11, 1998, Hernandez filed in the Regional Trial Court of Leyte a case for replevin to recover the items seized by the DENR.  The case was raffled off to Branch 34 of said court and docketed as Civil Case No. 98-03-42.

On March 16, 1998, subpoenas were issued to the respondents in I.S. No. 98-296.  On March 17, 1998, confiscation proceedings were conducted by the Provincial Environment and Natural Resources Office (PENRO)-Leyte, with both Hernandez and his counsel present.

On March 19, 1998, herein respondent Judge Frisco T. Lilagan issued a writ of replevin and directed respondent Sheriff IV Leonardo V. Aguilar to take possession of the items seized by the DENR and to deliver them to Hernandez after the expiration of five days. [4] Respondent sheriff served a copy of the writ to the Philippine Coast Guard station in Tacloban City at around 5:45 p.m. of March 19, 1998.

Thus, the filing of this administrative complaint against respondents via a letter addressed to the Chief Justice and dated April 13, 1998, by Atty. Tabao.

Complainant avers that replevin is not available where the properties sought to be recovered are involved in criminal proceedings for illegal logging.  He points out that this is a well-settled issue and cites several decisions[5] of this Court and the Court of Appeals on the matter.  He argues that respondent judge should have known of the existing jurisprudence on this issue, particularly since they are subject to mandatory judicial notice per Section 1, Rule 129 of the Revised Rules of Court.

Complainant submits that respondent judge is either grossly ignorant of the law and jurisprudence or purposely disregarded them.  But he avers that it is respondent judge’s duty to keep abreast of developments in law and jurisprudence.

Complainant claims that respondent judge cannot claim ignorance of the proceedings in I.S. No. 98-296 for the following reasons:  (1) the defendants in the replevin case were all DENR officers, which should have alerted respondent judge to the possibility that the items sought to be recovered were being held by the defendants in their official capacities; and (2) the complaint for replevin itself states that the items were intercepted by the NBI for verification of supporting documents, which should have made respondent judge suspect that the same were being held by authority of law.

As regards respondent sheriff Leonardo V. Aguilar, complainant states that it was incumbent upon Aguilar to safeguard the M/L Hadija and prevent it from leaving the port of Tacloban City, after he had served a writ of seizure therefor on the Philippine Coast Guard.  However, on March 19, 1998, the vessel left the port of Tacloban City, either through respondent sheriff’s gross negligence or his direct connivance with interested parties, according to complainant.  As of the time of the filing of the complaint, according to complainant, the whereabouts of the vessel and its crew were unknown.

Moreover, complainant points out that respondent sheriff released the seized tanbark to Hernandez on March 20 and 21, 1998, or within the five-day period that he was supposed to keep it under the terms of the writ.  Complainant argues that the tanbark formed part of the people’s evidence in the criminal complaint against Hernandez and the others.  By his act, respondent sheriff effectively altered, suppressed, concealed, or destroyed the integrity of said evidence.  For this act, complainant contends that respondent sheriff may be held liable under

Section 1(b) of P.D. 1829, Penalizing Obstruction of Apprehension and Prosecution of Criminal Offenders.[6] Respondent sheriff’s acts also constitute gross irregularity in the performance of his duty as a court employee.

Complainant notes that respondent sheriff was absent from his office from March 20 to March 24, 1998.  This period included the dates he was supposed to have released the tanbark to Hernandez.  Complainant contends that respondent sheriff not only unlawfully released the tanbark, he also made it appear that he was not physically present when such act was done.

In separate indorsements dated September 9, 1998, then Court Administrator Alfredo L. Benipayo referred this administrative matter to both respondents for comment.

In his comment dated October 12, 1998,[7] respondent judge calls the attention of the Office of the Court Administrator to a pending motion to dismiss filed by the defendants in the replevin case that effectively prevented him from commenting on the issue.  The discussions that would have to be included in the comment, he says, would also resolve the pending motion to dismiss.  Respondent judge contends that complainant should have been prudent enough to wait for the resolution of the motion to dismiss before filing the instant administrative case.

Respondent judge claims that he was unaware of the existence of I.S. No. 98-296.  He only learned of the criminal case from an urgent manifestation dated March 20, 1998, filed by complainant.  He argues that he issued an order dated March 25, 1998, suspending the transfer to Hernandez of possession of the subject items, pending resolution of the urgent manifestation.

Respondent judge stresses that the writ of replevin was issued in strict compliance with the requirements laid down in Rule 60 of the Revised Rules of Court.  He also points out that said writ was issued provisionally and was not intended to be the final disposition of the replevin case.

Respondent judge avers that the charge of gross ignorance of the law is premature since he has not made a ruling yet on the motion to dismiss filed in the replevin case.  He contends that it was too much to ask from him to take note of the fact that the defendants in said case were officials of DENR and make assumptions based on such fact.  Moreover, respondent judge submits that while the complaint alleged that the cargo of tanbark was intercepted by the NBI, it also alleged that the consignee thereof produced documents to prove that the shipment was legal.

In conclusion, respondent judge points out that no apprehension report was issued by the NBI regarding the shipment.  Neither did the DENR issue a seizure report.  Respondent judge contends that the validity of the seizure of the subject items by the DENR is a matter that will have to be resolved in relation to the motion to dismiss.

For his part, respondent sheriff submits[8] that he served the writ of replevin on the Coast Guard precisely to prevent the departure of the subject vessel, since he does not have the means to physically prevent said vessel from sailing.  The Coast Guard commander should have examined the vessel and its crew after being served the writ, to determine whether or not they were engaged in any illegal activity.

Respondent sheriff narrates that no cargo was on board the vessel when he served the writ on the Coast Guard.  He verified the cargo’s status with DENR, which furnished him a copy of a fax transmission stating that the tanbark came from legitimate sources except that the shipment documents were not in order.[9]

Respondent sheriff contends that it was his ministerial duty to serve the writ of replevin, absent any instruction to the contrary.  He argues further that since the items subject of the writ are in the custody of the court and could be disposed of only through court order, there could not be any unwarranted benefit to a private individual as claimed by complainant.

Noting that the questioned shipment of tanbark was not covered by either an NBI apprehension report or a DENR seizure report, respondent sheriff contends that complainant should have taken steps to protect the integrity of the shipment instead of heaping blame upon others for his own negligence.  Respondent sheriff avers that it was not his intention to obstruct the apprehension and prosecution of criminal offenders, contrary to complainant’s claim.

Respondent sheriff refutes complainant’s claim that he was absent from his office from March 20 to March 24, 1998, and alleges that it was complainant who was absent from court hearings on several occasions, in violation of his duty as a prosecutor.

Respondent submitted two supplemental comments dated October 30, 1998,[10] and May 3, 1999,[11] (1) reiterating his contention that the tanbark seized by the DENR and subject of the replevin case had been found to come from a legitimate source, per an order signed by the Regional Director (Region 8) of the DENR,[12] and (2) informing the OCA that the main replevin case was dismissed per an order of respondent judge dated November 27, 1998.[13]

As required by resolution of the Court dated January 24, 2001, the parties herein separately manifested that they are willing to have the present case resolved based on the record on hand.

We note that in its report dated April 8, 1999, the OCA, after reviewing the case, recommended that respondent judge be fined in the amount of P15,000.00 for gross ignorance of the law.  At the same time, the OCA recommended that the charges against respondent sheriff be dismissed for lack of merit.

The recommendation of the OCA is well taken, except for the amount of the fine to be imposed on said respondent judge.

The complaint for replevin itself states that the shipment of tanbark as well as the vessel on which it was loaded were seized by the NBI for verification of supporting documents. [14] It also states that the NBI turned over the seized items to the DENR “for official disposition and appropriate action.”[15] A copy of the document evidencing the turnover to DENR was attached to the complaint as Annex “D”.[16] To our mind, these allegations would have been sufficient to alert respondent judge that the DENR has custody of the seized items and that administrative proceedings may have already been commenced concerning the shipment.  Under the doctrine of primary jurisdiction, courts cannot take cognizance of cases pending before administrative agencies of special competence.[17] Note, too, that the plaintiff in the replevin suit who seeks to recover the shipment from the DENR had not exhausted the administrative remedies available to him.[18] The prudent thing for respondent judge to have done was to dismiss the replevin suit outright.

Under Section 78-A of the Revised Forestry Code, the DENR secretary or his authorized representatives may order the confiscation of forest products illegally cut, gathered, removed, or possessed or abandoned, including the conveyances used in the commission of the offense.

In this regard, we declared in Paat v. Court of Appeals:

“…the enforcement of forestry laws, rules and regulations and the protection, development and management of forest lands fall within the primary and special responsibilities of the Department of Environment and Natural Resources.  By the very nature of its function, the DENR should be given a free hand unperturbed by judicial intrusion to determine a controversy which is well within its jurisdiction.  The assumption by the trial court, therefore, of the replevin suit filed by private respondents constitutes an unjustified encroachment into the domain of the administrative agency’s prerogative.  The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence. xxx”[19]

Respondent judge’s act of taking cognizance of the subject replevin suit clearly demonstrates ignorance of the law.  He has fallen short of the standard set forth in Canon 1, Rule 1.01 of the Code of Judicial Conduct, that a judge must be the embodiment of competence, integrity, and independence.  To measure up to this standard, judges are expected to keep abreast of all laws and prevailing jurisprudence.[20] Judges are duty bound to have more than just a cursory acquaintance with laws and jurisprudence.  Failure to follow basic legal commands constitutes gross ignorance of the law from which no one may be excused, not even a judge.[21]

We find, however, that respondent judge had already vacated the Writ of Seizure he issued on March 19, 1998, in a subsequent Order dated November 27, 1998, dismissing the Civil Complaint for replevin filed by Robert Hernandez against the Regional Director of the DENR and other officers.  He also directed in said order the sheriff to return to CENRO, Tacloban City, all the chattels confiscated by virtue of the Writ of Seizure.[22]

Further, we find that Sheriff Aguilar in his Final Return of the Writ, dated December 15, 1998, had already delivered to CENRO the 102 tons and 120 kilos of tanbark duly receipted by CENRO representative Marcial A. Dalimot on the same date.[23]

The OCA recommends that respondent judge be fined in the amount of P15,000.00.  Under the circumstances, considering that this is the first complaint against him, we deem a fine of P10,000.00 to be sufficient.

Regarding the charges against respondent sheriff, we agree with the OCA that they should be dismissed.  Respondent sheriff merely complied with his ministerial duty to serve the writ with reasonable celerity and to execute it promptly in accordance with its mandates.[24]

WHEREFORE, respondent Judge Frisco T. Lilagan is hereby found liable for gross ignorance of the law and is accordingly ordered to pay a FINE of P10,000.00, with a WARNING that a repetition of the same or a similar offense will be dealt with more severely.  The complaint against respondent Sheriff IV Leonardo V. Aguilar is DISMISSED for lack of merit.

SO ORDERED.

G.R. No. L-39655 March 21, 1975

ARROW TRANSPORTATION CORPORATION, petitioner, vs.BOARD OF TRANSPORTATION and SULTAN RENT-A-CAR, INC., respondents.

Manuel Imbong for petitioner.

Office of the Solicitor General Estelito P. Mendoza and Assistant Solicitor General Reynato S. Puno for respondent Board.

Pastor C. Bacani and Ernesto Ganiban for private respondent.

 

FERNANDO, J.:ñé+.£ªwph!1

It must have been the realization that a challenge to a provisional permit issued by respondent Board of Transportation 1 based on the absence of a hearing is not likely to be attended with success that prompted petitioner to rely on another aspect of procedural due process, the infirmity alleged being traceable to what it considered lack of jurisdiction. 2 There is the invocation of Philippine Long Distance Telephone Company v. Medina 3 with its mention of both competitors and the public being notified. It does not suffice. Something more, which more, is necessary. The reliance is misplaced. Its applicability is by no means obvious. As was pointed out in the answer of respondent Board of Transportation, such a claim is hardly persuasive with the procedure set forth in Presidential Decree No. 101 being followed and the provisional authority to operate being based on an urgent public need. Such a contention merits the approval of the Court. The petition cannot prosper.

Both petitioner and private respondent Sultan Rent-a-Car are domestic corporations. 4 The former has in his favor a certificate of public convenience to operate a public utility bus air-conditioned-auto-truck service from Cebu City to Mactan International Airport and vice-versa with the use of twenty (20) units. 5 Private respondent on September 12, 1974 filed a petition with the respondent Board for the issuance of a certificate of public convenience to operate a similar service on the same line. 6 Eight days later, without the required publication, the Board issued an order granting it provisional permit to operate such auto-truck service on the line applied for. 7There was a motion for reconsideration and for the cancellation of such provisional permit filed on October 21, 1974, 8 but without awaiting final action thereon, this petition was filed. 9 This is the explanation: "That petitioner has not waited for the resolution of his Motion for Reconsideration before going to this Court considering that the question involved herein is purely a legal one, aside from the fact that the issuance of the Order without the Board having acquired jurisdiction of the case yet, is patently illegal or was performed without jurisdiction." 10

So it was set forth in the petition filed on November 16, 1974. As a preliminary injunction was likewise sought, a hearing was scheduled for November 29, 1974. It was cancelled, this Court issuing a resolution instead, requiring respondents to file an answer not later than December 6, 1974 and setting the hearing on the merits of the case on Wednesday, December 11, 1974. In the answer submitted the facts alleged were substantially admitted. 11 It denied the allegation that there must be a publication before a provisional permit can be issued, reference being made, as noted, to Presidential Decree No. 101, which authorized respondent Board to grant provisional permits when warranted by compelling circumstances and to proceed promptly along the method of legislative inquiry. 12The case was then argued on December 11, 1974, Attorney Manuel Imbong appearing for petitioner and Assistant Solicitor General Reynato S. Puno appearing for respondent Board of Transportation. 13 Thereafter, the parties were given twenty days to file their respective memoranda

and an additional ten-day period to submit replies thereto if so minded. In time all the pleadings were submitted, and the case was ready for decision.

The petition, to repeat, cannot prosper.

1. It is to be, admitted that the claim for relief on the asserted constitutional deficiency based on procedural due process, not from the standpoint of the absence of a hearing but from the lack of jurisdiction without the required publication having been made, was argued vigorously and developed exhaustively in the memoranda of petitioner. The arguments set forth, while impressed with plausibility, do not suffice to justify the grant of certiorari. Moreover, the doctrine announced in the Philippine Long Distance Telephone Company decision, heavily leaned on by petitioner is, at the most, a frail and insubstantial support and gives way to decisions of this Court that have an even more specific bearing on this litigation.

2. A barrier to petitioner's pretension, not only formidable but also insurmountable, is the well-settled doctrine that for a provisional permit, an ex parte hearing suffices. 14 The decisive consideration is the existence of the public need. 15 That was shown in this case, respondent Board, on the basis of demonstrable data, being satisfied of the pressing necessity for the grant of the provisional permit sought. There is no warrant for the nullification of what was ordered by it. It must have been, as already noted, this state of the law that did lead petitioner to harp on its interpretation of what for it is the teaching of the Philippine Long Distance Telephone Company decision. 16 There was therein stated that one of the compelling reasons that led this Court to hold that the defunct Public Service Commission did not acquire jurisdiction was that no provision was made for bringing in as parties thereto the competitors of the Philippine Long Distance Telephone Company. 17 That is the basis for the objection on procedural due process ground. While no doubt such a holding was necessary for the decision of that case which dealt with a petition for the reexamination of a decision that was held to be final and executory, it finds no application to this controversy dealing with a provisional permit. This is made clear by this portion of the opinion of Justice Sanchez: "Araneta seeks reexamination of the rates approved by the Commission. Araneta avers that PLDT can carry out its improvement and expansion program at less onerous terms to the subscribers. But Araneta [University] was not a party to the rate-fixing case or to any of the other proceedings below. These rate-fixing and allied cases terminated with the final judgment of January 9, 1964. Not being a party, it could not have moved to reconsider said decision. Nor could it have appealed from that decision — it had no standing in that case. Even if we treat Araneta's reexamination petition as one for reconsideration, the time therefor has long passed. 18 It was then stated: The reexamination herein sought by Araneta, perforce seeks the fixing of new and different rates. 19Further: Araneta in effect, institutes a freshpetition — for new rates different from those already established. Such petition is a proceeding separate and distinct from those concluded by the final judgment of PSC of January 9, 1964. 20 The conclusion, therefore, necessarily follows:" We hold that the Public Service Commission may not reduce or increase rates established in a judgment that has become final, without proper notice; and that a Commission order reducing or increasing said rates without such notice is void." 21 Under the facts of that case, the procedural due process infirmity amounting to lack of jurisdiction is quite apparent. The opposite is true with this present petition which deals with a grant of provisional permit. It would be to lift out of context the reference made in the aforesaid opinion with reference to notification to the competitors to give a color of applicability to the situation before us. Clearly then, the allegation of a failure to follow the command of the due process guarantee is bereft of any legal foundation.

3. The question of whether the controversy is ripe for judicial determination was likewise argued by the parties. For it is undeniable that at the time the petition was filed. there was pending with the respondent Board a motion for reconsideration. Ordinarily, its resolution should be awaited. Prior

thereto, an objection grounded on prematurity can be raised. Nonetheless, counsel for petitioner would stress that certiorari lies as the failure to observe procedural due process ousted respondent Board of whatever jurisdiction it could have had in the premises. This Court was impelled to go into the merits of the controversy at this stage, not only because of the importance of the issue raised but also because of the strong public interest in having the matter settled. As was set forth in Executive Order No. 101 which prescribes the procedure to be followed by respondent Board, it is the policy of the State, as swiftly as possible, to improve the deplorable condition of vehicular traffic, obtain maximum utilization of existing public motor vehicles and eradicate the harmful and unlawful trade of clandestine operators, as well as update the standard of those carrying such business, making it "imperative to provide, among other urgently needed measures, more expeditious methods in prescribing, redefining, or modifying the lines and mode of operation of public utility motor vehicles that now or thereafter, may operate in this country. 22 It is essential then both from the standpoint of the firms engaged as well as of the riding public to ascertain whether or not the procedure followed in this case and very likely in others of a similar nature satisfies the procedural due process requirement. Thus its ripeness for adjudication becomes apparent.

