G.R. No.

L-49705-09 February 8, 1979

TOMATIC ARATUC, SERGIO TOCAO, CISCOLARIO DIAZ, FRED TAMULA, MANGONTAWAR GURO and
BONIFACIO LEGASPI, petitioners,
vs.
The COMMISSION ON ELECTIONS, REGIONAL BOARD OF CANVASSERS for Region XII (Central
Mindanao), ABDULLAH DIMAPORO, JESUS AMPARO, ANACLETO BADOY, et al., respondents.
Nos. L-49717-21 February 8,1979.
LINANG MANDANGAN, petitioner,
vs.
THE COMMISSION ON ELECTIONS, THE REGIONAL BOARD OF CANVASSERS for Region XII, and
ERNESTO ROLDAN, respondents.
L-49705-09 Lino M. Patajo for petitioners.
Estanislao A. Fernandez for private respondents.
L-49717-21 Estanislao A. Fernandez for petitioner.
Lino M. Patajo for private respondent.
Office of the Solicitor General, for Public respondents.

BARREDO, J .:
Petition in G. R. Nos. L-49705-09 for certiorari with restraining order and preliminary injunction filed by six (6)
independent candidates for representatives to tile Interim Batasang Pambansa who had joined together under
the banner of the Kunsensiya ng Bayan which, however, was not registered as a political party or group under
the 1976 Election Code, P.D. No. 1296, namely Tomatic Aratuc, Sorgio Tocao, Ciscolario Diaz, Fred Tamula,
Mangontawar Guro and Bonifacio Legaspi her referred to as petitioners, to review the decision of the
respondent Commission on Election (Comelec) resolving their appeal from the Of the respondent Regional
Board of Canvasses for Region XII regarding the canvass of the results of the election in said region for
representatives to the I.B.P. held on April 7, 1978. Similar petition in G.R. Nos. L49717-21, for certiorari with
restraining order and preliminary injunction filed by Linang Mandangan, abo a candidate for representative in
the same election in that region, to review the decision of the Comelec declaring respondent Ernesto Roldan
as entitled to be proclaimed as one of the eight winners in said election.
The instant proceedings are sequels of Our decision in G.R. No. L- 48097, wherein Tomatic Aratuc et al.
sought the suspension of the canvass then being undertaken by respondent dent Board in Cotabato city and
in which canvass, the returns in 1966 out of a total of 4,107 voting centers in the whole region had already
been canvassed showing partial results as follows:
NAMES OF
CANDIDATES
NO. OF
VOTES
1. Roldan,
Ernesto (KB)
225,674
2. Valdez,
Estanislao (KBL)
217,789
3. Dimporo,
Abdullah (KBL)
199,244
4. Tocao, Sergio
(KB)
199,062
5. Badoy,
Anacleto (KBL)
198,966
6. Amparo, Jesus
(KBL)
184,764
7.
Pangandaman,
Sambolayan
(KBL)
183,646
8. Sinsuat, Datu
Blah (KBL)
182,457
9. Baga, Tomas
(KBL)
171,656
10. Aratuc,
Tomatic (KB)
165,795
11. Mandangan,
Linang(KB)
165,032
12. Diaz,
Ciscolario (KB)
159,977
13. Tamalu, Fred
(KB)
153,734
14. Legaspi
Bonifacio (KB)
148,200
15. Guro,
Mangontawar
(KB)
139,386
16. Loma,
Nemesio (KB)
107,455
17. Macapeges,
Malamama
(Independent)
101,350
(Votes Of the independent candidates who actually were not in contention omitted)" (Page 6, Record, L-
49705-09.)
A supervening panel headed by Commissioner of Elections, Hon- Venancio S. Duque, had conducted of the
complaints of the petitioners therein of alleged irregularities in the election records in all the voting centers in
the whole province of Lanao del Sur, the whole City of Marawi, eight (8) towns of Lanao del Norte, namely,
Baloi, Karomatan, Matungao, Munai, Nunungan, Pantao Ragat, Tagoloan and Tangcal, seven (7) towns in
Maguindanao, namely, Barrira, Datu Piang, Dinaig, Matanog Parang, South Upi and Upi, ten (10) towns in
North Cotabato, namely, Carmen, Kabacan, Kidapwan, Magpet, Matalam Midsayap, Pigcawayan, Pikit, Pres.
Roxas and Tulonan, and eleven (11) towns in Sultan Kudarat, namely, Bagumbayan, Columbia Don Mariano
Marcos, Esperanza, Isulan, Kalamansig, Lebak, Lutayan, Palimbang, President Quirino and Tacurong, by
reason for which, petitioners had asked that the returns from said voting centers be excluded from the
canvass. Before the start of the hearings, the canvass was suspended but after the supervisory panel
presented its report, on May 15, 1978, the Comelec lifted its order of suspension and directed the resumption
of the canvass to be done in Manila. This order was the one assailed in this Court. We issued a restraining
order.
After hearing the parties, the Court allowed the resumption of the canvass but issued the following guidelines
to be observed thereat:
1. That the resumption of said canvass shall be held in the Comelec main office in Manila
starting not later than June 1, 1978;
2. That in preparation therefor, respondent Commission on Elections shall see to it that all
the material election paragraph corresponding to all the voting center involved in Election
Nos. 78-8, 78-9, 78-10, 78-11 and 78-12 are taken to its main office in Manila, more
particularly, the ballot boxes, with the contents, used during the said elections, the books of
voters or records of voting and the lists or records of registered voters, on or before May 31,
1978;
3. That as soon as the corresponding records are available, petitioners and their counsel
shall be allowed to examine the same under such security measures as the respondent
Board may determine, except the contents of the ballot boxes which shall be opened only
upon orders of either the respondent Board or respondent Commission, after the need
therefor has become evident, the purpose of such examination being to enable petitioners,
and their counsel to expeditiously determine which of them they would wish to be scrutinized
and passed upon by the Board as supporting their charges of election frauds and
anomalies, petitioners and their counsel being admonished in this connection, that no
dilatory tactics should be in by them and that only such records substantial objections
should be offered by them for the scrutiny by the Board;
4. That none of the election returns reffered to in the petition herein shall be canvassed
without first giving the herein petitioners ample opportunity to make their specific objections
thereto, if they have any, and to show sufficient basis for the rejection of any of the returns,
and, in this connection, the respondent Regional Board of Canvassers should give due
consideration to the points raised in the memorandum filed by said petitioners with the
Commission on Election in the above cases dated April 26, 1978;
5. That should it appear to the board upon summary scrutiny of the records to be offered by
petitioners indication that in the voting center actually held and/or that election returns were
prepared either before the day of the election returns or at any other time, without regard
thereto or that there has been massive substitution of voters, or that ballots and/or returns
were prepared by the same groups of persons or individuals or outside of the voting centers,
the Board should exclude the corresponding returns from the canvass;
6. That appeals to the commission on Election of the Board may be made only after all the
returns in question in all the above, the above five cases shall have been passed upon by
the Board and, accordingly, no proclamation made until after the Commission shall have
finally resolved the appeal without prejudice to recourse to this court, if warranted as
provided by the Code and the Constitution, giving the parties reasonable time therefor;
7. That the copies of the election returns found in the corresponding ballot boxes shall be
the one used in the canvass;
8. That the canvass shall be conducted with utmost dispatch, to the end that a proclamation,
if feasible, may be made not later than June 10, 1978; thus, the canvass may be terminated
as soon as it is evident that the possible number of votes in the still uncanvassed returns
with no longer affect the general results of the elections here in controversy;
9. That respondent Commission shall promulgate such other directive not inconsistent with
this resolution y necessary to expedite the proceedings herein contemplated and to
accomplish the purposes herein intended. (Pp. 8-9, Record.
On June 1, 1978, upon proper motion, said guidelines were modified:
... in the sense that the ballot boxes for the voting centers just referred to need not be taken
to Manila, EXCEPT those of the particular voting centers as to which the petitioners have
the right to demand that the corresponding ballot boxes be opened in order that the votes
therein may be counted because said ballots unlike the election returns, have not been
tampered with or substituted, which instances the results of the counting shall be specified
and made known by petitioners to the Regional Board of Canvassers not later than June 3,
1978; it being understood, that for the purposes of the canvass, the petitioners shall not be
allowed to invoke any objection not already alleged in or comprehend within the allegations
in their complaint in the election cases above- mentioned. (Page 8, Id.)
Thus respondent Board proceeded with the canvass, with the herein petitioners presenting objections, most of
them supported by the report of handwriting and finger print experts who had examined the voting records and
lists of voters in 878 voting centers, out of 2,700 which they specified in their complaints or petitions in Election
Cases 78-8, 78-9, 78-10, 78-11 and 7812 in the Comelec. In regard to 501 voting centers, the records cf.
which, consisting of the voters lists and voting records were not available- and could not be brought to Manila,
petitions asked that the results therein be completely excluded from the canvass. On July 11, 1978,
respondent Board terminated its canvass and declared the result of the voting to be as follows:
NAME OF
CANDIDATE
VOTES
OBTAIN
VALDEZ,
Estanislao
436,069
DIMAPORO,
Abdullah
429,351
PANGANDAMAN,
Sambolayan
406,106
SINSUAT, Blah 403,445
AMPARO, Jesus 399,997
MANDANGAN,
Linang
387,025
BAGA, Tomas 386,393
BADOY,Anacleto 374,933
ROLDAN,
Ernesto
275,141
TOCAO, Sergio 239,914
ARATUC,
Tomatic
205,829
GURO,
Mangontawar
190,489
DIAZ, Ciscolario 190,077
TAMULA, Fred 180,280
LEGASPI,
Bonifacio
174,396
MACAPEGES,
Malamana
160,271
(Pp. 11-12,
Record.)

Without loss of time, the petitioners brought the resolution of respondent Board to the Comelec. Hearing was
held on April 25, 1978, after which , the case was declared submitted for decision. However, on August
30,1978, the Comelec issued a resolution stating inter alia that :
In order to enable the Commission to decide the appeal properly :
a. It will have to go deeper into the examination of the voting records and registration
records and in the case of voting centers whose voting and registration records which have
not yet been submitted for the Commission to decide to open the ballot boxes; and
b. To interview and get statements under oath of impartial and disinterested persons from
the area to determine whether actual voting took place on April 7, 1978, as well as those of
the military authorities in the areas affects (Page 12). Record, L-49705-09 .)
On December 11, 1978, the Comelec required the parties "to file their respective written comments on the
reports they shall periodically receive from the NBI-Comelec team of finger-print and signature experts within
the inextendible period of seven (7) days from their receipt thereof". According to counsel for Aratuc, et al.,
"Petitioners submitted their various comments on the report 4, the principal gist of which was that it would
appear uniformly in all the reports submitted by the Comelec-NBI experts that the registered voters were not
the ones who voted as shown by the fact that the thumbprints appearing in Form 1 were different from the
thumbprints of the voters in Form 5. " But the Comelec denied a motion of petitioners asking that the ballot
boxes corresponding to the voting centers the record of which are not available be opened and that a date be
set when the statements of witnesses referred to in the August 30, 1978 resolution would be taken, on the
ground that in its opinion, it was no longer necessary to proceed with such opening of ballot boxes and taking
of statements.
For his part, counsel for petitioner M in G.R. No. L-49717-21 filed with Comelec on December 19,1978 a
Memorandum. To quote from the petition:
On December 19, 1978, the KBL, through counsel, filed a Memorandum for the Kilusang
Bagong Lipunan (KBL) Candidates on the Comelec's Resolution of December 11, 1978, a
xerox copy of which is attached hereto and made a part hereof as Annex 2, wherein they
discussed the following topics: (I) Brief History of the President Case; (II) Summary of Our
Position and Submission Before the Honorable commission; and (III) KBL's Appeal Ad
Cautelam. And the fourth topic, because of its relevance to the case now before this
Honorable Court, we hereby quote for ready reference:
IV
OUR POSITION WITH RESPECT TO THE
ESOLUTION OF THE HONORABLE
COMMISSION OF DECEMBER 11, 1978
We respectfully submit that the Resolution of this case by this Honorable Commission
should be limited to the precincts and municipalities involved in the KB'S Petitions in Cases
Nos. 78-8 to 78-12, on which evidence had been submitted by the parties, and on which the
KB submitted the reports of their handwriting-print. Furthermore, it should be limited by the
appeal of the KB. For under the Supreme Court Resolution of May 23, 1978, original
jurisdiction was given to the Board, with appeal to this Honorable Commission-
Considerations of other matters beyond these would be, in our humble opinion, without
jurisdiction.
For the present, we beg to inform this Honorable Commission that we stand by the reports
and findings of the COMELEC/NBI experts as submitted by them to the Regional Board of
Canvassers and as confirmed by the said Regional Board of Canvassers in its Resolution of
July 11, 1978, giving the 8 KBL candidates the majorities we have already above
mentioned. The Board did more than make a summary scrutiny of the records' required by
the Supreme Court Resolution, Guideline No. 5, of May 23, 1978. Hence, if for lack of
material time we cannot file any Memorandum within the non-extendible period of seven (7)
days, we would just stand by said COMELEC/NBI experts' reports to the Regional Board, as
confirmed by the Board (subject to our appeal ad cautelam).
The COMELEC sent to the parties copies of the reports of the NBI-COMELEC experts. For
lack of material time due to the voluminous reports and number of voting centers involved,
the Christmas holidays, and our impression that the COMELEC will exercise only its
appellate jurisdiction, specially as per resolution of this Honorable Court of May 23, 1978 (in
G.R. No. L-48097), we, the KBL, did not comment any more on said reports. (Pp. 5-6,
Record, L-49717-21.)
On January 13, 1979, the Comelec rendered its resolution being assailed in these cases, declaring the final
result of the canvass to be as follows:
CANDIDATES
VOTES
VALDEZ, 319,514
Estanislao
DIMAPORO,
Abdullah
289.751
AMPARO, Jesus 286,180
BADOY, Anacleto 285,985
BAGA, Tomas 271,473
PANGANDAMAN,
Sambolayan
271,393
SINSUAT, Blah 269,905
ROLDAN,
Ernesto
268,287
MANDANGAN,
Linang
251,226
TACAO, Sergio 229,124
DIAZ, Ciscolario 187,986
ARATUC,
Tomatic
183,316
LEGASPI,
Bonifacio
178,564
TAMULA, Fred 177,270
GURO,
Mangontawar
163,449
LOMA, Nemesio 129,450
(Page 14, Record,
L-49705-09.)

