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[No. 1051. May 19, 1903.

THE UNITED STATES, complainant and appellee, vs. FRED L. DORR


ET AL., defendants and appellants.

1.CRIMINAL LAW; SEDITION; GOVERNMENT DEFINED.The term


"government" as employed in Act No. 292 of the United States
Philippine Commission is used in the abstract sense of the
existing political system as distinguished from the concrete
organism of the Government.

2.CRIMINAL PROCEDURE; COMPLAINT OR INFORMATION.When


an offense may be committed in any of several different modes,
and the complaint alleges the crime to have been committed in
two or more modes, it is sufficient to prove the offense committed
in any one of them.

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United States vs. Dorr

3.ID.; SEDITION.The publication of an article can not be


punished under Act No. 202 of the United States Philippine
Commission as having seditious tendencies unless it has a
tendency to produce disaffection or a feeling incompatible with a
disposition to remain loyal to the Government and obedient to its
laws.

4.ID.; ID.The publication of an article abusive of the United


States Philippine Commission and its members is not a libel upon
the Government and does not fall within said Act No. 292 of the
United States Philippine Commission.
APPEAL from a judgment of the Court of First Instance of Manila.

The facts are stated in the opinion of the court.

F. G. Waite, for appellants.

Solicitor-General Araneta, for appellee.

LADD, J.:

The defendants have been convicted upon a complaint charging


them with the offense of writing, publishing, and circulating a
scurrilous libel against the Government of the United States and
the Insular Government of the Philippine Islands. The complaint is
based upon section 8 of Act No. 292 of the Commission, which is
as follows:

"Every person who shall utter seditious words or speeches, write,


publish, or circulate scurrilous libels against the Government of
the United States or the Insular Government of the Philippine
Islands, or which tend to disturb or obstruct any lawful officer in
executing his office, or which tend to instigate others to cabal or
meet together for unlawful purposes, or which suggest or incite
rebellious conspiracies or riots, or which tend to stir up the people
against the lawful authorities, or to disturb the peace of the
community, the safety and order of the Government, or who shall
knowingly conceal such evil practices, shall be punished by a fine
not exceeding two thousand dollars or by imprisonment not
exceeding two years, or both, in the discretion of the court."

The alleged libel was published as an editorial in the issue of the


"Manila Freedom" of April 6, 1902, under the caption of "A few
hard facts."

The Attorney-General in his brief indicates the following

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PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

passages of the article as those upon which he relies to sustain


the conviction:

"Sidney Adamson, in a late letter in 'Leslie's Weekly,' has the


following to say of the action of the Civil Commission in
appointing rascally natives to important Government positions:

" 'It is a strong thing to say, but nevertheless true, that the Civil
Commission, through its ex-insurgent office holders, and by its
continual disregard for the records of natives obtained during the
military rule of the Islands, has, in its distribution of offices,
constituted a protectorate over a set of men who should be in jail
or deported. * * * [Reference is then made to the appointment of
one Tecson as justice of the peace.] This is the kind of foolish work
that the Commission is doing all over the Islands, reinstating
insurgents and rogues and turning down the men who have
during the struggle, at the risk of their lives, aided the Americans.'

* * * * * * *

"There is no doubt but that the Filipino office holders of the


Islands are in a good many instances rascals.

* * * * * * *

"The Commission has exalted to the highest positions in the


Islands Filipinos who are alleged to be notoriously corrupt and
rascally, and men of no personal character.
* * * * * * *

"Editor Valdez, of 'Miau,' made serious charges against two of the


native Commissionerscharges against Trinidad H. Pardo de
Tavera, which, if true, would brand the man as a coward and a
rascal, and with what result? * * * [Reference is then made to the
prosecution and conviction of Valdez for libel 'under a law which
specifies that the greater the truth the greater the libel.'] Is it the
desire of the people of the United States that the natives against
whom these charges have been made (which, if true, absolutely
vilify their personal characters) be permitted to retain their seats
on the Civil Commission, the executive body of the Philippine
Government, without an investigation?