To paraphrase what was said in Edu v. Ericta 23 where the validity of a legislation was passed upon in a certiorari proceeding to annul and set aside a writ of preliminary injunction, to so act would be to conserve both time and effort. Those desiring to engage in public utility business as well as the public are both vitally concerned with the final determination of the standards to be followed in the procedure that must be observed. There is, to repeat, a great public interest in a definitive outcome of the crucial issue involved. One of the most noted authorities on Administrative Law, professor Kenneth Culp Davis, discussing the ripeness concept, is of the view that the resolution of what could be a debilitating uncertainty with the conceded ability of the judiciary to work out a solution of the problem posed is a potent argument for minimizing the emphasis laid on its technical aspect. 24

WHEREFORE, the petition for certiorari is dismissed. No costs.

Makalintal, C.J., Barredo, Antonio and Fernandez, JJ., concur. 1äwphï1.ñët

Aquino, J., is on leave.

G.R. No. 85439 January 13, 1992

KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA NG BAGONG PAMILIHANG BAYAN NG MUNTINLUPA, INC. (KBMBPM), TERESITA A. FAJARDO, NADYESDA B. PONSONES, MA. FE V. BOMBASE, LOIDA D. LUCES, MARIO S. FRANCISCO, AMADO V. MANUEL and ROLANDO G. GARCIA, incumbent members of the Board, AMADO G. PEREZ and MA. FE V. BOMBASE, incumbent General Manager and Secretary-Treasurer, respectively, petitioners, vs.HON. CARLOS G. DOMINGUEZ, Secretary of Agriculture, Regional Director of Region IV of the Department of Agriculture ROGELIO P. MADRIAGA, RECTO CORONADO and Municipal Mayor IGNACIO R. BUNYE, both in his capacity as Municipal Mayor of Muntinlupa, Metro Manila and as Presiding Officer of Sangguniang Bayan ng Muntinglupa, and JOHN DOES, respondents.

G.R. No. 91927 January 13, 1992

IGNACIO R. BUNYE, JAIME R. FRESNEDI, CARLOS G. TENSUAN, VICTOR E. AGUINALDO, ALEJANDRO I. MARTINEZ, EPIFANIO A. ESPELETA, REY E. BULAY, LUCIO B. CONSTANTINO, ROMAN E. NIEFES, NEMESIO O. MOZO, ROGER SMITH, RUFINO B.

JOAQUIN, NOLASCO I. DIAZ, RUFINO IBE and NESTOR SANTOS,petitioners, vs.THE SANDIGANBAYAN, THE OMBUDSMAN and ROGER C. BERBANO, Special Prosecutor III, respondents.

Jose O. Villanueva and Roberto B. Romanillos for petitioners in G.R. No. 85439.

Alampay & Manhit Law Offices for petitioners in G.R. No. 91927.

 

DAVIDE, JR., J.:

These cases have been consolidated because they are closely linked with each other as to factual antecedents and issues.

The first case, G.R. No. 85439 (hereinafter referred to as the Kilusang Bayan case), questions the validity of the order of 28 October 1988 of then Secretary of Agriculture Hon. Carlos G. Dominguez which ordered: (1) the take-over by the Department of Agriculture of the management of the petitioner Kilusang Bayan sa Paglilingkod Ng Mga Magtitinda ng Bagong Pamilihang Bayan ng Muntilupa, Inc. (KBMBPM) pursuant to the Department's regulatory and supervisory powers under Section 8 of P.D. No. 175, as amended, and Section 4 of Executive Order No. 13, (2) the creation of a Management Committee which shall assume the management of KBMBPM upon receipt of the order, (3) the disbandment of the Board of Directors, and (4) the turn over of all assets, properties and records of the KBMBPM the Management Committee.

The second case. G.R. No. 91927 (hereinafter referred to as the Bunye case), seeks the nullification of the Resolution of 4 January 1990 of the Sandiganbayan admitting the Amended Information against petitioners in Criminal Case No. 13966 and denying their motion to order or direct preliminary investigation, and its Resolution of 1 February 1990 denying the motion to reconsider the former.

The procedural and factual antecedents are not disputed.

On 2 September 1985, the Municipal Government of Muntinlupa (hereinafter, Municipality), Metro Manila, thru its then Mayor Santiago Carlos, Jr., entered into a contract with the KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA SA BAGONG PAMILIHANG BAYAN NG MUNTINLUPA, INC. (KBMBPM) represented by its General Manager, Amado Perez, for the latter's management and operation of the new Muntinlupa public market. The contract provides for a twenty-five (25) year term commencing on 2 September 1985, renewable for a like period, unless sooner terminated and/or rescinded by mutual agreement of the parties, at a monthly consideration of Thirty-Five Thousand Pesos (P35,000) to be paid by the KBMBPM within the first five (5) days of each month which shall, however, be increased by ten percent (10%) each year during the first five (5) years only. 1

The KBMBPM is a service cooperative organized by and composed of vendors occupying the New Muntinlupa Public Market in Alabang, Muntinlupa, Metro Manila pursuant to Presidential Decree No. 175 and Letter of Implementation No. 23; its articles of incorporation and by-laws were registered with the then Office of the Bureau of Cooperatives Development (thereafter the Bureau of Agricultural Cooperatives Development or BACOD and now the Cooperative Development Authority). 2

Following his assumption into office as the new mayor succeeding Santiago Carlos, Jr., petitioner Ignacio Bunye, claiming to be particularly scandalized by the "virtual 50-year term of the agreement, contrary to the provision of Section 143, paragraph 3 of Batas Pambansa Blg. 337," and the "patently inequitable rental," directed a review of the aforesaid contract. 3 He sought opinions from both the Commission on Audit and the Metro Manila Commission (MMC) on the validity of the instrument. In separate letters, these agencies urged that appropriate legal steps be taken towards its rescission. The letter of Hon. Elfren Cruz of the MMC even granted the Municipality authority "to take the necessary legal steps for the cancellation/recission of the above cited contract and make representations with KBMBPM for the immediate transfer/takeover of the possession, management and operation of the New Muntinlupa Market to the Municipal Government of Muntinlupa." 4

Consequently, upon representations made by Bunye with the Municipal Council, the latter approved on 1 August 1988 Resolution No. 45 abrogating the contract. To implement this resolution, Bunye, together with his co-petitioners and elements of the Capital Command of the Philippine Constabulary, proceeded, on 19 August 1986, to the public market and announced to the general public and the stallholders thereat that the Municipality was taking over the management and operation of the facility, and that the stallholders should henceforth pay their market fees to the Municipality, thru the Market Commission, and no longer to the KBMBPM. 5

On 22 August 1988, the KBMBPM filed with Branch 13 of the Regional Trial Court of Makati a complaint for breach of contract, specific performance and damages with prayer for a writ of preliminary injunction against the Municipality and its officers, which was docketed as Civil Case No. 88-1702. 6 The complaint was premised on the alleged illegal take-over of the public market effected "in excess of his (Bunye's) alleged authority" and thus "constitutes breach of contract and duty as a public official."

The writ applied for having been denied, 7 the KBMBPM officers resisted the attempts of Bunye and company to complete the take-over; they continued holding office in the KBS building, under their respective official capacities. The matter having been elevated to this Court by way of certiorari, 8 We remanded the same to the Court of Appeals which docketed it as C.A.-G.R. No. L-16930. 9

On 26 August 1988, Amado Perez filed with the Office of the Ombudsman a letter-complaint charging Bunye and his co-petitioners with oppression, harassment, abuse of authority and violation of the Anti-Graft and Corrupt Practices Act 10 for taking over the management and operation of the public market from KBMBPM. 11

In a subpoena dated 7 October 1988, prosecutor Mothalib C. Onos of the Office of the Special Prosecutor directed Bunye and his co-petitioners to submit within ten (10) days from receipt thereof counter-affidavits, affidavits of their witnesses and other supporting documents. 12 The subpoena and letter-complaint were received on 12 October 1988.

On 20 October 1988, two (2) days before the expiration of the period granted to file said documents, Bunye, et al. filed by mail an urgent motion for extension of "at least fifteen (15) days from October 22, 1988" within which to comply 13 with the subpoena.

Thereafter, the following transpired which subsequently gave rise to these petitions:

G.R. No. 85439

In the early morning of 29 October 1988, a Saturday, respondent Madriaga and Coronado, allegedly accompanied by Mayor Bunye and the latters' heavily armed men, both in uniform and in civilian

clothes, together with other civilians, namely: Romulo Bunye II, Alfredo Bunye, Tomas Osias, Reynaldo Camilon, Benjamin Taguibao, Benjamin Bulos and other unidentified persons, allegedly through force, violence and intimidation, forcibly broke open the doors of the offices of petitioners located at the second floor of the KBS Building, new Muntinlupa Public Market, purportedly to serve upon petitioners the Order of respondent Secretary of Agriculture dated 28 October 1988, and to implement the same, by taking over and assuming the management of KBMBPM, disbanding the then incumbent Board of Directors for that purpose and excluding and prohibiting the General Manager and the other officers from exercising their lawful functions as such. 14 The Order of the Secretary reads as follows: 15

O R D E R

WHEREAS, the KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA NG BAGONG PAMILIHANG BAYAN NG MUNTINLUPA, INC., (KBMBPM), Alabang, Muntinlupa, Metro Manila is a Cooperative registered under the provisions of Presidential Decree No. 175, as amended;

WHEREAS, the Department of Agriculture is empowered to regulate and supervise cooperatives registered under the provisions of Presidential Decree No. 175, as amended;

WHEREAS, the general membership of the KBMBPM has petitioned the Department of Agriculture for assistance in the removal of the members of the Board of Directors who were not elected by the general membership of said cooperative;

WHEREAS, the on-going financial and management audit of the Department of Agriculture auditors show (sic) that the management of the KBMBPM is not operating that cooperative in accordance with PD. 175, LOI No. 23, the Circulars issued by DA/BACOD and the provisions of the by-laws of KBMBPM;

WHEREAS, the interest of the public so demanding it is evident and urgently necessary that the KBMBPM MUST BE PLACED UNDER MANAGEMENT TAKE-OVER of the Department of Agriculture in order to preserve the financial interest of the members of the cooperative and to enhance the cooperative development program of the government;

WHEREAS, it is ordered that the Department of Agriculture in the exercise of its regulatory and supervisory powers under Section 8 of PD 175, as amended, and Section 4 of Executive Order No. 113, take over the management of KBMBPM under the following directives:

1. THAT a Management Committee is hereby created composed of the following:

a) Reg. Dir. or OIC RD — DA Region IV

b) Atty. Rogelio P. Madriaga — BACOD

c) Mr. Recto Coronado — KBMBPM

d) Mrs. Nadjasda Ponsones — KBMBPM

e) One (1) from the Municipal Government of Muntinlupa to be designated by the Sangguniang Pambayan ng Muntinlupa;

2. THAT the Management Committee shall, upon receipt of this Order, assume the management of KBMBPM;

3. THAT the present Board of Directors is hereby disbanded and the officers and Manager of the KBMBPM are hereby directed to turnover all assets, properties and records of the KBMBPM to the Management Committee herein created;

4. THAT the Management Committee is hereby empowered to promulgate rules of procedure to govern its workings as a body;

5. THAT the Management Committee shall submit to the undersigned thru the Director of BACOD monthly reports on the operations of KBMBPM;

6. THAT the Management Committee shall call a General Assembly of all registered members of the KBMBPM within Ninety (90) days from date of this Order to decide such matters affecting the KBMBPM, including the election of a new set of Board of Director (sic).

This Order takes effect immediately and shall continue to be in force until the members of the Board of Directors shall have been duly elected and qualified.

Done this 28th day of October, 1988 at Quezon City.

As claimed by petitioners, the Order served on them was not written on the stationary of the Department, does not bear its seal and is a mere xerox copy.

The so-called petition upon which the Order is based appears to be an unverified petition dated 10 October 1988 signed, according to Mayor Bunye, 16 by 371 members of the KBMBPM.

On 2 November 1988, petitioners filed the petition in this case alleging, inter alia, that:

(a) Respondent Secretary acted without or in excess of jurisdiction in issuing the Order for he arrogated unto himself a judicial function by determining the alleged guilt of petitioners on the strength of a mere unverified petition; the disbandment of the Board of Directors was done without authority of law since under Letter of Implementation No. 23, removal of officers, directors or committee members could be done only by the majority of the members entitled to vote at an annual or special general assembly and only after an opportunity to be heard at said assembly.

(b) Respondent Secretary acted in a capricious, whimsical, arbitrary and despotic manner, so patent and gross that it amounted to a grave abuse of discretion.

(c) The Order is a clear violation of the By-Laws of KBMBPM and is likewise illegal and unlawful for it allows or tolerates the violation of the penal provisions under paragraph (c), Section 9 of P.D. No. 175.

(d) The Order is a clear violation of the constitutional right of the individual petitioners to be heard. 17

They pray that upon the filing of the petition, respondents, their agents, representatives or persons acting on their behalf be ordered to refrain, cease and desist from enforcing and implementing the questioned Order or from excluding the individual petitioners from the exercise of their rights as such officers and, in the event that said acts sought to be restrained were already partially or wholly done, to immediately restore the management and operation of the public market to petitioners, order respondents to vacate the premises and, thereafter, preserve the status quo; and that, finally, the challenged Order be declared null and void.

In the Resolution of 9 October 1988, 18 We required the respondents to Comment on the petition. Before any Comment could be filed, petitioners filed on 2 January 1989 an Urgent Ex-Parte Motion praying that respondent Atty. Rogelio Madriaga, who had assumed the position of Chairman of the Management Committee, be ordered to stop and/or cancel the scheduled elections of the officers of the KBMBPM on 6 January 1989 and, henceforth, desist from scheduling any election of officers or Members of the Board of Directors thereof until further orders on the Court. 19 The elections were, nevertheless, held and a new board of directors was elected. So, on 19 January 1989, petitioners filed a supplemental motion 20 praying that respondent Madriaga and the "newly elected Board of Directors be ordered to cease and desist from assuming, performing or exercising powers as such, and/or from removing or replacing the counsels of petitioners as counsels for KBMBPM and for Atty. Fernando Aquino, Jr., to cease and desist from unduly interfering with the affairs and business of the cooperative."

Respondent Bunye, by himself, filed his Comment on 23 January 1989. 21 He denies the factual allegations in the petition and claims that petitioners failed to exhaust administrative remedies. A reply thereto was filed by petitioners on 7 February 1989. 22

Respondent Recto Coronado filed two (2) Comments. The first was filed on 6 February 1989 23 by his counsel, Atty. Fernando Aquino, Jr., and the second, which is for both him and Atty. Madriaga, was filed by the latter on 10 February 1989. 24

On 20 February 1989, petitioners filed a Reply to the first Comment of Coronado 25 and an Ex-Parte Motion for the immediate issuance of a cease and desist order 26 praying that the so-called new directors and officers of KBMBPM, namely: Tomas M. Osias, Ildefonso B. Reyes, Paulino Moldez, Fortunato M. Medina, Aurora P. del Rosario, Moises Abrenica, and Lamberto Casalla, be ordered to immediately cease and desist from filing notices of withdrawals or motions to dismiss cases filed by the Cooperative now pending before the courts, administrative offices and the Ombudsman and Tanodbayan, and that if such motions or notices were already filed, to immediately withdraw and desist from further pursuing the same until further orders of this Court. The latter was precipitated by the Resolution No. 19 of the "new" board of directors withdrawing all cases filed by its predecessors against Bunye, et al., and more particularly the following cases: (a) G.R. No. 85439 (the instant petition), (b) Civil Case No. 88-1702, (c) OSP Case No. 88-2110 before the Ombudsman, (d) IBP Case No. 88-0119 before the Tanodbayan, and Civil Case No. 88-118 for Mandamus. 27

On 1 March 1989, We required the Solicitor General to file his Comment to the petition and the urgent motion for the immediate issuance of a cease and desist order. 28

A motion to dismiss the instant petition was filed on 30 March 1989. 29 On 19 April 1989, We resolved to dismiss the case and consider it closed and terminated. 30 Thereupon, after some

petitioners filed a motion for clarification and reconsideration, We set aside the dismissal order and required the new directors to comment on the Opposition to Motion to Dismiss filed by the former. 31

The new board, on 14 June 1989, prayed that its Manifestation of 6 June 1989 and Opposition dated 9 June 1989, earlier submitted it response to petitioners' motion for reconsideration of the order dismissing the instant petition, be treated as its Comment. 32 Both parties then continued their legal fencing, serving several pleadings on each other.

In Our Resolution of 9 August 1989, 33 We gave the petition due course and required the parties to submit their respective Memoranda.

On 14 August 1989, petitioners filed an urgent ex-parte motion for the immediate issuance of a cease and desist order 34 in view of the new board's plan to enter into a new management contract; the motion was noted by this Court on 23 August 1989. A second ex-parte motion, noted on 18 October 1989, was filed on 19 September 1989 asking this court to consider the "Invitation to pre-qualify and bid" for a new contract published by respondent Bunye. 35

In a belated Comment 36 for the respondent Secretary of Agriculture filed on 22 September 1989, the Office of the Solicitor General asserts that individual petitioners, who were not allegedly elected by the members or duly designated by the BACOD Director, have no right or authority to file this case; the assailed Order of the Secretary was issued pursuant to P.D. No. 175, more particularly Section 8 thereof which authorizes him "(d) to suspend the operation or cancel the registration of any cooperative after hearing and when in its judgment and based on findings, such cooperative is operating in violation of this Decree, rules and regulations, existing laws as well as the by-laws of the cooperative itself;" the Order is reasonably necessary to correct serious flaws in the cooperative and provide interim measures until election of regular members to the board and officers thereof; the elections conducted on 6 January 1989 are valid; and that the motion to dismiss filed by the new board of directors binds the cooperative. It prays for the dismissal of the petition.