It is alleged in the Aratuc petition that:
The Comelec committee grave abuse of dicretion, amounting to lack of jurisdiction:
1. In not pursuing further the examination of the registration records and voting records from
the other voting centers questioned by petitioners after it found proof of massive substitute
voting in all of the voting records and registration records examined by Comelec and NBI
experts;
2. In including in the canvass returns from the voting centers whose book of voters and
voting records could not be recovered by the Commission in spite of its repeated efforts to
retrieve said records;
3. In not excluding from the canvass returns from voting centers showing a very high
percentage of voting and in not considering that high percentage of voting, coupled with
massive substitution of voters is proof of manufacturing of election returns;
4. In denying petitioners' petition for the opening of the ballot boxes from voting centers
whose records are not available for examination to determine whether or not there had been
voting in said voting centers;
5. In not Identifying the ballot boxes that had no padlocks and especially those that were
found to be empty while they were shipped to Manila pursuant to the directive of the
Commission in compliance with the guidelines of this Honorable Court;
6. In not excluding from the canvass returns where the results of examination of the voting
records and registration records show that the thumbprints of the voters in CE Form 5 did
not correspond to those of the registered voters as shown in CE Form 1;
7. In giving more credence to the affidavits of chairmen and members of the voting centers,
municipal treasurers and other election officials in the voting centers where irregularities had
been committed and not giving credence to the affidavits of watchers of petitioners;
8. In not including among those questioned before the Board by petitioners those included
among the returns questioned by them in their Memorandum filed with the Commission on
April 26, 1978, which Memorandum was attached as Annex 'I' to their petition filed with this
Honorable Court G.R. No. L-48097 and which the Supreme Court said in its Guidelines
should be considered by the Board in the course of the canvass (Guidelines No. 4). (Pp. 15-
16, Record, Id.)
On the other hand, the Mandangan petition submits that the Comelec comitted the following errors:
1. In erroneously applying the earlier case of Diaz vs. Commission on Elections (November
29, 1971; 42 SCRA 426), and particularly the highly restrictive criterion that when the votes
obtained by the candidates with the highest number of votes exceed the total number of
highest possible valid votes, the COMELEC ruled to exclude from the canvass the election
return reflecting such rests, under which the COMELEC excluded 1,004 election returns,
involving around 100,000 votes, 95 % of which are for KBL candidates, particularly the
petitioner Linang Mandangan, and which rule is so patently unfair, unjust and oppressive.
2. In not holding that the real doctrine in the Diaz Case is not the total exclusion of election
returns simply because the total number of votes exceed the total number of highest
possible valid votes, but 'even if all the votes cast by persons Identified as registered voters
were added to the votes cast by persons who can not be definitely ascertained as registered
or not, and granting, ad arguendo, that all of them voted for respondent Daoas, still the
resulting total is much below the number of votes credited to the latter in returns for Sagada,
'and that 'of the 2,188 ballots cast in Sagada, nearly one-half (1,012) were cast by persons
definitely Identified as not registered therein or still more than 40 % of substitute voting
which was the rule followed in the later case of Bashier/Basman (Diaz Case, November
19,1971,42 SCRA 426,432).
3. In not applying the rule and formula in the later case of Bashier and Basman vs.
Commission on Election(February 24, 1972, 43 SCRA 238) which was the one followed by
the Regional Board of Canvassers, to wit:
In Basman vs Comelec (L-33728, Feb. 24, 1972) the Supreme Court
upheld the Supreme Court upheld the ruling of the Commission setting the
standard of 40 % excess votes to justify the exclusion of election returns.
In line with the above ruling, the Board of Canvassers may likewise set
aside election returns with 40 % substitute votes. Likewise, where excess
voting occured and the excess was such as to destroy the presumption of
innocent mistake, the returns was excluded.
(COMELEC'S Resolution, Annex I hereof, p. 22), which this Honorable Court must have
meant when its Resolution of May 23, 1978 (G.R. No. 7), it referred to "massive substitution
of voters.
4. In examining, through the NBI/COMELEC experts, the records in more than 878 voting
centers examined by the KB experts and passed upon by the Regional Board of Canvassers
which was all that was within its appellate jurisdiction is examination of more election
records to make a total of 1,085 voting centers (COMELEC'S Resolution, Annex 1 hereof, p.
100), being beyond its jurisdiction and a denial of due process as far as the KBL, particularly
the petitioner Mandangan, were concerned because they were informed of it only on
December, 1978, long after the case has been submitted for decision in September, 1978;
and the statement that the KBL acquiesced to the same is absolutely without foundation.
5. In excluding election returns from areas where the conditions of peace and order were
allegedly unsettled or where there was a military operation going on immediately before and
during election and where the voter turn out was high (90 % to 100 %), and where the
people had been asked to evacuate, as a ruling without jurisdiction and in violation of due
process because no evidence was at all submitted by the parties before the Regional Board
of Canvasssers. (Pp. 23-25, Record, L-47917-21.)
Now before discussing the merits of the foregoing contentions, it is necessary to clarify first the nature and
extent of the Supreme Court's power of review in the premises. The Aratuc petition is expressly predicated on
the ground that respondent Comelec "committed grave abuse of discretion, amounting to lack of jurisdiction" in
eight specifications. On the other hand, the Mandangan petition raises pure questions of law and jurisdiction.
In other words, both petitions invoked the Court's certiorari jurisdiction, not its appellate authority of review.
This is as it should be. While under the Constitution of 1935, "the decisions, orders and rulings of the
Commission shall be subject to review by the Supreme Court" (Sec. 2, first paragraph, Article X) and pursuant
to the Rules of Court, the petition for "certiorari or review" shall be on the ground that the Commission "has
decided a question of substance not theretofore determined by the Supreme Court, or has decided it in a way
not in accord with law or the applicable decisions of the Supreme Court" (Sec. 3. Rule 43), and such
provisions refer not only to election contests but even to pre-proclamation proceedings, the 1973 Constitution
provides somewhat differently thus: "Any decision, order or ruling of the Commissionmay be brought to the
Supreme Court on certiorari by the aggrieved party within thirty days from his receipt of a copy thereof"
(Section 11, Article XII c), even as it ordains that the Commission shall "be the sole judge of all contests
relating to the elections, returns and qualifications of all members of the National Assembly and elective
provincial and city official" (Section 2(2).)
Correspondingly, the ElectionCode of 1978, which is the first legislative constructionof the pertinent
constitutional provisions, makes the Commission also the "sole judge of all pre-proclamation controversies"
and further provides that "any of its decisions, orders or rulings (in such contoversies) shall be final and
executory", just as in election contests, "the decision of the Commission shall be final, and executory and
inappealable." (Section 193)
It is at once evident from these constitutional and statutory modifications that there is a definite tendency to
enhance and invigorate the role of the Commission on Elections as the independent constitutinal body
charged with the safeguarding of free, peaceful and honest elections. The framers of the new Constitution
must be presumed ot have definite knowledge of what it means to make the decisions, orders and rulings of
the Commission "subject to review by the Supreme Court". And since instead of maintaining that provision
intact, it ordained that the Commission's actuations be instead "brought to the Supreme Court on certiorari",
We cannot insist that there was no intent to change the nature of the remedy, considering that the limited
scope of certiorari, compared to a review, is well known in remedial law.
Withal, as already stated, the legislative construction of the modified peritinent constitutional provision is to the
effect that the actuations of the Commission are final, executory and even inappealable. While such
construction does not exclude the general certiorari jurisdiction of the Supreme Court which inheres in it as the
final guardian of the Constitution, particularly, of its imperious due process mandate, it correspondingly
narrows down the scope and extent of the inquiry the Court is supposed to undertake to what is strictly the
office of certiorari as distinguished from review. We are of the considered opinion that the statutory
modifications are consistent with the apparent new constitional intent. Indeed, it is obvious that to say that
actuations of the Commission may be brought to the Supreme Court on certiorari technically connotes
something less than saying that the same "shall be subject to review by the Supreme Court", when it comes to
the measure of the Court's reviewing authority or prerogative in the premises.
A review includes digging into the merits and unearthing errors of judgment, while certiorari deals exclusively
with grave abuse of discretion, which may not exist even when the decision is otherwise erroneous. certiorari
implies an indifferent disregard of the law, arbitrariness and caprice, an omission to weight pertinent
considerations, a decision arrived at without rational deliberation. While the effecdts of an error of judgment
may not differ from that of an indiscretion, as a matter of policy, there are matters taht by their nature ought to
be left for final determination to the sound discretion of certain officers or entities, reserving it to the Supreme
Court to insure the faithful observance of due process only in cases of patent arbitrariness.
Such, to Our mind, is the constitutional scheme relative to the Commission on Elections. Conceived by the
charter as the effective instrument to preserve the sanctity of popular suffrage, endowed with independence
and all the needed concommittant powers, it is but proper that the Court should accord the greatest measure
of presumption of regularity to its course of action and choice of means in performing its duties, to the end that
it may achieve its designed place in the democratic fabric of our government. Ideally, its members should be
free from all suspicions of partisan inclinations, but the fact that actually some of them have had stints in the
arena of politics should not, unless the contrary is shown, serve as basis for denying to its actuations the
respect and consideration that the Constitution contemplates should be accorded to it, in the same manner
that the Supreme Court itself which from time to time may have members drawn from the political ranks or
even from military is at all times deemed insulated from every degree or form of external pressure and
influence as well as improper internal motivations that could arise from such background or orientation.
We hold, therefore that under the existing constitution and statutory provisions, the certiorari jurisdiction of the
Court over orders, and decisions of the Comelec is not as broad as it used to be and should be confined to
instances of grave abuse of discretion amounting to patent and substantial denial of due process. Accordingly,
it is in this light that We the opposing contentions of the parties in this cases.
THE MANDANGAN CASE
Being more simple in Our view, We shall deal with the petition in G.R. No. L-49717-21 first.
The errors assigned in this petition boil down to two main propositions, namely, (1) that it was an error of law
on the part of respondent Comelec to have applied to the extant circumstances hereof the ruling of this Court
in Diaz vs. Comelec 42 SCRA 426 instead of that of Bashier vs. Comelec 43 SCRA 238; and (2) that
respondent Comelec exceeded its jurisdiction and denied due process to petitioner Mandangan in extending
its inquiry beyond the election records of "the 878 voting centers examined by the KB experts and passed
upon by the Regional Board of Canvassers" and in excluding from the canvass the returns showing 90 to 100
% voting, from voting centers where military operations were by the Army to be going on, to the extent that
said voting centers had to be transferred to the poblaciones the same being by evidence.
Anent the first proposition, it must be made clear that the Diaz and Bashier rulings are not mutually exclusive
of each other, each being an outgrowth of the basic rationale of statistical improbability laid down in Lagumbay
vs. Comelec and , 16 SCRA 175. Whether they be apply together or separately or which of them be applied
depends on the situation on hand. In the factual milieu of the instant case as found by the Comelec, We see
no cogent reason, and petitioner has not shown any, why returns in voting centers showing that the votes of
the candidate obtaining highest number of votes of the candidate obtaining the highest number of votes
exceeds the highest possible number of valid votes cast therein should not be deemed as spurious and
manufactured just because the total number of excess votes in said voting centers were not more than 40 %.
Surely, this is not the occasion, consider the historical antecedents relative to the highly questionable manner
in which elections have been bad in the past in the provinces herein involved, of which the Court has judicial
notice as attested by its numerous decisions in cases involving practically every such election, of the Court to
move a whit back from the standards it has enunciated in those decisions.
In regard to the jurisdictional and due process points raised by herein petitioner, it is of decisive importance to
bear in mind that under Section 168 of the Revised Election Code of 1978, "the Commission (on Elections)
shall have direct control and supervision on over the board of canvassers" and that relatedly, Section 175 of
the same Code provides that it "shall be the sole judge of all pre-proclamation controversies." While nominally,
the procedure of bringing to the Commission objections to the actuations of boards of canvassers has been
quite loosely referred to in certain quarters, even by the Commission and by this Court, such as in the
guidelines of May 23,1978 quoted earlier in this opinion, as an appeal, the fact of the matter is that the
authority of the Commission in reviewing such actuations does not spring from any appellate jurisdiction
conferred by any specific provision of law, for there is none such provision anywhere in the Election Code, but
from the plenary prerogative of direct control and supervision endowed to it by the above-quoted provisions of
Section 168. And in administrative law, it is a too well settled postulate to need any supporting citation here,
that a superior body or office having supervision and control over another may do directly what the latter is
supposed to do or ought to have done.
Consequently, anything said in Lucman vs. Dimaporo, 33 SCRA 387, cited by petitioner, to the contrary
notwithstanding, We cannot fault respondent Comelec for its having extended its inquiry beyond that
undertaken by the Board of Canvass On the contrary, it must be stated that Comelec correctly and
commendably asserted its statutory authority born of its envisaged constitutional duties vis-a-vis the
preservation of the purity of elections and electoral processes and p in doing what petitioner it should not have
done. Incidentally, it cannot be said that Comelec went further than even what Aratuc et al. have asked, since
said complaints had impugned from the outset not only the returns from the 878 voting centers examined by
their experts but all those mentioned in their complaints in the election cases filed originally with the Comelec
enumerated in the opening statements hereof, hence respondent Comelec had that much field to work on.
The same principle should apply in respect to the ruling of the Commission regarding the voting centers
affected by military operations. It took cognizance of the fact, not considered by the board of canvass, that
said voting centers had been transferred to the poblaciones. And, if only for purposes of pre-proclamation
proceedings, We are persuaded it did not constitute a denial of due process for the Commission to have taken
into account, without the need or presentation of evidence by the parties, a matter so publicly notorious as the
unsettled situation of peace and order in localities in the provinces herein involved that their may perhaps be
taken judicial notice of, the same being capable of unquestionable demonstration. (See 1, Rule 129)
In this connection, We may as well perhaps, say here as later that regrettably We cannot, however, go along
with the view, expressed in the dissent of our respected Chief Justice, that from the fact that some of the
voting centers had been transferred to the poblaciones there is already sufficient basis for Us to rule that the
Commission should have also subjected all the returns from the other voting centers of the some
municipalities, if not provinces, to the same degree of scrutiny as in the former. The majority of the Court feels
that had the Commission done so, it would have fallen into the error by petitioner Mandangan about denial of
due process, for it is relatively unsafe to draw adverse conclusions as to the exact conditions of peace and
order in those other voting centers without at list some prima facie evidence to rely on considering that there is
no allegation, much less any showing at all that the voting centers in question are so close to those excluded
by the Comelec on as to warrant the inescapable conclusion that the relevant circumstances by the Comelec
as obtaining in the latter were Identical to those in the former.
Premises considered the petition in G.R. Nos. L-49717-21 is hereby dismiss for lack of merit.
THE ARATUC ET AL. PETITION
Of the eight errors assigned by herein petitioners earlier adverted to, the seventh and the sight do not require
any extended disquisition. As to the issue of whether the elections in the voting centers concerned were held
on April 7, 1978, the date designated by law, or earlier, to which the seventh alleged error is addressed, We
note that apparently petitioners are not seriously pressing on it anymore, as evidenced by the complete
absence of any reference thereto during the oral argument of their counsel and the practically cavalier
discussion thereof in the petition. In any event, We are satisfied from a careful review of the analysis by the
Comelec in its resolution now before Us that it took pains to consider as meticulously as the nature of the
evidence presented by both parties would permit all the contentions of petitioners relative to the weight that
should be given to such evidence. The detailed discussion of said evidence is contained in not less than
nineteen pages (pp. 70-89) of the resolution. In these premises, We are not prepared to hold that Comelec
acted wantonly and arbitrarily in drawing its conclusions adverse to petitioners' position. If errors there are in
any of those conclusions, they are errors of judgment which are not reviewable in certiorari, so long as they
are founded on substantial evidence.
As to eighth assigned error. the thrust of respondents, comment is that the results in the voting centers
mentioned in this assignment of error had already been canvassed at the regional canvass center in Cotabato
City. Again, We cannot say that in sustaining the board of canvassers in this regard, Comelec gravely abused
its discretion, if only because in the guidelines set by this Court, what appears to have been referred to is,
rightly or wrongly, the resumption only of the canvass, which does not necessarily include the setting aside
and repetition of the canvass already made in Cotabato City.
The second and fourth assignments of error concern the voting centers the corresponding voters' record (C.E.
Form 1) and record of voting, (C.E. Form 5) of which have never been brought to Manila because they, were
not available The is not clear as to how many are these voting centers. According to petitioners they are 501,
but in the Comelec resolution in question, the number mentioned is only 408, and this number is directly
challenged in the petition. Under the second assignment, it is contended that the Comelec gravely abused its
discretion in including in the canvass the election returns from these voting centers and, somewhat
alternatively, it is alleged as fourth assignment that the petitioners motion for the opening of the ballot boxes
pertaining to said voting centers was arbitraly denied by respondent Comelec.
The resolution under scrutiny explains the situation that confronted the Commission in regard to the 408 voting
centers reffered to as follows :
The Commission had the option of excluding from the canvass the election returns under
category. By deciding to exclude, the Commission would be summarily disenfranchising the
voters registered in the voting centers affected without any basis. The Commission could
also order the inclusion in the canvass of these elections returns under the injunction of the
Supreme Court that extremes caution must be exercised in rejecting returns unless these
are palpably irregular. The Commission chose to give prima facie validity to the election
returns mentioned and uphold the votes cast by the voters in those areas. The Commission
held the view that the failure of some election officials to comply with Commission orders(to
submit the records) should not parties to such official disobedience. In the case of Lino Luna
vs. Rodriguez, 39 Phil. 208, the Supreme Court ruled that when voters have honestly cast
their ballots, the same should not be nullified because the officers appointed under the law
to direct the election and guard the purity of the ballot have not complied with their duty.
(cited in Laurel on Elections, p. 24)
On page 14 of the comment of the Solicitor General, however, it is stated that:
At all events, the returns corresponding to these voting centers were examined by the
Comelec and 141 of such returns were excluded, as follows:
SUMMARY
PROVINCE TOTAL EXCLUDED INCLUDED
Lanao del Norte 30 30
Lanao del Sur 342 137 205
Maguindanao 21 1 20
North Cotabato 7 1 6
Sultan Kudarat 12 2 10
totals ----- 412 141 271
(Page 301, Record.)
This assertion has not been denied by petitioners.
Thus, it appears that precisely use of the absence or unavailability of the CE Forms 1 and 5 corresponding to
the more than 400 voting centers concerned in our present discussion the Comelec examined the returns from
said voting centers to determine their trustworthiness by scrutinizing the purported relevant data appearing on
their faces, believing that such was the next best thing that could be done to avoid total disenfranchisement of
the voters in all of them On the Other hand, Petitioners' insist that the right thing to do was to order the
opening of the ballot boxes involved.
In connection with such opposing contentions, Comelec's explanation in its resolution is:
... The commission had it seen fit to so order, could have directed the opening of the ballot
boxes. But the Commission did not see the necessity of going to such length in a that was in
nature and decided that there was sufficient bases for the revolution of the appeal. That the
Commission has discretion to determine when the ballot boxes should be opened is implicit
in the guidelines set by the Supreme Court which states that '. . . the ballot bones [which]
shall be opened only upon orders of either the respondent Board or respondent
Commission, after the need therefor has become evident ... ' (guideline No. 3;
emphasissupplied). Furthermore, the Court on June 1, 1978, amended the guidelines that
the "ballot boxes for the voting centers ... need not be taken to Manila EXCEPT those of the
centers as to which the petitioners have the right to demand that the corresponding ballot
boxes be opened ... provided that the voting centers concerned shall be specified and made
known by petitioners to the Regional Board of Canvassers not later than June 3,1978 ... '
(Emphasis supplied). The KB, candidates did not take advantage of the option granted them
under these guidelines.( Pp 106-107, Record.)
Considering that Comelec, if it had wished to do so, had the facilities to Identify on its own the voting centers
without CE Forms I and 5, thereby precluding the need for the petitioners having to specify them, and under
the circumstances the need for opening the ballot boxes in question should have appeared to it to be quite
apparent, it may be contended that Comelec would have done greater service to the public interest had it
proceeded to order such opening, as it had announced it had thoughts of doing in its resolution of August 30,
1978. On the other hand, We cannot really blame the Commission too much, since the exacting tenor of the
guidelines issued by Us left it with very little elbow room, so to speak, to use its own discretion independently
of what We had ordered. What could have saved matters altogether would have been a timely move on the
part of petitioners on or before June 3, 1978, as contemplated in Our resolution. After all come to think of it,
that the possible outcome of the opening of the ballot boxes would favor the petitioners was not a certainty
the contents them could conceivably boomerang against them, such as, for example, if the ballots therein had
been found to be regular and preponderantly for their opponents. Having in mind that significantly, petitioners
filed their motion for only on January 9, 1979, practically on the eve of the promulgation of the resolution, We
hold that by having adhered to Our guidelines of June 1, 1978, Comelec certainly cannot be held to be guilty
of having gravely abused its discretion, in examining and passing on the returns from the voting centers
reffered to in the second and fourth assignments of error in the canvass or in denying petitioners' motion for
the of the ballot boxes concerned.
The first, third and sixth assignment of involve related matters and maybe discussed together. They all deal
with the inclusion in or exclusion from the canvass of returns on the basis of the percentage of voting in
specified voting centers and the corresponding findings of the Comelec on the extent of substitute voting
therein as indicated by the result of either the technical examination by experts of the signatures and thumb-
prints of the voters threat.
To begin with, petitioners' complaint that the Comelec did not examine and study 1,694 of the records in an
the 2,775 voting centers questioned by them is hardly accurate. To be more exact, the Commission excluded
a total of 1,267 returns coming under four categories namely: 1,001 under the Diaz, supra, ruling, 79 because
of 90-100 % turnout of voters despite military operations, 105 palpably manufactured owe and 82 returns
excluded by the board of canvass on other grounds. Thus, 45.45 % of the of the petitioners were sustained by
the Comelec. In contrast, in the board of canvassers, only 453 returns were excluded. The board was
reversed as to 6 of these, and 821 returns were excluded by Comelec over and above those excluded by the
board. In other words, the Comelec almost doubled the exclusions by the board.
Petitioners would give the impression by their third assignment of error that Comelec refused to consider high
percentage of voting, coupled with mass substitute voting, as proof that the pertinent returns had been
manufactured. That such was not the case is already shown in the above specifications. To add more, it can
be gleaned from the resolution that in t to the 1,065 voting centers in Lanao del Sur and Marawi City where a
high percentage of voting appeared, the returns from the 867 voting centers were excluded by the Comelec
and only 198 were included a ratio of roughly 78 % to 22 %. The following tabulation drawn from the figures in
the resolution shows how the Comelec went over those returns center by center and acted on them
individually:
90% 100% VOTING
MARAWI CITY AND LANAO DEL SUR
NO. OF V/C THAT V/C WITH 90% to 100%
MUNICIPALITIES FUNCTIONED VOTING
N
o
.

o
f

V
/
C
E
x
c
l
u
d
e
d
I
n
c
l
u
d
e
d
Mara
wi
City
1
5
1
1
1
2
1
0
7
5
Bacol
od
Gran
de
2
8
2
8
2
7
1
Balab
agan
5
3
5
3
4
9
4
Balin
dong
2
2
2
2
1
5
7
Baya
ng
2
9
2
0
1
3
7
Binid
ayan
3
7
3
3
2
9
4
Buadi
poso
Bunto
n
4
1
1
0
1
0
0
Bubo
ng
2
4
2
3
2
1
2
Bumb
aran
2
1
(
A
ll
e
x
cl
u
d
e
d
)

Butig 3
5
3
3
3
2
1
Calan
ogas
2
3
2
1
2
1
0
Ditsa
an-
Rama
in
4
2
3
9
3
8
1
Gana
ssi
3
9
3
8
2
3
1
5
Lumb
a
Baya
bao
6
4
6
3
4
7
1
6
Lumb
atan
3
0
2
8
1
7
1
1
Lumb
ayan
ague
3
7
3
3
2
8
5
Mada
lum
1
4
1
3
6 7
Mada
mba
2
0
2
0
5 1
5
Magu
ing
5
7
5
5
5
3
2
Mala
bang
5
9
4
7
5 4
2
Mara
ntao
7
9
6
3
4
1
2
2
Maru
gong
3
7
3
5
3
2
3
Masiu 2 2 2 2
7 6 4
Paga
yawa
n
1
5
1
3
9 4
Piaga
po
3
9
3
9
3
6
3
Poon
a-
Baya
bao
4
4
4
4
4
2
2
Puala
s
2
3
2
0
2
0
0
Sagui
aran
3
6
3
2
2
1
1
1
Sulta
n
Gum
ander
3
5
3
1
3
1
0
Tamp
aran
2
4
2
1
1
5
6
Tarak
a
3
1
3
1
3
1
0
Tubar
an
2
3
1
9
1
9
0
TOTA
LS:
Mara
wi &

Lana
o del
Sur
1,
2
1
8
1
,
0
6
5
8
6
7
1
9
8
We are convinced, apart from presuming regularity in the performance of its duties, that there is enough
showing in the record that it did examine and study the returns and pertinent records corresponding to all the
2775 voting centers subject of petitioners' complaints below. In one part of its resolution the Comelec states:
The Commission as earlier stated examined on its own the Books of Voters (Comelec Form
No. 1) and the Voters Rewards Comelec Form No. 5) to determine for itself which of these
elections form needed further examination by the COMELEC-NBI experts. The Commission,
aware of the nature of this pre-proclamation controversy, believes that it can decide, using
common sense and perception, whether the election forms in controversy needed further
examination by the experts based on the presence or absence of patent signs of irregularity.
(Pp. 137-138, Record.)
In the face of this categorical assertion of fact of the Commission, the bare charge of petitioners that the
records pertaining to the 1,694 voting centers assailed by them should not create any ripple of serious doubt.
As We view this point under discussion, what is more factually accurate is that those records complained of
were not examined with the aid of experts and that Comelec passed upon the returns concerned "using
common sense and perception only." And there is nothing basically objectionable in this. The defunct
Presidential Senate and House Electoral Tribunals examine passed upon and voided millions of votes in
several national elections without the assistance of experts and "using" only common sense and perception".
No one ever raised any eyebrows about such procedure. Withal, what we discern from the resolution is that
Comelec preliminary screened the records and whatever it could not properly pass upon by "using common
sense and perception" it left to the experts to work on. We might disagree with he Comelec as to which voting
center should be excluded or included, were We to go over the same records Ourselves, but still a case of
grave abuse of discretion would not come out, considering that Comelec cannot be said to have acted
whimsically or capriciously or without any rational basis, particularly if it is considered that in many respects
and from the very nature of our respective functions, becoming candor would dictate to Us to concede that the
Commission is in a better position to appreciate and assess the vital circumstances closely and accurately. By
and large, therefore, the first, third and sixth assignments of error of the petitioners are not well taken.
The fifth assignment of error is in Our view moot and academic. The Identification of the ballot boxes in
defective condition, in some instances open and allegedly empty, is at best of secondary import because, as
already discussed, the records related thereto were after all examined, studied and passed upon. If at all,
deeper inquiry into this point would be of real value in an electoral protest.
CONCLUSION
Before closing, it may not be amiss to state here that the Court had initially agreed to dispose of the cases in a
minute resolution, without prejudice to an extended or reasoned out opinion later, so that the Court's decision
may be known earlier. Considering, however, that no less than the Honorable Chief Justice has expressed
misgivings as to the propriety of yielding to the conclusions of respondent Commission because in his view
there are strong considerations warranting farther meticulous inquiry of what he deems to be earmarks of
seemingly traditional faults in the manner elections are held in the municipalities and provinces herein
involved, and he is joined in this pose by two other distinguished colleagues of Ours, the majority opted to ask
for more time to put down at least some of the important considerations that impelled Us to see the matters in
dispute the other way, just as the minority bidded for the opportunity to record their points of view. In this
manner, all concerned will perhaps have ample basis to place their respective reactions in proper perspective.
In this connection, the majority feels it is but meet to advert to the following portion of the ratiocination of
respondent Board of Canvassers adopted by respondent Commission with approval in its resolution under
question:
First of all this Board was guided by the legal doctrine that canvassing boards must exercise
"extreme caution" in rejecting returns and they may do so only when the returns are
palpably irregular. A conclusion that an election return is obviously manufactured or false
and consequently should be disregarded in the canvass must be approached with extreme
caution, and only upon the most convincing proof. Any plausible explanation one which is
acceptable to a reasonable man in the light of experience and of the probabilities of the
situation, should suffice to avoid outright nullification, with the resulting t of those who
exercised their right of suffrage. (Anni vs. Isquierdo et at L-35918, Jude 28,1974; Villavon v.
Comelec L-32008, August 31,1970; Tagoranao v. Comelec 22 SCRA 978). In the absence
of strong evidence establishing the spuriousness of the return, the basis rule of their being
accorded prima facie status as bona fide reports of the results of the count of the votes for
canvassing and proclamation purposes must be applied, without prejudice to the question
being tried on the merits with the presentation of evidence, testimonial and real in the
corresponding electoral protest. (Bashier vs. Comelec L-33692, 33699, 33728, 43 SCRA
238, February 24, 1972). The decisive factor is that where it has been duly de ed after
investigation and examination of the voting and registration records hatactual voting and
election by the registered voters had taken place in the questioned voting centers, the
election returns cannot be disregarded and excluded with the resting disenfranchisement of
the voters, but must be accorded prima facie status as bona fide reports of the results of the
voting for canvassing and registration purposes. Where the grievances relied upon is the
commission of irregularities and violation of the Election Law the proper remedy is election
protest. (Anni vs. Isquierdo et al. Supra). (P. 69, Record, L-49705-09).
The writer of this opinion has taken care to personally check on the citations to be doubly sure they were not
taken out of context, considering that most, if not all of them arose from similar situations in the very venues of
the actual milieu of the instant cases, and We are satisfied they do fit our chosen posture. More importantly,
they actually came from the pens of different members of the Court, already retired or still with Us,
distinguished by their perspicacity and their perceptive prowess. In the context of the constitutional and
legislative intent expounded at the outset of this opinion and evident in the modifications of the duties and
responsibilities of the Commission on Elections vis-a-vis the matters that have concerned Us herein,
particularly the elevation of the Commission as the "sole judge of pre-proclamation controversies" as well as of
all electoral contests, We find the afore-quoted doctrines compelling as they reveal through the clouds of
existing jurisprudence the pole star by which the future should be guided in delineating and circumscribing
separate spheres of action of the Commission as it functions in its equally important dual role just indicated
bearing as they do on the purity and sanctity of elections in this country.
In conclusion, the Court finds insufficient merit in the petition to warrant its being given due course. Petition
dismissed, without pronouncement as to costs. Justices Fernando, Antonio and Guerrero who are presently
on official missions abroad voted for such dismissal.
Fernando, Antonio, Concepcion Jr., Santos Fernandez, and Guerrero, JJ., concur.
Teehankee, J. took no part.
Aquino and Abad Santos, Jr., took no part.
EN BANC
[G.R. Nos. 95203-05 : December 18, 1990.]
192 SCRA 363
SENATOR ERNESTO MACEDA, Petitioner, vs. ENERGY REGULATORY BOARD
(ERB); MARCELO N. FERNANDO, ALEJANDRO B. AFURONG; REX V.
TANTIONGCO; and OSCAR E. ALA, in their collective official capacities as
Chairman and Members of the Board (ERB), respectively; CATALINO
MACARAIG, in his quadruple official capacities as Executive Secretary,
Chairman of Philippine National Oil Company; Office of the Energy Affairs, and
with MANUEL ESTRELLA, in their respective official capacities as Chairman
and President of the Petron Corporation; PILIPINAS SHELL PETROLEUM
CORPORATION; with CESAR BUENAVENTURA and REY GAMBOA as chairman
and President, respectively; CALTEX PHILIPPINES with FRANCIS ABLAN,
President and Chief Executive Officer; and the Presidents of Philippine
Petroleum Dealer's Association, Caltex Dealer's Co., Petron Dealer's Asso.,
Shell Dealer's Asso. of the Phil., Liquefied Petroleum Gas Institute of the
Phils., any and all concerned gasoline and petrol dealers or stations; and such
other persons, officials, and parties, acting for and on their behalf; or in
representation of and/or under their authority, Respondents.
[G.R. Nos. 95119-21 : December 18, 1990.]
192 SCRA 363
OLIVER O. LOZANO, Petitioner, vs. ENERGY REGULATORY BOARD (ERB),
PILIPINAS SHELL PETROLEUM CORPORATION, CALTEX (PHIL.), INC., and
PETRON CORPORATION, Respondents.

