AMERICAN INTER-FASHION CORP.

OFFICE OF THE PRESIDENT

Gutierrez, J. | May 23, 1991
FACTS:
- In 1984, Glorious Sun (Glorious) was found guilty of dollar-salting
and misdeclaration of importations by the Garments and Textile
Export Board (GTEB), as a result of which, the export quotas
allocated to it were cancelled.
- Glorious then filed a petition for certiorari and prohibition contending
that its right to due process of law was violated, and that the GTEB
decision was not supported by evidence.
- The Court issued a resolution ordering GTEB to conduct further
proceedings. However, Glorious subsequently filed a motion to
withdraw its petition, which was granted. Glorious then filed another
motion to dismiss, which was duly noted by the court.
- Two years later, Glorious filed with the GTEB a petition for restitution
of its export quota and requested for a reconsideration of the
previous decision by the GTEB. In addition to alleging that it was
denied due process, it also contended that the GTEB decision to
cancel its quotas was due to duress and threats from former Minister
Ongpin in order to transfer Glorious quotas to Marcos crony-owned
corporations Del Soleil Apparel Manufacturing and American InterFashion Corporation (AIFC). This petition was denied.
- Thereafter, an appeal was brought to the Office of the President.
AIFC sought to intervene claiming that the GTEB decision had long
become final.
- The Office of the President ruled in favor of Glorious and remanded
the case to GTEB for further proceedings.
ISSUES and HOLDING:
- WON the previous GTEB decision constituted res judicata to the
instant case on the ground that the former decision was a final
judgment on the merits. NO
- WON Glorious was accorded due process in relation to the 1984
GTEB decision. NO
RATIO:
- A judgment on the merits is one rendered after a determination of
which party is right, as distinguished from a judgment rendered upon
preliminary or final or merely technical points.
- The dismissal of the GTEB case cannot be considered as a judgment
on the merits. It was based solely on the notice of withdrawal of
Glorious.
On the due process issue:

Although AIFC admits that the 1984 GTEB decision failed to disclose
to Glorious vital evidence used by GTEB in arriving at its conclusion
that Glorious was guilty of dollar-salting, it contends that the
subsequent disclosure in 1987, where relevant documents were given
to Glorious and that the latter was given an opportunity to comment
thereon, cured the defect. This contention by AIFC, the court holds as
MISLEADING.
The SC recognized that the instant petition involves the 1984
resolution of the GTEB.
AIFC cannot use as an excuse the subsequent disclosure of the
evidence used by the GTEB to Glorious in 1987 to justify the 1984
GTEB resolution. The glaring fact is that Glorious was denied due
process when GTEB failed to disclose evidence used by it in rendering
a resolution against Glorious.
Moreover, the documents disclosed to Glorious by GTEB in 1987
enhanced the charge that the former was denied due process. The
data given showed that the price of Glorious was actually below the
median. Apparently, the GTEB Investigating Panel picked up four
importers whose prices were lower than Glorious in order to show that
the latters prices were the highest.
Attention was also brought to the Puno affidavit and how AIFC claims
that it is an inconsequential matter in that the GTEB Board did not give
credence to it. To this the court replied that Mr. Puno stated that he
was pressured by Minister Ongpin, not the members of the
Investigating Panel. Mr. Puno was the Chairman of the Investigating
Panel. Hence, it is plausible that in view of his position he was the one
pressured by Minister Ongpin. There is every reason to suspect that
even before Glorious Sun was investigated, a decision to strip it of its
quotas and to award them to friends of their administration had already
been made. At the very least, Mr. Puno's "complete turn about" casts
doubts on the veracity and fairness of the Investigating Panel's Report
to GTEB which formed the basis for the 1984 GTEB decision.
Finally, the court held that although factual findings of administrative
agencies are generally accorded respect, such factual findings may be
disregarded if they are not supported by evidence; where the findings
are initiated by fraud, imposition or collusion; where the procedures
which lead to the factual findings are irregular; when palpable errors
are committed; or when grave abuse of discretion arbitrarines or
capriciousness is manifest.
Clearly, the right of Gloriuos to due process was violated. Glorious
export quota allocation, which initially was a privilege, evolved into
some form of property right which should not be removed from it

arbitrarily and without due process only to hurriedly confer it to

another.