Respondent Secretary of Agriculture manifested on 22 September 1989 that he is adopting the Comment submitted by the Office of the Solicitor General as his memorandum; 37 petitioners and respondents Coronado and Madriaga filed their separate Memoranda on 6 November 1989; 38 while the new board of directors submitted its Memorandum on 11 December 1989. 39

The new KBMBPM board submitted additional pleadings on 16 February 1990 which it deemed relevant to the issues involved herein. Reacting, petitioners filed a motion to strike out improper and inadmissible pleadings and annexes and sought to have the pleaders cited for contempt. Although We required respondents to comment, the latter did not comply.

Nevertheless, a manifestation was filed by the same board on 25 February 1991 40 informing this Court of the holding, on 9 January 1991, of its annual general assembly and election of its board of directors for 1991. It then reiterates the prayer that the instant petition be considered withdrawn and dismissed. Petitioners filed a counter manifestation alleging that the instant petition was already given due course on 9 August 1989. 41 In its traverse to the counter manifestation, the new board insists that it "did not derive authority from the October 28, 1988 Order, the acts of the Management Committee, nor (sic) from the elections held in (sic) January 6, 1989," but rather from the members of the cooperative who elected them into office during the elections.

Petitioners filed a rejoinder asserting that the election of new directors is not a supervening event independent of the main issue in the present petition and that to subscribe to the argument that the issues in the instant petition became moot with their assumption into office is to reward a wrong done.

G. R. NO. 91927

Petitioners claim that without ruling on their 20 October 1988 motion for an extension of at last 15 days from 22 October 1988 within which to file their counter-affidavits, which was received by the Office of the Special Prosecutor on 3 November 1988, Special Prosecutor Onos promulgated on 11 November 1988 a Resolution finding the evidence on hand sufficient to establish a prima facie case against respondents (herein petitioners) and recommending the filing of the corresponding information against them before the Sandiganbayan. 42Petitioners also claim that they submitted their counter-affidavits on 9 November 1988. 43

In their motion dated 2 December 1988, petitioners move for a reconsideration of the above Resolution, 44 which was denied by Onos 45 in his 18 January 1989 Order. The information against the petitioners was attached to this order.

Upon submission of the records for his approval, the Ombudsman issued a first indorsement on 4 April 1989 referring to "Judge Gualberto J. de la Llana, Acting Director , IEO/RSSO, this Office, the within records of OSP Case No. 88-02110 . . . for further preliminary investigation . . ." 46

Thereafter, on 28 April 1989, Bunye and company received a subpoena from de la Llana requiring them to appear before the latter on 25 April 1989, 47 submit a report and file comment. After being granted an extension, Bunye and company submitted their comment on 18 May 1989. 48

On 22 August 1989, de la Llana recommended the filing of an information for violation of section 3 (e) of the Anti-Graft and Corrupt Practices Act. 49 The case was referred to special prosecuting officer Jose Parentela, Jr. who, in his Memorandum 50 to the Ombudsman through the Acting Special Prosecutor, likewise urged that an information be filed against herein petitioners. On 3 October 1989, the Ombudsman signed his conformity to the Memorandum and approved the 18 January information prepared by Onos, which was then filed with the Sandiganbayan.

Consequently, Bunye, et al. were served arrest warrants issued by the Sandiganbayan. Detained at the NBI on 9 October 1989, they claim to have discovered only then the existence of documents recommending and approving the filing of the complaint and a memorandum by special prosecutor Bernardita G. Erum proposing the dismissal of the same. 51

Arraignment was set for 18 October 1989. 52

However, on 14 October 1989, petitioners filed with the Sandiganbayan an "Omnibus Motion to Remand to the Office of the Ombudsman; to Defer Arraignment and to Suspend Proceedings." 53

Subsequently, through new counsel, petitioners filed on 17 October 1989 a Consolidated Manifestation and Supplemental Motion 54 praying, inter alia, for the quashal of the information on the ground that they were deprived of their right to a preliminary investigation and that the information did not charge an offense.

The Sandiganbayan issued an order on 18 October 1989 deferring arraignment and directing the parties to submit their respective memoranda, 55 which petitioners complied with on 2 November 1989. 56 On 16 November 1989, special Prosecutor Berbano filed a motion to admit amendedinformation. 57

On 17 November 1989, the Sandiganbayan handed down a Resolution 58 denying for lack of merit the Omnibus Motion to Remand the Case To The Office of the Ombudsman, to Defer Arraignment

and to Suspend Proceedings. Petitioners then filed a motion to order a preliminary investigation 59 on the basis of the introduction by the amended information of new, material and substantive allegations, which the special prosecutor opposed,60 thereby precipitating a rejoinder filed by petitioners. 61

On 4 January 1990, the Sandiganbayan handed down a Resolution 62 admitting the Amended Information and denying the motion to direct preliminary investigation. Their motion to reconsider this Resolution having been denied in the Resolution of 1 February 1990, 63 petitioners filed the instant petition on 12 February 1990.

Petitioners claim that respondent Sandiganbayan acted without or in excess of jurisdiction or with manifest grave abuse of discretion amounting to lack of jurisdiction in denying petitioners their right to preliminary investigation and in admitting the Amended Information.

They then pray that: (a) the 4 January and 1 February 1990 Resolutions of the Sandiganbayan, admitting the amended information and denying the motion for reconsideration, respectively, be annulled; (b) a writ be issued enjoining the Sandiganbayan from proceeding further in Criminal Case No. 13966; and (c) respondents be enjoined from pursuing further actions in the graft case.

We required the respondents to Comment on the petition.

On 21 February 1990, petitioners' counsel filed a motion to drop Epifanio Espeleta and Rey E. Dulay as petitioners, 64 and in the Comment they filed on 30 March 1990, in compliance with Our Resolution of 1 March 1990, they state that they do not interpose any objection to the motion.

On 20 March 1990, the Office of the Solicitor General moved that it be excused from filing comment for the respondents as it cannot subscribe to the position taken by the latter with respect to the questions of law involved.65 We granted this motion in the resolution of 8 May 1990.

Respondent Berbano filed his comment on 10 September 1991 and petitioners replied on 20 December 1990; Berbano subsequently filed a Rejoinder thereto on 11 January 1991. 66 The Sandiganbayan then filed a manifestation proposing that it be excused from filing comment as its position on the matters in issue is adequately stated in the resolutions sought to be annulled. 67 On 7 March 1991, We resolved to note the manifestation and order the instant petition consolidated with G.R. No. 85439.

The present dispute revolves around the validity of the antecedent proceedings which led to the filing of the original information on 18 January 1989 and the amended information afterwards.

THE ISSUES AND THEIR RESOLUTION

1. G. R. No. 85439.

As adverted to in the introductory portion of this Decision, the principal issue in G.R. No. 85439 is the validity of the 28 October 1988 Order of respondent Secretary of Agriculture. The exordium of said Order unerringly indicates that its basis is the alleged petition of the general membership of the KBMBPM requesting the Department for assistance "in the removal of the members of the Board of Directors who were not elected by the general membership" of the cooperative and that the "ongoing financial and management audit of the Department of Agriculture auditors show (sic) that the management of the KBMBPM is not operating that cooperative in accordance with P.D. 175, LOI 23,

the Circulars issued by DA/BACOD and the provisions and by-laws of KBMBPM." It is also professed therein that the Order was issued by the Department "in the exercise of its regulatory and supervisory powers under Section 8 of P.D. 175, as amended, and Section 4 of Executive Order No. 113."

Respondents challenge the personality of the petitioners to bring this action, set up the defense of non-exhaustion of administrative remedies, and assert that the Order was lawfully and validly issued under the above decree and Executive Order.

We find merit in the petition and the defenses interposed do not persuade Us.

Petitioners have the personality to file the instant petition and ask, in effect, for their reinstatement as Section 3, Rule 65 of the Rules of Court, defining an action for mandamus, permits a person who has been excluded from the use and enjoyment of a right or office to which he is entitled, to file suit. 68 Petitioners, as ousted directors of the KBMBPM, are questioning precisely the act of respondent Secretary in disbanding the board of directors; they then pray that this Court restore them to their prior stations.

As to failure to exhaust administrative remedies, the rule is well-settled that this requirement does not apply where the respondent is a department secretary whose acts, as an alter ego of the President, bear the implied approval of the latter, unless actually disapproved by him. 69 This doctrine of qualified political agency ensures speedy access to the courts when most needed. There was no need then to appeal the decision to the office of the President; recourse to the courts could be had immediately. Moreover, the doctrine of exhaustion of administrative remedies also yields to other exceptions, such as when the question involved is purely legal, as in the instant case, 70 or where the questioned act is patently illegal, arbitrary or oppressive. 71 Such is the claim of petitioners which, as hereinafter shown, is correct.

And now on the validity of the assailed Order.

Regulation 34 of Letter of Implementation No. 23 (implementing P.D. No. 175) provides the procedure for the removal of directors or officers of cooperatives, thus:

An elected officer, director or committee member may be removed by a vote of majority of the members entitled to vote at an annual or special general assembly. The person involved shall have an opportunity to be heard.

A substantially identical provision, found in Section 17, Article III of the KBMBPM's by-laws, reads:

Sec. 17. Removal of Directors and Committee Members. — Any elected director or committee member may be removed from office for cause by a majority vote of the members in good standing present at the annual or special general assembly called for the purpose after having been given the opportunity to be heard at the assembly.

Under the same article are found the requirements for the holding of both the annual general assembly and a special general assembly.

Indubitably then, there is an established procedure for the removal of directors and officers of cooperatives. It is likewise manifest that the right to due process is respected by the express provision on the opportunity to be heard. But even without said provision, petitioners cannot be deprived of that right.

The procedure was not followed in this case. Respondent Secretary of Agriculture arrogated unto himself the power of the members of the KBMBPM who are authorized to vote to remove the petitioning directors and officers. He cannot take refuge under Section 8 of P.D. No. 175 which grants him authority to supervise and regulate all cooperatives. This section does not give him that right.

An administrative officer has only such powers as are expressly granted to him and those necessarily implied in the exercise thereof. 72 These powers should not be extended by implication beyond what may to necessary for their just and reasonable execution. 73

Supervision and control include only the authority to: (a) act directly whenever a specific function is entrusted by law or regulation to a subordinate; (b) direct the performance of duty; restrain the commission of acts; (c) review, approve, reverse or modify acts and decisions of subordinate officials or units; (d) determine priorities in the execution of plans and programs; and (e) prescribe standards, guidelines, plans and programs. Specifically, administrative supervision is limited to the authority of the department or its equivalent to: (1) generally oversee the operations of such agencies and insure that they are managed effectively, efficiently and economically but without interference with day-to-day activities; (2) require the submission of reports and cause the conduct of management audit, performance evaluation and inspection to determine compliance with policies, standards and guidelines of the department; (3) take such action as may be necessary for the proper performance of official functions, including rectification of violations, abuses and other forms of mal-administration; (4) review and pass upon budget proposals of such agencies but may not increase or add to them. 74

The power to summarily disband the board of directors may not be inferred from any of the foregoing as both P.D. No. 175 and the by-laws of the KBMBPM explicitly mandate the manner by which directors and officers are to be removed. The Secretary should have known better than to disregard these procedures and rely on a mere petition by the general membership of the KBMBPM and an on-going audit by Department of Agriculture auditors in exercising a power which he does not have, expressly or impliedly. We cannot concede to the proposition of the Office of the Solicitor General that the Secretary's power under paragraph (d), Section 8 of P.D. No. 175 above quoted to suspend the operation or cancel the registration of any cooperative includes the "milder authority of suspending officers and calling for the election of new officers." Firstly, neither suspension nor cancellation includes the take-over and ouster of incumbent directors and officers, otherwise the law itself would have expressly so stated. Secondly, even granting that the law intended such as postulated, there is the requirement of a hearing. None was conducted.

Likewise, even if We grant, for the sake of argument, that said power includes the power to disband the board of directors and remove the officers of the KBMBPM, and that a hearing was not expressly required in the law, still the Order can be validly issued only after giving due process to the affected parties, herein petitioners.

Due process is guaranteed by the Constitution 75 and extends to administrative proceedings. In the landmark case of Ang Tibay vs. Court of Industrial Relations, 76 this Court, through Justice Laurel, laid down the cardinal primary requirements of due process in administrative proceedings, foremost of which is the right to a hearing, which includes the right to present one's case and submit evidence in support thereof. The need for notice and the opportunity to be heard is the heart of procedural due process, be it in either judicial or administrative proceedings. 77 Nevertheless, a plea of a denial of procedural due process does not lie where a defect consisting in an absence of notice of hearing was thereafter cured by the aggrieved party himself as when he had the opportunity to be heard on a subsequent motion for reconsideration. This is consistent with the principle that what the law

prohibits is not the absence of previous notice but the absolute absence thereof and lack of an opportunity to be heard. 78

In the instant case, there was no notice of a hearing on the alleged petition of the general membership of the KBMBPM; there was, as well, not even a semblance of a hearing. The Order was based solely on an alleged petition by the general membership of the KBMBPM. There was then a clear denial of due process. It is most unfortunate that it was done after democracy was restored through the peaceful people revolt at EDSA and the overwhelming ratification of a new Constitution thereafter, which preserves for the generations to come the gains of that historic struggle which earned for this Republic universal admiration.

If there were genuine grievances against petitioners, the affected members should have timely raise these issues in the annual general assembly or in a special general assembly. Or, if such a remedy would be futile for some reason or another, judicial recourse was available.

Be that as it may, petitioners cannot, however, be restored to their positions. Their terms expired in 1989, thereby rendering their prayer for reinstatement moot and academic. Pursuant to Section 13 of the by-laws, during the election at the first annual general assembly after registration, one-half plus one (4) of the directors obtaining the highest number of votes shall serve for two years, and the remaining directors (3) for one year; thereafter, all shall be elected for a term of two years. Hence, in 1988, when the board was disbanded, there was a number of directors whose terms would have expired the next year (1989) and a number whose terms would have expired two years after (1990). Reversion to the status quo preceding 29 October 1988 would not be feasible in view of this turn of events. Besides, elections were held in 1990 and 1991. 79 The affairs of the cooperative are presently being managed by a new board of directors duly elected in accordance with the cooperative's by-laws.

2. G. R. No. 91927.

The right of an accused to a preliminary investigation is not among the rights guaranteed him in the Bill of Rights. As stated in Marcos, et al. vs. Cruz, 80 "the preliminary investigation in criminal cases is not a creation of the Constitution; its origin is statutory and it exists and the right thereto can be invoked when so established and granted by law. It is so specifically granted by procedural law. 81 If not waived, absence thereof may amount to a denial of due process. 82 However, lack of preliminary investigation is not a ground to quash or dismiss a complaint or information. Much less does it affect the court's jurisdiction. In People vs. Casiano, 83 this Court ruled:

Independently of the foregoing, the absence of such investigation [preliminary] did not impair the validity of the information or otherwise render it defective. Much less did it affect the jurisdiction of the court of first instance over the present case. Hence, had the defendant-appellee been entitled to another preliminary investigation, and had his plea of not guilty upon arraignment not implied a waiver of said right, the court of first instance should have, either conducted such preliminary investigation, or ordered the Provincial Fiscal to make it, in pursuance of section 1687 of the Revised Administrative Code (as amended by Republic Act No. 732), or remanded the record for said investigation to the justice of the peace court, instead of dismissing the case as it did in the order appealed from.

This doctrine was thereafter reiterated or affirmed in several case. 84

In the instant case, even if it is to be conceded for argument's sake that there was in fact no preliminary investigation, the Sandiganbayan, per Doromal vs. Sandiganbayan, 85 "should merely suspend or hold in abeyance proceedings upon the questioned Amended Information and remand the case to the Office of the Ombudsman for him to conduct a preliminary investigation."

It is Our view, however, that petitioners were not denied the right to preliminary investigation. They, nevertheless, insist that the preliminary investigation conducted by the Office of the Special Prosecutor existed more in form than in substance. This is anchored on the failure by prosecutor Onos to consider the counter-affidavits filed by petitioners. The same sin of omission is ascribed to Acting Director de la Llana who purportedly failed to consider the comments submitted by the petitioners pursuant to a subpoena dated 13 April 1989. The failure of special prosecutor Berbano to conduct a preliminary investigation before amending the information is also challenged.

It is finally urged that the Sandiganbayan completely disregarded the "glaring anomaly that on its face the Information filed by the Office of the Special Prosecutor" was prepared and subscribed on 18 January 1989, while the records indicate that the preliminary investigation was concluded on 3 October 1989.

In his Comment, respondent Berbano dispassionately traces the genesis of the criminal information filed before the Sandiganbayan. His assessment that a preliminary investigation sufficient in substance and manner was conducted prior to the filing of the information reflects the view of the Sandiganbayan, maintained in both the 17 November 1989 and 4 January 1990 resolutions, that there was compliance with the requirements of due process.

