G.R. No. 77663 April 12, 1988

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, petitioner, vs.HON. EMMANUEL G. PEÑA, as Presiding Judge, RTC, NCJR, Br. CLII, Pasig, Metropolitan Manila, and YEUNG CHUN KAM, YEUNG CHUM HO and ARCHIE CHAN represented by YIM KAM SHING, respondents.

 

TEEHANKEE, C.J.:

This special civil action for certiorari, prohibition and mandamus with preliminary injunction and/or restraining order seeks to set aside the orders, dated February 16 and March 5, 1987, rendered by respondent trial judge on grounds of lack of jurisdiction and grave abuse of discretion. The main issue is whether regional trial courts have jurisdiction over the petitioner Presidential Commission on Good Government (hereinafter referred to as the Commission) and properties sequestered and placed in its custodia legis in the exercise of its powers under Executive Orders Nos. 1, 2 and 14, as amended, and whether said regional trial courts may interfere with and restrain or set aside the orders and actions of the Commission. The Court holds that regional trial courts do not have such jurisdiction over the Commission and accordingly grants the petition. To eliminate all doubts, the Court upholds the primacy of administrative jurisdiction as vested in the Commission and holds that jurisdiction over all sequestration cases of ill-gotten wealth, assets and properties under the past discredited regime fall within the exclusive and original jurisdiction of the Sandiganbayan, subject to review exclusively by this Court. *

The antecedent facts are:

On March 25, 1986, the Commission issued an order freezing the assets, effects, documents and records of two export garment manufacturing firms denominated as American Inter-fashion Corporation and De Soleil Apparel Manufacturing Corporation. Said firms had both been organized by joint venture agreement on July 2,1984 with the approval of the Garments & Textile Export Board. Two-thirds or 67% of the stock of both corporations were subscribed by so-called Local Investors represented by Renato Z. Francisco and Atty. Gregorio R. Castillo and one-third or 33% thereof were subscribed by the so-called Hongkong Investors, namely respondents Yeung Chun Kam and Yeung Chun Ho. The Commission appointed Ms. Noemi L. Saludo as Officer-in-Charge (OIC) of the said corporations with full authority to manage and operate the same. On June 27, 1986, the Commission designated the OIC, Saludo, and Mr.Yeung Chun Ho private respondent herein, as authorized signatories to effect deposits and withdrawals of the funds of the two corporations. On September 4, 1986, the Commission designated Mr. Yim Kam Shing as co-signatory, in the absence of Mr. Yeung Chun Ho and Mr. Marcelo de Guzman, in the absence of Ms. Saludo. However, in a memorandum dated February 3, 1987, and addressed to depository banks of the said two corporations, Ms. Saludo revoked the authorizations previously issued upon finding that Mr. Yim Kam Shing was a Hongkong Chinese national staying in the country on a mere tourist visa, and designated James Dy as her co-signatory and Enrico Reyes Santos as the other authorized signatory with Teresita Yu as the latter's co-signatory. The said memorandum was approved by then Commissioner Mary Concepcion Bautista of the Commission.

On February 11, 1987, the OIC withdrew the amount of P400,000.00, more or less, from the Metropolitan Bank and Trust Company against the accounts of the said corporations for payment of the salaries of the staff, employees and laborers of the same for the period from February 1 to 15 of 1987. On February 13, 1987, respondents Yeung Chun Kam Yeung Chun Ho and Archie Chan who are all in Hongkong, instituted through Yim Kam Shing an action for damages with prayer for a writ of preliminary injunction against the said bank, the Commission, then Commissioner Mary Concepcion Bautista and the OIC, Saludo, docketed as Civil Case No. 54298 of Branch 152 of the Regional Trial Court at Pasig, Metro Manila, presided by respondent judge, and questioning the aforesaid revocation of the authorization as signatory previously granted to Mr. Yim Kam Shing as private respondents' representative. On February 16, 1987, respondent judge issued ex-parte the questioned temporary restraining order enjoining the bank, its attorneys, agents or persons acting in their behalf "from releasing any funds of American Inter-fashion Corporation without the signature of plaintiff Yim Kam Shing and to desist from committing any other acts complained of ..." and the Commission "from enforcing the questioned memorandum dated February 3, 1987" (Annex "J" Petition).

On February 20, 1987, the Commission filed a motion to dismiss with opposition to plaintiffs' (private respondents herein) prayer for a writ of preliminary injunction on the ground that the trial court has no jurisdiction over the Commission or over the subject of the case and that assuming arguendo its jurisdiction, it acted with grave abuse of discretion since private respondents as 33% minority shareholders are not entitled to

any restraining order or preliminary injunction. On March 5, 1987, respondent judge issued the other assailed order denying the Commission's motion to dismiss and granting private respondents prayer for a writ of preliminary injunction on a P10,000 bond (Annex "L," Petition). On March 20, 1987, the Commission filed the petition at bar questioning the jurisdiction of respondent judge's court over it and praying for (a) the nullification of the aforesaid February 16 and March 5, 1987 orders and (b) the issuance of a writ of prohibition ordering the respondent judge to cease and desist from proceeding with the said case.

On March 24, 1987, the Court issued a temporary restraining order, "ordering respondent judge to cease and desist from enforcing his orders dated February 16 and March 5, 1987 and from proceeding with Civil Case No. 54298 ... subject to the condition that the amounts that the petitioner may withdraw from the accounts of (the sequestered corporations) with the Metropolitan Bank and Trust Company, Inc., shall be limited to the 'necessary operating expenses of the two companies and for the payment of the salaries, wages and allowances of the companies" staff, employees and laborers" ... and that the proceeds and income received shall likewise in due course be deposited with the said companies' accounts with the said Metropolitan Bank and Trust Company, Inc."

On the issue of jurisdiction squarely raised, as above indicated, the Court sustains petitioner's stand and holds that regional trial courts and the Court of Appeals for that matter have no jurisdiction over the Presidential Commission on Good Government in the exercise of its powers under the applicable Executive Orders and Article XVIII, section 26 of the Constitution and therefore may not interfere with and restrain or set aside the orders and actions of the Commission. Under section 2 of the President's Executive Order No. 14 issued on May 7, 1986, all cases of the Commission regarding "the Funds, Moneys, Assets, and Properties Illegally Acquired or Misappropriated by Former President Ferdinand Marcos, Mrs. Imelda Romualdez Marcos, their Close Relatives, Subordinates, Business Associates, Dummies, Agents, or Nominees" 1 whether civil or criminal, are lodged within the "exclusive and original jurisdiction of the Sandiganbayan" 2 and all incidents arising from, incidental to, or related to, such cases necessarily fall likewise under the Sandiganbayan's exclusive and original jurisdiction, subject to review on certiorari exclusively by the Supreme Court. 3

The Constitution and the applicable Executive Orders and established legal principles and jurisprudence fully support the Court's ruling at bar.

1. The very first Executive Order issued by President Corazon C. Aquino after her assumption of office and the ouster of deposed President Ferdinand E. Marcos on February 25, 1986 was Executive Order No. 1 issued on February 28, 1986 creating the Presidential Commission on Good Government, charging it with the task of assisting the President in regard to the "recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad, including the takeover or sequestration of all business enterprises and entities owned or controlled by them, during his administration, directly or through nominees, by taking undue advantage of their public office and/or using their powers, authority, influence, connections or relationship." 4

In the discharge of its vital task "to recover the tremendous wealth plundered from the people by the past regime in the most execrable thievery perpetrated in all history," 5 or "organized pillage" (to borrow a phrase from the articulate Mr. Blas Ople 6 ), the Commission was vested with the ample power and authority

(a) x x x

(b) to sequester or place or cause to be placed under its control or possession any building or office wherein any ill-gotten wealth or properties may be found, and any records pertaining thereto, in order to prevent their destruction, concealment or disappearance which would frustrate or hamper the investigation or otherwise prevent the Commission from accomplishing its task.

(c) to provisionally takeover in the public interest or to prevent the disposal or dissipation of business enterprises and properties taken over by the government of the Marcos Administration or by entities or persons close to former President Marcos, until the transactions leading to such acquisition by the latter can be disposed of by the appropriate authorities.

(d) to enjoin or restrain any actual or threatened commission of acts by any person or entity that may render moot and academic, or frustrate or otherwise make ineffectual the efforts of the Commission to carry out its task under this Order. ... 7

As stressed in Baseco "So that it might ascertain the facts germane to its objectives, it [the Commission] was granted power to conduct investigations; require submission of evidence by subpoena ad testificandum and duces tecum; administer oaths; punish for contempt. It was given power also to promulgate such rules and regulations as may be necessary to carry out the purposes of (its creation)." 8

2. These ample powers and authority vested in the Commission by the President in the exercise of legislative power granted her in the Provisional (Freedom) Constitution 9 were confirmed in said Constitution and in the 1987 Constitution. Thus, the Freedom Constitution (Proc. No. 3) mandated that 'The President shall give priority to measures to achieve the mandate of the people to: .. (d) recover ill-gotten properties amassed by the leaders and supporters of the previous regime and protect the interest of the people through orders of sequestration or freezing of assets or accounts. ..."10 The Constitution overwhelmingly ratified by the people in the February 2, 1987 plebiscite likewise expressly confirmed that:

Sec. 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 dated March 25, 1986 in relation to the recovery of ill- gotten wealth shall remain operative for not more than eighteen months after the ratification of this Constitution. However, in the national interest, as certified by the President, the Congress may extend said period.

A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order and the list of the sequestered or frozen properties shall forthwith be registered with the proper court. For orders issued before the ratification of this Constitution, the corresponding judicial action or proceeding shall be filed within six months from its ratification. For those issued after such ratification, the judicial action or proceeding shall be commenced within six months from the issuance thereof.

The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is commenced as herein provided. 11

3. As can be readily seen from the foregoing discussion of the duties and functions and the power and authority of the Commission, it exercises quasi-judicial functions. In the exercise of quasi-judicial functions, the Commission is a co-equal body with regional trial courts and "co-equal bodies have no power to control the other." 12 The Solicitor General correctly submits that the lack of jurisdiction of regional trial courts over quasi-judicial agencies is recognized in section 9, paragraph 3 of Batas Pambansa Blg. 129 (the Judiciary Reorganization Act of 1980), which otherwise vests exclusive appellate jurisdiction in the Court of Appeals over all final judgment, decisions, resolutions, orders, or awards of regional trial courts and quasi judicial agencies, instrumentalities, boards or commissions. But as already indicated hereinabove, the Court of Appeals is not vested with appellate or supervisory jurisdiction over the Commission. Executive Order No. 14, which defines the jurisdiction over cases involving the ill-gotten wealth of former President Marcos, his wife, Imelda, members of their immediate family, close relatives, subordinates, close and/or business associates, dummies, agents and nominees, specifically provides in section 2 that "The Presidential Commission on Good Government shall file all such cases, whether civil or criminal, with the Sandiganbayan which shall have exclusive and original jurisdiction thereof." Necessarily, those who wish to question or challenge the Commission's acts or orders in such cases must seek recourse in the same court, the Sandiganbayan, which is vested with exclusive and original jurisdiction. The Sandiganbayan's decisions and final orders are in turn subject to review on certiorari exclusively by this Court.

4. Having been charged with the herculean task of bailing the country-out of the financial bankruptcy and morass of the previous regime and returning to the people what is rightfully theirs, the Commission could ill-afford to be impeded or restrained in the performance of its functions by writs or injunctions emanating from tribunals co-equal to it and inferior to this Court. Public policy dictates that the Commission be not embroiled in and swamped by legal suits before inferior courts all over the land, since the loss of time and energy required to defend against such suits would defeat the very purpose of its creation. Hence, section 4(a) of Executive Order No. 1 has expressly accorded the Commission and its members immunity from suit for damages in that: "No civil action shall lie against the Commission or any member thereof for anything done or omitted in the discharge of the task contemplated by this order."

The law and the courts frown upon split jurisdiction and the resultant multiplicity of actions. To paraphrase the leading case of Rheem of the Phil., Inc. vs. Ferrer, et al, 12-a to draw a tenuous jurisdiction line is to undermine stability in litigations. A piecemeal resort to one court and another gives rise to multiplicity of suits, To force the parties to shuttle from one court to another to secure full determination of their suit is a situation gravely prejudicial to the administration of justice. The time lost, the effort wasted, the anxiety augmented, additional

expenses incurred, the irreparable injury to the public interest – are considerations which weigh heavily against split jurisdiction.

Civil Case No. 54298 pending before respondent judge is expressly denominated as one "for damages with prayer for a writ of preliminary injunction" (Annex "I," petition) filed by private respondents against the Commission and then Commissioner Mary Concepcion Bautista. The said case is clearly barred by the aforequoted immunity provision of Executive Order No. 1, as buttressed by section 4(b) thereof which further provides that: "No member or staff of the Commission shall be required to testify or produce evidence in any judicial, legislative or administrative proceeding concerning matters within its official cognizance."

Executive Order No. 1 thus effectively withholds jurisdiction over cases against the Commission from all lower courts, including the Court of Appeals, except the Sandiganbayan in whom is vested original and exclusive jurisdiction and this Court. Early on, in special civil actions questioning challenged acts of the Commission, its submittal that the cited Executive Order bars such actions in this Court was given short shrift because this Court, as the third great department of government vested with the judicial power and as the guardian of the Constitution, cannot be deprived of its certiorari jurisdiction to pass upon and determine alleged violations of the citizens' constitutional and legal rights under the Rule of Law.

5. The rationale of the exclusivity of such jurisdiction is readily understood. Given the magnitude of the past regime's "organized pillage" and the ingenuity of the plunderers and pillagers with the assistance of the experts and best legal minds available in the market, it is a matter of sheer necessity to restrict access to the lower courts, which would have tied into knots and made impossible the Commission's gigantic task of recovering the plundered wealth of the nation, whom the past regime in the process had saddled and laid prostrate with a huge $27 billion foreign debt that has since ballooned to $28.5 billion.

To cite an example as recorded in Baseco, "in the ongoing case filed by the government to recover from the Marcoses valuable real estate holdings in New York and the Lindenmere estate in Long Island, former PCGG chairman Jovito Salonga has revealed that their names do not appear on any title to the property. Every building in New York is titled in the name of a Netherlands Antilles Corporation, which in turn is purportedly owned by three Panamanian corporations, with bearer shares. This means that the shares of this corporation can change hands any time, since they can be transferred, under the law of Panama, without previous registration on the books of the corporation. One of the first documents that we discovered shortly after the February revolution was a declaration of trust handwritten by Mr. Joseph Bernstein on April 4, 1982 on a Manila Peninsula Hotel stationery stating that he would act as a trustee for the benefit of President Ferdinand Marcos and would act solely pursuant to the instructions of Marcos with respect to the Crown Building; in New York." 13 Were it not for this stroke of good fortune, it would have been impossible, legally and technically, to prove and recover this ill-gotten wealth from the deposed President and his family, although their ownership of these fabulous real estate holdings were a matter of public notoriety

Hence, the imperative need for the Government of the restored Republic as its first official act to create the Commission as an administrative and quasi- judicial commission to recover the ill-gotten wealth "amassed from vast resources of the government by the former President, his immediate family, relatives and close associates."14

This is the only possible and practical way to enable the Commision to begin to do its formidable job. Thus, in the fifties in an analogous case, the Court taking cognizance of the trend to vest jurisdiction in administrative commissions and boards the power to resolve specialized disputes 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 not 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 services of the administrative tribunal to determine technical and intricate matters of fact, and of the regulatory statute administered. 15

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. For example, the Court in the case of Ebon vs. de Guzman 16 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."

6. The Court recently had occasion to stress once more, in G.R. No. 82218, Reyes vs. Caneba March 17, 1988, that "(T)he thrust of the related doctrines of primary administrative jurisdiction and exhaustion of administrative remedies is that courts must allow administrative agencies to carry out their functions and discharge their responsibilities within the specialized areas of their respective competence. Acts of an administrative agency must not casually be overturned by a court, and a court should as a rule not substitute its judgment for that of the administrative agency acting within the perimeters of its own competence." Applying these fundamental doctrines to the case at bar, the questions and disputes raised by respondents seeking to controvert the Commission's finding of prima facie basis for the issuance of its sequestration orders as well as the interjection of the claims of the predecessor of American Inter-fashion and De Soleil Corporations, viz. Glorious Sun Phil., headed by Nemesis Co are all questions that he within the primary administrative jurisdiction of the Commission that cannot be prematurely brought up to clog the court dockets without first resorting to the exhaustion of the prescribed administrative remedies. The administrative procedure and remedies for contesting orders of sequestration issued by the Commission are provided for in its rules and regulations. Thus, the person against whom a writ of sequestration is directed may request the lifting thereof, in writing; after due hearing or motu proprio for good cause shown, the Commission may lift the writ unconditionally or subject to such conditions as it may deem necessary, taking into consideration the evidence and the circumstances of the case. The resolution of the Commission is appealable to the President of the Philippines. The Commission conducts a hearing, after due notice to the parties concerned to ascertain whether any particular asset, property or enterprise constitutes ill-gotten wealth. The Commission's order of sequestration is not final, at the proper time, the question of ownership of the sequestered properties shall be exclusively determined in the Sandiganbayan, whose own decisions in turn are subject to review exclusively by the Supreme Court.

It should be emphasized here, as again stressed by the Court in the recent case of Republic, et al. vs. De los Angeles, et al., G.R. No. L-30240, March 25, 1988, that "it is well-recognized principle that purely administrative and discretionary function may not be interfered with by the courts. In general, courts have no supervising power over the proceedings and actions of the administrative departments of government. This is generally true with respect to acts involving the exercise of judgment or discretion, and findings of fact. There should be no thought of disregarding the traditional line separating judicial and administrative competence, the former being entrusted with the determination of legal questions and the latter being limited as a result of its expertise to the ascertainment of the decisive facts." This is specially true in sequestration cases affected by the Commission for the recovery of the nation' s plundered wealth that may affect the nation's very survival, in the light of the constitutional mandate that such sequestration or freeze orders "shall be issued only upon showing of a prima facie case" 17 and the settled principle that findings by administrative or quasi-judicial agencies like the Commission are entitled to the greatest respect and are practically binding and conclusive, like the factual findings of the trial and appellate courts, save where they are patently arbitrary or capricious or are not supported by substantial evidence.

7. The Solicitor General has herein picturesquely submitted its "more than prima facie evidence" for its sequestration and provisional take-over of the subject assets and properties as follows:

... the subject sequestered assets are completely owned and/or completely utilized and/or otherwise taken over by the Marcoses, with due 'compensation' to their co-participants in terms of tacitly agreed upon 'mutual benefits,' for their personal benefits and selfish economic interests, including particularly the salting, stashing and secreting of dollars abroad, cum loculo et pera as witness the following, by way of summarizing PCGG's submission, ... as supported by more than prima facie evidence:

The fun: Glorious Sun, Phils., headed by Nemesio G. Co and with private respondents herein holding 40% of the shares of stock, soon after its incorporation on June 8, 1977, engaged in dollar salting, among other business unlawful manipulations. This was unearthed by the Garments and Textiles Export Board (GTEB) in January 1984. At that time, in the reign of Marcos, it had been decreed that the matter of dollar salting was the exclusive domain of the so-called 'Binondo Central Bank,' and any other person or en entity found engaging therein was guilty of 'economic sabotage,' more so where the 'saboteurs' are aliens like the herein private respondents who are otherwise known as the 'Hongkong investors.

The squeeze: GTEB, under the Ministry of Trade, under then .Minister Roberto V. Ongpin, on April 27,1984 choked the lifeliness of Glorious Sun in terms of cancelling its export quotas, export authorizations, and license to maintain bonded warehouses and of

disqualifying its 'major stockholders and officers from engaging in exports.' With protestations of innocence, Glorious Sun on May 25, 1984 even had the temerity to file a Petition with the Supreme Court (G.R. No. 67180). How did Glorious Sun extricate itself from the tightening .screws let loose upon its neck by the then reigning Ceasar with his apparently legal contretemps?

Easy: Give unto Ceasar what is Ceasar's. In July, 1984, herein private respondents came up with two (2) joint venture agreements. and within the month, respondents themselves withdrew their Petition in G.R. No. 67180. Pursuant to the two (2) joint venture agreements, American Inter-Fashion Co. was incorporated on August 22, 1984 and De Soleil on September 3, 1984, in each of which herein private respondents, the Hongkong investors, held 33% of the shares of stock while the 'Filipino investors' held 67%.

The sting:

In August, 1984, the GTEB informed Glorious Sun, Phils., that the substantial portion of the latter's cancelled export quotas had been awarded to American Inter-Fashion and De Soleil. But while the Yeung brothers control only 33% of the two corporations, they, however, operated and managed said corporation and utilized 100% of their export quota allocations. The Yeung brothers paid the nominees of the Filipino investors controlling 67%, the amount of $3.75 per dozen as royalty for the utilization of the 67% export quota of said two corporations. It may also be stated that even before the export quota allocations were awarded to American Inter-Fashion and De Soleil Glorious Sun, Phils., despite the GTEB decision, Annex A hereof, was allowed to ship out garments worth US $1,261,794.00 under its [previously cancelled] quota from April 27 to May 30,1984. And on petition of a foreign buyer, Generra Sports Company of Seattle, Washington, Glorious Sun, Phils., was allowed to fin its 3rd and 4th fashion-quarter orders of 186,080 pieces valued at about US $1,159,531.00. As a result, Glorious Sun, Phils. continued to operate its bonded manufacturing warehouse ordered closed by the GTEB (Please see GTEB Comment dated June 4, 1984 in G.R. No. 67180.). (pp. 9-10, Consolidated Reply, May 15, 1987).

The end of the fun: All was fun that ended in fun for all the participants in the fun, the squeeze and the sting, until of course the EDSA Revolution, when PCGG shortly sequestered the subject assets and provisionally took over the conservation thereof pursuant to law (Secs. 2 & 3, Executive Order No. 1 and related issuances) and pursuant to the very Baseco case cited ironically in the Motion at bar. Again, with protestations of innocence, the herein private respondents through their counsel and now Congressman Francisco Sumulong with the game temerity have gone to the courts and other forum (Civil Case No. 54298 entitled Yeung Chun Kam et al. vs. PCGG, et al., RTC, Branch 151, Pasig, Metro Manila: SEC Case No. 003144 entitled Yeung Chun Kam et al. vs. PCGG, et al., Securities and Exchange Commission) just as Nemesio Co allegedly President and owner of Glorious Sun, through counsel Benjamin C. Santos, has gone to the courts with the same protestations of innocence and equal temerity (Civil Cases Nos. 86-37220 and 86-37221 before RTC, Branches 33 and 36, Manila; Civil Cases Nos. 761-87 and 762-87, Metropolitan Trial Court, Branch 56, Malabon;Civil Case No. 54911, RTC, Branch 151 Pasig, Metro Manila) and with his own 'brand' of private army to boot, resorted to the midnight plunder of the subject sequestered assets under a "midnight" writ (issued in Civil Case No. 54911 by Judge Eutropio Migriño). Obviously, the herein private respondent as well as Nemesio Co would like to continue their fun. 18

Such proliferation of suits filed against the Commission in the trial courts, and gross disregard of the Commission's primacy of administrative jurisdiction has of course compelled the Commission to question in turn in this Court and obtain restraining orders against the lower courts' usurpation of jurisdiction, in the following pending cases:

1. G.R. No. 79901 (PCGG v. Hon. Eutropio Migriño Executive Judge, Regional Trial Court of Pasig and Glorious Sun Fashion Manufacturing Co., Inc. and Nemesio Co )

2. G.R. No. 80072 (PCGG v. Emilio Opinion, Presiding Judge of the Metropolitan Trial Court, Branch 56, Malabon, Metro Manila; Glorious Sun Fashion Manufacturing Co., Inc. and Nemesio Co )

3. G.R. No. 80121 (PCGG v. Hon. Maximo M. Japzon as Presiding Judge of the Regional Trial Court, Branch 36, Manila; Glorious Sun Fashion Garments Manufacturing Co., Inc. and Nemesio Co.)

4. G.R. No. 80281 (PCGG v. Hon. Felix Barbers as Presiding Judge of the Regional Trial Court, Branch 33, Manila, Deputy Sheriff Salvador A. Pueca and Glorious Sun Fashion Garments Manufacturing Co., Inc. and Nemesio Co )

5. G.R. No. 80395 (PCGG v. Hon. Emiho C. Opinion as Presiding Judge of Branch 56 of the Metropolitan Trial Court, Malabon, Metro Manila; Glorious Sun Garments Manufacturing Co., Inc. and Nemesio Co)

Going back to the pre-EDSA squeeze and scam, it need only be added that everything at the time seemingly ended to everybody's satisfaction. Nemesio Co's Glorious Sun, Phil. notwithstanding the GTEB's closure order, continued to operate its bonded warehouse and to ship out millions of dollars of garments under its supposedly cancelled export quotas and peremptorily withdrew on August 20, 1984 19 its petition in G.R. No. 67180 from this Court . The two new substitute corporations American Inter-Fashion Co. and De Soleil cropped out of nowhere to take over the factories and export quotas and it was of public notoriety, particularly in the trade, that the family had taken over.

8. This is the thrust of the complaint filed on July 16, 1987 [well ahead of the Constitutional deadline of August 2, 1987]by the Solicitor General on behalf of the Commission representing Plaintiff Republic of the Philippines docketed as Civil Case No. 0002, PCGG-3, with the Sandiganbayan, against therein defendants Ferdinand E. Marcos, Imelda R. Marcos, Imelda (Imee) R. Marcos, Tomas Manotoc, Irene R. Marcos Araneta, Gregorio Ma. Araneta III and Ferdinand R. Marcos, Jr., for reversion, reconveyance, restitution, accounting and damages, involving, among others, the subject matter of the petition at bar, namely, American Inter-Fashion and De Soleil Corporations, together with their assets, shares of stocks, effects, evidence and records, which the Commission avers, based on documents in its possession, were "illegally acquired by said defendants in unlawful concert with one another and with gross abuse of power and authority. ...  20 The Commission correctly submits that "questions on whether or not the Plaintiff Republic of the Philippines is entitled to reversion, reconveyance, restitution, accounting or damages in respect of the above-subject matter is for the Sandiganbayan to resolve" — not in any of the scattershot cases that respondents have filed in the various courts of the land.

The Court has so held in various cases, among them, Ofelia Trinidad vs. PCGG, et al., G.R. No. 77695, June 16, 1987, wherein We pointed out that — "The Supreme Court is not a trier of facts: it cannot conceivably go over all the minute evidence that may be presented by the PCGG. What is significant is that this Court believes that in the instant case no abuse, much less a grave abuse of discretion has been exercised by the PCGG," and Agro-Industrial Foundation Colleges of Southern Philippines, et al. vs. Regional XI Operating Team No. Five and/or the PCGG, G.R. No. 78116, July 28, 1987, wherein We ruled that the parties affected "may raise their defenses at the appropriate time and before the proper forum  [the Sandiganbayan]. They will have their day in court."

9. What has not been appreciated by respondents and others similarly situated is that the provisional remedies (including the encompassing and rarely availed of remedy of provisional takeover) granted to the Commission in pursuing its life-and-death mission to recover from a well-entrenched plundering regime of twenty years, the ill-gotten wealth which rightfully belongs to the Republic although pillaged and plundered in the name of dummy or front companies, in several known instances carried out with the bold and mercenary, if not reckless, cooperation and assistance of members of the bar as supposed nominees, the full extent of which has yet to be uncovered, are rooted in the police power of the State, the most pervasive and the least limitable of the powers of Government since it represents "the power of sovereignty, the power to govern men and things within the limits of its domain."21 Police power has been defined as the power inherent in the State "to prescribe regulations to promote the health, morals, education, good order or safety, and general welfare of the people." 22 Police power rests upon public necessity and upon the right of the State and of the public to self-protection. 23 " Salus populi suprema est lex" — the welfare of the people is the supreme law. For this reason, it is coextensive with the necessities of the case and the safeguards of public interest. Its scope expands and contracts with changing needs. 24 "It may be said in a general way that the police power extends to all the great public needs. It may be put forth in aid of what is sanctioned by usage, or held by the prevailing morality or strong and preponderant opinion to be greatly and immediately necessary to the public welfare." 25

That the public interest and the general welfare are subserved by sequestering the purported ill-gotten assets and properties and taking over stolen properties of the government channeled to dummy or front companies is stating the obvious. The recovery of these ill-gotten assets and properties would greatly aid our financially crippled government and hasten our national economic recovery, not to mention the fact that they rightfully belong to the people. While as a measure of self-protection, if, in the interest of general welfare, police power, may be exercised to protect citizens and their businesses in financial and economic matters, it may similarly be exercised to protect the government itself against potential financial loss and the possible disruption of governmental functions. Police power as the power of self-protection on the part of the community that the principle of self-defense bears to the individual. 26 Truly, it may be said that even more than self-defense, the recovery of ill-gotten wealth and of the government's own properties involves the material and moral survival of the nation, marked as the past regime was by the obliteration of any line between private funds and the public treasury and abuse of unlimited power and elimination of any accountability in public office, as is a matter of public record and knowledge.

10 Despite all the complexities and difficulties, the original Commission created under Executive Order No. 1 headed by its first chairman, now Senate President Jovito R. Salonga, and composed of Hon. Ramon Diaz, the incumbent chairman, now Associate Justice Pedro L. Yap of this Court, Hon. Raul Daza, now a ranking member of the House of Representatives, and Hon.. Mary Concepcion Bautista, now chairman of the Human Rights Commission, and the present Commission headed by Chairman Ramon Diaz have produced unprecedented positive results for which they fully deserve the inadequately expressed (– at times – ) appreciation and gratitude of the nation. The report as of the end of 1987 of Chairman Ramon Diaz shows the great extent of the Commission's accomplishments despite its limited resources, but fortunately bolstered by the spontaneous and welcome assistance of friendly foreign governments and lawyers, in the brief period of less than two years since its creation and which are regarded yet as the tip of the iceberg:

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT SUMMARY OF ACCOMPLISHMENTS As of January 05, 1988

 

1. CASH & OTHER CASH ITEMS

Funds turned over to

the treasury — Gen. Fund 592,350,799.00

Proceeds of Sale of

Princeton Property with

PNB—New York 20,500,000.00

Proceeds of New Jersey

Settlement 9,669,781.00

Proceeds of Auction Sale 17,231,429.00

Proceeds of Sale of

Paintings 8,879,500.00

SBTC (1st payment Seq. T/Ds) 250,000,000.00

UPCB Bal of Profit Sharing 77,678,854.00

Other Cash Items

(Certificate of Time

Deposits) 1,492,951.00

Contribution to CARP 140,000,000.00

Sub-Total P1,117,803,314.00

 

2. OTHER RECOVERED FUNDS

Government Funds in TRB/

National Treasury

(Casino Funds) 1,138,000,000.00

T-Bills delivered to the

office of the President 100,020,000.00

Funds from Filbakers 59,884,453.00

P1,297,904,453.00

3. RECEIVABLES

Projected Proceeds of Sale

of knick-knacks and

Furnitures from Hachensach

in Olympic Towers 20,720,000.00

Projected Proceeds of New York

Properties (Lindenmere,

Olympic Towers Apartments,

Makiki Properties) $9.0M 184,500,000.00

SBTC Certificates of Time

Deposits 731,407,842.00

Sub-total P936,627,842.00

 

4. FUNDS HELD IN TRUST

Funds with the Treasury 71,975,722.00

Funds with PNB-Ortigas 52,535,298.00

Sub-Total P124,511,020.00

 

GRAND TOTAL P3,476,846,629.00

 

5. JEWELRY

 

Estimated Value P250 M

 

6. COMPANIES WHICH WERE AFFECTED

BY SEQUESTRATION ORDER INCLUDING

RADION AND TV STATIONS

297 Companies were subject to

sequestration (including those

whose sequestrations was lifted and those surrendered companies

by J.Y. Campos and those holding

companies whose investments in

shares were affected by Writs of

Sequestration)

 

74 Companies have available

financial statements with

estimated total assets of P44B

223 Companies still without

financial statements

18 TV Stations were sequestered

38 Radio Stations were sequestered

 

7. REAL PROPERTIES (BUILDING AND

IMPROVEMENTS)

 

Coconut Palace

13 Houses and improvements

12 Condominium units

Offices of R.S. Benedicto, E. Garcia, etc.

2 National Art and Museum Centers

2 Fishponds

 

8. SEQUESTERED LANDS (INCLUDING

IMPROVEMENTS)

 

450 parcels of land (including

improvements) have been issued

with specific Writs of Sequestration

of which only 148 have an area of

19,276,970.76 sq. m.

 

23 Haciendas of which 13 haciendas

constituting RSB Farms, Inc. have

an area of 27,859,207.00 sq m.

 

9. SURRENDERED LANDS BY JOSE YAO CAMPOS

 

Total area in sq. m. of all surrendered

properties 19,684,435.45 sq. m.

 

Disposed to DAR (202 IRC titles) with

total area of 13,997,529 sq. m.

 

Remaining balance of 75 titles recommended for

disposal, with total area of 5,686,906.45 sq. m.

 

OTHER INFORMATION:

 

81 Sequestered Vehicles

29 Sequestered Aircrafts

13 Sequestered Vessels

11. A final word about the alleged misdeeds of the OIC which the Solicitor General has denounced as false and unfounded. 27 Such alleged misdeeds, even if taken as true for the nonce, do not and cannot detract from the Commission's accomplishments in the unselfish service of the nation, rendered with integrity and honor and without the least taint of scandal and self-interest (in welcome contrast to the past regime's rape and plunder sub-silentio of the nation!). In our free and democratic space now, with full restoration of a free press and the people's liberties, it should be acknowledged with some sort of appreciation that any such misdeeds on the part of the Commission's representative or agents have been subjected to full public exposure and the erring parties dismissed and replaced.

ACCORDINGLY, the writs of certiorari and prohibition shall issue. The orders of respondent Judge dated February 16, 1987 and March 5, 1987 are hereby set aside as null and void. Respondent Judge is ordered to cease and desist from any further proceeding in Civil Case No. 54298 which is hereby ordered DISMISSED. This decision is IMMEDIATELY EXECUTORY, **

Yap, Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.

Griño-Aquino, J., took no part.

 

G.R. No. 127198             May 16, 2005

LAND BANK OF THE PHILIPPINES, petitioner, vs.HON. ELI G. C. NATIVIDAD, Presiding Judge of the Regional Trial Court, Branch 48, San Fernando, Pampanga, and JOSE R. CAGUIAT represented by Attorneys-in-fact JOSE T. BARTOLOME and VICTORIO MANGALINDAN, respondents.

D E C I S I O N

TINGA, J.:

This is a Petition for Review1 dated December 6, 1996 assailing the Decision2 of the Regional Trial Court3 dated July 5, 1996 which ordered the Department of Agrarian Reform (DAR) and petitioner Land Bank of the Philippines (Land Bank) to pay private respondents the amount of P30.00 per square meter as just compensation for the State’s acquisition of private respondents’ properties under the land reform program.

The facts follow.

On May 14, 1993, private respondents filed a petition before the trial court for the determination of just compensation for their agricultural lands situated in Arayat, Pampanga, which were acquired by the government pursuant to Presidential Decree No. 27 (PD 27). The petition named as respondents the DAR and Land Bank. With leave of court, the petition was amended to implead as co-respondents the registered tenants of the land.

After trial, the court rendered the assailed Decision the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of petitioners and against respondents, ordering respondents, particularly, respondents Department of Agrarian Reform and the Land Bank of the Philippines, to pay these lands owned by petitioners and which are the subject of acquisition by the State under its land reform program, the amount of THIRTY PESOS (P30.00) per square meter, as the just compensation due for payment for same lands of petitioners located at San Vicente (or Camba), Arayat, Pampanga.

Respondent Department of Agrarian Reform is also ordered to pay petitioners the amount of FIFTY THOUSAND PESOS (P50,000.00) as Attorney’s Fee, and to pay the cost of suit.

SO ORDERED.4

DAR and Land Bank filed separate motions for reconsideration which were denied by the trial court in its Order5dated July 30, 1996 for being pro forma as the same did not contain a notice of hearing. Thus, the prescriptive period for filing an appeal was not tolled. Land Bank consequently failed to file a timely appeal and the assailedDecision became final and executory.

Land Bank then filed a Petition for Relief from Order Dated 30 July 1996,6 citing excusable negligence as its ground for relief. Attached to the petition for relief were two affidavits of merit claiming that the failure to include in the motion for reconsideration a notice of hearing was due to accident and/or mistake.7 The affidavit of Land Bank’s counsel of record notably states that "he simply scanned and signed the Motion for Reconsideration for Agrarian Case No. 2005, Regional Trial Court of Pampanga, Branch 48, not knowing, or unmindful that it had no notice of hearing"8 due to his heavy workload.

The trial court, in its Order9 of November 18, 1996, denied the petition for relief because Land Bank lost a remedy in law due to its own negligence.

In the instant petition for review, Land Bank argues that the failure of its counsel to include a notice of hearing due to pressure of work constitutes excusable negligence and does not make the motion for reconsideration pro formaconsidering its allegedly meritorious defenses. Hence, the denial of its petition for relief from judgment was erroneous.

According to Land Bank, private respondents should have sought the reconsideration of the DAR’s valuation of their properties. Private respondents thus failed to exhaust administrative remedies when they filed a petition for the determination of just compensation directly with the trial court. Land Bank also insists that the trial court erred in declaring that PD 27 and Executive Order No. 228 (EO 228) are mere guidelines in the determination of just compensation, and in relying on private respondents’ evidence of the valuation of the properties at the time of possession in 1993 and not on Land Bank’s evidence of the value thereof as of the time of acquisition in 1972.

Private respondents filed a Comment10 dated February 22, 1997, averring that Land Bank’s failure to include a notice of hearing in its motion for reconsideration due merely to counsel’s heavy workload, which resulted in the motion being declared pro forma, does not constitute excusable negligence, especially in light of the admission of Land Bank’s counsel that he has been a lawyer since 1973 and has "mastered the intricate art and technique of pleading."

Land Bank filed a Reply11 dated March 12, 1997 insisting that equity considerations demand that it be heard on substantive issues raised in its motion for reconsideration.

The Court gave due course to the petition and required the parties to submit their respective memoranda.12 Both parties complied.13

The petition is unmeritorious.

At issue is whether counsel’s failure to include a notice of hearing constitutes excusable negligence entitling Land Bank to a relief from judgment.

Section 1, Rule 38 of the 1997 Rules of Civil Procedure provides:

Sec. 1. Petition for relief from judgment, order, or other proceedings.—When a judgment or final order is entered, or any other proceeding is thereafter taken against a party in any court through fraud, accident, mistake, or excusable negligence, he may file a petition in such court and in the same case praying that the judgment, order or proceeding be set aside.

As can clearly be gleaned from the foregoing provision, the remedy of relief from judgment can only be resorted to on grounds of fraud, accident, mistake or excusable negligence. Negligence to be excusable must be one which ordinary diligence and prudence could not have guarded against.14

Measured against this standard, the reason profferred by Land Bank’s counsel, i.e., that his heavy workload prevented him from ensuring that the motion for reconsideration included a notice of hearing, was by no means excusable.

Indeed, counsel’s admission that "he simply scanned and signed the Motion for Reconsideration for Agrarian Case No. 2005, Regional Trial Court of Pampanga, Branch 48, not knowing, or unmindful that it had no notice of hearing" speaks volumes of his arrant negligence, and cannot in any manner be deemed to constitute excusable negligence.

The failure to attach a notice of hearing would have been less odious if committed by a greenhorn but not by a lawyer who claims to have "mastered the intricate art and technique of pleading."15

Indeed, a motion that does not contain the requisite notice of hearing is nothing but a mere scrap of paper. The clerk of court does not even have the duty to accept it, much less to bring it to the attention of the presiding judge.16 The trial court therefore correctly considered the motion for reconsideration pro forma. Thus, it cannot be faulted for denying Land Bank’s motion for reconsideration and petition for relief from judgment.

It should be emphasized at this point that procedural rules are designed to facilitate the adjudication of cases. Courts and litigants alike are enjoined to abide strictly by the rules. While in certain instances, we allow a relaxation in the application of the rules, we never intend to forge a weapon for erring litigants to violate the rules with impunity. The liberal interpretation and application of rules apply only in proper cases of demonstrable merit and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice. Party litigants and their counsel are well advised to abide by, rather than flaunt, procedural rules for these rules illumine the path of the law and rationalize the pursuit of justice.17

Aside from ruling on this procedural issue, the Court shall also resolve the other issues presented by Land Bank, specifically as regards private respondents’ alleged failure to exhaust administrative remedies and the question of just compensation.

Land Bank avers that private respondents should have sought the reconsideration of the DAR’s valuation instead of filing a petition to fix just compensation with the trial court.

The records reveal that Land Bank’s contention is not entirely true. In fact, private respondents did write a letter18to the DAR Secretary objecting to the land valuation summary submitted by the Municipal Agrarian Reform Office and requesting a conference for the purpose of fixing just compensation. The letter, however, was left unanswered prompting private respondents to file a petition directly with the trial court.

At any rate, in Philippine Veterans Bank v. Court of Appeals,19 we declared that there is nothing contradictory between the DAR’s primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving the implementation of agrarian reform, which includes the determination of questions of just compensation, and the original and exclusive jurisdiction of regional trial courts over all petitions for the determination of just compensation. The first refers to administrative proceedings, while the second refers to judicial proceedings.

In accordance with settled principles of administrative law, primary jurisdiction is vested in the DAR to determine in a preliminary manner the just compensation for the lands taken under the agrarian reform program, but such determination is subject to challenge before the courts. The resolution of just compensation cases for the taking of lands under agrarian reform is, after all, essentially a judicial function.20

Thus, the trial did not err in taking cognizance of the case as the determination of just compensation is a function addressed to the courts of justice.

Land Bank’s contention that the property was acquired for purposes of agrarian reform on October 21, 1972, the time of the effectivity of PD 27, ergo just compensation should be based on the value of the property as of that time and not at the time of possession in 1993, is likewise erroneous. In Office of the President, Malacañang, Manila v. Court of Appeals,21 we ruled that the seizure of the landholding did not take place on the date of effectivity of PD 27 but would take effect on the payment of just compensation.

Under the factual circumstances of this case, the agrarian reform process is still incomplete as the just compensation to be paid private respondents has yet to be settled. Considering the passage of Republic Act No. 6657 (RA 6657)22 before the completion of this process, the just compensation should be determined and the process concluded under the said law. Indeed, RA 6657 is the applicable law, with PD 27 and EO 228 having only suppletory effect, conformably with our ruling in Paris v. Alfeche.23

Section 17 of RA 6657 which is particularly relevant, providing as it does the guideposts for the determination of just compensation, reads as follows:

Sec. 17. Determination of Just Compensation.—In determining just compensation, the cost of acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessment made by government assessors shall be considered. The social and economic benefits contributed by the farmers and the farm-workers and by the Government to the property as well as the non-payment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation.