* * * * * * *

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United States vs. Dorr

"It is a notorious fact that many branches of the Government


organized by the Civil Commission are rotten and corrupt. The
fiscal system, upon which life, liberty, and justice depends, is
admitted by the Attorney-General himself to be most
unsatisfactory. It is a fact that the Philippine judiciary is far from
being what it should. Neither fiscals nor judges can be persuaded
to convict insurgents when they wish to protect them.

* * * * * * *
"Now we hear all sorts of reports as to rottenness existing in the
province [of Tayabas], and especially the northern end of it; it is
said that it is impossible to secure the conviction of lawbreakers
and outlaws by the native justices, or a prosecution by the native
fiscals.

* * * * * * *

"The long and short of it is that Americans will not stand for an
arbitrary government, especially when evidences of
carpetbagging and rumors of graft are too thick to be pleasant."

We do not understand that it is claimed that the defendants


succeeded in establishing at the trial the truth of any of the
foregoing statements. The only question which we have
considered is whether their publication constitutes an offense
under section 8 of Act No. 292, above cited.

Several allied offenses or modes of committing the same offense


are defined in that section, viz: (1) The uttering of seditious words
or speeches; (2) the writing, publishing, or circulating of scurrilous
libels against the Government of the United States or the Insular
Government of the Philippine Islands; (3) the writing, publishing,
or circulating of libels which tend to disturb or obstruct any lawful
officer in executing his office; (4) or which tend to instigate others
to cabal or meet together for unlawful purposes; (5) or which
suggest or incite rebellious conspiracies or riots; (6) or which tend
to stir up the people against the lawful authorities or to disturb
the peace of the community, the safety and order of the
Government; (7) knowingly concealing such evil practices.

The complaint appears to be framed upon the theory that a


writing, in order to be punishable as a libel under this section,
must be of a scurrilous nature and directed against the
Government of the United States or the Insular Government of the
Philippine Islands, and must, in addition, tend to some one of the
results enumerated in the section. The article in question is
described in the complaint as "a scurrilous libel against the
Government of the United States and the Insular Government of
the Philippine Islands, which tends to obstruct the lawful officers
of the United States and the Insular Government of the Philippine
Islands in the execution of their offices, and which tends to
instigate others to cabal and meet together for unlawful purposes,
and which suggests and incites rebellious conspiracies, and which
tends to stir up the people against the lawful authorities, and
which disturbs the safety and order of the Government of the
United States and the Insular Government of the Philippine
Islands." But it is "a well-settled rule in considering indictments
that where an offense may be committed in any of several
different modes, and the offense, in any particular instance, is
alleged to have been committed in two or more modes specified,
it is sufficient to prove the offense committed in any one of them,
provided that it be such as to constitute the substantive offense"
(Com. vs. Kneeland, 20 Pick., Mass., 206, 215), and the
defendants may, therefore, be convicted if any one of the
substantive charges into which the complaint may be separated
has been made out.

We are all, however, agreed upon the proposition that the article
in question has no appreciable tendency to "disturb or obstruct
any lawful officer in executing his office," or to "instigate" any
person or class of persons "to cabal or meet together for unlawful
purposes," or to "suggest or incite rebellious conspiracies or
riots," or to "stir up the people against the lawful authorities or to
disturb the peace of the community, the safety and order of the
Government" All these various tendencies, which are described in
section 8 of Act No. 292, each one of which is made an element of
a certain form of libel, may be characterized in general terms as
seditious tendencies.
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United States vs. Dorr

This is recognized in the description of the offenses punished by


this section, which is found in the title of the act, where they are
defined as the crimes of "seditious utterances, whether written or
spoken."