D E C I S I O N

SARMIENTO, J.:

The petitioners pray for injunctive relief, to stop the Energy Regulatory Board (Board
hereinafter) from implementing its Order, dated September 21, 1990, mandating a
provisional increase in the prices of petroleum and petroleum products, as follows:
PRODUCTS IN PESOS PER LITER
OPSF
Premium Gasoline 1.7700
Regular Gasoline 1.7700
Avturbo 1.8664
Kerosene 1.2400
Diesel Oil 1.2400
Fuel Oil 1.4900
Feedstock 1.4900
LPG 0.8487
Asphalts 2.7160
Thinners 1.7121 1
It appears that on September 10, 1990, Caltex (Philippines), Inc., Pilipinas Shell
Petroleum Corporation, and Petron Corporation proferred separate applications with
the Board for permission to increase the wholesale posted prices of petroleum
products, as follows:
Caltex P3.2697 per liter
Shell 2.0338 per liter
Petron 2.00 per liter 2
and meanwhile, for provisional authority to increase temporarily such wholesale
posted prices pending further proceedings.:-cralaw
On September 21, 1990, the Board, in a joint (on three applications) Order granted
provisional relief as follows:
WHEREFORE, considering the foregoing, and pursuant to Section 8 of Executive Order
No. 172, this Board hereby grants herein applicants' prayer for provisional relief and,
accordingly, authorizes said applicants a weighted average provisional increase of ONE
PESO AND FORTY-TWO CENTAVOS (P1.42) per liter in the wholesale posted prices of
their various petroleum products enumerated below, refined and/or marketed by them
locally. 3
The petitioners submit that the above Order had been issued with grave abuse of
discretion, tantamount to lack of jurisdiction, and correctible by Certiorari.
The petitioner, Senator Ernesto Maceda, 4 also submits that the same was issued
without proper notice and hearing in violation of Section 3, paragraph (e), of Executive
Order No. 172; that the Board, in decreeing an increase, had created a new source for
the Oil Price Stabilization Fund (OPSF), or otherwise that it had levied a tax, a power
vested in the legislature, and/or that it had "re-collected", by an act of taxation, ad
valorem taxes on oil which Republic Act No. 6965 had abolished.
The petitioner, Atty. Oliver Lozano, 5 likewise argues that the Board's Order was
issued without notice and hearing, and hence, without due process of law.
The intervenor, the Trade Union of the Philippines and Allied Services (TUPAS/FSM)-
W.F.T.U., 6 argues on the other hand, that the increase cannot be allowed since the
respondents oil companies had not exhausted their existing oil stock which they had
bought at old prices and that they cannot be allowed to charge new rates for stock
purchased at such lower rates.
The Court set the cases (in G.R. Nos. 95203-05) for hearing on October 25, 1990, in
which Senator Maceda and his counsel, Atty. Alexander Padilla, argued. The Solicitor
General, on behalf of the Board, also presented his arguments, together with Board
Commissioner Rex Tantiangco. Attys. Federico Alikpala, Jr. and Joselia Poblador
represented the oil firms (Petron and Caltex, respectively).
The parties were thereafter required to submit their memorandums after which, the
Court considered the cases submitted for resolution.
On November 20, 1990, the Court ordered these cases consolidated.
On November 27, 1990, we gave due course to both petitions.
The Court finds no merit in these petitions.
Senator Maceda and Atty. Lozano, in questioning the lack of a hearing, have
overlooked the provisions of Section 8 of Executive Order No. 172, which we quote:
"SECTION 8. Authority to Grant Provisional Relief . The Board may, upon the filing
of an application, petition or complaint or at any stage thereafter and without prior
hearing, on the basis of supporting papers duly verified or authenticated, grant
provisional relief on motion of a party in the case or on its own initiative, without
prejudice to a final decision after hearing, should the Board find that the pleadings,
together with such affidavits, documents and other evidence which may be submitted
in support of the motion, substantially support the provisional order: Provided, That
the Board shall immediately schedule and conduct a hearing thereon within thirty (30)
days thereafter, upon publication and notice to all affected parties.: nad
As the Order itself indicates, the authority for provisional increase falls within the
above provision.
There is no merit in the Senator's contention that the "applicable" provision is Section
3, paragraph (e) of the Executive Order, which we quote:
(e) Whenever the Board has determined that there is a shortage of any petroleum
product, or when public interest so requires, it may take such steps as it may consider
necessary, including the temporary adjustment of the levels of prices of petroleum
products and the payment to the Oil Price Stabilization Fund created under Presidential
Decree No. 1956 by persons or entities engaged in the petroleum industry of such
amounts as may be determined by the Board, which will enable the importer to
recover its cost of importation.
What must be stressed is that while under Executive Order No. 172, a hearing is
indispensable, it does not preclude the Board from ordering, ex parte, a provisional
increase, as it did here, subject to its final disposition of whether or not: (1) to make it
permanent; (2) to reduce or increase it further; or (3) to deny the application. Section
37 paragraph (e) is akin to a temporary restraining order or a writ of preliminary
attachment issued by the courts, which are given ex parte, and which are subject to
the resolution of the main case.
Section 3, paragraph (e) and Section 8 do not negate each other, or otherwise,
operate exclusively of the other, in that the Board may resort to one but not to both at
the same time. Section 3(e) outlines the jurisdiction of the Board and the grounds for
which it may decree a price adjustment, subject to the requirements of notice and
hearing. Pending that, however, it may order, under Section 8, an authority to
increase provisionally, without need of a hearing, subject to the final outcome of the
proceeding. The Board, of course, is not prevented from conducting a hearing on the
grant of provisional authority which is of course, the better procedure however, it
cannot be stigmatized later if it failed to conduct one. As we held in Citizens' Alliance
for Consumer Protection v. Energy Regulatory Board. 7
In the light of Section 8 quoted above, public respondent Board need not even have
conducted formal hearings in these cases prior to issuance of its Order of 14 August
1987 granting a provisional increase of prices. The Board, upon its own discretion and
on the basis of documents and evidence submitted by private respondents, could have
issued an order granting provisional relief immediately upon filing by private
respondents of their respective applications. In this respect, the Court considers the
evidence presented by private respondents in support of their applications i.e.,
evidence showing that importation costs of petroleum products had gone up; that the
peso had depreciated in value; and that the Oil Price Stabilization Fund (OPSF) had by
then been depleted as substantial and hence constitutive of at least prima facie
basis for issuance by the Board of a provisional relief order granting an increase in the
prices of petroleum products. 8
We do not therefore find the challenged action of the Board to have been done in
violation of the due process clause. The petitioners may contest however, the
applications at the hearings proper.
Senator Maceda's attack on the Order in question on premises that it constitutes an
act of taxation or that it negates the effects of Republic Act No. 6965, cannot prosper.
Republic Act No. 6965 operated to lower taxes on petroleum and petroleum products
by imposing specific taxes rather than ad valorem taxes thereon; it is, not, however,
an insurance against an "oil hike", whenever warranted, or is it a price control
mechanism on petroleum and petroleum products. The statute had possibly forestalled
a larger hike, but it operated no more.: nad
The Board Order authorizing the proceeds generated by the increase to be deposited
to the OPSF is not an act of taxation. It is authorized by Presidential Decree No. 1956,
as amended by Executive Order No. 137, as follows:
SECTION 8. There is hereby created a Trust Account in the books of accounts of the
Ministry of Energy to be designated as Oil Price Stabilization Fund (OPSF) for the
purpose of minimizing frequent price changes brought about by exchange rate
adjustments and/or changes in world market prices of crude oil and imported
petroleum products. The Oil Price Stabilization Fund (OPSF) may be sourced from any
of the following:
a) Any increase in the tax collection from ad valorem tax or customs duty imposed on
petroleum products subject to tax under this Decree arising from exchange rate
adjustment, as may be determined by the Minister of Finance in consultation with the
Board of Energy;
b) Any increase in the tax collection as a result of the lifting of tax exemptions of
government corporations, as may be determined by the Minister of Finance in
consultation with the Board of Energy;
c) Any additional amount to be imposed on petroleum products to augment the
resources of the Fund through an appropriate Order that may be issued by the Board
of Energy requiring payment by persons or companies engaged in the business of
importing, manufacturing and/or marketing petroleum products;
d) Any resulting peso cost differentials in case the actual peso costs paid by oil
companies in the importation of crude oil and petroleum products is less than the peso
costs computed using the reference foreign exchange rates as fixed by the Board of
Energy.
Anent claims that oil companies cannot charge new prices for oil purchased at old
rates, suffice it to say that the increase in question was not prompted alone by the
increase in world oil prices arising from tension in the Persian Gulf. What the Court
gathers from the pleadings as well as events of which it takes judicial notice, is that:
(1) as of June 30, 1990, the OPSF has incurred a deficit of P6.1 Billion; (2) the
exchange rate has fallen to P28.00 to $1.00; (3) the country's balance of payments is
expected to reach $1 Billion; (4) our trade deficit is at $2.855 Billion as of the first
nine months of the year.
Evidently, authorities have been unable to collect enough taxes necessary to replenish
the OPSF as provided by Presidential Decree No. 1956, and hence, there was no
available alternative but to hike existing prices.
The OPSF, as the Court held in the aforecited CACP cases, must not be understood to
be a funding designed to guarantee oil firms' profits although as a subsidy, or a trust
account, the Court has no doubt that oil firms make money from it. As we held there,
however, the OPSF was established precisely to protect the consuming public from the
erratic movement of oil prices and to preclude oil companies from taking advantage of
fluctuations occurring every so often. As a buffer mechanism, it stabilizes domestic
prices by bringing about a uniform rate rather than leaving pricing to the caprices of
the market.
In all likelihood, therefore, an oil hike would have probably been imminent, with or
without trouble in the Gulf, although trouble would have probably aggravated it.: nad
The Court is not to be understood as having prejudged the justness of an oil price
increase amid the above premises. What the Court is saying is that it thinks that
based thereon, the Government has made out a prima facie case to justify the
provisional increase in question. Let the Court therefore make clear that these findings
are not final; the burden, however, is on the petitioners' shoulders to demonstrate the
fact that the present economic picture does not warrant a permanent increase.
There is no doubt that the increase in oil prices in question (not to mention another
one impending, which the Court understands has been under consideration by policy-
makers) spells hard(er) times for the Filipino people. The Court can not, however,
debate the wisdom of policy or the logic behind it (unless it is otherwise arbitrary), not
because the Court agrees with policy, but because the Court is not the suitable forum
for debate. It is a question best judged by the political leadership which after all,
determines policy, and ultimately, by the electorate, that stands to be better for it or
worse off, either in the short or long run.
At this point, the Court shares the indignation of the people over the conspiracy of
events and regrets its own powerlessness, if by this Decision it has been powerless.
The constitutional scheme of things has simply left it with no choice.
In fine, we find no grave abuse of discretion committed by the respondent Board in
issuing its questioned Order.
WHEREFORE, these petitions are DISMISSED. No costs.
SO ORDERED.
Narvasa, Gutierrez, Jr ., Cruz, Gancayco, Bidin, Grio Aquino, Medialdea and
Regalado, JJ., concur.
Fernan, C.J., Melencio-Herrera and Padilla, JJ., no part.
Feliciano, J., is on leave.

G.R. No. 86695. September 3, 1992.

MARIA ELENA MALAGA, doing business under the name B.E. CONSTRUCTION; JOSIELEEN
NAJARRO, doing business under the name BEST BUILT CONSTRUCTION; JOSE N. OCCEA,
doing business under the name THE FIRM OF JOSE N. OCCEA; and the ILOILO BUILDERS
CORPORATION, petitioners, vs. MANUEL R. PENACHOS, JR., ALFREDO MATANGGA, ENRICO
TICAR AND TERESITA VILLANUEVA, in their respective capacities as Chairman and
Members of the Pre-qualification Bids and Awards Committee (PBAC)-BENIGNO
PANISTANTE, in his capacity as President of Iloilo State College of Fisheries, as well as in
their respective personal capacities; and HON. LODRIGIO L. LEBAQUIN, respondents.

Salas, Villareal & Velasco for petitioners.
Virgilio A. Sindico for respondents.

SYLLABUS

1. ADMINISTRATIVE LAW; GOVERNMENT INSTRUMENTALITY, DEFINED. The 1987
Administrative Code defines a government instrumentality as follows: Instrumentality refers
to any agency of the National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed with some if not
all corporate powers, administering special funds, and enjoying operational autonomy,
usually through a charter. This term includes regulatory agencies, chartered institutions, and
government-owned or controlled corporations. (Sec. 2 (5) Introductory Provisions).

2. ID.; CHARTERED INSTITUTION; DEFINED; APPLICATION IN CASE AT BAR. The 1987
Administrative Code describes a chartered institution thus: Chartered institution refers to
any agency organized or operating under a special charter, and vested by law with functions
relating to specific constitutional policies or objectives. This term includes the state
universities and colleges, and the monetary authority of the state. (Sec. 2 (12) Introductory
Provisions). It is clear from the above definitions that ISCOF is a chartered institution and is
therefore covered by P.D. 1818. There are also indications in its charter that ISCOF is a
government instrumentality. First, it was created in pursuance of the integrated fisheries
development policy of the State, a priority program of the government to effect the socio-
economic life of the nation. Second, the Treasurer of the Republic of the Philippines shall
also be the ex-officio Treasurer of the state college with its accounts and expenses to be
audited by the Commission on Audit or its duly authorized representative. Third, heads of
bureaus and offices of the National Government are authorized to loan or transfer to it,
upon request of the president of the state college, such apparatus, equipment, or supplies
and even the services of such employees as can be spared without serious detriment to
public service. Lastly, an additional amount of P1.5M had been appropriated out of the
funds of the National Treasury and it was also decreed in its charter that the funds and
maintenance of the state college would henceforth be included in the General
Appropriations Law. (Presidential Decree No. 1523)

3. ID.; PROHIBITION OF ANY COURT FROM ISSUING INJUNCTION IN CASES INVOLVING
INFRASTRUCTURE PROJECTS OF GOVERNMENT (P.D. 1818); POWER OF THE COURTS TO
RESTRAIN APPLICATION. In the case of Datiles and Co. vs. Sucaldito, (186 SCRA 704) this
Court interpreted a similar prohibition contained in P.D. 605, the law after which P.D. 1818
was patterned. It was there declared that the prohibition pertained to the issuance of
injunctions or restraining orders by courts against administrative acts in controversies
involving facts or the exercise of discretion in technical cases. The Court observed that to
allow the courts to judge these matters would disturb the smooth functioning of the
administrative machinery. Justice Teodoro Padilla made it clear, however, that on issues
definitely outside of this dimension and involving questions of law, courts could not be
prevented by P.D. No. 605 from exercising their power to restrain or prohibit administrative
acts. We see no reason why the above ruling should not apply to P.D. 1818. There are at
least two irregularities committed by PBAC that justified injunction of the bidding and the
award of the project.

4. ID.; POLICIES AND GUIDELINES PRESCRIBED FOR GOVERNMENT INFRASTRUCTURE
(PD 1594); RULES IMPLEMENTING THEREOF, NOT SUFFICIENTLY COMPLIED WITH IN CASE AT
BAR. Under the Rules Implementing P.D. 1594, prescribing policies and guidelines for
government infrastructure contracts, PBAC shall provide prospective bidders with the
Notice to Pre-qualification and other relevant information regarding the proposed work.
Prospective contractors shall be required to file their ARC-Contractors Confidential
Application for Registration & Classifications & the PRE-C2 Confidential Pre-qualification
Statement for the Project (prior to the amendment of the rules, this was referred to as Pre-
C1) not later than the deadline set in the published Invitation to Bid, after which date no
PRE-C2 shall be submitted and received. Invitations to Bid shall be advertised for at least
three times within a reasonable period but in no case less than two weeks in at least two
newspapers of general circulations. (IB 13 1.2-19, Implementing Rules and Regulations of
P.D. 1594 as amended) PBAC advertised the pre-qualification deadline as December 2, 1988,
without stating the hour thereof, and announced that the opening of bids would be at 3
o'clock in the afternoon of December 12, 1988. This scheduled was changed and a notice of
such change was merely posted at the ISCOF bulletin board. The notice advanced the cut-off
time for the submission of pre-qualification documents to 10 o'clock in the morning of
December 2, 1988, and the opening of bids to 1 o'clock in the afternoon of December 12,
1988. The new schedule caused the pre-disqualification of the petitioners as recorded in the
minutes of the PBAC meeting held on December 6, 1988. While it may be true that there
were fourteen contractors who were pre-qualified despite the change in schedule, this fact
did not cure the defect of the irregular notice. Notably, the petitioners were disqualified
because they failed to meet the new deadline and not because of their expired licenses.
(B.E. & Best Built's licenses were valid until June 30, 1989. [Ex. P & O respectively: both were
marked on December 28, 1988]) We have held that where the law requires a previous
advertisement before government contracts can be awarded, non-compliance with the
requirement will, as a general rule, render the same void and of no effect. (Caltex Phil. v.
Delgado Bros., 96 Phil. 368) The fact that an invitation for bids has been communicated to a
number of possible bidders is not necessarily sufficient to establish compliance with the
requirements of the law if it is shown that other possible bidders have not been similarly
notified.
5. ID.; ID.; ID.; PURPOSE THEREOF; CASE AT BAR. The purpose of the rules
implementing P.D. 1594 is to secure competitive bidding and to prevent favoritism, collusion
and fraud in the award of these contracts to the detriment of the public. This purpose was
defeated by the irregularities committed by PBAC. It has been held that the three principles
in public bidding are the offer to the public, an opportunity for competition and a basis for
exact comparison of bids. A regulation of the matter which excludes any of these factors
destroys the distinctive character of the system and thwarts the purpose of its adoption.
(Hannan v. Board of Education, 25 Okla. 372) In the case at bar, it was the lack of proper
notice regarding the pre-qualification requirement and the bidding that caused the
elimination of petitioners B.E. and Best Built. It was not because of their expired licenses, as
private respondents now claim. Moreover, the plans and specifications which are the
contractors' guide to an intelligent bid, were not issued on time, thus defeating the guaranty
that contractors be placed on equal footing when they submit their bids. The purpose of
competitive bidding is negated if some contractors are informed ahead of their rivals of the
plans and specifications that are to be the subject of their bids.

6. ID.; ID.; ID.; EFFECT OF NON-COMPLIANCE THEREOF. It has been held in a long line
of cases that a contract granted without the competitive bidding required by law is void, and
the party to whom it is awarded cannot benefit from it. It has not been shown that the
irregularities committed by PBAC were induced by or participated in by any of the
contractors. Hence, liability shall attach only to the private respondents for the prejudice
sustained by the petitioners as a result of the anomalies described above.

7. CIVIL LAW; NOMINAL DAMAGES; AWARD THEREOF, WHEN AVAILABLE. As there is
no evidence of the actual loss suffered by the petitioners, compensatory damage may not
be awarded to them. Moral damages do not appear to be due either. Even so, the Court
cannot close its eyes to the evident bad faith that characterized the conduct of the private
respondents, including the irregularities in the announcement of the bidding and their
efforts to persuade the ISCOF president to award the project after two days from receipt of
the restraining order and before they moved to lift such order. For such questionable acts,
they are liable in nominal damages at least in accordance with Article 2221 of the Civil Code,
which states: Art. 2221. Nominal damages are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant may be vindicated or,
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by
him. These damages are to be assessed against the private respondents in the amount of
P10,000.00 each, to be paid separately for each of petitioners B.E. Construction and Best
Built Construction.

D E C I S I O N

CRUZ, J:

This controversy involves the extent and applicability of P.D. 1818, which prohibits any court
from issuing injunctions in cases involving infrastructure projects of the government.
The facts are not disputed.

The Iloilo State College of Fisheries (henceforth ISCOF) through its Pre-qualification, Bids and
Awards Committee (henceforth PBAC) caused the publication in the November 25, 26, 28,
1988 issues of the Western Visayas Daily an Invitation to Bid for the construction of the
Micro Laboratory Building at ISCOF. The notice announced that the last day for the
submission of pre-qualification requirements (PRE C-1)
**
was December 2, 1988, and that
the bids would be received and opened on December 12, 1988, 3 o'clock in the afternoon.
1


Petitioners Maria Elena Malaga and Josieleen Najarro, respectively doing business under the
name of the B.E. Construction and Best Built Construction, submitted their pre-qualification
documents at two o'clock in the afternoon of December 2, 1988. Petitioner Jose Occea
submitted his own PRE-C1 on December 5, 1988. All three of them were not allowed to
participate in the bidding because their documents were considered late, having been
submitted after the cut-off time of ten o'clock in the morning of December 2, 1988.

On December 12, 1988, the petitioners filed a complaint with the Regional Trial Court of
Iloilo against the chairman and members of PBAC in their official and personal capacities.
The plaintiffs claimed that although they had submitted their PRE-C1 on time, the PBAC
refused without just cause to accept them. As a result, they were not included in the list of
pre-qualified bidders, could not secure the needed plans and other documents, and were
unable to participate in the scheduled bidding.

In their prayer, they sought the resetting of the December 12, 1988 bidding and the
acceptance of their PRE-C1 documents. They also asked that if the bidding had already been
conducted, the defendants be directed not to award the project pending resolution of their
complaint.

On the same date, Judge Lodrigio L. Lebaquin issued a restraining order prohibiting PBAC
from conducting the bidding and awarding the
project.
2


On December 16, 1988, the defendants filed a motion to lift the restraining order on the
ground that the Court was prohibited from issued restraining orders, preliminary injunctions
and preliminary mandatory injunctions by P.D. 1818. cdll

The decree reads pertinently as follows:

Section 1. No Court in the Philippines shall have jurisdiction to issue any
restraining order, preliminary injunction, or preliminary infrastructure project, or a
mining, fishery, forest or other natural resource development project of the
government, or any public utility operated by the government, including among
others public utilities for the transport of the goods and commodities, stevedoring
and arrastre contracts, to prohibit any person or persons, entity or government
official from proceeding with, or continuing the execution or implementation of any
such project, or the operation of such public utility, or pursuing any lawful activity
necessary for such execution, implementation or operation.
The movants also contended that the question of the propriety of a preliminary injunction
had become moot and academic because the restraining order was received late, at 2
o'clock in the afternoon of December 12, 1988, after the bidding had been conducted and
closed at eleven thirty in the morning of that date.

In their opposition of the motion, the plaintiffs argued against the applicability of P.D. 1818,
pointing out that while ISCOF was a state college, it had its own charter and separate
existence and was not part of the national government or of any local political subdivision.
Even if P.D. 1818 were applicable, the prohibition presumed a valid and legal government
project, not one tainted with anomalies like the project at bar.

They also cited Filipinas Marble Corp. vs. IAC,
3
where the Court allowed the issuance of a
writ of preliminary injunction despite a similar prohibition found in P.D. 385. The Court
therein stated that:

The government, however, is bound by basic principles of fairness and decency
under the due process clauses of the Bill of Rights. P.D. 385 was never meant to
protect officials of government-lending institutions who take over the management
of a borrower corporation, lead that corporation to bankruptcy through
mismanagement or misappropriation of its funds, and who, after ruining it, use the
mandatory provisions of the decree to avoid the consequences of their misleads (p.
188, emphasis supplied).