It would certainly be inequitable to determine just compensation based on the guideline provided by PD 27 and EO 228 considering the DAR’s failure to determine the just compensation for a considerable length of time. That just compensation should be determined in accordance with RA 6657, and not PD 27 or EO 228, is especially imperative considering that just compensation should be the full and fair equivalent of the property taken from its owner by the expropriator, the equivalent being real, substantial, full and ample.24

In this case, the trial court arrived at the just compensation due private respondents for their property, taking into account its nature as irrigated land, location along the highway, market value, assessor’s value and the volume and value of its produce. This Court is convinced that the trial court correctly determined the amount of just compensation due private respondents in accordance with, and guided by, RA 6657 and existing jurisprudence.

WHEREFORE, the petition is DENIED. Costs against petitioner.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

G.R. No. 122363            April 29, 2003

VICTOR G. VALENCIA, petitioner, vs.COURT OF APPEALS, HON. TEOFISTO T. GUINGONA, JR., as Executive Secretary, HON. ERNESTO GARILAO, Secretary of Agrarian Reform, CRISOSTOMO M. CORPIN, Regional Director, DAR Region VII, SANTOS GARGAYA, JULIANO MAGDAYAO, CRESCENCIANO FRIAS, FEDERICO JARE, ROSENDO LOBRESCO, ERNESTO LOBRESCO, FELICIANO LOBRESCO, CATALINO MANTAC, VICTORIANO MONTE-FALCON, FRANCISCO OBANG, AMBROSIO SEMILLANO, ROGELIO TAMAYO and EDILBERTO LOBRESCO,respondents.

BELLOSILLO, J.:

THE tenancy crisis in the Philippines is not just of recent vintage. History is replete with instances where tenant-farmers, relegated to a life of perpetual bondage, have rushed onto the battlefield with hopes of freedom from imminent thralldom, aptly described by Professor Harold J. Laski as the normal life of the poor - their perpetual fear of the morrow, their haunting sense of impending disaster, their fitful search for beauty that perpetually eludes them.

Every administration that took over the reins of government saw the gravity of this problem. Thus, each offered to the tenant-tillers its own version of the appropriate legislation for their emancipation.

The Agricultural Tenancy Act of 1954 (R. A. No. 1199), the initial attempt of President Magsaysay at agrarian reform, was conceived as a remedial legislation to uplift the social and economic status of tenants. It was insinuated in the legislative deliberations that several provisions therein operated to deprive the landowner of his right to contract and his right to property without due process of law. But, it was also argued, this involved societal values and the agricultural tenancy act was meant to remedy an existing social evil. Hence, all tenancy laws that followed thereafter were crafted along this line. This case is now being scrutinized and tested against the bedrock of legal and equitable safeguards to achieve a truly successful and balanced agrarian reform initiative.

For more than a quarter of a century petitioner Victor G. Valencia, a government retiree, sought justice through administrative and judicial channels to regain possession of his two (2) parcels of land which he claims to have been unjustly withheld from him by persons claiming to be tenants with the ostensible complicity of government officials implementing the agrarian reform program. In the meantime his appeal for fairness and justice was denied him through procedural infirmities. We are now asked to probe into his lonely plight with a reminder that it is our solemn duty to dispense equal justice to the rich and the poor.

We have repeatedly stressed that social justice - or any justice for that matter - is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for justice must always be served for the poor and the rich alike according to the mandate of the law.1

The property in dispute involves two (2) parcels of land situated at Barangay Linothangan, Canlaon City, Negros Oriental, covered by TCT No. H-T-137 with an area of 23.7279 hectares, and by Homestead Application No. HA-231601 with Final Proof and Tax Declaration No. 0515 with an area of 6.4397 hectares.

On 7 May 1957 Victor G. Valencia acquired the first parcel covered by TCT No. H-T-137 from a certain Bonifacio Supnet. The only tenant of the property at that time was a certain Digoy Besario who was succeeded by his son Jesus Besario. On 2 July 1961 Valencia and Jesus Besario terminated their landlord-tenant relationship through a public instrument voluntarily executed by them, thus reverting the actual physical possession of the property to petitioner Valencia.

On 22 October 1962 Valencia entered into a ten (10)-year civil law lease agreement over his two (2) parcels of land with a certain Glicerio Henson. Before the ten (10)-year lease expired, apparently without objection from Henson, Valencia leased the property for five (5) years to Fr. Andres Flores under a civil law lease concept beginning 21 August 1970 or until 30 June 1975 after which the lease was cancelled and inscribed as Entry No. 1578 in TCT No. H-T-137. The lease agreement between Valencia and Fr. Flores was subject to a prohibition against subleasing or encumbering the land without Valencia's written consent. This was admitted by the parties as reflected in the DAR Investigation Report and Recommendations.2 The prohibition against subleasing or encumbering of the land apparently included the prohibition against installing a leasehold tenant thereon. Incidentally, it may be mentioned that in the prior lease agreement with Henson no such prohibition was stipulated.

During the period of his lease, Henson instituted Crescenciano Frias and Marciano Frias to work on the property, although only Crescenciano Frias apparently remained in the land while Marciano Frias must have abandoned his cause if any, as he was not impleaded in this case; neither did he appear on record to have been issued a CLT in his name.

During the lease of Fr. Andres Flores, he designated Francisco Obang (as overseer), Rogelio Tamayo, Federico Jare, Feliciano Lobresco, Melchor Moncada, Rosendo Lobresco, Victoriano Montefalcon, Santos Gargaya, Catalino Mantac, Herodita Semillano, Ernesto Lobresco, Natividad Lobresco and Alfredo Demerin, along with Crescenciano and Marciano Frias, to cultivate the land. These farmhands shared their produce with Fr. Flores. Subsequently, Francisco Obang, Santos Gargaya, Crescenciano Frias, Federico Jare, Rosendo Lobresco, Juliano Magdayao, Ernesto Lobresco, Feliciano Lobresco, Catalino Mantac, Victoriano Montefalcon, Ambrosio Semillano, Rogelio Tamayo and Edilberto Lobresco, became recipients of CLTs and are collectively referred to herein as private respondents.

When the lease agreement between Valencia and Fr. Flores expired on 30 June 1975, Valencia demanded that private respondents vacate the premises. Instead of complying with the demand, they refused and continued cultivating the land despite the demand for them to vacate. Valencia wanted to regain possession of his

property so he could work it by administration, having in fact appointed Bernie Bautista as overseer until petitioner could retire from the government service.

In his initial step in his long and agonizing journey, Valencia filed a letter of protest with the Minister of Agrarian Reform to take back the actual possession of his property that was subject of the civil law lease agreement. On 20 March 1976 his letter was referred to the DAR Regional Office in Cebu City.

Meanwhile, without the knowledge much less consent of Valencia, private respondents applied for Certificates of Land Transfer (CLTs) under the Operation Land Transfer (OLT) Program pursuant to Presidential Decree No. 27 claiming they were bona fide tenants of the property.

On 10 December 1985, while the investigation was being conducted by the DAR pursuant to petitioner's letter of protest of 20 March 1976, but before it could be terminated, the DAR issued the questioned CLTs to private respondents. The DAR Team Office in Canlaon City pursuant to the Operation Land Transfer Program under Pres. Decree No. 27 and Letter of Instruction No. 474 identified the following persons as farmer-beneficiaries:3

NAME CLT NO. LOT NO. AREA (hectares)

A. TAX DEC. No. 0515

1. Santos Gargaya 0-071160 0111 0.3300 ha.

2. Juliano Magdayao a) 0-071161 0122 0.3350 ha.

b) 0-071163 0114 0.2550 ha.

c) 0-071166 0117 0.4825 ha.

d) 0-071175 0124 0.3140 ha.

B. TCT No. HT-137

3. Crescenciano Frias 0-071164 0115 0.8890 ha.

4. Federico Jare a) 0-71171 0120 0.4600 ha.

b) 0-71172 0121 0.2500 ha.

5. Rosendo Lobresco a) 0-071189 0135 0.2335 ha.

b) 0-071182 0129 1.0325 ha.

6. Ernesto Lobresco a) 0-071185 0132 0.8900 ha.

b) 0-71187 0133 0.8400 ha.

7. Feliciano Lobresco 0-071188 0134 0.3400 ha.

8. Catalino Mantac 0-071162 0113 0.0425 ha.

9. Victoriano Montefalcon 0-071190 0136 0.1800 ha.

10. Francisco Obang 0-071168 0118 1.200 has.

11. Ambrosio Semillano a) 0-071165 0116 0.0340 ha.

b) 0-071176 0125 0.1135 ha.

c) 0-071177 0126 0.0340 ha.

12. Rogelio Tamayo 0-071194 0139 0.3400 ha

13. Edilberto Lobresco 0-071173 0122 1.2040 has.

Total Area 10.1055 has

In view of the issuance of CLTs to private respondents, petitioner Valencia filed a second letter of protest and requested an investigation and subsequent cancellation of the CLTs.

In February 1988 petitioner Valencia and Catalino Mantac, one of private respondents, entered into a leasehold contract undertaking to have a profit-sharing agreement. No other respondent entered into any agreement or tenancy contract, whether written or verbal, with Valencia, Henson or Fr. Flores.

On 6 and 8 July 1988 an administrative investigation was conducted by the DAR Hearing Officer, Atty. Vilmo Ampong. This was done more than twelve (12) years after the initial letter of protest was filed on 20 March 1976. After an on-site investigation and inspection of the Valencia property, Atty. Ampong, in his Investigation Report and Recommendations dated 7 December 1988 found that: (a) Bernie Bautista, without any authority from protestant Valencia, obtained and/or received shares of the palay produced every harvest from private respondents starting 1975 to 1983 with his wife Hazel issuing the corresponding receipts; (b) Since the time Bautista and spouse obtained and/or received the owner's shares of the produce from private respondents not a single cavan nor its equivalent in cash was turned over or remitted to Valencia; (c) Private respondents stopped giving the landowner's shares to Bautista and his wife when they already refused to issue receipts, and so from then on private respondents appropriated to themselves all the landowner's shares; (d) While enjoying the possession, cultivation and utilization of the two (2) parcels of land, some of the private respondents sublet their farmholdings for financial considerations and turned them over to the sublessees for specified periods; 4 (e) The DAR Team Office in Canlaon City had the landholding included in the Final Survey of 1983 notwithstanding Valencia's pending protest contesting the issuance of the CLTs;5 and, (f) Sometime in February 1988 Valencia and Catalino Mantac entered into a leasehold contract over a 0.0425 hectare of the 23.7279 hectares covered by TCT No. H-T-137.6

Atty. Vilmo Ampong also found that the right of private respondents to the land ceased upon the termination of the lease contracts, except as regards respondent Catalino Mantac with whom petitioner Valencia entered into a tenancy agreement. Atty. Ampong further confirmed that Valencia did not receive anything from private respondents as consideration for tilling his land. Consequently, Atty. Ampong recommended that the CLTs issued to private respondents be cancelled and the final survey conducted on the landholding of Valencia set aside.

On 24 August 1989 the DAR Regional Office in Cebu City, in DARRO Adm. Case No. VII-117-89, notwithstanding the Investigation Report and Recommendations of its DAR Team Office, dismissed Valencia's protest and held that private respondents had the right to continue on the land until otherwise ordered by the court. 7 Valencia moved for reconsideration but on 12 July 1991 the motion was denied.

This setback of Valencia prompted him to appeal to the Office of the President under authority of DAR Memo. Circ. No. 3, series of 1994, arguing that the Secretary of Agrarian Reform8 erred in considering private respondents as tenants and in not recognizing petitioner's right of retention under R. A. No. 6657 otherwise known as The Comprehensive Agrarian Reform Law.

On 8 October 1993 Executive Secretary Teofisto Guingona, Jr., by authority of the President, affirmed the order of the DAR of 12 July 1991 subject to the modification that the area acquired by petitioner Valencia as homestead be excluded from the coverage of P. D. No. 27.

Valencia then brought his case to the Court of Appeals contending that the Executive Secretary erred in recognizing private respondents as tenants and disallowing him and his seven (7) "compulsory heirs" from exercising their right of retention under R. A. No. 6657. However, in a decision promulgated on 27 July 1995 the Court of Appeals dismissed the case on a technical ground, i.e., that his appeal was filed out of time. 9 The appellate court ruled that petitioner should have filed with it a petition for review within fifteen (15) days from receipt of the order of the DAR Secretary pursuant to Sec. 54 of R. A. No. 6657 and Supreme Court Adm. Circ. No. 1-95, instead of elevating the case to the Office of the President pursuant to DAR Memo. Circ. No. 3, series of 1994. Hence, according to the Court of Appeals, the petition of Valencia was filed out of time.

On 22 September 1995 petitioner's motion for reconsideration was denied. In its Resolution the Court of Appeals, citing Shell Philippines, Inc. v. Central Bank,10 held that in case of discrepancy between the basic law and a rule or regulation issued to implement the law, the basic law prevails because the rule or regulation cannot go beyond the terms and provisions of the basic law.11 Thus, DAR Memo. Circ. No. 3, series of 1994, according to the Court of Appeals, cannot be considered valid and effective since it runs counter to Sec. 54 of R. A. No. 6657 which provides for an appeal from any decision, order, award or ruling by the DAR to the Court of Appeals.12 Likewise, the appellate court held that the doctrine of exhaustion of administrative remedies does not apply in the present case where the respondent is a Department Secretary whose acts, as alter ego of the President, bear the implied approval of the latter.13

Valencia filed this Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision of the Court of Appeals in CA-G.R. SP No. 32669 dated 27 July 1995 as well as its Resolution denying his Motion for Reconsideration of 22 September 1995.

Petitioner contends that DAR Memo. Circ. No. 3, series of 1994, is valid not being contrary to law and jurisprudence, and should be accorded respect being the Agrarian Reform Secretary's construction of the law that his Department administers and implements.

Public respondents, on the other hand, aver that Secs. 15 and 20 of Book VII of E. O. No. 292 which are cited as the legal bases of DAR Memo. Circ. No. 3 refer to the procedure for administrative appeals from an agency to the Department Head which in this case is the DAR through its Secretary. They argue that there is no provision for appeal to the Office of the President since in the administrative structure the Secretary of Agrarian Reform is the alter ego of the President. They contend that Sec. 23 of Book VII cites the finality of the decision of the appellate agency without providing for a further appeal, and that Sec. 25 provides for judicial review from an agency decision, as they point to Sec. 54 of R. A. No. 665714 and SC Adm. Circ. No. 1-95.15

We agree with petitioner. Interpreting and harmonizing laws with laws is the best method of interpretation.Interpretare et concordare leges legibus est optimus interpretandi modus.16 This manner of construction would provide a complete, consistent and intelligible system to secure the rights of all persons affected by different legislative and quasi-legislative acts. Where two (2) rules on the same subject, or on related subjects, are apparently in conflict with each other, they are to be reconciled by construction, so far as may be, on any fair and reasonable hypothesis. Validity and legal effect should therefore be given to both, if this can be done without destroying the evident intent and meaning of the later act. Every statute should receive such a construction as will harmonize it with the pre-existing body of laws.

Harmonizing DAR Memo. Circ. No. 3, series of 1994, with SC Adm. Circ. No. 1-95 and Sec. 54 of R. A. No. 6657 would be consistent with promoting the ends of substantial justice for all parties seeking the protective mantle of the law. To reconcile and harmonize them, due consideration must be given to the purpose for which each was promulgated. The purpose of DAR Memo. Circ. No. 3, series of 1994, is to provide a mode of appeal for matters not falling within the jurisdictional ambit of the Department of Agrarian Reform Adjudication Board (DARAB) under R. A. No. 6657 and correct technical errors of the administrative agency. In such exceptional cases, the Department Secretary has established a mode of appeal from the Department of Agrarian Reform to the Office of the President as a plain, speedy, adequate and inexpensive remedy in the ordinary course of law. This would enable the Office of the President, through the Executive Secretary, to review technical matters within the expertise of the administrative machinery before judicial review can be resorted to by way of an appeal to the Court of Appeals under Rule 43 of the 1997 Rules on Civil Procedure.

On the other hand, the purpose of SC Adm. Circ. No. 1-95, now embodied in Rule 43 of the 1997 Rules of Civil Procedure, is to invoke the constitutional power of judicial review over quasi-judicial agencies, such as the Department of Agrarian Reform under R. A. No. 6657 and the Office of the President in other cases by providing for an appeal to the Court of Appeals. Section 54 of R. A. No. 6657 is consistent with SC Adm. Circ. No. 1-95 and Rule 43 in that it establishes a mode of appeal from the DARAB to the Court of Appeals.

In Angara v. Electoral Commission this Court upheld the promulgation of the rules of procedure of the Commission since they were necessary to the proper exercise of its express power to hear and decide election contests involving members of the legislature, although not specifically granted by the Constitution or statute.17 We ruled18-

x x x the creation of the Electoral Commission carried with it ex necesitate rei the power regulative in character to limit the time within which protests intrusted to its cognizance should be filed.  It is a settled rule of construction that where a general power is conferred or duty enjoined, every particular power necessary for the exercise of the one or the performance of the other is also conferred (Cooley, Constitutional Limitations, 8th ed., Vol. I, pp. 138, 139). In the absence of any further constitutional provision relating to the procedure to be followed in filing protests before the Electoral Commission, therefore, the incidental power to promulgate such rules necessary for the proper exercise of its exclusive power x x x must be deemed by necessary implication to have been lodged also in the Electoral Commission (emphasis supplied).

Thus, the power of the Department Secretary to promulgate internal rules of administrative procedure is lodged in him by necessary implication as part of his express power to "promulgate rules and regulations necessary to carry out department objectives, policies, functions, plans, programs and projects."19

Is an appeal to the Office of the President from the Department Secretary pursuant to DAR Memo. Circ. No. 3, series of 1994, proper under the doctrine of exhaustion of administrative remedies?

Petitioner contends that an appeal to the Office of the President from the Secretary of Agrarian Reform is proper under the doctrine of exhaustion of administrative remedies. On the other hand, it is the contention of public respondent, the Office of the Solicitor General, that an exception to this well-settled principle is the doctrine of qualified political agency. Where the respondent is a Department Secretary, whose acts as an alter ego of the President bear the implied or assumed approval of the latter, unless the President actually disapproves them, administrative remedies have already been exhausted. Recourse to the court may be made at that point, according to private respondents, a view that was sustained by the Court of Appeals. In this case, the appellate court ruled that the appeal before it was filed beyond the reglementary period as petitioner appealed to the Office of the President, and not to the Court of Appeals, where it should have been brought. In Tan v. Director of Forestry this Court ruled that even if the respondent was a Department Secretary, an appeal to the President was proper where the law expressly provided for exhaustion.20

As a valid exercise of the Secretary's rule-making power to issue internal rules of procedure, DAR Memo. Circ. No. 3, series of 1994, expressly provides for an appeal to the Office of the President. Thus, petitioner Valencia filed on 24 November 1993 a timely appeal by way of a petition for review under Rule 43 to the Court of Appeals from the decision of the Office of the President, which was received on 11 November 1993, well within the fifteen (15)-day reglementary period.

An administrative decision must first be appealed to administrative superiors up to the highest level before it may be elevated to a court of justice for review. The power of judicial review may therefore be exercised only if an appeal is first made by the highest administrative body in the hierarchy of the executive branch of government.

In Calo v. Fuertes this Court held that an administrative appeal to the President was the final step in the administrative process and thus a condition precedent to a judicial appeal. 21 Hence, an appeal to the Office of the President from the decision of the Department Secretary in an administrative case is the last step that an aggrieved party should take in the administrative hierarchy, as it is a plain, speedy and adequate remedy available to the petitioner.

Indeed, certain procedural technicalities have beclouded this case from the outset such that the substantive issue regarding the true nature of the relationship between petitioner and private respondents was not addressed by the Court of Appeals, hence, the raison d'être of the case. It must necessarily be discussed if this Court were to resolve with finality the protracted conflict that has lasted over twenty-five (25) years. We are resolving the question at this point to bring this case once and for all to a just, fair and equitable conclusion. Where there are clear errors of law this Court must exercise its constitutional power of judicial review to correct such errors.

The substantive issue to be resolved may be expressed in this manner: Can a contract of civil law lease prohibit a civil law lessee from employing a tenant on the land subject matter of the lease agreement? Otherwise stated, can petitioner's civil law lessee, Fr. Flores, install tenants on the subject premises without express authority to do so under Art. 1649 of the Civil Code, more so when the lessee is expressly prohibited from doing so, as in the instant case?

Contrary to the impression of private respondents, Sec. 6 of R. A. No. 3844, as amended, does not automatically authorize a civil law lessee to employ a tenant without the consent of the landowner. The lessee must be so specifically authorized. For the right to hire a tenant is basically a  personal right of a landowner, except as may be provided by law. But certainly nowhere in Sec. 6 does it say that a civil law lessee of a landholding is automatically authorized to install a tenant thereon. A different interpretation would create a perverse and absurd situation where a person who wants to be a tenant, and taking advantage of this perceived ambiguity in the law, asks a third person to become a civil law lessee of the landowner. Incredibly, this tenant would technically have a better right over the property than the landowner himself. This tenant would then gain security of tenure, and eventually become owner of the land by operation of law. This is most unfair to the hapless and unsuspecting landowner who entered into a civil law lease agreement in good faith only to realize later on that he can no longer regain possession of his property due to the installation of a tenant by the civil law lessee.

On the other hand, under the express provision of Art. 1649 of the Civil Code, the lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary. In the case before us, not only is there no stipulation to the contrary; the lessee is expressly prohibited from subleasing or encumbering the land, which includes installing a leasehold tenant thereon since the right to do so is an attribute of ownership. Plainly stated therefore, a contract of civil law lease can prohibit a civil law lessee from employing a tenant on the land subject matter of the lease agreement. An extensive and correct discussion of the statutory

interpretation of Sec. 6 of R. A. No. 3844, as amended, is provided by the minority view in Bernas v. Court of Appeals.22

When Sec. 6 provides that the agricultural leasehold relations shall be limited to the person who furnishes the landholding, either as owner, civil law lessee, usufructuary, or legal possessor, and the person who personally cultivates the same, it assumes that there is already an existing agricultural leasehold relation, i.e., a tenant or agricultural lessee already works the land. The epigraph of Sec. 6 merely states who are "Parties to Agricultural Leasehold Relations," which assumes that there is already a leasehold tenant on the land; not until then. This is precisely what we are still asked to determine in the instant proceedings.

To better understand Sec. 6, let us refer to its precursor, Sec. 8 of R. A. No. 1199, as amended.23 Again, Sec. 8 of R. A. No. 1199 assumes the existence of a tenancy relation. As its epigraph suggests, it is a " Limitation of Relation," and the purpose is merely to limit the tenancy "to the person who furnishes the land, either as owner, lessee, usufructuary, or legal possessor, and to the person who actually works the land himself with the aid of labor available from within his immediate farm household." Once the tenancy relation is established, the parties to that relation are limited to the persons therein stated. Obviously, inherent in the right of landholders to install a tenant is their authority to do so; otherwise, without such authority, civil law lessees as landholders cannot install a tenant on the landholding. Neither Sec. 6 of R. A. No. 3844 nor Sec. 8 of R. A. No. 1199 automatically authorizes the persons named therein to employ a tenant on the landholding.

According to Mr. Justice Guillermo S. Santos and CAR Executive Judge Artemio C. Macalino, respected authorities on agrarian reform, the reason for Sec. 6 of R. A. No. 3844 and Sec. 8 of R. A. No. 1199 in limiting the relationship to the lessee and the lessor is to "discourage absenteeism on the part of the lessor and the custom of co-tenancy" under which "the tenant (lessee) employs another to do the farm work for him, although it is he with whom the landholder (lessor) deals directly. Thus, under this practice, the one who actually works the land gets the short end of the bargain, for the nominal or 'capitalist' lessee hugs for himself a major portion of the harvest."24 This breeds exploitation, discontent and confusion x x x x The kasugpong, kasapi, or katulong also works at the pleasure of the nominal tenant.25 When the new law, therefore, limited tenancy relation to the landholder and the person who actually works the land himself with the aid of labor available from within his immediate farm household, it eliminated the nominal tenant or middleman from the picture.26

Another noted authority on land reform, Dean Jeremias U. Montemayor,27 explains the rationale for Sec. 8 of R. A. No. 1199, the precursor of Sec. 6 of R. A. No. 3844:

Since the law establishes a special relationship in tenancy with important consequences, it properly pinpoints the persons to whom said relationship shall apply. The spirit of the law is to prevent both landholder absenteeism and tenant absenteeism. Thus, it would seem that the discretionary powers and important duties of the landholder, like the choice of crop or seed, cannot be left to the will or capacity of an agent or overseer, just as the cultivation of the land cannot be entrusted by the tenant to some other people. Tenancy relationship has been held to be of a personal character.28

Section 6 as already stated simply enumerates who are the parties to an existing contract of agricultural tenancy, which presupposes that a tenancy already exists. It does not state that those who furnish the landholding, i.e., either as owner, civil law lessee, usufructuary, or legal possessor, are automatically authorized to employ a tenant on the landholding. The reason is obvious. The civil lease agreement may be restrictive. Even the owner himself may not be free to install a tenant, as when his ownership or possession is encumbered or is subject to a lien or condition that he should not employ a tenant thereon. This contemplates a situation where the property may be intended for some other specific purpose allowed by law, such as, its conversion into an industrial estate or a residential subdivision.

Under Lastimoza v. Blanco,29 private respondents in that case could not be lawful tenants of the landowner for the reason that the civil law lessees, after failing to return the landholding to the landowner, already became deforciants. A deforciant cannot install a lawful tenant who is entitled to security of tenure.

Attention may be invited to settled jurisprudence that the existence of an agricultural leasehold relationship is not terminated by changes of ownership in case of sale, or transfer of legal possession as in lease.30 This, again, assumes that tenancy already exists. In the case at bar, no such relationship was ever created between the civil law lessees and private respondents, and subsequently, between Valencia and private respondents except Catalino Mantac. With respect to the lease agreement between Valencia and Fr. Flores, the lessee did not have any authority to sublease Valencia's property due to the prohibition in their lease agreement. It is likewise in clear and unambiguous terms that the lease agreement was only for a limited duration with no extension.31

In Ponce v. Guevarra32 and Joya v. Pareja33 the agricultural leasehold relations were preserved because the "legal possessors therein were clearly clothed with legal authority or capacity to install tenants." But even assuming that they were not so authorized as in the Ponce case where the civil law lessee was expressly barred from installing a tenant under their contract of lease, the subsequent actions of the landowners in extending the lifetime of the lease, or in negotiating for better terms with the tenants, placed the landowners in estoppel to contest the agricultural leasehold relations. Consequently, the tenants in those cases may be categorized as tenants de jure enjoying tenurial security guaranteed by the Agricultural Tenancy Law, now by the Agricultural Land Reform Code, as amended. This is not the case before us.

It must be noted that Valencia never extended the term of the civil law lease, nor did he negotiate with respondents for "better terms" upon the expiration of the lease. He wanted precisely to recover possession of the property upon the expiration of the contract on 30 June 1975, except from Mantac with whom he already entered into a tenancy contract as herein before stated. Valencia appointed an overseer to prepare for his eventual takeover and to cultivate the property through labor administration after his long years in the government service. Verily, the intention of Valencia after the expiration of the lease contract was for him to cultivate the land by administration, or by himself, and not to surrender possession, much less ownership, to the private respondents.

There may be apprehensions that should Sec. 6 of R. A. No. 3844 be construed as not to vest the civil law lessee or legal possessor with automatic authority to install tenants, it would in effect open the floodgates to their ejectment on the mere pretext that the civil law lessee or legal possessor was not so authorized by the landowner.

This is more imagined than real. In the very recent case of Ganzon v. Court of Appeals, decided 30 July 2002, this Court resolved the issue of whether the private respondents should be considered agricultural tenants of the petitioner.34 The Court ruled that the respondents were not instituted as agricultural lessees but as civil law lessees of the land. This was evident from the contract of lease executed by the parties. The respondents were neither "impliedly" instituted as tenants nor designated as agricultural lessees by reason alone of the acquiescence by petitioner to the continued possession of the property.

The Department of Agrarian Reform in Ganzon made the factual determination that the agreement entered into between Florisco Banhaw (one of the respondents) and Carolina L. Ganzon (petitioner) was a civil law lease. However, there was no evidence to prove that the other defendants in that case allegedly instituted as tenants were sharing or paying rentals to Florisco Banhaw or to the landowner. The DAR held that mere allegation without the corresponding receipts would not sufficiently establish a tenancy relationship especially since there was an express prohibition in the civil law lease contract from subleasing the subject land to any other person.35

From the foregoing discussion, it is reasonable to conclude that a civil law lessee cannot automatically institutetenants on the property under to Sec. 6 of R. A. No. 3844. The correct view that must necessarily be adopted is that the civil law lessee, although a legal possessor, may not install tenants on the property unless expressly authorized by the lessor. And if a prohibition exists or is stipulated in the contract of lease the occupants of the property are merely civil law sublessees whose rights terminate upon the expiration of the civil law lease agreement.

In the present case, the Decision of the Secretary of Agrarian Reform, as modified by the Office of the President through the Executive Secretary, held that private respondents were deemed leasehold tenants. They anchored their proposition on Sec. 6 of R. A. No. 3844, as amended, otherwise known as The Agricultural Land Reform Code, which states that since the civil law lessees had a valid contract with Valencia, the sublessees wereautomatically deemed his tenants by operation of law.

This conclusion espoused by the Secretary of Agrarian Reform is arbitrary and unfounded. The following essential requisites must concur in order to establish a tenancy relationship:36 (a) the parties being landowner and tenant; (b) the subject matter is agricultural land; (c) there is consent by the landowner; (d) the purpose is agricultural production; (e) there is personal cultivation by the tenant; and, (f) there is sharing of harvests between the parties. An allegation that an agricultural tenant tilled the land in question does not make the case an agrarian dispute.37Claims that one is a tenant do not automatically give rise to security of tenure. The elements of tenancy must first be proved in order to entitle the claimant to security of tenure.38

A tenancy relationship cannot be presumed. There must be evidence to prove this allegation. Hence, a perusal of the records and documents is in order to determine whether there is substantial evidence to prove the allegation that a tenancy relationship does exist between petitioner and private respondents.

The principal factor in determining whether a tenancy relationship exists is intent. Tenancy is not a purely factual relationship dependent on what the alleged tenant does upon the land. It is also a legal relationship. The intent of the parties, the understanding when the farmer is installed, and their written agreements, provided these are complied with and are not contrary to law, are even more important.39

In Caballes v. DAR40 the Court held that all these requisites must concur in order to create a tenancy relationship. The absence of one does not make an occupant or a cultivator thereof or a planter thereon a de jure tenant. This is so because unless a person has established his status as a de jure tenant he is not entitled to security of tenure nor is he covered by the Land Reform Program of the Government under existing tenancy laws.41

The security of tenure guaranteed by our tenancy laws may be invoked only by tenants de jure, not by those who are not true and lawful tenants.42

In Berenguer, Jr. v. Court of Appeals this Court ruled that the respondents' self-serving statements regarding their tenancy relations could not establish the claimed relationship.43 The fact alone of working on another's landholding does not raise a presumption of the existence of agricultural tenancy.44 Substantial evidence does not only entail the presence of a mere scintilla of evidence in order that the fact of sharing can be established; there must be concrete evidence on record adequate enough to prove the element of sharing. 45 Bejasa v. Court of Appeals similarly ruled that to prove sharing of harvests, a receipt or any other evidence must be presented as self-serving statements are deemed inadequate.46

In the present case, it is not disputed that the relationship between Valencia and Henson, and subsequently, Valencia and Fr. Flores, partook of a civil law lease. Henson and later Fr. Flores were not instituted as agricultural lessees but as civil law lessees. As a finding of fact, the Secretary of Agrarian Reform held that  a written civil law lease contract between Valencia and Fr. Flores was on file which contained in clear and precise terms the stipulation prohibiting the subleasing or encumbering of his parcels of land without the written consent of Valencia.47 The Secretary even went as far as stating for the record that such stipulation barring the subletting of the property was violated by Fr. Flores when he subleased the subject parcels of land to private respondents.48

The findings of fact by the DAR Hearing Officer, Atty. Ampong, in his Investigation Report and Recommendationsdated 7 December 1988 concerning the admission by private respondents that they never turned over the rentals or harvests to Valencia and, instead, to his overseer who was not authorized to receive any payments, must be deemed conclusive.49

As to the civil law lease between Valencia and Fr. Flores, the prohibition against subletting the property without the written consent of Valencia must be upheld. Thus, there is no tenurial security for private respondents designated by the civil law lessee, except for the oft-mentioned Catalino Mantac.

Furthermore, it must be noted that private respondents Ernesto Lobresco and Francisco Obang sublet the land to third persons. Even assuming arguendo then that they were tenants, although installed without authority, the act of subletting to third persons extinguished the agricultural leasehold relations of Ernesto Lobresco and Francisco Obang as it constituted an abandonment of the landholding due to absence of personal cultivation.

Since private respondents with the exception of Catalino Mantac cannot be deemed tenants in contemplation of law, they are therefore not entitled to Certificates of Land Transfer (CLTs) under the Operation Land Transfer (OLT) Program pursuant to Pres. Decree No. 27 and L.O.I. No. 474. All other persons found in the land in question are considered unlawful occupants of the property unless otherwise authorized by the landowner to possess the same in a lawful capacity.

Even as we uphold time and again the existence and validity of implied agricultural tenancy agreements, we encourage the forging of written documents to prevent ambiguity as to the terms set by both parties and for them to express their intent in clear language. This would minimize and even prevent the "shotgun approach" to tenancy relations imposed by some officials of the Government without complying with the essential requisites of tenancy as provided by law. Agreements must be entered freely and voluntarily by the parties concerned without the influence of third parties, much less the Government, making representations for either side. An express tenancy agreement would facilitate the aims of the agricultural tenancy laws and promote social justice for both landowner and tenant.

With respect to the retention limits of land ownership by Valencia and his "direct descendants," the Comprehensive Agrarian Reform Law allows landowners whose lands have been covered by Pres. Decree No. 27 to keep the area originally retained by them provided the original homestead grantees who still own the original homestead at the time of the approval of Rep. Act No. 6657 shall retain the same areas as long as they continue to cultivate the homestead.50 The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the landowner, as a general rule.51 However, the factual determination of whether Valencia and his "direct descendants" have complied with Sec. 6 of Rep. Act No. 6657 should be addressed by the Department of Agrarian Reform. Ascertaining if petitioner and his "direct descendants" are within the seven (7)-hectare retention limit provided by Pres. Decree No. 27 requires the technical expertise of the administrative agency concerned.

It is appalling to note that it took over twelve (12) years for the Agrarian Reform Team 202 of the Canlaon City Office of the DAR to act on a simple matter calling for a preliminary determination of tenancy status, in spite of a telegram sent on 30 March 1976 by the Secretary of Agrarian Reform directing the Team Leader of A.R.T. 202 to investigate and submit a report on the landholding of petitioner Valencia.52 This is truly a travesty of great magnitude and a clear-cut case of undue delay and administrative injustice, for the rights of the landowner must equally be protected just as passionately as the rights of the tenant-tiller, especially so that in the meantime he has been deprived of the actual possession of his property which he envisioned to cultivate himself after retiring from the government service; worse, he was not paid his landholder's shares in the harvests, and there is no telling when, if ever, he will ever be paid by private respondents who claim to be his "tenants."

Executive or administrative justice must always be dispensed with an even hand, regardless of a person's economic station in life.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 32669 dated 27 July 1995 and its Resolution dated 22 September 1995 denying the Motion for Reconsideration are REVERSED and SET ASIDE, and a new one is entered as follows:

1. The area acquired by petitioner Victor G. Valencia under his Homestead Application No. HA-231601 with Final Proof and Tax Declaration No. 0515 is EXCLUDED from the coverage of Pres. Decree No. 27, hence, must be retained by him;

2. The Certificates of Land Transfer (CLTs) issued to private respondents Santos Gargaya (CLT No. 0-071160), Juliano Magdayao (CLTs Nos. 0-071161, 0-071163, 0-071166 & 0-071175), Crescenciano Frias (CLT No. 0-071164), Federico Jare (CLTs Nos. 0-071171 & 0-071172), Rosendo Lobresco (CLTs Nos. 0-071189 & 0-071182), Ernesto Lobresco (CLTs Nos. 0-071185 & 0-071187), Feliciano Lobresco (CLT No. 0-071188), Victoriano Montefalcon (CLT No. 0-071190), Francisco Obang (CLT No. 0-071168), Ambrosio Semillano (CLTs Nos. 0-071165, 0-071176 & 0-071177), Rogelio Tamayo (CLT No. 0-071194) and Edilberto Lobresco (CLT No. 0-071173) are CANCELLED and NULLIFIED for having been issued without factual and legal basis;

3. The agricultural leasehold of respondent Catalino Mantac (CLT No. 0-071162) covering an area of 0.0425 hectare subject of tenancy agreement with petitioner Victor G. Valencia is maintained and respected;

4. All unlawful occupants of the property under TCT No. H-T-137 and Homestead Application No. HA-231601 with Final Proof, and Tax Declaration No. 0515 including but not limited to the private respondents mentioned in par. 2 hereof are ORDERED to IMMEDIATELY VACATE and RETURN peacefully to the lawful owner, petitioner Victor G. Valencia, the parcels of land respectively possessed or occupied by them.

No pronouncement as to costs.

SO ORDERED

DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD (DARAB) of the DEPARTMENT OF AGRARIAN REFORM (DAR), REPRESENTED by DAR SECRETARY ROBERTO M. PAGDANGANAN, petitioner, vs. JOSEFINA S. LUBRICA, in her capacity as Assignee of the rights and interest of FEDERICO SUNTAY, respondent.

D E C I S I O N

TINGA, J.:

Before this Court is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure, seeking the reversal of the Decision[1] of the Court of Appeals in CA-G.R. SP No. 66710 granting herein respondent’s petition for prohibition and its Resolution[2] denying herein petitioner’s motion for reconsideration.

This Court adopts the appellate court’s narration of facts.

On August 4, 2000, Federico Suntay, now deceased, filed a petition for fixing and payment of just compensation under Presidential Decree No. 27 against the Department of Agrarian Reform (“DAR”), the DAR Regional Director for Region IV and the Land Bank of the Philippines (“Land Bank”). [3] Docketed as DARAB Case No. V-0405-0001-00, the case was filed before the Office of the Regional Agrarian Reform Adjudicator (“RARAD”) and raffled to Adjudicator Conchita Miñas. Subject of the case was Suntay’s landholdings covering a total area of 948.1911 hectares situated in Sablayan, Occidental Mindoro and embraced under Transfer Certificate of Title T-31. The DAR and Land Bank determined its value at Four Million Two Hundred Fifty-One Thousand One Hundred Forty-One Pesos and 68/100 (P4,251,141.68) or Four Thousand Four Hundred Ninety-Seven Pesos and 50/100 (P4,497.50) per hectare, which valuation according to Suntay, was unconscionably low and tantamount to taking of property without due process of law.[4]

After summary administrative proceedings, the RARAD rendered a Decision[5] on January 24, 2001 in favor of Suntay, ordering Land Bank to pay the former the amount of One Hundred Fifty-Seven Million Five Hundred Forty-One Thousand Nine Hundred Fifty-One Pesos & 30/100 (P157,541,951.30) as just compensation for the taking of a total of 948.1911 hectares of Suntay’s properties. Land Bank sought reconsideration of the RARAD decision for not being supported by clear and convincing evidence and for its conclusions which are contrary to law. However, in anOrder[6] dated March 14, 2001, the RARAD denied Land Bank’s motion. Land Bank received a copy of the order of denial on March 26, 2001.[7]

On April 20, 2001, Land Bank filed a petition for just compensation [8] with the Regional Trial Court (RTC) of San Jose, Occidental Mindoro against Suntay, DAR, and RARAD. The petition, docketed as Agrarian Case No. R-1241, prayed that just compensation for the taking of Suntay’s landholdings be declared in the amount of Four Million Two Hundred Fifty One Thousand, One Hundred Forty-One Pesos (P4,251,141.00). Suntay moved to dismiss the petition on the grounds of lack of capacity to sue, lack of cause of action, and res judicata. After Land Bank filed its comment on Suntay’s motion to dismiss, the RTC, sitting as a special agrarian court, dismissed on August 6, 2001 Land Bank’s petition for failure to pay the docket fees within the reglementary period.[9] The special agrarian court also denied Land Bank’s Motion for Reconsideration for being pro-forma.[10] Thereafter, Land Bank appealed the order of dismissal to the Court of Appeals by filing a Notice of Appeal with the special agrarian court.[11]

While the petition for just compensation was pending with the special agrarian court, upon motion of Suntay, the RARAD issued an Order[12] on May 22, 2001, declaring its January 24, 2001Decision as final and executory after noting that Land Bank’s petition for just compensation with the special agrarian court was filed beyond the fifteen-day reglementary period in violation of Section 11, Rule XIII of the DARAB Rules of Procedure.[13] In its July 10, 2001 Order,[14] the RARAD denied LBP’s motion for reconsideration of the order of finality. On July 18, 2001, the RARAD issued a Writ of Execution,[15] directing the Regional Sheriff of DARAB-Region IV to implement its January 24, 2001 Decision.

Thus, Land Bank filed a Petition for Certiorari with Prayer for the Issuance of Temporary Restraining Order/Preliminary Injunction[16] before the DARAB on September 12, 2001 against Suntay and RARAD. The petition, docketed as DSCA No. 0252, prayed for the nullification of the following issuances of the RARAD: [1] the January 24, 2001 Decision directing Land Bank to pay Suntay just compensation in the amount of P157,541,951.30; [2] the Order dated May 22, 2001 declaring the finality of the aforesaid Decision; [3] the July 10, 2001 Order denying Land Bank’s motion for reconsideration; and [4] the Writ of Execution dated July 18, 2001. On September 12, 2001, the DARAB issued an Order[17] enjoining the RARAD from momentarily implementing its January 24, 2001 Decision and directing the parties to attend the hearing for the purpose of determining the propriety of issuing a preliminary/permanent injunction.