Petitioners were provided a reasonable period within which to submit their counter-affidavits; they did not avail of the original period; they moved for an extension of at least fifteen (15) days from 22 October 1988. Despite the urgency of its nature, the motion was sent by mail. The extension prayed for was good up to 6 November 1988. But, as admitted by them, they filed the Counter-Affidavits only on 9 November 1988. Yet, they blamed prosecutor Onos for promulgating the 11 November 1989 Resolution and for, allegedly, not acting on the motion. Petitioners then should not lay the blame on Onos; they should blame themselves for presuming that the motion would be granted.

This notwithstanding, petitioners were able to file a Motion for Reconsideration on 13 December 1988 requesting that the reviewing prosecutor consider the belatedly filed documents; 86 thus, there is the recommendation of prosecutor Bernardita Erum calling for the dismissal of the charges on 2 March 1989, which, however, was not sustained upon subsequent review. The Sandiganbayan, in its 17 November 1989 Resolution, succinctly summed up the matter when it asserted that "even granting, for the sake of argument, that prosecutor Onos . . . failed to consider accused-movants' counter-affidavits, such defect was cured when a "Motion for Reconsideration" was filed, and which . . . de la Llana took into account upon review."

It may not then be successfully asserted that the counter-affidavits were not considered by the Ombudsman in approving the information. Perusal of the factual antecedents reveals that a second investigation was conducted upon the "1st Indorsement" of the Ombudsman of 4 April 1989. As a result, subpoenas were issued and comments were asked to be submitted, which petitioners did, but only after a further extension of fifteen (15) days from the expiration of the original deadline. From this submission the matter underwent further review.

Moreover, in the 18 January 1989 Order of prosecutor Onos, there was an ample discussion of the defenses raised by the petitioners in their counter-affidavits, thus negating the charge that the issues raised by them were not considered at all. 87

It is indisputable that the respondents were not remiss in their duty to afford the petitioners the opportunity to contest the charges thrown their way. Due process does not require that the accused actually file his counter-affidavits before the preliminary investigation is deemed completed. All that is required is that he be given the opportunity to submit such if he is so minded. 88

In any event, petitioners did in fact, although belatedly, submit their counter-affidavits and as a result thereof, the prosecutors concerned considered them in subsequent reviews of the information, particularly in the re-investigation ordered by the Ombudsman.

And now, as to the protestation of lack of preliminary investigation prior to the filing of the Amended Information. The prosecution may amend the information without leave of court before arraignment, 89 and such does not prejudice the accused. 90 Reliance on the pronouncements in Doromal vs. Sandiganbayan 91 is misplaced as what obtained therein was the preparation of an entirely new information as contrasted with mere amendments introduced in the amended information, which also charges petitioners with violating Section 3 (e) of the Anti-Graft Law.

In Gaspar vs. Sandiganbayan, 92 We held that there is no rule or law requiring the Tanodbayan to conduct another preliminary investigation of a case under review by it. On the contrary, under P.D. No. 911, in relation to Rule 12, Administrative Order No. VII, the Tanodbayan may, upon review, reverse the findings of the investigator and thereafter "where he finds a prima facie case, to cause the filing of an information in court against the respondent, based on the same sworn statements or evidence submitted, without the necessity of conducting another preliminary investigation."

Respondent Sandiganbayan did not then commit any grave abuse of discretion in respect to its Resolutions of 4 January 1990 and 1 February 1990.

The petition then must fail.

CONCLUSION

WHEREFORE, judgment is hereby rendered:

1. GRANTING the petition in G.R. No. 85439; declaring null and void the challenged Order of 28 October 1988 of the respondent Secretary of Agriculture; but denying, for having become moot and academic, the prayer of petitioners that they be restored to their positions in the KBMBPM.

2. DISMISSING, for lack of merit, the petition in G.R. No. 91927.

No pronouncement as to costs.

IT IS SO ORDERED.

Narvasa, C.J., Melencio-Herrera, Cruz, Paras, Feliciano, Padilla, Bidin, Griño-Aquino, Medialdea, Regalado and Romero, JJ., concur.

Gutierrez, Jr. and Nocon, JJ., took no part.

G.R. No. L-65718 June 30, 1987

NATIONAL DEVELOPMENT COMPANY AND DOLE PHILIPPINES, INC., petitioners, vs.WILFREDO HERVILLA, respondent.

 

PADILLA, J.:

Assailed in this petition for review on certiorari is the decision 1 dated 10 November 1983 of the Intermediate Appellate Court (now Court of Appeals) in AC-G.R. No. CV-66215 entitled, "Wilfredo Hervilla, Plaintiff-Appellant, versus Dole Philippines, Inc., Candido de Pedro, and National Development Co., Defendants-Appelleea, "which reversed the decision of the Court of First Instance of South Cotabato, General Santos City, as well as its resolution dated 9 August 1985 denying the motion for reconsideration of said decision.

The facts of the case, as gathered from the decision under review, are as follows:

An action for Recovery of Possession and Damages filed on December 20, 1973 by Wilfredo Hervilla against Dole Philippines, a duly registered corporation doing business in Polomolok, South Cotabato, involving Lots Nos. 3284, and 3283, GSS-269-D, each containing four (4) hectares, more or less, situated at Sitio Bahsong, Palkan, Polomolok, South Cotabato, now in the possession of defendant corporation as Administrator of the properties of National Development Corporation (NDC) impleaded as party defendant (Records, p. 48).

On December 28, 1958, claimant Rolando Gabales, for a consideration of P450.00, sold to Hernane Hervilla all his rights and interest over a four-hectare land located in Palkan, Polomolok, South Cotabato but Identified only by its boundaries:

... On the North, by the property of Teopisto Espafiola; on the south, by Mr. Macarandan; on the east by Francisco Macarandan and on the west by Regina Fabrea ...(Exh."K").

It was apparently on the strength of the Tax Declaration No. 1376 that Hernane Hervilla was induced to acquire it (Exh. "L").

On August 1, 1959, its adjoining occupant-claimant, Fernando Jabagat, for a consideration of P270.00, also sold his interest and rights to Hernane Hervilla over another four (4) hectares of land, situated at Balisong, Bo. Kablon, Tupi [later plotted in Palkan, Polomolok] South Cotabato, Identified by its boundaries:

...On the North by the property of Candido de Pedro; on the south by the property of Santiago Macarandan; on the East by creek and on the West by the property of HernaneHervilla ...(Exh."H").

Undoubtedly, while adjoining each other, one of these is situated on Polomolok, South Cotabato, while the other is in Tupi, South Cotabato [the two lots were later plotted to be in Palkan, Polomolok). For, at the time of these transfers, the boundary between these places had not definitely been settled. Hence, the discrepancy.

On June 1, 1961, Wilfredo Hervilla, claiming to be the successor-in-interest of his brother, Hernane Hervilla who vacated these properties, [in favor of the former], filed with the District Land Office of the Bureau of Lands in General Santos City Free Patent Application Nos. 2054 and 2054-A, respectively, over the lots, after the same were surveyed and designated as Lot Nos. 3264, GSS-269-D and 3l66 (Exhs. "A", "A-7", "B", "B-4", tsn, p. 249).

On April 1, 1963, as claimant and occupant of Lots 3283 and 3284, GSS-269-D, situated at Balisong, Kablon, Tupi, South Cotabato since 1945, Candido de Pedro filed with the Bureau of Lands, Manila, his Free Patent Application, having planted it to abaca, coffee, banana, corn and other seasonal crops, erecting therein a farm house (Exhs, "E", "2", "2-A", "2-B"). Land taxes from 1945 until 1963 were paid per Official Receipts Nos. B-9134501 and B-913492 (Record, pp. 126, 131). Then, exactly four months after filing his application, Candido de Pedro ceded all his rights to the National Development Corporation, represented by Pedro Changco, Jr. (Exhs. "J", "J-1").

On April 27, 1968, Wilfredo Hervilla who was then in Palawan, thru his wife, Enuna V. Hervilla, filed an ejectment suit against Dole before the Municipal Court of Tupi, South Cotabato (then Cotabato) alleging that "sometime in the early part of March 1968 defendant by means of threats, of force, intimidation, strategy and stealth and against the wig of the plaintiffs, entered and occupied the entire parcels (lots Nos. 3264 and 3265, GSS-269-D)... constructing ..." (Exh. "F", Record, p. 109). This was dismissed, however, on September 30, 1970 for failure to state a cause of action and without the benefit of trying it upon the merits (Exh. "H", Record, p. 195).

On July 28, 1972, as Lots 3264 and 3265 applied by plaintiff on June 1, 1961, had obviously been designated as Lots 3283 and 3284 initially applied on August 1, 1963 by Candido de Pedro, predecessorin-interest of Dole, counsel for plaintiff's Wilfredo Hervilla wrote the District Land Officer of the Bureau of Lands, stationed in Koronadal, South Cotabato, requesting for an Investigation of these Lots (Exh. "G").

On January 30, 1975, Jesus Ma. Baltazar, supplied with verbal information by Wilfredo Hervilla in his occular inspection about the facts surrounding the claim of plaintiff, [in an investigation duly conducted with the aid of the map of the Bureau and in the presence of Candido de Pedro] submitted his report to the District Land Officer, recommending:

... that PPa, Nos. (VIII-4)-40 54 and (VII-4) 2054-A be amended accordingly such that it shall cover Lot No. 3284 and 3283, respectively both of GSS-269-D, Palkan, Polomolok, South Cotabato, instead of Lot Nos. 3264 and 3265, respectively, both of GSS-269-D, and Kablon, Tupi, South Cotabato (Exh. "H", "H l").

On June 15, 1973, Hernando Jereos, Provincial Officer of Koronadal, South Cotabato, pursuant to the report of the Land Investigator, Jesus Ma. Baltazar, issued an order:

"That the Free Patent Application No. (VIII-4) 2054 and Free Patent Application No. (VIII-4) 2054-A of Wilfredo D. Hervilla for Lots Nos. 3264 and 3265, GSS-269-D, respectively, be, as hereby they are, modified in the sense that the disposition therein contained shall in

the order named refer to Lots Nos. 3284 and 3283, GSS-269-D and, as thus modified, further action on the herein mentioned application held in abeyance pending the final determination of the adverse claim of Dolefil thereto"(Exh."D").

So, on September 20, 1973, armed with that recommendation, counsel for plaintiff wrote Dolefil demanding the immediate return of Lots 3284 and 3283 to Wilfredo Hervilla as well as payment of actual and moral damages since the former's occupation and fencing of the land in March 1968, with a warning of a court suit if it failed (Exh. "I", Record, p. 125). Falling on deaf ears, plaintiff instituted the presentsuit, engaged the services of a counsel in the sum of P2,000.00 (tsn, p. 115). 2

On the basis of the foregoing facts, the court a quo rendered a decision in favor of the National Development Company (NDC, for short) and Dole Philippines, Inc., (Dolephil, for short), petitioners herein, by dismissing the herein private respondent's complaint against them. On 30 March 1979, private respondent iplaintiff in the trial court) appealed to the Intermediate Appellate Court which, on 10 November 1983, rendered the herein assailed decision, thus:

WHEREFORE, in view of an the foregoing considerations, the decision appealed from is hereby REVERSED and set aside and another one entered herein;

1. Declaring that plaintiff-appellant, Wilfredo Hervilla, the rightful possessor of the subject lots or lots designated as Lots Nos. 3283 and 3284, GSS-269-D, situated at Palkan, Polomololok, South Cotabato;

2. Ordering the NDC and DOLE to vacate the said lots and deliver possession thereof to the said plaintiff-appellant;

3. Ordering the defendants-appellees: Dole (Philippines, Inc.); Candido de Pedro and National Development Co. (NDC), jointly and severally to pay Wilfredo Hervilla P700.00 per annum, representing the value of the yearly harvest of the land at the time it was taken, with legal interest from the tune of judicial demand until funy paid; and

4. Ordering the said defendants-appeuees jointly and severally to pay P5,000.00 in the concept of attorney's fees and to pay the costs. 3

A motion for reconsideration was timely filed by herein petitioners and on 9 January 1984, a Supplement to the Motion for Reconsideration with Motion for New Trial was filed praying that the case be reopened and a new trial conducted for the purpose of submitting original certificate of Title Nos. 26651 and 26653. Petitioners alleged therein that, on 5 December 1980, or while the case was pending with respondent Court, the Bureau of Lands issued the free patents in favor of Petitioners' predecessor-in-interest.

On 9 August 1985, respondent Court issued a resolution denying the Motion for Reconsideration and Supplement to the Motion for Reconsideration with Motion for New Trial, stating thus:

Finding that all the grounds and arguments raised in the Motion for Reconsideration are practically the same or at least included, considered and passed upon adversely against movant by this Court in its decision now sought to be reconsidered, the Court RESOLVED to DENY the Motion for Reconsideration.

Regarding the Supplement to the Motion for Reconsideration with Motion for New Trial, in which defendants-appellees now claim that the "issue of possession and ownership have been conclusively determined in favor of defendant-appellee National Development Co. " per patents OCTs Nos. p-26651 and p-26653 both recently dated December 5, 1980, as Annexes "1" & "2", We do not think the Bureau of Lands could validly make a pronouncement on the issue of possession over the subject land upon which rested the issuance of the patents in favor of defendants-appellee, as against the prior finding of this Court that the plaintiff-appellant had the prior, superior and physical possession thereof, since said issue is the very sameDecision of the Intermediate Appellate Court, issue litigated in this case submitted by the parties to the court of justice. In other words, when the Bureau of Lands issued the patents and OCT's in question, the case was already pending in court; hence, subjudice. The issuance of the patents and Original Certificates of Title over the subject land, therefore, is nun and void, the same having been issued, while the case is still pending in court.

In view thereof, this Court likewise hereby RESOLVES to DENY the Supplement to the Motion for Reconsideration with Motion for New Trial, for being unmeritorious. 4

Hence, the present petition interposed by the National Development Company (NDC).

There is no question that the authority given to the Lands Department over the disposition of public lands 5 does not exclude the courts from their jurisdiction over possessory actions, the public character of the land notwithstanding 6 and that the exercise by the courts of such jurisdiction is not an interference with the alienation, disposition and control of public lands. 7 The question that is raised by petitioner NDC before this Court is: "May the Court in deciding a case involving recovery of possession declare null and void title issued by an administrative body or office during the pendency of such case? Specifically, is the Bureau of Lands precluded, on the ground that the matter is subjudice, from issuing a free patent during the pendency of a case in court for recovery of possession?

The questions are answered in the negative. It is now well settled that the administration and disposition of public lands are committed by law to the Director of Lands primarily, and, ultimately, to the Secretary of Agriculture and Natural Resources. 8 The jurisdiction of the Bureau of Lands is confined to the determination of the respective rights of rival claimantsx to public lands 9 or to cases which involve disposition and alienation of public lands. 10The jurisdiction of courts in possessory actions involving public lands is limited to the determination of who has the actual, physical possession or occupation of the land in question (in forcible entry cases, before municipal courts) or, the better right of possession (in accion publiciana, in cases before Courts of First Instance, now Regional Trial Courts). 11

In forcible entry cases, moreover, title is not in issue; as a matter of fact, evidence thereof is expressly barred, except to prove the nature of the possession. 12

In any event, petitioners' possession of the lands in question has been confirmed by the issuance of Free Patents in favor of their predecessor-in-interest. By this act, nothing more is left for the courts to pursue. Thus, the private respondent's cause of action has been rendered moot and academic by the decision of the Director of Lands. InRallon vs. Ruiz, 13 this Court said:

The reason then for possessory actions in court, namely, to "facilitate adjudication" by the Lands Department of a dispute over public land no longer exists. For, defendants' applications are no longer pending investigation. Defendants' possession

of the lands disputed, for purposes of the free patents, has been confirmed in the administrative case. The administrative branch of the government has thus already spoken. Its action has lapsed into finality. Accordingly, plaintiffs' claim of possession is lost. Since plaintiffs' protests, in reference to possession, has already been resolved adversely against them by the Lands Department, nothing more is left for the courts to pursue.

In Realize vs. Duarte, 14 this Court stated:

The land on which Duarte settled may be initially presumed as pubhe land, his homestead application over it having been approved by the Director of Lands. It is our considered opinion that the approval of his homestead application legalized his possession, and such approval constitutes a justifiable defense against the action for revival of judgment as it necessarily affects the appellee's right of possession of the land from which Duarte was ordered ejected.

The principle was reiterated in De los Santos vs. Rodriguez thus: 15

At the time of the rendition of the decision in CA-G.R. No. 18912-R, the question of whether or not said portion was to be part of her homestead had not as yet been definitely settled. Accordingly, it became necessary to determine in that case who rhafl meanwhile be in possession. The aforementioned question was finany decided in favor of Rodriguez, in the order of the Director of Fisheries, dated February 27, 1959. Thereafter he is, therefore, the party entitled to said possession. In other words, the decision in CA-G.R. 18912-R may no longer be executed, not because the decision in CA-G.R. 32970-R has annulled it, but because of events subsequent to the first decision, which events have changed materially the situation between the parties. Thus, in Hernandez vs. Clapis, this Court, speaking through then Chief Justice Paras, said:

In our opinion the present appeal is meritorious. While the decision in the forcible entry and detainer case is final, it can no longer be executed at least in so far as the possession of the land in question is concerned, because, under section 4 of Commonwealth Act No. 141, the Director of Lands has direct executive control of the survey, classification, lease, sale or any other form of concession of disposition and management of the lands of the public domain, and his decisions as to questions of fact are conclusive when approved by the Secretary of Agriculture; and because the latter had already cancelled the right of plaintiff Maria L. Hernandez to administer the land in question and rejected both her sales application and that of her husband, plaintiff Antonio Hernandez, at the same time giving the defendants the preferential right to apply for said land in virtue of the provisions of Republic Act No. 65. The correctness of the final decision of the Secretary of Agriculture is not herein involved, but it is valid and binding until reversed in a proper proceeding by the No. L-23170, January 31, 1968, 22 SCRA 451, 457court. The situation is not that the judgment in the forcible entry and detainer case has lost its virtuality, but that the plaintiffs had subsequently ceased to be entitled to the relief awarded by said judgment. (Emphasis supplied.)