On January 2, 1989, the trial court lifted the restraining order and denied the petition for
preliminary injunction. It declared that the building sought to be construed at the ISCOF was
an infrastructure project of the government falling within the coverage of P.D. 1818. Even if
it were not, the petition for the issuance of a writ of preliminary injunction would still fail
because the sheriff's return showed that PBAC was served a copy of the restraining order
after the bidding sought to be restrained had already been held. Furthermore, the members
of the PBAC could not be restrained from awarding the project because the authority to do
so was lodged in the President of the ISCOF, who was not a party to the case.
4


In the petition now before us, it is reiterated that P.D. 1818 does not cover the ISCOF
because of its separate and distinct corporate personality. It is also stressed again that the
prohibition under P.D. 1818 could not apply to the present controversy because the project
was vitiated with irregularities, to wit:

1. The invitation to bid as published fixed the deadline of submission of pre-
qualification document on December 2, 1988 without indicating any time, yet after
10:00 o'clock of the given late, the PBAC already refused to accept petitioners'
documents.

2. The time and date of bidding was published as December 12, 1988 at 3:00
p.m. yet it was held at 10:00 o'clock in the morning.

3. Private respondents, for the purpose of inviting bidders to participate, issued
a mimeographed "Invitation to Bid" form, which by law (P.D. 1594 and Implementing
Rules, Exh. B-1) is to contain the particulars of the project subject of bidding for the
purpose of.
(i) enabling bidders to make an intelligent and accurate bids;
(ii) for PBAC to have a uniform basis for evaluating the bids;
(iii) to prevent collusion between a bidder and the PBAC, by opening to all
the particulars of a project.

Additionally, the Invitation to Bid prepared by the respondents and the Itemized Bill of
Quantities therein were left blank.
5
And although the project in question was a
"Construction," the private respondents used an Invitation to Bid form for "Materials."
6


The petitioners also point out that the validity of the writ of preliminary injunction had not
yet become moot and academic because even if the bids had been opened before the
restraining order was issued, the project itself had not yet been awarded. The ISCOF
president was not an indispensable party because the signing of the award was merely a
ministerial function which he could perform only upon the recommendation of the Award
Committee. At any rate, the complaint had already been duly amended to include him as a
party defendant.

In their Comment, the private respondents maintain that since the members of the board of
trustees of the ISCOF are all government officials under Section 7 of P.D. 1523 and since the
operations and maintenance of the ISCOF are provided for in the General Appropriations
Law, it is should be considered a government institution whose infrastructure project is
covered by P.D. 1818.

Regarding the schedule for pre-qualification, the private respondents insist that PBAC
posted on the ISCOF bulletin board an announcement that the deadline for the submission
of pre-qualifications documents was at 10 o'clock of December 2, 1988, and the opening of
bids would be held at 1 o'clock in the afternoon of December 12, 1988. As of ten o'clock in
the morning of December 2, 1988, B.E. construction and Best Built construction had filed
only their letters of intent. At two o'clock in the afternoon, B.E., and Best Built filed through
their common representative, Nenette Garuello, their pre-qualification documents which
were admitted but stamped "submitted late." The petitioners were informed of their
disqualification on the same date, and the disqualification became final on December 6,
1988. Having failed to take immediate action to compel PBAC to pre-qualify them despite
their notice of disqualification, they cannot now come to this Court to question the binding
proper in which they had not participated.

In the petitioners' Reply, they raise as an additional irregularity the violation of the rule that
where the estimate project cost is from P1M to P5M, the issuance of plans, specifications
and proposal book forms should made thirty days before the date of bidding.
7
They point
out that these forms were issued only on December 2, 1988, and not at the latest on
November 12, 1988, the beginning of the 30-day period prior to the scheduled bidding.

In their Rejoinder, the private respondents aver that the documents of B.E. and Best Built
were received although filed late and were reviewed by the Award Committee, which
discovered that the contractors had expired licenses. B.E.'s temporary certificate of Renewal
of Contractor's License was valid only until September 30, 1988, while Best Built's license
was valid only up to June 30, 1988.

The Court has considered the arguments of the parties in light of their testimonial and
documentary evidence and the applicable laws and jurisprudence. It finds for the
petitioners.
The 1987 Administrative Code defines a government instrumentality as follows:
Instrumentality refers to any agency of the National Government, not integrated
within the department framework, vested with special functions or jurisdiction by
law, endowed with some if not all corporate powers, administering special funds,
and enjoying operational autonomy, usually through a charter. This term includes
regulatory agencies, chartered institutions, and government-owned or controlled
corporations. (Sec. 2 (5) Introductory Provisions).

The same Code describes a chartered institution thus:

Chartered institution refers to any agency organized or operating under a special
charter, and vested by law with functions relating to specific constitutional policies
or objectives. This term includes the state universities and colleges, and the
monetary authority of the state. (Sec. 2 (12) Introductory Provisions).

It is clear from the above definitions that ISCOF is a chartered institution and is therefore
covered by P.D. 1818.

There are also indications in its charter that ISCOF is a government instrumentality. First, it
was created in pursuance of the integrated fisheries development policy of the State, a
priority program of the government of effect the socio-economic life of the nation. Second,
the Treasurer of the Republic of the Philippines also be the ex-officio Treasurer of the state
college with its accounts and expenses to be audited by the Commission on Audit or its duly
authorized representative. Third, heads of bureaus and offices of the National Government
are authorized to loan or transfer to it, upon request of the president of the state college,
such apparatus, equipment, or supplies and even the services of such employees as can be
spared without serious detriment to public service. Lastly, an additional amount of P1.5M
had been appropriated out of the funds of the National Treasury and it was also decreed in
its charter that the funds and maintenance of the state college would henceforth be
included in the General Appropriations Law.
8


Nevertheless, it does not automatically follow that ISCOF is covered by the prohibition in the
said decree.

In the case of Datiles and Co. vs. Sucaldito,
9
this Court interpreted a similar prohibition
contained in P.D. 605, the law after which P.D. 1818 was patterned. It was there declared
that the prohibition pertained to the issuance of injunctions or restraining orders by courts
against administrative acts in controversies involving facts or the exercise of discretion in
technical cases. The Court observed that to allow the courts to judge these matters would
disturb the smooth functioning of the administrative machinery. Justice Teodoro Padilla
made it clear, however, that on issues definitely outside of this dimension and involving
questions of law, courts could not be prevented by P.D. No. 605 from exercising their power
to restrain or prohibit administrative acts.

We see no reason why the above ruling should not apply to P.D. 1818.

There are at least two irregularities committed by PBAC that justified injunction of the
bidding and the award of the project.

First, PBAC set deadlines for the filing of the PRE-C1 and the opening of bids and then
changed these deadlines without prior notice to prospective participants.

Under the Rules Implementing P.D. 1594, prescribing policies and guidelines for government
infrastructure contracts, PBAC shall provide prospective bidders with the Notice of Pre-
qualification and other relevant information regarding the proposed work. Prospective
contractors shall be required to file their ARC-Contractors Confidential Application for
Registration & Classifications & the PRE-C2 Confidential Pre-qualification Statement for the
Project (prior to the amendment of the rules, this was referred to as PRE-C1) not later than
the deadline set in the published Invitation to Bid, after which date no PRE-C2 shall be
submitted and received. Invitations to Bid shall be advertised for at least three times within
a reasonable period but in no case less than two weeks in at least two newspapers of
general circulations.
10


PBAC advertised the pre-qualification deadline as December 2, 1988, without stating the
hour thereof, and announced that the opening of bids would be at 3 o'clock in the afternoon
of December 12, 1988. This schedule was changed and a notice of such change was merely
posted at the ISCOF bulletin board. The notice advanced the cut-off time for the submission
of pre-qualification documents to 10 o'clock in the morning of December 2, 1988, and the
opening of bids to 1 o'clock in the afternoon of December 12, 1988.

The new schedule caused the pre-disqualification of the petitioners as recorded in the
minutes of the PBAC meeting held on December 6, 1988. While it may be true that there
were fourteen contractors who were pre-qualified despite the change in schedule, this fact
did not cure the defect of the irregular notice. Notably, the petitioners were disqualified
because they failed to meet the new deadline and not because of their expired licenses.
***


We have held that where the law requires a previous advertisement before government
contracts can be awarded, non-compliance with the requirement will, as a general rule,
render the same void and of no effect
11
The facts that an invitation for bids has been
communicated to a number of possible bidders is not necessarily sufficient to establish
compliance with the requirements of the law if it is shown that other public bidders have
not been similarly notified.
12


Second, PBAC was required to issue to pre-qualified applicants the plans, specifications and
proposal book forms for the project to be bid thirty days before the date of bidding if the
estimate project cost was between P1M and P5M. PBAC has not denied that these forms
were issued only on December 2, 1988, or only ten days before the bidding scheduled for
December 12, 1988. At the very latest, PBAC should have issued them on November 12,
1988, or 30 days before the scheduled bidding.

It is apparent that the present controversy did not arise from the discretionary acts of the
administrative body nor does it involve merely technical matters. What is involved here is
non-compliance with the procedural rules on bidding which required strict observance. The
purpose of the rules implementing P.D. 1594 is to secure competitive bidding and to
prevent favoritism, collusion and fraud in the award of these contracts to the detriment of
the public. This purpose was defeated by the irregularities committed by PBAC.

It has been held that the three principles in public bidding are the offer to the public, an
opportunity for competition and a basis for exact comparison of bids. A regulation of the
matter which excludes any of these factors destroys the distinctive character of the system
and thwarts and purpose of its adoption.
13


In the case at bar, it was the lack of proper notice regarding the pre-qualification
requirement and the bidding that caused the elimination of petitioners B.E. and Best Built. It
was not because of their expired licenses, as private respondents now claim. Moreover, the
plans and specifications which are the contractors' guide to an intelligent bid, were not
issued on time, thus defeating the guaranty that contractors be placed on equal footing
when they submit their bids. The purpose of competitive bidding is negated if some
contractors are informed ahead of their rivals of the plans and specifications that are to be
the subject of their bids.

P.D. 1818 was not intended to shield from judicial scrutiny irregularities committed by
administrative agencies such as the anomalies above described. Hence, the challenged
restraining order was not improperly issued by the respondent judge and the writ of
preliminary injunction should not have been denied. We note from Annex Q of the private
respondent's memorandum, however, that the subject project has already been "100%
completed as to the Engineering Standard." This fait accompli has made the petition for a
writ of preliminary injunction moot and academic.

We come now to the liabilities of the private respondents.

It has been held in a long line of cases that a contract granted without the competitive
bidding required by law is void, and the party to whom it is awarded cannot benefit from
it
14
. It has not been shown that the irregularities committed by PBAC were induced by or
participated in by any of the contractors. Hence, liability shall attach only to the private
respondents for the prejudice sustained by the petitioners as a result of the anomalies
described above.

As there is no evidence of the actual loss suffered by the petitioners, compensatory damage
may not be awarded to them. Moral damages do not appear to be due either. Even so, the
Court cannot close its eyes to the evident bad faith that characterized the conduct of the
private respondents, including the irregularities in the announcement of the bidding and
their efforts to persuade the ISCOF president to award the project after two days from
receipt of the restraining order and before they moved to lift such order. For such
questionable acts, they are liable in nominal damages at least in accordance with Article
2221 of the Civil Code, which states:

"Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant may be vindicated or,
recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.

These damages are to assessed against the private respondents in the amount of
P10,000.00 each, to be paid separately for each of petitioners B.E. Construction and Best
Built Construction. The other petitioner, Occea Builders, is not entitled to relief because it
admittedly submitted its pre-qualification documents on December 5, 1988, or three days
after the deadline.

WHEREFORE, judgment is hereby rendered: a) upholding the restraining order dated
December 12, 1988, as not covered by the prohibition in P.D. 1818; b) ordering the
chairman and the members of the PBAC board of trustees, namely Manuel R. Penachos, Jr.,
Alfredo Matangga, Enrico Ticar, and Teresita Villanueva, to each pay separately to
petitioners Maria Elena Malaga and Josieleen Najarro nominal damages P10,000.00 each;
and c) removing the said chairman and members from the PBAC board of trustees, or
whoever among them is still incumbent therein, for their malfeasance in office. Costs
against PBAC.

Let a copy of this decision be sent to the Office of the Ombudsman.
SO ORDERED.
Grio-Aquino, Medialdea and Bellosillo, JJ., concur.


G.R. No. 135945 March 7, 2001
THE UNITED RESIDENTS OF DOMINICAN HILL, INC., represented by its President RODRIGO S.
MACARIO, SR., petitioner,
vs.
COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS, represented by its Commissioner,
RUFINO V. MIJARES; MARIO PADILAN, PONCIANO BASILAN, HIPOLITO ESLAVA, WILLIAM LUMPISA,
PACITO MOISES, DIONISIO ANAS, NOLI DANGLA, NAPOLEON BALESTEROS, ELSIE MOISES, SEBIO
LACWASAN, BEN FLORES, DOMINGO CANUTAB, MARCELINO GABRIANO, TINA TARNATE, ANDREW
ABRAZADO, DANNY LEDDA, FERNANDO DAYAO, JONATHAN DE LA PENA, JERRY PASSION, PETER
AGUINSOD, and LOLITA DURAN, respondents.
DE LEON, JR., J .:
Before us is a petition for prohibition and declaratory relief seeking the annulment of a status quo order
1
dated
September 29, 1998 issued by the public respondent Commission on the Settlement of Land Problems
(COSLAP, for brevity) in COSLAP Case No. 98-253.
The facts are:
The property being fought over by the parties is a 10.36-hectare property in Baguio City called Dominican
Hills, formerly registered in the name of Diplomat Hills, Inc. It appeared that the property was mortgaged to the
United Coconut Planters Bank (UCPB) which eventually foreclosed the mortgage thereon and acquired the
same as highest bidder. On April 11, 1983, it was donated to the Republic of the Philippines by UCPB through
its President, Eduardo Cojuangco. The deed of donation stipulated that Dominican Hills would be utilized for
the "priority programs, projects, activities in human settlements and economic development and governmental
purposes" of the Ministry of Human Settlements.
On December 12, 1986, the then President Corazon C. Aquino issued Executive Order No. 85 abolishing the
Office of Media Affairs and the Ministry of Human Settlements. All agencies under the latter's supervision as
well as all its assets, programs and projects, were transferred to the Presidential Management Staff (PMS).
2

On October 18, 1988, the PMS received an application from petitioner UNITED RESIDENTS OF DOMINICAN
HILL, INC. (UNITED, for brevity), a community housing association composed of non-real property owning
residents of Baguio City, to acquire a portion of the Dominican Hills property. On February 2, 1990, PMS
Secretary Elfren Cruz referred the application to the HOME INSURANCE GUARANTY CORPORATION
(HIGC). HIGC consented to act as originator for UNITED.
3
Accordingly, on May 9, 1990, a Memorandum of
Agreement was signed by and among the PMS, the HIGC, and UNITED. The Memorandum of Agreement
called for the PMS to sell the Dominican Hills property to HIGC which would, in turn, sell the same to UNITED.
The parties agreed on a selling price of P75.00 per square meter.
Thus, on June 12, 1991, HIGC sold 2.48 hectares of the property to UNITED. The deed of conditional sale
provided that ten (10) per cent of the purchase price would be paid upon signing, with the balance to be
amortized within one year from its date of execution. After UNITED made its final payment on January 31,
1992, HIGC executed a Deed of Absolute Sale dated July 1, 1992.
Petitioner alleges that sometime in 1993, private respondents entered the Dominican Hills property allocated
to UNITED and constructed houses thereon. Petitioner was able to secure a demolition order from the city
mayor.
4

Unable to stop the razing of their houses, private respondents, under the name DOMINICAN HILL BAGUIO
RESIDENTS HOMELESS ASSOCIATION (ASSOCIATION, for brevity) filed an action
5
for injunction docketed
as Civil Case No. 3316-R, in the Regional Trial Court of Baguio City, Branch 4. Private respondents were able
to obtain a temporary restraining order but their prayer for a writ of preliminary injunction was later denied in
an Order dated March 18, 1996.
6

While Civil Case No. 3316-R was pending, the ASSOCIATION, this time represented by the Land Reform
Beneficiaries Association, Inc. (BENEFICIARIES, for brevity), filed Civil Case No. 3382-R before Branch 61 of
the same court. The complaint
7
prayed for damages, injunction and annulment of the said Memorandum of
Agreement between UNITED and HIGC. Upon motion of UNITED, the trial court in an Order dated May 27,
1996 dismissed Civil Case No. 3382-R.
8
The said Order of dismissal is currently on appeal with the Court of
Appeals.
9

Demolition Order No. 1-96 was subsequently implemented by the Office of the City Mayor and the City
Engineer's Office of Baguio City. However, petitioner avers that private respondents returned and
reconstructed the demolished structures.
To forestall the re-implementation of the demolition order, private respondents filed on September 29, 1998 a
petition
10
for annulment of contracts with prayer for a temporary restraining order, docketed as COSLAP Case
No. 98-253, in the Commission on the Settlement of Land Problems (COSLAP) against petitioner, HIGC,
PMS, the City Engineer's Office, the City Mayor, as well as the Register of Deeds of Baguio City. On the very
same day, public respondent COSLAP issued the contested order requiring the parties to maintain the status
quo.
Without filing a motion for reconsideration from the aforesaid status quo order, petitioner filed the instant
petition questioning the jurisdiction of the COSLAP.
The issues we are called upon to resolve are:
1
IS THE COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS [COSLAP] CREATED
UNDER EXECUTIVE ORDER NO. 561 BY THE OFFICE OF THE PHILIPPINES [sic] EMPOWERED
TO HEAR AND TRY A PETITION FOR ANNULMENT OF CONTRACTS WITH PRAYER FOR A
TEMPORARY RESTRAINING ORDER AND THUS, ARROGATE UNTO ITSELF THE POWER TO
ISSUE STATUS QUO ORDER AND CONDUCT A HEARING THEREOF [sic]?
2
ASSUMING THAT THE COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS [COSLAP]
HAS JURISDICTION ON THE MATTER, IS IT EXEMPTED FROM OBSERVING A CLEAR CASE
OF FORUM SHOPPING ON THE PART OF THE PRIVATE RESPONDENTS?
To the extent that the instant case is denominated as one for declaratory relief, we initially clarify that we do
not possess original jurisdiction to entertain such petitions.
11
Such is vested in the Regional Trial
Courts.
12
Accordingly, we shall limit our review to ascertaining if the proceedings before public respondent
COSLAP are without or in excess, of its jurisdiction. In this wise, a recounting of the history of the COSLAP
may provide useful insights into the extent of its powers and functions.
The COSLAP was created by virtue of Executive Order No. 561 dated September 21, 1979. Its forerunner was
the Presidential Action Committee on Land Problems (PACLAP) founded on July 31, 1970 by virtue of
Executive Order No. 251. As originally conceived, the committee was tasked "to expedite and coordinate the
investigation and resolution of land disputes, streamline and shorten administrative procedures, adopt bold
and decisive measures to solve land problems, and/or recommend other solutions." It was given the power to
issue subpoenas duces tecum and ad testificandum and to call upon any department, office, agency or
instrumentality of the government, including government owned or controlled corporations and local
government units, for assistance in the performance of its functions. At the time, the PACLAP did not exercise
quasi-judicial functions.
On March 19, 1971, Executive Order No. 305 was issued reconstituting the PACLAP.
13
The committee was
given exclusive jurisdiction over all cases involving public lands and other lands of the public domain and
accordingly was tasked:
1. To investigate, coordinate, and resolve expeditiously land disputes, streamline administrative
procedures, and in general, to adopt bold and decisive measures to solve problems involving public
lands and lands of the public domain;
2. To coordinate and integrate the activities of all government agencies having to do with public lands
or lands of the public domain;
3. To study and review present policies as embodied in land laws and administrative rules and
regulations, in relation to the needs for land of the agro-industrial sector and small farmers, with the
end in view to evolving and recommending new laws and policies and establishing priorities in the
grant of public land, and the simplification of processing of land applications in order to relieve the
small man from the complexities of existing laws, rules and regulations;
4. To evolve and implement a system for the speedy investigation and resolution of land disputes;
5. To receive all complaints of settlers and small farmers, involving public lands or other lands of the
public domain;
6. To look into the conflicts between Christians and non-Christians, between corporations and small
settlers and farmers; cause the speedy settlement of such conflicts in accordance with priorities or
policies established by the Committee; and
7. To perform such other functions as may be assigned to it by the President.
Thereafter, the PACLAP was reorganized pursuant to Presidential Decree No. 832 dated November 27,
1975.
14
Its jurisdiction was revised thus:
xxx xxx xxx
2. Refer for immediate action any land problem or dispute brought to the attention of the PACLAP, to
any member agency having jurisdiction thereof: Provided, that when the Executive Committee
decides to act on a case, its resolution, order or decision thereon, shall have the force and effect of a
regular administrative resolution, order or decision, and shall be binding upon the parties therein
involved and upon the member agency having jurisdiction thereof;
xxx xxx xxx
Notably, the said Presidential Decree No. 832 did not contain any provision for judicial review of the
resolutions, orders or decisions of the PACLAP.
On September 21, 1979, the PACLAP was abolished and its functions transferred to the present Commission
on the Settlement of Land Problems by virtue of Executive Order No. 561. This reorganization, effected in line
with Presidential Decree No. 1416, brought the COSLAP directly under the Office of the President.
15
It was
only at this time that a provision for judicial review was made from resolutions, orders or decisions of the said
agency, as embodied in section 3(2) thereof, to wit:
Powers and functions. The Commission shall have the following powers and functions:
1. Coordinate the activities, particularly the investigation work, of the various government
offices and agencies involved in the settlement of land problems or disputes, and streamline
administrative procedures to relieve small settlers and landholders and members of cultural
minorities of the expense and time-consuming delay attendant to the solution of such
problems or disputes;
2. Refer and follow-up for immediate action by the agency having appropriate jurisdiction
any land problem or dispute referred to the Commission: Provided, that the Commission
may, in the following cases, assume jurisdiction and resolve land problems or disputes
which are critical and explosive in nature considering, for instance, the large number of the
parties involved, the presence or emergence of social tension or unrest, or other similar
critical situations requiring immediate action:
(a) Between occupants/squatters and pasture lease agreement holders or timber
concessionaires;
(b) Between occupants/squatters and government reservation grantees;
(c) Between occupants/squatters and public land claimants or applicants;
(d) Petitions for classification, release and/or subdivision of lands of the public
domain; and
(e) Other similar land problems of grave urgency and magnitude.
The Commission shall promulgate such rules of procedure as will insure expeditious resolution and
action on the above cases. The resolution, order or decision of the Commission on any of the
foregoing cases shall have the force and effect of a regular administrative resolution, order or
decision and shall be binding upon the parties therein and upon the agency having jurisdiction over
the same. Said resolution, order or decision shall become final and executory within thirty (30) days
from its promulgation and shall be appealable by certiorari only to the Supreme Court.
xxx xxx xxx
In the performance of its functions and discharge of its duties, the Commission is authorized, through
the Commission, to issue subpoena and subpoena duces tecum for the appearance of witnesses and
the production of records, books and documents before it. It may also call upon any ministry, office,
agency or instrumentality of the National Government, including government-owned or controlled
corporations, and local governments for assistance. This authority is likewise, conferred upon the
provincial offices as may be established pursuant to Section 5 of this Executive Order.
In Baaga v. Commission on the Settlement of Land Problems,
16
we characterized the COSLAP's jurisdiction
as being general in nature, as follows:
Petitioners also contend in their petition that the COSLAP itself has no jurisdiction to resolve the
protest and counter-protest of the parties because its power to resolve land problems is confined to
those cases "which are critical and explosive in nature."
This contention is devoid of merit. It is true that Executive Order No. 561 provides that the COSLAP
may take cognizance of cases which are "critical and explosive in nature considering, for instance,
the large number of parties involved, the presence or emergence of social tension or unrest, or other
similar critical situations requiring immediate action." However, the use of the word "may" does not
mean that the COSLAP's jurisdiction is merely confined to the above mentioned cases. The
provisions of the said Executive Order are clear that the COSLAP was created as a means of
providing a more effective mechanism for the expeditious settlement of land problems in general,
which are frequently the source of conflicts among settlers, landowners and cultural minorities.
Besides, the COSLAP merely took over from the abolished PACLAP whose functions, including its
jurisdiction, power and authority to act on, decide and resolve land disputes (Sec. 2, P.D. No. 832)
were all assumed by it. The said Executive Order No. 561 containing said provision, being enacted
only on September 21, 1979, cannot affect the exercise of jurisdiction of the PACLAP Provincial
Committee of Koronadal on September 29, 1978. Neither can it affect the decision of the COSLAP
which merely affirmed said exercise of jurisdiction.
Given the facts of the case, it is our view that the COSLAP is not justified in assuming jurisdiction over the
controversy. As matters stand, it is not the judiciary's place to question the wisdom behind a law;
17
our task is
to interpret the law. We feel compelled to observe, though, that by reason of the ambiguous terminology
employed in Executive Order No. 561, the power to assume jurisdiction granted to the COSLAP provides an
ideal breeding ground for forum shopping, as we shall explain subsequently. Suffice it to state at this stage
that the COSLAP may not assume jurisdiction over cases which are already pending in the regular courts.
The reason is simple. Section 3(2) of Executive Order 561 speaks of any resolution, order or decision of the
COSLAP as having the "force and effect of a regular administrative resolution, order or decision." The
qualification places an unmistakable emphasis on the administrative character of the COSLAP's
determination, amplified by the statement that such resolutions, orders or decisions "shall be binding upon the
parties therein and upon the agency having jurisdiction over the same." An agency is defined by statute as
"any of the various units of the Government, including a department, bureau, office, instrumentality, or
government-owned or controlled corporation, or a local government or a distinct unit therein."
18
A department,
on the other hand, "refers to anexecutive department created by law."
19
Whereas, a bureau is understood to
refer "to any principal subdivision of any department."
20
In turn, an office "refers, within the framework of
governmental organization, to any major functional unit of a department or bureau including regional offices. It
may also refer to any position held or occupied by individual persons, whose functions are defined by law or
regulation."
21
An instrumentality is deemed to refer "to any agency of the National Government, not integrated
within the department framework, vested with special functions or jurisdiction by law, endowed with some if not
all corporate powers, administering special funds and enjoying operational autonomy, usually through a
charter. This term includes regulatory agencies, chartered institutions and government-owned or controlled
corporations."
22
Applying the principle in statutory construction ofejusdem generis, i.e., "where general words
follow an enumeration or persons or things, by words of a particular and specific meaning, such general words
are not to be construed in their widest extent, but are to be held as applying only to persons or things of the
same kind or class as those specifically mentioned,"
23
section 3(2) of Executive Order 561 patently indicates
that the COSLAP's dispositions are binding on administrative or executiveagencies. The history of the
COSLAP itself bolsters this view. Prior enactments enumerated its member agencies among which it was to
exercise a coordinating function.
The COSLAP discharges quasi-judicial functions:
"Quasi-judicial function" is a term which applies to the actions, discretion, etc. of public administrative
officers or bodies, who are required to investigate facts, or ascertain the existence of facts, hold
hearings, and draw conclusions from them, as a basis for their official action and to exercise
discretion of a judicial nature."
24