On September 20, 2001, Josefina Lubrica, the successor-in-interest of Suntay, filed with the Court of Appeals a Petition for Prohibition,[18] docketed as CA-G.R. SP No. 66710. The petition, impleading DARAB and Land Bank as respondents, sought to enjoin DARAB from further proceeding with DSCA No. 0252, mainly on the theory that Republic Act (R.A.) No. 6657, which confers adjudicatory functions upon the DAR, does not grant DAR jurisdiction over special civil actions for certiorari. On the same day, the Court of Appeals granted Lubrica’s prayer for a temporary restraining order.[19] This notwithstanding, DARAB issued a Writ of Preliminary Injunction[20] on October 3, 2001, directing RARAD not to implement its January 24, 2001 Decision and the other orders in relation thereto, including the Writ of Execution.

On October 8, 2001, DARAB filed a Comment[21] in CA-G.R. SP No. 66710, arguing that the writ of certiorari/injunction was issued under its power of supervision over its subordinates/delegates like the PARADs and RARADs to restrain the execution of a decision which had not yet attained finality. In an omnibus motion

filed on October 10, 2001, Lubrica sought to nullify the Writ of Preliminary Injunction issued by DARAB in DSCA No. 0252 and to cite the DARAB for contempt. [22] Land Bank also filed its Comment[23] on October 15, 2001, raising the prematurity of Lubrica’s petition for prohibition. It contended that the issue of whether or not DARAB can take cognizance of Land Bank’s petition for certiorari may be elevated to the Office of the DAR Secretary, in accordance with the doctrine of exhaustion of administrative remedies. Land Bank also questioned Lubrica’s personality to file the petition for prohibition considering that she never intervened in the proceedings before the RARAD.

The Court of Appeals rendered the assailed Decision[24] on August 22, 2002. The appellate court ruled that petitioner DARAB had no personality to file a comment on Lubrica’s petition for prohibition filed with the Court of Appeals because DARAB was a mere formal party and could file a comment only when specifically and expressly directed to do so. The appellate court also ruled that DARAB’s exercise of jurisdiction over the petition for certiorari had no constitutional or statutory basis. It rejected DARAB’s contention that the issuance of the writ of certiorari arose from its power of direct and functional supervision over the RARAD. In sum, the Court of Appeals declared that DARAB was without jurisdiction to take cognizance of DSCA No. 0252 and issued a Writ of Prohibition, perpetually enjoining DARAB from proceeding with DSCA No. 0252 and ordering its dismissal.

Hence, the instant petition, in which DARAB assigns the following errors to the Court of Appeals:

The Honorable Court of Appeals erred when it ruled:

1.       THAT THE PETITIONER (DARAB), BEING A FORMAL PARTY, SHOULD NOT HAVE FILED COMMENT TO THE PETITION AND INSTEAD, IT SHOULD HAVE BEEN CO-RESPONDENT LAND BANK, THE FINANCIAL INTERMEDIARY OF CARP;

2.       THAT PETITIONER HAS NO JURISDICTION OVER DSCA 0252 WHICH IS A PETITION FOR CERTIORARI; AND

3.       THAT WRIT OF PRELIMINARY INJUNCTION ISSUED BY DARAB IN DSCA 0252 WAS NULL AND VOID FOR HAVING BEEN ISSUED IN VIOLATION OF THE TEMPORARY RESTRAINING ORDER IT ISSUED.[25]

This Court affirms the ruling of the Court of Appeals that the DARAB does not have jurisdiction over Land Bank’s petition for certiorari.

Jurisdiction, or the legal power to hear and determine a cause or causes of action, must exist as a matter of law.[26] It is settled that the authority to issue writs of certiorari, prohibition, andmandamus involves the exercise of original jurisdiction which must be expressly conferred by the Constitution or by law. [27] It is never derived by implication. Indeed, while the power to issue the writ of certiorari is in some instance conferred on all courts by constitutional or statutory provisions, ordinarily, the particular courts which have such power are expressly designated.[28]

Pursuant to Section 17 of Executive Order (E.O.) No. 229 and Section 13 of E.O. No. 129-A, the DARAB was created to act as the quasi-judicial arm of the DAR. With the passage of R.A. No. 6657, the adjudicatory powers and functions of the DAR were further delineated when, under Section 50 thereof, it was vested with the primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving the implementation of agrarian reform except those falling under the exclusive jurisdiction of the Department of Agriculture, Department of Environment and Natural Resources and the Special Agrarian Courts. The same provision granted the DAR the power to summon witnesses, administer oaths, take testimony, require submission of reports, compel the production of books and documents and answers to interrogatories and issue subpoena and subpoena duces tecum, and enforce its writs through sheriffs or other duly deputized officers, and the broad power to adopt a uniform rule of procedure to achieve a just, expeditious and inexpensive determination of cases before it.[29]Section 13 of E.O. No. 129-A also authorized the DAR to delegate its adjudicatory powers and functions to its regional offices.

To this end, the DARAB adopted its Rules of Procedure, where it delegated to the RARADs and PARADs the authority “to hear, determine and adjudicate all agrarian cases and disputes, and incidents in connection therewith, arising within their assigned territorial jurisdiction.”[30] In the absence of a specific statutory grant of jurisdiction to issue the said extraordinary writ of certiorari, the DARAB, as a quasi-judicial body with only limited jurisdiction, cannot exercise jurisdiction over Land Bank’s petition for certiorari. Neither the quasi-judicial authority of the DARAB nor its rule-making power justifies such self-conferment of authority.

In general, the quantum of judicial or quasi-judicial powers which an administrative agency may exercise is defined in the enabling act of such agency. In other words, the extent to which an administrative entity may exercise such powers depends largely, if not wholly, on the provisions of the statute creating or empowering such agency.[31] The grant of original jurisdiction on a quasi-judicial agency is not implied. There is no question

that the legislative grant of adjudicatory powers upon the DAR, as in all other quasi-judicial agencies, bodies and tribunals, is in the nature of a limited and special jurisdiction, that is, the authority to hear and determine a class of cases within the DAR’s competence and field of expertise. In conferring adjudicatory powers and functions on the DAR, the legislature could not have intended to create a regular court of justice out of the DARAB, equipped with all the vast powers inherent in the exercise of its jurisdiction. The DARAB is only a quasi-judicial body, whose limited jurisdiction does not include authority over petitions for certiorari, in the absence of an express grant in R.A. No. 6657, E.O. No. 229 and E.O. No. 129-A.

In addition, Rule XIII, §11 of the DARAB Rules of Procedure allows a party who does not agree with the RARAD’s preliminary valuation in land compensation cases fifteen (15) days from receipt of notice to bring the matter to the proper special agrarian court, thus:

SECTION 11. Land Valuation and Preliminary Determination and Payment of Just Compensation. The decision of the Adjudicator on land valuation and preliminary determination and payment of just compensation shall not be appealable to the Board but shall be brought directly to the Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration.

In Philippine Veterans Bank vs. Court of Appeals,[32] this Court affirmed the dismissal of a landowner’s petition for judicial determination of just compensation for its failure to file the petition within the fifteen-day reglementary period provided under Rule XIII, §11 of the DARAB Rules of Procedure.

In the instant case, Land Bank received a copy of the RARAD order denying its motion for reconsideration on March 26, 2001. Land Bank filed the petition for just compensation with the special agrarian court only on April 20, 2001, which is doubtlessly beyond the fifteen-day reglementary period. Thus, the RARAD Decision had already attained finality in accordance with the afore-quoted rule, notwithstanding Land Bank’s recourse to the special agrarian court.

DARAB takes exception to the general rule that jurisdiction over special civil actions must be expressly conferred by law before a court or tribunal can take cognizance thereof. It believes that this principle is applicable only in cases where the officials/entities contemplated to be subject thereof are not within the administrative power/competence, or in any manner under the control or supervision, of the issuing authority.

This Court is not persuaded. The function of a writ of certiorari is to keep an inferior court within the bounds of its jurisdiction or to prevent it from committing such a grave abuse of discretion amounting to excess of jurisdiction.[33] In the instant case, the RARAD issued the order of finality and the writ of execution upon the belief that its decision had become final and executory, as authorized under Section 1, Rule XII of the DARAB Rules of Procedure. It is worth noting that in its petition, DARAB maintains that in preventing the RARAD from implementing its decision, it merely “exercised its residual power of supervision, to insure that the RARAD acted within the bounds of delegated authority and/or prevent/avoid her from committing grave and serious disservice to the Program.”[34] DARAB’s action, therefore, is a rectification of what it perceived as an abuse of the RARAD’s jurisdiction. By its own admission, DARAB took upon itself the power to correct errors of jurisdiction which is ordinarily lodged with the regular courts by virtue of express constitutional grant or legislative enactments.

This Court recognizes the supervisory authority of the DARAB over its delegates, namely, the RARADs and PARADs, but the same should be exercised within the context of administrative supervision and/or control. In the event that the RARADs or PARADs act beyond its adjudicatory functions, nothing prevents the aggrieved party from availing of the extraordinary remedy of certiorari, which is ordinarily within the jurisdiction of the regular courts.

That the statutes allowed the DARAB to adopt its own rules of procedure does not permit it with unbridled discretion to grant itself jurisdiction ordinarily conferred only by the Constitution or by law. Procedure, as distinguished from jurisdiction, is the means by which the power or authority of a court to hear and decide a class of cases is put into action. Rules of procedure are remedial in nature and not substantive. They cover only rules on pleadings and practice.[35]

While the Court of Appeals held that the DARAB should not have participated in the proceedings before said court by filing a comment in CA-G.R. SP No. 66710, this Court considers satisfactory the explanation of the DARAB that it has a peculiar interest in the final outcome of this case. As DARAB pointed out, while it is only an adjunct of, it is at the same time not totally independent from it. The DARAB is composed of the senior officials of the DAR, who are guided by the State’s main policy in agrarian reform when resolving disputes before the DARAB. The DARAB’s interest in the case is not purely legal but also a matter of governance; thus, it cannot be strictly considered as a nominal party which must refrain from taking an active part in the proceedings.

WHEREFORE, the instant petition is DENIED. No costs.

SO ORDERED.

ARSENIO PASCUAL, JR., petitioner-appellee, vs.BOARD OF MEDICAL EXAMINERS, respondent-appellant, SALVADOR GATBONTON and ENRIQUETA GATBONTON, intervenors-appellants.

Conrado B. Enriquez for petitioner-appellee.Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and Solicitor Pedro A. Ramirez for respondent-appellant.Bausa, Ampil and Suarez for intervenors-appellants.

FERNANDO, J.:

The broad, all-embracing sweep of the self-incrimination clause,1 whenever appropriately invoked, has been accorded due recognition by this Court ever since the adoption of the Constitution.2 Bermudez v. Castillo,3decided in 1937, was quite categorical. As we there stated: "This Court is of the opinion that in order that the constitutional provision under consideration may prove to be a real protection and not a dead letter, it must be given a liberal and broad interpretation favorable to the person invoking it." As phrased by Justice Laurel in his concurring opinion: "The provision, as doubtless it was designed, would be construed with the utmost liberality in favor of the right of the individual intended to be served." 4

Even more relevant, considering the precise point at issue, is the recent case of Cabal v. Kapunan,5where it was held that a respondent in an administrative proceeding under the Anti-Graft Law  6 cannot be required to take the witness stand at the instance of the complainant. So it must be in this case, where petitioner was sustained by the lower court in his plea that he could not be compelled to be the first witness of the complainants, he being the party proceeded against in an administrative charge for malpractice. That was a correct decision; we affirm it on appeal.

Arsenio Pascual, Jr., petitioner-appellee, filed on February 1, 1965 with the Court of First Instance of Manila an action for prohibition with prayer for preliminary injunction against the Board of Medical Examiners, now respondent-appellant. It was alleged therein that at the initial hearing of an administrative case 7 for alleged immorality, counsel for complainants announced that he would present as his first witness herein petitioner-appellee, who was the respondent in such malpractice charge. Thereupon, petitioner-appellee, through counsel, made of record his objection, relying on the constitutional right to be exempt from being a witness against himself. Respondent-appellant, the Board of Examiners, took note of such a plea, at the same time stating that at the next scheduled hearing, on February 12, 1965, petitioner-appellee would be called upon to testify as such witness, unless in the meantime he could secure a restraining order from a competent authority.

Petitioner-appellee then alleged that in thus ruling to compel him to take the witness stand, the Board of Examiners was guilty, at the very least, of grave abuse of discretion for failure to respect the constitutional right against self-incrimination, the administrative proceeding against him, which could result in forfeiture or loss of a privilege, being quasi-criminal in character. With his assertion that he was entitled to the relief demanded consisting of perpetually restraining the respondent Board from compelling him to testify as witness for his adversary and his readiness or his willingness to put a bond, he prayed for a writ of preliminary injunction and after a hearing or trial, for a writ of prohibition.

On February 9, 1965, the lower court ordered that a writ of preliminary injunction issue against the respondent Board commanding it to refrain from hearing or further proceeding with such an administrative case, to await the judicial disposition of the matter upon petitioner-appellee posting a bond in the amount of P500.00.

The answer of respondent Board, while admitting the facts stressed that it could call petitioner-appellee to the witness stand and interrogate him, the right against self-incrimination being available only when a question calling for an incriminating answer is asked of a witness. It further elaborated the matter in the affirmative defenses interposed, stating that petitioner-appellee's remedy is to object once he is in the witness stand, for respondent "a plain, speedy and adequate remedy in the ordinary course of law," precluding the issuance of the relief sought. Respondent Board, therefore, denied that it acted with grave abuse of discretion.

There was a motion for intervention by Salvador Gatbonton and Enriqueta Gatbonton, the complainants in the administrative case for malpractice against petitioner-appellee, asking that they be allowed to file an answer as intervenors. Such a motion was granted and an answer in intervention was duly filed by them on March 23, 1965 sustaining the power of respondent Board, which for them is limited to compelling the witness to take the

stand, to be distinguished, in their opinion, from the power to compel a witness to incriminate himself. They likewise alleged that the right against self-incrimination cannot be availed of in an administrative hearing.

A decision was rendered by the lower court on August 2, 1965, finding the claim of petitioner-appellee to be well-founded and prohibiting respondent Board "from compelling the petitioner to act and testify as a witness for the complainant in said investigation without his consent and against himself." Hence this appeal both by respondent Board and intervenors, the Gatbontons. As noted at the outset, we find for the petitioner-appellee.

1. We affirm the lower court decision on appeal as it does manifest fealty to the principle announced by us inCabal v. Kapunan. 8 In that proceeding for certiorari and prohibition to annul an order of Judge Kapunan, it appeared that an administrative charge for unexplained wealth having been filed against petitioner under the Anti-Graft Act,9the complainant requested the investigating committee that petitioner be ordered to take the witness stand, which request was granted. Upon petitioner's refusal to be sworn as such witness, a charge for contempt was filed against him in the sala of respondent Judge. He filed a motion to quash and upon its denial, he initiated this proceeding. We found for the petitioner in accordance with the well-settled principle that "the accused in a criminal case may refuse, not only to answer incriminatory questions, but, also, to take the witness stand."

It was noted in the opinion penned by the present Chief Justice that while the matter referred to an a administrative charge of unexplained wealth, with the Anti-Graft Act authorizing the forfeiture of whatever property a public officer or employee may acquire, manifestly out proportion to his salary and his other lawful income, there is clearly the imposition of a penalty. The proceeding for forfeiture while administrative in character thus possesses a criminal or penal aspect. The case before us is not dissimilar; petitioner would be similarly disadvantaged. He could suffer not the forfeiture of property but the revocation of his license as a medical practitioner, for some an even greater deprivation.

To the argument that Cabal v. Kapunan could thus distinguished, it suffices to refer to an American Supreme Court opinion highly persuasive in character. 10 In the language of Justice Douglas: "We conclude ... that the Self-Incrimination Clause of the Fifth Amendment has been absorbed in the Fourteenth, that it extends its protection to lawyers as well as to other individuals, and that it should not be watered down by imposing the dishonor of disbarment and the deprivation of a livelihood as a price for asserting it." We reiterate that such a principle is equally applicable to a proceeding that could possibly result in the loss of the privilege to practice the medical profession.

2. The appeal apparently proceeds on the mistaken assumption by respondent Board and intervenors-appellants that the constitutional guarantee against self-incrimination should be limited to allowing a witness to object to questions the answers to which could lead to a penal liability being subsequently incurred. It is true that one aspect of such a right, to follow the language of another American decision, 11 is the protection against "any disclosures which the witness may reasonably apprehend could be used in a criminal prosecution or which could lead to other evidence that might be so used." If that were all there is then it becomes diluted.lawphi1.ñet

The constitutional guarantee protects as well the right to silence. As far back as 1905, we had occasion to declare: "The accused has a perfect right to remain silent and his silence cannot be used as a presumption of his guilt." 12Only last year, in Chavez v. Court of Appeals, 13 speaking through Justice Sanchez, we reaffirmed the doctrine anew that it is the right of a defendant "to forego testimony, to remain silent, unless he chooses to take the witness stand — with undiluted, unfettered exercise of his own free genuine will."

Why it should be thus is not difficult to discern. The constitutional guarantee, along with other rights granted an accused, stands for a belief that while crime should not go unpunished and that the truth must be revealed, such desirable objectives should not be accomplished according to means or methods offensive to the high sense of respect accorded the human personality. More and more in line with the democratic creed, the deference accorded an individual even those suspected of the most heinous crimes is given due weight. To quote from Chief Justice Warren, "the constitutional foundation underlying the privilege is the respect a government ... must accord to the dignity and integrity of its citizens." 14

It is likewise of interest to note that while earlier decisions stressed the principle of humanity on which this right is predicated, precluding as it does all resort to force or compulsion, whether physical or mental, current judicial opinion places equal emphasis on its identification with the right to privacy. Thus according to Justice Douglas: "The Fifth Amendment in its Self-Incrimination clause enables the citizen to create a zone of privacy which government may not force to surrender to his detriment." 15 So also with the observation of the late Judge Frank who spoke of "a right to a private enclave where he may lead a private life. That right is the hallmark of our

democracy." 16 In the light of the above, it could thus clearly appear that no possible objection could be legitimately raised against the correctness of the decision now on appeal. We hold that in an administrative hearing against a medical practitioner for alleged malpractice, respondent Board of Medical Examiners cannot, consistently with the self-incrimination clause, compel the person proceeded against to take the witness stand without his consent.

WHEREFORE, the decision of the lower court of August 2, 1965 is affirmed. Without pronouncement as to costs.

Reyes, Dizon, Makalintal, Zaldivar, Sanchez and Capistrano, JJ., concur.Teehankee and Barredo, JJ., took no part.Concepcion, C.J., and Castro, J., are on leave.

WILFREDO T. PADILLA, petitioner, vs.THE NATIONAL LABOR RELATIONS COMMISSION and SAN BEDA COLLEGE, respondents.

 

ROMERO, J.:

This petition for certiorari seeks to set aside the decision of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 10-03520-84, which reversed the decision of the Labor Arbiter, and its resolution denying petitioner's motion for reconsideration.

The factual antecedents in this case are not disputed.

Petitioner was a faculty member of the College of Arts and Sciences of San Beda College (SBC) from June 1980 up to his dismissal.

Sometime in November 1983, petitioner approached co-professor Leopoldo Martinez in behalf of his alleged "nephew," a student by the name of Luis Santos, whom Martinez failed in History I. Petitioner apparently disagreed with the grading system of Professor Martinez and urged the latter to change the grade of Santos. On November 10, 1983, an urgent meeting was called to deliberate on Santos' case. However, prior to said meeting, petitioner initiated a "whispering campaign" among the faculty members and students who failed in the same subject against Martinez, the obvious purpose of which was to exert pressure and influence on the latter regarding the proposed changing of the grades.

Petitioner admittedly approached the members of the Dean's Council 1 to lobby for the reconsideration of Santos' failing grade. 2 In several instances, he also acknowledged that Santos was not actually his nephew but he said so only to add weight to his request.

On ground of serious misconduct, petitioner's services were terminated on July 23, 1984. In a complaint for illegal dismissal against SBC, Labor Arbiter Isabel T. Ortiguerra rendered a decision dated October 10, 1991, the dispositive portion of which reads thus:

WHEREFORE, premises considered, judgment is hereby rendered declaring the respondent guilty of illegal dismissal and ordering it to reinstate the complainant to his former position of full time professor without loss of seniority rights and with full backwages computed from the time he was dismissed up to the time he will actually be reinstated but not to exceed 3 years.

The claim for moral and exemplary damages are dismissed for lack of merit.

SO ORDERED.

This decision was, however, reversed on appeal by the NLRC in its decision dated July 26, 1993. His motion for reconsideration having been denied on February 23, 1994, petitioner filed the instant petition for certiorari.

The petition must be dismissed.

This Court is convinced that the pressure and influence exerted by the petitioner on his colleague to change a failing grade to a passing one, as well as his misrepresentation that Santos is his nephew, constitute serious misconduct, which is a valid ground for dismissing an employee. 3

Petitioner asserts that he facilitated the request of Santos because he believed it was meritorious and that he did it in his capacity as teaching evaluator.

We are not persuaded. As aptly observed by the NLRC, it became petitioner's personal crusade to help Santos, which he did not exhibit with the other students who failed. It further stated, "(a) teacher evaluator can, at best, advise a student as to how he can finish his course but certainly not to act as his lobbyist." 4

With respect to the issue of whether petitioner was afforded due process, we rule in the affirmative.

Before an employee can be validly dismissed, the employee must be afforded due process and his dismissal must be for any of the causes specified in Article 282 of the Labor Code. 5

Labor Arbiter Ortiguerra mentioned in her decision 6 that SBC failed to afford petitioner an impartial investigation, imputing to Father Odilardo Arceo, Dean of the College of Arts and Sciences, an "obvious predisposition" to dismiss him. This was, however, refuted by Fr. Arceo who declared in his sworn statement that he merely recommended the termination of petitioner's employment to the Fr. Rector of SBC who, after an official investigation, adopted his recommendation.

Petitioner was indeed duly notified of the charges levelled against him. The records show that on June 7, 1984, he was officially informed that SBC was considering his dismissal on charges of serious misconduct, an investigation of which was scheduled on June 28, 1984. A postponement was requested and the hearing was moved to July 5, 1984. While the hearing was being conducted at the Fr. Rector's office, petitioner suddenly walked out just as Professor Martinez was about to commence giving his testimony.

The essence of due process in administrative proceedings is the opportunity to explain one's side or a chance to seek reconsideration of the action or ruling complained of. 7 Thus, the Labor Code requires the employer to furnish the employee with a written notice containing a statement of the cause for termination and to afford said employee ample opportunity to be heard and to depend himself  with the assistance of his representative, if he so desires. The employer is also required to notify the worker in writing of the decision to dismiss him, stating clearly the reasons therefore. 8 In the instant case, SBC amply complied with the abovementioned requisites.

Petitioner also alleges that he was denied due process, as well as the thirty-day prior written notice when he was dismissed. He even cited in his memorandum the case of RCPI v. NLRC 9 to support his contentions. The aforementioned case, however, does not mention any thirty-day period. Petitioner erred in relying on the procedural requirement outlined in Article 283 of the Labor Code which applies only when termination of the employment is due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking.

WHEREFORE, in view of the foregoing, the petition is DISMISSED and the July 26, 1993 decision of respondent National Labor Relations Commission is AFFIRMED. No costs.

SO ORDERED.

PHILIPPINE LONG DISTANCE            G.R. Nos. 164684-85TELEPHONE COMPANY, INC.,

Petitioner,                                                                    Present:

                                                                PUNO, J., Chairman,- versus -                                                 AUSTRIA-MARTINEZ,

                                                                        CALLEJO, SR.,                                                                        TINGA, and                                                                        CHICO-NAZARIO,* JJ.  ANTONIO Q. TIAMSON,                       

Respondent.                             Promulgated: 

                                                                        November 11, 2005 x-----------------------------------------------------------------------------------------x DECISION 

CALLEJO, SR., J.:         

Being questioned in this petition for review on certiorari is the Decision[1] of the Court of Appeals (CA)

dated April 16, 2004 in CA-G.R. SP Nos. 51855 and 52247, and the Resolution dated July 27, 2004 denying the

motion for reconsideration thereof.  

          On April 16, 1986, the Philippine Long Distance Telephone Company, Inc. (PLDT) employed Antonio Q.

Tiamson as a Radio Technician II (JG4).  He was assigned at the company’s North Luzon Toll Network Division,

Clark Transmission Maintenance Center (Clark-TMC) in Pampanga. After the expiration of the probationary

period, he was extended regular appointment for the same position.         

In a Letter[2] dated July 29, 1994, Anthony Dy Dee, the President of the Angeles City Telephone

System and Datelcom Corporation, informed PLDT of his complaint against its employees assigned in Clark-

TMC, stating therein that he suspected them to be in cohorts with the local subscribers in effecting illegal

overseas calls. Acting on the letter-complaint, PLDT immediately dispatched a team of inspectors and

investigators from its Quality Control and Inspection Department (QCID) and Security Division to conduct

surveillance operations in the area.  On August 2, 1994, Vidal Busa, a radio technician, was caught in flagrante

delicto while monitoring an illegally connected overseas call using the radio facilities of the company’s Clark-

TMC Radio Room.[3]

 

The QCID, likewise, requested the Switching Network Division at PLDT’s Sampaloc National Toll

Center to print the CAMA[4] tape recording of all long distance calls originating from the PLDT Clark Exchange

Traffic 

for the period of July 29 to August 2, 1994. The printout revealed that a total of 469 fraudulent

overseas and local calls were connected and completed at the PLDT Clark-TMC Radio Room for the said period.

Three overseas calls to Saudi Arabia made on August 1, 1994 were imputed to Tiamson who appeared to be on

duty from 10:00 p.m. to 6:00 a.m.[5]

 

The QCID conducted its initial investigation on August 2, 1994, where Busa readily admitted his

involvement in the illegal connection of overseas calls. In his sworn statement, he specifically named Arnel

Cayanan, his Shift Supervisor, Antonio Tiamson and Paul Cruzada, both radio technicians, as the other

employees actively engaged in the illegal practice. He stated that he knew about this because whenever he

would relieve them from their tour of duty, he would see that the circuit was engaged.[6]

 

On August 3, 1994, during a confrontation between Busa and Tiamson, the former reiterated his

earlier statement that the latter was involved in the illegal act of connecting overseas calls. [7] For his part,

Tiamson admitted that he knew how to make an overseas call using the company’s radio equipment and that

he learned how to do so through hands-on experimentation and intensive reading of operating manuals. He,

however, denied having actually made an illegal connection of overseas calls.  He declared that he knew of the

wrongdoings of Busa and even disconnected the latter’s overseas telephone calls whenever he (Tiamson) was

on duty. Tiamson claimed that he failed to report the actuations of Busa because the latter was his supervisor

and was afraid to antagonize him.[8]  

On August 5, 1994, there was another confrontation proceeding between Busa, Tiamson, Cruzada

and Cayanan. In their sworn statements, Busa and Cruzada testified that, sometimes when they relieve

Cayanan from his duty, they would discover an illegal connection and an on-going conversation in the line. [9] 

Tiamson maintained that he disconnected the illegal calls of Busa, while Cayanan implicated his subordinates. 

The QCID recommended that administrative action for serious misconduct be instituted against the

said employees. Consequently, the company issued to Tiamson an Inter-Office Memorandum dated August 12,

1994, charging him with violation of the company’s disciplinary rules and regulations.   He was, likewise,

required to explain within 72 hours why he should not be dismissed, thus:             Investigation of the complaint indicated hereunder disclosed that:

 1.      Complainant – Mr. Anthony Dy, President DATELCOM Corp.

 2.      The decrease of toll revenue for DATELCOM Angeles/Mabalacat Exchange due to

fraudulent overseas call scam was complained and notified by Mr. A. Dy to Mrs. B. G. Gendrano – Clark Exchange Division Head on July 26, 1994.

 3.      The complainant requested assistance to NBI and PLDT QCI to apprehend the

personnel responsible for the illegal connection. 

4.      A clue was provided by Mr. Anthony Dy that the illegal overseas call was coming from Clark-TMC through taped and equipment monitoring.

5.  In the QCI investigation, you were implicated by your fellow Radio Technician Mr. Vidal C. Busa as involved in the case. You admitted you know how to operate the Lenkurt 26600 Signalling Test Set to initiate a call but denied doing it for personal gain or interest but you failed to report the anomaly to your superior as one of your supervisors was involved in the fraudulent case.

 The acts described above are in violation of the Company’s rules and

regulations and is punishable with dismissal from the service. 

In view of the above, please explain in writing within 72 hours from receipt hereof why you should not be dismissed from the service for the acts described above. You may elect to be heard if you so desire. …[10]

                                                

Meanwhile, Tiamson was placed under preventive suspension on August 16, 1994.[11]

 

On August 18, 1994, Tiamson submitted his written explanation denying any participation in the

illegal activities at PLDT’s Clark-TMC. He averred that Busa’s statement against him was malicious and untrue

and that he was the one relieving Busa from his tour of duty and not the other way around.   He insisted that on

August 1, 1994, his tour of duty was from 6:00 a.m. to 10:00 p.m.[12]

 

PLDT found his explanation unsatisfactory and inadequate in substance. Thus, it issued an Inter-

Office Memo[13] dated October 5, 1994, terminating Tiamson’s employment effective October 7, 1994 on the

ground of serious misconduct and/or fraud. 

Tiamson filed a complaint against PLDT for illegal suspension, illegal dismissal, damages and other

monetary claims, docketed as NLRC Case No. RAB-III-07-6414-95.  

The Labor Arbiter resolved the case in favor of Tiamson: WHEREFORE, premises considered, judgment is hereby rendered declaring

respondent PLDT guilty of illegal dismissal and it is hereby ordered to reinstate complainant to his former position without loss of seniority rights and with full backwages reckoned from the date of his dismissal up to his actual or payroll reinstatement at the option of the respondent, which as of this date is in the amount of Three Hundred Seventy-Two Thousand Eight Hundred Twenty-Five and 32/100 (P372,825.32) Pesos.

 Further, respondent is ordered to pay complainant attorney’s fee in the

amount of Thirty-Seven Thousand Two Hundred Eighty-Two and 53/100 (P37,282.53) Pesos.

 The claims for moral and exemplary damages are dismissed for lack of

evidence. SO ORDERED.[14]

 

The Labor Arbiter declared that the complainant could not have made any illegal connection on

August 1, 1994 from 10:00 p.m. to 6:00 a.m. because he was off-duty. 

PLDT elevated the case to the National Labor Relations Commission (NLRC). On August 31, 1998, the

NLRC ruled that while there was just cause for Tiamson’s dismissal, the penalty of dismissal was too harsh.

Hence, the NLRC ordered that Tiamson be reinstated to his former position without loss of seniority rights, but

without backwages.[15]

 

Both parties moved to reconsider the decision, but the NLRC denied the motions for lack of merit.[16]

 

PLDT filed a petition for certiorari before the CA, assailing the NLRC’s order of reinstatement despite

a categorical finding that Tiamson was guilty of illegal connection of overseas calls. The petition was docketed

as CA-G.R. SP No. 51855. Tiamson filed a similar petition, assailing the deletion of the award of backwages and

attorney’s fees. This was docketed as CA-G.R. SP No. 52247. The CA, thereafter, ordered the consolidation of

the two petitions. 

          On April 16, 2004, the CA reinstated the decision of the Labor Arbiter, thus: WHEREFORE, the petition by the PLDT under CA-G.R. SP No. 51855

is DENIED DUE COURSE and DISMISSED while the petition by Antonio Tiamson under CA-G.R. SP No. 52247 is GIVEN DUE COURSE and GRANTED, and the Decision dated October 15, 1997 of the Labor Arbiter which was set aside by the NLRC, is hereby REINSTATED in its fullness and without modifications.

 SO ORDERED.[17]

          

The CA held that Busa’s sworn statement was not worthy of credence,  a mere afterthought, the

contents of which were seriously flawed. The appellate court found it difficult to believe Busa’s assertion that,

on several occasions when he came to relieve the respondent, a circuit was in use which the latter would turn

off before leaving. In this regard, the appellate court noted that Busa’s work shift preceded that of the

respondent, such that it would be impossible for him to see the respondent make an illegal connection.[18]

 

The CA likewise opined that the respondent was denied due process when he was not apprised of

nor given the opportunity to confute the charge that during his duty on August 1, 1994, three overseas calls to

Saudi Arabia were recorded in the CAMA tape.[19]

 

The petitioner timely filed a motion for reconsideration, which the CA denied in its

Resolution[20] dated July 27, 2004. 

The petitioner now comes before this Court, alleging that: 

… THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN REINSTATING THE DECISION OF THE ARBITER A QUO AS SAID DECISION WAS NOT IN ACCORD WITH LAW AND CONTRARY TO THE EVIDENCE ON RECORD.[21]

 

The petitioner submits that it has presented more than substantial evidence to prove that the

respondent was involved in the illegal connection of overseas calls. The petitioner avers that the CA erred in

holding that Busa’s sworn statement was not credible. According to the CA, it would have been impossible for

Busa to see the respondent making an illegal connection since his tour of duty preceded that of the respondent.

The petitioner, however, asserts that there was a rotation of the employees’ tour of duty such that, at times, it

was Busa who would take over from the respondent; hence, Busa had the occasion to personally see the

respondent connecting illegal calls. In support of this, the petitioner proffers the copy of logbook entries from

July 13 to August 3, 1994, which was attached to its Memorandum of Appeal filed with the NLRC. The logbook

shows that on several occasions, it was Busa who took over from the respondent.[22]

 

The petitioner further asserts that the respondent failed to show that Busa was actuated and

impelled by improper motive and bad faith in executing his sworn statement. [23]The records show that Busa,

from the very start, had categorically and unequivocally named the respondent as one of those engaged in the

illegal connection of overseas calls.[24]  Moreover, Busa’s sworn statement had been corroborated by the

printout of the CAMA tapes (which disclosed that during the respondent’s August 1, 1994 duty, three fraudulent

calls to Saudi Arabia were illegally made),[25] as well as Cayanan’s sworn statement implicating the respondent.

[26]

 

The petitioner submits that the respondent’s offense was serious  in character and merits the

penalty of dismissal from employment. It contends that the respondent was accorded the full measure of due

process before he was dismissed: he was given a notice which apprised him of the charge against him and

required him to explain why he should not be dismissed, and later, a notice of termination. The petitioner

claims that the Labor Code simply requires that the employee be given a written notice containing a statement

of the causes of termination.  It insists that the printout of the recording of the CAMA tapes showing that three

illegal connections were made on August 1, 1994 is a mere evidentiary matter that need not be mentioned in

the notice.[27]

 

For his part, the respondent avers that Busa’s statement was uncorroborated and hearsay for lack of

cross-examination. He insists that Busa could not have seen him make illegal connections since the latter’s shift

came before his.[28]

 

The petitioner replies that an affidavit may be admissible even if the witness is not presented during

trial because technical rules are not strictly followed in proceedings before the Labor Arbiter and the NLRC. [29]

 

The petition has no merit. 

It is a settled rule that factual findings of labor officials, who are deemed to have acquired expertise

in matters within their respective jurisdictions, are generally accorded not only respect but even finality.

[30] Moreover, in a petition for review on certiorari under Rule 45, the Supreme Court reviews only errors of law

and not errors of facts.[31]However, where there is divergence in the findings and conclusions of the NLRC, on

the one hand, from those of the Labor Arbiter and the Court of Appeals, on the other, the Court is constrained

to examine the evidence.[32]

 

In termination cases, the burden of proof rests upon the employer to show that the dismissal is for

just and valid cause; failure to do so would necessarily mean that the dismissal was illegal. [33] The employer’s

case succeeds or fails on the strength of its evidence and not on the weakness of the employee’s defense. If

doubt exists between the evidence presented by the employer and the employee, the scales of justice must be

tilted in favor of the latter.[34] Moreover, the quantum of proof required in determining the legality of an

employee’s dismissal is only substantial evidence. Substantial evidence is more than a mere scintilla of

evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if

other minds, equally reasonable, might conceivably opine otherwise.[35]

 

In this case, the appellate court ruled for respondent Tiamson, ratiocinating as follows: The issues posed by both parties involve the evaluation of the findings of facts

by the agencies a quo. While the general rule is that factual issues could not be properly raised and considered in a petition for certiorari, it however admits of this exception that a disharmony between the factual findings of the Labor Arbiter and those of the NLRC opens the door to review thereof by the Supreme Court (Asuncion vs. National Labor Relations Commission, 362 SCRA 56), including, of course, the Court of Appeals.

 The crux of both petitions is whether the NLRC with its findings quoted below,

was correct in setting aside the disposition of the Labor Arbiter: 

We disagree that respondent failed to present evidence linking complainant to the illegal connection scam. As pointed out by the respondent, co-employee Busa and Cayanan in the course of their investigation implicated complainant’s participation in illegal overseas connection.  Complainant also failed to refute respondent’s evidence that on August 1, 1994, while he was on duty, three (3) overseas calls to Saudi Arabia were recorded in cama tape (Annex 4, p. 30, records).

 However, we consider the penalty of dismissal too harsh

considering that respondent imposed a sixty (60)-day suspension on Paul Cruzada, a co-employee of complainant who submitted (sic) culpability.  For where a lesser punitive penalty would suffice, the supreme penalty of dismissal should be visited (Almira vs. B.F. Goodrich, 58 SCRA 120).  Under the circumstances, reinstatement but without backwages is appropriate (pp. 39-40, Rollo)

 Our review of the records reveals that among the three employees who issued sworn statements, namely, Busa, Cayanan and Cruzada,  it was only Busa who directly

implicated Tiamson and it was done inexplicably only in his second sworn statement. It does not inspire credence as it comes as an afterthought and the contents are seriously flawed on material points.  Looming large is the claim of Busa that on several occasions when he came to relieve Tiamson, he observed that his circuit was logged on and in use, and Tiamson would then put it off before leaving.  This is a canard because the shift of Busa was from 1:00 p.m. to 6:00 a.m. and of course ahead of the 6:00 a.m. to 2:00 p.m. shift of Tiamson who came in as his reliever.  Their tours of duty was in the converse order of what Busa claimed, and so he spoke with a forked tongue when he stated that Tiamson at the preceding shift had his circuit logged on and switched this off when he left.

 A no less important point is the undisputed fact that Tiamson was not given

the opportunity to confute the charge that on August 1, 1994 while he was on duty, three (3) overseas calls to Saudi Arabia were recorded in the cama tape.  This was not indicated in the memorandum sent to him on August 12, 1994, the full text of which reads:

                                                                  August 12, 1994 

TO                 : MR. ANTONIO Q. TIAMSON – Radio Tech II Clark TMCFROM      : Division Head, North Luzon Toll NetworkSUBJECT: ADMINISTRATIVE CASE- - - - - - -  - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -      

Investigation of the complaint indicated hereunder disclosed that: 

1.  Complainant Mr. Anthony Dy, President DATELCOM Corp. 

2. The decrease of toll revenue for DATELCOM Angeles/Mabalacat Exchange due to fraudulent overseas call scam was complained and notified by Mr. A. Dy to Mrs. H. G. Gendrano – Clark Exchange Division Head on July 26, 1994.

 3. The complainant requested assistance to NBI and PLDT QCI to

apprehend the personnel responsible for the illegal connection. 

4.  A clue was provided by Mr. Anthony Dy that the illegal overseas call was coming from Clark-TMC through taped and equipment monitoring. 

           5. In the QCI investigation, you were implicated by your fellow Radio Technician Mr. Vidal C. Busa as involved in the case. You admitted you know how to operate the Lenkurt 26600 Signalling Test Set to initiate a call but denied doing it for personal gain or interest but you failed to report the anomaly to your superior as one of your supervisors was involved in the fraudulent case.          The acts described above are in violation of the Company’s rules and regulations and is punishable with dismissal from the service.           In view of the above, please explain in writing within 72 hours from receipt hereof why you should not be dismissed from the service for the acts described above.  You may elect to be heard if you so desire.          Please be informed also that you will be placed under preventive suspension which will take effect on August 16, 1994 pending resolution of the case.          If no written explanation is received from you within the said period of 72 hours, this case will be decided on the basis of the evidence on hand. (p. 227, Rollo)                                                                       (SGD.)                                                     ARMANDO A. ABESAMIS

             Procedural due process requires that an employee be apprised of the charge against him, given reasonable time to answer the same, allowed ample opportunity to be heard and defend himself, and assisted by a representative if the employee so desires (Concorde Hotel vs. Court of Appeals, 362 SCRA 583; underlining supplied). Procedural due process requires that the employer serve the employees to be dismissed two (2) written notices before the termination of their employment is effected: (a) the first, to apprise them of the particular acts or omission for which theirdismissal is

sought; and (b) second, to inform them of the decision of the employer that they are being dismissed (Perpetual Help Credit Cooperative, Inc. vs. Faburada, 366 SCRA 693; underlining supplied). The Labor Arbiter, therefore, was correct in ruling that Tiamson was indeed illegally dismissed from his employment.[36]

 

The petitioner maintains that contrary to the findings and conclusions of the appellate court, it has

established through substantial evidence that there was just cause for the respondent’s dismissal. To bolster

such contention, the petitioner adduces the following documentary evidences: (1) the sworn statements of

Vidal Busa specifically implicating the respondent; 

(2) the sworn statement of Arnel Cayanan; and (3) the printout of the CAMA tape, recording the

unauthorized overseas calls originating from Clark-TMC during the respondent’s tour of duty. 

The respondent disputes the admissibility of Busa’s sworn statements for being hearsay since the

latter was not presented for cross-examination. This argument, however, is not persuasive because the rules of

evidence are not strictly observed in proceedings before administrative bodies like the NLRC where decisions

may be reached on the basis of position papers only.[37]

 

The Court agrees with the contentions of the respondent and the findings and rulings of the CA. 

The petitioner indeed failed to adduce substantial evidence to prove that the dismissal of the

respondent was for a just cause.  In his first sworn statement, Busa implicated the respondent in the illegal

connections of overseas calls in this manner: T 25 - Bukod sa iyo, sinu-sino pa sa mga kasamahan mo ang tinuruan ni   Mr. Cayanan ng

sistemang ito?S   - Sina Antonio Tiamson at Paul Cruzada na pawang mga Radio Technicians din. T 26 - Ang ibig mo sabihin, ginagawa din nina Mr. Tiamson at Cruzada               ang magpa-patch ng mga tawag sa abroad o overseas?S      - Opo. T 27 - Paano mo naman nasisiguro ito?S      - Nakikita ko po. T 28 - Paano mo naman nakita samantalang magka-iba ang tour of duty              ninyo?S      - Pag nag-relyebo kami ay naaabutan kong naka-engage ang circuit at pag tinanong

ko ay sinasabi nga nilang may tawag sila at kasalukuyang nag-uusap ang magkabilang parties.[38]

  

During the confrontation between Busa and the respondent, the former likewise made the following

statements: T 3  -  Ayon sa iyo, ginagawa rin ni Mr. Tiamson ang magku-kunekta ng mga illegal na

tawag overseas sa pamamagitan ng pag-gamit ng inyong Radio Equipment. Tama ba ito?