Moreover, records do not show that private respondent Wilfredo Hervilla ever filed a motion for reconsideration of the decision of the Director of Lands issuing free patent over the lands in dispute in favor of petitioners' predecessor-in-interest. Neither did he appeal said decision to the Secretary of Agriculture and Natural Resources, nor did he appeal to the office of the President of the Philippines.

In short, Hervilla failed to exhaust administrative remedies, a flaw which, to our mind, is fatal to a court review. The decision of the Director of Lands has now become final. The Courts may no longer interfere with such decision. 16

WHEREFORE, the decision dated 10 November 1983 and the resolution dated 9 August 1985 of the respondent Appellate Court are hereby reversed and set aside. The decision of the court a quo dated 28 February 1979 is hereby ordered reinstated. No costs.

SO ORDERED.

Fenan, Gutierrez, Jr., Paras, Bidin and Cortes, JJ., concur.

G.R. No. 75501 September 15, 1987

ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION, petitioner, vs.Hon. FULGENCIO S. FACTORAN, JR., in his capacity as Deputy Executive Secretary, and ASTERIO BUQUERON, respondents.

 

PARAS, J:

This is a petition for review on certiorari, seeking to set aside the decision rendered by public respondent Deputy Executive Secretary Fulgencio S. Factoran, Jr., by authority of the President, reinstating and confirming the decision dated April 17, 1978 of the Director of Mines and Geo Sciences, and setting aside the decision of the Minister of Natural Resources.

The undisputed facts of this case are as follows:

On February 9, 1972, Atlas Consolidated Mining and Development Corporation registered the location of its "Master VII Fr." mining claim with the Mining Recorder of Toledo City. On September 10, 1973, private respondent Asterio Buqueron registered the declarations of location of his "St. Mary Fr." and "St. Joseph Fr." mining claims with the same Mining Recorder. On October 15, 1973, Atlas registered the declarations of location of its "Carmen I Fr." to "Carmen V. Fr. " with the same Mining Recorder.

Buqueron's "St. Mary Fr." and "St. Joseph Fr." were surveyed and the survey plans thereof were duly approved by the Director of Mines and Geo Sciences. Notice of Buqueron's lease application was published in the February 22 and 28, 1977 issues of the Evening Post.

During the said period of publication, petitioner filed an adverse claim against private respondent's mining claims on the ground that they allegedly overlapped its own mining claims.

After hearing, the Director of Mines rendered a decision, dated April 17, 1978, the dispositive portion of which reads:

VIEWED IN THE LIGHT OF THE FOREGOING, respondent (Buqueron) is hereby given the preferential right to possess, lease, explore, exploit and operate the areas covered by his "St. Mary Fr." and "St. Joseph Fr." mining claims, except the area covered thereby which is in conflict with adverse claimant's (Atlas) "Master VII Fr."

Adverse claimant (Atlas) on the other hand, is given the preferential right to possess, lease, explore, exploit and operate the area covered by its "Master VII Fr." case.

Atlas appealed to the Minister of Natural Resources who rendered a decision dated November 10, 1978, the dispositive portion of which reads as follows:

PREMISES CONSIDERED, the derision of the Director of Mines dated April 17, 1978, should be, as hereby it is, set aside. In lieu thereof, it is hereby decision that the "St. Mary Fr." and "St. Joseph Fr." mining claims of Asterio Buqueron are null and void, that the "Carmen I Fr. " to "Carmen V. Fr. " mining claims of Atlas Consolidated Mining and Development Corporation are valid, and that it be given the preferential right to possesses, explore, exploit, lease and operate the areas covered thereby. (Decision, Office of the President; Rollo, pp. 52-57; Decision of the Minister of Natural Resources, Rollo, pp. 47-51; Comment of Public Respondent, Rollo, pp. 88-90; Decision, Director of Mines, Rollo, pp. 157-160).

As aforestated, on further appeal, the Deputy Executive Secretary, Office of the President, reversed the decision of the Minister of Natural Resources and reinstated the decision of the Director of Mines and Geo Sciences.

Hence, this petition.

Briefly stated, petitioner's assignment of errors may be combined into the following issues:

(1) Whether or not private respondent's appeal to the Office of the President was time-barred;

(2) Whether or not there was a valid location and discovery of the disputed mining claims.

The Second Division of this Court without giving due course to the petition, required respondents to comment in the resolution of October 6, 1986 (Rollo, p. 76). Both private respondent and public respondent filed their respective comments on November 17, 1986 (Rollo, pp. 81-86; pp. 88-95).

On December 8, 1986 (Rollo, p. 104) this Court required the respondents to file a rejoinder to the consolidated reply filed by counsel for petitioner dated November 4, 1986 (Rollo, pp. 97-102). Said rejoinder was filed on February 6, 1987 (Rollo, pp. 108-111), by the Solicitor General for public respondent, after which petitioner filed a sur-rejoinder thereto on March 13, 1987 (Rollo, pp. 113-116). Thereafter the Court in the resolution of March 30, 1987 gave due course to the petition and required both parties to file their respective memoranda.

Counsel for public respondent filed a Manifestation/Motion praying to be allowed to adopt its comment dated November 2, 1986 and Rejoinder dated February 4, 1987 as the memorandum for public respondent. Petitioner filed its memorandum on May 25,1987 (Rollo, p. 136).

The petition is devoid of merit.

I.

It is not disputed that private respondent received a copy of the decision of the Minister of Natural Resources dated November 10, 1978 on November 27, 1978 and that under Section 50 of

Presidential Decree No. 463, the decision of the Minister is appealable to the Office of the President within five (5) days from receipt thereof. In the case at bar, the 5-day period expired on December 2, 1978, a Saturday, private respondent filed his appeal on December 4, 1978, a Monday.

Petitioner contends that the appeal was filed out of time and therefore, the Office of the President did not acquire jurisdiction over the case and should have dismissed the same outright (Rollo, pp. 20-21).

This contention is untenable.

Petitioner and private respondent are in accord on the fact that at the time of the filing of the questioned appeal, Saturday was observed as a legal holiday in the Office of the President pursuant to Section 29 of the Revised Administrative Code as amended.

The same law provides:

Section 31. Pretermission of holiday. — Where the day, or the last day, for doing any act required or permitted by law falls on a holiday, the act may be done on the next succeeding business day.

Apart from the fact that the law is clear and needs no interpretation, this Court in accordance therewith has invariably held that in case the last day for doing an act is a legal holiday, it does not have the effect of making the preceding day, the last day for doing the same; the act may be done on the next succeeding business day (Gonzaga vs. Ce David, 110 Phil. 463-464 [1960]; Calano vs. Cruz, 91 Phil. 247 [1952]; Austria, et al. vs. The Solicitor General, et al., 71 Phil. 288 [1941]).

Coming back to the case at bar, as the next working day after December 2,1978 was December 4, 1978 — a Monday, it is evident that private respondent's appeal was filed on time.

II.

It is apparent that the second issue as to whether or not there was a valid location and discovery of the disputed mining claims is a question of fact best left to the determination of the administrative bodies charged with the implementation of the law they are entrusted to enforce. As uniformly held by the Court, it is sufficient that administrative findings of fact are supported by evidence, or negatively stated, it is sufficient that findings of fact are not shown to be unsupported by evidence. Substantial evidence is all that is needed to support an administrative finding of fact, and substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." (Ang Tibay vs. Court of Industrial Relations, 69 Phil. 635, 642; Police Commission vs. Lood, 127 SCRA 762 [1984]).

In the case at bar, the record amply shows that the Director of Mines' decision was supported by substantial evidence.

Petitioner claimed that it is a registered surface land owner and locator of six (6) lode claims duly registered with the Office of the Mining Recorder as above stated and that in derogation of its permission, caused the "table" location and survey and applied for the lease of his alleged mining claims known as "St. Mary Fr." and "St. Joseph Fr. " lode claims.

In his answer, private respondent denied the material allegations of the adverse claim and by way of affirmative defense alleged that all of petitioner's claims including a portion of Master VII Fr. are null

and void for having been located in areas which were closed to mining location in open and gross violation of paragraph 1 (d) of Section 28 and of Section 60 of the Mining Act as amended.

The main thrust of petitioner's claim is that all of the mining claims of both petitioner and private respondent are located inside the premises or properties of the former, so that it is hardly possible for private respondent to have conducted the requisite location and survey without having been seen or noticed by petitioner and its personnel.

The Director of Mines established that there is in fact an overlapping of mining claims of petitioner and private respondent and that as a matter of record petitioner's mining claims were registered subsequent to those of private respondent with the exception of Master VII Fr. which was registered on February 9, 1972 or prior to the registration of the mining claims of private respondent.

In ruling as to who, between the parties shall be given preferential right to lease the area in question, the Director of Mines' findings are as follows:

Adverse claimant in its attempt to impugn the validity of the mining claims of respondent alleged that said mining claims were the result of table locations and survey and in support thereof submitted the sworn statements of its Chief Geologist and Chief Security.

On the other hand, respondent asserted that he, through his authorized representative actually and validly performed all the acts of discovery and location required by law and the field survey of his mining claims was actually conducted by Geodetic Engineer Salvador Aligaen from December 16 to 18, 1974. In support of this assertion, respondent submitted in evidence affidavit of the authorized agent (Annex "D" of the answer) and another affidavit of Geodetic Engineer Salvador Aligaen (Annex "F" of the answer). Respondent also submitted in evidence Bureau of Forestry map and Bureau of Coast and Geodetic Survey map of the total area (Exhs. "9" to "10") which embraces the area in question. These maps tend to prove that the Atlas main gate is not the only point of ingress and egress such that one can enter the area in question for the purpose of mining location and survey without being noticed by any of the personnel of Atlas.

After a careful appraisal of the evidence submitted, and cognizance as we are of the provisions of Presidential Decree No. 99-A, we are of the view that adverse claimant failed to adduce sufficient evidence to nullify the prior claims of respondent. Stated differently, the evidence submitted are not sufficient to destroy the prima facie character of the sworn declarations of location of respondent's mining claims which were duly registered on the date herein before stated. Thus "A location notice certificate or statement when re-examine accorded is prima facie evidence of all the facts the statute requires it to contain and which were sufficiently set forth" (40 C.J. pp. 811-812) and constitute notice to all persons and to the whole world of the contents of the same (Sec. 56 of the Mining Act, as amended).

It is, therefore, pertinent to quote hereunder Sections 28(d) and 60 of the Mining Act, as amended, as well as Section 1 of Presidential Decree No. 99-A:

SEC. 28 — No Prospecting shall be allowed:

(d)-In lands which have been located for mining leases by other prospectors under the provisions of this Act.

SEC. 60. — No valid mining claim or any part thereof, may be located by others until the original locator or his successors in interest abandons the claim or forfeits his rights on the same under the provisions of this Act.

SEC. 1 — Whenever there is any conflict between claim owners over any mining claims whether mineral or non-mineral, the locator of the claim who first registered his claim with the proper mining registrar, notwithstanding any defect in form or technicality, shall have the exclusive right to possess, exploit, explore, develop and operate such mining claims. ...

In the light of the aforequoted provisions of law applicable on the matter, and in view of our findings, earlier discussed, the subsequent mining claims of adverse claimant insofar as they conflict the prior claims of respondent are hereby declared nun and void.

On the other hand, it is also our view that respondent failed to adduce sufficient evidence to prove that the prior claim of adverse claimant (Master VII Fr.) is null and void. Considering that this mining claim is prior in point of location and registration, it follows that this claim will have to prevail over that of respondent. For the same reason, therefore, that the subsequent claims of adverse claimant were declared null and void insofar as they conflict with the prior claims of respondent, the mining claims of respondent insofar as they conflict with "Master VII Fr." claim of adverse claimant are likewise declared null and void. (Decision, Director of Mines; rollo pp. 157-160).

As earlier stated the above findings, although reversed by the Minister of Natural Resources, were affirmed by the Office of the President.

However, petitioner would have this Court look into the said findings because of the open divergence of views and findings by the adjudicating authorities in this mining conflict involving highly contentious issues which warrant appellate review (Rollo, p. 18).

This Court has repeatedly ruled that judicial review of the decision of an administrative official is of course subject to certain guide posts laid down in many decided cases. Thus, for instance, findings of fact in such decision should not be disturbed if supported by substantial evidence, but review is justified when there has been a denial of due process, or mistake of law or fraud, collusion or arbitrary action in the administrative proceeding (L-21588-Atlas Development and Acceptance Corp. vs. Gozon, etc. et al., 64 O.G. 11511 [1967]), where the procedure which led to factual findings is irregular; when palpable errors are committed; or when a grave abuse of discretion, arbitrariness, or capriciousness is manifest (Ateneo de Manila University vs. CA, 145 SCRA 100-101 [1986]; International Hardwood and Veneer Co., of the Philippines vs. Leogardo, 117 SCRA 967; Baguio Country Club Corporation vs. National Labor Relations Commission, 118 SCRA 557; Sichangco vs.

Commissioner of Immigration, 94 SCRA 61; and Eusebio vs. Sociedad Agricola de Balarin, 16 SCRA 569).

A careful study of the records shows that none of the above circumstances is present in the case at bar, which would justify the overturning of the findings of fact of the Director of Mines which were affirmed by the Office of the President. On the contrary, in accordance with the prevailing principle that "in reviewing administrative decisions, the reviewing Court cannot re-examine the sufficiency of the evidence as if originally instituted therein, and receive additional evidence, that was not submitted to the administrative agency concerned," the findings of fact in this case must be respected. As ruled by the Court, they will not be disturbed so long as they are supported by substantial evidence, even if not overwhelming or preponderant (Police Commission vs. Lood, supra).

PREMISES CONSIDERED, this petition is hereby DENIED and the assailed decision of the Office of the President, is hereby AFFIRMED.

SO ORDERED.

Teehankee, C.J., Narvasa and Cruz, JJ., concur.

Gancayco, J., is on leave.

G.R. No. 96409 February 14, 1992

CITIZEN J. ANTONIO M. CARPIO, petitioner, vs.THE EXECUTIVE SECRETARY, THE SECRETARY OF LOCAL GOVERNMENTS, THE SECRETARY OF NATIONAL DEFENSE and THE NATIONAL TREASURER, respondents.

 

PARAS, J.:

At the very outset, it should be well to set forth the constitutional provision that is at the core of the controversy now confronting us, thus:

Article XVI, Section 6:

The State shall establish and maintain one police force, which stall be national in scope and civilian in character, to be administered and controlled by a national police commission. The authority of local executives over the police units in their jurisdiction shall be provided by law. 1

With the aforequoted provision in mind, Congress passed Republic Act No. 6975 entitled "AN ACT ESTABLISHING THE PHILIPPINE NATIONAL POLICE UNDER A REORGANIZED DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AND FOR OTHER PURPOSES" as the consolidated version of House Bill No. 23614 and Senate Bill No. 463.

Following the said Act's approval by President Corazon C. Aquino on December 13, 1990, it was published on December 17, 1990. 2

Presently, however, petitioner as citizen, taxpayer and member of the Philippine Bar sworn to defend the Constitution, filed the petition now at bar on December 20, 1990, seeking this Court's declaration of unconstitutionality of RA 6975 with prayer for temporary restraining order.

But in an en banc resolution dated December 27, 1990, We simply required the public respondents to file their Comment, without however giving due course to the petition and the prayer therein. Hence, the Act took effect after fifteen days following its publication, or on January 1, 1991. 3

Before we settle down on the merits of the petition, it would likewise be well to discuss albeit briefly the history of our police force and the reasons for the ordination of Section 6, Article XVI in our present Constitution.

During the Commonwealth period, we had the Philippine Constabulary as the nucleus of the Philippine Ground Force (PGF), now the Armed Forces of the Philippines (AFP). The PC was made part of the PGF but its administrative, supervisory and directional control was handled by the then Department of the Interior. After the war, it remained as the "National Police" under the Department of National Defense, as a major service component of the AFP. 4

Later, the Integration Act of 1975 5 created the Integrated National Police (INP) under the Office of the President, with the PC as the nucleus, and the local police forces as the civilian components. The PC-INP was headed by the PC Chief who, as concurrent Director-General of the INP, exercised command functions over the INP. 6

The National Police Commission (NAPOLCOM) 7 exercised administrative control and supervision while the local executives exercised operational supervision and direction over the INP units assigned within their respective localities. 8

The set-up whereby the INP was placed under the command of the military component, which is the PC, severely eroded the INP's civilian character and the multiplicity in the governance of the PC-INP resulted in inefficient police service. 9 Moreover, the integration of the national police forces with the PC also resulted in inequities since the military component had superior benefits and privileges. 10

The Constitutional Commission of 1986 was fully aware of the structural errors that beset the system. Thus, Com. Teodulo C. Natividad explained that:

xxx xxx xxx

MR. NATIVIDAD. . . . The basic tenet of a modern police organization is to remove it from the military. 11

xxx xxx xxx

Here in our draft Constitution, we have already made a constitutional postulate that the military cannot occupy any civil service position [in Section 6 of the Article on the Civil Service 12] Therefore, in keeping with this and because of the universal acceptance that a police force is a civilian function, a public service, and should not be performed by military force, one of the basic reforms we are presenting here is that it should be separated from the military force which is the PC. 13

xxx xxx xxx

Furthermore:

xxx xxx xxx

. . . the civilian police cannot blossom into full profession because most of the key positions are being occupied by the military So, it is up to this Commission to remove the police from such a situation so that it can develop into a truly professional civilian police. . . . 14

Hence, the "one police force, national in scope, and civilian in character" provision that is now Article XVI, Section 6 of the 1987 Constitution.