Excluding from consideration the offense of publishing "scurrilous


libels against the Government of the United States or the Insular
Government of the Philippine Islands," which may conceivably
stand on a somewhat different footing, the offenses punished by
this section all consist in inciting, orally or in writing, to acts of
disloyalty or disobedience to the lawfully constituted authorities in
these Islands. And while the article in question, which is, in the
main, a virulent attack against the policy of the Civil Commission
in appointing natives to office, may have had the effect of exciting
among certain classes dissatisfaction with the Commission and its
measures, we are unable to discover anything in it which can be
regarded as having a tendency to produce anything like what may
be called disaffection, or, in other words, a state of feeling
incompatible with a disposition to remain loyal to the Government
and obedient to the laws. There can be no conviction, therefore,
for any of the offenses described in the section on which the
complaint is based, unless it is for the offense of publishing a
scurrilous libel against the Government of the United States or the
Insular Government of the Philippine Islands.

Can the article be regarded as embraced within the description of


"scurrilous libels against the Government of the United States or
the Insular Government of the Philippine Islands?" In the
determination of this question we have encountered great
difficulty, by reason of the almost entire lack of American
precedents which might serve as a guide in the construction of
the law. There are, indeed, numerous English decisions, most of
them of the eighteenth century, on the subject of libelous attacks
upon the "Government, the constitution, or the law generally,"
attacks upon the Houses of Parliament, the Cabinet, the
Established Church, and other governmental organisms, but these
decisions are not now accessible to us, and, if they

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PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

were, they were made under such diff erent conditions from those
which prevail at the present day, and are founded upon theories
of government so foreign to those which have inspired the
legislation of which the enactment in question forms a part, that
they would probably afford but little light in the present inquiry. In
England, in the latter part of the eighteenth century, any "written
censure upon public men for their conduct as such," as well as
any written censure "upon the laws or upon the institutions of the
country," would probably have been regarded as a libel upon the
Government. (2 Stephen, History of the Criminal Law of England,
348.) This has ceased to be the law in England, and it is doubtful
whether it was ever the common law of any American State. "It is
true that there are ancient dicta to the effect that any publication
tending to 'possess the people with an ill opinion of the
Government' is a seditious libel (per Holt, C. J., in R. vs. Tuchin,
1704, 5 St Tr., 532, and Ellenborough, C. J., in R. vs. Cobbett,
1804, 29 How. St. Tr., 49), but no one would accept that doctrine
now. Unless the words used directly tend to foment riot or
rebellion or otherwise to disturb the peace and tranquillity of the
Kingdom, the utmost latitude is allowed in the discussion of all
public affairs." (11 Enc. of the Laws of England, 450.) Judge
Cooley says (Const. Lim., 528) : "The English commonlaw rule
which made libels on the constitution or the government
indictable, as it was administered by the courts, seems to us
unsuited to the condition and circumstances of the people of
America, and therefore never to have been adopted in the several
States."

We find no decisions construing the Tennessee statute (Code, sec.


6663), which is apparently the only existing American statute of a
similar character to that in question, and from which much of the
phraseology of the latter appears to have been taken, though with
some essential modifications.

The important question is to determine what is meant in section 8


of Act No. 292 by the expression "the Insular Government of the
Philippine Islands." Does it mean in a general and abstract sense
the existing laws and institutions of the Islands, or does it mean
the aggregate of the individuals by whom the Government of the
Islands is, for the time being, administered? Either sense would
doubtless be admissible.

"We understand, in modern political science, * * * by the term


government, that institution or aggregate of institutions by which
an independent society makes and carries out those rules of
action which are necessary to enable men to live in a social state,
or which are imposed upon the people forming that society by
those who possess the power or authority of prescribing them.
Government is the aggregate of authorities which rule a society.
By ''administration", again, we understand in modern times, and
especially in more or less free countries, the aggregate of those
persons in whose hands the reins of government are for the time
being (the chief ministers or heads of departments)." (Bouvier,
Law Dictionary, 891.) But the writer adds that the terms
"government" and "administration" are not always used in their
strictness, and that "government" is often used for
"administration"