S      -  Tama po, Sir. 

T 4   -  Paano mo nalaman na  ginagawa rin ni Mr. Tiamson ito?S   - Dahil nakikita ko siyang nagkukunekta at ilang beses ko ring nadatnan kapag nag-

relyebo kami na gumagana ang circuit na ang ibig sabihin ay may nag-uusap. At bago siya aalis ay inilalagay niya sa normal position ang linyang ginamit niya.

 T 5  -  Kailan pa ito gingawa ni Mr. Tiamson kung natatandaan mo pa?S     -  Sa natatandaan ko ginagawa niya ito magmula noong 1992 pa. T 6 -  Ayon pa rin sa iyo, alam din ni Mr. Tiamson na ginagawa rin ni Mr. Cayanan itong

mga illegal activities na ito. Paano mo nasabi na alam ni Mr. Tiamson itong ginagawa ni Mr. Cayanan

 S   -  Kasi magkakasama kami at kaming apat lang nina Mr. Cayanan, Mr.Tiamson, Mr. Cruzada at ako ang nakaka-alam niyang operation na iyan.[39]

  

On the other hand, during the confrontation among all four employees implicated in the matter,

Cayanan testified that he was aware that his “subordinates” were engaged in illegal activities. However, he

failed to specifically mention who these subordinates were.[40]

 

Although admissible in evidence, affidavits being self-serving must be received with caution.   This is

because the adverse party is not afforded any opportunity to test their veracity. [41] By themselves, generalized

and pro forma affidavits cannot constitute relevant evidence which a reasonable mind may accept as adequate.

[42] There must be some other relevant evidence to corroborate such affidavits. 

On this point, the petitioner submits that the printout of the CAMA tapes corroborated Busa’s sworn

statement. A perusal of the printout, however, shows that it is not authenticated by the proper officer of the

company. Moreover, the name of the respondent and the other annotations in the said printout are handwritten

and unsigned. 

The ruling in Asuncion v. National Labor Relations Commission[43] is instructive on how such

document should be treated.  In that case, the employer submitted a handwritten listing and computer

printouts to establish the charges against the employee. The handwritten listing was not signed, and while

there was a computer-generated listing, the entries of time and other annotations therein were also

handwritten and unsigned. The Court ruled that the handwritten listing and unsigned computer printouts were

unauthenticated, hence, unreliable. Mere self-serving evidence (of which the listing and printouts are of that

nature) should be rejected as evidence without any rational probative value even in administrative 

proceedings.[44]

           

          Thus, in Uichico v. National Labor Relations Commission,[45] the Court elucidated the extent of the

liberality of procedure in administrative actions:…  It is true that administrative and quasi-judicial bodies like the NLRC are not

bound by the technical rules of procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules. While the rules of evidence prevailing in the courts of law or equity are not controlling in proceedings before the NLRC, the evidence presented before it must at least have a modicum of admissibility for it to be given some probative value. …[46]

  

The decisions of this Court, while adhering to a liberal view in the conduct of proceedings before

administrative agencies, have nonetheless consistently required some proof of authenticity or reliability as a

condition for the admission of documents.[47] Absent any such proof of authenticity, the printout of the CAMA

tape should be considered inadmissible, hence, without any probative weight. 

To conclude, the petitioner has not established by substantial evidence that there was just cause for

the respondent’s termination from his employment. The sworn statements of Busa and Cayanan alone are not

sufficient to establish that the respondent was guilty of serious misconduct. In light of such finding, there is no

need to delve into whether or not the respondent was afforded due process when he was dismissed by the

petitioner. 

WHEREFORE, premises considered, the petition is DENIED DUE COURSE. The Decision of the

Court of Appeals dated April 16, 2004, and its Resolution dated July 27, 2004 in CA-G.R. SP Nos. 51855 and

52247 are AFFIRMED.

GLOBE TELECOM, INC., petitioner, vs.THE NATIONAL TELECOMMUNICATIONS COMMISSION, COMMISSIONER JOSEPH A. SANTIAGO, DEPUTY COMMISSIONERS AURELIO M. UMALI and NESTOR DACANAY, and SMART COMMUNICATIONS, INC.respondents.

D E C I S I O N

TINGA, J.:

Telecommunications services are affected by a high degree of public interest.1 Telephone companies have historically been regulated as common carriers,2 and indeed, the 1936 Public Service Act has classified wire or wireless communications systems as a "public service," along with other common carriers.3

Yet with the advent of rapid technological changes affecting the telecommunications industry, there has been a marked reevaluation of the traditional paradigm governing state regulation over telecommunications. For example, the United States Federal Communications Commission has chosen not to impose strict common regulations on incumbent cellular providers, choosing instead to let go of the reins and rely on market forces to govern pricing and service terms.4

In the Philippines, a similar paradigm shift can be discerned with the passage of the Public Telecommunications Act of 1995 ("PTA"). As noted by one of the law's principal authors, Sen. John Osmeña, under prior laws, the government regulated the entry of pricing and operation of all public telecommunications entities. The new law proposed to dismantle gradually the barriers to entry, replace government control on price and income with market instruments, and shift the focus of government's intervention towards ensuring service standards and protection of customers.5 Towards this goal, Article II, Section 8 of the PTA sets forth the regulatory logic, mandating that "a healthy competitive environment shall be fostered, one in which telecommunications carriers are free to make business decisions and to interact with one another in providing telecommunications services, with the end in view of encouraging their financial viability while maintaining affordable rates." 6 The statute itself defines the role of the government to "promote a fair, efficient and responsive market to stimulate growth and development of the telecommunications facilities and services."7

The present petition dramatizes to a degree the clash of philosophies between traditional notions of regulation and the au corant trend to deregulation. Appropriately, it involves the most ubiquitous feature of the mobile phone, Short Messaging Service ("SMS")8 or "text messaging," which has been transformed from a mere technological fad into a vital means of communication. And propitiously, the case allows the Court to evaluate the role of the National Telecommunications Commission ("NTC") in this day and age.

The NTC is at the forefront of the government response to the avalanche of inventions and innovations in the dynamic telecommunications field.  Every regulatory action it undertakes is of keen interest not only to industry analysts and players but to the public at large.  The intensive scrutiny is understandable given the high

financial stakes involved and the inexorable impact on consumers.  And its rulings are traditionally accorded respect even by the courts, owing traditional deference to administrative agencies equipped with special knowledge, experience and capability to hear and determine promptly disputes on technical matters.9

At the same time, judicial review of actions of administrative agencies is essential, as a check on the unique powers vested unto these instrumentalities.10 Review is available to reverse the findings of the specialized administrative agency if the record before the Court clearly precludes the agency's decision from being justified by a fair estimate of the worth of the testimony of witnesses or its informed judgment on matters within its special competence, or both.11 Review may also be warranted to ensure that the NTC or similarly empowered agencies act within the confines of their legal mandate and conform to the demands of due process and equal protection.12

Antecedent Facts

Globe and private respondent Smart Communications, Inc. ("Smart") are both grantees of valid and subsisting legislative franchises,13 authorizing them, among others, to operate a Cellular Mobile Telephone System("CMTS"), utilizing the Global System for Mobile Communication ("GSM") technology.14 Among the inherent services supported by the GSM network is the Short Message Services (SMS),15 also known colloquially as "texting," which has attained immense popularity in the Philippines as a mode of electronic communication.

On 4 June 1999, Smart filed a Complaint16 with public respondent NTC, praying that NTC order the immediate interconnection of Smart's and Globe's GSM networks, particularly their respective SMS or texting services.   TheComplaint arose from the inability of the two leading CMTS providers to effect interconnection. Smart alleged that Globe, with evident bad faith and malice, refused to grant Smart's request for the interconnection of SMS.17

On 7 June 1999, NTC issued a Show Cause Order, informing Globe of the Complaint, specifically the allegations therein that, "among others…despite formal request made by Smart to Globe for the interconnection of their respective SMS or text messaging services, Globe, with evident bad faith, malice and to the prejudice of Smart and Globe and the public in general, refused to grant Smart's request for the interconnection of their respective SMS or text messaging services, in violation of the mandate of Republic Act 7925, Executive Order No. 39, and their respective implementing rules and regulations."18

Globe filed its Answer with Motion to Dismiss on 7 June 1999, interposing grounds that the Complaint was premature, Smart's failure to comply with the conditions precedent required in Section 6 of NTC Memorandum Circular 9-7-93,19 and its omission of the mandatory Certification of Non-Forum Shopping.20 Smart responded that it had already submitted the voluminous documents asked by Globe in connection with other interconnection agreements between the two carriers, and that with those voluminous documents the interconnection of the SMS systems could be expedited by merely amending the parties' existing CMTS-to-CMTS interconnection agreements.21

On 19 July 1999, NTC issued the Order now subject of the present petition.  In the Order, after noting that both Smart and Globe were "equally blameworthy" for their lack of cooperation in the submission of the documentation required for interconnection and for having "unduly maneuvered the situation into the present impasse,"22 NTC held that since SMS falls squarely within the definition of "value-added service" or "enhanced-service" given in NTC   Memorandum  Circular  No. 8-9-95  (MC No. 8-9-95) the  implementation  of SMS interconnection is mandatory pursuant to Executive Order (E.O.) No. 59.23

The NTC also declared that both Smart and Globe have been providing SMS without authority from it, in violation of Section 420 (f) of MC No. 8-9-95 which requires PTEs intending to provide value-added services (VAS) to secure prior approval from NTC through an administrative process.  Yet, in view of what it noted as the "peculiar circumstances" of the case, NTC refrained from issuing a Show Cause Order with a Cease and Desist Order, and instead directed the parties to secure the requisite authority to provide SMS within thirty (30) days, subject to the payment of fine in the amount of two hundred pesos (P200.00) "from the date of violation and for every day during which such violation continues."24

Globe filed with the Court of Appeals a Petition for Certiorari and Prohibition25 to nullify and set aside the Orderand to prohibit NTC from taking any further action in the case.  It reiterated its previous arguments that the complaint should have been dismissed for failure to comply with conditions precedent and the non-forum shopping rule.  It also claimed that NTC acted without jurisdiction in declaring that it had no authority to render SMS, pointing out that the matter was not raised as an issue before it at all.   Finally, Globe alleged that

the Order is a patent nullity as it imposed an administrative penalty for an offense for which neither it nor Smart was sufficiently charged nor heard on in violation of their right to due process.26

The Court of Appeals issued a Temporary Restraining Order on 31 August 1999.

In its Memorandum, Globe also called the attention of the appellate court to the earlier decision of NTC pertaining to the application of Isla Communications Co., Inc. ("Islacom") to provide SMS, allegedly holding that SMS is a deregulated special feature of the telephone network and therefore does not require the prior approval of NTC.27Globe alleged that its departure from its ruling in the Islacom case constitutes a denial of equal protection of the law.

On 22 November 1999, a Decision28 was promulgated by the Former Special Fifth Division of the Court of Appeals29 affirming in toto the NTC Order.  Interestingly, on the same day Globe and Smart voluntarily agreed to interconnect their respective SMS systems, and the interconnection was effected at midnight of that day.30

Yet, on 21 December 1999, Globe filed a Motion for Partial Reconsideration,31 seeking to reconsider only the portion of the Decision that upheld NTC's finding that Globe lacked the authority to provide SMS and its imposition of a fine.  Both Smart and NTC filed their respective comments, stressing therein that Globe indeed lacked the authority to provide SMS.32 In reply, Globe asserted that the more salient issue was whether NTC complied with its own Rules of Practice and Procedure before making the finding of want of authority and imposing the fine.  Globe also reiterated that it has been legally operating its SMS system since 1994 and that SMS being a deregulated special feature of the telephone network it may operate SMS without prior approval of NTC.

After the Court of Appeals denied the Motion for Partial Reconsideration,33 Globe elevated the controversy to this Court.

Globe contends that the Court of Appeals erred in holding that the NTC has the power under Section 17 of the Public Service Law34 to subject Globe to an administrative sanction and a fine without prior notice and hearing in violation of the due process requirements; that specifically due process was denied Globe because the hearings actually conducted dwelt on different issues; and, the appellate court erred in holding that any possible violation of due process committed by NTC was cured by the fact that NTC refrained from issuing a Show Cause Order with a Cease and Desist Order, directing instead the parties to secure the requisite authority within thirty days.  Globe also contends that in treating it differently from other carriers providing SMS the Court of Appeals denied it equal protection of the law.

The case was called for oral argument on 22 March 2004.  Significantly, Smart has deviated from its original position. It no longer prays that the Court affirm the assailed Decision and Order, and the twin rulings therein that SMS is VAS and that Globe was required to secure prior authority before offering SMS. Instead, Smart now argues that SMS is not VAS and that NTC may not legally require either Smart or Globe to secure prior approval before providing SMS. Smart has also chosen not to make any submission on Globe's claim of due process violations.35

As presented during the oral arguments, the central issues are: (1) whether NTC may legally require Globe to secure NTC approval before it continues providing SMS; (2) whether SMS is a VAS under the PTA, or special feature under NTC MC No. 14-11-97; and (3) whether NTC acted with due process in levying the fine against Globe.36 Another issue is also raised – whether Globe should have first filed a motion for reconsideration before the NTC, but this relatively minor question can be resolved in brief.

Necessity of Filing Motion for Reconsideration

Globe deliberately did not file a motion for reconsideration with the NTC before elevating the matter to the Court of Appeals via a petition for certiorari. Generally, a motion for reconsideration is a prerequisite for the filing of a petition for certiorari.37 In opting not to file the motion for reconsideration, Globe asserted before the Court of Appeals that the case fell within the exceptions to the general rule.38 The appellate court in the questionedDecision cited the purported procedural defect,39 yet chose anyway to rule on the merits as well.

Globe's election to elevate the case directly to the Court of Appeals, skipping the standard motion for reconsideration, is not a mortal mistake.  According to Globe, the Order is a patent nullity, it being violative of

due process; the motion for reconsideration was a useless or idle ceremony; and, the issue raised purely one of law.40Indeed, the circumstances adverted to are among the recognized exceptions to the general rule.41 Besides, the issues presented are of relative importance and novelty42 so much so that it is judicious for the Court to resolve them on the merits instead of hiding behind procedural fineries.

The Merits

Now, on to the merits of the petition.

Deregulation is the mantra in this age of globalization. Globe invokes it in support of its claim that it need not secure prior authority from NTC in order to operate SMS.  The claim has to be evaluated carefully.  After all, deregulation is not a magic incantation that wards off the spectre of intrusive government with the mere invocation of its name. The principles, guidelines, rules and regulations that govern a deregulated system must be firmly rooted in the law and regulations that institute or implement the deregulation regime.43 The implementation must likewise be fair and evenhanded.

Globe hinges its claim of exemption from obtaining prior approval from the NTC on NTC Memorandum Circular No. 14-11-97 ("MC No. 14-11-97"). Globe notes that in a 7 October 1998 ruling on the application of Islacom for the operation of SMS, NTC declared that the applicable circular for SMS is MC No. 14-11-97. 44 Under this ruling, it is alleged, NTC effectively denominated SMS as a "special feature" which under MC No. 14-11-97 is a deregulated service that needs no prior authorization from NTC. Globe further contends that NTC's requiring it to secure prior authorization violates the due process and equal protection clauses, since earlier it had exempted the similarly situated Islacom from securing NTC approval prior to its operation of SMS.45

On the other hand, the assailed NTC Decision invokes the NTC Implementing Rules of the PTA (MC No. 8-9-95) to justify its claim that Globe and Smart need to secure prior authority from the NTC before offering SMS.

The statutory basis for the NTC's determination must be thoroughly examined. Our first level of inquiry should be into the PTA. It is the authority behind MC No. 8-9-95. It is also the law that governs all public telecommunications entities ("PTEs") in the Philippines.46

Public Telecommunications Act

The PTA has not strictly adopted laissez-faire as its underlying philosophy to promote the telecommunications industry. In fact, the law imposes strictures that restrain within reason how PTEs conduct their business. For example, it requires that any access charge/revenue sharing arrangements between all interconnecting carriers that are entered into have to be submitted for approval to NTC.47 Each "telecommunication category"48established in the PTA is governed by detailed regulations. Also, international carriers and operators of mobile radio services are required to provide local exchange service in unserved or underserved areas.49

At the same time, the general thrust of the PTA is towards modernizing the legal framework for the telecommunications services sector. The transmutation has become necessary due to the rapid changes as well within the telecommunications industry. As noted by Senator Osmeña in his sponsorship speech:

[D]ramatic developments during the last 15 years in the field of semiconductors have drastically changed the telecommunications sector – worldwide as well as in the Philippines. New technologies have fundamentally altered the structure, the economics and the nature of competition in the telecommunications business.  Voice telephony is perhaps the most popular face of telecommunications, but it is no longer the only one. There are other faces – such as data communications, electronic mail, voice mail, facsimile transmission, video conferencing, mobile radio services like trunked radio, cellular radio, and personal communications services, radio paging, and so on.  Because of the mind-boggling developments in semiconductors, the traditional boundaries between computers, telecommunications, and broadcasting are increasingly becoming blurred.50

One of the novel introductions of the PTA is the concept of a "value-added service" ("VAS"). Section 11 of the PTA governs the operations of a "value-added service provider," which the law defines as "an entity which relying on the transmission, switching and local distribution facilities of the local exchange and inter-exchange operators, and overseas carriers, offers enhanced services beyond those ordinarily provided for by such

carriers."51 Section 11 recognizes that VAS providers need not secure a franchise, provided that they do not put up their own network.52However, a different rule is laid down for telecommunications entities such as Globe and PLDT. The section unequivocally requires NTC approval for the operation of a value-added service.  It reads, viz:

Telecommunications entities may provide VAS, subject to the additional requirements that:

a)         prior approval of the Commission is secured to ensure that such VAS offerings are not cross-subsidized from the proceeds of their utility operations;

b)        other providers of VAS are not discriminated against in rates nor denied equitable access to their facilities; and

c)        separate books of accounts are maintained for the VAS.   (Emphasis supplied)53

Oddly enough, neither the NTC nor the Court of Appeals cited the above-quoted provision in their respective decisions, which after all, is the statutory premise for the assailed regulatory action. This failure is but a mere indicia of the pattern of ignorance or incompetence that sadly attends the actions assailed in this petition.

It is clear that the PTA has left open-ended what services are classified as "value-added," prescribing instead a general standard, set forth as a matter of principle and fundamental policy by the legislature.54 The validity of this standard set by Section 11 is not put into question by the present petition, and there is no need to inquire into its propriety.55 The power to enforce the provisions of the PTA, including the implementation of the standards set therein, is clearly reposed with the NTC.56

It can also be gleaned from Section 11 that the requirement that PTEs secure prior approval before offering VAS is tied to a definite purpose, i.e.,  "to ensure that such VAS offerings are not cross-subsidized from the proceeds of their utility operations." The reason is related to the fact that PTEs are considered as public services,57 and mandated to perform certain public service functions. Section 11 should be seen in relation to E.O. 109, which mandates that "international gateway operators shall be required to provide local exchange service,"58 for the purpose of ensuring availability of reliable and affordable telecommunications service in both urban and rural areas of the country.59 Under E.O. No. 109, local exchange services are to be cross-subsidized by other telecommunications services within the same company until universal access is achieved.60 Section 10 of the PTA specifically affirms the requirements set by E.O. No. 109. The relevance to VAS is clear: public policy maintains that the offer of VAS by PTEs cannot interfere with the fundamental provision by PTEs of their other public service requirements.

More pertinently to the case at bar, the qualification highlights the fact that the legal rationale for regulation of VAS is severely limited. There is an implicit recognition that VAS is not strictly a public service offering in the way that voice-to-voice lines are, for example, but merely supplementary to the basic service. Ultimately, the regulatory attitude of the State towards VAS offerings by PTEs is to treat its provisioning as a "business decision" subject to the discretion of the offeror, so long as such services do not interfere with mandatory public service requirements imposed on PTEs such as those under E.O. No. 109. Thus, non-PTEs are not similarly required to secure prior approval before offering VAS, as they are not burdened by the public service requirements prescribed on PTEs.61 Due regard must be accorded to this attitude, which is in consonance with the general philosophy of deregulation expressed in the PTA.

The Pertinent NTC Memorandum Circulars

Next, we examine the regulatory framework devised by NTC in dealing with VAS.

NTC relied on Section 420(f) of the Implementing Rules of the PTA ("Implementing Rules") as basis for its claim that prior approval must be secured from it before Globe can operate SMS. Section 420 of the Implementing Rules, contained in MC No. 8-9-95, states in full:

VALUE ADDED SERVICES (VAS)

(a)  A non-PTE VAS provider shall not be required to secure a franchise from Congress.

(b)  A non-PTE VAS provider can utilize its own equipment capable only of routing, storing and forwarding messages in whatever format for the purpose of providing enhanced or augmented telecommunications services. It shall not put up its own network. It shall use the transmission network, toll or local distribution, of the authorized PTES.

(c)  The provision of VAS shall not in any way affect the cross subsidy to the local exchange network by the international and national toll services and CMTS service.

(d)  Entities intending to provide value added services only shall submit to the commission application for registration for approval. The application form shall include documents showing, among others, system configuration, mode of operation, method of charging rates, lease agreement with the PTE, etc.

(e)  The application for registration shall be acted upon by the Commission through an administrative process within thirty (30) days from date of application.

(f)   PTEs intending to provide value added services are required to secure prior approval by the Commission through an administrative process.

(g)  VAS providers shall comply strictly with the service performance and other standards prescribed commission. (Emphasis supplied.)

Instead of expressly defining what VAS is, the Implementing Rules defines what "enhanced services" are, namely: "a service which adds a feature or value not ordinarily provided by a public telecommunications entity such as format, media conversion, encryption, enhanced security features, computer processing, and the like."62 Given that the PTA defines VAS as "enhanced services," the definition provided in the Implementing Rules may likewise be applied to VAS. Still, the language of the Implementing Rules is unnecessarily confusing. Much trouble would have been spared had the NTC consistently used the term "VAS" as it is used in the PTA.

The definition of "enhanced services" in the Implementing Rules, while more distinct than that under the PTA, is still too sweeping. Rather than enumerating what possible features could be classified as VAS or enhanced services, the Implementing Rules instead focuses on the characteristics of these features. The use of the phrase "the like,"63 and its implications of analogy, presumes that a whole myriad of technologies can eventually be subsumed under the definition of "enhanced services." The NTC should not be necessarily faulted for such indistinct formulation since it could not have known in 199564 what possible VAS would be available in the future. The definition laid down in the Implementing Rules may validly serve as a guide for the NTC to determine what emergent offerings would fall under VAS.

Still, owing to the general nature of the definition laid down in the Implementing Rules, the expectation arises that the NTC would promulgate further issuances defining whether or not a specific feature newly available in the market is a VAS. Such expectation is especially demanded if the NTC is to penalize PTEs who fail to obtain prior approval in accordance with Section 11 of the PTA. To our knowledge, the NTC has yet to come out with an administrative rule or regulation listing which of the offerings in the market today fall under VAS or "enhanced services."

Still, there is MC No. 14-11-97, entitled "Deregulating the Provision of Special Features in the Telephone Network." Globe invokes this circular as it had been previously cited by the NTC as applicable to SMS.

On 2 October 1998, Islacom wrote a letter to the NTC, informing the agency that "it will be offering the special feature" of SMS for its CMTS, and citing therein that the notice was being given pursuant to NTC Memorandum Circular No. 14-11-97.65 In response, the NTC acknowledged receipt of the letter "informing" it of Islacom's "offering the special feature" of SMS for its CMTS, and instructed Islacom to "adhere to the provisions of MC No. 14-11-97."66 The clear implication of the letter is that NTC considers the Circular as applicable to SMS.

An examination of MC No. 14-11-97 further highlights the state of regulatory confusion befalling the NTC. The relevant portions thereof are reproduced below:

SUBJECT:    DEREGULATING THE PROVISION OF SPECIAL FEATURES IN THE TELEPHONE NETWORK.

For the purpose of exempting specific telecommunications service from rate or tariff regulations if the service has sufficient competition to ensure fair and reasonable rates or tariffs, the Commission hereby deregulates the provision of special features inherent to the Telephone Network.

Section 1.     For the purpose of this Circular, Special Feature shall refer to a feature inherent to the telephone network which may not be ordinarily provided by a Telephone Service Provider such as call waiting, call forwarding, conference calling, speed dialing, caller ID, malicious call ID, call transfer, charging information, call pick-up, call barring, recorded announcement, no double connect, warm line, wake-up call, hotline, voicemail, and special features offered to customers with PABXs such as direct inward dialing and number hunting, and the like; provided that in the provision of the feature, no law, rule, regulation or international convention on telecommunications is circumvented or violated.  The Commission shall periodically update the list of special features in the Telephone Network which, including the charging of rates therefor, shall be deregulated.

Section 2.  A duly authorized Telephone Service Provider shall inform the Commission in writing of the special features it can offer and the  corresponding rates thirty (30) days prior to launch date.

xxx

Section 4.  Authorized Telephone Service Providers shall continue to charge their duly approved rates for special services for 3 months from the effectivity of this circular, after which they may set their own rates.

xxx (Emphasis supplied)

Just like VAS as defined under the PTA, "special features" are also "not ordinarily provided" by the telephone company. Considering that MC No. 14-11-97 was promulgated after the passage of the PTA, it can be assumed that the authors of the Circular were well aware of the regulatory scheme formed under the PTA. Moreover, MC No. 14-11-97 repeatedly invokes the word "deregulation," and it cannot be denied that the liberalization ethos was introduced by the PTA. Yet, the net effect of MC No. 14-11-97 is to add to the haze beclouding the NTC's rationale for regulation. The introduction of a new concept, "special feature," which is not provided for in the PTA just adds to the confusion, especially in light of the similarities between "special features" and VAS. Moreover, there is no requirement that a PTE seeking to offer "special features" must secure prior approval from the NTC.

Is SMS a VAS, "enhanced service," or a "special feature"? Apparently, even the NTC is unsure. It had told Islacom that SMS was a "special feature," then subsequently held that it was a "VAS." However, the pertinent laws and regulations had not changed from the time of the Islacom letter up to the day the Order was issued. Only the thinking of NTC did.

More significantly, NTC never required ISLACOM to apply for prior approval in order to provide SMS, even after the Order to that effect was promulgated against Globe and Smart. This fact was admitted by NTC during oral arguments.67 NTC's treatment of Islacom, apart from being obviously discriminatory, puts into question whether or not NTC truly believes that SMS is VAS. NTC is unable to point out any subsequent rule or regulation, enacted after it promulgated the adverse order against Globe and Smart, affirming the newly-arrived determination that SMS is VAS.

In fact, as Smart admitted during the oral arguments, while it did comply with the NTC Order requiring it to secure prior approval, it was never informed by the NTC of any action on its request. 68 While NTC counters that it did issue a Certificate of Registration to Smart, authorizing the latter as a provider of SMS, such Certificate of Registration was issued only on 13 March 2003, or nearly four (4) years after Smart had made its request.69 This inaction indicates a lack of seriousness on the part of the NTC to implement its own rulings. Also, it tends to indicate the lack of belief or confusion on NTC's part as to how SMS should be treated. Given the abstract set of rules the NTC has chosen to implement, this should come as no surprise. Yet no matter how content the NTC may be with its attitude of sloth towards regulation, the effect may prove ruinous to the sector it regulates.

Every party subject to administrative regulation deserves an opportunity to know, through reasonable regulations promulgated by the agency, of the objective standards that have to be

met.  Such rule is integral to due process, as it protects substantive rights. Such rule also promotes harmony within the service or industry subject to regulation.  It provides indubitable opportunities to weed out the most frivolous conflicts with minimum hassle, and certain footing in deciding more substantive claims. If this results in a tenfold in administrative rules and regulations, such price is worth paying if it also results in clarity and consistency in the operative rules of the game. The administrative process will best be vindicated by clarity in its exercise.70

In short, the legal basis invoked by NTC in claiming that SMS is VAS has not been duly established. The fault falls squarely on NTC.  With the dual classification of SMS as a special feature and a VAS and the varying rules pertinent to each classification, NTC has unnecessarily complicated the regulatory framework to the detriment of the industry and the consumers. But does that translate to a finding that the NTC Order subjecting Globe to prior approval is void? There is a fine line between professional mediocrity and illegality. NTC's byzantine approach to SMS regulation is certainly inefficient. Unfortunately for NTC, its actions have also transgressed due process in many ways, as shown in the ensuing elucidation.

Penalized Via a Quasi-Judicial Process, Globe and Smart are Entitled to Corresponding Protections

It is essential to understand that the assailed Order was promulgated by NTC in the exercise of its quasi-judicial functions. The case arose when Smart had filed the initial complaint against Globe before NTC for interconnection of SMS.71 NTC issued a Show Cause Order requiring Globe to answer Smart's charges. Hearings were conducted, and a decision made on the merits, signed by the three Commissioners of the NTC, sitting as a collegial body.72

The initial controversy may have involved a different subject matter, interconnection, which is no longer contested. It cannot be denied though that the findings and penalty now assailed before us was premised on the same exercise of jurisdiction.  Thus, it is not relevant to this case that the process for obtaining prior approval under the PTA and its Implementing Rules is administrative in nature. While this may be so, the assailed NTC's determination and corresponding penalty were rendered in the exercise of quasi-judicial functions. Therefore, all the requirements of due process attendant to the exercise of quasi-judicial power apply to the present case. Among them are the seven cardinal primary rights in justiciable cases before administrative tribunals, as enumerated inAng Tibay v. CIR.73 They are synthesized in a subsequent case, as follows:

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. Not 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.74

NTC violated several of these cardinal rights due Globe in the promulgation of the assailed Order.

First. The NTC Order is not supported by substantial evidence. Neither does it sufficiently explain the reasons for the decision rendered.

Our earlier discussion pertained to the lack of clear legal basis for classifying SMS as VAS, owing to the failure of the NTC to adopt clear rules and regulations to that effect. Muddled as the legal milieu governing SMS already is, NTC's attempt to apply its confusing standards in the case of Globe and Smart is even more disconcerting.    The very rationale adopted by the NTC in its Order holding that SMS is VAS is short and shoddy. Astoundingly, the Court of Appeals affirmed the rationale bereft of intelligent inquiry, much less comment.  Stated in full, the relevant portion of the NTC Order reads:

xxx Getting down [to] the nitty-gritty, Globe's SMS involves the transmission of data over its CMTS which is Globe's basic service. SMS is not ordinarily provided by a CMTS operator like Globe, and

since SMS  enhances  Globe's  CMTS,  SMS  fits  in  to  a nicety [sic] with the definition of "value-added-service" or "enhanced-service" under NTC Memorandum Circular 8-9-95 (Rule 001, Item 15).75

The Court usually accords great respect to the technical findings of administrative agencies in the fields of their expertise, even if they are infelicitously worded. However, the above-quoted "finding" is nothing more than bare assertions, unsupported by substantial evidence.76 The Order reveals that no deep inquiry was made as to the nature of SMS or what its provisioning entails. In fact, the Court is unable to find how exactly does SMS "fits into a nicety" with NTC M.C. No. 8-9-95, which defines "enhanced services" as analogous to "format, media conversion, encryption, enhanced security features, computer processing, and the like."77 The NTC merely notes that SMS involves the "transmission of data over [the] CMTS," a phraseology that evinces no causal relation to the definition in M.C. No. 8-9-95.  Neither did the NTC endeavor to explain why the "transmission of data" necessarily classifies SMS as a VAS.

In fact, if "the transmission of data over [the] CMTS" is to be reckoned as the determinative characteristic of SMS, it would seem that this is already sufficiently covered by Globe and Smart's respective legislative franchises.78Smart is authorized under its legislative franchise to establish and operate integrated telecommunications/computer/ electronic services for public domestic and international communications,79 while Globe is empowered to establish and operate domestic telecommunications, and stations for transmission and reception of messages by means of electricity, electromagnetic waves or any kind of energy, force, variations or impulses, whether conveyed by wires, radiated through space or transmitted through other media and for the handling of any and all types of telecommunications services.80

The question of the proper legal classification of VAS is uniquely technical, tied as at is to the scientific and technological application of the service or feature.  Owing to the dearth of substantive technical findings and data from the NTC on which a judicial review may reasonably be premised, it is not opportunely proper for the Court to make its own technical evaluation of VAS, especially in relation to SMS.  Judicial fact-finding of the de novo kind is generally abhorred and the shift of decisional responsibility to the judiciary is not favored as against the substantiated and specialized determination of administrative agencies.81 With greater reason should this be the standard for the exercise of judicial review when the administrative agency concerned has not in the first place come out with a technical finding based on evidence, as in this case.

Yet at the same time, this absence of substantial evidence in support of the finding that SMS is VAS already renders reversible that portion of the NTC Order.

Moreover, the Order does not explain why the NTC was according the VAS offerings of Globe and Smart a different regulatory treatment from that of Islacom. Indeed, to this day, NTC has not offered any sensible explanation why Islacom was accorded to a less onerous regulatory requirement, nor have they compelled Islacom to suffer the same burdens as Globe and Smart.

 While stability in the law, particularly in the business field, is desirable, there is no demand that the NTC slavishly follow precedent.82 However, we think it essential, for the sake of clarity and intellectual honesty, that if an administrative agency decides inconsistently with previous action, that it explain thoroughly why a different result is warranted, or if need be, why the previous standards should no longer apply or should be overturned.83 Such explanation is warranted in order to sufficiently establish a decision as having rational basis.84 Any inconsistent decision lacking thorough, ratiocination in support may be struck down as being arbitrary. And any decision with absolutely nothing to support it is a nullity.85

Second. Globe and Smart were denied opportunity to present evidence on the issues relating to the nature of VAS and the prior approval.

Another disturbing circumstance attending this petition is that until the promulgation of the assailed Order Globe and Smart were never informed of the fact that their operation of SMS without prior authority was at all an issue for consideration. As a result, neither Globe or Smart was afforded an opportunity to present evidence in their behalf on that point.

NTC asserts that since Globe and Smart were required to submit their respective Certificates of Public Convenience and Necessity and franchises, the parties were sufficiently notified that the authority to operate such service was a matter which NTC could look into. This is wrong-headed considering the governing law and regulations. It is clear that before NTC could penalize Globe and Smart for unauthorized provision of SMS, it must first establish that SMS is VAS. Since there was no express rule or regulation on that question, Globe and

Smart would be well within reason if they submitted evidence to establish that SMS was not VAS. Unfortunately, no such opportunity arose and no such arguments were raised simply because Globe and Smart were not aware that the question of their authority to provide SMS was an issue at all. Neither could it be said that the requisite of prior authority was indubitable under the existing rules and regulations. Considering the prior treatment towards Islacom, Globe (and Smart, had it chosen to do so) had every right to rely on NTC's disposal of Islacom's initiative and to believe that prior approval was not necessary.

Neither was the matter ever raised during the hearings conducted by NTC on Smart's petition. This claim has been repeatedly invoked by Globe.  It is borne out by the records or the absence thereof.  NTC could have easily rebuffed this claim by pointing to a definitive record. Yet strikingly, NTC has not asserted that the matter of Globe's authority was raised in any pleading or proceeding.  In fact, Globe in its Consolidated Reply before this Court challenged NTC to produce the transcripts of the hearings it conducted to prove that the issue of Globe's authority to provide SMS was put in issue.  The Court similarly ordered the NTC to produce such transcripts.86 NTC failed to produce any.87

The opportunity to adduce evidence is essential in the administrative process, as decisions must be rendered on the evidence presented, either in the hearing, or at least contained in the record and disclosed to the parties affected.88 The requirement that agencies hold hearings in which parties affected by the agency's action can be represented by counsel may be viewed as an effort to regularize this struggle for advantage within a legislative adversary framework.89 It necessarily follows that if no evidence is procured pertinent to a particular issue, any eventual resolution of that issue on substantive grounds despite the absence of evidence is flawed. Moreover, if the parties did have evidence to counter the ruling but were wrongfully denied the opportunity to offer the evidence, the result would be embarrassing on the adjudicator.

Thus, the comical, though expected, result of a definitive order which is totally unsupported by evidence.   To this blatant violation of due process, this Court stands athwart.

Third. The imposition of fine is void for violation of due process

The matter of whether NTC could have imposed the fine on Globe in the assailed Order is necessarily related to due process considerations. Since this question would also call to fore the relevant provisions of the Public Service Act, it deserves its own extensive discussion.

Globe claims that the issue of its authority to operate SMS services was never raised as an issue in the Complaintfiled against it by Smart. Nor did NTC ever require Globe to justify its authority to operate SMS services beforethe issuance of the Order imposing the fine.

The Court of Appeals, in its assailed decision, upheld the power of NTC to impose a fine and to make a pronouncement on Globe's alleged lack of operational authority without need of hearing, simply by citing the provision of the Public Service Act90 which enumerates the instances when NTC may act motu proprio.  That is Section 17, paragraph (a), which reads thus:

Sec. 17. Proceedings of [the National Telecommunications Commission] without previous hearing. The Commission shall have power, without previous hearing, subject to established limitations and exceptions and saving provisions to the contrary:

(a)  To investigate, upon its own initiative, or upon complaint in writing, any matter concerning any public service as regards matters under its jurisdiction; to require any public service to furnish safe, adequate, and proper service as the public interest may require and warrant; to enforce compliance with any standard, rule, regulation, order or other requirement of this Act or of the Commission, and to prohibit or prevent any public service as herein defined from operating without having first secured a certificate of public convenience or public necessity and convenience, as the case may be, and require existing public services to pay the fees provided for in this Act for the issuance of the proper certificate of public convenience or certificate of public necessity and convenience, as the case may be, under the penalty, in the discretion of the Commission, of the revocation and cancellation of any acquired rights.

On the other hand, NTC itself, in the Order, cites Section 21 as the basis for its imposition of fine on Globe. The provision states:

Sec. 21.  Every public service violating or failing to comply with the terms and conditions of any certificate or any orders, decisions or regulations of the Commission shall be subject to a fine of not exceeding two hundred pesos per day for every day during which such default or violation continues; and the Commission is hereby authorized and empowered to impose such fine, after due notice and hearing. [Emphasis supplied.]

Sections 17 and 21 of the Public Service Act confer two distinct powers on NTC.  Under Section 17, NTC has the power to investigate a PTE compliance with a standard, rule, regulation, order, or other requirement imposed by law or the regulations promulgated by NTC, as well as require compliance if necessary. By the explicit language of the provision, NTC may exercise the power without need of prior hearing.   However, Section 17 does not include the power to impose fine in its enumeration.  It is Section 21 which adverts to the power to impose fine and in the same breath requires that the power may be exercised only after notice and hearing.

Section 21 requires notice and hearing because fine is a sanction, regulatory and even punitive in character. Indeed, the requirement is the essence of due process.  Notice and hearing are the bulwark of administrative due process, the right to which is among the primary rights that must be respected even in administrative proceedings.91 The right is guaranteed by the Constitution itself and does not need legislative enactment. The statutory affirmation of the requirement serves merely to enhance the fundamental precept.  The right to notice and hearing is essential to due process and its non-observance will, as a rule, invalidate the administrative proceedings.92

In citing Section 21 as the basis of the fine, NTC effectively concedes the necessity of prior notice and hearing.   Yet the agency contends that the sanction was justified by arguing that when it took cognizance of Smart's complaint for interconnection, "it may very well look into the issue of whether the parties had the requisite authority to operate such services."93 As a result, both parties were sufficiently notified that this was a matter that NTC could look into in the course of the proceedings.  The parties subsequently attended at least five hearings presided by NTC.94

That particular argument of the NTC has been previously disposed of. But it is essential to emphasize the need for a hearing before a fine may be imposed, as it is clearly a punitive measure undertaken by an administrative agency in the exercise of its quasi-judicial functions. Inherently, notice and hearing are indispensable for the valid exercise by an administrative agency of its quasi-judicial functions. As the Court held in  Central Bank of the Phil. v. Hon. Cloribel:95

[T]he necessity of notice and hearing in an administrative proceeding depends on the character of the proceeding and the circumstances involved. In so far as generalization is possible in view of the great variety of administrative proceedings, it may be stated as a general rule that notice and hearing are not essential to the validity of administrative action where the administrative body acts in the exercise of executive, administrative, or legislative functions; but where a public administrative body acts in a judicial or quasi-judicial matter, and its acts are particular and immediate rather than general and prospective, the person whose rights or property may be affected by the action is entitled to notice and hearing.96

The requirement of notice and hearing becomes even more imperative if the statute itself demands it, as in the case of Section 21 of the Public Service Act.

As earlier stated, the Court is convinced that prior to the promulgation of the assailed Order Globe was never notified that its authority to operate SMS was put in issue. There is an established procedure within NTC that provides for the steps that should be undertaken before an entity such as Globe could be subjected to a disciplinary measure.  Section 1, Rule 10 of the NTC Rules of Procedure provides that any action, the object of which is to subject a holder of a certificate of public convenience or authorization, or any person operating without authority from NTC, to any penalty or a disciplinary or other measure shall be commenced by the filing of a complaint. Further, the complaint should state, whenever practicable, the provisions of law or regulation violated, and the acts or omissions complained of as constituting the offense. 97 While a complaint was indeed filed against Globe by Smart, the lack of Globe's authority to operate SMS was not raised in the  Complaint, solely predicated as it was on Globe's refusal to interconnect with Smart.98

Under the NTC Rules of Procedure, NTC is to serve a Show Cause Order on the respondent to the complaint, containing therein a "statement of the particulars and matters concerning which the Commission is inquiring and the reasons for such actions."99 The Show Cause Order served on Globe  in  this case gave notice of Smart's charge  that  Globe, acting  in bad faith and contrary to law, refused to allow the interconnection of their

respective SMS systems.100 Again, the lack of authority to operate SMS was not adverted to in NTC's  Show Cause Order.

The records also indicate that the issue of Globe's authority was never raised in the subsequent hearings on Smart's complaint.  Quite noticeably, the respondents themselves have never asserted that the matter of Globe's authority was raised in any pleading or proceeding.  In fact, Globe in its Consolidated Reply before this Court challenged NTC to produce the transcripts of the hearings it conducted to prove that the issue of Globe's authority to provide SMS was put in issue.  It did not produce any transcript.

Being an agency of the government, NTC should, at all times, maintain a due regard for the constitutional rights of party litigants.101 In this case, NTC blindsided Globe with a punitive measure for a reason Globe was not made aware of, and in a manner that contravened express provisions of law. Consequently, the fine imposed by NTC on Globe is also invalid. Otherwise put, since the very basis for the fine was invalidly laid, the fine is necessarily void.