And so we now come to the merits of the petition at hand.

In the main, petitioner herein respectfully advances the view that RA 6975 emasculated the National Police Commission by limiting its power "to administrative control" over the Philippine National Police (PNP), thus, "control" remained with the Department Secretary under whom both the National Police Commission and the PNP were placed. 15

We do not share this view.

To begin with, one need only refer to the fundamentally accepted principle in Constitutional Law that the President has control of all executive departments, bureaus, and offices to lay at rest petitioner's contention on the matter.

This presidential power of control over the executive branch of government extends over all executive officers from Cabinet Secretary to the lowliest clerk 17 and has been held by us, in the landmark case of Mondano vs. Silvosa,18 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." 19

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 at the same time and in person, 20 he will have to delegate some of them to his Cabinet members.

Under this doctrine, which recognizes the establishment of a single executive, 21 "all executive and administrative organizations are adjuncts of the Executive Department, the heads of the various executive departments are assistants 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 on 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, unless disapproved or reprobated by the Chief Executive presumptively the acts of the Chief Executive." 22 (emphasis ours)

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." 23

Additionally, the circumstance that the NAPOLCOM and the PNP are placed under the reorganized Department of Interior and Local Government is merely an administrative realignment that would bolster a system of coordination and cooperation among the citizenry, local executives and the integrated law enforcement agencies and public safety agencies created under the assailed Act, 24 the funding of the PNP being in large part subsidized by the national government.

Such organizational set-up does not detract from the mandate of the Constitution that the national police force shall be administered and controlled by a national police commission as at any rate, and in fact, the Act in question adequately provides for administration and control at the commission level, as shown in the following provisions, to wit:

Sec. 14. Powers and Functions of the Commission. — The Commission shall exercise the following powers and functions:

xxx xxx xxx

(i) Approve or modify plans and programs on education and training, logistical requirements, communications, records, information systems, crime laboratory, crime prevention and crime reporting;

(j) Affirm, reverse or modify, through the National Appellate Board, personnel disciplinary actions involving demotion or dismissal from the service imposed upon members of the Philippine National Police by the Chief of the PNP;

(k) Exercise appellate jurisdiction through .the regional. appellate boards over administrative cases against policemen and over decisions on claims for police benefits;

xxx xxx xxx

Sec. 26. The Command and direction of the PNP shall be vested in the Chief of the PNP . . . Such command and direction of the Chief of the PNP may be delegated to subordinate officials with respect to the units under their respective commands, in accordance with the rules and regulations prescribed by the Commission. . . .

xxx xxx xxx

Sec. 35. . . . To enhance police operational efficiency and effectiveness, the Chief of the PNP may constitute such other support units as may be necessary subject to the approval of the Commission. . . .

xxx xxx xxx

Sec. 37. . . . There shall be established a performance evaluation system which shall be administered in accordance with the rules, regulations and standards; and a code of conduct promulgated by the Commission for members of the PNP. . . .

xxx xxx xxx

Petitioner further asserts that in manifest derogation of the power of control of the NAPOLCOM over the PNP, RA 6975 vested the power to choose the PNP Provincial Director and the Chiefs of Police

in the Governors and Mayors, respectively; the power of "operational supervision and control" over police units in city and municipal mayors; in the Civil Service Commission, participation in appointments to the positions of Senior Superintendent to Deputy Director-General as well as the administration of qualifying entrance examinations; disciplinary powers over PNP members in the "People's Law Enforcement Boards" and in city and municipal mayors. 25

Once more, we find no real controversy upon the foregoing assertions.

It is true that when the Constitutional Commissioners of 1986 provided that the authority of local executives over the police units in their jurisdiction shall be provided by law, they intended that the day-to-day functions of police work like crime, investigation, crime prevention activities, traffic control, etc., would be under the operational control of the local executives as it would not be advisable to give full control of the police to the local executives.26

They reasoned that in the past, this gave rise to warlordism, bossism, and sanctuaries for vices and abuses. 27

It would appear then that by vesting in the local executives the power to choose the officers in question, the Act went beyond the bounds of the Constitution's intent.

Not so. We find light in the principle of constitutional construction that every presumption should be indulged in favor of constitutionality and the court in considering the validity of the statute in question should give it such reasonable construction as can be reached to bring it within the fundamental law. 28

Under the questioned provisions, which read as follows:

D. PARTICIPATION OF LOCAL EXECUTIVES IN THE ADMINISTRATION OF THE PNP.

Sec. 51. Powers of Local Government Officials over the PNP Units or Forces.

Governors and mayors shall be deputized as representatives of the Commission in their respective territorial jurisdictions. As such, the local executives shall discharge the following functions:

a.) Provincial Governor — (1) . . .

The provincial governor shall choose the provincial director from a list of three (3) eligibles recommended by the PNP Regional Director.

4) . . . City and municipal mayors shall have the following authority over the PNP units in their respective jurisdictions:

i.) Authority to choose the chief of police from a list of five (5) eligibles recommended by the Provincial Police Director. . . . (Emphasis ours)

full control remains with the National Police Commission.

We agree, and so hold, with the view of the Solicitor General that "there is no usurpation of the power of control of the NAPOLCOM under Section 51 because under this very same provision, it is

clear that the local executives are only acting as representatives of the NAPOLCOM. . . . As such deputies, they are answerable to the NAPOLCOM for their actions in the exercise of their functions under that section. Thus, unless countermanded by the NAPOLCOM, their acts are valid and binding as acts of the NAPOLCOM." 29 It is significant to note that the local officials, as NAPOLCOM representatives, will choose the officers concerned from a list of eligibles (those who meet the general qualifications for appointment to the PNP) 30 to be recommended by PNP officials.

The same holding is true with respect to the contention on the operational supervision and control exercised by the local officials. Those officials would simply be acting as representatives of the Commission.

As regards the assertion involving the Civil Service Commission, suffice it to say that the questioned provisions, which read:

Sec. 31. Appointment of PNP Officers and Members. — The Appointment of the officers and members of the PNP shall be effected in the following manner:

a.) Police Officer I to Senior Police Officer IV. — Appointed by the PNP regional director for regional personnel or by the Chief of the PNP for national headquarters personnel and attested by the Civil Service Commission;

b.) Inspector to Superintendent. — Appointed by the Chief of the PNP, as recommended by their immediate superiors, and attested by the Civil Service Commission;

c.) Senior Superintendent to Deputy Director-General. — Appointed by the President upon recommendation of the Chief of the PNP, with proper endorsement by the Chairman of the Civil Service Commission . . .

Sec. 32. Examinations for Policemen. — The Civil Service Commission shall administer the qualifying entrance examinations for policemen on the basis of the standards set by the NAPOLCOM.

precisely underscore the civilian character of the national police force, and will undoubtedly professionalize the same.

The grant of disciplinary powers over PNP members to the "People's Law Enforcement Boards" (or the PLEB) and city and municipal mayors is also not in derogation of the commission's power of control over the PNP.

Pursuant to the Act, the Commission exercises appellate jurisdiction, thru the regional appellate boards, over decisions of both the PLEB and the said mayors. This is so under Section 20(c). Furthermore, it is the Commission which shall issue the implementing guidelines and procedures to be adopted by the PLEB for in the conduct of its hearings, and it may assign NAPOLCOM hearing officers to act as legal consultants of the PLEBs (Section 43-d4, d5).

As a disciplinary board primarily created to hear and decide citizen's complaints against erring officers and members of the PNP, the establishment of PLEBs in every city, and municipality would all the more help professionalize the police force.

Petitioner would likewise have this Court imagine that Section 12 of the questioned Act, the pertinent portion of which reads:

Sec. 12. Relationship of the Department with the Department of National Defense. — During a period of twenty- four (24) months from the effectivity of this Act, the Armed Forces of the Philippines (AFP) shall continue its present role of preserving the internal and external security of the State: Provided, that said period may be extended by the President, if he finds it justifiable, for another period not exceeding twenty-four (24) months, after which, the Department shall automatically take over from the AFP the primary role of preserving internal security, leaving to the AFP its primary role of preserving external security.

xxx xxx xxx

constitutes an "encroachment upon, interference with, and an abdication by the President of, executive control and commander-in-chief powers."

That We are not disposed to do for such is not the case at all here. A rejection thus of petitioner's submission anent Section 12 of the Act should be in order in the light of the following exchanges during the CONCOM deliberations of Wednesday, October 1, 1986:

xxx xxx xxx

MR. RODRIGO. Just a few questions. The President of the Philippines is the Commander-in-Chief of all the armed forces.

MR. NATIVIDAD. Yes, Madam President.

MR. RODRIGO. Since the national police is not integrated with the armed forces, I do not suppose they come under the Commander-in-Chief powers of the President of the Philippines.

MR. NATIVIDAD. They do, Madam President. By law they are under the supervision and control of the President of the Philippines.

MR. RODRIGO. Yes, but the President is not the Commander-in-Chief of the national police.

MR. NATIVIDAD. He is the President.

MR. RODRIGO. Yes, the Executive. But they do not come under that specific provision that the President is Commander-in-Chief of all the armed forces.

MR. NATIVIDAD. No, not under the Commander-in-Chief provision.

MR. RODRIGO. There are two other powers of the President. The President has control over departments, bureaus and offices, and supervision over local governments. Under which does the police fall, under control or under supervision?

MR. NATIVIDAD. Both, Madam President.

MR. RODRIGO. Control and Supervision.

MR. NATIVIDAD. Yes, in fact, the National Police Commission is under the Office of the President. (CONCOM RECORDS, Vol. 5, p. 296)

It thus becomes all too apparent then that the provision herein assailed precisely gives muscle to and enforces the proposition that the national police force does not fall under the Commander-in-Chief powers of the President. This is necessarily so since the police force, not being integrated with the military, is not a part of the Armed Forces of the Philippines. As a civilian agency of the government, it properly comes within, and is subject to, the exercise by the President of the power of executive control.

Consequently, Section 12 does not constitute abdication of commander-in-chief powers. It simply provides for the transition period or process during which the national police would gradually assume the civilian function of safeguarding the internal security of the State. Under this instance, the President, to repeat, abdicates nothing of his war powers. It would bear to here state, in reiteration of the preponderant view, that the President, as Commander-in-Chief, is not a member of the Armed Forces. He remains a civilian whose duties under the Commander-in-Chief provision "represent only a part of the organic duties imposed upon him. All his other functions are clearly civil in nature." 31 His position as a civilian Commander-in-Chief is consistent with, and a testament to, the constitutional principle that "civilian authority is, at all times, supreme over the military." (Article II, Section 3, 1987 Constitution)

Finally, petitioner submits that the creation of a "Special Oversight Committee" under Section 84 of the Act, especially the inclusion therein of some legislators as members (namely: the respective Chairmen of the Committee on Local Government and the Committee on National Defense and Security in the Senate, and the respective Chairmen of the Committee on Public Order and Security and the Committee on National Defense in the House of Representatives) is an "unconstitutional encroachment upon and a diminution of, the President's power of control over all executive departments, bureaus and offices."

But there is not the least interference with the President's power of control under Section 84. The Special Oversight Committee is simply an ad hoc or transitory body, established and tasked solely with planning and overseeing the immediate "transfer, merger and/or absorption" into the Department of the Interior and Local Governments of the "involved agencies." This it will undertake in accordance with the phases of implementation already laid down in Section 85 of the Act and once this is carried out, its functions as well as the committee itself would cease altogether. 32 As an ad hoc body, its creation and the functions it exercises, decidedly do not constitute an encroachment and in diminution of the power of control which properly belongs to the President. What is more, no executive department, bureau or office is placed under the control or authority, of the committee.33

As a last word, it would not be amiss to point out here that under the Constitution, there are the so-calledindependent Constitutional Commissions, namely: The Civil Service Commission, Commission on Audit, and the Commission on Elections. (Article IX-A, Section 1)

As these Commissions perform vital governmental functions, they have to be protected from external influences and political pressures. Hence, they were made constitutional bodies, independent of and not under any department of the government. 34 Certainly, they are not under the control of the President.

The Constitution also created an independent office called the "Commission on Human Rights." (Article XIII, Section 17[1]).However, this Commission is not on the same level as the Constitutional Commissions under Article IX, although it is independent like the latter Commissions. 35 It still had to be constituted thru Executive Order No. 163 (dated May 5, 1987).

In contrast, Article XVI, Section 6 thereof, merely mandates the statutory creation of a national police commission that will administer and control the national police force to be established thereunder.

This commission is, for obvious reasons, not in the same category as the independent Constitutional Commissions of Article IX and the other constitutionally created independent Office, namely, the Commission on Human Rights.

By way of resume, the three Constitutional Commissions (Civil Service, Audit, Elections) and the additional commission created by the Constitution (Human Rights) are all independent of the Executive; but the National Police Commission is not. 36 In fact, it was stressed during the CONCOM deliberations that this commission would be under the President, and hence may be controlled by the President, thru his or her alter ego, the Secretary of the Interior and Local Government.

WHEREFORE, having in view all of the foregoing holdings, the instant petition is hereby DISMISSED for lack of merit.

SO ORDERED.

Narvasa, C.J., Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Medialdea, Regalado, Davide, Jr., Romero and Nocon, JJ., concur.

G.R. No. L-49823 February 26, 1992

THE HEIRS OF EUGENIO SEVILLA, INC., petitioner,

vs.

THE COURT OF APPEALS and CORAZON BABAO-GONZALES, respondents.

Miguel Z. Berba for petitioner.

Jose Sotto Beltran for private respondent.

 

DAVIDE, JR., J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the respondent Court of Appeals' decision of 2 November 1978 in C.A.-G.R. No. SP-07822-R, 1 the dispositive portion of which provides:

PREMISES CONSIDERED, the order of respondent Judge dated January 25, 1978 is SET ASIDE and respondent sheriff Jaime de Leon is hereby ordered to restore petitioner Corazon Babao Gonzales to the possession of the questioned premises No. 1265 Calle Sande, Tondo, Manila upon the filing by the latter of a bond in the

amount of P10,000.00 for any and all damages which the Heirs of Eugenio Sevilla, Inc. may suffer.

SO ORDERED.

The facts of the case are not disputed by the parties.

On 17 June 1976, the petitioner filed an action for unlawful detainer in the City Court (now Metropolitan Trial Court) of Manila against Jesus A. Co; the complaint was docketed as Civil Case No. 12235-CV and was raffled to Branch I thereof. Petitioner alleged therein that it is the owner of a parcel of land, with a theater building namedCinema Gigi, standing thereon, located at Calle Sande, Tondo, Manila, and that Jesus Co, as lessee of the theater building, failed to pay the agreed rentals at the rate of two thousand pesos (P2,000.00) a month since 1974. In his Answer, Jesus Co countered that it is he who owns both the lot and the theater building, having acquired the same by virtue of a sale made by the petitioner; he further avers that on 15 June 1976, he leased Cinema Gigi to herein private respondent Corazon Babao-Gonzales for a period of ten (10) years.

During the pendency of the unlawful detainer case, particularly on 30 September 1977, Jesus A. Co filed an action "To Quite (sic) Possession, Ownership and Issuance of Title" against the petitioner in the then Court of First Instance (now Regional Trial Court) of Manila. The case involved the same property abovementioned and was docketed as Civil Case No. 105465. A motion to dismiss the complaint was filed by the petitioner.

On 30 September 1977, the City Court of Manila rendered a decision in the unlawful detainer case in favor of the petitioner, ordering inter alia, defendant Jesus A. Co:

. . . and any and all persons, if any, claiming under him or otherwise privies to him in the occupancy of the said premises referred to in the complaint to vacate the same immediately; . . . 2

In the same decision, the court ruled that petitioner is the owner of the property and that the so-called Deed of Sale by installment over it, purportedly executed by Ramon Sevilla in favor of Co, is a forgery.

Defendant Jesus A. Co failed to appeal from this decision, thus resulting in its becoming final and executory. On 3 November 1977, a writ of execution was issued by the City Court and served by special sheriff Jaime L. de Leon on the occupants of the property.

On 15 November 1977, Corazon Babao-Gonzales, respondent herein, claiming to be a lessee of Jesus A. Co with respect to the subject premises, filed with the Court of First Instance of Manila a petition for "Declaratory Relief and to Vacate Judgment, Execution Order and Notice to Vacate, with Prayer for Preliminary Injunction," against herein petitioner, Jaime de Leon, National Deputy Sheriff, and the Hon. Judge Gregorio Garcia, Presiding Judge of Branch I, City Court of Manila. 3 The case was docketed as Civil Case No. 112027.

On 16 November 1977, after ejecting all the occupants of Cinema Gigi, sheriff Jaime de Leon padlocked and closed the premises, delivering, at the same time, possession thereof to the petitioner.

On the same day, 16 November 1977, after the sheriff delivered possession of the subject premises to petitioner thru its president, Ramon S. Sevilla, and after the latter left the premises, Corazon

Babao-Gonzales, together with Atty. Beltran Sotto and two John Does, forcibly destroyed the chain and padlocks of the building and took possession thereof. 4

The following day, 17 November 1977, in Civil Case No. 112027, Judge Pedro Cenzon issued a restraining order prohibiting petitioner from reacquiring possession of the subject premises. Petitioner filed a motion to lift the restraining order. A hearing was thereafter conducted on said motion and Gonzales application for the issuance of a writ of preliminary injunction.