In the act of Congress of July 14, 1798, commonly known as the


"Sedition Act," 'it is made an offense to "write, print, utter, or
publish," or "cause to procure to be written, printed, uttered, or
published," or to "knowingly and willingly assist or aid in writing,
printing, uttering, or publishing any false, scandalous, and
malicious writing or writings against the Government of the
United States, or either House of the Congress of the United
States, or the President of the United States, with intent to
defame the said Government, or either House of the said
Congress, or the said President, or to bring them, or either of
them, into contempt or disrepute, or to excite against them or
either or any of them the hatred of the good people of the United
States," etc. The term "government" would appear to be used
here in the abstract sense of the existing political system, as
distinguished from the concrete organisms of the Government
the Houses of Congress and the Executivewhich are also
specially mentioned.

Upon the whole, we are of the opinion that this is the

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PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

sense in which the term is used in the enactment under


consideration.
It may be said that there can be no such thing as a scurrilous
libel, or any sort of a libel, upon an abstraction like the
Government in the sense of the laws and institutions of a country,
but we think an answer to this suggestion is that the expression
"scurrilous libel" is not used in section 8 of Act No. 292 in the
sense in which it is used in the general libel law (Act No. 277)
that is, in the sense of written defamation of individualsbut in
the wider sense, in which it is applied in the common law to
blasphemous, obscene, or seditious publications in which there
may be no element of defamation whatever. "The word 'libel' as
popularly used, seems to mean only defamatory words; but words
written, if obscene, blasphemous, or seditious, are technically
called libels, and the publication of them is, by the law of England,
an indictable offense." (Bradlaugh vs. The Queen, 3 Q. B. D., 607,
627, per Bramwell, L. 3. See Com. vs. Kneeland, 20 Pick., 206,
211.)

While libels upon forms of government, unconnected with


defamation of individuals, must in the nature of things be of
uncommon occurrence, the offense is by no means an imaginary
one. An instance of a prosecution f or an offense essentially of
this natue is Respublica vs. Dennie, 4 Yeates (Pa.), 267, where the
defendant was indicted "as a factious and seditious person of a
wicked mind and unquiet and turbulent disposition and
conversation, seditiously, maliciously, and willfully intending, as
much as in him lay, to bring into contempt and hatred the
independence of the United States, the constitution of this
Commonwealth and of the United States, to excite popular
discontent and dissatisfaction against the scheme of polity
instituted, and upon trial in the said United States and in the said
Commonwealth, to molest, disturb, and destroy the peace and
tranquillity of the said United States and of the said
Commonwealth, to condemn the principles of the Revolution, and
revile, depreciate, and scandalize the characters of the
Revolutionary patriots and statesmen, to endanger, subvert, and
totally destroy the republican constitutions and free governments
of the said United

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United States vs. Dorr

States and this Commonwealth, to involve the said United States


and this Commonwealth in civil war, desolation, and anarchy, and
to procure by art and force a radical change and alteration in the
principles and forms of the said constitutions and governments,
without the free will, wish, and concurrence of the people of the
said United States and this Commonwealth, respectively," the
charge being that "to fulfill, perfect, and bring to effect his wicked,
seditious, and detestable intentions aforesaid he * * * falsely,
maliciously, factiously, and seditiously did make, compose, write,
and publish the following libel, to wit: 'A democracy is scarcely
tolerable at any period of national history. Its omens are always
sinister and its powers are unpropitious. With all the lights of
experience blazing before our eyes, it is impossible not to
discover the futility of this form of government. It was weak and
wicked at Athens, it was bad in Sparta, and worse in Rome. It has
been tried in France and terminated in despotism. It was tried in
England and rejected with the utmost leaching and abhorrence. It
is on its trial here and its issue will be civil war, desolation, and
anarchy. No wise man but discerns its imperfections; no good man
but shudders at its miseries; no honest man but proclaims its
fraud, and no brave man but draws his sword against its force.
The institution of a scheme of polity so radically contemptible and
vicious is a memorable example of what the villainy of some men
can devise, the folly of others receive, and both establish, in
despite of reason, reflection, and sensation.' "

An attack upon the lawfully established system of civil


government in the Philippine Islands, like that which Dennie was
accused of making upon the republican form of government
lawfully established in the United States and in the State of
Pennsylvania would, we think, if couched in scandalous language,
constitute the precise offense described in section 8 of Act No.
292 as a scurrilous libel against the Insular Government of the
Philippine Islands.