Conclusion

In summary: (i) there is no legal basis under the PTA or the memorandum circulars promulgated by the NTC to denominate SMS as VAS, and any subsequent determination by the NTC on whether SMS is VAS should be made with proper regard for due process and in conformity with the PTA; (ii) the assailed Order violates due process for failure to sufficiently explain the reason for the decision rendered, for being unsupported by substantial evidence, and for imputing violation to, and issuing a corresponding fine on, Globe despite the absence of due notice and hearing which would have afforded Globe the right to present evidence on its behalf.

Thus, the Order effectively discriminatory and arbitrary as it is, was issued with grave abuse of discretion and it must be set aside.  NTC may not legally require Globe to secure its approval for Globe to continue providing SMS. This does not imply though that NTC lacks authority to regulate SMS or to classify it as VAS.   However, the move should be implemented properly, through unequivocal regulations applicable to all entities that are similarly situated, and in an even-handed manner.

Concurrently, the Court realizes that the PTA is not intended to constrain the industry within a cumbersome regulatory regime.102 The policy as pre-ordained by legislative fiat renders the traditionally regimented business in an elementary free state to make business decisions, avowing that it is under this atmosphere that the industry would prosper.103 It is disappointing at least if the deregulation thrust of the law is skirted deliberately.  But it is ignominious if the spirit is defeated through a crazy quilt of vague, overlapping rules that are implemented haphazardly.

By no means should this Decision be interpreted as removing SMS from the ambit of jurisdiction and review by the NTC. The issue before the Court is only the prior approval requirement as imposed on Globe and Smart. The NTC will continue to exercise, by way of its broad grant, jurisdiction over Globe and Smart's SMS offerings, including questions of rates and customer complaints. Yet caution must be had. Much complication could have been avoided had the NTC adopted a proactive position, promulgating the necessary rules and regulations to cope up with the advent of the technologies it superintends.  With the persistent advent of new offerings in the telecommunications industry, the NTC's role will become more crucial than at any time before. If NTC's behavior in the present case is but indicative of a malaise pervading this crucial regulatory arm of the State, the Court fears the resultant confusion within the industry and the consuming public. The credibility of an administrative agency entrusted with specialized fields subsists not on judicial doctrine alone, but more so on its intellectual strength, adherence to law, and basic fairness.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated 22 November 1999, as well as its Resolution dated 29 July 2000, and the assailed Order of the NTC dated 19 July 1999 are hereby SET ASIDE. No cost.

SO ORDERED

NATIONAL POWER CORPORATION, petitioner, vs.MANUBAY AGRO-INDUSTRIAL DEVELOPMENT CORPORATION, respondents.

D E C I S I O N

PANGANIBAN, J.:

How much just compensation should be paid for an easement of a right of way over a parcel of land that will be traversed by high-powered transmission lines? Should such compensation be a simple easement fee or the full value of the property? This is the question to be answered in this case.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse and set aside the November 23, 2001 Decision2 of the Court of Appeals (CA) in CA-GR CV No. 60515. The CA affirmed the June 24, 1998 Decision3 of the Regional Trial Court4 (RTC) of Naga City (Branch 26), directing the National Power Corporation (NPC) to pay the value of the land expropriated from respondent for the use thereof in NPC’s Leyte-Luzon HVDC Power Transmission Project.

The Facts

The CA summarized the antecedents of the case as follows:

"In 1996, [Petitioner] NATIONAL POWER CORPORATION, a government-owned and controlled corporation created for the purpose of undertaking the development and generation of hydroelectric power, commenced its 350 KV Leyte-Luzon HVDC Power Transmission Project. The project aims to transmit the excess electrical generating capacity coming from Leyte Geothermal Plant to Luzon and various load centers in its vision to interconnect the entire country into a single power grid. Apparently, the project is for a public purpose.

"In order to carry out this project, it is imperative for the [petitioner’s] transmission lines to cross over certain lands owned by private individuals and entities. One of these lands, [where] only a portion will be traversed by the transmission lines, is owned by [respondent] MANUBAY AGRO-INDUSTRIAL DEVELOPMENT CORPORATION.

"Hence, on 03 December 1996, [petitioner] filed a complaint for expropriation before the Regional Trial Court of Naga City against [respondent] in order to acquire an easement of right of way over the land which the latter owns. The said land is situated at Km. 8, Barangay Pacol, Naga City, Camarines Sur and described with more particularity, as follows:

TCT/OCT NO. IN SQ.M.

TOTAL AREA AFFECTED IN SQ. M.

AREA CLASS. OF LAND

17795 490,232 21,386.16 Agri.

17797 40,848 1,358.17 Agri.

17798 5,279 217.38 Agri.

TOTAL 22,961.71

"On 02 January 1997, [respondent] filed its answer. Thereafter, the court a quo issued an order dated 20 January 1997 authorizing the immediate issuance of a writ of possession and directing Ex-Officio Provincial Sheriff to immediately place [petitioner] in possession of the subject land.

"Subsequently, the court a quo directed the issuance of a writ of condemnation in favor of [petitioner] through an order dated 14 February 1997. Likewise, for the purpose of determining the fair and just compensation due to [respondent], the court appointed three commissioners composed of one representative of the petitioner, one for the respondent and the other from the court, namely: OIC-Branch Clerk of Court Minda B. Teoxon as Chairperson and Philippine National Bank-Naga City Loan Appraiser Mr. Isidro Virgilio Bulao, Jr. and City Assessor Ramon R. Albeus as members.

"On 03 and 06 March 1997, respectively, Commissioners Ramon Albeus and Isidro Bulao, Jr. took their oath of office before OIC Branch Clerk of Court and Chairperson Minda B. Teoxon.

"Accordingly, the commissioners submitted their individual appraisal/valuation reports. The commissioner for the [petitioner], Commissioner Albeus, finding the subject land irregular and sloppy, classified the same as low density residential zone and recommended the price of  P115.00 per square meter. On the other hand, Commissioner Bulao, commissioner for the [respondent], recommended the price of P550.00 per square meter. The court’s Commissioner and Chairperson of the Board Minda Teoxon, on the other hand, found Commissioner Albeus’ appraisal low as compared to the BIR Zonal Valuation and opted to adopt the price recommended by Commissioner Bulao. On the assumption that the subject land will be developed into a first class subdivision, she recommended the amount of P550.00 per square meter as just compensation for the subject property, or the total amount of P12,628,940.50 for the entire area affected."5

Taking into consideration the condition, the surroundings and the potentials of respondent’s expropriated property, the RTC approved Chairperson Minda B. Teoxon’s recommended amount of P550 per square meter as just compensation for the property. The trial court opined that the installation thereon of the 350 KV Leyte-Luzon HVDC Power Transmission Project would impose a limitation on the use of the land for an indefinite period of time, thereby justifying the payment of the full value of the property.

Further, the RTC held that it was not bound by the provision cited by petitioner -- Section 3-A6 of Republic Act 63957, as amended by Presidential Decree 938. This law prescribes as just compensation for the acquired easement of a right of way over an expropriated property an easement fee in an amount not exceeding 10 percent of the market value of such property. The trial court relied on the earlier pronouncements of this Court that the determination of just compensation in eminent domain cases is a judicial function. Thus, valuations made by the executive branch or the legislature are at best initial or preliminary only.

Ruling of the Court of Appeals

Affirming the RTC, the CA held that RA 6395, as amended by PD No. 938, did not preclude expropriation. Section 3-A thereof allowed the power company to acquire not just an easement of a right of way, but even the land itself. Such easement was deemed by the appellate court to be a "taking" under the power of eminent domain.

The CA observed that, given their nature, high-powered electric lines traversing respondent’s property would necessarily diminish -- if not damage entirely -- the value and the use of the affected property; as well as endanger lives and limbs because of the high-tension current conveyed through the lines. Respondent was therefore deemed entitled to a just compensation, which should be neither more nor less than the monetary equivalent of the property taken. Accordingly, the appellate found the award of P550 per square meter to be proper and reasonable.

Hence, this Petition.8

Issues

In its Memorandum, petitioner submits this lone issue for our consideration:

"Whether or not the Honorable Court of Appeals gravely erred in affirming the Decision dated June 24, 1998 of the Regional Trial Court, Branch 26, Naga City considering that its Decision dated November 23, 2001 is not in accord with law and the applicable decisions of this Honorable Court."9

The Court’s Ruling

The Petition is devoid of merit.

Sole Issue:Just Compensation

Petitioner contends that the valuation of the expropriated property -- fixed by the trial court and affirmed by the CA -- was too high a price for the acquisition of an easement of a mere aerial right of way, because respondent would continue to own and use the subject land anyway. Petitioner argues that in a strict sense, there is no "taking" of property, but merely an imposition of an encumbrance or a personal easement/servitude under Article 61410 of the Civil Code. Such encumbrance will not result in ousting or depriving respondent of the beneficial enjoyment of the property. And even if there was a "taking," petitioner points out that the loss is limited only to a portion of the aerial domain above the property of respondent. Hence, the latter should be compensated only for what it would actually lose.

We are not persuaded.

Petitioner averred in its Complaint in Civil Case No. RTC 96-3675 that it had sought to acquire an easement of a right of way over portions of respondent’s land -- a total area of 22,961.71 square meters. 11 In its prayer, however, it also sought authority to enter the property and demolish all improvements existing thereon, in order to commence and undertake the construction of its Power Transmission Project.

In other words, the expropriation was not to be limited to an easement of a right of way. In its Answer, respondent alleged that it had already authorized petitioner to take possession of the affected portions of the property and to install electric towers thereon.12 The latter did not controvert this material allegation.

Granting arguendo that what petitioner acquired over respondent’s property was purely an easement of a right of way, still, we cannot sustain its view that it should pay only an easement fee, and not the full value of the property. The acquisition of such an easement falls within the purview of the power of eminent domain. This conclusion finds support in similar cases in which the Supreme Court sustained the award of just compensation for private property condemned for public use.13 Republic v. PLDT14 held thus:

"x x x. Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why the said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right of way."15

True, an easement of a right of way transmits no rights except the easement itself, and respondent retains full ownership of the property. The acquisition of such easement is, nevertheless, not gratis. As correctly observed by the CA, considering the nature and the effect of the installation power lines, the limitations on the use of the land for an indefinite period would deprive respondent of normal use of the property. For this reason, the latter is entitled to payment of a just compensation, which must be neither more nor less than the monetary equivalent of the land.16

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the taker’s gain, but the owner’s loss. The word "just" is used to intensify the meaning of the word "compensation" and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full and ample.17

In eminent domain or expropriation proceedings, the just compensation to which the owner of a condemned property is entitled is generally the market value. Market value is "that sum of money which a person desirous but not compelled to buy, and an owner willing but not compelled to sell, would agree on as a price to be given and received therefor."18 Such amount is not limited to the assessed value of the property or to the schedule of

market values determined by the provincial or city appraisal committee. However, these values may serve as factors to be considered in the judicial valuation of the property.19

The parcels of land sought to be expropriated are undeniably undeveloped, raw agricultural land. But a dominant portion thereof has been reclassified by the Sangguniang Panlungsod ng Naga -- per Zoning Ordinance No. 94-076 dated August 10, 1994 -- as residential, per the August 8, 1996 certification of Zoning Administrator Juan O. Villegas Jr.20 The property is also covered by Naga City Mayor Jesse M. Robredo’s favorable endorsement of the issuance of a certification for land use conversion by the Department of Agrarian Reform (DAR) on the ground that the locality where the property was located had become highly urbanized and would have greater economic value for residential or commercial use.21

The nature and character of the land at the time of its taking is the principal criterion for determining how much just compensation should be given to the landowner.22 All the facts as to the condition of the property and its surroundings, as well as its improvements and capabilities, should be considered.23

In fixing the valuation at P550 per square meter, the trial court had considered the Report of the commissioners and the proofs submitted by the parties. These documents included the following: (1) the established fact that the property of respondent was located along the Naga-Carolina provincial road; (2) the fact that it was about 500 meters from the Kayumanggi Resort and 8 kilometers from the Naga City Central Business District; and a half kilometer from the main entrance of the fully developed Naga City Sports Complex -- used as the site of the Palarong Pambansa -- and the San Francisco Village Subdivision, a first class subdivision where lots were priced at P2,500 per square meter; (3) the fair market value of P650 per square meter proffered by respondent, citing its recently concluded sale of a portion of the same property to Metro Naga Water District at a fixed price of P800 per square meter; (4) the BIR zonal valuation of residential lots in Barangay Pacol, Naga City, fixed at a price of P220 per square meter as of 1997; and (5) the fact that the price of  P430 per square meter had been determined by the RTC of Naga City (Branch 21)24 as just compensation for the Mercados’ adjoining property, which had been expropriated by NPC for the same power transmission project.

The chairperson of the Board of Commissioners, in adopting the recommendation of Commissioner Bulaos, made a careful study of the property. Factors considered in arriving at a reasonable estimate of just compensation for respondent were the location; the most profitable likely use of the remaining area; and the size, shape, accessibility as well as listings of other properties within the vicinity. Averments pertaining to these factors were supported by documentary evidence.

On the other hand, the commissioner for petitioner -- City Assessor Albeus -- recommended a price of  P115 per square meter in his Report dated June 30, 1997. No documentary evidence, however, was attached to substantiate the opinions of the banks and the realtors, indicated in the commissioner’s Report and computation of the market value of the property.

The price of P550 per square meter appears to be the closest approximation of the market value of the lots in the adjoining, fully developed San Francisco Village Subdivision. Considering that the parcels of land in question are still undeveloped raw land, it appears to the Court that the just compensation of  P550 per square meter is justified.

Inasmuch as the determination of just compensation in eminent domain cases is a judicial function, 25 and the trial court apparently did not act capriciously or arbitrarily in setting the price at P550 per square meter -- an award affirmed by the CA -- we see no reason to disturb the factual findings as to the valuation of the property. Both the Report of Commissioner Bulao and the commissioners’ majority Report were based on uncontroverted facts supported by documentary evidence and confirmed by their ocular inspection of the property. As can be gleaned from the records, they did not abuse their authority in evaluating the evidence submitted to them; neither did they misappreciate the clear preponderance of evidence. The amount fixed and agreed to by the trial court and respondent appellate court has not been grossly exorbitant or otherwise unjustified.26

Majority Report ofCommissioners Sufficient

Deserving scant consideration is petitioner’s contention that the Report adopted by the RTC and affirmed by the CA was not the same one submitted by the board of commissioners, but was only that of its chairperson. As correctly pointed out by the trial court, the commissioner’s Report was actually a decision of the majority of the board. Note that after reviewing the Reports of the other commissioners, Chairperson Teoxon opted to adopt the recommendation of Commissioner Bulao. There has been no claim that fraud or prejudice tainted the

majority Report. In fact, on December 19, 1997, the trial court admitted the commissioner’s Report without objection from any of the parties.27

Under Section 8 of Rule 67 of the Rules of Court, the court may "accept the report and render judgment in accordance therewith; or for cause shown, it may recommit the same to the commissioners for further report of facts, or it may set aside the report and appoint new commissioners, or it may accept the report in part and reject it in part; x x x." In other words, the reports of commissioners are merely advisory and recommendatory in character, as far as the courts are concerned.28

Thus, it hardly matters whether the commissioners have unanimously agreed on their recommended valuation of the property. It has been held that the report of only two commissioners may suffice, even if the third commissioner dissents.29 As a court is not bound by commissioners’ reports it may make such order or render such judgment as shall secure for the plaintiff the property essential to the exercise of the latter’s right of condemnation; and for the defendant, just compensation for the property expropriated. For that matter, the court may even substitute its own estimate of the value as gathered from the evidence on record.30

WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Corona, and Carpio Morales, JJ., concur. Sandoval-Gutierrez, J., on leave

G.R. No. L-46732 May 5, 1979

MARIO Z. REYES, petitioner, vs.HON. RONALDO B. ZAMORA as Presidential Assistant for Legal Affairs, Office of the President, MARSMAN and Co., Inc., and e.g. Vito, respondents.

Calanog & Associates Law Office for petitioner.

Wilfredo Y. Guevarra for private respondents.

Office of the Solicitor General for the Public respondent.

 

SANTOS, J.:

Special civil action filed on August 24, 1977 for (1) certiorari to annul and set aside the decision dated November 12, 1976 of the Office of the President thru Deputy Executive Secretary Roberto V. Reyes, which granted respondent Marsman and Co., leave to terminate petitioner's employment, and reversed the decision of the Secretary of Labor dated August 22, 1974 ordering the reinstatement of petitioner with back wages, from the date of his preventive suspension on January 17, 1974, and (2) mandamus to compel the Office of the President to limit its review of the decision of the Secretary of Labor solely on the basis of the evidence presented and established during the hearing conducted at the mediation-fact-finding stage.

On October 7, 1977, private respondents Marsman and Co., Inc. (henceforth Company) and e.g. Vito filed their comment 1 to which petitioner filed his reply on October 26, 1977. 2

Respondent public official after extension, filed his comment on December 20, 1977.  3 On February 1, 1978, We gave due course to the petition, considered respondent's comments as answers, and required the parties to submit their respective memoranda. 4 The Solicitor General, in behalf of respondent public official, manifested on February 16, 1978 that he is adopting the comment he filed as his memorandum.  5 Petitioner, in turn thru counsel, filed his memorandum on March 21, 1978.  6 Private respondents, Company and e.g. Vito, also after

extension, adopted their comment filed on May 29, 1978 as their memorandum. 7 Thereafter, the case was submitted for decision on June 9, 1978.

The following are the factual and procedural antecedents which gave rise to this petition. Petitioner Mario Z. Reyes is Credit and Collection Manager and Operations Coordinator of Marsman and Co., Inc. On January 17, 1974, the Company thru its Vice- President, e.g. Vito, herein private respondent, suspended him indefinitely for "misappropriation of company funds." At that time, petitioner has been with the Company for seven years, six months and twelve days. 8

It appears that in December, 1973, the Company sponsored a sales promotional contest to advertise its pondocillinproducts. A certain Evangeline R. Tagulao, a nurse employed at Singer Industries Phil., Inc., won the first prize — a Volkswagen Beetle 1200. However, Miss Tagulao chose to receive the cash value of the car which was P24,000.00. Accordingly, the Company issued PCIB Check No. 416234 dated December 19, 1973 for P24,000.00 in favor of Miss Tagulao. The check was delivered to Miss Tagulao by petitioner Reyes, accompanied by his co-employee Victor Santos. Together, the three of them went to a bank 9 to cash the check.

On January 16, 1974, the Company received two handwrite ten letters from Miss Tagulao:

First letter

January 16, 1974

Marsman Co. Leo

Pharmaceutical Inc.

This is to certify that I only received P20,000 from Mr. Mario Reyes, and I expect to receive the balance of P4,000.

(Sgd) E.R Tagulao

Evangeline R. Tagulao

Second Letter

January 16, 1974

Marsman Co.

Leo Pharmaceutical Inc.

The following are the circumstances the of the P20,000 to me.

Sometime December 20, 1973 Mr. Mario Reyes came to my clinic bringing the P24,000 check supposedly the equivalent of (1 200 Beetle VW) which I won in the  pondocillin raffle .

From the clinic we proceeded to Rizal Commercial Bank (sic) at Buendia to cash the check. I was surprised when I received only P20,000, but Mr. Reyes explained that the remaining P4,000 will go to the consolation prizes. I didn't complain at that time thinking that what Mr. Reyes told me was true and I found out later that the whole amount of P24,000 is due to me.

(Sgd) E.R. Tagulao

Evangeline R. Tagulao

On the following day, January 17, 1974, respondent Company wrote to Miss Tagulao attaching RCBC Check No. 1363018 for P4,000.00, and indicating that the said check was in lieu of the amount withheld by petitioner Reyes. The Company thereafter advised petitioner Reyes that he was being placed on suspension starting January 18, 1974. It also filed with National Labor Relations Commission (NLRC) on January 21, 1974, an application for clearance to terminate complainant's services alleging that "(P)ending further investigation and considering that this constitutes misappropriation of company funds, and in accordance with existing policy as well as the applicable rules and regulations, Mr. Reyes has been placed under preventive suspension effective as of the close of office hours on January 17, 1974 pursuant to Section 2 of NLRC Implementing Instructions No. 1 issued on November 9, 1972 and Presidential Decree No. 21 issued on October 14, 1972." It added further that "the preventive suspension of Mr. Mario Z. Reyes is necessary in order to prevent further violation of the provisions of the Revised Penal Code and other statutes as well as the established employment policies and reasonable company rules and regulations, said violation being inimical to the interests of the company." 11

Toward the latter part of January 1974, the Company received two letters from Miss Tagulao this time informing it that she was returning the check for P4,000.00 because she ... actually received the full amount of P24,000.00 ...12 One of the letters reads:

January 24, 1974

Mr. E.G. Vito

Exec. Vice Pres.

Marsman and Co. Inc.

Sir:

In all conscience now that I know the truth and everything is clear to me, I'm voluntarily returning the cheek in the amount of P4,000.00. I would like to retract an the previous statement I have given.

I hope this statement of mine closes the case and clear Mr. Mario Reyes of whatever charges.

I don't expect to be bothered again about this matter. I hope this closes the case.

Yours truly,

(Sgd.) E.R. TAGULAO

EVANGELINE R. TAGULAO

On January 30, 1974, petitioner Reyes filed with the NLRC an "Opposition to Request for Clearance to Dismiss" which was docketed and considered as a complaint for illegal dismissal. 14 He alleged that "in spite of results of investigations tending to exculpate him from the charges, he has been placed under harassing situations to the prejudice of himself and his family ... and prayed that respondent Company be ordered "to immediately reinstate (him) to his former position with full back-salaries ..."

The case was assigned to Mediator-Fact-finder Mirasol Corleto for mediation and/or fact-finding. After hearing, she submitted a "Mediation Report" 15 dated February 25, 1974 to the NLRC wherein she found petitioner innocent of the charge of misappropriation and recommended his reinstatement with backwages, thus:

xxx xxx xxx

FINDINGS:

In order to shed light to this case, Miss Tagulao personally testified during the mediation stage and stated that without her knowledge, the amount of P4,000 was taken by Mr. Victor Santos from the envelope containing the cash prize. She was at that time, personally indebted to Mr. Victor Santos of the sum of P4,000 for a diamond ring which she purchased on installment basis on November 15, 1973 as evidenced by hereto attached promissory note. She further testified that she did not have any intention of filing a complaint against Mr. Mario Reyes were it not for the instigation and prodding of Mr. Romeo Henson.

The other witness Mr. Victor Santos also testified to the fact that he was the one who took the P4,000 as payment to him by Miss Tagulao for a diamond ring. When Mr. Santos explained the whole thing and after he had issued a receipt to Miss Tagulao for the P4,000, Miss Tagulao withdrew her complaint from Marsman and returned the check to respondent Co.

It is crystal clear from the evidences and testimonies presented by witnesses that complainant Mario Reyes was innocent of what had transpired to the sum of P4,000 and he was just a victim of an honest mistake.

Respondent company does not have any right to suspend complainant after Miss Tagulao had clarified the whole matter to them.

Respondent does not have any sound basis to lose their trust and confidence in complainant who had rendered service with the Company for almost 8 years.

RECOMMENDATION

In view of the foregoing, it is respectfully recommended that complainant be reinstated with backwages and request for clearance of respondent be denied.

The NLRC 16 issued an Order 17 dated February 14,1974 adopting the "findings of Mediator-Fact-finder Mirasol Corleto dated 25 February 1974 (sic)." Contrary to Corleto recommendation however, the NLRC ordered the Company to reinstate petitionerwithout backwages.

From the NLRC's order, both parties appealed to the Secretary, now Minister, of Labor. Respondent Company's, "Motion for Reconsideration" 18 dated April 2, 1974, which was denied, was considered as its appeal to the Minister of Labor. The Company based its appeal on the following grounds:

1. Vital evidences were disregarded, which if otherwise considered would have substantially changed the nature of the Order.

2. Assuming arguendo that substantial evidence on the whole had been considered, the circumstances of the case do not warrant the relief granted.

Petitioner on the other hand, on April 8, 1974, appealed that portion of the NLRC's order which denied him backwages. 19

The Minister of Labor's "Decision" 20 dated August 22, 1974 ordered the reinstatement of petitioner with backwages. Pertinent portion of the decision reads:

xxx xxx xxx

Based on the evidence, we hold complainant completely blameless from the imputation and charges which were the bases for respondent's application for clearance to dismiss complainant. Consequently, loss of trust may not be imputed to complainant. Also, the grounds in support of complainant's preventive suspension, namely: 'to prevent further violation of the provisions of the Revised Penal Code and other statutes as well as the established employment policies and reasonable company rules and regulations' would be gratuitous assertions devoid of factual foundation. On this basis, complainant's prayer to modify the Commission's Order to one of reinstatement with backwages deserves utmost consideration.

The Minister of Labor decided in favor of petitioner on the strength of the "diamond ring story" mentioned in Mediator-Fact-finder Corletos Report (supra), and sustained by the NLRC, thus:

At the mediation-fact-findings stage, Miss Evangeline Tagulao declared that she did not know that Mr. Victor Santos deducted the amount of P4,000 from the envelope containing her rash prize. She further declared that at that time she was indebted to Mr. Santos of the sum of P4,000 for a diamond ring she purchased from him on installment basis on November 15, 1973 as evidenced by a promissory note she executed in his favor. Further testimony reveals that she filed the complaint against Mr. Mario Reyes because of the instigation and prodding of Mr. Romeo Henson, Promotions Coordinator at Marsman & Company, Inc.

These facts were confirmed by Mr. Victor Santos who was presented as witness for complainant and further admitted that he took the amount of P4,000 from the envelope containing Miss Tagulao's cash prize as payment of the balance of the diamond ring he sold to her. It appears that after these circumstances were explained to her, on the basis of which she issued a receipt for P4,000 as full payment of the diamond ring by Mr. Victor Santos, Miss Evangeline Tagulao withdrew her complaint against complainant Mario Reyes and returned the check for P4,000 which was earlier issued to her by respondent company.

Despite these clarifications by both Miss Tagulao and Mr. Santos of an apparent misunderstanding of which complainant was the unsuspecting victim, respondents continued with their suspension of complainant.

Respondents Company and e.g. Vito filed a Motion for Reconsideration 21 dated September 2, 1974 alleging that —

1. The decision treated the evidence unfairly and with manifest subjectivity in favor of complainant;

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2. The consideration of complainants' appeal has denied respondents their right to due process; and

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3. The reinstatement and backwages ordered in the decision of August 22, 1974 is without legal basis.

The Minister of Labor, Hon. Blas F. Ople, found the Motion for Reconsideration "lacking of merit" and denied the same in an Order 22 dated December 23,1974.

A Second Motion for Reconsideration 23 dated January 16, 1975 filed by respondents was again denied "(F)or lack of merit" in an Order 24 dated March 22, 1975.

Respondents then appealed to the Office of the President, praying for the reversal of the Order of the Minister of Labor dated March 22, 1975 denying their motion for reconsideration, on the following "extraordinary grounds" : 25

1. The Order is contrary to law and jurisprudence on the matter and

2. The Order contains serious errors in the findings of facts and would cause grave or irreparable damage and injury to the appellants.

Anent the first ground, respondents allege that reinstatement with payment of backwages cannot be ordered "in the absence of a finding of unfair labor practice (as in this case)", and that mere loss of confidence win suffice for the dismiss of a supervisory or managerial employee, such as petitioner in this case. As to the second ground, the main thrust of respondent's argument is that it was clear error for the Minister of labor to hold petitioner Reyes ... blameless from the imputation and charges ..." by the mere fact "that the complaint and previous statement of the winner, Evangeline Tagulao, had already been with drawn or retracted by her. They allege that in termination cases, direct and positive evidence of an employee's guilt of the charges, as required in criminal cases, need not be shown.

The Office of the President decided the appeal by a 1st Indorsement 26 dated November 12, 1975. The decision was arrived at after additional hearings were conducted by it on July 15, July 25 and October 22, 1975. It reversed the decision of the Minister of Labor dated August 22, 1974 ordering the reinstatement of petitioner with backwages, having found Tagulao's "diamond ring story" implausible, thus:

At the fact-finding proceedings of February 18, 1974, Miss Tagulao for the first time stated the reason for her retraction. According to her, she owed Victor Santos (the promotions supervisor with whom she and the complainant proceeded to the bank for the cashing of the prize money check) the balance of P4,000 for a diamond ring which she purchased from the latter on installment basis since November 15, 1973, as per a promissory note she executed in his favor. She testified that she filed the complaint against Mario Reyes because she was allegedly instigated by Romeo Henson, production coordinator of the respondent. Received for all and whatever it is worth, the promissory note allegedly executed by Tagulao in Victor Santos' favor sans the formalities ordinarily attendant to such undertakings exists as a document the truth of which can never really be ascertained except on the verbal testimony of the person supposedly its author. The existence of this note, however, was never revealed to the respondent at the time Miss Tagulao complained on January 16, 1974. If as alleged by Miss Tagulao the P4,000 deducted from the prize money on the very day the check was cashed represented payment of the promissory note, then Victor Santos, the supposed creditor, could have simply asked for the P4,000 balance from her, the alleged debtor, and just demanded a receipt for the payment of such amount, nothing more. Instead, in her letter-complaint against Mario Reyes, Tagulao charged that she was made by the complainant herein to believe that the P4,000 deducted from her prize money was for consolation prizes. This contradictory allegations of Tagulao puts her credibility in serious doubt.

Moreover, a week or so had passed since the filing of her Complaint on January 16, 1975, up to her retraction on January 24, 1975, and within this period, Miss Tagulao set up entirely different and opposite explanations. So also, during the entire period of time that passed from the encashment of the check in December 1973 to the filing of the complaint on January 16, 1974, the P4,000 was not delivered to the winner Miss Evangeline Tagulao. This leads this of office to gravely doubt the integrity of her retraction and suspect that her letter of January 24, 1975 was, more than anything else, made to exculpate the complainant-appellee. Under the circumstances, this Office is inclined to hold that complainant's guilt as complained has not been satisfactorily erased.

On the finding of the Minister of Labor that the complaint against petitioner was due to "instigation and prodding of Mr. Romeo Henson, Promotions Coordinator at Marsman and Company, Inc. ", the Office of the President made the following observations:

For his part, Romeo Henson, testifying on oath before this Office on October 22, 1975, disclosed that as promotions manager of the respondent, he had to see to the proper and orderly disposition of awards in promotional contests, including that in which the

complainant was allegedly irregularly involved and in which Evangeline Tagulao emerged winner.

Tipped off by one Romeo Real promotions supervisor of the pharmaceuticals division of the respondent, on alleged anomalies attending the aforesaid contest, Henson accordingly proceeded to investigate the matter and visited Tagulao at the latter's residence. Whereupon he learned from the winner that she received P20,000, the complainant having allegedly told her that the P4,000 was allocated for consolation prizes. He therefore informed her that she should have received P24,000, and that the company shall forthwith remit to her the balance of P4,000, upon her proper notice to the respondent, Thereafter Tagulao drafted a handwritten letter to the company which Henson picked up at the winner's office the following day.

Henson, who admitted being a "compadre" and a personal friend of the complainant averred that both he and Tagulao never discussed anything beyond the winner's desire to have the balance of her prize money remitted to her by Marsman & Company. He therefore expressed surprise at Tagulao's subsequent "retraction". Further, he vehemently denied having prodded or instigated Tagulao to file the complaint against Mario Reyes, and that his only purpose was to help Miss Tagulao recover the balance of the prize due her. ... A circumspect consideration of the testimonies adduced in this case leads this Office to believe the version of Henson than Tagulao's. For in the natural course of things no amount of prodding by Henson could have moved Tagulao to make the complaint against anybody if she were not short-changed in the payment of the prize. And if there really was a private transaction between her and Victor Santos and/or Mario Reyes which accounted for the withholding or non-remittance to her of the P4,000, it is beyond comprehension why she would still file, as she did file, the complaint in question.

Finally, the Office of the President concluded:

There is, therefore, basis for the respondent to claim that it had lost confidence on the complainant employee, in the light of the fact that the complainant-appellee deliberately withheld the sum of P4,000 from Miss Tagulao, the latter receiving only P20,000 from the original prize money of P24,000. The turnabout of events as manifested in Tagulao's retraction fails to convince this Office of the innocence of the complainant-appellee from the irregularity. Verily, tile complainant has sufficiently given his employer, the respondent, ground for loss of confidence.

xxx xxx xxx

This Office (so) holds that the foregoing circumstances are sufficient for the respondent employer to terminate (the services of) the complainant employee. It is not wise to tolerate the latter to remain in his position simply because of the questionable retraction by the winner of the sales promotional contest because the breach of trust has already been committed. The interest not only of the respondent corporation, but of the public itself it involved, since promotional contests such as the one involved herein are advertised to the public at large. The respondent was, therefore, justified in requesting the termination of the services of its managerial employee, the complainant herein The decision of the Secretary of Labor dated August 22, 1974, is therefore hereby reversed, and the request for clearance to terminate complainant's employment is granted. (Emphasis supplied).

Petitioner filed a Motion for Reconsideration 27 dated December 29, 1975 of the decision of the Office of the President. It was however denied for lack of merit by said Office thru Presidential Assistant for Legal Affairs, Hon. Ronaldo B. Zamora, in a letter 28 dated February 8, 1977. Hence this petition.

Petitioner alleges that the Office of the President acted without or in excess of jurisdiction and/or with grave abuse of discretion amounting to lack of jurisdiction in issuing the questioned decision dated November 12, 1976 and the resolution dated February 8, 1977 denying his Motion for Reconsideration, on the grounds that the Office of the President —

1. Does not have any jurisdiction to entertain the appeal; and

2. Has no authority to conduct a new hearing on appeal for the purpose of fishing new or additional evidence.

With respect to the first ground, petitioner argues that the appeal of respondents does not fall under Section 13, Rule XIII of the Rules and Regulations Implementing the Labor Code,  infra, since the grounds alleged in the said appeal are not those prescribed by the aforesaid provision.

Anent the second ground, petitioner insists that the Office of the President "committed grave abuse of discretion amounting to lack of jurisdiction when, apart from reviewing the case on the basis of the evidence on records, (it) went further thereby conducting a new hearing on appeal .. . ."

Private respondents Marsman and Co. and e.g. Vito on the other hand contend that -

... The allegation of being contrary to law and jurisprudence is really one such purely on questions of law which is therefore in keeping with par. (b) of Sec. 13, Rule XIII and, the allegation that serious errors in the findings of facts would definitely lead one to conclude as the prima facie evidence of abuse of discretion and therefore substantially in keeping with par. (a) of Sec. 13, Rule XIII.

On the allegation that the Office of the President does not have jurisdiction to conduct a new hearing on appeal, they maintain that a new hearing was necessary because of patent inconsistencies" in the case for the complainant which must be clarified so that the Office of the President may render a "judicious decision."

The Solicitor General 29 postulates - similarly with the private respondents - that "serious errors in the findings of facts" relied upon by respondents may be considered as falling under "abuse of discretion" (par. [a], Sec. 13, Rule XIII) whereas the averment that "the order is contrary to law and jurisprudence on the matter" may be considered as a ground raising a question of law (par. [b], sec. 13, Rule XIII)

On the propriety/legality of the new hearings conducted by the Office of the President, the Solicitor General maintains that "(T)here is no law which prohibits the Office of the President from conducting additional hearings in an appealed case. Furthermore, it is by itself an administrative body and as such is possessed with fact-finding prerogatives, especially so when the purpose thereof is necessary, nay indispensable, to the proper adjudication of the case. In the case at bar, public respondent found the evidence on record wanting in some important factual aspects as to be able to determine whether or not petitioner's suspension and/or dismissal was justified. Thus it could not be said that public respondent abused its discretion in conducting additional hearings prompted as it was by its desire to render a correct and just decision."

From the foregoing discussions/arguments the following issued emerge for Our resolution, i.e. —

1. Whether or not the Office of the President has jurisdiction to entertain the appeal of private respondents, under Rule XXI, Sec. 13 of the Rules and Regulations Implementing the Labor Code of the Philippines:

2. Whether or not the Office of the President acted without or in excess of its jurisdiction and/or with grave abuse of discretion in conducting new hearings on appeal; and

3. Whether or not petitioner's dismissal on the ground of loss of confidence is justified.

Now to resolve the foregoing in seriatim

1. We perceive no difficulty in sustaining respondents' claim on the first issue. They relied in their appeal to the Office of the President on the following.

a) The Order is contrary to law and jurisprudence on the matter; and

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b) The Order contains serious errors in the findings of facts and would cause grave or irreparable damage and injury to the appellants; "

whereas, the grounds provided under Rule XIII, Section 13 of the Rules and Regulations Implementing the Labor Code, are:

a) If there is prima facie evidence of abuse of discretion;

b) If made purely on questions of law and

c) If there is a showing that the national security or social and economic stability is threatened.

Petitioner's allegation that the grounds relied upon are not those provided for is more apparent than real. For the truth is, as the Solicitor General and the private respondents point out, the allegation that "(T)he order is contrary to law and jurisprudence on the matter" raises a question of law and hence can be subsumed under paragraph (b), aforequoted. Indeed when one alleges that an order is  contrary to law and jurisprudence, plain common sense dictates that the order is being attacked on question of law.

Again, the second ground - that "the order contains serious errors in the findings of facts and would cause grave or irreparable damage and injury to appellants - is in the final analysis tantamount to alleging "abuse of discretion", and may be subsumed under paragraph (a), supra. Serious errors in the findings of facts may not per se be equated with abuse of discretion. Under Rule XIII, Section 7 30 of the Rules and Regulations providing for appeals from the decision of the Labor Arbiter or compulsory arbitrator to the NLRC, "abuse of discretion" and "serious errors in the findings of facts" are two separate and distinct grounds, i.e. (a) and (d) thereof. In this case, however, a careful perusal of private respondents' appeal wig show that they are raising principally grave abuse of discretion on the part of the Minister in rendering decision. As previously stated, the main thrust of respondents' argument is that under the circumstances of the case, the Minister made a palpably erroneous conclusion in holding that petitioner did not commit a breach of respondents' trust and confidence. This is tantamount to ascribing to him an abuse of discretion.

In any event, the first ground, which raised a question of law, already conferred jurisdiction in the Office of the President to entertain the appeal.

2. Petitioner's bare allegation that the Office of the President acted without or in excess of its jurisdiction and/or with grave abuse of discretion in conducting a new hearing on appeal is devoid of merit. Firstly, if that were his belief, he should not have taken part in the hearing, and testified therein. 31 He should have taken proper legal steps to raise his objection at the earliest opportunity. With his participation and cooperation in said new hearing, he is now estopped from complaining that the Office of the President conducted new hearings on appeal. Secondly, petitioner can cite no law or jurisprudence to support his argument. For the truth is, as pointed out by the Solicitor General, "(T)here is no law which prohibits the Office of the President from conducting additional hearings in an appealed case" * and that the said Office "is by itself an administrative body and as such is possessed with fact-finding prerogative, especially so when the purpose thereof is necessary, nay indispensable, to the proper adjudication of the case." Further, the Solicitor General observed that the new hearing was necessary because "public respondent found the evidence on record wanting in some important factual aspects as to be able to determine whether or not petitioner's suspension and/or dismissal was justified."

3. Is petitioner's dismissal on the ground of loss of confidence justified?

Loss of confidence is a valid ground for dismissing an employee, and proof beyond reasonable doubt of the employee's misconduct - apparently demanded by the Minister of Labor - is not required to dismiss him on this charge. 32 It is sufficient if there is "some basis" for such loss of confidence; 33 or if the employer has reasonable grounds to believe, if not to entertain the moral conviction that the employee concerned is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position. 34

In the case at bar, it is an admitted fact that petitioner is a managerial employee, one in whom respondent Company has given its complete trust and confidence. 35 He was, at the time of the anomaly, per his own claim,

"concurrent Acting Manager of Leo Pharmaceutical (a division of respondent Company) and Credit and Collection Manager 36 The Company, therefore, was justified in expecting that his actuations should be above suspicion. Because of petitioner's involvement in the raffle anomaly, i.e., having withheld from the winner Miss Tagulao, P4,000 of the P24,000 prize money, which withholding he was not able to explain convincingly much less disprove, 'it is not in the words of the decision of the Office of the President, "wise to tolerate the latter (petitioner) to remain in his position . . . because the breach of trust has already been committed.37

The petitioner would also pray that the writ of mandamus issue against the Office of the President, directing said Office to confine its review of the decision of the Minister of Labor solely on the evidence presented and established during the hearing conducted at the mediation-fact-finding stage. Petitioner would, in effect, request this Court to prevent said Office from considering the evidence presented at the hearings conducted by the said Office, in its resolution of the appeal .

This petition also lacks merit. In the first. place, the office of the writ of mandamus is to direct "any tribunal ... , board or person" to perform " an act which the law specifically enjoins as a duty resulting from an office, trust, or station ... . " 38 In the instant case, there is no duty that the Office of the President neglected to do which would warrant the issuance of a writ of mandamus. Secondly, as has been observed earlier, the petitioner did not take legal steps to prevent said hearings. On the contrary, he participated in the same. He is therefore now estopped from questioning the said proceedings through a request for the issuance of a writ of mandamus which, obviously, is not the proper remedy.

WHEREFORE, let this Petition be as it is hereby DISMISSED. The decision of the Office of the President dated November 12, 1975 — granting respondent company's application for clearance to terminate petitioner's employment is hereby AFFIRMED. Costs against petitioner. This decision is immediately executory.

SO ORDERED.

Antonio, Aquino, Concepcion Jr., and Abad Santos 

GOVERNOR FELICISIMO T. SAN LUIS, THE SANGGUNIANG PANLALAWIGAN, PROVINCIAL ENGINEER JUANITO C. RODIL AND PROVINCIAL TREASURER AMADEO C. ROMEY, ALL OF LAGUNA, petitioners, vs.COURT OF APPEALS AND MARIANO L. BERROYA, JR., respondents.

Dakila F. Castro & Associates for petitioners.

Cecilio C. Villanueva for Gov. San Luis.

Felicisimo T. San Luis for himself and in behalf of his co- petitioners.

Renato B. Vasquez for private respondent.

 

CORTES, J.:

The instant petition for certiorari and mandamus and/or appeal by certiorari assails the appellate court's ruling that mandamus lies to compel the reinstatement of a quarry superintendent in the provincial government of Laguna who was initially detailed or transferred to another office, then suspended, and finally dismissed following his expose of certain anomalies and irregularities committed by government employees in the province.