However, it does not depart from its basic nature as an administrative agency, albeit one that exercises quasi-
judicial functions. Still, administrative agencies are not considered courts; they are neither part of the judicial
system nor are they deemed judicial tribunals.
25
The doctrine of separation of powers observed in our system
of government reposes the three (3) great powers into its three (3) branches the legislative, the executive,
and the judiciary each department being co-equal and coordinate, and supreme in its own sphere.
Accordingly, the executive department may not, by its own fiat, impose the judgment of one of its own
agencies, upon the judiciary. Indeed, under the expanded jurisdiction of the Supreme Court, it is empowered
"to determine whether or not there has been grave abuse of discretion amounting to lack of or excess of
jurisdiction on the part of any branch or instrumentality of the Government."
26

There is an equally persuasive reason to grant the petition. As an additional ground for the annulment of the
assailed status quo order of COSLAP, UNITED accuses private respondents of engaging in forum shopping.
Forum shopping exists when a party "repetitively avail[s] of several judicial remedies in different courts,
simultaneously or successively, all substantially founded on the same transactions and the same essential
facts and circumstances, and all raising substantially the same issues either pending in, or already resolved
adversely by some other court."
27
In this connection, Supreme Court Administrative Circular No. 04-94 dated
February 8, 1994 provides:
Revised Circular No. 28-91, dated February 8, 1994, applies to and governs the filing of petitions in
the Supreme Court and the Court of Appeals and is intended to prevent the multiple filing of petitions
or complaints involving the same issues in other tribunals or agencies as a form of forum shopping.
Complementary thereto and for the same purpose, the following requirements, in addition to those in
pertinent provisions of the Rules of Court and existing circulars, shall be strictly complied with in the
filing of complaints, petitions, applications or other initiatory pleadings in all courts and agencies other
than the Supreme Court and the Court of Appeals and shall be subject to the sanctions provided
hereunder.
1. The plaintiff, petitioner, applicant or principal part seeking relief in the complaint, petition,
application or other initiatory pleading shall certify under oath in such original pleading, or in
a sworn certification annexed thereto and simultaneously filed therewith, to the truth of the
following facts and undertakings: (a) he has not theretofore commenced any other action or
proceeding involving the same issues in the Supreme Court, the Court of Appeals, or any
other tribunal or agency; (b) to the best of his knowledge, no such action or proceedings is
pending in the Supreme Court, the Court of Appeals, or any other tribunal or agency; (c) if
there is any such action or proceeding which is either pending or may have been
terminated, he must state the status thereof; and (d) if he should thereafter learn that a
similar action or proceeding has been filed or is pending before the Supreme Court, the
Court of Appeals or any other tribunal or agency, he undertakes to report that fact within five
(5) days therefrom to the court or agency wherein the original pleading and sworn
certification contemplated herein have been filed.
The complaint and other initiatory pleadings referred to and subject of this Circular are the
original civil complaint, counterclaim, cross-claim, third (fourth, etc.) party complaint, or
complaint-in-intervention, petition, or application wherein a party asserts his claim for relief.
2. Any violation of this Circular shall be a cause for the dismissal of the complaint, petition,
application or other initiatory pleading, upon motion and after hearing. However, any clearly
willful and deliberate forum shopping by any other party and his counsel through the filing of
multiple complaints or other initiatory pleadings to obtain favorable action shall be a ground
for the summary dismissal thereof and shall constitute contempt of court. Furthermore, the
submission of a false certification or non-compliance with the undertakings therein, as
provided in Paragraph 1 hereof, shall constitute indirect contempt of court, without prejudice
to disciplinary proceedings against the counsel and the filing of a criminal action against the
part. [emphasis supplied]
xxx xxx xxx
The said Administrative Circular's use of the auxiliary verb "shall" imports "an imperative obligation . . .
inconsistent with the idea of discretion."
28
Hence, compliance therewith is mandatory.
29

It bears stressing that there is a material distinction between the requirement of submission of the certification
against forum shopping from the undertakings stated therein. Accordingly,
x x x [f]ailure to comply with this requirement cannot be excused by the fact that plaintiff is not guilty
of forum shopping. The Court of Appeals, therefore, erred in concluding that Administrative Circular
No. 04-94 did not apply to private respondent's case merely because her complaint was not based on
petitioner's cause of action. The Circular applies to any complaint, petition, application, or other
initiatory pleading, regardless of whether the party filing it has actually committed forum shopping.
Every party filing a complaint or any other initiatory pleading is required to swear under oath that he
has not committed nor will he commit forum shopping. Otherwise, we would have an absurd situation
where the parties themselves would be the judge of whether their actions constitute a violation of said
Circular, and compliance therewith would depend on their belief that they might or might not have
violated the requirement. Such interpretation of the requirement would defeat the very purpose of
Circular 04-94.
Indeed, compliance with the certification against forum shopping is separate from, and independent
of, the avoidance of forum shopping itself. Thus, there is a difference in the treatment in terms of
imposable sanctions between failure to comply with the certification requirement and violation of
the prohibition against forum shopping. The former is merely a cause for the dismissal, without
prejudice, of the complaint or initiatory pleading, while the latter is a ground for summary dismissal
thereof and constitutes direct contempt.
30

A scrutiny of the pleadings filed before the trial courts and the COSLAP sufficiently establishes private
respondents' propensity for forum shopping. We lay the premise that the certification against forum shopping
must be executed by the plaintiff or principal party, and not by his counsel.
31
Hence, one can deduce that the
certification is a peculiar personal representation on the part of the principal party, an assurance given to the
court or other tribunal that there are no other pending cases involving basically the same parties, issues and
causes of action. In the case at bar, private respondents' litany of omissions range from failing to submit the
required certification against forum shopping to filing a false certification, and then to forum shopping itself.
First, the petition filed before the COSLAP conspicuously lacked a certification against forum shopping.
Second, it does not appear from the record that the ASSOCIATION informed Branch 4 of the Regional Trial
Court of Baguio City before which Civil Case No. 3316-R was pending, that another action, Civil Case No.
3382-R, was filed before Branch 61 of the same court. Another group of homeless residents of Dominican Hill,
the LAND REFORM BENEFICIARIES ASSOCIATION, INC. initiated the latter case. The aforesaid plaintiff,
however, does not hesitate to admit that it filed the second case in representation of private respondent, as
one of its affiliates. In the same manner, the certification against forum shopping accompanying the complaint
in Civil Case No. 3382-R does not mention the pendency of Civil Case No. 3316-R. In fact, the opposite
assurance was given, that there was no action pending before any other tribunal. Another transgression is that
both branches of the trial court do not appear to have been notified of the filing of the subject COSLAP Case
No. 98-253.
It is evident from the foregoing facts that private respondents, in filing multiple petitions, have mocked our
attempts to eradicate forum shopping and have thereby upset the orderly administration of justice. They
sought recourse from three (3) different tribunals in order to obtain the writ of injunction they so desperately
desired. "The willful attempt by private respondents to obtain a preliminary injunction in another court after it
failed to acquire the same from the original court constitutes grave abuse of the judicial process."
32

In this connection, we expounded on forum shopping in Viva Productions, Inc. v. Court of Appeals
33
that:
Private respondent's intention to engage in forum shopping becomes manifest with undoubted clarity
upon the following considerations. Notably, if not only to ensure the issuance of an injunctive relief,
the significance of the action for damages before the Makati court would be nil. What damages
against private respondent would there be to speak about if the Paraaque court already enjoins the
performance of the very same act complained of in the Makati court? Evidently, the action for
damages is premature if not for the preliminary injunctive relief sought. Thus, we find grave abuse of
discretion on the part of the Makati court, being a mere co-equal of the Paraaque court, in not giving
due deference to the latter before which the issue of the alleged violation of the sub-judice rule had
already been raised and submitted. In such instance, the Makati court, if it was wary of dismissing the
action outrightly under Administrative Circular No. 04-94, should have, at least, ordered the
consolidation of its case with that of the Paraaque court, which had first acquired jurisdiction over
the related case x x x, or it should have suspended the proceedings until the Paraaque court may
have ruled on the issue x x x.
xxx xxx xxx
Thus, while we might admit that the causes of action before the Makati court and the Paraaque
court are distinct, and that private respondent cannot seek civil indemnity in the contempt
proceedings, the same being in the nature of criminal contempt, we nonetheless cannot ignore
private respondent's intention of seeking exactly identical reliefs when it sought the preliminary relief
of injunction in the Makati court. As earlier indicated, had private respondent been completely in good
faith there would have been no hindrance in filing the action for damages with the regional trial court
of Paraaque and having it consolidated with the contempt proceedings before Branch 274, so that
the same issue on the alleged violation of the sub judicerule will not have to be passed upon twice,
and there would be no possibility of having two courts of concurrent jurisdiction making two conflicting
resolutions.
Yet from another angle, it may be said that when the Paraaque court acquired jurisdiction over the
said issue, it excluded all other courts of concurrent jurisdiction from acquiring jurisdiction over the
same. To hold otherwise would be to risk instances where courts of concurrent jurisdiction might
have conflicting orders. This will create havoc and result in an extremely disordered administration of
justice. Therefore, even on the assumption that the Makati court may acquire jurisdiction over the
subject matter of the action for damages, without prejudice to the application of Administrative
Circular No. 04-94, it cannot nonetheless acquire jurisdiction over the issue of whether or not
petitioner has violated the sub judice rule. At best, the Makati court may hear the case only with
respect to the alleged injury suffered by private respondent after theParaaque court shall have ruled
favorably on the said issue.
We also noted several indications of private respondents' bad faith. The complaint filed in Civil Case No. 3316-
R was prepared by the ASSOCIATION's counsel, Atty. Conrado Villamor Catral, Jr. whereas the complaint
filed in Civil Case No. 3382-R was signed by a different lawyer, Atty. Thomas S. Tayengco. With regard to the
petition filed with the COSLAP, the same was signed by private respondents individually. As to the latter case,
we noted that the petition itself could not have been prepared by ordinary laymen, inasmuch as it exhibits
familiarity with statutory provisions and legal concepts, and is written in a lawyerly style.
In the same manner, the plaintiffs in the three (3) different cases were made to appear as dissimilar: in Civil
Case No. 3316-R, the plaintiff was ASSOCIATION of which private respondent Mario Padilan was head, while
the plaintiff in Civil Case No. 3382-R was the BENEFICIARIES. Before the COSLAP, private respondents
themselves were the petitioners, led again by Padilan.
34
Private respondents also attempted to vary their
causes of action: in Civil Case No. 3382-R and COSLAP Case No. 98-253, they seek the annulment of the
Memorandum of Agreement executed by and among UNITED, the PMS, and HIGC as well as the transfer
certificates of title accordingly issued to petitioner. All three (3) cases sought to enjoin the demolition of private
respondents' houses.
It has been held that forum shopping is evident where the elements of litis pendentia or res judicata are
present. Private respondents' subterfuge comes to naught, for the effects of res judicata or litis pendentia may
not be avoided by varying the designation of the parties or changing the form of the action or adopting a
different mode of presenting one's case.
35

In view of the foregoing, all that remains to be done is the imposition of the proper penalty. A party's willful and
deliberate act of forum shopping is punishable by summary dismissal of the actions filed.
36
The summary
dismissal of both COSLAP Case No. 98-253 and Civil Case No. 3316-R is therefore warranted under the
premises. We shall refrain from making any pronouncement on Civil Case No. 3382-R, the dismissal of which
was elevated on appeal to the Court of Appeals where it is still pending.
WHEREFORE, the petition is hereby GRANTED. The status quo order dated September 29, 1998 issued in
COSLAP Case No. 98-253 by respondent Commission On The Settlement Of Land Problems (COSLAP) is
hereby SET ASIDE; and the petition filed in COSLAP Case No. 98-253 and the complaint in Civil Case No.
3316-R are hereby DISMISSED for lack of jurisdiction and forum shopping. Costs against private respondents.
SO ORDERED.
Bellosillo, Mendoza, Quisumbing, and Buena, JJ ., concur.


G.R. No. 97149 March 31, 1992
FIDENCIO Y. BEJA, SR., petitioner,
vs.
COURT OF APPEALS, HONORABLE REINERIO O. REYES, in his capacity as Secretary of the
Department of Transportation and Communications; COMMODORE ROGELIO A. DAYAN, in his
capacity as General Manager of the Philippine Ports Authority; DEPARTMENT OF TRANSPORTATION
AND COMMUNICATIONS, ADMINISTRATIVE ACTION BOARD; and JUSTICE ONOFRE A. VILLALUZ, in
his capacity as Chairman of the Administrative Action Board, DOTC, respondents.

ROMERO, J .:
The instant petition for certiorari questions the jurisdiction of the Secretary of the Department of Transportation
and Communications (DOTC) and/or its Administrative Action Board (AAB) over administrative cases involving
personnel below the rank of Assistant General Manager of the Philippine Ports Authority (PPA), an agency
attached to the said Department.
Petitioner Fidencio Y. Beja, Sr.
1
was first employed by the PPA as arrastre supervisor in 1975. He became
Assistant Port Operations Officer in 1976 and Port Operations Officer in 1977. In February 1988, as a result of
the reorganization of the PPA, he was appointed Terminal Supervisor.
On October 21, 1988, the PPA General Manager, Rogelio A. Dayan, filed Administrative Case No. 11-04-88
against petitioner Beja and Hernando G. Villaluz for grave dishonesty, grave misconduct, willful violation of
reasonable office rules and regulations and conduct prejudicial to the best interest of the service. Beja and
Villaluz allegedly erroneously assessed storage fees resulting in the loss of P38,150.77 on the part of the
PPA. Consequently, they were preventively suspended for the charges. After a preliminary investigation
conducted by the district attorney for Region X, Administrative Case No. 11-04-88 was "considered closed for
lack of merit."
On December 13, 1988, another charge sheet, docketed as Administrative Case No. 12-01-88, was filed
against Beja by the PPA General Manager also for dishonesty, grave misconduct, violation of reasonable
office rules and regulations, conduct prejudicial to the best interest of the service and for being notoriously
undesirable. The charge consisted of six (6) different specifications of administrative offenses including fraud
against the PPA in the total amount of P218,000.00. Beja was also placed under preventive suspension
pursuant to Sec. 41 of P.D. No. 807.
The case was redocketed as Administrative Case No. PPA-AAB-1-049-89 and thereafter, the PPA general
manager indorsed it to the AAB for "appropriate action." At the scheduled hearing, Beja asked for continuance
on the ground that he needed time to study the charges against him. The AAB proceeded to hear the case
and gave Beja an opportunity to present evidence. However, on February 20, 1989, Beja filed a petition
for certiorari with preliminary injunction before the Regional Trial Court of Misamis Oriental.
2
Two days later,
he filed with the AAB a manifestation and motion to suspend the hearing of Administrative Case No. PPA-
AAB-1-049-89 on account of the pendency of the certiorari proceeding before the court. AAB denied the
motion and continued with the hearing of the administrative case.
Thereafter, Beja moved for the dismissal of the certiorari case below and proceeded to file before this Court a
petition for certiorari with preliminary injunction and/or temporary restraining order. The case was docketed as
G.R. No. 87352 captioned "Fidencio Y. Beja v. Hon. Reinerio 0. Reyes, etc., et al." In the en banc resolution of
March 30, 1989, this Court referred the case to the Court of Appeals for "appropriate action."
3
G.R. No. 87352
was docketed in the Court of Appeals as CA-G.R. SP No. 17270.
Meanwhile, a decision was rendered by the AAB in Administrative Case No. PPA-AAB-049-89. Its dispositive
portion reads:
WHEREFORE, judgment is hereby rendered, adjudging the following, namely:
a) That respondents Geronimo Beja, Jr. and Hernando Villaluz are exonerated from the
charge against them;
b) That respondent Fidencio Y. Beja be dismissed from the service;
c) That his leave credits and retirement benefits are declared forfeited;
d) That he be disqualified from re-employment in the government service;
e) That his eligibility is recommended to be cancelled.
Pasig, Metro Manila, February 28, 1989.
On December 10, 1990, after appropriate proceedings, the Court of Appeals also rendered a decision
4
in CA-
G.R. SP No. 17270 dismissing the petition for certiorari for lack of merit. Hence, Beja elevated the case back
to this Court through an "appeal by certiorari with preliminary injunction and/or temporary restraining order."
We find the pleadings filed in this case to be sufficient bases for arriving at a decision and hence, the filing of
memoranda has been dispensed with.
In his petition, Beja assails the Court of Appeals for having "decided questions of substance in a way probably
not in accord with law or with the applicable decisions" of this Court.
5
Specifically, Beja contends that the
Court of Appeals failed to declare that: (a) he was denied due process; (b) the PPA general manager has no
power to issue a preventive suspension order without the necessary approval of the PPA board of directors;
(c) the PPA general manager has no power to refer the administrative case filed against him to the DOTC-
AAB, and (d) the DOTC Secretary, the Chairman of the DOTC-AAB and DOTC-AAB itself as an adjudicatory
body, have no jurisdiction to try the administrative case against him. Simply put, Beja challenges the legality of
the preventive suspension and the jurisdiction of the DOTC Secretary and/or the AAB to initiate and hear
administrative cases against PPA personnel below the rank of Assistant General Manager.
Petitioner anchors his contention that the PPA general manager cannot subject him to a preventive
suspension on the following provision of Sec. 8, Art. V of Presidential Decree No. 857 reorganizing the PPA:
(d) the General Manager shall, subject to the approval of the Board, appoint and remove
personnel below the rank of Assistant General Manager. (Emphasis supplied.)
Petitioner contends that under this provision, the PPA Board of Directors and not the PPA General Manager is
the "proper disciplining authority.
6

As correctly observed by the Solicitor General, the petitioner erroneously equates "preventive suspension" as
a remedial measure with "suspension" as a penalty for administrative dereliction. The imposition of preventive
suspension on a government employee charged with an administrative offense is subject to the following
provision of the Civil Service Law, P.D. No. 807:
Sec. 41. Preventive Suspension. The proper disciplining authority may preventively
suspend any subordinate officer or employee under his authority pending an investigation, if
the charge against such officer or employee involves dishonesty, oppression or grave
misconduct, or neglect in the performance of duty, or if there are reasons to believe that the
respondent is guilty of charges which would warrant his removal from the service.
Imposed during the pendency of an administrative investigation, preventive suspension is not a penalty in
itself. It is merely a measure of precaution so that the employee who is charged may be separated, for obvious
reasons, from the scene of his alleged misfeasance while the same is being investigated.
7
Thus, preventive
suspension is distinct from the administrative penalty of removal from office such as the one mentioned in Sec.
8(d) of P.D. No 857. While the former may be imposed on a respondent during the investigation of the charges
against him, the latter is the penalty which may only be meted upon him at the termination of the investigation
or the final disposition of the case.
The PPA general manager is the disciplining authority who may, by himself and without the approval of the
PPA Board of Directors, subject a respondent in an administrative case to preventive suspension. His
disciplinary powers are sanctioned, not only by Sec. 8 of P.D. No. 857 aforequoted, but also by Sec. 37 of
P.D. No. 807 granting heads of agencies the "jurisdiction to investigate and decide matters involving
disciplinary actions against officers and employees" in the PPA.
Parenthetically, the period of preventive suspension is limited. It may be lifted even if the disciplining authority
has not finally decided the administrative case provided the ninety-day period from the effectivity of the
preventive suspension has been exhausted. The employee concerned may then be reinstated. 8 However, the
said ninety-day period may be interrupted. Section 42 of P.D. No. 807 also mandates that any fault,
negligence or petition of a suspended employee may not be considered in the computation of the said period.
Thus, when a suspended employee obtains from a court of justice a restraining order or a preliminary
injunction inhibiting proceedings in an administrative case, the lifespan of such court order should be excluded
in the reckoning of the permissible period of the preventive suspension.
9