After the hearing, Judge Pedro Cenzon issued on 25 January 1978 an Order 5 denying the petition for declaratory relief and lifting the restraining order issued therein, based on the following findings of facts:

a. The issuance of the writ of execution was based on a final judgment of the City Court of Manila, Branch I, in Civil Case No. 12235-CV entitled "Heirs of Eugenio Sevilla, Inc. versus Jesus Co," for ejectment. This judgment has not been set aside in any proceeding as null and void.

b. The writ of execution was duly served by the respondent sheriff, implemented and completed. The possession of the premises in question has been turned over to the possession of the private respondent, Ramon Sevilla, by the respondent sheriff as per Exhibit 8.

c. If the petitioner (Corazon Babao-Gonzales) is now in physical possession of the premises in question, such physical possession is a mere interference or disturbance of the possession of the private respondent (Heirs of Eugenio Sevilla, Inc.) after he (sic) acquired it when the respondent sheriff delivered the premises to him (sic) in compliance with the writ of execution. There is nothing to restrain. There (sic) respondent City Court judge has already ordered execution of the judgment and the respondent sheriff has already carried out the order and placed the private respondent in possession of the premises in question.

d. The petitioner is herself a wrong doer when she interferred (sic) with the possession of the private respondent after it was given to him (sic) by the respondent sheriff.

e. The petitioner has failed to established (sic) a clear or positive right over the property in question. Her so called (sic) right is predicated on a contract of lease between herself and Jesus Co as the lessor-owner of the property. But the ownership of Jesus Co on the property is based on a Deed of Sale by installment which the PC Crime Laboratory, Camp Crame, Quezon City, has declared to be a forgery. Likewise, the very notary public who allegedly notarized this document it (sic) to be a fake. In short, the right of the petitioner on (sic) the property in question is not in essee or "in being" up to this hour.

f. The existence of Civil Case No. 10465 (sic) entitled "Jesus Altavano Co. vs. the Heirs of Eugenio Sevilla, represented by Ramon Sevilla," in Branch IX of this Court where the issue is allegedly one of ownership, will not be rendered moot and academic by the denial of a writ of preliminary injunction by this Branch of the Court. If Jesus Altavano Co, the plaintiff in that case will be declared the owner of the property in question, then its possession will go with his ownership. But the final judgment of the City Court, Branch I, in the ejectment case should be, as it was, executed, because it is a valid decision until declared otherwise in a proper

proceedings (sic). Importantly, the petitioner did not intervene in Civil Case No. 12235 of Branch I of the City Court of Manila.

xxx xxx xxx

On 9 February 1978, petitioner herein filed a motion praying that Gonzales and her counsel be held guilty of indirect contempt and to be ordered to vacate the Cinema Gigi. Acting thereon, Judge Jose B. Herrera issued on 8 March 1978 an Order directing "Deputy Sheriff Jaime de Leon, who may avail himself (sic) of the assistance of any law enforcement agency, to eject the defendant Jesus A. Co and all other persons claiming right (sic) under him from the premises of Cine GIGI situated at Calle Sande St., Tondo, Manila, and to restore plaintiff to the possession thereof." 6

Her motion to reconsider the Order of Judge Pedro Cenzon in Civil Case No. 112027 of 25 January 1978 having been denied, herein private respondent Babao-Gonzales filed with the respondent Court on 25 May 1978 "a Petition for Review with Prayer for Preliminary Injunction and Damages," 7 docketed as C.A.-G.R. No. SP-07822-R. In the said petition, private respondent claimed that she has a better right to possess the subject premises and prayed, inter alia, that a writ of preliminary mandatory injunction be issued to restore her to the possession of the questioned premises. On 2 November 1978, the respondent Court rendered a decision setting aside the 25 January 1978 Order of Judge Pedro Cenzon and ordering Sheriff Jaime de Leon to restore respondent Corazon Babao-Gonzales to the possession of the questioned premises upon the filing of a bond to answer for any and all damages that may be suffered by petitioner corporation. 8 In granting the petition, respondent Court relied on the following arguments:

We find merit in the instant petition. In the first place, it is a fact that petitioner Corazon Babao Gonzales is not a sub-lessee of Jesus Altavano Co but a lessee in which case she cannot come under the term "persons claiming under him". Secondly, in the ejectment case (Civil Case No. 12235-CV), the defendant was Jesus A. Co only. To enforce the judgment in said ejectment case against herein petitioner Corazon Babao Gonzales would indeed be violative of the constitutional provision regarding the due process clause. Thirdly, the action to quiet title instituted by Jesus Altavano (sic) Co vs. Heirs of Eugenio Sevilla, Inc. (Civil Case No. 105465) is still pending trial before the Court of First Instance of Manila, Branch IX. It was not within the competence of the City Court in the ejectment suit to say that the true owner of the property are the Heirs of Eugenio Sevilla, Inc. because the sale in favor of Jesus Altavano Co was a forgery. This matter is within the competence and jurisdiction of the court of first instance and precisely that is the issue in said Civil Case 105465. . . . We believe it would be more prudent to maintain the status quo of the parties and for the respondent sheriff and his duly authorized representatives and agents to desist from enforcing the writ of execution issued by the City Court of Manila in Civil Case No. 0-12235-CV against Corazon Babao Gonzales until the court of first instance has decided the action to quiet possession, ownership and possession of title.

Its motion for reconsideration of the above decision having been denied, petitioner filed the instant petition on 2 March 1979.

On 9 march 1979, this Court required respondent to comment on the petition within ten (10) days from receipt of notice. 9

However, before respondent could submit its Comment, petitioner, on 13 March 1979, filed a supplemental petition10 apprising this Court of the fact that Civil Case No. 105465, the action for

Quieting of Title before the Court of First Instance of Manila, was dismissed on the ground of res judicata by said court in the Order handed down on 26 February 1979. 11 Co appealed the Order to the Court of Appeals, which was docketed as C.A.-G.R. No. 67454-R.

Private respondent subsequently submitted both her comment to the petition 12 and comment to the supplemental petition. 13

This Court resolved to give due course to the petition and required both parties to submit their respective Memoranda simultaneously, which they complied with.

On 2 March 1987, this Court required both parties to manifest whether they are still interested in prosecuting this case. 14

Petitioner manifested on 30 March 1987 that it is still interested in prosecuting the case; it likewise informed this Court that Co's appeal (C.A.-G.R. No. 67454-R) was dismissed by the respondent Court of Appeals on 5 May 1981, as "evidence by the Court of Appeals" entry of judgment dated 24 May 1981." 15 The dismissal was based on Co's failure to file the record on appeal.

In this petition, petitioner raises the following issues: 16

Whether the City Court of Manila has the jurisdiction to pass upon the issue of ownership in an ejectment case brought before it.

Whether certiorari, petition for review, or appeal to the Court of Appeals is the proper remedy against, a final order or decision of the Court of First Instance in an petition for Declaratory Relief.

Whether a writ of execution in an action for illegal detainer is enforceable against an occupant who claim to be a lessee of the party ordered ejected therefrom.

This petition is impressed with merit.

Since the first two (2) issues have become moot and academic in view of the dismissal of Jesus Co's appeal, C.A.-G.R. No. 67454-R, We shall focus our discussion on the third issue.

To recapitulate, the decision in the unlawful detainer case, Civil Case No. 12235-CV, wherein the court held that the petitioner is the owner of the subject premises, the so-called deed of sale on installment upon which Co based his claim of ownership is a forgery and Co is a mere lessee thereof, had long become final and had in fact been executed. Also, Co's action for Quieting of Title, Civil Case No. 105465, filed in the Court of First Instance of Manila, was dismissed on the ground that the cause of action is barred by prior judgment. The dismissal had likewise become final because Co's appeal (C.A.-G.R. No. 67454-R) to the Court of Appeals was dismissed and entry of judgment was made on 24 May 1981.

In view of the above final decision and order, herein private respondent cannot claim any better right than Mr. Co.

In Jorge vs. Consolacion, 17 this Court held:

The petitioners, as mere lessees of the losing party, have no rights whatsoever to claim and to be protected by the mantle of the law and neither do they have the right to intervene and/or block the execution of the judgment in Civil Case No. 1160.

Furthermore, private respondent was in reality a mere sublessee. It is a well settled rule in this jurisdiction that "the sublessee . . . can invoke no right superior to that of his sublessor." 18 In Guevara Realty Inc. vs. Court of Appeals, 19 We held:

A judgment of eviction against a lessee affects his sub-lessees, even if the latter are not sued in the ejectment case. This is so, because a sublessee can invoke no right superior to that of his sublessor, and the moment the latter is duly ousted from the premises, the former has no leg to stand on. The sublessees' right, if any, is to demand reparation for damages from his sublessor, should the latter be at fault. The sublessees can only assert such right of possession as could have been granted them by their sublessor, their right of possession depending entirely upon that of the latter. (Tolentino, Civil Code of the Philippines, Vol. 5, pp. 194-195, citing the cases of Ng Sui Tan v. Amparo, 80 Phil 921; Go King v. Geronimo, 81 Phil 445; Sipin v. Court of First Instance of Manila, 74 Phil. 650; Madrigal v. Ang Sam To, et al., 46 Off. Gas. 2173).

Hence, even if respondent was not made a party in the unlawful detainer case, the judgment evicting Jesus Co is equally binding on her, contrary to her contention.

WHEREFORE, the petition is GRANTED. The assailed decision of the respondent Court of Appeals in C.A-G.R. SP-07822-R is hereby REVERSED and SET ASIDE and the Order of the trial court of 25 January 1978 in Civil Case No. 112027 is REINSTATED.

Costs against respondent.

IT IS SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Romero, JJ., concur.

G.R. No. L-29171 April 15, 1988

INDUSTRIAL POWER SALES, INC., petitioner-appellant, vs.HON. DUMA SINSUAT etc., et al., respondents-appellees.

Norberto J. Quisumbing for petitioner-appellant.

Emerito M. Salva Law Offices and Juan B. Diaz for private respondents- appellees.

The Solicitor General for public respondent.

 

NARVASA, J.:

Certain universally accepted axioms govern judicial review through the extraordinary actions of certiorari or prohibition of determinations of administrative officers or agencies: first, that before

said actions may be entertained in the courts of justice, it must be shown that all the administrative remedies prescribed by law or ordinance have been exhausted; and second, that the administrative decision may properly be annulled or set aside only upon a clear showing that the administrative official or tribunal has acted without or in excess of jurisdiction, or with grave abuse of discretion. 1 There are however exceptions to the principle known as exhaustion of administrative remedies, these being: (1) where the issue is purely a legal one, (2) where the controverted act is patently illegal or was done without jurisdiction or in excess of jurisdiction; (3) where the respondent is a department secretary whose acts as an alter ego of the President bear the latter's implied or assumed approval, unless actually disapproved; or (4) where there are circumstances indicating the urgency of judicial intervention. 2

Application of these established precepts to the undisputed facts, hereunder briefly set out, 3 impels the grant of the writ of certiorari to annul the administrative decision complained of in the proceedings at bar.

In April of 1965 two (2) Invitations To Bid were advertised by the Bureau of Supply Coordination of the Department of General Services.

The first, dated April 6, 1965, called for 'eight (8) units TRUCKS, Line Construction, left-hand drive, complete and special factory built, series of 1965, brand new, for the use of the Bureau of Telecommunications pursuant to Requisition No. 18792 dated March 9,1965." The Invitation to Bid as well as the requisition itself contained a proviso limiting the offers to foreign made products on a CIF basis, Port of Manila.

The second, dated April 29, 1965, amended the first notice on the basis of suggestions contained in letters of Industrial Power Sales, Inc. sent on April 7 and 13, 1965, which were evidently found worth considering. Those letters proposed that the invitation include not only foreign made products on a CIF-Manfla basis but also those of local manufacture on an FOB Manila basis. Concerning this, Acting Undersecretary of Public Works & Communications Lachica addressed a 3rd Indorsement to the Director of Supply Coordination, dated April 22, 1965. 4

... advising that Office would not have any objection to locally manufactured utility truck bodiesprovided they conform to the approved technical specification of this Office as well as to the manufacturer's standard product specification, since this type of body manufacture has been acceptable in most government vehicles ... (and in view thereof) it may therefore be necessary thatboth CIP and FOB Manila quotations be considered.

The second Invitation to Bid thus announced that both CIF Port of Manila and FOB Manila quotations would be accepted and made part of bid requirements.

The bidding took place on May 11, 1965, as scheduled. Among the bidders were Industrial Power Sales, Inc. and Delta Motor Corporation, hereafter respectively referred to simply as IPSI and DELTA.

The bids were deliberated on by the Committee on Awards. In attendance at the deliberations, at the Chairman's explicit request, were two (2) authorized representatives of the Bureau of Telecommunications, the requisitioner of the vehicles. 5 The Committee thereafter recommended. —

Award to Industrial Power Sales at P52,500 each, FOB Manila has the same is the lowest complying; the offer in dollars is higher. The lowest offer at $10,688.77 is non-complying.

On the strength thereof, Letter-Order No. B-207495 was drawn up in IPSI's favor, dated June 10, 1965 and signed by the acting Director of Supply, Conrado L. Ledda.

DELTA protested the award to IPSI by telegram sent to the Bureau of Telecommunications on June 11, 1965. It claimed that the trucks offered by IPSI were not factory built, as stipulated in the specifications contained in the requisition itself and in the Invitation to Bid The telegraphic protest of DELTA was considered and adjudicated adversely to it by the Acting Director of Supply Coordination. In his decision dated June 23, 1965, the Director ruled that the bidding had been made in strict compliance with the technical specifications and requirements stated by the Bureau of Telecommunications as modified by the Chairman, Committee on Specifications Review of Equipment, Plant and Machinery of the Department of Public Works and Communications; and that after due deliberation on the different bids received, the Committee on Awards, with the concurrence of the requisitioner's duly authorized representatives, had resolved to award the contract in IPSI's favor. On the same date, the Acting Director of Supply informed the Acting Director of the Bureau of Telecommunications of the Letter-Order dated June 10, 1965 in IPSI's favor, and that delivery of the units was to be made within sixty (60) working days from date of receipt of that order. 6

On July 16, 1965, however, Acting Undersecretary Lachica tried to reverse himself. He wrote to the Director of Bureau of Supply Coordination recalling his 3rd indorsement of April 22, in which he had expressed his office's absence of objection to offers of trucks with locally manufactured utility bodies, it having been "found out that the requisition as approved by the Secretary calls for special factory built, Line Construction Trucks, and not merely utility trucks." 7 The reply of the Acting Director of Supply dated July 27,1965 however reiterated and reaffirmed the conclusions in his Decision of June 23, 1965 8 just mentioned, i.e., that IPSI's bid conformed stictly to all declared requirements and specifications and had thus been correctly accepted. The director further made the points 9 that —

The term "special" as stated in the ... (Undersecretary's) basic letter, which qualified the (description)factory built line construction trucks was not originally required in the specifications and requirements submitted by the Bureau of Telecommunications, which espicification and requirement were approved by that Department, hence, not included in the bid advertisement. Requirements that are not contained in the advertisement for bids could not be entertained as they voiolate Rule 46 (7) of the Department of General Services Order No. 32, Series of 1963.

It may not be amiss to inform in this connection that based on the results of public bidding the offer of Industrial Power Sales for eight (8) Utility Construction trucks at P52,000.00 each net all taxes included, delivered at site, conforms to the specifications and requirements, and the price is the lowest as against Delta Motor Corporation's $14,000.00 each, CIF Port of Manila, (which) excludesgovernment taxes, banking charges, local arrastre and wharfage fees.

This letter of the Director of Supply was forwarded by the Undersecretary to the Director of Telecommunications. The latter wrote back to the Undersecretary on August 18, 1965, 10 expressing his concurrence with the views set forth in said letter of the Director of Supply. He also stressed his Bureau's "dire need" for the vehicles; 'further postponement" of their acquisition "will contribute greatly to the delay in the early completion of our projects to be derived from expected income." Obviously satisfied, the Undersecretary transmitted the Telecommunications Director's letter to the Acting Director of Supply (by 4th Indorsement dated August 20, 1965), making no reference to his recall of 3rd Indorsement of April 22, 1965. 11

Delta's next move was to file with the Office of the Secretary of General Services a letter of protest against the proposed award to IPSI accompanied by a protest bond in the amount of P44,000.00 executed by the Meridian Assurance Corporation. DELTA's position was that IPSI's offer of locally assembled trucks was not in accordance with the bid specification for bread new, complete and factory-built trucks. 12 Acting thereon, Secretary Duma Sinsuat, in his 1st Indorsement dated Septemb er 3, 1965 addressed to the Director of the Bureau of Supply, opined that —

... only Delta Motor Corporation has complied with the technical specifications originally called for in Requisition No. 198792 dated March 9, 1965, duly approved by Secretary Abad. The award of the eight (8) line construction trucks called for ... should, therefore, be made to Delta ... at a price equal to that offered by the Industrial Power Sales, Inc., as manifested by the Protestant in its letter-protest and as provided for in Rule 45 of Department Order No. 32, Series of 1963.

In Secretary Sinsuat's view, when Acting Director Lachica agreed to announce and advertise a supplemental or amended Invitation to Bid which would admit offers of trucks with locally manufactured utility bodies," the latter had violated a department rule 13 that—

Any subsequent alteration or modification made separately or on the requisition itself by any subordinate official should bear the approval of the Department Head concerned, pursuant to Section 2048 of the Revised Administrative Code, or of the Undersecretary if so delegated.

Sinsuat asserted that as there was no showing that Undersecretary Lachica had been authorized to approve any modifications of the requisition, the modification sanctioned by him in his aforesaid 3rd Indorsement of April 22, 1965 was null and void; besides, Lachica had afterwards withdrawn his approval thereof in his letter of July 16, 1965.