The background facts, as narrated by the respondent Court of Appeals are:

Records show that at all pertinent times, petitioner-appellant (private respondent herein) had been the quarry superintendent in the Province of Laguna since his appointment as such on May 31, 1959. In April and May of

1973, petitioner-appellant denounced graft and corrupt practices by employees of the provincial government of Laguna. Thereafter, the development of events may be briefly encapsulated as follows:

a. On July 20, l973, herein respondent-appellee provincial governor (one of the petitioners herein) issued Office Order No. 72 transferring Berroya to the office of the Provincial Engineer. An amended office order invoked LOI 14-B for said transfer.

b. Berroya challenged said transfer, and on October 25, 1973, the Civil Service Commission ruled the same violative of Section 32, RA 2260, and ordered that Berroya be reverted to his regular position of quarry superintendent.

c. On December 12, 1973, instead of complying with the CSC directive that Berroya be reverted to his regular position, herein respondent-appellee provincial governor suspended Berroya for alleged gross discourtesy, inefficiency and insubordination. On that basis, reconsideration of the CSC directive that Berroya be reverted to the position of quarry superintendent was sought as academic (sic).

d. On February 26, 1974 the Civil Service Commission reiterated its October 25, 1973 directive for the immediate reversion of Berroya to his former position, and ruled the one-year suspension illegal.

e. Respondent-appellee provincial governor appealed to the Office of the President from the CSC rulings alluded to.

f. On May 29, 1974, there issued OP Decision 954, Series of 1974 reversing the CSC rulings without prejudice to the decision of the Local Review Board [which had in fact already sustained the one-year suspension under date of May 6, 1974].

g. On petitioner-appellant's motion for reconsideration, the Office of the President rendered OP Decision 1834, Series of 1976, dated May 19, 1976, setting aside OP Decision 954, declaring the one-year suspension improper, and ordering payment of back salaries to Berroya.

h. Respondent-appellant moved for reconsideration of OP Decision 1834 on June 14, 1976. The said motion for reconsideration was denied on November 6, 1978.

i. In the interim, respondent-appellant provincial governor issued an Order of April 27, 1977 dismissing Berroya for alleged neglect of duty, frequent unauthorized absences, conduct prejudicial to the best interest of duty and abandonment of office, which order of dismissal was appealed by Berroya to the Civil Service Commission on May 12, 1977.

j. On January 23, 1979, the Civil Service Commission resolved said appeal by declaring the dismissal unjustified, exonerating Berroya of charges, and directing his reinstatement as quarry superintendent.

k. On February l4, 1979, respondent-appellee provincial governor sought relief from the CSC decision of January 23, 1979 declaring Berroya's dismissal unjustified.

1. On October 15, 1979, the CSC Merit System Board denied said motion for reconsideration in its Resolution No. 567.

m. Thereafter, respondent-appellee provincial governor moved anew to set aside O.P. Decision 1834, Series of 1976-the first motion for reconsideration of which had been denied on November 6, 1978. (ref. #h, supra). The Office of the President dismissed said motion on March 27, 1981.

Petitioner-appellant's formal demand for reinstatement to the position of quarry superintendent having been disdained despite the factual antecedents aforestated, he filed, [on May 27, 1980] the antecedent Civil Case No. SC-1834 for mandamus to compel his reversion to the position of quarry superintendent at the Oogong Quarry, with back salaries for the entire period of his suspension and dismissal (exclusive of leaves of absence with pay), and prayed for moral and exemplary damages, attorney's fees and expenses of suit.

Respondents-appellees moved to dismiss said petition for mandamus, as amended, and opposed the therein application for preliminary injunctive relief for immediate reinstatement.

In an Order of December 1, 1980, the trial court denied the application for preliminary injunctive relief "until after the parties shall have adduced evidence, pro and con the grant of injunctive relief", and similarly deferred its resolution on the motion to dismiss "for lack of merit for the present ... until after the trial."

On December 15, 1980, respondents-appellees answered the petition for mandamus and prayed that judgment be rendered-

1. Dismissing the Complaint and denying the prayer for Preliminary Injunction;

2. Declaring petitioner to have been legally separated or dismissed from the government service;

3. Order petitioner to pay each of them the sum of P 200,000.00 by way of moral damages; P 100,000.00 as exemplary damages and P 10,000.00 as attorney's fees plus P 300.00 each per court appearance; other litigation expenses which may be incurred as may be proved in due course; and to pay the costs of suit [Rollo, pp. 35-37].

During the pendency of the civil case for mandamus, on April 9, 1981 petitioner provincial governor filed a petition for relief from O.P. Decision 1834 with the Office of the President. This was denied on November 27, 1984 on the ground that only one motion for reconsideration of O.P. Decision 1834 was allowed, the petition for relief being the third such motion filed by petitioner.

On May 17, 1985, after trial, the court a quo rendered its decision finding the transfer of petitioner- appellant from his position of quarry superintendent to the office of the Provincial Engineer sufficiently warranted. Furthermore, his one-year suspension was found to be proper under LOI 14-B and unassailable upon affirmation by the Local Review Board. His summary dismissal was likewise found to be a justified exercise of the authority granted under LOI 14-B. The trial Court further decided "that none of the respondents should be held personally liable in their private capacity to the petitioner because their actuations are not at all tainted with malice and bad faith" [Rollo, p. 38].

However, although the trial court upheld the validity of Berroya's dismissal, it nevertheless ordered his reinstatement to an equivalent position as a matter of equity. Hence, the dispositive portion of its decision reads as follows:

WHEREFORE, judgment is hereby rendered:

1. Ordering respondents to reinstate petitioner to any position equivalent to that of a quarry superintendent which has been abolished in the present plantilla of the provincial government of Laguna as reorganized pursuant to PD 1136 without diminution in rank and salary;

2. Ordering respondents to pay the back salary of petitioner from April 26, 1977 to September 1, 1977 only and appropriating funds therefor, as soon as this decision becomes final;

3. Dismissing all claims and counterclaims of both parties for other damages including attorney's fees [Rollo, p. 35].

On June 6, 1985, herein private respondent Berroya appealed from the decision of the Regional Trial Court dated May 17, 1985. The appeal was resolved by the respondent Court of Appeals in his favor in a decision which was promulgated on April 30, 1987, the decretal portion of which states:

WHEREFORE, the present appeal is accordingly resolved as follows:

(a) Petitioner-appellant is ordered to be reinstated to the position of quarry superintendent of the Oogong Quarry in Laguna or to the position which said office may now be called pursuant to the reorganization of the plantilla of the Provincial Government of Laguna under PD 1136, without diminution in rank and salary;

(b) Respondents-appellees are ordered to pay the back salary of petitioner-appellant corresponding to the period of suspension and of illegal dismissal from the service, exclusive of that corresponding to leaves of absences with pay;

(c) Respondents-appellants (sic) are ordered, jointly and severally, to pay petitioner-appellant the sum of P 50,000.00 as and for moral damages;

(d) Respondents-appellants (sic) are ordered, jointly and severally, to pay petitioner-appellant the further sum of P 20,000.00 as and for attorney's fees, plus costs and expenses of suit.

The decision of May 17, 1985, in Civil Case No. SC-1748 is accordingly set aside forthwith.

With costs against respondents-appellees.

SO ORDERED. [Rollo, p. 43.]

Petitioners moved to reconsider the decision of the appellate court but their motion was denied. Hence, the instant petition docketed as G.R. No. 80160, which is "both or alternatively an original action for certiorari and mandamus and an appeal by certiorari" [See Rollo, p. 1, et seq.] Another petition for review of the Court of Appeals' decision was filed with this Court on October 8, 1987 docketed as G.R. No. 79985 by the same petitioners. However, in a resolution dated November 16, 1987, the Court noted the manifestation/motion filed by petitioners stating, among other things, that the petition docketed as G.R. No. 79985 be considered withdrawn and the petition dated October 16, 1987 which was filed on October 19, 1987 and docketed as G.R. No. 80160 be considered as the main and real petition [Rollo, p. 50].

Accordingly, the parties were required to submit their respective pleadings in G.R. No. 80160. The petition in G.R. No. 80160 contains the following assignment of errors:

First

THE RESPONDENT COURT GRAVELY ABUSED ITS DISCRETION AS WELL AS EXCEEDED ITS JURISDICTION IN DENYING PETITIONERS' MOTION FOR RECONSIDERATION BY MEANS OF A MERE MINUTE RESOLUTION, STATING NO LEGAL BASIS THEREFOR, IN GROSS VIOLATION OF THE CONSTITUTION'S EXPRESS MANDATE AND WHEN IT STATED AND HELD IN SAID RESOLUTION "THAT NO NEW REASON HAS BEEN ADDUCED [IN SAID MOTION] TO JUSTIFY A REVERSAL OR MODIFICATION OF [ITS] FINDINGS AND CONCLUSIONS".

Second

THE RESPONDENT COURT ERRED AND GRAVELY ABUSED ITS DISCRETION AS WELL AS EXCEEDED ITS JURISDICTION IN FINDING THAT THE RESPONDENT MARIANO L. BERROYA, JR. DOES NOT FALL UNDER THE CATEGORY OF "NOTORIOUSLY UNDESIRABLE" AND THAT THE "APPLICABILITY OF LOI 14-B TO RESPONDENT BERROYA IS OPEN TO QUESTION AS HE WAS NEVER ASKED TO RESIGN AS BEING NOTORIOUSLY UNDESIRABLE".

Third

THE RESPONDENT COURT BLATANTLY ERRED AND GRAVELY ABUSED ITS DISCRETION AS WELL AS EXCEEDED ITS JURISDICTION IN FINDING THAT THE "RECALL" OF THE DISMISSAL ORDER IS ITSELF ATTENDED BY A TOUCH OF MYSTERY, MENTIONED ONLY IN THE TESTIMONY OF PETITIONER PROVINCIAL GOVERNOR, UNFORTIFIED BY ANY WRITING THEREOF, AND NOT ADVERTED TO IN THE DECEMBER 15, 1980 ANSWER FILED IN THE ANTECEDENT mandamus ACTION, AND IN NOT FINDING THAT RESPONDENT BERROYA COMMITTED ABANDONMENT OF OFFICE.

Fourth

THE RESPONDENT COURT ERRED AND GRAVELY ABUSED ITS DISCRETION AS WELL AS EXCEEDED ITS JURISDICTION IN FINDING THAT THE DECISION OF THE LOCAL BOARD OF REVIEW UNDER LOI 14-B MAY BE REVIEWED UNDER THE CONSTITUTIONAL PREROGATIVE OF THE PRESIDENT TO SUPERVISE LOCAL GOVERNMENT UNITS, WHICH INCLUDES THE AUTHORITY TO REVIEW, MODIFY OR REVERSE DECISION INVOLVING SUSPENSION OF LOCAL OFFICIALS AND EMPLOYEES.

Fifth

THE RESPONDENT COURT ERRED AND GRAVELY ABUSED ITS DISCRETION AS WELL AS EXCEEDED ITS JURISDICTION IN CONCLUDING IN RATHER STRONG LANGUAGE THAT THE "ABOLITION OF THE POSITION OF QUARRY SUPERINTENDENT FROM THE PLANTILLA OF THE PROVINCIAL GOVERNMENT OF LAGUNA MUST BE VIEWED WITH (sic) ABERRATION AND AN ANOMALY, IN THE LIGHT OF UNCONTROVERTED SHOWING THAT QUARRY OPERATIONS AT THE SAME SITE CONTINUE TO DATE, AS WOULD MILITATE AGAINST ATTENDANCE OF GOOD FAITH IN THE ABOLITION OF SAID OFFICE."

Sixth

THE RESPONDENT COURT ERRED AND GRAVELY ABUSED ITS DISCRETION AS WELL AS EXCEEDED ITS JURISDICTION IN ORDERING THE PAYMENT OF PRIVATE RESPONDENTS BACK SALARIES FOR THE PERIOD OF HIS SUSPENSION AS WELL AS DISMISSAL UNTIL REINSTATEMENT AS QUARRY SUPERINTENDENT, AND IN AWARDING MORAL DAMAGES IN THE SUM OF P50,000.00 AND ATTORNEY'S FEES IN THE SUM OF P20,000.00 IN FAVOR OF THE PRIVATE RESPONDENT BERROYA, AND IN HOLDING ALL THE PETITIONERS HEREIN SOLIDARILY LIABLE FOR THE PAYMENT OF AFORESAID BACK SALARIES AND DAMAGES [Rollo, pp. 13-14].

The first error assigned in the instant petition is not well taken. A thorough perusal of the assailed resolution of the respondent CA denying petitioners' motion for reconsideration reveals clearly its legal basis. Thus, its resolution stating that

Considering that the motion for reconsideration of the decision promulgated on April 30, 1987 filed by respondent-appellee merely reiterates the grounds and arguments already discussed, thoroughly analyzed and passed upon by this Court; and that no new reason has been adduced to justify a reversal or modification of the findings and conclusion of this Court.

WHEREFORE, the motion for reconsideration is DENIED for lack of merit [Rollo, p. 45; Emphasis supplied].

constitutes sufficient compliance with the constitutional mandate that no motion for reconsideration of a decision of the court shall be denied without stating the legal basis therefor (1987 Constitution, Art. VIII, Sec. 14, par. 2).

The resolution of the remaining assigned errors hinges on a determination of the effect of the decisions rendered in favor of Berroya by two administrative agencies.

A. It is worth noting that the issue of legality of the order of suspension by petitioner Governor dated December 12, 1973 had already been passed upon in a decision of the Office of the President (O.P. Decision No. 1834) dated May 19, 1976 reversing its earlier ruling in O.P. Decision No. 954 dated May 29, 1974. The Office of the President categorically ruled as follows:

xxx xxx xxx

It is not disputed that the Governor, in issuing his Order of Suspension, was exercising an authority legally endowed upon (sic) him by LOI 14-B, but it must not be an unbridled exercise of such authority....

A review of the records discloses that the only act of the governor which was sustained by the Local Review Board was his imposing the suspension on Berroya for alleged discourtesy. This Office is prone to adopt a contrary stand on the matter taking into consideration the circumstances leading to the writing of the so-called

"dishonest' statements of the petitioner. It is unfortunate that the Local Review Board took it as an infraction of the Civil Service Rules and Regulations. It must be observed that the said statements were made in the course of a pending case before the Civil Service Commission, and in defense of the position of the petitioner. Although the said statements, by themselves, may be considered as lacking in refinement, still this fact alone does not justify the drastic action taken against the petitioner in this case. . . .

In view of the foregoing, this Office rules that the suspension order was unjustified. Considering that respondent Berroya has already served the suspension order and that his suspension was not proper, it is hereby ordered that he be entitled to the payment of his back salaries corresponding to the period of his suspension [Folder of Exhibits, Vol. 1, pp. 102-103].

From this decision of the Office of the President, petitioner Governor filed a petition for reconsideration dated June 14, 1976 which was denied for lack of merit in a resolution of the Office of the President dated November 6, 1978 [Folder of Exhibits, Vol. 1, p. 170]. On July 3, 1979, petitioner governor filed a second petition to reconsider O.P. Decision No. 1834 on the main ground that the disputed decision is null and void ab initio allegedly because Berroya filed his motion for reconsideration of O.P. Decision No. 954 only on July 15, 1975 or after a lapse of one year and forty seven (47) days from the date when the said decision was rendered. The Office of the President denied such petition in a resolution dated March 27, 1981 [Folder of Exhibits, Vol. 1, p. 210] on the strength of Executive Order No. 19, Series of 1966 which empowers said office to act upon petitions for reconsideration, even if filed late, in exceptionally meritorious cases. Said Office further pointed out that upon review of the records of the case, it was shown that Berroya's motion for reconsideration was filed on July 15, 1974 and not on July 15, 1975 as erroneously indicated in O.P. Decision No. 1834 [Folder of Exhibits, Vol. 1, p. 213].

From the foregoing, it can be seen that OP Decision No. 1834 had already attained finality upon denial of the first motion for reconsideration in view of the clear provisions of the applicable law at the time. Executive Order No. 19, Series of 1966, which provides:

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5. Petitions for reconsideration filed after the lapse of the aforesaid period (fifteen days from receipt of the decision) shall not be entertained unless the Office of the President, for exceptionally meritorious causes, decides to act thereon, provided that only one petition for reconsideration by any party shall be allowed [Emphasis supplied.]

Accordingly, the filing of the second petition for reconsideration could not have stayed the finality of the aforesaid decision.

In a last ditch attempt to assail the validity of O.P. Decision No. 1834, a petition for relief was filed by herein petitioners on April 9, 1981, during the pendency of the mandamus case. This petition was finally denied in a resolution of the office dated November 27, 1984.

B. On the other hand, the validity of Berroya's dismissal was already passed upon by the Merit Systems Board of the Civil Service Commission in MSB Case No. 40. In a decision promulgated on January 23, 1979, the Merit Systems Board held as follows:

After carefully perusing the records of this case, this board is convinced that there is no strong evidence of guilt against Berroya. In fact, there is not even sufficient evidence to maintain the charges against him. Hence, the same does not fall within the scope of Section 40, Presidential Decree No. 807.

The record does not show that Berroya is notoriously undesirable. On the contrary, his performance ratings from the period ending December 31, 1969 to the period ending June 30, 1973 are all very satisfactory.

Such being the case, he is not notoriously undesirable under the standard laid down by the President, to wit: "the test of being notoriously undesirable is two-fold: whether it is common knowledge or generally known as universally believed to be true or manifest to the world that petitioner committed the acts imputed against him, and whether he had contracted the habit for any of the enumerated misdemeanors". The same are not present in the case of Berroya. On the contrary he should be given recognition for his efforts in exposing the

irregularities allegedly committed by some authorities of the Laguna Provincial Government which led to the filing of criminal as well as administrative cases against such officials.

Foregoing premises considered, this Board finds the order of dismissal dated April 27, 1977, without justifiable basis. Wherefore, the Board hereby exonerates Engr. Mariano Berroya, Jr. of the charges against him. Consequently, it is hereby directed that he be reinstated to his position as Quarry Superintendent of Laguna immediately, [Folder of Exhibits, Vol. 1, pp. 175-176].

The motion for reconsideration from this decision was denied in a resolution of the Board dated October 15, 1979. This decision was therefore already final when Berroya instituted suit in 1980 to compel petitioner to reinstate him to his former position and to pay his back salaries.

Since the decisions of both the Civil Service Commission and the Office of the President had long become final and executory, the same can no longer be reviewed by the courts. It is well-established in our jurisprudence that the decisions and orders of administrative agencies, rendered pursuant to their quasi-judicial authority, have upon their finality, the force and binding effect of a final judgment within the purview of the doctrine of resjudicata [Brillantes v. Castro, 99 Phil. 497 (1956), Ipekdjian Merchadising Co., Inc. v. Court of Tax Appeals, G.R. No. L-15430, September 30, 1963, 9 SCRA 72.] The rule of res judicata which forbids the reopening of a matter once judicially determined by competent authority applies as well to the judicial and quasi-judicial acts of public, executive or administrative officers and boards acting within their jurisdiction as to the judgments of courts having general judicial powers [Brillantes v. Castro, supra at 503].

Indeed, the principle of conclusiveness of prior adjudications is not confined in its operation to the judgments of what are ordinarily known as courts, but it extends to all bodies upon whom judicial powers had been conferred. Hence, whenever any board, tribunal or person is by law vested with authority to judicially determine a question, like the Merit Systems Board of the Civil Service Commission and the Office of the President, for instance, such determination, when it has become final, is as conclusive between the same parties litigating for the same cause as though the adjudication had been made by a court of general jurisdiction [Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals, supra at 76].

Furthermore, the trial court's act of reviewing and setting aside the findings of the two administrative bodies was in gross disregard of the basic legal precept that accords finality to administrative findings of facts.

The general rule, under the principles of administrative law in force in this jurisdiction, is that decisions of administrative officers shall not be disturbed by the courts, except when the former have acted without or in excess of their jurisdiction, or with grave abuse of discretion. Findings of administrative officials and agencies who have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but at times even finality if such findings are supported by substantial] evidence. . . . [Lianga Bay Logging Co., Inc. v. Lopez Enage, G.R. No. L-30637, July 16, 1987,152 SCRA 80].

Finally, the Court cannot ignore the undisputed fact that the decisions rendered by the Office of the President and the Merit Systems Board had attained finality without petitioners having taken any timely legal recourse to have the said decisions reviewed by the courts. On the other hand, Berroya, in order to enforce his right to reinstatement and to back salaries pursuant to these final and executory administrative rulings, instituted a suit for mandamus to compel petitioners to comply with the directives issued by the two administrative agencies.

Since private respondent Berroya had established his clear legal right to reinstatement and back salaries under the aforementioned final and executory administrative decisions, it became a clear ministerial duty on the part of the authorities concerned to comply with the orders contained in said decisions [Tanala v. Legaspi, G.R. No. L-22537, March 31, 1965,13 SCRA 566 at 574-575].

The established rule is that a writ of mandamus lies to enforce a ministerial duty or "the performance of an act which the law specifically enjoins as a duty resulting from office, trust or station" [Section 3, Rule 65 of the Revised Rules of Court; Lianto v. Mohamad Ali Dimaporo, et al., G.R. No. L-21905, March 31, 1966, 16 SCRA 599]. In this case, the appropriate administrative agencies having determined with finality that Berroya's suspension and dismissal were without just cause, his reinstatement becomes a plain ministerial duty of the petitioner Provincial Governor, a duty whose performance may be controlled and enjoined by mandamus [Ynchausit and Co. v. Wright, 47 Phil. 866 (1925); Tee and Co. v. Wright, 53 Phil. 194 (1929); Gementiza v. Court of Appeals, G.R. Nos. L-41717-33, April 12, 1982,113 SCRA 477; Laganapan v. Asedillo, G.R. No. L-28353, September 30, 1987, 154 SCRA 377].

Thus, this Tribunal upholds the appellate court's judgment for the reinstatement of respondent Berroya and payment of his back salaries corresponding to the period of suspension and of illegal dismissal from service, exclusive of that corresponding to leaves of absences with pay. However, as respondent Berroya can no longer be reinstated because he has already reached the compulsory retirement age of sixty five years on December 7, 1986,** he should be paid his back salaries [Salcedo v. Court of Appeals, G.R. No. L-40846, January 31, 1978, 81 SCRA 408] and also all the retirement and leave privileges that are due him as a retiring employee in accordance with law [Tanala v. Legaspi, supra at 576].

According to settled jurisprudence, Berroya, as an illegally terminated civil service employee is entitled to back salaries limited only to a maximum period of five years Laganapan v. Asedillo, supra; Balquidra v. CFI of Capiz, Branch II, G.R. No. L-40490, October 28, 1977, 80 SCRA 123; Salcedo v. Court of Appeals, supra, Gementiza v. Court of Appeals, supra].

That petitioners Provincial Governor, Provincial Treasurer and Provincial Engineer of Laguna, the Sangguniang Panlalawigan of Laguna and the Province of Laguna, formally impleaded herein,'** are liable for back salaries in case of illegal termination of a civil service employee finds support in earlier decisions of this Court [Balquidra v. Court of First Instance of Capiz, Branch II, supra; Gementiza v. Court of Appeals, supra; Rama v. Court of Appeals, G.R. Nos. L-44484, 1,44842, L-44894, L-44591, March 16, 1987,148 SCRA 496; Laganapan v. Asedillo, supra].

However, the petitioners Juanito Rodil and Amado Romey must be held liable only in their official capacities as Provincial Engineer and Provincial Treasurer, respectively since they had been expressly sued by Berroya as such [Petition for mandamus with Preliminary Injunction, Record, Vol. 1, p. 1, et seq.; Gray v. De Vera, G.R. No. L-23966, May 22, 1969, 28 SCRA 268].

The same does not hold true for petitioner provincial governor who was found by the appellate court to have acted in bad faith as manifested by his contumacious refusal to comply with the decisions of the two administrative agencies, thus prompting respondent Berroya to secure an indorsement from the Minister of Local Government and Community Development dated November 15, 1979 for his reinstatement [Annex "Y-9", Folder of Exhibits, Vol. 1, p. 207]. The Minister's directive having been ignored, Berroya was compelled to bring an action for mandamus.

Where, as in this case, the provincial governor obstinately refused to reinstate the petitioner, in defiance of the orders of the Office of the President and the Ministry of Local Government and in palpable disregard of the opinion of the Civil Service Commission, the appellate court's finding of bad faith cannot be faulted and accordingly, will not be disturbed by this Tribunal Enciso v. Remo, G.R. No. L-23670, September 30, 1969, 29 SCRA 580.] This is in line with our previous ruling in Remo v. Palacio [107 Phil. 803 (1960)] that

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(i)t having been clearly shown by evidence, that respondent, Deogracias Remo, in his capacity as Mayor of Goa, refused to reinstate the petitioner to his former position in the police force of Goa, despite the orders of Malacanang to do so (Exhs. G and I), and inspite of the opinion of the Secretary of Finance (Exh. H), the respondent Mayor of Goa, willfully acted in bad faith, and therefore, he, as Mayor of Goa, should pay for damages caused to the petitioner, Angel Enciso. [At pp. 807-808.]

It is well-settled that when a public officer goes beyond the scope of his duty, particularly when acting tortiously, he is not entitled to protection on account of his office, but is liable for his acts like any private individual [Palma v. Graciano, 99 Phil. 72 (1956)].

Thus, in Mendoza v. De Leon [33 Phil. 508 (1916)], it was held:

Nor are officers or agents of the Government charged with the performance of governmental duties which are in their nature legislative or quasi-judicial liable for the consequences of their official acts, unless it be shown that they act wilfully and maliciously and with the express purpose of inflicting injury upon the plaintiff [at 513; Emphasis supplied].

Accordingly, applying the principle that a public officer, by virtue of his office alone, is not immune from damages in his personal capacity arising from illegal acts done in bad faith [Tabuena v. Court of Appeals, G.R. No. L-16290, October 31, 1961, 3 SCRA 413; Correa v. Court of First Instance of Bulacan, G. R. No. L-46096, July 30, 1979, 92 SCRA 312], the Court holds that petitioner Felicisimo T. San Luis, the Provincial Governor of Laguna who has been sued both in his official and private capacities, must be held personally liable to Berroya for the consequences of his illegal and wrongful acts.

In this regard, the Court sustains the appellate court's finding that petitioner San Luis must be held liable to Berroya for moral damages since justice demands that the latter be recompensed for the mental suffering and hardship he went through in order to vindicate his right, apart from the back salaries legally due him [Rama v. Court of Appeals, supra at p. 5061]. The appellate court was clearly warranted in awarding moral damages in favor of respondent Berroya because of the obstinacy of petitioner Governor who arbitrarily and without legal justification refused Berroya's reinstatement in defiance of directives of the administrative agencies with final authority on the matter. We agree with the appellate court that the sum of P 50,000.00 for moral damages is a reasonable award considering the mental anguish and serious anxiety suffered by Berroya as a result of the wrongful acts of petitioner Governor in refusing to reinstate him.

Finally, as correctly adjudged by respondent court, petitioner San Luis must likewise answer to Berroya for attorney's fees plus costs and expenses of suit, which have been fixed by said court at P 20,000.00, in view of the wrongful refusal of petitioner provincial governor to afford Berroya his plainly valid and just claim for reinstatement and back salaries [Rollo, p. 42].

WHEREFORE, the assailed decision of the appellate court is hereby MODIFIED as follows: (1) the petitioners, in their official capacities, are ordered to pay private respondent Berroya, his back salaries for a maximum period of five years; (2) since the reinstatement of Berroya can no longer be ordered by reason of his having reached the retirement age, he should instead be paid all the retirement benefits to which he is entitled under the law; and (3) petitioner Felicisimo T. San Luis, in his personal capacity, is further ordered to pay Berroya the sum of P 50,000.00 as and for moral damages, the sum of P 20,000.00 as and for attorney's fees plus costs and other expenses of suit. This decision shall be IMMEDIATELY EXECUTORY.

SO ORDERED.

G.R. No. 109703 July 5, 1994

REALTY EXCHANGE VENTURE CORPORATION AND/OR MAGDIWANG, REALTY CORPORATION, petitioner, vs.LUCINA S. SENDINO and the OFFICE OF THE EXECUTIVE SECRETARY, Office of the President, Malacañang, Manila, respondents.

Siruelo, Muyco & Associates Law Office for petitioner.

Sisenando Villaluz, Jr. for private respondent.

 

KAPUNAN, J.:

Private respondent Lucina C. Sendino entered into a reservation agreement with Realty Exchange Venture, Inc. (REVI) for a 120-square meter lot in Raymondville Subdivision in Sucat, Paranaque for P307,800.00 as its purchase price. 1 She paid P1,000.00 as partial reservation fee on January 15, 1989 and completed payment of this fee on January 20, 1989 by paying P4,000.00. 2

On July 18, 1989, private respondent paid REVI P16,600.00 as full downpayment on the purchase price. 3However, she was advised by REVI to change her co-maker, which she agreed, asking for an extension of one month to do so.

For alleged non-compliance with the requirement of submission of the appropriate documents under the terms of the original agreement, 4 REVI, through its Vice-President for Marketing, informed respondent of the cancellation of the contract on the 31st of July 1989. 5

On April 20, 1990, private respondent filed a complaint for Specific Performance against REVI with the office of Appeals, Adjudication and Legal Affairs (OAALA) of the Housing and Land Use Regulatory Board (HLURB) asking that respondent be ordered:

1. To comply and continue with the sale of the house and lot, Block 4, Lot 17 at the Raymondville Subdivision, Sucat Road, Paranaque, Metro Manila;

2. To pay complainant actual, nominal and moral damages, the amount of which will be proved in the hearing;

3. To pay complainant attorney's fee in the sum of P10,000.00;

4. To pay complainant exemplary damages in the sum of P10,000.00 to set an example and to avoid a repetition of such illegal and unsound business practices of the respondent. 6

This petition was amended on August 17, 1990 by impleading petitioners Magdiwang Realty Corporation (MRC) which appeared to be the registered owner of the subject lot as per TCT No. 76023.

On April 3, 1991 the HLURB, whose authority to hear and decide the complaint was challenged by REVI in its answer, 7 rendered its judgment in favor of private respondent and ordered petitioners to continue with the sale of the house and lot and to pay private respondent P5,000 as moral damages, P5,000 as exemplary damages and P6,000 as attorney's fees and costs of the suit. 8 An appeal from this decision was taken to the HLURB OAALA Arbiter, which affirmed the Board's decision. The decision of the OAALA Arbiter was appealed to the Office of the President, herein public respondent.

On January 7, 1993, the public respondent rendered its decision dismissing the petitioners' appeal. Motion for reconsideration of the decision was denied by the public respondent on January 26, 1993. Consequently petitioners come before this Court, in this petition, which the Court resolves to treat as a petition for  certiorari, raising the following issues:

I

PUBLIC RESPONDENT COMMITTED SERIOUS ERROR IN DECLARING THAT THE HOUSING AND LAND USE REGULATORY BOARD HAS QUASI-JUDICIAL FUNCTIONS, NOTWITHSTANDING ABSENCE OF EXPRESS GRANT BY EXECUTIVE ORDER NO. 90 OF DECEMBER 17, 1986 WHICH CREATED IT. AND EVEN IF THE HLURB HAS QUASI-JUDICIAL FUNCTIONS, PUBLIC RESPONDENT LIKEWISE SERIOUSLY ERRED IN DECLARING THAT THE BOARD OF COMMISSIONERS IS ALLOWED TO SIT IN A DECISION TO RENDER JUDGMENT AND TO DELEGATE ITS QUASI-JUDICIAL AUTHORITY TO A SUBORDINATE OFFICE.

II

PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN DECLARING THAT THE LOT SUBJECT OF THE CONTRACT SOUGHT TO BE ENFORCED IS PARAPHERNAL DESPITE ADMISSION OF ITS CONJUGAL NATURE.

III

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

As the first and third issues raised by the petitioners strike at the core of the case at bench, this Court deems it appropriate to initially dispose of the issue of private respondent's capacity to bring her complaint before the HLURB-OAALA.

It is settled that rules of procedure are as a matter of course construed liberally in proceedings before administrative bodies. 9 In the instant case, the original suit for specific performance and damages was filed by the private respondent with the HLURB-OAALA, an administrative body not hamstrung by the strict procedural technicalities of the Rules of Court. Under the circumstances, it was certainly appropriate for the HLURB-OAALA to have acted on the substantive questions relating to the validity of petitioners' unilateral rescission of the contract without unduly concerning itself with a mere procedural slip, the non-joinder of private petitioner's husband in the original complaint before the HLURB. Moreover, since petitioners participated in the administrative proceedings without objecting to or raising the procedural infirmity, they were certainly estopped from raising it on appeal before the Office of the President and before this Court.

Proceeding to the principal issues raised by the petitioner, while E.O. 85 dated 12 December 1986 abolished the Ministry of Human Settlements (MHS), it is patently clear from a reading of its provisions that the said executive order did not abolish the Human Settlements Regulatory Commission (HSRC) which continued to exercise its powers and functions even after the Ministry of Human Settlements ceased to exist. In spite of the Aquino Government's stated intention of eradicating what it considered the vestiges of the previous regime, it was not its intention to create a vacuum by abolishing those juridical entities, agencies, corporations, etc., attached to or supervised by the MHS, which performed vital administrative functions. Pertinently, Section 3 of E.O. 85 mandates that:

. . . The final disposition and final organizational alignment or attachment of the juridical entities, agencies, corporations and councils attached to, or under the administrative supervision of the MHS including their respective existing projects, appropriations and other assets shall be subject to subsequent enactments by the President.

Pursuant to this provision therefore, the President subsequently issued Executive Order No. 90, series of 1986, recognizing the Human Settlements Regulatory Commission (renamed the HLURB) as one of the principal housing agencies of the government. Prior to this, Executive Order No. 648 in 1981 transferred all the functions of the National Housing Authority (pursuant to Presidential Decrees Nos. 957, 1216 and 1344) to the Human Settlements Regulatory Commission (HSRC) consolidating all regulatory functions relating to land use and housing development in a single entity. 10 Being the sole regulatory body for housing and land development, the renamed body, the HLURB, 11 would have been reduced to a functionally sterile entity if, as the petitioner contends, it lacked the powers exercised by its predecessor which included the power to settle disputes concerning land use and housing development and acquisition. Moreover, this Court has had the occasion to definitively rule on the question as to whether or not the Housing and Land Use Regulatory Board could exercise the same quantum of judicial or quasi-judicial powers possessed by the HSRC under the Ministry of Human Settlements in the exercise of its regulatory functions when it held, in United Housing Corporation vs. Hon. Dayrit 12 that:

As explicitly provided by law, jurisdiction over actions for specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner or developer, is vested exclusively in the HSRC, Section 1 of PD 1344, in no uncertain terms, provides:

Sec. 1. In the exercise of its functions to regulate real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive jurisdiction to hear and decide cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and

C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or

condominium unit against the owner, developer, dealer, broker or salesman. (Emphasis Ours)

This is reinforced by section 8 of EO 648 (otherwise known as the Charter of the Human Settlements Regulatory Commission) which took effect on February 7, 1981, thus:

Sec. 8. Transfer of Functions. — The Regulatory functions of the National Housing Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and other related laws are hereby transferred to the Human Settlements Regulatory Commission. . . . Among the regulatory functions are . . . (11) Hear and decide cases of unsound real estate business practices, claims involving refund filed against project owners, developers, dealers, brokers, or salesmen and cases of specific performance(Emphasis Ours).

Private respondents reliance, therefore, on sections 1 and 8 of the Judiciary Reorganization Act of 1980 is untenable. Thus, as correctly pointed out by petitioner, section 19, paragraph 6 of said law is material to the issue of where jurisdiction lies, and We quote:

Sec. 19. . . .

(6) In all other cases not within the exclusive jurisdiction of any court, tribunal, persons or body exercising judicial or quasi-judicial functions.

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Neither can We accede to private respondents' claim that resort to the courts is justified under section 41 of PD 957 specifically under the phrase "legal remedies that may beavailable to aggrieved subdivision lot buyers."

There is no question that a statute may vest exclusive original jurisdiction in an administrative agency over certain disputes and controversies falling within the agency's special expertise. The constitutionality of such grant of exclusive jurisdiction to the National Housing Authority (now Housing and Land Use Regulatory Board) over cases involving the sale of lots in commercial subdivisions was upheld in Tropical Homes Inc. v. National Housing Authority (152 SCRA 540 [1987]) and again sustained in a later decision in Antipolo Realty Corporation v. National Housing Authority (153 SCRA 399 [1987]) where We restated that the National Housing Authority (now HLURB) shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the terms of PD No. 957 which defines the quantum of judicial or quasi-judicial powers of said agency. 13

Clearly, therefore, the HLURB properly exercised its jurisdiction over the case filed by the petitioners with its adjudicative body, the OAALA, in ordering petitioners to comply with their obligations arising from the Reservation Agreement. In general, the quantum of judicial or quasi-judicial powers which an administrative agency may exercise is defined in the agency's enabling act. In view of the Court's pronouncement in United Housing Corporation vs. Hon. Dayrit, supra, recognizing the HLURB as the successor agency of the HSRC's powers and functions, it therefore follows that the transfer of such functions from the NHA to the HRSC effected by Section 8 of E.O. 648, series of 1981, thereby resulted in the acquisition by the HLURB of adjudicatory powers which included the power to "(h)ear and decide cases of unsound real estate business practices . . . and cases of specific performance." 14 Obviously, in the exercise of its powers and functions, the HLURB must interpret and apply contracts, determine the rights of the parties under these contracts, and award damages whenever appropriate. 15 We fail to see how the HSRC — which possessed jurisdiction over the actions for specific performance for contractual and statutory obligations filed by buyers of subdivision lots against developers — had suddenly lots its adjudicatory powers by the mere fiat of a change in name through E.O. 90. One thrust of the multiplication of administrative agencies is that the interpretation of such contracts and agreements and the determination of private rights under these agreements is no longer a uniquely judicial function. 16 The absence of any provision, express or implied, in E.O. 90, repealing those quasi-judicial powers inherited by the HSRC from the National Housing Authority, furthermore militates against petitioners' position on the question.

Going to petitioners' contention that the decision of the OAALA should have been rendered by the Board of Commissioners sitting en banc, we find ample authority — both in the statutes and in jurisprudence-justifying the Board's act of dividing itself into divisions of three. Under Section 5 of E.O. 648 which defines the powers and duties of the Commission, the Board is specifically mandated to "(a)dopt rules of procedure for the conduct of its business" and perform such functions necessary for the effective accomplishment of (its) above mentioned functions." Since nothing in the provisions of either E.O. 90 or E.O. 648 denies or withholds the power or authority to delegate adjudicatory functions to a division, we cannot see how the Board, for the purpose of effectively carrying out its administrative responsibilities and quasi-judicial powers as a regulatory body should be denied the power, as a matter of practical administrative procedure, to constitute its adjudicatory boards into various divisions. After all, the power conferred upon an administrative agency to issue rules and regulations necessary to carry out its functions has been held "to be an adequate source of authority to delegate a particular function, unless by express provision of the Act or by implication it has been withheld." 17 The practical necessity of establishing a procedure whereby cases are decided by three (3) Commissioners furthermore assumes greater significance when one notes that the HLURB, as constituted, only has four (4) full time commissioners and five (5) part time commissioners to deal with all the functions, administrative, adjudicatory, or otherwise, entrusted toit. 18 As the Office of the President noted in its February 26, 1993 Resolution denying petitioners' Motion for Reconsideration, "it is impossible and very impractical to gather the four (4) full time and five (5) part time commissioners (together) just to decide a case." Considering that its part time commissioners act merely in an ex-officio capacity, requiring a majority of the Board to sit en banc on each and every case brought before it would result in an administrative nightmare.19

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

Sec. 24. Failure to Pay Installments — The rights of the buyer in the event of his failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552.

As the Solicitor General correctly pointed out, RA 6552 makes no distinction between "option" and "sale" 20 which, under P.D. 957 also includes "an exchange or attempt to sell, an option of sale or purchase, a solicitation of a sale or an offer to sell directly." 21 This all-embracing definition virtually includes all transactions concerning land and housing acquisition, including reservation agreements. Since R.A. 6552 mandates cancellation by notarialact — among other requirements — before any cancellation of a contract may be effected, petitioners' precipitate cancellation of its contract with private respondent without observing the conditions imposed by the said law was invalid and improper.

In fine, the HLURB-OAALA acted within the scope of its authority in ordering petitioners to comply and continue with the sale of the house and lot subject of the contract between the original parties. It cannot be gainsaid that the quasi-judicial functions exercised by the body are necessary incidents to the proper exercise of its powers and functions under E.O. 90 and the laws enacted delineating the scope of authority of its Board of Commissioners. Denying the body those functions so necessary in carrying out its power to regulate housing and land use results in its effective emasculation as an important regulatory body in an area vital to the national economy.

The acute housing shortage problem has prompted thousands of middle and lower class buyers of houses and lots and condominium units to enter into all sorts of agreements with private housing developers involving all manner of installment schemes under contracts drawn exclusively by these developers. Many of these virtual contracts of adhesion entrap innocent buyers by requiring cash deposits under reservation agreements which include, sometimes in the fine print, default clauses guaranteeing huge monetary windfalls for the developers in the event that their buyers (oftentimes for the flimsiest of reasons) default by failing to come up with certain requirements. While the Court can take judicial notice of this pernicious practice, it can only hope that future legislation would address the need to protect the innocent middle or lower class home purchaser. In the case of the individual victim, this Court can only go to the extent of awarding such damages as may be proper under the peculiar circumstances of the cases brought before it.

WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit. Costs against petitioners.

SO ORDERED.

SPS. JOSE S. VELASQUEZ and JUSTINA ADVINCULA-VELASQUEZ, petitioners, vs.SPS. MARTIN NERY and LEONCIA DE LEON NERY; and ROSARIO LORENZO, SALUD RODRIGUEZ, VDA. DE LORENZO, MARIANO LORENZO, PACIFICO LORENZO, ONOFRE LORENZO, GERTRUDES DE LEON VDA. DE LORENZO; AND LOLOY LORENZO, TRINIDAD LORENZO, DIONISIO LORENZO, PERFECTO LORENZO, MARIA REBECCA LORENZO, ASUNCION LORENZO, MAURO LORENZO and LOURDES LORENZO; DELTA MOTOR CORPORATION represented by its President/Manager, Mr. RICARDO C. SILVERIO; and FISCAL ERNESTO A. BERNABE in his personal and official capacity as Ex-Officio Register of Deeds of Metro Manila District IV, Pasay City; and HON. JUDGE MANUEL E. VALENZUELA, in his personal and official capacity as Judge of the Court of First Instance, Seventh Judicial, Branch XXIX, now Regional Trial Court, National Capital Region, Pasay City, Metro Manila; and the HON. INTERMEDIATE APPELLATE COURT, FIRST SPECIAL CASES DIVISION, respondents.