With respect to the issue of whether or not the DOTC Secretary and/or the AAB may initiate and hear
administrative cases against PPA Personnel below the rank of Assistant General Manager, the
Court qualifiedlyrules in favor of petitioner.
The PPA was created through P.D. No. 505 dated July 11, 1974. Under that Law, the corporate powers of the
PPA were vested in a governing Board of Directors known as the Philippine Port Authority Council. Sec. 5(i) of
the same decree gave the Council the power "to appoint, discipline and remove, and determine the
composition of the technical staff of the Authority and other personnel."
On December 23, 1975, P.D. No. 505 was substituted by P.D. No. 857, See. 4(a) thereof created the
Philippine Ports Authority which would be "attached" to the then Department of Public Works, Transportation
and Communication. When Executive Order No. 125 dated January 30, 1987 reorganizing the Ministry of
Transportation and Communications was issued, the PPA retained its "attached" status.
10
Even Executive
Order No. 292 or the Administrative Code of 1987 classified the PPA as an agency "attached" to the
Department of Transportation and Communications (DOTC). Sec. 24 of Book IV, Title XV, Chapter 6 of the
same Code provides that the agencies attached to the DOTC "shall continue to operate and function in
accordance with the respective charters or laws creating them, except when they conflict with this Code."
Attachment of an agency to a Department is one of the three administrative relationships mentioned in Book
IV, Chapter 7 of the Administrative Code of 1987, the other two being supervision and control and
administrative supervision. "Attachment" is defined in Sec. 38 thereof as follows:
(3) Attachment. (a) This refers to the lateral relationship between the Department or its
equivalent and the attached agency or corporation for purposes of policy and program
coordination. The coordination shall be accomplished by having the department represented
in the governing board of the attached agency or corporation, either as chairman or as a
member, with or without voting rights, if this is permitted by the charter; having the attached
corporation or agency comply with a system of periodic reporting which shall reflect the
progress of programs and projects; and having the department or its equivalent provide
general policies through its representative in the board, which shall serve as the framework
for the internal policies of the attached corporation or agency;
(b) Matters of day-to-day administration or all those pertaining to internal operations shall he
left to the discretion or judgment of the executive officer of the agency or corporation. In the
event that the Secretary and the head of the board or the attached agency or corporation
strongly disagree on the interpretation and application of policies, and the Secretary is
unable to resolve the disagreement, he shall bring the matter to the President for resolution
and direction;
(c) Government-owned or controlled corporations attached to a department shall submit to
the Secretary concerned their audited financial statements within sixty (60) days after the
close of the fiscal year; and
(d) Pending submission of the required financial statements, the corporation shall continue
to operate on the basis of the preceding year's budget until the financial statements shall
have been submitted. Should any government-owned or controlled corporation incur an
operation deficit at the close of its fiscal year, it shall be subject to administrative supervision
of the department; and the corporation's operating and capital budget shall be subject to the
department's examination, review, modification and approval. (emphasis supplied.)
An attached agency has a larger measure of independence from the Department to which it is attached than
one which is under departmental supervision and control or administrative supervision. This is borne out by
the "lateral relationship" between the Department and the attached agency. The attachment is merely for
"policy and program coordination." With respect to administrative matters, the independence of an attached
agency from Departmental control and supervision is further reinforced by the fact that even an agency under
a Department's administrative supervision is free from Departmental interference with respect to appointments
and other personnel actions "in accordance with the decentralization of personnel functions" under the
Administrative Code of 1987.
11
Moreover, the Administrative Code explicitly provides that Chapter 8 of Book
IV on supervision and control shall not apply to chartered institutions attached to a Department.
12

Hence, the inescapable conclusion is that with respect to the management of personnel, an attached agency
is, to a certain extent, free from Departmental interference and control. This is more explicitly shown by P.D.
No. 857 which provides:
Sec. 8. Management and Staff. a) The President shall, upon the recommendation of the
Board, appoint the General Manager and the Assistant General Managers.
(b) All other officials and employees of the Authority shall be selected and appointed on the
basis of merit and fitness based on a comprehensive and progressive merit system to be
established by the Authority immediately upon its organization and consistent with Civil
Service rules and regulations.The recruitment, transfer, promotion, and dismissal of all
personnel of the Authority, including temporary workers, shall be governed by such merit
system.
(c) The General Manager shall, subject to the approval of the Board, determine the staffing
pattern and the number of personnel of the Authority, define their duties and responsibilities,
and fix their salaries and emoluments. For professional and technical positions, the General
Manager shall recommend salaries and emoluments that are comparable to those of similar
positions in other government-owned corporations, the provisions of existing rules and
regulations on wage and position classification notwithstanding.
(d) The General Manager shall, subject to the approval by the Board, appoint and remove
personnel below the rank of Assistant General Manager.
xxx xxx xxx
(emphasis supplied.)
Although the foregoing section does not expressly provide for a mechanism for an administrative investigation
of personnel, by vesting the power to remove erring employees on the General Manager, with the approval of
the PPA Board of Directors, the law impliedly grants said officials the power to investigate its personnel below
the rank of Assistant Manager who may be charged with an administrative offense. During such investigation,
the PPA General Manager, as earlier stated, may subject the employee concerned to preventive suspension.
The investigation should be conducted in accordance with the procedure set out in Sec. 38 of P.D. No.
807.
13
Only after gathering sufficient facts may the PPA General Manager impose the proper penalty in
accordance with law. It is the latter action which requires the approval of the PPA Board of Directors.
14

From an adverse decision of the PPA General Manager and the Board of Directors, the employee
concerned mayelevate the matter to the Department Head or Secretary. Otherwise, he may appeal directly to
the Civil Service Commission. The permissive recourse to the Department Secretary is sanctioned by the Civil
Service Law (P.D. No. 807) under the following provisions:
Sec. 37. Disciplinary Jurisdiction. (a) The Commission shall decide upon appeal all
administrative disciplinary cases involving the imposition of a penalty of suspension for more
than thirty days, or fine in an amount exceeding thirty days salary, demotion in rank or salary
or transfer, removal or dismissal from office. A complaint may be filed directly with the
Commission by a private citizen against a government official or employee in which case it
may hear and decide the case or it may deputize any department or agency or official or
group of officials to conduct the investigation. The results of the investigation shall be
submitted to the Commission with recommendation as to the penalty to be imposed or other
action to be taken.
(b) The heads of departments, agencies and instrumentalities, provinces, cities and
municipalities shall have jurisdiction to investigate and decide matters involving disciplinary
action against officers and employees under their jurisdiction. The decisions shall be final in
case the penalty imposed is suspension for not more than thirty days or fine in an amount
not exceeding thirty days' salary. In case the decision rendered by a bureau or office head is
appealable to the Commission, the same may be initially appealed to the department and
finally to the Commission and pending appeal, the same shall be executory except when the
penalty is removal, in which case the same shall be executory only after confirmation by the
department head.
xxx xxx xxx
(Emphasis supplied.)
It is, therefore, clear that the transmittal of the complaint by the PPA General Manager to the AAB was
premature. The PPA General Manager should have first conducted an investigation, made the proper
recommendation for the imposable penalty and sought its approval by the PPA Board of Directors. It was
discretionary on the part of the herein petitioner to elevate the case to the then DOTC Secretary Reyes. Only
then could the AAB take jurisdiction of the case.
The AAB, which was created during the tenure of Secretary Reyes under Office Order No. 88-318 dated July
1, 1988, was designed to act, decide and recommend to him "all cases of administrative malfeasance,
irregularities, grafts and acts of corruption in the Department." Composed of a Chairman and two (2)
members, the AAB came into being pursuant to Administrative Order No. 25 issued by the President on May
25, 1987.
15
Its special nature as a quasi-judicial administrative body notwithstanding, the AAB is not exempt
from the observance of due process in its proceedings.
16
We are not satisfied that it did so in this case the
respondents protestation that petitioner waived his right to be heard notwithstanding. It should be observed
that petitioner was precisely questioning the AAB's jurisdiction when it sought judicial recourse.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED insofar as it upholds the power of the PPA
General Manager to subject petitioner to preventive suspension and REVERSED insofar as it validates the
jurisdiction of the DOTC and/or the AAB to act on Administrative Case No. PPA-AAB-1-049-89 and rules that
due process has been accorded the petitioner.
The AAB decision in said case is hereby declared NULL and VOID and the case in REMANDED to the PPA
whose General Manager shall conduct with dispatch its reinvestigation.
The preventive suspension of petitioner shall continue unless after a determination of its duration, it is found
that he had served the total of ninety (90) days in which case he shall be reinstated immediately.
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Bidin, Grio-Aquino, Medialdea, Regalado,
Davide, Jr. and Nocon JJ., concur.
Padilla and Bellosillo, JJ., took no part.
Feliciano, J., is on leave.


G.R. No. 115863 March 31, 1995
AIDA D. EUGENIO, petitioner,
vs.
CIVIL SERVICE COMMISSION, HON. TEOFISTO T. GUINGONA, JR. & HON. SALVADOR ENRIQUEZ,
JR.,respondents.

PUNO, J .:
The power of the Civil Service Commission to abolish the Career Executive Service Board is challenged in this
petition for certiorari and prohibition.
First the facts. Petitioner is the Deputy Director of the Philippine Nuclear Research Institute. She applied for a
Career Executive Service (CES) Eligibility and a CESO rank on August 2, 1993, she was given a CES
eligibility. On September 15, 1993, she was recommended to the President for a CESO rank by the Career
Executive Service Board.
1

All was not to turn well for petitioner. On October 1, 1993, respondent Civil Service Commission
2
passed
Resolution No. 93-4359, viz:
RESOLUTION NO. 93-4359
WHEREAS, Section 1(1) of Article IX-B provides that Civil Service shall be administered by
the Civil Service Commission, . . .;
WHEREAS, Section 3, Article IX-B of the 1987 Philippine Constitution provides that "The
Civil Service Commission, as the central personnel agency of the government, is mandated
to establish a career service and adopt measures to promote morale, efficiency, integrity,
responsiveness, progresiveness and courtesy in the civil service, . . .";
WHEREAS, Section 12 (1), Title I, Subtitle A, Book V of the Administrative Code of 1987
grants the Commission the power, among others, to administer and enforce the
constitutional and statutory provisions on the merit system for all levels and ranks in the Civil
Service;
WHEREAS, Section 7, Title I, Subtitle A, Book V of the Administrative Code of 1987
Provides, among others, that The Career Service shall be characterized by (1) entrance
based on merit and fitness to be determined as far as practicable by competitive
examination, or based highly technical qualifications; (2) opportunity for advancement to
higher career positions; and (3) security of tenure;
WHEREAS, Section 8 (c), Title I, Subtitle A, Book V of the administrative Code of 1987
provides that "The third level shall cover Positions in the Career Executive Service";
WHEREAS, the Commission recognizes the imperative need to consolidate, integrate and
unify the administration of all levels of positions in the career service.
WHEREAS, the provisions of Section 17, Title I, Subtitle A. Book V of the Administrative
Code of 1987 confers on the Commission the power and authority to effect changes in its
organization as the need arises.
WHEREAS, Section 5, Article IX-A of the Constitution provides that the Civil Service
Commission shall enjoy fiscal autonomy and the necessary implications thereof;
NOW THEREFORE, foregoing premises considered, the Civil Service Commission hereby
resolves to streamline reorganize and effect changes in its organizational structure.
Pursuant thereto, the Career Executive Service Board, shall now be known as the Office for
Career Executive Service of the Civil Service Commission. Accordingly, the existing
personnel, budget, properties and equipment of the Career Executive Service Board shall
now form part of the Office for Career Executive Service.
The above resolution became an impediment. to the appointment of petitioner as Civil Service Officer, Rank
IV. In a letter to petitioner, dated June 7, 1994, the Honorable Antonio T. Carpio, Chief Presidential legal
Counsel, stated:
xxx xxx xxx
On 1 October 1993 the Civil Service Commission issued CSC Resolution No. 93-4359
which abolished the Career Executive Service Board.
Several legal issues have arisen as a result of the issuance of CSC Resolution No. 93-4359,
including whether the Civil Service Commission has authority to abolish the Career
Executive Service Board. Because these issues remain unresolved, the Office of the
President has refrained from considering appointments of career service eligibles to career
executive ranks.
xxx xxx xxx
You may, however, bring a case before the appropriate court to settle the legal issues
arising from issuance by the Civil Service Commission of CSC Resolution No. 93-4359, for
guidance of all concerned.
Thank You.
Finding herself bereft of further administrative relief as the Career Executive Service Board which
recommended her CESO Rank IV has been abolished, petitioner filed the petition at bench to annul, among
others, resolution No. 93-4359. The petition is anchored on the following arguments:
A.
IN VIOLATION OF THE CONSTITUTION, RESPONDENT COMMISSION USURPED THE
LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ABOLISHED THE CESB, AN
OFFICE CREATED BY LAW, THROUGH THE ISSUANCE OF CSC: RESOLUTION NO.
93-4359;
B.
ALSO IN VIOLATION OF THE CONSTITUTION, RESPONDENT CSC USURPED THE
LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ILLEGALLY AUTHORIZED THE
TRANSFER OF PUBLIC MONEY, THROUGH THE ISSUANCE OF CSC RESOLUTION
NO. 93-4359.
Required to file its Comment, the Solicitor General agreed with the contentions of petitioner. Respondent
Commission, however, chose to defend its ground. It posited the following position:
ARGUMENTS FOR PUBLIC RESPONDENT-CSC
I. THE INSTANT PETITION STATES NO CAUSE OF ACTION AGAINST THE
PUBLIC RESPONDENT-CSC.
II. THE RECOMMENDATION SUBMITTED TO THE PRESIDENT FOR APPOINTMENT TO
A CESO RANK OF PETITIONER EUGENIO WAS A VALID ACT OF THE CAREER
EXECUTIVE SERVICE BOARD OF THE CIVIL SERVICE COMMISSION AND IT DOES
NOT HAVE ANY DEFECT.
III. THE OFFICE OF THE PRESIDENT IS ESTOPPED FROM QUESTIONING THE
VALIDITY OF THE RECOMMENDATION OF THE CESB IN FAVOR OF PETITIONER
EUGENIO SINCE THE PRESIDENT HAS PREVIOUSLY APPOINTED TO CESO RANK
FOUR (4) OFFICIALS SIMILARLY SITUATED AS SAID PETITIONER. FURTHERMORE,
LACK OF MEMBERS TO CONSTITUTE A QUORUM. ASSUMING THERE WAS NO
QUORUM, IS NOT THE FAULT OF PUBLIC RESPONDENT CIVIL SERVICE
COMMISSION BUT OF THE PRESIDENT WHO HAS THE POWER TO APPOINT THE
OTHER MEMBERS OF THE CESB.
IV. THE INTEGRATION OF THE CESB INTO THE COMMISSION IS AUTHORIZED BY
LAW (Sec. 12 (1), Title I, Subtitle A, Book V of the Administrative Code of the 1987). THIS
PARTICULAR ISSUE HAD ALREADY BEEN SETTLED WHEN THE HONORABLE COURT
DISMISSED THE PETITION FILED BY THE HONORABLE MEMBERS OF THE HOUSE
OF REPRESENTATIVES, NAMELY: SIMEON A. DATUMANONG, FELICIANO R.
BELMONTE, JR., RENATO V. DIAZ, AND MANUEL M. GARCIA IN G.R. NO. 114380. THE
AFOREMENTIONED PETITIONERS ALSO QUESTIONED THE INTEGRATION OF THE
CESB WITH THE COMMISSION.
We find merit in the petition.
3

The controlling fact is that the Career Executive Service Board (CESB) was created in the Presidential Decree
(P.D.) No. 1 on September 1, 1974
4
which adopted the Integrated Plan. Article IV, Chapter I, Part of the III of
the said Plan provides:
Article IV Career Executive Service
1. A Career Executive Service is created to form a continuing pool of well-selected and
development oriented career administrators who shall provide competent and faithful
service.
2. A Career Executive Service hereinafter referred to in this Chapter as the Board, is created
to serve as the governing body of the Career Executive Service. The Board shall consist of
the Chairman of the Civil Service Commission as presiding officer, the Executive Secretary
and the Commissioner of the Budget as ex-officio members and two other members from
the private sector and/or the academic community who are familiar with the principles and
methods of personnel administration.
xxx xxx xxx
5. The Board shall promulgate rules, standards and procedures on the selection,
classification, compensation and career development of members of the Career Executive
Service. The Board shall set up the organization and operation of the service. (Emphasis
supplied)
It cannot be disputed, therefore, that as the CESB was created by law, it can only be abolished by the
legislature. This follows an unbroken stream of rulings that the creation and abolition of public offices is
primarily a legislative function. As aptly summed up in AM JUR 2d on Public Officers and
Employees,
5
viz:
Except for such offices as are created by the Constitution, the creation of public offices is
primarily a legislative function. In so far as the legislative power in this respect is not
restricted by constitutional provisions, it supreme, and the legislature may decide for itself
what offices are suitable, necessary, or convenient. When in the exigencies of government it
is necessary to create and define duties, the legislative department has the discretion to
determine whether additional offices shall be created, or whether these duties shall be
attached to and become ex-officio duties of existing offices. An office created by the
legislature is wholly within the power of that body, and it may prescribe the mode of filling
the office and the powers and duties of the incumbent, and if it sees fit, abolish the office.
In the petition at bench, the legislature has not enacted any law authorizing the abolition of the CESB. On the
contrary, in all the General Appropriations Acts from 1975 to 1993, the legislature has set aside funds for the
operation of CESB. Respondent Commission, however, invokes Section 17, Chapter 3, Subtitle A. Title I,
Book V of the Administrative Code of 1987 as the source of its power to abolish the CESB. Section 17
provides:
Sec. 17. Organizational Structure. Each office of the Commission shall be headed by a
Director with at least one Assistant Director, and may have such divisions as are necessary
independent constitutional body, the Commission may effect changes in the organization as
the need arises.
But as well pointed out by petitioner and the Solicitor General, Section 17 must be read together with Section
16 of the said Code which enumerates the offices under the respondent Commission, viz:
Sec. 16. Offices in the Commission. The Commission shall have the following offices:
(1) The Office of the Executive Director headed by an Executive Director, with a Deputy
Executive Director shall implement policies, standards, rules and regulations promulgated
by the Commission; coordinate the programs of the offices of the Commission and render
periodic reports on their operations, and perform such other functions as may be assigned
by the Commission.
(2) The Merit System Protection Board composed of a Chairman and two (2) members shall
have the following functions:
xxx xxx xxx
(3) The Office of Legal Affairs shall provide the Chairman with legal advice and assistance;
render counselling services; undertake legal studies and researches; prepare opinions and
ruling in the interpretation and application of the Civil Service law, rules and regulations;
prosecute violations of such law, rules and regulations; and represent the Commission
before any court or tribunal.
(4) The Office of Planning and Management shall formulate development plans, programs
and projects; undertake research and studies on the different aspects of public personnel
management; administer management improvement programs; and provide fiscal and
budgetary services.
(5) The Central Administrative Office shall provide the Commission with personnel, financial,
logistics and other basic support services.
(6) The Office of Central Personnel Records shall formulate and implement policies,
standards, rules and regulations pertaining to personnel records maintenance, security,
control and disposal; provide storage and extension services; and provide and maintain
library services.
(7) The Office of Position Classification and Compensation shall formulate and implement
policies, standards, rules and regulations relative to the administration of position
classification and compensation.
(8) The Office of Recruitment, Examination and Placement shall provide leadership and
assistance in developing and implementing the overall Commission programs relating to
recruitment, execution and placement, and formulate policies, standards, rules and
regulations for the proper implementation of the Commission's examination and placement
programs.
(9) The Office of Career Systems and Standards shall provide leadership and assistance in
the formulation and evaluation of personnel systems and standards relative to performance
appraisal, merit promotion, and employee incentive benefit and awards.
(10) The Office of Human Resource Development shall provide leadership and assistance in
the development and retention of qualified and efficient work force in the Civil Service;
formulate standards for training and staff development; administer service-wide scholarship
programs; develop training literature and materials; coordinate and integrate all training
activities and evaluate training programs.
(11) The Office of Personnel Inspection and Audit shall develop policies, standards, rules
and regulations for the effective conduct or inspection and audit personnel and personnel
management programs and the exercise of delegated authority; provide technical and
advisory services to Civil Service Regional Offices and government agencies in the
implementation of their personnel programs and evaluation systems.
(12) The Office of Personnel Relations shall provide leadership and assistance in the
development and implementation of policies, standards, rules and regulations in the
accreditation of employee associations or organizations and in the adjustment and
settlement of employee grievances and management of employee disputes.
(13) The Office of Corporate Affairs shall formulate and implement policies, standards, rules
and regulations governing corporate officials and employees in the areas of recruitment,
examination, placement, career development, merit and awards systems, position
classification and compensation, performing appraisal, employee welfare and benefit,
discipline and other aspects of personnel management on the basis of comparable industry
practices.
(14) The Office of Retirement Administration shall be responsible for the enforcement of the
constitutional and statutory provisions, relative to retirement and the regulation for the
effective implementation of the retirement of government officials and employees.
(15) The Regional and Field Offices. The Commission shall have not less than thirteen
(13) Regional offices each to be headed by a Director, and such field offices as may be
needed, each to be headed by an official with at least the rank of an Assistant Director.
As read together, the inescapable conclusion is that respondent Commission's power to reorganize is
limited to offices under its control as enumerated in Section 16, supra. From its inception, the CESB
was intended to be an autonomous entity, albeit administratively attached to respondent
Commission. As conceptualized by the Reorganization Committee "the CESB shall be autonomous.
It is expected to view the problem of building up executive manpower in the government with a broad
and positive outlook."
6
The essential autonomous character of the CESB is not negated by its
attachment to respondent Commission. By said attachment, CESB was not made to fall within the
control of respondent Commission. Under the Administrative Code of 1987, the purpose of attaching
one functionally inter-related government agency to another is to attain "policy and program
coordination." This is clearly etched out in Section 38(3), Chapter 7, Book IV of the aforecited Code,
to wit:
(3) Attachment. (a) This refers to the lateral relationship between the department or its
equivalent and attached agency or corporation for purposes of policy and program
coordination. The coordination may be accomplished by having the department represented
in the governing board of the attached agency or corporation, either as chairman or as a
member, with or without voting rights, if this is permitted by the charter; having the attached
corporation or agency comply with a system of periodic reporting which shall reflect the
progress of programs and projects; and having the department or its equivalent provide
general policies through its representative in the board, which shall serve as the framework
for the internal policies of the attached corporation or agency.
Respondent Commission also relies on the case of Datumanong, et al., vs. Civil Service Commission, G. R.
No. 114380 where the petition assailing the abolition of the CESB was dismissed for lack of cause of action.
Suffice to state that the reliance is misplaced considering that the cited case was dismissed for lack of
standing of the petitioner, hence, the lack of cause of action.
IN VIEW WHEREOF, the petition is granted and Resolution No. 93-4359 of the respondent Commission is
hereby annulled and set aside. No costs.
SO ORDERED.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Vitug,
Kapunan and Mendoza, JJ., concur.