Replying to Secretary Sinsuat, the Acting Director of Supply, by 2nd Indorsement dated September 7, 1965, drew attention to the fact that DELTA's quoted price of U.S. $13,425.00 per unit, CIF-Manila — computed on the basis of FOB Manila, to place it on a parity with IPSI's bid and would then like IPSI's have to include banking charges, duties and taxes, would in Philippine Currency amount to P65,467.88 and, therefore, would not be equal to IPSI's tendered price of P52,500.00. Secretary Sinsuat however wrote back the following day, September 8, 1965 (3rd Indorsement), and told the Acting Director that the Department had already approved DELTA's price of $13,425.00, CIFManila per unit of Toyota Line Construction Trucks and categorically directed him to award to DELTA the purchase order for the eight Line Construction Trucks with the least possible delay. In view thereof, Letter-Order No. B210230 was forthwith made by Acting Supply Director Ledda and approved and signed by Secretary of General Services Duma Sinsuat. Even at this time, one other dissenting voice still made itself heard. The Senior Buyer of the Committee on Awards wrote to the Committee Chairman on September 9, 1965, confessing hims "at a loss in framing out the legend of the order (in DELTA's favor) and also the minutes of the Committee's deliberation," and stating that he would "refrain in the award in favor of the Delta Motor Corporation."14

IPSI lost no time in appealing from Secretary Sinsuat's decision to award the purchase contract to DELTA. It appealed on September 9, 1965 to the Office of the President 15 as well as to the Office of the Auditor General. 16The latter acted just as promptly. By lst Indorsement dated September 10, 1965 of the Deputy Auditor General, the Secretary of General Services was required to comment on IPSI's letter-appeal and to forward the pertinent papers to the General Auditing Office for final consideration. 17 The appeal notwithstanding, the Letter-Order in favor of DELTA was released to it on September 17,1965. 18

IPSI then filed with the Quezon City Court of First Instance on September 21, 1965, a petition for certiorari, prohibition and mandamus, with application for preliminary prohibitory and mandatory injunction, which was docketed as Case No. Q9477. 19 The injunction prayed for issued upon a bond in the amount of P100,000.00 given by Capitol Insurance & Surety Co., Inc. The verdict went against IPSI, however. After trial, the Court rendered judgment dismissing IPSI's petition and sentencing it and its surety, on the counterclaim, to pay damages to DELTA. The dispositive portion of that judgment reads:

WHEREFORE, judgment is hereby rendered in favor of respondent Delta Motors Corporation and its co-respondents and against the petitioner Industrial Power Sales, Inc., dismiss the latter's petition for certiorari, prohibition and mandamus, dated September 20,1965, and dissolving the preliminary injunction issued in this case, and ordering petitioner Industrial Power Sales;

1. To pay P400,000.00, jointly and severally with the Capital Insurance and Surety Co., Inc., the latter, to the extent of P100,000.00 only, as damages to respondent Delta Motors Corporation by reason of the writ of preliminary injunction issued in this case;

2. To pay attorney's fees in the sum of P20,000.00, and

3. To pay the costs of this suit.

From this judgment IPSI has appealed to this Court, contending that the Trial Court erred —

1) in not holding that regardless of the validity of the modification approved by Undersecretary Lachica, local manufacturers cannot be lawfully excluded from the bidding even under the original invitation to bid because mandatorily required by law;

2) in holding that IPSI is not a local manufacturer or domestic entity entitled to 15% preference over DELTA;

3) in not holding that Secretary Sinsuat exceeded his jurisdiction petition in giving due course to DELTA's appeal although filed beyond the reglementary period therefor;

4) in not holding that even if DELTA's appeal were timely perfected, Secretary Sinsuat gravely abused his discretion or exceeded his jurisdiction in not affording IPSI a right to be heard on that appeal;

5) in not holding that Secretary Sinsuat had gravely abused his discretion in reversing the decision to award the contract to IPSI and ruling that Undersecretary's approval of the modification of the bidding terms was unauthorized;

6) in not holding that Secretary Sinsuat gravely abused his discretion in permitting DELTA to reduce its price to equal that of qqqIPSI the latter's bid not being defective, and in insisting on approval of DELTA's reduced price although higher than IPSI's;

7) in not holding that the award in DELTA's favor violated the Retail Trade Nationalization Law;

8) in denying IPSI's claim for damages; and

9) in awarding excessive damages to DELTA, the evidence to justify the same being insufficient and the award being, in any case, against the law.

It appears that respondent Secretary of General Services disregarded certain material facts, or considered them as of no consequence, these being:

1) the amended notice to bidders or Invitation to Bid was duly advertised;

2) it was clear from that advertised, modified Invitation to Bid that offers not only of foreign made or factory-built trucks but also of trucks with bodies of local manufacture, or offers of trucks either CIF Manila or FOB-Manila, would be acceptable;

3) the modification had been favorably considered by the Bureau of Supply Coordination and approved by the Undersecretary of Public Works & Communications, who had observed on that occasion that "this type of body manufacture (i.e., 'locally manufactured utility truck bodies') has been acceptable in most government vehicles;"

4) no protest whatever had been made by DELTA to the terms set forth in that second Invitation to Bid prior to the scheduled bidding on May 11, 1965;

5) All bids submitted were studied and weighed by the Committee on Awards, with the participation of two (2) representatives of the requisitioning agency; and thereafter, the Committee, in a reasoned report, unanimously declared IPSI's bid as the winning bid and recommended award to it of the contract;

6) the recommendation of the Awards Committee was approved by the Director of Supply;

7) that approval was reaffirmed by the Director of Supply-in his decision on the protest of DELTA, which it filed after learning that it had lost in the bidding-aserting that the bidding had been done in strict compliance with all relevant requisites, and the award given not only after due deliberations, but also with the concurrence of the representatives of the requisitioning bureau;

8) although the Undersecretary of Public Works & Communications had subsequently tried to recall his approval of the modification (for acceptance of bids, FOB-Manila, or of trucks with locally manufactured bodies), supra, he had abandoned that attempt after receiving communications from —

a) the Director of Supply, reiterating his stand on the propriety of the bidding and the award to IPSI; and

b) the Director of the requisitioning agency, the Bureau of Telecommunications, concurring with the position of the Director of Supply, and requesting quick action on the award in view of the Bureau's "dire need" therefor;

9) the Senior Buyer of the Committee on Awards refused to go along with the Award to DELTA;

10) in fine all the Government agencies concerned were agreed on the correctness of the award to IPSI the requisitioner, the Bureau of Telecommunications, the Department of Public Works & Communications to which said Bureau of Telecommunications pertains, the Bureau of Supply, which had direct supervision and control of the bidding, and of course, the Committee on Awards.

These material circumstances were, to repeat, considered of no moment by respondent Secretary of General Services. He ignored, too, the additional circumstance of estoppel as regards DELTA. For DELTA, with full knowledge of the amendment of the notice to bidders (making acceptable bids for truly with locally manufactured bodies, or FOB-Manila) made no protest at all but, on the contrary, participated in the bidding under said advertised terms, objecting thereto only after its bid had been rejected by the Committee on Awards and the other Government offices concerned.

Respondent Secretary's justification for doing so is that (1) the modification had not been validly approved by the Undersecretary of Public Works & Communications, because there was "no showing that the latter ... (had been) authorized by (the) Secretary ... to make the modifications;" and (2) said Undersecretary had subsequently withdrawn the approval to the modification

It should at once be apparent that the second ground of justification is not borne out by the facts. As already above stated, the Undersecretary did not persist in but implicitly abandoned his attempt to withdraw his approval of the modification. As to the first ground, it being a legal presumption that official duty 20 has been regularly performed, 20 it must be a assigned, no evidence having been adduced to destroy the presumption, that Undersecretary Lachica indeed possessed the requisite authority to approve the modifications in question. In any event, his possession of that authority may be demonstrated by Department Order No. 82 dated November 30,1964 by which the Secretary of Public Works & Communications delineated the powers of his two undersecretaries and the chiefs of offices in relation to his own. 21

Apart from material facts, also ignored were applicable provisions of law conferring preferential status to locally manufactured equipment and supplies, etc., and to domestic, as distinguished from foreign, entities. Republic Act No. 4164, the Appropriations Act relevant to the time in question, provided 22 that all appropriations for the purchase of equipment, supplies and materials authorized thereunder shall be available only for locally manufactured equipment, parts, accessories, supplies and materials, unless none be available in the market, or the price of the locally manufactured article exceed those determined by the Flag Law by 10%. The applicability of the provision in IPSI's favor seems indisputable. The Flag Law, 23 on the other hand, provides that whenever several bidders participate in a bidding for supplying articles, materials, and equipment for any office of the government for public use ... or public works, the award shall be made to the domestic entity making the lowest bid, provided it is not more than 15% in excess of the lowest bid made by a bidder other than a domestic entity. While DELTA was organized under Philippine laws, it was acting in this case merely as agent of a foreign company; it was the latter which to all intents and purposes was the bidder, hence, as between it and IPSI, IPSI should be considered the preferred bidder.

The plea made in behalf of respondent Secretary that IPSI had gone to Court without first exhausting all administrative remedies cannot be sustained in view of the doctrines set out in the opening paragraph of this opinion.

There is merit in IPSI's appeal, therefore. The respondent Secretary had indeed acted with grave abuse of diwmtion amount to lack or excess of jurisdiction. His acts must be nullified, and the Trial Court's judgment upholding those acts must be set aside.

WHEREFORE, the decision of the Trial Court subject of the appeal is REVERSED AND SET ASIDE and another entered NULLIFYING the orders of respondent Secretary of General Services embodied in his l st Indorsement dated September 8, 1965 and those in affirmance and implementation thereof, and SENTENCING defendant-appellee Delta Motor Corporation to pay the sum of P 20,000.00 to Plaintiff-appellant Industrial Power Sales, Inc. as and for attomey's fees, and the costs of the suit.

Teehankee, C.J., Cruz, Gancayco and Griño-Aquino, JJ., concur.

G.R. No. L-19180            October 31, 1963

NATIONAL DEVELOPMENT COMPANY, ET AL., petitioners-appellees, vs.THE COLLECTOR OF CUSTOMS OF MANILA, respondent-appellant.

Ross, Selph and Carrascoso for petitioners-appellees.Office of the Solicitor General for respondent-appellant.

BAUTISTA ANGELO, J.:

The National Development Company which is engaged in the shipping business under the name of "Philippine National Lines" is the owner of steamship "S.S. Doña Nati" whose local agent in Manila is A. V. Rocha. On August 4, 1960, the Collector of Customs sent a notice to C.F. Sharp & Company as alleged operator of the vessel informing it that said vessel was apprehended and found to have committed a violation of the customs laws and regulations in that it carried an unmanifested cargo consisting of one RCA Victor TV set 21" in violation of Section 2521 of the Tariff and Customs Code. Inserted in said notice is a note of the following tenor: "The above article was being carried away by Dr. Basilio de Leon y Mendez, official doctor of M/S "Doña Nati" who readily admitted ownership of the same." C.F. Sharp & Company was given 48 hours to show cause why no administrative fine should be imposed upon it for said violation.

C.F. Sharp & Company, not being the agent or operator of the vessel, referred the notice to A. V. Rocha, the agent and operator thereof, who on August 8, 1960, answered the notice stating, among other things, that the television set referred to therein was not a cargo of the vessel and, therefore, was not required by law to be manifested. Rocha stated further: "If this explanation is not sufficient, we request that this case be set for investigation and hearing in order to enable the vessel to be informed of the evidence against it to sustain the charge and to present evidence in its defense."

The Collector of Customs replied to Rocha on August 9, 1960 stating that the television set in question was a cargo on board the vessel and that he does not find his explanation satisfactory enough to exempt the vessel from liability for violating Section 2521 of the Tariff and Customs Code. In said letter, the collector imposed a fine of P5,000.00 on the vessel and ordered payment thereof within 48 hours with a threat that he will deny clearance to said vessel and will issue a warrant of seizure and detention against it if the fine is not paid.

And considering that the Collector of Customs has exceeded his jurisdiction or committed a grave abuse of discretion in imposing the fine of P5,000.00 on the vessel without the benefit of an investigation or hearing as requested by A. V. Rocha, the National Development Company, as owner of the vessel, as well as A. V. Rocha as agent and operator thereof, filed the instant special civil action of certiorari with preliminary injunction before the Court of First Instance of Manila against the official abovementioned. The court, finding the petition for injunction sufficient in form and substance, issued ex parte the writ prayed for upon the filing of a bond in the amount of P5,00.00.

Respondent set up the following special defenses: (1) the court a quo has no jurisdiction to act on matters arising from violations of the Customs Law, but the Court of Tax Appeals; (2) assuming that it has, petitioners have not exhausted all available administrative remedies, one of which is to appeal to the Commissioner of Customs; (3) the requirements of administrative due process have already been complied with in that the written notice given by respondent to petitioner Rocha clearly specified the nature of the violation complained of and that the defense set up by Rocha constitute

merely a legal issue which does not require further investigation; and (4) the investigation conducted by the customs authorities showed that the television set in question was unloaded by the ship's doctor without going thru the custom house as required by law and was not declared either in the ship's manifest or in the crew declaration list.

On the basis of the stipulation of facts submitted by the parties, the court a quo rendered decision setting aside the ruling of respondent which imposes a fine of P5,000.00 on the vessel Doña Nati payable within 48 hours from receipt thereof. The court stated that said ruling appears to be unjust and arbitrary because the party affected has not been accorded the investigation it requested from the Collector of Customs.

Respondent interposed the present appeal.

When the customs authorities found that the vessel Doña Nati carried on board an unmanifested cargo consisting of one RCA Victor TV set 21" in violation of Section 2521 of the Tariff and Customs Code, respondent sent a written notice to C. F. Sharp & Company, believing it to be the operator or agent of the vessel, and when the latter referred the notice to A. V. Rocha, the real operator of the vessel, for such step as he may deem necessary to be taken the latter answered the letter stating that the television set was not cargo and so was not required by law to be manifested, and he added to his answer the following: "If this explanation is not sufficient, we request that this case be set for investigation and hearing in order to enable the vessel to be informed of the evidence against it to sustain the charge and to present evidence in its defense. "Respondent, however, replied to this letter saying that said television was a cargo within the meaning of the law and so he does not find his explanation satisfactory and then and there imposed on the vessel a fine of P5,00.00. Respondent even went further. He ordered that said fine be paid within 48 hours from receipt with a threat that the vessel would be denied clearance and a warrant of seizure would be issued if the fine will not be paid. Considering this to be a grave abuse of discretion, petitioners commenced the present action for certiorari before the court a quo.

We find this action proper for it really appears that petitioner Rocha was not given an opportunity to prove that the television set complained of is not a cargo that needs to be manifested as required by Section 2521 of the Tariff and Customs Code. Under said section, in order that an imported article or merchandise may be considered a cargo that should be manifested it is first necessary that it be so established for the reason that there are other effects that a vessel may carry that are excluded from the requirement of the law, among which are the personal effects of the members of the crew. The fact that the set in question was claimed by the customs authorities not to be within the exception does not automatically make the vessel liable. It is still necessary that the vessel, its owner or operator, be given a chance to show otherwise. This is precisely what petitioner Rocha has requested in his letter. Not only was he denied this chance, but respondent collector immediately imposed upon the vessel the huge fine of P5,000.00. This is a denial of the elementary rule of due process.

True it is that the proceedings before the Collector of Customs insofar as the determination of any act or irregularity that may involve a violation of any customs law or regulation is concerned, or of any act arising under the Tariff and Customs Code, are not judicial in character, but merely administrative, where the rules of procedure are generally disregarded, but even in the administrative proceedings due process should be observed because that is a right enshrined in our Constitution. The right to due process is not merely statutory. It is a constitutional right. Indeed, our Constitution provides that "No person shall be deprived of life, liberty, or property without due process of law", which clause epitomize the principle of justice which hears before it condemns, which proceeds upon inquiry and renders judgment only after trial. That this principle applies with

equal force to administrative proceedings was well elaborated upon by this Court in the Ang Tibay case as follows:

... The fact, however, that the Court of Industrial Relations may be said to be free from the rigidity of certain procedural requirements does not mean that it can, in justiciable case coming before it, entirely ignore or disregard the fundamental and essential requirements of due process in trials and investigations of an administrative character.

... There are cardinal primary rights which must be respected even in proceedings of this character. The first of these rights is the right to a hearing, which includes the right of the party interested or affected to present his own case and submit evidence in support thereof. Not only must the party be given an opportunity to present his case and to adduce evidence tending to establish the rights which he asserts but the tribunal must consider the evidence presented. While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity which cannot be disregarded, namely, that of having something to support its decision. No only must there be some evidence to support a finding or conclusion, but the evidence must be substantial. The decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected. The Court of Industrial Relations or any of its judges, therefore, must act on its or his own independent consideration of the law and facts of the controversy, and not simply accept the views of a subordinate in arriving at a decision. The Court of Industrial Relations should, in all controversial questions, render its decision in such a manner that the parties to the proceeding can know the various issues involved, and the reason for the decision rendered. The performance of this duty is inseparable from the authority conferred upon it. (Ang Tibay, et al. v. The Court of Industrial Relations, et al., 40 O.G., No. 11, Supp. p. 29).

There is, therefore, no point in the contention that the court a quo has no jurisdiction over the present case because what is here involved is not whether the imposition of the fine by the Collector of Customs on the operator of the ship is correct or not but whether he acted properly in imposing said fine without first giving the operator an opportunity to be heard. Here we said that he acted improvidently and so the action taken against him is in accordance with Rule 67 of our Rules of Court.

Another point raised is that petitioners have brought this action prematurely for they have not yet exhausted all the administrative remedies available to them, one of which is to appeal the ruling to the Commissioner of Customs. This may be true, but such step we do not consider a plain, speedy or adequate remedy in the ordinary course of law as would prevent petitioners from taking the present action, for it is undisputed that respondent collector has acted in utter disregard of the principle of due process.

WHEREFORE, the decision appealed from is affirmed. No costs.

Bengzon, C.J., Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.