 

NOCON, J.:

Petitioners Jose Velasquez and Justina Velasquez are the agricultural lessees of a certain riceland consisting of 51,538 square meters, situated at Sitio Malaking Kahoy, Bo. Ibayo, Parañaque, Metro Manila. The subject property was originally possessed and claimed by respondent Martin Nery. In an action for annulment and reconveyance, the Supreme Court finally decided 1 and declared in 1972, that private respondents Lorenzos are co-owners of the land together with Martin Nery. They applied for the confirmation of their title with the then Court of First Instance of Rizal and the parcel of land was subsequently registered under TCT No. 64132. The title was issued in the name of following respondents, spouses Martin Nery and Leoncia de Leon Nery, Salud Rodriguez, Gertrudes de Leon, Rosario, Mariano, Pacifico, Onofre, Loloy, Trinidad, Dionisio, Perfecto, Maria Rebecca, Asuncion, Mauro and Lourdes all surnamed Lorenzo.

In 1978, respondents Lorenzos filed an action for partition against their co-owners Martin and Leoncia Nery which was docketed as Civil Case No. 5313-P before the Court of First Instance of Rizal, Pasay City Branch. In a compromise agreement 2 submitted by the parties, the latter agreed to sell the said land to respondent Delta Motors Corporation.

On August 24, 1979, petitioner Jose B. Velasquez, in his capacity as agricultural leasehold tenant, filed an action before the then Court of Agrarian Relations against private respondents, which was docketed as CAR Case No. 42, 6th Regional District, Branch I, Quezon City for the redemption of the subject property, as he has information that the said land is offered for sale.

On January 25, 1980, private respondent Delta Motor Corporation purchased the subject property for P2,319,210.00, evidenced by a Deed ofSale 3 and was issued TCT No. 26486 by the Register of Deeds of Metro Manila on March 4, 1980.

Petitioner Jose S. Velasquez seeks to redeem the said land from Delta Motors for the sum of P8,800.00 anchoring his right under Presidential Decree No. 27.

The then Court of Agrarian Relations rendered a decision dismissing the complaint on the ground that the reasonable value of the land is P2,319,210.00 and not P8,800.00, the dispositive portion of which reads:

Foregoing premises considered, judgment is hereby rendered:

1. Dismissing the instant action for lack of interest on plaintiff's part to redeem the land in question at its acquisition price in the amount of P2,319,210.00, which we find reasonable;

2. Directing defendants to maintain plaintiff as agricultural lessee in the peaceful possession and enjoyment of the land subject matter of this litigation containing an area of 51,538 square meters, more or less, covered by TCT No. 64132 and to respect the rights accorded to him as such by law.

3. Directing the Clerk of Court, this Court, (sic) to return to plaintiff the amount of P600.00 which he consigned with the Court as part of the redemption price for the land in question covered by OR. No. 2402913 dated June 13, 1980.

4. Dismissing all other claims and counterclaims for lack of evidence in support thereof. 4

Petitioner appealed the case to the then Intermediate Appellate Court, which affirmed the decision of the lower court, as follows:

IN VIEW WHEREOF, the appeals interposed by the plaintiffs (sic) and the defendants Martin Nery, Leoncia de Leon Nery, Dionisio, Perfecto, Maria Rebecca, Lourdes, Asuncion and Mauro, all surnamed Lorenzo, are both dismissed for lack of merit, We affirm in toto the Decision in CAR Case No 42. 5

Not satisfied with the decision of the appellate court, petitioners now elevated the case to this court in a petition for review on certiorari.

We find no merit in the instant petition.

The issues raised by the petitioners before Us is but a reiteration of the issues they have raised before the defunct Court of Agrarian Relations and the then Intermediate Appellate Court. The main issue in the instant case however, is whether or not the subject property is covered by Presidential Decree No. 27 or Republic Act 6389.

Petitioners contend that they should be declared owners of the land pursuant to Presidential Decree No. 27. But as aptly found by the Court of Agrarian Relations, the land in question is not covered by Operation Land Transfer.6

The agricultural land involved in this case consists of 51,538 square meters or about 5.15 hectares. The retention limit provided by P.D. No. 27 is seven (7) hectares. The law provides:

In all cases, the landowner may retain an area of not more than seven (7) hectares if such landowner is cultivating such area or will now cultivate it.

Clearly, the property in question is not covered by P.D. No. 27 but by Section 12 of RA 6389, as amended, which provides:

In case the landholding is sold to a third person without the knowledge of the agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and consideration . . . . The redemption price shall be the reasonable price of the land at the time of the sale.

Thus, in its discussion as to what is the "reasonable price" as provided under Section 12 of RA 6389, the Intermediate Appellate Court stated:

Under this Section, the redemption price shall be the "reasonable price" of the land at the time of the sale. We are not convinced that the price of P2,319.210.00 fixed by the court a quo (sic) as redemption price is unreasonable. The subject land consisting of 51,538 square meters is located in Parañaque, Metro Manila, near the South Diversion Road, surrounded by residential subdivisions and by industrial firms. Theabove-quoted price is the same amount paid by Delta Motors Corporation to the other defendants. There is no showing that the price is a product of collusion between Delta Motors and the other defendants. 7

We agree with the findings of the defunct Court of Agrarian Relations and the then Intermediate Appellate Court, that the reasonable redemption price of the land is P2,319,210, which is the amount or consideration at the time of the sale.

Petitioners claim that the transfer of the land by the respondents Nery and Lorenzo's in favor of Delta Motor Corporation is null and void ab initio on the ground that the transfer was not accompanied by an affidavit of non-tenancy as required by Republic Act 6389 and Circular No. 31 of the Department of Justice. What militates against this claim of the petitioners is the evidence borne by the records that the transfer was effected through a judgment8 of the respondent lower court in a civil case, and not through a sale as envisioned by Republic Act No. 6389. Though the date of the sale was earlier than the date of the judgment, it is correct to say that the transfer was effected through a judgment, because the sale must be approved by the court, considering the pendency of a case (partition) before the court that issued the judgment. Moreover, there is nothing in the Act declaring any sale or transfer as null and void ab initio when the sale was without the knowledge of the lessee. As a matter of fact, Republic Act No. 6389 states the remedy available to the agricultural lessee, the petitioners herein, which is to redeem the land based on the reasonable price at the time of the sale and not to seek the declaration of nullity of the alleged sale.

Further, the review sought by petitioners does not fall under any of the grounds warranting the exercise of this Court's discretionary power. The matter of what is the reasonable redemption price being factual, precludes this Court from reviewing the factual findings of the appellate court. The findings and conclusions of the Intermediate Appellate Court that the sum of P2,319,210 is the "reasonable price" is supported by evidence. The land being located in Parañaque, surrounded by residential subdivisions and industrial firms near the South Diversion road are factors in determining its reasonable price for sale or for redemption as in the instant case. It is the established doctrine in this jurisdiction supported by unbroken line of decisions that such findings of facts and conclusions can not be reviewed on appeal by certiorari. 9

As a general rule, the findings of facts of the Court of Agrarian Relations will not be disturbed on appeal where there is substantial evidence to support the same and all that this Court is called upon to do insofar as the evidence is concerned, is to find out if the conclusion of the lower court is supported by "substantial evidence". 10Substantial evidence in support of the findings of the Court of Agrarian Relations does not necessarily import preponderant evidence as is required in ordinary civil cases. Substantial evidence has been defined to be such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, and its absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial, for the appellate court cannot substitute its own judgment or criterion for that of the trial court in determining wherein lies the weight of evidence or what evidence is entitled to belief. 11

Noteworthy mentioning is that the Philippine National Bank (PNB), although not a party to the instant case, has extra-judicially foreclosed the subject property, and will consolidate its ownership thereof if private respondent Delta Motor Corporation does not redeem the same within one year. Still, petitioners are protected in their rights as agricultural lessees pursuant to Section 10 of Republic Act No. 3844, as amended, which provides:

Sec. 10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period, etc. — The agricultural leasehold relation under this Code shall not be extinguished by mere expiration of the term or period in a leasehold contract nor by the sale, alienation or transfer of the legal possession of the landholding. In case the agricultural lessor, sells, alienates or transfers the legal possession of the landholding, the purchaser or transferee thereof shall be subrogated to the rights and substitutes to the obligations of the agricultural lessor.

Because of the extra-judicial foreclosure of the mortgage over the subject property by the Philippine National Bank, the present case has become moot and academic with regard to petitioner's claim against Delta Motor Corporation. It is now the PNB or its subsequent transferees from whom the petitioners must redeem, if and when PNB decides to sell or alienate the subject property in the future, and of course subject to the provisions of the 1975 Revised Charter of the Philippine National Bank. 12

WHEREFORE, the instant petition for review on certiorari is hereby DISMISSED and the appealed decision of the then Intermediate Appellate Court which affirmed the decision of the defunct Court of Agrarian Relations is hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

S/SGT. JOSE SANTIAGO, petitioner-appellant, vs.LT. COL. CELSO ALIKPALA, ET AL., respondents-appellees.

Floro A. Sarmiento and Noe Maines for petitioner-appellant.Cuadrato Palma and the Office of the Solicitor General for respondents-appellees.

 

FERNANDO, J.:

The validity of a court-martial proceeding was challenged in the lower court on due process grounds to show lack of jurisdiction. Petitioner, a sergeant in the Philippine Army and the accused in a court-martial proceeding, through a writ of certiorari and prohibition, filed on April 17, 1963, with the lower court, sought to restrain respondents, the officers, constituting the court-martial, that was then in the process of trying petitioner for alleged violation of two provisions of the Articles of War, from continuing with the proceedings on the ground of its being without jurisdiction. There was likewise a plea for a restraining order, during the pendency of his petition, but it was unsuccessful.

No response, either way, was deemed necessary by the then Presiding Judge of the lower court, now Justice Nicasio Yatco of the Court of Appeals, as petitioner had, in the meanwhile, been convicted by the court-martial. The lower court verdict, rendered on September 16, 1963, was one of dismissal, as in its opinion, "this case had already become moot and academic ... ."

An appeal was taken to us, the same due process objections being raised. We think that the question before us is of such import and significance that an easy avoidance through the technicality of the "moot and academic" approach hardly recommends itself. For reasons to be more fully set forth, we find that such court-martial was not lawfully convened, and, consequently, devoid of jurisdiction. Accordingly, we reverse the lower court.

There was a stipulation of facts submitted to the lower court on July 10, 1963, to the following effect: "That the arraignment of the petitioner on December 17, 1962 was for the purpose of avoiding prescription pursuant to Article of War 38 of one of the offenses with which the accused is charged since, as charged, same was allegedly committed on or about December 18, 1960; That prior to the said arraignment, no written summons or subpoena was issued addressed to the petitioner or his counsel, informing them of said arraignment; That instead of said written summons or subpoena Col. Eladio Samson, Constabulary Staff Judge Advocate called up First Sergeant Manuel Soriano at the Headquarters II Philippine Constabulary Zone, Camp Vicente Lim, Canlubang, Laguna on December 16, 1962 by telephone with instructions to send the petitioner to HPC, Camp Crame, Quezon City, under escort, for arraignment and only for arraignment; That upon arrival in HPC, the petitioner was directed to proceed to the PC Officer's Clubhouse, where a General Court-Martial composed of the respondents, created to try the case of 'People vs. Capt. Egmidio Jose, for violation of Articles of War 96 and 97', pursuant to paragraph 10, Special Order No. 14, Headquarters Philippine Constabulary, dated 18 July 1962, ..., was to resume, as scheduled, the trial of 'People vs. Pfc. Numeriano Ohagan, for violation of Articles of War 64, 85, and 97'; That it was only at the time (December 17, 1962) that petitioner learned that he will be arraigned for alleged violation of Articles of War 85 and 97, after being informed by one of the respondents, Capt. Cuadrato Palma as Trial Judge Advocate why he was there; That prior to that arraignment on December 17, 1962 there was no special order published by the Headquarters Philippine Constabulary creating or directing the General Court-Martial composed of the respondents to arraign and try the case against the petitioner, there however was already an existing court trying another case; That the respondents relied on the first indorsement of the Acting Adjutant General, HPC, Camp Crame, Quezon City, dated December 14, 1962 and addressed to the Trial Judge Advocate of the General Court-martial ... directing the said Trial Judge Advocate to refer the case against petitioner to the above-mentioned court, ...; That the above paragraph 10, Special Order No. 14 dated 18 July 1962, does not contain the phrase 'and such other cases which may be referred to it,' but however said orders were amended only on 8 January 1963, to include such phrase, ... ."  1

It was further stipulated that petitioner's counsel did object to his arraignment asserting that a general court-martial then convened was without jurisdiction, as there was no special order designating respondents to compose a general court-martial for the purpose of trying petitioner, as petitioner was not furnished a copy of the charge sheet prior to his arraignment as required in the Manual for Court-Martial, except on the very day thereof, and as there was no written summons or subpoena served on either the petitioner, as accused, or the counsel. Respondents, acting as the general court-martial, overruled the above objections, and the Trial Judge Advocate was then ordered to proceed to read the charges and specifications against petitioner over the vigorous objections of counsel. It was shown, likewise, in the stipulation of facts, that the case, having been postponed to February 21, 1963, petitioner's counsel had in the meanwhile complained to the Chief of Constabulary against the proceedings on the ground of its nullity, and sought to have respondents restrained from continuing with the trial of petitioner due to such lack of jurisdiction but the Chief of Constabulary ruled that he could not act on such complaint until the records of the trial were forwarded to him for review. With such a ruling, and with the denial of two other motions by petitioner upon the court-martial being convened

anew on February 21, 1963, one to invalidate his arraignment on December 17, 1962, and the other to quash the complaint based on the denial of due process and lack of jurisdiction, the present petition for certiorari and prohibition was filed with the lower court.2

As above noted, the lower court dismissed the petition due to its belief that, petitioner having been convicted in the meanwhile, there being no restraining order, the matter had become moot and academic. As was set forth earlier, we differ, the alleged lack of jurisdiction being too serious a matter to be thus summarily ignored.

The firm insistence on the part of petitioner that the general court-martial lacks jurisdiction on due process grounds, cannot escape notice. The basic objection was the absence of a special order "designating respondents to compose a general court-martial to convene and try the case of petitioner; ... ." It was expressly stipulated that the respondents were convened to try the case of a certain Capt. Egmidio Jose and not that filed against petitioner. As a matter of fact, the opening paragraph of the stipulation of facts made clear that he was arraigned on December 17, 1962 by respondents as a general court-martial appointed precisely to try the above Capt. Jose solely "for the purpose of avoiding prescription pursuant to Article of War 38 of one of the offenses with which the accused is charged ... ."

Is such a departure from what the law and regulations 3 prescribe offensive to the due process clause? If it were, then petitioner should be sustained in his plea for a writ of certiorari and prohibition, as clearly the denial of the constitutional right would oust respondents of jurisdiction, even on the assumption that they were vested with it originally. Our decisions to that effect are impressive for their unanimity.

In Harden v. The Director of Prisons, 4 Justice Tuason, speaking for the Court, explicitly announced that "deprivation of any fundamental or constitutional rights" justify a proceeding for habeas corpus on the ground of lack of jurisdiction. Abriol v. Homeres 5 is even more categorical. In that case, the action of a lower court, denying the accused the opportunity to present proof for his defense, his motion for dismissal failing, was held by this Court as a deprivation of his right to due process. As was made clear by the opinion of Justice Ozaeta: "No court of justice under our system of government has the power to deprive him of that right. If the accused does not waive his right to be heard but on the contrary — as in the instant case — invokes the right, and the court denies it to him, that court no longer has jurisdiction to proceed; it has no power to sentence the accused without hearing him in his defense; and the sentence thus pronounced is void and may be collaterally attacked in a habeas corpusproceeding." 6

A recent decision rendered barely a month ago, in Chavez v. Court of Appeals, 7 is even more in point. Here, again, habeas corpus was relied upon by petitioner whose constitutional rights were not respected, but, in addition, the special civil actions of certiorari and mandamus were likewise availed of, in view of such consequent lack of jurisdiction. The stress though in the opinion of Justice Sanchez was on  habeas corpus. Thus: "The course which petitioner takes is correct. Habeas corpus is a high prerogative writ. It is traditionally considered as an exceptional remedy to release a person whose liberty is illegally restrained such as when the accused's constitutional rights are disregarded. Such defect results in the absence or loss of jurisdiction and therefore invalidates the trial and the consequent conviction of the accused whose fundamental right was violated. That void judgment of conviction may be challenged by collateral attack, which precisely is the function of habeas corpus. This writ may issue even if another remedy which is less effective may be availed of by the defendant."

The due process concept rightfully referred to as "a vital and living force in our jurisprudence" calls for respect and deference, otherwise the governmental action taken suffers from a fatal infirmity. As was so aptly expressed by the then Justice, now Chief Justice, Concepcion: "... acts of Congress, as well as those of the Executive, can deny due process only under pain of nullity, and judicial proceedings suffering from the same flaw are subject to the same sanction, any statutory provision to the contrary notwithstanding."  8

The crucial question, then, is whether such failure to comply with the dictates of the applicable law insofar as convening a valid court martial is concerned, amounts to a denial of due process. We hold that it does. There is such a denial not only under the broad standard which delimits the scope and reach of the due process requirement, but also under one of the specific elements of procedural due process.

It is to be admitted that there is no controlling and precise definition of due process which, at the most furnishes a standard to which governmental action should conform in order to impress with the stamp of validity any deprivation of life, liberty or property. A recent decision of this Court, in Ermita-Malate Hotel v. Mayor of Manila 9treated the matter thus: "It is responsiveness to the supremacy of reason, obedience to the dictates of justice. Negatively put, arbitrariness is ruled out and unfairness avoided. To satisfy the due process requirement, official action, to paraphrase Cardozo, must not outrun the bounds of reason and result in sheer

oppression. Due process is thus hostile to any official action marred by lack of reasonableness. Correctly has it been identified as freedom from arbitrariness. It is the embodiment of the sporting idea of fair play. It exacts fealty 'to those strivings for justice' and judges the act of officialdom of whatever branch 'in the light of reason drawn from considerations of fairness that reflect [democratic] traditions of legal and political thought.'"

Nor is such a reliance on the broad reach of due process the sole ground on which the lack of jurisdiction of the court-martial convened in this case could be predicated. Recently, stress was laid anew by us on the first requirement of procedural due process, namely, the existence of the court or tribunal clothed with judicial, or quasi-judicial, power to hear and determine the matter before it. 10 This is a requirement that goes back to Banco Español-Filipino v. Palanca, a decision rendered half a century ago. 11

There is the express admission in the statement of facts that respondents, as a court-martial, were not convened to try petitioner but someone else, the action taken against petitioner being induced solely by a desire to avoid the effects of prescription; it would follow then that the absence of a competent court or tribunal is most marked and undeniable. Such a denial of due process is therefore fatal to its assumed authority to try petitioner. The writ ofcertiorari and prohibition should have been granted and the lower court, to repeat, ought not to have dismissed his petition summarily.

The significance of such insistence on a faithful compliance with the regular procedure of convening court-martials in accordance with law cannot be over-emphasized. As was pointed out by Justice Tuason in Ruffy v. The Chief of Staff, Philippine Army: 12 "Courts-martial are agencies of executive character, and one of the authorities for the ordering of courts-martial has been held to be attached to the constitutional functions of the President as Commander-in-Chief, independently of legislation. (Winthrop's Military Law and Precedents, 2d Edition, p. 49.) Unlike courts of law, they are not a portion of the judiciary." Further on, his opinion continues: "Not belonging to the judicial branch of the government, it follows that courts-martial must pertain to the executive department; and they are in fact simply instrumentalities of the executive power, provided by Congress for the President as Commander-in-Chief, to aid him in properly commanding the army and navy and enforcing discipline therein, and utilized under his orders or those of his authorized military representatives." 13

It is even more indispensable, therefore, that such quasi-judicial agencies, clothed with the solemn responsibility of depriving members of the Armed Forces of their liberties, even of their lives, as a matter of fact, should be held all the more strictly bound to manifest fidelity to the fundamental concept of fairness and the avoidance of arbitrariness for which due process stands as a living vital principle. If it were otherwise, then, abuses, even if not intended, might creep in, and the safeguards so carefully thrown about the freedom of an individual, ignored or disregarded. Against such an eventuality, the vigilance of the judiciary furnishes a shield. That is one of its grave responsibilities. Such a trust must be lived up to; such a task cannot be left undone.

WHEREFORE, the order of respondent Court of September 6, 1963, dismissing the petition for certiorari and prohibition is reversed, and the writ of certiorari and prohibition granted, annulling the proceedings as well as the decision rendered by respondents as a court-martial and perpetually restraining them from taking any further action on the matter. Without pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Sanchez, Angeles and Capistrano, JJ., concur.Dizon and Zaldivar, JJ., are on leave.

G.R. No. 127262 July 24, 1997

HUBERT WEBB, ANTONIO LEJANO, HOSPICIO FERNANDEZ, MIGUEL RODRIGUEZ, PETER ESTRADA and MICHAEL GATCHALIAN, petitioners, vs.PEOPLE OF THE PHILIPPINES, THE HONORABLE AMELITA G. TOLENTINO, Presiding Judge, Regional Trial Court of Parañaque, Branch 274, and LAURO VIZCONDE, respondents.

 

PUNO, J.:

Petitioners Hubert Webb, Antonio Lejano, Hospicio Fernandez, Miguel Rodriguez, Peter Estrada and Michael Gatchalian 1 assail the decision of the Court of Appeals dated June 21, 1996 in C.A. G.R. SP No. 39839  2 and C.A.

G.R. SP No. 39840, 3 as well as its resolution dated November 15, 1996 insofar as it denied the petition for the inhibition of respondent Judge Amelita G. Tolentino in Criminal Case No. 95-404  4 pending before Branch 274 of the Regional Trial Court of Paranaque. 5

The antecedent facts show that on August 8, 1995, petitioners were charged with the crime of  rape with homicidefor allegedly raping Carmela Vizconde and on the occasion thereof, killing Carmela herself and her mother, Estrellita, and her sister, Jennifer. The crime was committed in the evening of June 29 up to the early morning of June 30, 1991 at the Vizconde residence in BF Homes, Paranaque. 6

The case, docketed as Criminal Case No. 95-404, was raffled to Branch 274 of the Regional Trial Court of Paranaque presided by respondent judge.

Prior to their arraignment, petitioner Webb and his co-accused, Gerardo Biong, had sought the disqualification of respondent judge in Criminal Case No. 95-404. In his motion of August 21, 1995, petitioner Webb relied on the ground that respondent judge allegedly told the media that "failure of the accused to surrender following the issuance of the warrant of arrest is an indication of guilt." Respondent judge denied the motion. Two days later, on August 23, 1995, petitioner Webb filed a second motion to disqualify respondent judge as the latter allegedly told the media that the accused "should not expect the comforts of home," pending the resolution of his motion to be committed to the custody of the Philippine National Police at Camp Ricardo Papa, Bicutan, Paranaque. Respondent judge again denied the motion to inhibit. On September 4, 1995, Gerardo Biong filed another motion to disqualify respondent judge on the ground of bias and partiality. This was likewise denied by respondent judge.

The petitioners were arraigned on September 4, 1995. They then filed separate petitions for bail.

On September 21, 1995, petitioner Webb filed an Urgent Motion for Hospitalization. He alleged that he was sick of dermatitis or asthma of the skin which aggravated due to his continuous commitment at the Paranaque Municipal Jail. The motion was denied by respondent judge on October 16, 1995.

On October 9, 1995, the hearing on petitioners' petitions for bail commenced. The prosecution presented its "star witness," Jessica Alfaro, who identified petitioners as the perpetrators of the crime. During the cross-examination, the defense counsel tried to impeach Alfaro's credibility by asking her questions regarding the contents of an affidavit she executed at the National Bureau of Investigation (NBI) on April 28, 1995. The defense tried to show that some of her statements in said affidavit are inconsistent with her statements in a subsequent affidavit executed on May 21, 1995 and with her testimony in court. The prosecution objected and moved that all questions relating to the contents of Alfaro's April 28 affidavit be expunged from the records for being inadmissible in evidence under Article III Section 12(1) and (3) of the 1987 Constitution.  7 Respondent judge sustained the objection and on October 30, 1995, she issued an order holding that Alfaro cannot be cross examined on the contents of her April 28 affidavit because said affidavit was inadmissible in evidence as it was not executed in the presence of a counsel. 8

The defense also tried to prove Alfaro's motive in testifying against petitioners. She was questioned about her brother, Patrick Alfaro, and her uncle, Roberto Alfaro. Jessica Alfaro allegedly admitted that her brother, Patrick, was a drug addict and was arrested once by the NBI for illegal possession of drugs and that he is presently in the United States. When defense counsel inquired about the circumstances of Patrick's departure for the United States, the prosecution objected to the questions on the ground of irrelevancy. Respondent judge sustained the objection.

The defense also cross-examined Alfaro on her educational attainment to show that she lied in her direct testimony. The defense presented her transcript of records to prove that she only enrolled for a year and earned nine (9) academic units, contrary to her claim that she finished second year college. The prosecution again objected on the ground that Alfaro's educational attainment was irrelevant. Respondent judge sustained the objection.

On November 9, 1995, petitioners filed a motion to disqualify or inhibit respondent judge due to bias and prejudice. Respondent judge denied the motion for lack of merit on November 28, 1995. 9

On November 15, 1995, petitioners filed two separate petitions with this Court. Petitioners Webb, Lejano, Fernandez, together with their co-accused, Gerardo Biong, filed a petition for certiorari seeking to set aside (1) the order of respondent judge dated October 16, 1995 denying petitioner Webb's motion for hospitalization and

(2) the order of respondent judge dated October 30, 1995 disallowing the defense to cross-examine Alfaro on the contents of her April 28 affidavit. 10 Petitioners Gatchalian and Estrada filed a petition for certiorari, prohibition andmandamus assailing respondent judge's order prohibiting the cross-examination of Alfaro on the contents of her April 28 affidavit. 11

On December 8, 1995, petitioners filed with this Court a supplemental petition to set aside the November 28, 1995 order of respondent judge denying their motion for inhibition.

In a resolution dated January 22, 1996, we referred both petitions and the supplemental petition to the Court of Appeals for proper disposition.

In the meantime, the hearing on petitioners' petitions for bail continued. The prosecution presented Mila Gaviola, a former maid at the Webb residence, who testified that she saw petitioner Webb in their house in the early morning of June 30, 1991. On December 5, 1995, respondent judge, over the objection of the petitioners, ordered an ocular inspection of the former Webb residence in BF Homes, Paranaque to verify Gaviola's testimony about a secret door through which she peeped to see petitioner Webb.

On January 12, 1996, petitioner Webb filed a motion for deposition of witnesses residing in the United States who shall testify on his presence in the United States on the date of the commission of the crime. 12 On February 6, 1996, respondent judge denied the motion for the reason that petitioner Webb failed to allege that the witnesses do not have the means to go to the place of the trial. 13 Hence, on January 12, 1996, petitioner Webb filed another supplemental petition to the Court of Appeals challenging the said order.

Petitioners made their Formal Offer of Evidence upon conclusion of the hearings on the petitions for bail. On September 25, 1995, the prosecution filed its Comment/Objection to the Formal Offer of Evidence. On October 1, 1996, respondent judge ruled on petitioner's formal offer of evidence. She admitted only ten (10) out of the one hundred forty two (142) exhibits offered by petitioner. 14

On October 11, 1996, respondent judge denied petitioners' petitions for bail. 15

On June 21, 1996, the Court of Appeals rendered its Decision on the various petitions and supplemental petitions. It reversed respondent judge's ruling refusing to admit Alfaro's April 28 affidavit but denied all the other reliefs prayed for by petitioners. 16 It also denied petitioners' motion for reconsideration in a resolution dated November 15, 1996.17

On December 12, 1996, petitioners filed the present petition contending:

I

The Court of Appeals erred in declaring that no sufficient ground exists for the disqualification of the respondent judge.

A. Respondent judge has consistently and repeatedly shown bias and hostility against petitioners.

B. The rejection of the 132 of 142 exhibits not only paved the way for the denial of bail but also sets irreversibly the eventual conviction of all the accused.

C. The reported trip to the Vizconde residence by the respondent judge exposes her propensity to consort with the complainant on the pending issues.

II

The Court of Appeals erred in not honoring that the right to a fair trial requires that the case be tried by an impartial judge.

On February 5, 1997, petitioners filed a supplemental petition. It alleged, among others, that during the trial on the merits, respondent judge allowed prosecution witness Atty. Pedro Rivera to testify on the character of the accused although the defense had not put his character in issue; that respondent judge disallowed the defense to impeach the credibility of Atty. Rivera by the presentation of an earlier statement executed by him because such statement was immaterial; and that respondent judge struck off from the record the proffer of oral evidence made by defense counsel Atty. Vitaliano Aguirre after ruling that the proffer was improper on cross-examination. 18

The core issue is whether respondent judge should inhibit herself from hearing Criminal Case No. 95-404 on the ground of bias and prejudice.

We rule in the negative.

The Bill of Rights guarantees that "(n)o person shall be held to answer for a criminal offense without due process of law." 19 A critical component of due process is a hearing before an impartial and disinterested tribunal. We have ingrained the jurisprudence that every litigant is entitled to nothing less than the cold neutrality of an impartial judge for all the other elements of due process, like notice and hearing, would be meaningless if the ultimate decision would come from a partial and biased judge. 20 Hence, the Rules of Court allows a judge to voluntarily inhibit himself from hearing a case for "just or valid reasons" other than those referring to his pecuniary interest, relation, previous connection, or previous rulings or decisions. Section 1 Rule 137 of the Revised Rules of Court states:

Sec. 1. Disqualification of judges. — No judge or judicial officer shall sit in any case in which he, or his wife or child, is pecuniarily interested as heir, legatee, creditor or otherwise, or in which he is related to either party within the sixth degree of consanguinity or affinity, or to counsel within the fourth degree, computed according to the rules of the civil law, or in which he has been executor, administrator, guardian, trustee or counsel, or in which he has presided in any inferior court when his ruling or decision is the subject of review, without the written consent of all parties in interest, signed by them and entered upon the record.

A judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for just or valid reasons other than those mentioned above.

Under the second paragraph, a party has the right to seek the inhibition or disqualification of a judge who does not appear to be wholly free, disinterested, impartial and independent in handling the case. This right must be weighed with the duty of a judge to decide cases without fear of repression. Hence, to disqualify a judge on the ground of bias and prejudice the movant must prove the same by clear and convincing evidence. This is a heavy burden and petitioners failed to discharge their burden of proof.

To prove bias and prejudice on the part of respondent judge, petitioners harp on the alleged adverse and erroneous rulings of respondent judge on their various motions. By themselves, however, they do not sufficiently prove bias and prejudice to disqualify respondent judge. To be disqualifying, the bias and prejudice must be shown to have stemmed from an extrajudicial source and result in an opinion on the merits on some basis other than what the judge learned from his participation in the case. Opinions formed in the course of judicial proceedings, although erroneous, as long as they are based on the evidence presented and conduct observed by the judge, do not prove personal bias or prejudice on the part of the judge. 21 As a general rule, repeated rulings against a litigant, no matter how erroneous and vigorously and consistently expressed, are not a basis for disqualification of a judge on grounds of bias and prejudice. 22 Extrinsic evidence is required to establish bias, bad faith, malice or corrupt purpose, in addition to the palpable error which may be inferred from the decision or order itself. Although the decision may seem so erroneous as to raise doubts concerning a judge's integrity, absent extrinsic evidence, the decision itself would be insufficient to establish a case against the judge. 23 The only exception to the rule is when the error is so gross and patent as to produce an ineluctable inference of bad faith or malice.

A perusal of the records will reveal that petitioners failed to adduce any extrinsic evidence to prove that respondent judge was motivated by malice or bad faith in issuing the assailed rulings. Petitioners simply lean

on the alleged series of adverse rulings of the respondent judge which they characterized as palpable errors. This is not enough. We note that respondent judge's rulings resolving the various motions filed by petitioners were all made after considering the arguments raised by all the parties. It is true that the respondent judge erred in some of her rulings such as her rejection of petitioners' one hundred thirty two (132) pieces of evidence. It appears, however, that respondent judge reversed this erroneous ruling and already admitted these 132 pieces of evidence after finding that "the defects in (their) admissibility have been cured through the introduction of additional evidence during the trial on the merits." 24 This correction diminishes the strength of petitioners' charge that respondent judge is hopelessly biased against them. To be sure, the respondent judge did not score a complete cipher in her rulings against the petitioners. Just last June 11, 1997, the Third Division of this Court dismissed an administrative complaint against the respondent judge on the ground that ". . . it is within the respondent judge's right to conduct an ocular inspection since it is an exercise of her judicial prerogative . . ." 25 There is still another reason why we should observe caution in disqualifying respondent judge. The trial of the petitioners is about to end and to assign a new judge to determine the guilt or innocence of petitioners will not be for the best interest of justice. The records of the case at bar run into volumes. These voluminous records cannot capture in print the complete credibility of witnesses when they testified in court. As the respondent judge observed the demeanor of witnesses while in the witness chair, she is in the best position to calibrate their credibility. The task of evaluating the credibility of witnesses includes interpreting their body language and their meaningful nuances are not expressed in the transcripts of their testimonies.

We hasten to stress that a party aggrieved by erroneous interlocutory rulings in the course of a trial is not without remedy. The range of remedy is provided in our Rules of Court and we need not make an elongated discourse on the subject. But certainly, the remedy for erroneous rulings, absent any extrinsic evidence of malice or bad faith, is not the outright disqualification of the judge. For there is yet to come a judge with the omniscience to issue rulings that are always infallible. The courts will close shop if we disqualify judges who err for we all err.

We again remind respondent judge of our counsel in the first Webbcase 26 ". . . that our ability to dispense impartial justice is an issue in every trial, and in every criminal prosecution, the judiciary always stands as a silent accused. More than convicting the guilty and acquitting the innocent, the business of the judiciary is to assure fulfillment of the promise that justice shall be done and is done — and that is the only way for the judiciary to get an acquittal from the bar of public opinion."

IN VIEW WHEREOF, the petition is dismissed for lack of merit. No costs.

SO ORDERED.

G.R. No. 117565 November 18, 1997

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

 

ROMERO, J.:

Does the due process clause encompass the right to be assisted by counsel during an administrative inquiry?

Arsenio P. Lumiqued was the Regional Director of the Department of Agrarian Reform — Cordillera Autonomous Region (DAR-CAR) until President Fidel V. Ramos dismissed him from that position pursuant to Administrative Order No. 52 dated May 12, 1993. In view of Lumiqued's death on May 19, 1994, his heirs instituted this petition for certiorari and mandamus, questioning such order.

The dismissal was the aftermath of three complaints filed by DAR-CAR Regional Cashier and private respondent Jeannette Obar-Zamudio with the Board of Discipline of the DAR. The first affidavit-complaint dated November 16, 1989, 1 charged Lumiqued with malversation through falsification of official documents. From May to September 1989, Lumiqued allegedly committed at least 93 counts of falsification by padding gasoline receipts. He even submitted a vulcanizing shop receipt worth P550.00 for gasoline bought from the shop, and another receipt for P660.00 for a single vulcanizing job. With the use of falsified receipts, Lumiqued claimed and was reimbursed the sum of P44,172.46. Private respondent added that Lumiqued seldom made field trips and preferred to stay in the office, making it impossible for him to consume the nearly 120 liters of gasoline he claimed everyday.

In her second affidavit-complaint dated November 22, 1989, 2 private respondent accused Lumiqued with violation of Commission on Audit (COA) rules and regulations, alleging that during the months of April, May, July, August, September and October, 1989, he made unliquidated cash advances in the total amount of P116,000.00. Lumiqued purportedly defrauded the government "by deliberately concealing his unliquidated cash advances through the falsification of accounting entries in order not to reflect on 'Cash advances of other officials' under code 8-70-600 of accounting rules."

The third affidavit-complaint dated December 15, 1989, 3 charged Lumiqued with oppression and harassment. According to private respondent, her two previous complaints prompted Lumiqued to retaliate by relieving her from her post as Regional Cashier without just cause.

The three affidavit-complaints were referred in due course to the Department of Justice (DOJ) for appropriate action. On May 20, 1992, Acting Justice Secretary Eduardo G. Montenegro issued Department Order No. 145 creating a committee to investigate the complaints against Lumiqued. The order appointed Regional State Prosecutor Apolinario Exevea as committee chairman with City Prosecutor Erdolfo Balajadia and Provincial Prosecutor Felix Cabading as members. They were mandated to conduct an investigation within thirty days from receipt of the order, and to submit their report and recommendation within fifteen days from its conclusion.

The investigating committee accordingly issued a subpoena directing Lumiqued to submit his counter-affidavit on or before June 17, 1992. Lumiqued, however, filed instead an urgent motion to defer submission of his counter-affidavit pending actual receipt of two of private respondent's complaints. The committee granted the motion and gave him a five-day extension.

In his counter-affidavit dated June 23, 1992, 4 Lumiqued alleged, inter alia, that the cases were filed against him to extort money from innocent public servants like him, and were initiated by private respondent in connivance with a certain Benedict Ballug of Tarlac and a certain Benigno Aquino III. He claimed that the apparent weakness of the charge was bolstered by private respondent's execution of an affidavit of desistance. 5

Lumiqued admitted that his average daily gasoline consumption was 108.45 liters. He submitted, however, that such consumption was warranted as it was the aggregate consumption of the five service vehicles issued under his name and intended for the use of the Office of the Regional Director of the DAR. He added that the receipts which were issued beyond his region were made in the course of his travels to Ifugao Province, the DAR Central Office in Diliman, Quezon City, and Laguna, where he attended a seminar. Because these receipts were merely turned over to him by drivers for reimbursement, it was not his obligation but that of auditors and accountants to determine whether they were falsified. He affixed his signature on the receipts only to signify that the same were validly issued by the establishments concerned in order that official transactions of the DAR-CAR could be carried out.

Explaining why a vulcanizing shop issued a gasoline receipt, Lumiqued said that he and his companions were cruising along Santa Fe, Nueva Vizcaya on their way to Ifugao when their service vehicle ran out of gas. Since it was almost midnight, they sought the help of the owner of a vulcanizing shop who readily furnished them with the gasoline they needed. The vulcanizing shop issued its own receipt so that they could reimburse the cost of the gasoline. Domingo Lucero, the owner of said vulcanizing shop, corroborated this explanation in an affidavit dated June 25, 1990. 6 With respect to the accusation that he sought reimbursement in the amount of P660.00 for one vulcanizing job, Lumiqued submitted that the amount was actually only P6.60. Any error committed in posting the amount in the books of the Regional Office was not his personal error or accountability.

To refute private respondent's allegation that he violated COA rules and regulations in incurring unliquidated cash advances in the amount of P116,000.00, Lumiqued presented a certification 7 of DAR-CAR Administrative Officer Deogracias F. Almora that he had no outstanding cash advances on record as of December 31, 1989.

In disputing the charges of oppression and harassment against him, Lumiqued contended that private respondent was not terminated from the service but was merely relieved of her duties due to her prolonged absences. While admitting that private respondent filed the required applications for leave of absence, Lumiqued claimed that the exigency of the service necessitated disapproval of her application for leave of absence. He allegedly rejected her second application for leave of absence in view of her failure to file the same immediately with the head office or upon her return to work. He also asserted that no medical certificate supported her application for leave of absence.

In the same counter-affidavit, Lumiqued also claimed that private respondent was corrupt and dishonest because a COA examination revealed that her cash accountabilities from June 22 to November 23, 1989, were short by P30,406.87. Although private respondent immediately returned the amount on January 18, 1990, the day following the completion of the cash examination, Lumiqued asserted that she should be relieved from her duties and assigned to jobs that would not require handling of cash and money matters.

Committee hearings on the complaints were conducted on July 3 and 10, 1992, but Lumiqued was not assisted by counsel. On the second hearing date, he moved for its resetting to July 17, 1992, to enable him to employ the services of counsel. The committee granted the motion, but neither Lumiqued nor his counsel appeared on the date he himself had chosen, so the committee deemed the case submitted for resolution.

On August 12, 1992, Lumiqued filed an urgent motion for additional hearing, 8 alleging that he suffered a stroke on July 10, 1992. The motion was forwarded to the Office of the State Prosecutor apparently becausethe investigation had already been terminated. In an order dated September 7, 1992,  9 State Prosecutor Zoila C. Montero denied the motion, viz:

The medical certificate given show(s) that respondent was discharged from the Sacred Heart Hospital on July 17, 1992, the date of the hearing, which date was upon the request of respondent (Lumiqued). The records do not disclose that respondent advised the Investigating committee of his confinement and inability to attend despite his discharge, either by himself or thru counsel. The records likewise do not show that efforts were exerted to notify the Committee of respondent's condition on any reasonable date after July 17, 1992. It is herein noted that as early as June 23, 1992, respondent was already being assisted by counsel.

Moreover an evaluation of the counter-affidavit submitted reveal(s) the sufficiency, completeness and thoroughness of the counter-affidavit together with the documentary evidence annexed thereto, such that a judicious determination of the case based on the pleadings submitted is already possible.

Moreover, considering that the complaint-affidavit was filed as far back as November 16, 1989 yet, justice can not be delayed much longer.

Following the conclusion of the hearings, the investigating committee rendered a report dated July 31, 1992, 10finding Lumiqued liable for all the charges against him. It made the following findings:

After a thorough evaluation of the evidences (sic) submitted by the parties, this committee finds the evidence submitted by the complainant sufficient to establish the guilt of the respondent for Gross Dishonesty and Grave Misconduct.

That most of the gasoline receipts used by the respondent in claiming for the reimbursement of his gasoline expenses were falsified is clearly established by the 15 Certified Xerox Copies of the duplicate receipts (Annexes G-1 to G-15) and the certifications issued by the different gasoline stations where the respondent purchased gasoline. Annexes "G-1" to "G-15" show that the actual average purchase made by the respondent is about 8.46 liters only at a purchase price of P50.00, in contrast to the receipts used by the respondent which reflects an average of 108.45 liters at a purchase price of P550.00. Here, the greed of the respondent is made manifest by his act of claiming reimbursements of more than 10 times the value of what he actually spends. While only 15 of the gasoline receipts were ascertained to have been falsified, the motive, the pattern and the scheme employed by the respondent in defrauding the government has, nevertheless, been established.

That the gasoline receipts have been falsified was not rebutted by the respondent. In fact, he had in effect admitted that he had been claiming for the payment of an average consumption of 108.45 liters/day by justifying that this was being used by the 4 vehicles issued to his office. Besides he also admitted having signed the receipts.

Respondent's act in defrauding the government of a considerable sum of money by falsifying receipts constitutes not only Dishonesty of a high degree but also a criminal offense for Malversation through Falsification of Official Documents.