G.R. No. 120319 October 6, 1995
LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA in her
capacity as VOLUNTARY ARBITRATOR, respondents.

ROMERO, J .:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon
Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining Agreement provision
and the Memorandum of Agreement dated April 1994, on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers on December 1-15,
1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper on
January 18, 1995. LDB, on the other hand, failed to submit its Position Paper despite a letter from the
Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no Position Paper had been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision disposing as
follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective
Bargaining Agreement provision nor the Memorandum of Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator
and to prohibit her from enforcing the same.
In labor law context, arbitration is the reference of a labor dispute to an impartial third person for determination
on the basis of evidence and arguments presented by such parties who have bound themselves to accept the
decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as either compulsory or
voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government to
forego their right to strike and are compelled to accept the resolution of their dispute through arbitration by a
third party.
1
The essence of arbitration remains since a resolution of a dispute is arrived at by resort to a
disinterested third party whose decision is final and binding on the parties, but in compulsory arbitration, such
a third party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a
voluntary arbitration clause in their collective agreement, to an impartial third person for a final and binding
resolution.
2
Ideally, arbitration awards are supposed to be complied with by both parties without delay, such
that once an award has been rendered by an arbitrator, nothing is left to be done by both parties but to comply
with the same. After all, they are presumed to have freely chosen arbitration as the mode of settlement for that
particular dispute. Pursuant thereto, they have chosen a mutually acceptable arbitrator who shall hear and
decide their case. Above all, they have mutually agreed to de bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include
therein provisions for a machinery for the resolution of grievances arising from the interpretation or
implementation of the CBA or company personnel policies.
3
For this purpose, parties to a CBA shall name and
designate therein a voluntary arbitrator or a panel of arbitrators, or include a procedure for their selection,
preferably from those accredited by the National Conciliation and Mediation Board (NCMB). Article 261 of the
Labor Code accordingly provides for exclusive original jurisdiction of such voluntary arbitrator or panel of
arbitrators over (1) the interpretation or implementation of the CBA and (2) the interpretation or enforcement of
company personnel policies. Article 262 authorizes them, but only upon agreement of the parties, to exercise
jurisdiction over other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the following
enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have original
and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether agricultural or non-
agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving
the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators
is quite limited compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of the
National Labor Relations Commission (NLRC) for that matter.
4
The state of our present law relating to
voluntary arbitration provides that "(t)he award or decision of the Voluntary Arbitrator . . . shall be final and
executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties,"
5
while
the "(d)ecision, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or
orders."
6
Hence, while there is an express mode of appeal from the decision of a labor arbiter, Republic Act
No. 6715 is silent with respect to an appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not, elevated to
the Supreme Court itself on a petition for certiorari,
7
in effect equating the voluntary arbitrator with the NLRC
or the Court of Appeals. In the view of the Court, this is illogical and imposes an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al.,
8
on the settled premise that the judgments of courts and
awards of quasi-judicial agencies must become final at some definite time, this Court ruled that the awards of
voluntary arbitrators determine the rights of parties; hence, their decisions have the same legal effect as
judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al.,
9
this Court ruled that "a voluntary
arbitrator by the nature of her functions acts in a quasi-judicial capacity." Under these rulings, it follows that the
voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency but
independent of, and apart from, the NLRC since his decisions are not appealable to the latter.
10

Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall
exercise:
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or
awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission, the Employees
Compensation Commission and the Civil Service Commission, except those falling within
the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4)
of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be
considered as a quasi-judicial agency, board or commission, still both he and the panel are comprehended
within the concept of a "quasi-judicial instrumentality." It may even be stated that it was to meet the very
situation presented by the quasi-judicial functions of the voluntary arbitrators here, as well as the subsequent
arbitrator/arbitral tribunal operating under the Construction Industry Arbitration Commission,
11
that the broader
term "instrumentalities" was purposely included in the above-quoted provision.
An "instrumentality" is anything used as a means or agency.
12
Thus, the terms governmental "agency" or
"instrumentality" are synonymous in the sense that either of them is a means by which a government acts, or
by which a certain government act or function is performed.
13
The word "instrumentality," with respect to a
state, contemplates an authority to which the state delegates governmental power for the performance of a
state function.
14
An individual person, like an administrator or executor, is a judicial instrumentality in the
settling of an estate,
15
in the same manner that a sub-agent appointed by a bankruptcy court is an
instrumentality of the court,
16
and a trustee in bankruptcy of a defunct corporation is an instrumentality of the
state.
17

The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated to him
under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and powers are provided for
in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial
instrumentality as contemplated therein. It will be noted that, although the Employees Compensation
Commission is also provided for in the Labor Code, Circular No. 1-91, which is the forerunner of the present
Revised Administrative Circular No. 1-95, laid down the procedure for the appealability of its decisions to the
Court of Appeals under the foregoing rationalization, and this was later adopted by Republic Act No. 7902 in
amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable
to the Court of Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95, just
like those of the quasi-judicial agencies, boards and commissions enumerated therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide a
uniform procedure for the appellate review of adjudications of all quasi-judicial entities
18
not expressly
excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute. Nor will it run
counter to the legislative intendment that decisions of the NLRC be reviewable directly by the Supreme Court
since, precisely, the cases within the adjudicative competence of the voluntary arbitrator are excluded from the
jurisdiction of the NLRC or the labor arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known as the
Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the contract or
submission, or if none be specified, the Regional Trial Court for the province or city in which one of the parties
resides or is doing business, or in which the arbitration is held, shall have jurisdiction. A party to the
controversy may, at any time within one (1) month after an award is made, apply to the court having
jurisdiction for an order confirming the award and the court must grant such order unless the award is vacated,
modified or corrected.
19

In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial court.
Consequently, in a petition for certiorari from that award or decision, the Court of Appeals must be deemed to
have concurrent jurisdiction with the Supreme Court. As a matter of policy, this Court shall henceforth remand
to the Court of Appeals petitions of this nature for proper disposition.
ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.
SO ORDERED.
Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Francisco and Hermosisima, Jr.,
JJ., concur.
Feliciano, J., concurs in the result.
Narvasa, C.J. and Melo, J. are on leave.


G.R. No. 102976 October 25, 1995
IRON AND STEEL AUTHORITY, petitioner,
vs.
THE COURT OF APPEALS and MARIA CRISTINA FERTILIZER CORPORATION, respondents.

FELICIANO, J .:
Petitioner Iron and Steel Authority ("ISA") was created by Presidential Decree (P.D.) No. 272 dated 9 August
1973 in order, generally, to develop and promote the iron and steel industry in the Philippines. The objectives
of the ISA are spelled out in the following terms:
Sec. 2. Objectives The Authority shall have the following objectives:
(a) to strengthen the iron and steel industry of the Philippines and to expand the domestic
and export markets for the products of the industry;
(b) to promote the consolidation, integration and rationalization of the industry in order to
increase industry capability and viability to service the domestic market and to compete in
international markets;
(c) to rationalize the marketing and distribution of steel products in order to achieve a
balance between demand and supply of iron and steel products for the country and to
ensure that industry prices and profits are at levels that provide a fair balance between the
interests of investors, consumers suppliers, and the public at large;
(d) to promote full utilization of the existing capacity of the industry, to discourage
investment in excess capacity, and in coordination, with appropriate government agencies to
encourage capital investment in priority areas of the industry;
(e) to assist the industry in securing adequate and low-cost supplies of raw materials and to
reduce the excessive dependence of the country on imports of iron and steel.
The list of powers and functions of the ISA included the following:
Sec. 4. Powers and Functions. The authority shall have the following powers and
functions:
xxx xxx xxx
(j) to initiate expropriation of land required for basic iron and steel facilities for subsequent
resale and/or lease to the companies involved if it is shown that such use of the State's
power is necessary to implement the construction of capacity which is needed for the
attainment of the objectives of the Authority;
xxx xxx xxx
(Emphasis supplied)
P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting from 9 August 1973.
1
When
ISA's original term expired on 10 October 1978, its term was extended for another ten (10) years by Executive
Order No. 555 dated 31 August 1979.
The National Steel Corporation ("NSC") then a wholly owned subsidiary of the National Development
Corporation which is itself an entity wholly owned by the National Government, embarked on an expansion
program embracing, among other things, the construction of an integrated steel mill in Iligan City. The
construction of such a steel mill was considered a priority and major industrial project of the Government.
Pursuant to the expansion program of the NSC, Proclamation No. 2239 was issued by the President of the
Philippines on 16 November 1982 withdrawing from sale or settlement a large tract of public land (totalling
about 30.25 hectares in area) located in Iligan City, and reserving that land for the use and immediate
occupancy of NSC.
Since certain portions of the public land subject matter Proclamation No. 2239 were occupied by a non-
operational chemical fertilizer plant and related facilities owned by private respondent Maria Cristina Fertilizer
Corporation ("MCFC"), Letter of Instruction (LOI), No. 1277, also dated 16 November 1982, was issued
directing the NSC to "negotiate with the owners of MCFC, for and on behalf of the Government, for the
compensation of MCFC's present occupancy rights on the subject land." LOI No. 1277 also directed that
should NSC and private respondent MCFC fail to reach an agreement within a period of sixty (60) days from
the date of LOI No. 1277, petitioner ISA was to exercise its power of eminent domain under P.D. No. 272 and
to initiate expropriation proceedings in respect of occupancy rights of private respondent MCFC relating to the
subject public land as well as the plant itself and related facilities and to cede the same to the NSC.
2

Negotiations between NSC and private respondent MCFC did fail. Accordingly, on 18 August 1983, petitioner
ISA commenced eminent domain proceedings against private respondent MCFC in the Regional Trial Court,
Branch 1, of Iligan City, praying that it (ISA) be places in possession of the property involved upon depositing
in court the amount of P1,760,789.69 representing ten percent (10%) of the declared market values of that
property. The Philippine National Bank, as mortgagee of the plant facilities and improvements involved in the
expropriation proceedings, was also impleaded as party-defendant.
On 17 September 1983, a writ of possession was issued by the trial court in favor of ISA. ISA in turn placed
NSC in possession and control of the land occupied by MCFC's fertilizer plant installation.
The case proceeded to trial. While the trial was ongoing, however, the statutory existence of petitioner ISA
expired on 11 August 1988. MCFC then filed a motion to dismiss, contending that no valid judgment could be
rendered against ISA which had ceased to be a juridical person. Petitioner ISA filed its opposition to this
motion.
In an Order dated 9 November 1988, the trial court granted MCFC's motion to dismiss and did dismiss the
case. The dismissal was anchored on the provision of the Rules of Court stating that "only natural or juridical
persons or entities authorized by law may be parties in a civil case."
3
The trial court also referred to non-
compliance by petitioner ISA with the requirements of Section 16, Rule 3 of the Rules of Court.
4

Petitioner ISA moved for reconsideration of the trial court's Order, contending that despite the expiration of its
term, its juridical existence continued until the winding up of its affairs could be completed. In the alternative,
petitioner ISA urged that the Republic of the Philippines, being the real party-in-interest, should be allowed to
be substituted for petitioner ISA. In this connection, ISA referred to a letter from the Office of the President
dated 28 September 1988 which especially directed the Solicitor General to continue the expropriation case.
The trial court denied the motion for reconsideration, stating, among other things that:
The property to be expropriated is not for public use or benefit [__] but for the use
and benefit [__] of NSC, a government controlled private corporation engaged in
private business and for profit, specially now that the government, according to
newspaper reports, is offering for sale to the public its [shares of stock] in the
National Steel Corporation in line with the pronounced policy of the present
administration to disengage the government from its private business
ventures.
5
(Brackets supplied)
Petitioner went on appeal to the Court of Appeals. In a Decision dated 8 October 1991, the Court of Appeals
affirmed the order of dismissal of the trial court. The Court of Appeals held that petitioner ISA, "a government
regulatory agency exercising sovereign functions," did not have the same rights as an ordinary corporation
and that the ISA, unlike corporations organized under the Corporation Code, was not entitled to a period for
winding up its affairs after expiration of its legally mandated term, with the result that upon expiration of its
term on 11 August 1987, ISA was "abolished and [had] no more legal authority to perform governmental
functions." The Court of Appeals went on to say that the action for expropriation could not prosper because the
basis for the proceedings, the ISA's exercise of its delegated authority to expropriate, had become ineffective
as a result of the delegate's dissolution, and could not be continued in the name of Republic of the Philippines,
represented by the Solicitor General:
It is our considered opinion that under the law, the complaint cannot prosper, and therefore,
has to be dismissed without prejudice to the refiling of a new complaint for expropriation if
the Congress sees it fit." (Emphases supplied)
At the same time, however, the Court of Appeals held that it was premature for the trial court to have
ruled that the expropriation suit was not for a public purpose, considering that the parties had not yet
rested their respective cases.
In this Petition for Review, the Solicitor General argues that since ISA initiated and prosecuted the action for
expropriation in its capacity as agent of the Republic of the Philippines, the Republic, as principal of ISA, is
entitled to be substituted and to be made a party-plaintiff after the agent ISA's term had expired.
Private respondent MCFC, upon the other hand, argues that the failure of Congress to enact a law further
extending the term of ISA after 11 August 1988 evinced a "clear legislative intent to terminate the juridical
existence of ISA," and that the authorization issued by the Office of the President to the Solicitor General for
continued prosecution of the expropriation suit could not prevail over such negative intent. It is also contended
that the exercise of the eminent domain by ISA or the Republic is improper, since that power would be
exercised "not on behalf of the National Government but for the benefit of NSC."
The principal issue which we must address in this case is whether or not the Republic of the Philippines is
entitled to be substituted for ISA in view of the expiration of ISA's term. As will be made clear below, this is
really the only issue which we must resolve at this time.
Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil action:
Sec. 1. Who May Be Parties. Only natural or juridical persons or entities authorized by
law may be parties in a civil action.
Under the above quoted provision, it will be seen that those who can be parties to a civil action may
be broadly categorized into two (2) groups:
(a) those who are recognized as persons under the law whether natural, i.e., biological
persons, on the one hand, or juridical person such as corporations, on the other hand; and
(b) entities authorized by law to institute actions.
Examination of the statute which created petitioner ISA shows that ISA falls under category (b) above. P.D.
No. 272, as already noted, contains express authorization to ISA to commence expropriation proceedings like
those here involved:
Sec. 4. Powers and Functions. The Authority shall have the following powers and
functions:
xxx xxx xxx
(j) to initiate expropriation of land required for basic iron and steel facilities for subsequent
resale and/or lease to the companies involved if it is shown that such use of the State's
power is necessary to implement the construction of capacity which is needed for the
attainment of the objectives of the Authority;
xxx xxx xxx
(Emphasis supplied)
It should also be noted that the enabling statute of ISA expressly authorized it to enter into certain
kinds of contracts "for and in behalf of the Government" in the following terms:
xxx xxx xxx
(i) to negotiate, and when necessary, to enter into contracts for and in behalf of the
government, for the bulk purchase of materials, supplies or services for any sectors in the
industry, and to maintain inventories of such materials in order to insure a continuous and
adequate supply thereof and thereby reduce operating costs of such sector;
xxx xxx xxx
(Emphasis supplied)
Clearly, ISA was vested with some of the powers or attributes normally associated with juridical personality.
There is, however, no provision in P.D. No. 272 recognizing ISA as possessing general or comprehensive
juridical personality separate and distinct from that of the Government. The ISA in fact appears to the Court to
be a non-incorporated agency or instrumentality of the Republic of the Philippines, or more precisely of the
Government of the Republic of the Philippines. It is common knowledge that other agencies or
instrumentalities of the Government of the Republic are cast in corporate form, that is to say, are incorporated
agencies or instrumentalities, sometimes with and at other times without capital stock, and accordingly vested
with a juridical personality distinct from the personality of the Republic. Among such incorporated agencies or
instrumentalities are: National Power Corporation;
6
Philippine Ports Authority;
7
National Housing
Authority;
8
Philippine National Oil Company;
9
Philippine National Railways;
10
Public Estates
Authority;
11
Philippine Virginia Tobacco Administration,
12
and so forth. It is worth noting that the term
"Authority" has been used to designate both incorporated and non-incorporated agencies or instrumentalities
of the Government.
We consider that the ISA is properly regarded as an agent or delegate of the Republic of the Philippines. The
Republic itself is a body corporate and juridical person vested with the full panoply of powers and attributes
which are compendiously described as "legal personality." The relevant definitions are found in the
Administrative Code of 1987:
Sec. 2. General Terms Defined. Unless the specific words of the text, or the context as a
whole, or a particular statute, require a different meaning:
(1) Government of the Republic of the Philippines refers to the corporate governmental
entity through which the functions of government are exercised throughout the Philippines,
including, save as the contrary appears from the context, the various arms through which
political authority is made effective in the Philippines, whether pertaining to the autonomous
regions, the provincial, city, municipal or barangay subdivisions or other forms of local
government.
xxx xxx xxx
(4) Agency of the Government refers to any of the various units of the Government,
including a department, bureau, office, instrumentality, or government-owned or
controlled corporation, or a local government or a distinct unit therein.
xxx xxx xxx
(10) Instrumentality refers to any agency of the National Government, not integrated within
the department framework, vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds, and enjoying operational
autonomy, usually through a charter. This term includes regulatory agencies, chartered
institutions and government-owned or controlled corporations.
xxx xxx xxx
(Emphases supplied)
When the statutory term of a non-incorporated agency expires, the powers, duties and functions as well as the
assets and liabilities of that agency revert back to, and are re-assumed by, the Republic of the Philippines, in
the absence of special provisions of law specifying some other disposition thereof such as, e.g., devolution or
transmission of such powers, duties, functions, etc. to some other identified successor agency or
instrumentality of the Republic of the Philippines. When the expiring agency is an incorporated one, the
consequences of such expiry must be looked for, in the first instance, in the charter of that agency and, by way
of supplementation, in the provisions of the Corporation Code. Since, in the instant case, ISA is a non-
incorporated agency or instrumentality of the Republic, its powers, duties, functions, assets and liabilities are
properly regarded as folded back into the Government of the Republic of the Philippines and hence assumed
once again by the Republic, no special statutory provision having been shown to have mandated succession
thereto by some other entity or agency of the Republic.
The procedural implications of the relationship between an agent or delegate of the Republic of the Philippines
and the Republic itself are, at least in part, spelled out in the Rules of Court. The general rule is, of course,
that an action must be prosecuted and defended in the name of the real party in interest. (Rule 3, Section 2)
Petitioner ISA was, at the commencement of the expropriation proceedings, a real party in interest, having
been explicitly authorized by its enabling statute to institute expropriation proceedings. The Rules of Court at
the same time expressly recognize the role of representative parties:
Sec. 3. Representative Parties. A trustee of an expressed trust, a guardian, an executor
or administrator, or a party authorized by statute may sue or be sued without joining the
party for whose benefit the action is presented or defended; but the court may, at any stage
of the proceedings, order such beneficiary to be made a party. . . . . (Emphasis supplied)
In the instant case, ISA instituted the expropriation proceedings in its capacity as an agent or delegate or
representative of the Republic of the Philippines pursuant to its authority under P.D. No. 272. The present
expropriation suit was brought on behalf of and for the benefit of the Republic as the principal of ISA.
Paragraph 7 of the complaint stated:
7. The Government, thru the plaintiff ISA, urgently needs the subject parcels of land for the
construction and installation of iron and steel manufacturing facilities that are indispensable
to the integration of the iron and steel making industry which is vital to the promotion of
public interest and welfare. (Emphasis supplied)
The principal or the real party in interest is thus the Republic of the Philippines and not the National
Steel Corporation, even though the latter may be an ultimate user of the properties involved should
the condemnation suit be eventually successful.
From the foregoing premises, it follows that the Republic of the Philippines is entitled to be substituted in the
expropriation proceedings as party-plaintiff in lieu of ISA, the statutory term of ISA having expired. Put a little
differently, the expiration of ISA's statutory term did not by itself require or justify the dismissal of the eminent
domain proceedings.
It is also relevant to note that the non-joinder of the Republic which occurred upon the expiration of ISA's
statutory term, was not a ground for dismissal of such proceedings since a party may be dropped or added by
order of the court, on motion of any party or on the court's own initiative at any stage of the action and on such
terms as are just.
13
In the instant case, the Republic has precisely moved to take over the proceedings as
party-plaintiff.
In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court,
14
the Court recognized that the
Republic may initiate or participate in actions involving its agents. There the Republic of the Philippines was
held to be a proper party to sue for recovery of possession of property although the "real" or registered owner
of the property was the Philippine Ports Authority, a government agency vested with a separate juridical
personality. The Court said:
It can be said that in suing for the recovery of the rentals, the Republic of the
Philippines acted as principal of the Philippine Ports Authority, directly exercising
the commission it had earlier conferred on the latter as its agent. . . .
15
(Emphasis
supplied)
In E.B. Marcha, the Court also stressed that to require the Republic to commence all over again
another proceeding, as the trial court and Court of Appeals had required, was to generate
unwarranted delay and create needless repetition of proceedings:
More importantly, as we see it, dismissing the complaint on the ground that the
Republic of the Philippines is not the proper party would result in needless delay in
the settlement of this matter and also in derogation of the policy against multiplicity
of suits. Such a decision would require the Philippine Ports Authority to refile the
very same complaint already proved by the Republic of the Philippines and bring
back as it were to square one.
16
(Emphasis supplied)
As noted earlier, the Court of Appeals declined to permit the substitution of the Republic of the Philippines for
the ISA upon the ground that the action for expropriation could not prosper because the basis for the
proceedings, the ISA's exercise of its delegated authority to expropriate, had become legally ineffective by
reason of the expiration of the statutory term of the agent or delegated i.e., ISA. Since, as we have held
above, the powers and functions of ISA have reverted to the Republic of the Philippines upon the termination
of the statutory term of ISA, the question should be addressed whether fresh legislative authority is necessary
before the Republic of the Philippines may continue the expropriation proceedings initiated by its own delegate
or agent.
While the power of eminent domain is, in principle, vested primarily in the legislative department of the
government, we believe and so hold that no new legislative act is necessary should the Republic decide, upon
being substituted for ISA, in fact to continue to prosecute the expropriation proceedings. For the legislative
authority, a long time ago, enacted a continuing or standing delegation of authority to the President of the
Philippines to exercise, or cause the exercise of, the power of eminent domain on behalf of the Government of
the Republic of the Philippines. The 1917 Revised Administrative Code, which was in effect at the time of the
commencement of the present expropriation proceedings before the Iligan Regional Trial Court, provided that:
Sec. 64. Particular powers and duties of the President of the Philippines. In addition to his
general supervisory authority, the President of the Philippines shall have such other specific
powers and duties as are expressly conferred or imposed on him by law, and also, in
particular, the powers and duties set forth in this Chapter.
Among such special powers and duties shall be:
xxx xxx xxx
(h) To determine when it is necessary or advantageous to exercise the right of eminent
domain in behalf of the Government of the Philippines; and to direct the Secretary of Justice,
where such act is deemed advisable, to cause the condemnation proceedings to be begun
in the court having proper jurisdiction. (Emphasis supplied)
The Revised Administrative Code of 1987 currently in force has substantially reproduced the
foregoing provision in the following terms:
Sec. 12. Power of eminent domain. The President shall determine when it is necessary or
advantageous to exercise the power of eminent domain in behalf of the National
Government, anddirect the Solicitor General, whenever he deems the action advisable, to
institute expopriation proceedings in the proper court. (Emphasis supplied)
In the present case, the President, exercising the power duly delegated under both the 1917 and
1987 Revised Administrative Codes in effect made a determination that it was necessary and
advantageous to exercise the power of eminent domain in behalf of the Government of the Republic
and accordingly directed the Solicitor General to proceed with the suit.
17

It is argued by private respondent MCFC that, because Congress after becoming once more the depository of
primary legislative power, had not enacted a statute extending the term of ISA, such non-enactment must be
deemed a manifestation of a legislative design to discontinue or abort the present expropriation suit. We find
this argument much too speculative; it rests too much upon simple silence on the part of Congress and
casually disregards the existence of Section 12 of the 1987 Administrative Code already quoted above.
Other contentions are made by private respondent MCFC, such as, that the constitutional requirement of
"public use" or "public purpose" is not present in the instant case, and that the indispensable element of just
compensation is also absent. We agree with the Court of Appeals in this connection that these contentions,
which were adopted and set out by the Regional Trial Court in its order of dismissal, are premature and are
appropriately addressed in the proceedings before the trial court. Those proceedings have yet to produce a
decision on the merits, since trial was still on going at the time the Regional Trial Court precipitously dismissed
the expropriation proceedings. Moreover, as a pragmatic matter, the Republic is, by such substitution as party-
plaintiff, accorded an opportunity to determine whether or not, or to what extent, the proceedings should be
continued in view of all the subsequent developments in the iron and steel sector of the country including,
though not limited to, the partial privatization of the NSC.
WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 8 October 1991 to the extent
that it affirmed the trial court's order dismissing the expropriation proceedings, is hereby REVERSED and SET
ASIDE and the case is REMANDED to the court a quo which shall allow the substitution of the Republic of the
Philippines for petitioner Iron and Steel Authority and for further proceedings consistent with this Decision. No
pronouncement as to costs.
SO ORDERED.
Romero, Melo, Vitug and Panganiban, JJ., concur.