This committee likewise finds that the respondent have (sic) unliquidated cash advances in the year 1989 which is in violation of established office and auditing rules. His cash advances totaling to about P116,000.00 were properly documented. The requests for obligation of allotments and the vouchers covering the amounts were all signed by him. The mere certification issued by the Administrative Officer of the DAR-CAR cannot therefore rebut these concrete evidences (sic).

On the third complaint, this committee likewise believes that the respondent's act in relieving the complainant of her functions as a Regional Cashier on December 1, 1989 was an act of harassment. It is noted that this was done barely two weeks after the complainant filed charges against her (sic). The recommendation of Jose G. Medina of the Commission on Audit came only on May 11, 1990 or almost six months after the respondent's order relieving the complainant was issued. His act in harassing a subordinate employee in retaliation to a complaint she filed constitute(s) Gross Misconduct on the part of the respondent who is a head of office.

The affidavits of Joseph In-uyay and Josefina Guting are of no help to the respondent. In fact, this only show(s) that he is capable of giving bribes if only to have the cases against him dismissed. He could not have given a certain Benigno Aquino III the sum of P10,000.00 for any other purpose.

Accordingly, the investigating committee recommended Lumiqued's dismissal or removal from office, without prejudice to the filing of the appropriate criminal charges against him.

Acting on the report and recommendation, former Justice Secretary Franklin M. Drilon adopted the same in his Memorandum to President Fidel V. Ramos dated October 22, 1992. He added that the filing of the affidavit of desistance 11 would not prevent the issuance of a resolution on the matter considering that what was at stake was not only "the violation of complainant's (herein private respondent's) personal rights" but also "the competence and fitness of the respondent (Lumiqued) to remain in public office." He opined that, in fact, the evidence on record could call for "a punitive action against the respondent on the initiative of the DAR."

On December 17, 1992, Lumiqued filed a motion for reconsideration of "the findings of the Committee" with the DOJ. 12 Undersecretary Ramon S. Esguerra indorsed the motion to the investigating committee. 13 In a letter dated April 1, 1993, the three-member investigating committee informed Undersecretary Esguerra that the committee "had no more authority to act on the same (motion for reconsideration) considering that the matter has already been forwarded to the Office of the President" and that their authority under Department Order No. 145 ceased when they transmitted their report to theDOJ. 14 Concurring with this view, Undersecretary Esguerra informed Lumiqued that the investigating committee could no longer act on his motion for reconsideration. He added that the motion was also prematurely filed because the Office of the President (OP) had yet to act on Secretary Drilon's recommendation. 15

On May 12, 1993, President Fidel V. Ramos himself issued Administrative Order No. 52 (A.O. No. 52),  16 finding Lumiqued administratively liable for dishonesty in the alteration of fifteen gasoline receipts, and dismissing him from the service, with forfeiture of his retirement and other benefits. Thus:

That the receipts were merely turned over to him by his drivers and that the auditor and accountant of the DAR-CAR should be the ones to be held liable is untenable. The receipts in question were signed by respondent for the purpose of attesting that those receipts were validly issued by the commercial establishments and were properly disbursed and used in the official business for which it was intended.

This Office is not about to shift the blame for all these to the drivers employed by the DAR-CAR as respondent would want us to do.

The OP, however, found that the charges of oppression and harassment, as well as that of incurring unliquidated cash advances, were not satisfactorily established.

In a "petition for appeal" 17 addressed to President Ramos, Lumiqued prayed that A.O. No. 52 be reconsidered and that he be reinstated to his former position "with all the benefits accorded to him by law and existing rules and regulations." This petition was basically premised on the affidavit dated May 27, 1993, of a certain Dwight L. Lumiqued, a former driver of the DAR-CAR, who confessed to having authored the falsification of gasoline receipts and attested to petitioner Lumiqued's being an "honest man" who had no "premonition" that the receipts he (Dwight) turned over to him were "altered." 18

Treating the "petition for appeal" as a motion for reconsideration of A.O. No. 52, the OP, through Senior Deputy Executive Secretary Leonardo A. Quisumbing, denied the same on August 31, 1993.

Undaunted, Lumiqued filed a second motion for reconsideration, alleging, among other things, that he was denied the constitutional right to counsel during the hearing. 19 On May 19, 1994, 20 however, before his motion could be resolved, Lumiqued died. On September 28, 1994, 21 Secretary Quisumbing denied the second motion for reconsideration for lack of merit.

Hence, the instant petition for certiorari and mandamus praying for the reversal of the Report and Recommendation of the Investigating Committee, the October 22, 1992, Memorandum of then Justice Secretary Drilon, A.O. No. 52 issued by President Ramos, and the orders of Secretary Quisumbing. In a nutshell, it prays for the "payment of retirement benefits and other benefits accorded to deceased Arsenio Lumiqued by law, payable to his heirs; and the backwages from the period he was dismissed from service up to the time of his death on May 19, 1994." 22

Petitioners fault the investigating committee for its failure to inform Lumiqued of his right to counsel during the hearing. They maintain that his right to counsel could not be waived unless the waiver was in writing and in the presence of counsel. They assert that the committee should have suspended the hearing and granted Lumiqued a reasonable time within which to secure a counsel of his own. If suspension was not possible, the committee should have appointed a counsel de oficio to assist him.

These arguments are untenable and misplaced. The right to counsel, which cannot be waived unless the waiver is in writing and in the presence of counsel, is a right afforded a suspect or an accused during custodial investigation. 23 It is not an absolute right and may, thus, be invoked or rejected in a criminal proceeding and, with more reason, in an administrative inquiry. In the case at bar, petitioners invoke the  right of an accused in criminal proceedings to have competent and independent counsel of his own choice. Lumiqued, however, was not accused of any crime in the proceedings below. The investigation conducted by the committee created by Department Order No. 145 was for the purpose of determining if he could be held administratively liable under the law for the complaints filed against him. The order issued by Acting Secretary of Justice Montenegro states thus:

In the interest of the public service and pursuant to the provisions of existing laws, a Committee to conduct the formal investigation of the administrative complaint for oppression, dishonesty, disgraceful and immoral conduct, being notoriously undesirable and conduct prejudicial to the best interest of the service against Mr. ARSENIO P. LUMIQUED, Regional Director, Department of Agrarian Reform, Cordillera Autonomous Region, is hereby created . . . 24

As such, the hearing conducted by the investigating committee was not part of a criminal prosecution. This was even made more pronounced when, after finding Lumiqued administratively liable, it hinted at the filing of a criminal case for malversation through falsification of public documents in its report and recommendation.

Petitioners' misconception on the nature of the investigation 25 conducted against Lumiqued appears to have been engendered by the fact that the DOJ conducted it. While it is true that under the Administrative Code of 1987, the DOJ shall "administer the criminal justice system in accordance with the accepted processes thereof consisting in the investigation of the crimes, prosecution of offenders and administration of the correctional

system, 26 conducting criminal investigations is not its sole function. By its power to "perform such other functions as may be provided by law," 27 prosecutors may be called upon to conduct administrative investigations. Accordingly, the investigating committee created by Department Order No. 145 was duty-bound to conduct the administrative investigation in accordance with the rules therefor.

While investigations conducted by an administrative body may at times be akin to a criminal proceeding, the fact remains that under existing laws, a party in an administrative inquiry  may or may not be assisted by counsel, irrespective of the nature of the charges and of the respondent's capacity to represent himself, and no duty rests on such a body to furnish the person being investigated with counsel. 28 In an administrative proceeding such as the one that transpired below, a respondent (such as Lumiqued) has the option of engaging the services of counsel or not. This is clear from the provisions of Section 32, Article VII of Republic Act No. 2260 29 (otherwise known as the Civil Service Act) and Section 39, paragraph 2, Rule XIV (on Discipline) of the Omnibus Rules Implementing Book V of Executive Order No. 292 30 (otherwise known as the Administrative Code of 1987). Excerpts from the transcript of stenographic notes of the hearings attended by Lumiqued 31 clearly show that he was confident of his capacity and so opted to represent himself . Thus, the right to counsel is not imperative in administrative investigations because such inquiries are conducted merely to determine whether there are facts that merit disciplinary measures against erring public officers and employees, with the purpose of maintaining the dignity of government service.

Furthermore, petitioners' reliance on Resolution No. 94-0521 of the Civil Service Commission on the Uniform Procedure in the Conduct of Administrative Investigation stating that a respondent in an administrative complaint must be "informed of his right to the assistance of a counsel of his choice,"  32 is inappropriate. In the first place, this resolution is applicable only to cases brought before the Civil Service Commission. 33 Secondly, said resolution, which is dated January 25, 1994, took effect fifteen days following its publication in a newspaper of general circulation, 34 much later than the July 1992 hearings of the investigating committee created by Department Order No. 145. Thirdly, the same committee was not remiss in the matter of reminding Lumiqued of his right to counsel. Thus, at the July 3, 1992, hearing, Lumiqued was repeatedly appraised of his option to secure the services of counsel:

RSP EXEVEA:

This is an administrative case against Director Lumiqued. Director Lumiqued is present. The complainant is present, Janet Obar-Zamudio. Complainant has just been furnished with a copy of the counter-affidavit of the respondent. Do you have a counsel, Director?

DIR. LUMIQUED:

I did not bring anybody, Sir, because when I went to see him, he told me, Sir, that he has already set a hearing, morning and afternoon today.

RSP EXEVEA:

So, we will proceed with the hearing even without your counsel? You are willing to proceed with the hearing even without your counsel?

DIR. LUMIQUED:

Yes, I am confident. . .

CP BALAJADIA:

You are confident that you will be able to represent yourself?

DIR. LUMIQUED:

That is my concern. 35 (Emphasis supplied)

In the course of private respondent's damaging testimony, the investigating committee once again reminded Lumiqued of his need for a counsel. Thus:

CP BALAJADIA:

Q. (To Director Lumiqued) You really wish to go through with this even without your counsel?

DIRECTOR LUMIQUED:

A. I think so, Sir.

CP BALAJADIA:

Let us make it of record that we have been warning you to proceed with the assistance of counsel but you said that you can take care of yourself so we have no other alternative but to proceed. 36 (Emphasis supplied).

Thereafter, the following colloquies transpired:

CP BALAJADIA:

We will suspend in the meantime that we are waiting for the supplemental affidavit you are going to present to us. Do you have any request from the panel of investigators, Director Lumiqued?

DIRECTOR LUMIQUED:

I was not able to bring a lawyer since the lawyer I requested to assist me and was the one who prepared my counter-affidavit is already engaged for a hearing and according to him he is engaged for the whole month of July.

RSP EXEVEA:

We cannot wait . . .

CP BALAJADIA:

Why don't you engage the services of another counsel. The charges against you are quite serious. We are not saying you are guilty already. We are just apprehensive that you will go through this investigation without a counsel. We would like you to be protected legally in the course of this investigation. Why don't you get the services of another counsel. There are plenty here in Baguio . . .

DIRECTOR LUMIQUED:

I will try to see, Sir . . .

CP BALAJADIA:

Please select your date now, we are only given one month to finish the investigation, Director Lumiqued.

RSP EXEVEA:

We will not entertain any postponement. With or without counsel, we will proceed.

CP BALAJADIA:

Madam Witness, will you please submit the document which we asked for and Director Lumiqued, if you have other witnesses, please bring them but reduce their testimonies in affidavit form so that we can expedite with the proceedings. 37

At the hearing scheduled for July 10, 1992, Lumiqued still did not avail of the services of counsel. Pertinent excerpts from said hearing follow:

FISCAL BALAJADIA:

I notice also Mr. Chairman that the respondent is not being represented by a counsel. The last time he was asked to invite his lawyer in this investigation. May we know if he has a lawyer to represent him in this investigation?

DIR. LUMIQUED:

There is none Sir because when I went to my lawyer, he told me that he had set a case also at 9:30 in the other court and he told me if there is a possibility of having this case postponed anytime next week, probably Wednesday so we will have good time (sic) of presenting the affidavit.

FISCAL BALAJADIA:

Are you moving for a postponement Director? May I throw this to the panel. The charges in this case are quite serious and he should be given a chance to the assistance of a counsel/lawyer.

RSP EXEVEA:

And is (sic) appearing that the supplemental-affidavit has been furnished him only now and this has several documents attached to it so I think we could grant him one last postponement considering that he has already asked for an extension.

DIR. LUMIQUED:

Furthermore Sir, I am now being bothered by my heart ailment. 38

The hearing was reset to July 17, 1992, the date when Lumiqued was released from the hospital. Prior to said date, however, Lumiqued did not inform the committee of his confinement. Consequently because the hearing

could not push through on said date, and Lumiqued had already submitted his counter-affidavit, the committee decided to wind up the proceedings. This did not mean, however, that Lumiqued was short-changed in his right to due process.

Lumiqued, a Regional Director of a major department in the executive branch of the government, graduated from the University of the Philippines (Los Baños) with the degree of Bachelor of Science major in Agriculture, was a recipient of various scholarships and grants, and underwent training seminars both here and abroad. 39 Hence, he could have defended himself if need be, without the help of counsel, if truth were on his side. This, apparently, was the thought he entertained during the hearings he was able to attend. In his statement, "That is my concern," one could detect that it had been uttered testily, if not exasperatedly, because of the doubt or skepticism implicit in the question, "You are confident that you will be able to represent yourself?" despite his having positively asserted earlier, "Yes, I am confident." He was obviously convinced that he could ably represent himself. Beyond repeatedly reminding him that he could avail himself of counsel and as often receiving the reply that he is confident of his ability to defend himself, the investigating committee could not do more. One can lead a horse to water but cannot make him drink.

The right to counsel is not indispensable to due process unless required by the Constitution or the law. In  Nera v.Auditor General, 40 the Court said:

. . . There is nothing in the Constitution that says that a party in a non-criminal proceeding is entitled to be represented by counsel and that, without such representation, he shall not be bound by such proceedings. The assistance of lawyers; while desirable, is not indispensable. The legal profession was not engrafted in the due process clause such that without the participation of its members, the safeguard is deemed ignored or violated. The ordinary citizen is not that helpless that he cannot validly act at all except only with a lawyer at his side.

In administrative proceedings, the essence of due process is simply the opportunity to explain one's side. One may be heard, not solely by verbal presentation but also, and perhaps even much more creditably as it is more practicable than oral arguments, through pleadings. 41 An actual hearing is not always an indispensable aspect of due process. 42 As long as a party was given the opportunity to defend his interests in due course; he cannot be said to have been denied due process of law, for this opportunity to be heard is the very essence of due process. 43 Moreover, this constitutional mandate is deemed satisfied if a person is granted an opportunity to seek reconsideration of the action or ruling complained of. 44 Lumiqued's appeal and his subsequent filing of motions for reconsideration cured whatever irregularity attended the proceedings conducted by the committee. 45

The constitutional provision on due process safeguards life, liberty and property.  46 In the early case of Cornejo v.Gabriel and Provincial Board of Rizal 47 the Court held that a public office is not property within the sense of the constitutional guarantee of due process of law for it is a public trust or agency. This jurisprudential pronouncement has been enshrined in the 1987 Constitution under Article XI, Section 1, on accountability of public officers, as follows:

Sec. 1. Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.

When the dispute concerns one's constitutional right to security of tenure, however, public office is deemed analogous to property in a limited sense; hence, the right to due process could rightfully be invoked. Nonetheless, the right to security of tenure is not absolute. Of equal weight is the countervailing mandate of the Constitution that all public officers and employees must serve with responsibility, integrity, loyalty and efficiency. 48 In this case, it has been clearly shown that Lumiqued did not live up to this constitutional precept.

The committee's findings pinning culpability for the charges of dishonesty and grave misconduct upon Lumiqued were not, as shown above, fraught with procedural mischief. Its conclusions were founded on the evidence presented and evaluated as facts. Well-settled in our jurisdiction is the doctrine that findings of fact of administrative agencies must be respected as long as they are supported by substantial evidence, even if such evidence is not overwhelming orpreponderant. 49 The quantum of proof necessary for a finding of guilt in administrative cases is only substantial evidence or such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. 50

Consequently, the adoption by Secretary Drilon and the OP of the committee's recommendation of dismissal may not in any way be deemed tainted with arbitrariness amounting to grave abuse of discretion. Government officials are presumed to perform their functions with regularity. Strong evidence is not necessary to rebut that presumption, 51 which petitioners have not successfully disputed in the instant case.

Dishonesty is a grave offense penalized by dismissal under Section 23 of Rule XIV of the Omnibus Rules Implementing Book V of the Administrative Code of 1987. Under Section 9 of the same Rule, the penalty of dismissal carries with it "cancellation of eligibility, forfeiture of leave credits and retirement benefits, and the disqualification for reemployment in the government service." The instant petition, which is aimed primarily at the "payment of retirement benefits and other benefits," plus back wages from the time of Lumiqued's dismissal until his demise, must, therefore, fail.

WHEREFORE, the instant petition for certiorari and mandamus is hereby DISMISSED and Administrative Order no. 52 of the Office of the President is AFFIRMED. Costs against petitioners.

SO ORDERED.

Regalado, Davide, Jr., Bellosillo, Melo, Puno, Vitug Kapunan, Mendoza, Francisco and Panganiban, JJ., concur.

Narvasa, C.J., is on leave.

NICOS INDUSTRIAL CORPORATION, JUAN COQUINCO and CARLOS COQUINCO, petitioners, vs.THE COURT OF APPEALS, VICTORINO P. EVANGELISTA, in his capacity as Ex-Officio Sheriff of Bulacan, UNITED COCONUT PLANTERS BANK, MANUEL L. CO, GOLDEN STAR INDUSTRIAL CORPORATION and THE REGISTER OF DEEDS FOR THE PROVINCE OF BULACAN, respondents.

Manuel T. Ubarra for petitioners.

Encanto, Mabugat & Associates for UCPB.

Mangalindan and Bermas Law Offices for private respondent.

Federico Reyes for Manuel L. Co.

 

CRUZ, J.:

We are asked once again to interpret the constitutional provision that no decision shall be rendered by any court without stating therein clearly and distinctly the facts and the law on which it is based,  1 this time in connection with an order of the trial court sustaining demurrer to the evidence. 2 The order has been affirmed by the respondent Court of Appeals, 3 and the appellant has come to this Court in this petition for review on certiorari, invoking the said provision and alleging several reversible errors.

In the complaint filed by the petitioners before the Regional Trial Court of Bulacan, it was alleged that on January 24, 1980, NICOS Industrial Corporation obtained a loan of P2,000,000.00 from private respondent United Coconut Planters Bank and to secure payment thereof executed a real estate mortgage on two parcels of land located at Marilao, Bulacan. The mortgage was foreclosed for the supposed non-payment of the loan, and the sheriff's sale was held on July 11, 1983, without re-publication of the required notices after the original date for the auction was changed without the knowledge or consent of the mortgagor. UCPB was the highest and lone bidder and the mortgaged lands were sold to it for P3,558,547.64. On August 29, 1983, UCPB sold all its rights to the properties to private respondent Manuel Co, who on the same day transferred them to Golden Star Industrial Corporation, another private respondent, upon whose petition a writ of possession was issued to it on November 4, 1983. On September 6, 1984, NICOS and the other petitioners, as chairman of its board of directors and its executive vice-president, respectively, filed their action for "annulment of sheriff's sale,

recovery of possession, and damages, with prayer for the issuance of a preliminary prohibitory and mandatory injunction."

Golden Star and Victorino P. Evangelista, as ex officio sheriff of Bulacan, moved to dismiss the complaint on the grounds of lack of jurisdiction, prescription, estoppel, and regularity of the sheriff's sale. Co denied the allegations of the plaintiffs and, like the other defendants, counterclaimed for damages. In its answer with counterclaim, UCPB defended the foreclosure of the mortgage for failure of NICOS to pay the loan in accordance with its promissory note and insisted that the sheriff's sale had been conducted in accordance with the statutory requirements.

The plaintiffs presented two witnesses, including petitioner Carlos Coquinco, who testified at three separate hearings. They also submitted 21 exhibits. On April 30, 1986, Golden Star and Evangelista filed a 7-page demurrer to the evidence where they argued that the action was a derivative suit that came under the jurisdiction of the Securities and Exchange Commission; that the mortgage had been validly foreclosed; that the sheriff's sale had been held in accordance with Act 3135; that the notices had been duly published in a newspaper of general circulation; and that the opposition to the writ of possession had not been filed on time. No opposition to the demurrer having been submitted despite notice thereof to the parties, Judge Nestor F. Dantes considered it submitted for resolution and on June 6, 1986, issued thefollowing —

O R D E R

Acting on the "Demurrer to Evidence" dated April 30, 1986 filed by defendants Victorino P. Evangelista and Golden Star Industrial Corporation to which plaintiff and other defendants did not file their comment/opposition and it appearing from the very evidence adduced by the plaintiff that the Sheriff's Auction Sale conducted on July 11, 1983 was in complete accord with the requirements of Section 3, Act 3135 under which the auction sale was appropriately held and conducted and it appearing from the allegations in paragraph 13 of the plaintiff's pleading and likewise from plaintiff Carlos Coquinco's own testimony that his cause is actually-against the other officers and stockholders of the plaintiff Nicos Industrial Corporation ". . . for the purpose of protecting the corporation and its stockholders, as well as their own rights and interests in the corporation, and the corporate assets, against the fraudulent ants and devices of the responsible officials of the corporation, in breach of the trust reposed upon them by the stockholders . . ." a subject matter not within the competent jurisdiction of the Court, the court finds the same to be impressed with merit.

WHEREFORE, plaintiff's complaint is hereby dismissed. The Defendants' respective counterclaims are likewise dismissed.

The Writ of Preliminary Injunction heretofore issued is dissolved and set aside.

It is this order that is now assailed by the petitioners on the principal ground that it violates the aforementioned constitutional requirement. The petitioners claim that it is not a reasoned decision and does not clearly and distinctly explain how it was reached by the trial court. They also stress that the sheriff's sale was irregular because the notices thereof were published in a newspaper that did not have general circulation and that the original date of the sheriff's sale had been changed without its consent, the same having been allegedly given by a person not authorized to represent NICOS. It is also contended that the original P2 million loan had already been paid and that if there was indeed a second P2 million loan also secured by the real estate mortgage, it was for UCPB to prove this, as well as its allegation that NICOS had defaulted in the payment of the first quarterly installment on the first loan.

The petitioners complain that there was no analysis of their testimonial evidence or of their 21 exhibits, the trial court merely confining itself to the pronouncement that the sheriff's sale was valid and that it had no jurisdiction over the derivative suit. There was therefore no adequate factual or legal basis for the decision that could justify its review and affirmance by the Court of Appeals.

Rejecting this contention, the respondent court held:

In their first assignment of error, appellants faults the court for its failure to state clearly and distinctly the facts and the law on which the order of dismissal is based, as required by Section 1, Rule 36, of the Rules of Court and the Constitution.

An order granting a demurrer to the evidence is in fact an adjudication on the merits and consequently the requirements of Section 1, Rule 36, is applicable. We are not however prepared to hold that there is a reversible omission of the requirements of the rule in the Order appealed from, it appearing from a reading thereof that there is substantial reference to the facts and the law on which it is based.

The Order which adverts to the Demurrer to the Evidence expressly referred to the evidence adduced by the plaintiff as showing that the Sheriff's auction sale conducted on July 11, 1983, was in complete accord with the requisites of Section 3, Act 3135 under which the auction sale was apparently held and conducted. It likewise makes reference to the allegations in paragraph 13 of plaintiff's pleadings and plaintiff Carlos Coquinco's own testimony that the case is actually against the other officers and stockholders of plaintiff NICOS Industrial Corporation and concludes, rightly or wrongly, that the subject matter thereof is not within the competent jurisdiction of the Court.

We hold that the order appealed from as framed by the court a quo while leaving much to be desired, substantially complies with the rules.

This Court does not agree. The questioned order is an over-simplification of the issues, and violates both the letter and spirit of Article VIII, Section 14, of the Constitution.

It is a requirement of due process that the parties to a litigation be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. The court cannot simply say that judgment is rendered in favor of X and against Y and just leave it at that without any justification whatsoever for its action. The losing party is entitled to know why he lost, so he may appeal to a higher court, if permitted, should he believe that the decision should be reversed. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal.

It is important to observe at this point that the constitutional provision does not apply to interlocutory orders, such as one granting a motion for postponement or quashing a subpoena, because it "refers only to decisions on the merits and not to orders of the trial court resolving incidental matters." 4 As for the minute resolutions of this Court, we have already observed in Borromeo v. Court of Appeals 5 that —

The Supreme Court disposes of the bulk of its cases by minute resolutions and decrees them as final and executory, as where a case is patently without merit, where the issues raised are factual in nature, where the decision appealed from is supported by substantial evidence and is in accord with the facts of the case and the applicable laws, where it is clear from the records that the petitions were filed merely to forestall the early execution of judgment and for non-compliance with the rules. The resolution denying due course or dismissing a petition always gives the legal basis.

xxx xxx xxx

The Court is not duty bound to render signed decisions all the time. It has ample discretion to formulate decisions and/or minute resolutions, provided a legal basis is given, depending on its evaluation of a case.

The order in the case at bar does not come under either of the above exceptions. As it is settled that an order dismissing a case for insufficient evidence is a judgment on the merits, 6 it is imperative that it be a reasoned decision clearly and distinctly stating therein the facts and the law on which it is based.

It may be argued that a dismissal based on lack of jurisdiction is not considered a judgment on the merits and so is not covered by the aforecited provision. There is no quarrel with this established principle. However, the

rule would be applicable only if the case is dismissed on the sole ground of lack of jurisdiction and not when some other additional ground is invoked.

A careful perusal of the challenged order will show that the complaint was dismissed not only for lack of jurisdiction but also because of the insufficiency of the evidence to prove the invalidity of the sheriff's sale. Regarding this second ground, all the trial court did was summarily conclude "from the very evidence adduced by the plaintiff" that the sheriff's sale "was in complete accord with the requirements of Section 3, Act 3135." It did not bother to discuss what that evidence was or to explain why it believed that the legal requirements had been observed. Its conclusion was remarkably threadbare. Brevity is doubtless an admirable trait, but it should not and cannot be substituted for substance. As the ruling on this second ground was unquestionably a judgment on the merits, the failure to state the factual and legal basis thereof was fatal to the order.

Significantly, the respondent court found that the trial court did have jurisdiction over the case after all. This made even more necessary the factual and legal explanation for the dismissal of the complaint on the ground that the plaintiff's evidence was insufficient.

In People v. Escober, 7 the trial court in a decision that covered only one and a half pages, single spaced found the defendant guilty of murder and sentenced him to death. Holding that the decision violated the constitutional requirement, the Court observed through then Associate Justice Marcelo B. Fernan:

The above-quoted decision falls short of this standard. The inadequacy stems primarily from the respondent judge's tendency to generalize and to form conclusions without detailing the facts from which such conclusions are deduced. Thus, he concluded that the material allegations of the Amended Information were the facts without specifying which of the testimonies or the exhibits supported this conclusion. He rejected the testimony of accused-appellant Escober because it was allegedly replete with contradictions without pointing out what these contradictions consist of or what "vital details" Escober could have recalled as a credible witness. He also found the crime to be attended by the aggravating circumstances of cruelty, nighttime, superior strength, treachery, in band, "among others" but did not particularly state the factual basis for such findings.

While it is true that the case before us does not involve the life or liberty of the defendant, as in Escober, there is still no reason for the constitutional short-cut taken by the trial judge. The properties being litigated are not of inconsequential value; they were sold for three and a half million pesos in 1983 and doubtless have considerably appreciated since then, after more than eight years. These facts alone justified a more careful and thorough drafting of the order, to fully inform the parties and the courts that might later be called upon to review it of the reasons why the demurrer to the evidence was sustained and the complaint dismissed.

In Romero v. Court of Appeals, 8 the Court, somewhat reluctantly, approved a memorandum decision of the Court of Appeals consisting of 4 pages, single-spaced, which adopted by reference the findings of fact and conclusions of law of the Court of Agrarian Relations. While holding that the decision could be considered substantial compliance with PD 946, Section 18, 9 and BP 129, Section 40, 10 Justice Jose Y. Feria nevertheless expressed the misgiving that "the tendency would be to follow the line of least resistance by just adopting the findings and conclusions of the lower court without thoroughly studying the appealed case."

Obviously, the order now being challenged cannot qualify as a memorandum decision because it was not issued by an appellate court reviewing the findings and conclusions of a lower court. We note that, contrary to the impression of the respondent court, there is not even an incorporation by reference of the evidence and arguments of the parties, assuming this is permitted. No less importantly, again assuming arguendo that such reference is allowed and has been made, there is no immediate accessibility to the incorporated matters so as to insure their convenient examination by the reviewing court. In Francisco v. Permskul, 11 which is the latest decision of the Court on the issue now before us, we categorically required:

. . . Although only incorporated by reference in the memorandum decision of the regional trial court, Judge Balita's decision was nevertheless available to the Court of Appeals. It is this circumstance, or even happenstance, if you will, that has validated the memorandum decision challenged in this case and spared it from constitutional infirmity.

That same circumstance is what will move us now to lay down the following requirement, as a condition for the proper application of Section 40 of BP Blg. 129. The memorandum decision, to be valid, cannot incorporate the findings of fact and the conclusions of law of

the lower court only byremote reference, which is to say that the challenged decision is not easily and immediately available to the person reading the memorandum decision. For the incorporation by reference to be allowed, it must provide for  direct access to the facts and the law being adopted, which must be contained in a statement attached to the said decision. In other words, the memorandum decision authorized under Section 40 of BP Blg. 129 should actually embody the findings of fact and conclusions of law of the lower court in an annex attached to and made an indispensable part of the decision.

It is expected that this requirement will allay the suspicion that no study was made of the decision of the lower court and that its decision was merely affirmed without a proper examination of the facts and the law on which it was based. The proximity at least of the annexed statement should suggest that such an examination has been undertaken. It is, of course, also understood that the decision being adopted should, to begin with, comply with Article VIII, Section 14 as no amount of incorporation or adoption will rectify its violation.

In Escober, the Court observed that the flawed decision "should have been remanded to the court  a quo for the rendition of a new judgment" but decided nevertheless to decide the case directly, the records being already before it and in deference to the right of the accused to a speedy trial as guaranteed by the Bill of Rights. However, we are not so disposed in the case now before us.

It is not the normal function of this Court to rule on a demurrer to the evidence in the first instance; our task comes later, to review the ruling of the trial court after it is examined by the Court of Appeals and, when proper, its decision is elevated to us. In the present case, we find that the respondent court did not have an adequate basis for such examination because of the insufficiency of the challenged order. It must also be noted that we deal here only with property rights and, although we do not mean to minimize them, they do not require the same urgent action we took in Escober, which involved the very life of the accused. All things considered, we feel that the proper step is to remand this case to the court a quo for a revision of the challenged order in accordance with the requirements of the Constitution.

Review by the Court of the other issues raised, most of which are factual, e.g., the allegation of default in the payment of the loan, the existence of a second loan, the nature of the newspapers where the notices of the sale were published, the authority of the person consenting to the postponement of the sale, etc., is impractical and unnecessary at this time. These matters should be discussed in detail in the revised order to be made by the trial court so that the higher courts will know what they are reviewing when the case is appealed.

In one case, 12 this Court, exasperated over the inordinate length of a decision rife with irrelevant details, castigated the trial judge for his "extraordinary verbiage." Kilometric decisions without much substance must be avoided, to be sure, but the other extreme, where substance is also lost in the wish to be brief, is no less unacceptable either. The ideal decision is that which, with welcome economy of words, arrives at the factual findings, reaches the legal conclusions, renders its ruling and, having done so, ends.

WHEREFORE, the challenged decision of the Court of Appeals is SET ASIDE for lack of basis. This case is REMANDED to the Regional Trial Court of Bulacan, Branch 10, for revision, within 30 days from notice, of the Order of June 6, 1986, conformably to the requirements of Article VIII, Section 14, of the Constitution, subject to the appeal thereof, if desired, in accordance with law. It is so ordered.

Narvasa, C.J., Griño-Aquino and Medialdea, JJ., concur.

G.R. No. 91429 July 13, 1990

SALVADOR M. MISON, in his capacity as Commissioner of Customs, petitioner, vs.COMMISSION ON AUDIT, CHAN CHIU, and CHEUNG I, respondents.

Juan T. David counsel and attorney-in-fact for the owner of the M/V Hyojin Maru.

 

NARVASA, J.:

In Customs Case No. 813, the Commissioner of Customs rendered a decision on August 11, 1969, declaring illegal the seizure by elements of the Philippine Navy of the M/V "Hyojin Maru" a vessel of Japanese registry, and ordered the release of the vessel and its cargo to the claimants, Chan Chiu On and Cheung I.  1 Return of the cargo as thus ordered was effected pursuant to a directive of the Secretary of Finance dated February 5, 1970. 2 Release of the vessel, however, was never effected; it sank while yet in the custody of the Bureau of Customs, and requests by the Bureau to the Philippine Navy and the CADA to refloat or salvage the ship could not be complied with for lack of funds. 3

Chan Chiu On and Cheung I then filed a claim with the Commission of Audit for the payment of the value of the vessel. 4 Acting thereon "(b)y authority of the Acting Chairman," Mr. Rogelio B. Espiritu, Manager, Technical Service Office of the COA, denied the claim for the reasons set forth in his registered letter to the claimant's lawyer dated November 3, 1977-captioned "Decision No. 77-142." 5 Another letter, dated December 9, 1977, this time signed by Acting COA Chairman Francisco S. Tantuico, was also sent to claimants' counsel, Atty. Juan David, enclosing "a copy of Decision No. 77-142 of this Commission, contained in a letter dated November 3, 1977, which is self-explanatory." 6

Atty. David moved for reconsideration by letter dated February 6, 1978. Acting COA Chairman Tantuico denied the motion, in his own letter dated April 17, 1978 on the ground that it had been filed beyond the reglementary period of 30 days from the date of receipt of a copy of the subject Decision which, in consequence, had "already become final and executory." 7 In a letter dated May 10, 1978, Mr. David replied that said Decision No. 77-142-rendered only by the Manager, Technical Service Office of the COA, and "not (by) the Acting Chairman, much less . . . the Commission on Audit" — was void because the matter could validly be acted upon only by "the Commission on Audit duly constituted, by the appointment and qualification of its Chairman and two Commissioners," "as specifically provided by Section 2, Article XII-D of the (1973) Constitution." 8 Commissioner Tantuico wrote back on August 24, 1978 informing Mr. David that "this Commission finds no cogent reason that would justify a reversal of its stand on the matter." 9

Again Atty. David moved for reconsideration, by letter dated April 5, 1979, reiterating the view that Acting Chairman Tantuico lacked constitutional authority to act on the claim on its merits, and requesting that "the same be submitted for resolution by the Commission on Audit, after the appointment of the two (2) commissioners thereof, as required by Section 2, Article XII-D of the Constitution." 10 In another communication dated April 20, 1981, Mr. David reiterated his request that his application for reconsideration be acted on, considering that "a Commissioner has (already) been appointed as member of said Commission." It does not appear that either letter was acted on. 11

On November 17, 1986, the Commission on Audit having been fully constituted with the appointment of the Chairman and two (2) members, Mr. David wrote still another letter to it, 12 drawing attention once again to his clients' claim for payment of the "nominal depreciated value . . . (of their vessel) in the sum of US $50,000.00, plus the amount corresponding to legal interest." An acceptable alternative based on "established practice," according to David, would be the conveyance to his clients by the Bureau of Customs of "forfeited merchandise, the value of which shall correspond to the nominal depreciated value of said vessel, plus legal interest . . .

In a 4th Indorsement dated June 22, 1987 addressed "to the Auditor, Bureau of Customs," Chairman Eufemio C. Domingo, acting "FOR THE COMMISSION," reconsidered Decision No. 77-142 of Acting Commissioner of Audit Tantuico, supra. He declared that the vessel sank while in illegal custody of the Bureau of Customs, which "should have pre-eminently taken adequate measures to preserve" it but did not.; hence, he declared that "this Commission will interpose no objection" to the instant claim, subject to the usual auditing and accounting requirements." 13

Petitioner Mison sought clarification of "the legal implication of the 4th Indorsement dated June 22, 1987," in two (2) letters dated November 8, 1988 and November 16, 1988. 14 The response was a letter dated May 19, 1989, entitled "COA Decision No. 992," signed by "the full complement of three (3) members of the Commission on Audit." 15 Said COA Decision No. 992 pointed out that the earlier decision, No. 77-142, was "open to question and cannot be recognized by the present Commission" because signed merely by the then Manager of the Technical Service Office," who evidently "was not acting for the Commission but only for the then Acting Chairman." It therefore held that the 4th Indorsement dated June 22, 1987 should be "deemed for all legal intents and purposes as the final decision on the matter . . ." This letter — Decision No. 992 — was received by the Bureau of Customs on June 22, 1989. 16

The petitioner filed a motion for reconsideration on August 30, 1989. 17 The motion was denied by letter dated October 20, 1989, denominated "COA Decision No. 1053," also signed by the Chairman and the two (2) Members of the Commission, notice of which was received by the petitioner on December 4, 1989. 18

Petitioner seasonably filed with this Court a petition for certiorari to nullify said COA Decisions No. 992 and 1053, pursuant to Section 7, Article IX of the 1987 Constitution. 19

1. The first point that the petitioner would make is that COA Decision No. 77-142, although signed only by the Manager, Technical Service Office of the COA, was ratified or made valid because it "was adopted  in toto as a decision of the COA in the letters dated December 9, 1977, April 17, 1978, and August 24, 1978 of then COA Chairman Francisco T. Tantuico, Jr. to Atty. Juan T. David." The point cannot be conceded.

In the first place the "Espiritu decision" was void ab initio. As manager of the COA Technical Service Office, Mr. Espiritu obviously had no power whatever to render and promulgate a decision of or for the Commission. Indeed, even the Chairman, alone, had not that power. As clearly set out in the Constitution then in force, the power was lodged in the Commission on Audit, "composed of a Chairman and two Commissioners."  20 It was the Commission, as a collegial body, which then as now, had the jurisdiction to "(d)ecide any case brought before it within sixty days from the date of its submission for resolution," subject to review by the Supreme Court on certiorari. 21

Hence, the adoption or ratification of the Espiritu decision by the Acting COA Chairman was inconsequential. Ratification cannot validate an act void ab initio because done absolutely without authority. The act has to be done anew by the person or entity duly endowed with authority to do so.

Moreover, even conceding the contrary, no proper ratification or validation could have been effected by the Acting Chairman since he was not the Commission, and he himself had no power to decide any case brought before the Commission, that power, to repeat, being lodged only in the Commission itself, as a collegial body.

Parenthetically, the proposition advocated in this connection that Chairman Domingo may no longer question the validity of the Espiritu Decision" (No. 77-142) because in assailing it, he had referred to it as "a decision of the Commission on Audit and not merely of its then Acting Chairman," is so patently unmeritorious as to deserve scant consideration.

2. The petitioner argues that to sanction the foregoing principle would result in the invalidation of "hundreds of decisions and orders signed by or signed by authority of the Acting Chairman Tantuico (alone)," considering that there was an appreciable interval during which only an Acting Chairman had been designated and no other Commissioner had been appointed or was otherwise acting as such. It suffices to rule, as this Court has already had occasion to in an analogous case, that the principle should logically apply only to those particular instances where there was a timely and specific challenge to the authority of the Acting COA Chairman to exercise the power of adjudication or decision; it should not affect all other cases where the parties expressly or by implication accepted the adjudicative authority of the Chairman. 22

3. The petitioner next contends that the objection—that the "Espiritu Decision" was "technically invalid due to . . . lack of collegiality" — was waived by failure of Atty. David to raise it in his motion for reconsideration, in which motion he confined his arguments to the merits of the decision, and additionally, by his failure, after denial of his motion for reconsideration, to appeal to the Supreme Court, with the result that the judgment became final and executory as of October 7, 1978.

The contention is also without merit. The record shows—although the petition does not allege 23 — that in a letter dated May 10, 1978, Mr. David did dispute Decision No. 77-142 because rendered only by the Manager, Technical Service Office of the COA, and "not (by) the Acting Chairman, much less . . . the Commission on Audit" "duly constituted, by the appointment and qualification of its Chairman and two Commissioners," "as specifically provided by Section 2, Article XII-D of the (1973) Constitution." He reiterated the challenge to Acting Chairman Tantuico's constitutional authority to act on the claim on its merits, in his letter dated April 5, 1979, and requested that "the same be submitted for resolution by the Commission on Audit, after the appointment of the two (2) commissioners thereof, as required by Section 2, Article XII-D of the Constitution." 24 And in another communication dated April 20, 1981, Mr. David once more requested that his application for reconsideration be acted on collegially, considering that "a Commissioner had (already) been appointed as members of said Commission."

Furthermore, it must be made clear that the Espiritu Decision was not merely "technically invalid," as the petitioner describes it. It was substantively void ab initio, because rendered without jurisdiction. It had an essential inherent defect that could not be cured or waived.

5. The petitioner also maintains that if the Espiritu Decision, or Decision No. 77-142 be held void because adopted and signed only by Acting COA Chairman Tantuico, then the decision embodied in the 4th Indorsement dated June 22, 1987, signed only by incumbent COA Chairman Domingo should also be pronounced void. There is no party in situation. In the first place, when Decision No. 77-142 was rendered, there was no commissioner in the Commission on Audit except the Acting Chairman himself. On the other hand, when the 4th Indorsement dated June 22, 1987 was rendered, there were two (2) members of the Commission: the Chairman, and Commissioner Fernandez, clearly a number sufficient to satisfy the constitutional requirement for collegial action. Moreover, it is made clear in said 4th Indorsement that the decision therein embodied was that of the Commission, composed of Chairman Domingo and Commissioner Fernandez. The phrase therefore, by which Chairman Domingo describes the capacity in which he acted, i.e., "FOR THE COMMISSION," must be taken as entirely accurate, not only because of the familiar presumption of regularity of performance of official functions, but because the records do show Commissioner Fernandez' full concurrence with the decision in said indorsement. Besides, said 4th Indorsement was ratified and reaffirmed by "COA Decision No. 992" of May 19, 1989 signed by "the full complement of three (3) members of the Commission on Audit," 25 to the effect inter alia that the 4th Indorsement dated June 22, 1987, (of Chairman Domingo and Commissioner Fernandez) should be "deemed for all legal intents and purposes as the final decision on the matter . . .

It thus appears that not only does the petition fail to show any grave abuse of discretion on the part of the respondent Commission in the rendition of its decision embodied in the 4th Indorsement dated June 22, 1987 and its Decision No. 992 of May 19, 1989, but that those judgments are in fact in accord with the relevant facts and applicable legal principles.

WHEREFORE, the petition is DISMISSED for lack of merit, without pronouncement as to costs.

SO ORDERED.

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