[G.R. No. 134990. April 27, 2000]
MANUEL M. LEYSON JR., petitioner, vs. OFFICE OF THE OMBUDSMAN, TIRSO ANTIPORDA,
Chairman, UCPB and CIIF Oil Mills, and OSCAR A. TORRALBA, President, CIIF Oil Mills,
respondents. ALEX
D E C I S I O N
BELLOSILLO, J.:
On 7 February 1996 International Towage and Transport Corporation (ITTC), a domestic
corporation engaged in the lighterage or shipping business, entered into a one (1)-year contract
with Legaspi Oil Company, Inc. (LEGASPI OIL), Granexport Manufacturing Corporation
(GRANEXPORT) and United Coconut Chemicals, Inc. (UNITED COCONUT), comprising the Coconut
Industry Investment Fund (CIIF) companies, for the transport of coconut oil in bulk through MT
Transasia. The majority shareholdings of these CIIF companies are owned by the United Coconut
Planters Bank (UCPB) as administrator of the CIIF. Under the terms of the contract, either party
could terminate the agreement provided a three (3)-month advance notice was given to the other
party. However, in August 1996, or prior to the expiration of the contract, the CIIF companies with
their new President, respondent Oscar A. Torralba, terminated the contract without the requisite
advance notice. The CIIF companies engaged the services of another vessel, MT Marilag, operated
by Southwest Maritime Corporation. miso
On 11 March 1997 petitioner Manuel M. Leyson Jr., Executive Vice President of ITTC, filed with
public respondent Office of the Ombudsman a grievance case against respondent Oscar A.
Torralba. The following is a summary of the irregularities and corrupt practices allegedly
committed by respondent Torralba: (a) breach of contract - unilateral cancellation of valid and
existing contract; (b) bad faith - falsification of documents and reports to stop the operation of MT
Transasia; (c) manipulation - influenced their insurance to disqualify MT Transasia; (d)
unreasonable denial of requirement imposed; (e) double standards and inconsistent in favor
of MT Marilag; (f) engaged and entered into a contract with Southwest Maritime Corp. which is
not the owner of MT Marilag, where liabilities were waived and whose paid-up capital is
only P250,000.00; and, (g) overpricing in the freight rate causing losses of millions of pesos to
Cocochem.
[1]

On 2 January 1998 petitioner charged respondent Tirso Antiporda, Chairman of UCPB and CIIF Oil
Mills, and respondent Oscar A. Torralba with violation of The Anti-Graft and Corrupt Practices
Act also before the Ombudsman anchored on the aforementioned alleged irregularities and
corrupt practices. spped
On 30 January 1998 public respondent dismissed the complaint based on its finding that
The case is a simple case of breach of contract with damages which should have
been filed in the regular court. This Office has no jurisdiction to determine the
legality or validity of the termination of the contract entered into by CIIF and ITTC.
Besides the entities involved are private corporations (over) which this Office has
no jurisdiction.
[2]

On 4 June 1998 reconsideration of the dismissal of the complaint was denied. The Ombudsman
was unswayed in his finding that the present controversy involved breach of contract as he also
took into account the circumstance that petitioner had already filed a collection case before the
Regional Trial Court of Manila-Br. 15, docketed as Civil Case No. 97-83354. Moreover, the
Ombudsman found that the filing of the motion for reconsideration on 31 March 1998 was
beyond the inextendible period of five (5) days from notice of the assailed resolution on 19 March
1998.
[3]
miso
Petitioner now imputes grave abuse of discretion on public respondent in dismissing his
complaint. He submits that inasmuch as Philippine Coconut Producers Federation, Inc. (COCOFED)
v. PCGG
[4]
and Republic v. Sandiganbayan
[5]
have declared that the coconut levy funds are public
funds then, conformably with Quimpo v. Tanodbayan,
[6]
corporations formed and organized from
those funds or whose controlling stocks are from those funds should be regarded as government
owned and/or controlled corporations. As in the present case, since the funding or controlling
interest of the companies being headed by private respondents was given or owned by the CIIF as
shown in the certification of their Corporate Secretary,
[7]
it follows that they are government
owned and/or controlled corporations. Corollarily, petitioner asserts that respondents Antiporda
and Torralba are public officers subject to the jurisdiction of the Ombudsman. Sdaadsc
Petitioner alleges next that public respondent's conclusion that his complaint refers to a breach of
contract is whimsical, capricious and irresponsible amounting to a total disregard of its main
point, i. e., whether private respondents violated The Anti-Graft and Corrupt Practices Act when
they entered into a contract with Southwest Maritime Corporation which was grossly
disadvantageous to the government in general and to the CIIF in particular. Petitioner admits that
his motion for reconsideration was filed out of time. Nonetheless, he advances that public
respondent should have relaxed its rules in the paramount interest of justice; after all, the delay
was just a matter of days and he, a layman not aware of technicalities, personally filed the
complaint. Rtcspped
Private respondents counter that the CIIF companies were duly organized and are existing by
virtue of the Corporation Code. Their stockholders are private individuals and entities. In addition,
private respondents contend that they are not public officers as defined under The Anti-Graft and
Corrupt Practices Act but are private executives appointed by the Boards of Directors of the CIIF
companies. They asseverate that petitioner's motion for reconsideration was filed through the
expert assistance of a learned counsel. They then charge petitioner with forum shopping since he
had similarly filed a case for collection of a sum of money plus damages before the trial court.
The Office of the Solicitor General maintains that the Ombudsman approved the recommendation
of the investigating officer to dismiss the complaint because he sincerely believed there was no
sufficient basis for the criminal indictment of private respondents. spped
We find no grave abuse of discretion committed by the Ombudsman. COCOFED v. PCGG referred
to in Republic v. Sandiganbayan reviewed the history of the coconut levy funds. I These funds
actually have four (4) general classes: (a) the Coconut Investment Fund created under R. A. No.
6260;
[8]
(b) the Coconut Consumers Stabilization Fund created under P. D. No. 276;
[9]
(c) the
Coconut Industry Development Fund created under P. D. No. 582;
[10]
and, (d) the Coconut Industry
Stabilization Fund created under P. D. No. 1841.
[11]

The various laws relating to the coconut industry were codified in 1976. On 21 October of that
year, P. D. No. 961
[12]
was promulgated. On 11 June 1978 it was amended by P. D. No. 1468
[13]
by
inserting a new provision authorizing the use of the balance of the Coconut Industry Development
Fund for the acquisition of "shares of stocks in corporations organized for the purpose of engaging
in the establishment and operation of industries x x x commercial activities and other allied
business undertakings relating to coconut and other palm oil indust(ries)."
[14]
From this fund thus
created, or the CIIF, shares of stock in what have come to be known as the "CIIF companies" were
purchased. miso
We then stated in COCOFED that the coconut levy funds were raised by the State's police and
taxing powers such that the utilization and proper management thereof were certainly the
concern of the Government. These funds have a public character and are clearly affected with
public interest.
Quimpo v. Tanodbayan involved the issue as to whether PETROPHIL was a government owned or
controlled corporation the employees of which fell within the jurisdictional purview of the
Tanodbayan for purposes of The Anti-Graft and Corrupt Practices Act. We upheld the jurisdiction
of the Tanodbayan on the ratiocination that -
While it may be that PETROPHIL was not originally "created" as a government-
owned or controlled corporation, after it was acquired by PNOC, which is a
government-owned or controlled corporation, PETROPHIL became a subsidiary of
PNOC and thus shed-off its private status. It is now funded and owned by the
government as, in fact, it was acquired to perform functions related to
government programs and policies on oil, a vital commodity in the economic life
of the nation. It was acquired not temporarily but as a permanent adjunct to
perform essential government or government-related functions, as the marketing
arm of the PNOC to assist the latter in selling and distributing oil and petroleum
products to assure and maintain an adequate and stable domestic supply. Korte
But these jurisprudential rules invoked by petitioner in support of his claim that the CIIF
companies are government owned and/or controlled corporations are incomplete without
resorting to the definition of "government owned or controlled corporation" contained in par.
(13), Sec. 2, Introductory Provisions of the Administrative Code of 1987, i. e., any agency
organized as a stock or non-stock corporation vested with functions relating to public needs
whether governmental or proprietary in nature, and owned by the Government directly or
through its instrumentalities either wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) percent of its capital stock. The definition
mentions three (3) requisites, namely, first, any agency organized as a stock or non-stock
corporation; second, vested with functions relating to public needs whether governmental or
proprietary in nature; and, third, owned by the Government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the
extent of at least fifty-one (51) percent of its capital stock. Sclaw
In the present case, all three (3) corporations comprising the CIIF companies were organized as
stock corporations. The UCPB-CIIF owns 44.10% of the shares of LEGASPI OIL, 91.24% of the
shares of GRANEXPORT, and 92.85% of the shares of UNITED COCONUT.
[15]
Obviously, the below
51% shares of stock in LEGASPI OIL removes this firm from the definition of a government owned
or controlled corporation. Our concern has thus been limited to GRANEXPORT and UNITED
COCONUT as we go back to the second requisite. Unfortunately, it is in this regard that petitioner
failed to substantiate his contentions. There is no showing that GRANEXPORT and/ or UNITED
COCONUT was vested with functions relating to public needs whether governmental or
proprietary in nature unlike PETROPHIL in Quimpo. The Court thus concludes that the CIIF
companies are, as found by public respondent, private corporations not within the scope of its
jurisdiction. Sclex
With the foregoing conclusion, we find it unnecessary to resolve the other issues raised by
petitioner.
A brief note on private respondents' charge of forum shopping. Executive Secretary v. Gordon
[16]
is
instructive that forum shopping consists of filing multiple suits involving the same parties for the
same cause of action, either simultaneously or successively, for the purpose of obtaining a
favorable judgment. It is readily apparent that the present charge will not prosper because the
cause of action herein, i. e., violation of The Anti-Graft and Corrupt Practices Act, is different from
the cause of action in the case pending before the trial court which is collection of a sum of
money plus damages. miso
WHEREFORE, the petition is DISMISSED. The Resolution of public respondent Office of the
Ombudsman of 30 January 1998 which dismissed the complaint of petitioner Manuel M. Leyson
Jr., as well as its Order of 4 June 1998 denying his motion for reconsideration, is AFFIRMED. Costs
against petitioner.
SO ORDERED.apdc
Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.


[G.R. Nos. 147706-07. February 16, 2005]
PEOPLE OF THE PHILIPPINES, petitioner, vs. THE HONORABLE SANDIGANBAYAN (Fifth Division)
and EFREN L. ALAS, respondents.
D E C I S I O N
CORONA, J.:
Does the Sandiganbayan have jurisdiction over presidents, directors or trustees, or managers
of government-owned or controlled corporations organized and incorporated under the
Corporation Code for purposes of the provisions of RA 3019, otherwise known as the Anti-Graft
and Corrupt Practices Act? The petitioner, represented by the Office of the Special Prosecutor
(OSP), takes the affirmative position in this petition for certiorari under Rule 65 of the Rules of
Court. Respondent Efren L. Alas contends otherwise, together with the respondent court.
Pursuant to a resolution dated September 30, 1999 of the Office of the Ombudsman, two
separate informations
[1]
for violation of Section 3(e) of RA 3019, otherwise known as the Anti-
Graft and Corrupt Practices Act, were filed with the Sandiganbayan on November 17, 1999 against
Efren L. Alas. The charges emanated from the alleged anomalous advertising contracts entered
into by Alas, in his capacity as President and Chief Operating Officer of the Philippine Postal
Savings Bank (PPSB), with Bagong Buhay Publishing Company which purportedly caused damage
and prejudice to the government.
On October 30, 2002, Alas filed a motion to quash the informations for lack of jurisdiction,
which motion was vehemently opposed by the prosecution. After considering the arguments of
both parties, the respondent court ruled that PPSB was a private corporation and that its officers,
particularly herein respondent Alas, did not fall under Sandiganbayan jurisdiction. According to
the Sandiganbayan:
After a careful consideration of the arguments of the accused-movant as well as of that of the
prosecution, we are of the considered opinion that the instant motion of the accused is well
taken. Indeed, it is the basic thrust of Republic Act as well as (sic) Presidential Decree No. 1606 as
amended by President Decree No. 1486 and Republic Act No. 7975 and Republic Act No. 8249 that
the Sandiganbayan has jurisdiction only over public officers unless private persons are charged
with them in the commission of the offenses.
The records disclosed that while Philippine Postal Savings Bank is a subsidiary of the Philippine
Postal Corporation which is a government owned corporation, the same is not created by a special
law. It was organized and incorporated under the Corporation Code which is Batas Pambansa Blg.
68. It was registered with the Securities and Exchange Commission under SEC No. AS094-005593
on June 22, 1994 with a lifetime of fifty (50) years. Under its Articles of Incorporation the purpose
for which said entity is formed was primarily for business, xxx
Likewise, a scrutiny of the seven (7) secondary purposes of the corporation points to the
conclusion that it exists for business. Obviously, it is not involved in the performance of a
particular function in the exercise of government power. Thus, its officers and employees are not
covered by the GSIS and are under the SSS law, and actions for reinstatement and backwages are
not within the jurisdiction of the Civil Service Commission but by the National Labor Relations
Commission (NLRC).
The Supreme Court, in the case of Trade Unions of the Philippines and Allied Services vs. National
Housing Corp., 173 SCRA 33, held that the Civil Service now covers only government owned or
controlled corporations with original or legislative charters, those created by an act of Congress or
by special law, and not those incorporated under and pursuant to a general legislation. The
Highest Court categorically ruled that the Civil Service does not include government-owned or
controlled corporation which are organized as subsidiaries of government-owned or controlled
corporation under the general corporation law.
In Philippine National Oil Company Energy Development Corporation vs. Leogardo, 175 SCRA 26,
the Supreme Court emphasized that:
The test in determining whether a government-owned or controlled corporation is subject to the
Civil Service Law is the manner of its creation such that government corporation created by
special charter are subject to its provision while those incorporated under the general corporation
law are not within its coverage.
Likewise in Davao City Water District vs. Civil Service Commission, 201 SCRA 601 it was held that
by government-owned or controlled corporation with original charter we mean government-
owned or controlled corporation created by a special law and not under the Corporation Code of
the Philippines while in Llenes vs. Dicdican, et al., 260 SCRA 207, a public officer has been ruled,
as a person whose duties involve the exercise of discretion in the performance of the function of
government.
Clearly, on the basis of the foregoing pronouncements of the Supreme Court, the accused herein
cannot be considered a public officer. Thus, this Court may not exercise jurisdiction over his act.
[2]

Dissatisfied, the People, through the Office of the Special Prosecutor (OSP), filed this
petition
[3]
arguing, in essence, that the PPSB was a government-owned or controlled corporation
as the term was defined under Section 2(13) of the Administrative Code of 1987.
[4]
Likewise, in
further defining the jurisdiction of the Sandiganbayan, RA 8249 did not make a distinction as to
the manner of creation of the government-owned or controlled corporations for their officers to
fall under its jurisdiction. Hence, being President and Chief Operating Officer of the PPSB at the
time of commission of the crimes charged, respondent Alas came under the jurisdiction of the
Sandiganbayan.
Quoting at length from the assailed resolution dated February 15, 2001, respondent Alas, on
the other hand, practically reiterated the pronouncements made by the respondent court in
support of his conclusion that the PPSB was not created by special law, hence, its officers did not
fall within the jurisdiction of the Sandiganbayan.
[5]

We find merit in the petition.
Section 2(13) of EO 292
[6]
defines government-owned or controlled corporations as follows:
Sec. 2. General Terms Defined Unless the specific words of the text or the context as a whole or
a particular statute, shall require a different meaning:
xxx xxx xxx
(13) government owned or controlled corporations refer to any agency organized as a stock or
non-stock corporation vested with functions relating to public needs whether governmental or
proprietary in nature, and owned by the government directly or indirectly or through its
instrumentalities either wholly, or where applicable as in the case of stock corporations to the
extent of at least 51% of its capital stock: provided, that government owned or controlled
corporations maybe further categorized by the department of the budget, the civil service
commission and the commission on audit for the purpose of the exercise and discharge of their
respective powers, functions and responsibilities with respect to such corporations.
From the foregoing, PPSB fits the bill as a government-owned or controlled corporation, and
organized and incorporated under the Corporation Code as a subsidiary of the Philippine Postal
Corporation (PHILPOST). More than 99% of the authorized capital stock of PPSB belongs to the
government while the rest is nominally held by its incorporators who are/were themselves
officers of PHILPOST. The creation of PPSB was expressly sanctioned by Section 32 of RA 7354,
otherwise known as the Postal Service Act of 1992, for purposes of, among others, to encourage
and promote the virtue of thrift and the habit of savings among the general public, especially the
youth and the marginalized sector in the countryside xxx and to facilitate postal service by
receiving collections and making payments, including postal money orders.
[7]

It is not disputed that the Sandiganbayan has jurisdiction over presidents, directors or
trustees, or managers of government-owned or controlled corporations with original charters
whenever charges of graft and corruption are involved. However, a question arises whether the
Sandiganbayan has jurisdiction over the same officers in government-owned or controlled
corporations organized and incorporated under the Corporation Code in view of the delimitation
provided for in Article IX-B Section 2(1) of the 1987 Constitution which states that:
SEC. 2. (1) The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of
the government, including government-owned or controlled corporations with original charters.
It should be pointed out however, that the jurisdiction of the Sandiganbayan is separate and
distinct from the Civil Service Commission. The same is governed by Article XI, Section 4 of the
1987 Constitution which provides that the present anti-graft court known as the
Sandiganbayan shall continue to function and exercise its jurisdiction as now or hereafter may be
provided by law. This provision, in effect, retained the jurisdiction of the anti-graft court as
defined under Article XIII, Section 5 of the 1973 Constitution which mandated its creation, thus:
Sec. 5. The Batasang Pambansa shall create a special court, to be known as Sandiganbayan, which
shall have jurisdiction over criminal and civil cases involving graft and corrupt practices and such
other offense committed by public officers and employees, including those in government-owned
or controlled corporations, in relation to their office as may be determined by law. (Italics ours)
On March 30, 1995, Congress, pursuant to its authority vested under the 1987 Constitution,
enacted RA 7975
[8]
maintaining the jurisdiction of the Sandiganbayan over presidents, directors or
trustees, or managers of government-owned or controlled corporations without any distinction
whatsoever. Thereafter, on February 5, 1997, Congress enacted RA 8249
[9]
which preserved the
subject provision:
Section 4, Jurisdiction. The Sandiganbayan shall exercise exclusive original jurisdiction in all cases
involving:
a. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-
Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section,
Title VII, Book II of the Revised Penal Code, where one or more of the accused are
officials occupying the following positions in the government, whether in a
permanent, acting or interim capacity, at the time of the commission of the
offense,
(1) Officials of the executive branch occupying the positions of regional
director, and higher, otherwise classified as grade 27 and higher, of the
Compensation and Position Classification Act of 1989 (Republic Act No. 6758)
specifically including:
xxx xxx xxx
(g) Presidents, directors or trustees, or managers of government-
owned or controlled corporations, state universities or educational
institutions or foundations. (Italics ours)
The legislature, in mandating the inclusion of presidents, directors or trustees, or managers
of government-owned or controlled corporations within the jurisdiction of the Sandiganbayan,
has consistently refrained from making any distinction with respect to the manner of their
creation.
The deliberate omission, in our view, clearly reveals the intention of the legislature to include
the presidents, directors or trustees, or managers of both types of corporations within the
jurisdiction of the Sandiganbayan whenever they are involved in graft and corruption. Had it been
otherwise, it could have simply made the necessary distinction. But it did not.
It is a basic principle of statutory construction that when the law does not distinguish, we
should not distinguish. Ubi lex non distinguit nec nos distinguere debemos. Corollarily, Article XI
Section 12 of the 1987 Constitution, on the jurisdiction of the Ombudsman (the governments
prosecutory arm against persons charged with graft and corruption), includes officers and
employees of government-owned or controlled corporations, likewise without any distinction.
In Quimpo v. Tanodbayan,
[10]
this Court, already mindful of the pertinent provisions of the
1987 Constitution, ruled that the concerned officers of government-owned or controlled
corporations, whether created by special law or formed under the Corporation Code, come under
the jurisdiction of the Sandiganbayan for purposes of the provisions of the Anti-Graft and Corrupt
Practices Act. Otherwise, as we emphasized therein, a major policy of Government, which is to
eradicate, or at the very least minimize, the graft and corruption that has permeated the fabric of
the public service like a malignant social cancer, would be seriously undermined. In fact, Section 1
of the Anti-Graft and Corrupt Practices Act embodies this policy of the government, that is, to
repress certain acts not only of public officers but also of private persons constituting graft or
corrupt practices or which may lead thereto.
The foregoing pronouncement has not outlived its usefulness. On the contrary, it has become
even more relevant today due to the rampant cases of graft and corruption that erode the
peoples faith in government. For indeed, a government-owned or controlled corporation can
conceivably create as many subsidiary corporations under the Corporation Code as it might wish,
use public funds, disclaim public accountability and escape the liabilities and responsibilities
provided by law. By including the concerned officers of government-owned or controlled
corporations organized and incorporated under the Corporation Code within the jurisdiction of
the Sandiganbayan, the legislature evidently seeks to avoid just that.
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the assailed
resolution dated February 15, 2001 of the respondent court is hereby REVERSED and SET ASIDE.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, Carpio-Morales, and Garcia, JJ., concur.