Defamation of individuals, whether holding official positions or


not, and whether directed to their public conduct or to their
private life, may always be adequately punished

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PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

under the general libel law. Defamation of the Civil Commission as


an aggregation, it being "a body of persons definite and small
enough for its individual members to be recognized as such"
(Stephen, Digest of the Criminal Law, art. 277), as well as
defamation of any of the individual members of the Commission
or of the Civil Governor, either in his public capacity or as a
private individual, may be so punished. The general libel law
enacted by the Commission was in force when Act No. 292 was
passed. There was no occasion for any further legislation on the
subject of libels against the individuals by whom the Insular
Government is administeredagainst the Insular Government in
the sense of the aggregate of such individuals. There was
occasion for stringent legislation against seditious words or libels,
and that is the main if not the sole purpose of the section under
consideration. It is not unreasonable to suppose that the
Commission, in enacting this section, may have conceived of
attacks of a malignant or scurrilous nature upon the existing
political system of the United States, or the political system
established in these Islands by the authority of the United States,
as necessarily of a seditious tendency, but it is not so reasonable
to suppose that they conceived of attacks upon the personnel of
the government as necessarily tending to sedition. Had this been
their view it seems probable that they would, like the framers of
the Sedition Act of 1798, have expressly and specifically
mentioned the various public officials and collegiate
governmental bodies defamation of which they meant to punish
as sedition.

The article in question contains no attack upon the governmental


system of the United States, and it is quite apparent that, though
grossly abusive as respects both the Commission as a body and
some of its individual members, it contains no attack upon the
governmental system by which the authority of the United States
is enforced in these Islands. The form of government by a Civil
Commission and a Civil Governor is not assailed. It is the
character of the men who are intrusted with the administration of
the government that the writer is seeking to bring into disrepute
by impugning the purity of their

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United States vs. Daligdig


motives, their public integrity, and their private morals, and the
wisdom of their policy. The publication of the article, therefore, no
seditious tendency being apparent, constitutes no offense under
Act No. 292, section 8.

The judgment of conviction is reversed and the defendants are


acquitted, with costs de oficio.

Arellano, C. J., Torres, Willard, and Mapa, JJ., concur.

Defendants acquitted.

______________ [United States vs. Dorr, 2 Phil. 332(1903)] [Mo.


1049. May 16, 1903.]

THE UNITED STATES, complainant and appellee, vs. FRED L. DORR


ET AL., defendants and appellants.

1.CONSTITUTIONAL LAW; JURY TRIAL.The provisions of the


Constitution of the United States relating to jury trials are not in
force in the Philippine Islands.

2.ID.; ID.; STATUS OF PHILIPPINES.The Philippine Islands


constitute territory which has been acquired by and belongs to
the United States, but differs from those territories which are a
part of the United States with reference to the Constitution.

3.ID.; ID.; ID.The terms of the treaty of Paris ceding the Islands
to the United States did not extend the Constitution to the Islands,
but left the determination of their status to Congress.

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PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr


4.ID.; ID.; ID.The mere cession of the Islands to the United
States only extended here such parts of the Constitution as fall
within the general principles of fundamental limitations in favor of
personal rights formulated in the Constitution and amendments
and also those express provisions which prohibit Congress from
passing laws in contravention thereof under any circumstances;
these do not include the provisions relating to jury trials.

5.ID.; ID.; ID.Congress has passed no law extending here the


provisions of the Constitution relative to jury trials, and in the
absence of laws providing for such trials at the date of their
cession there is no law entitling an accused person to such trial.

6.CRIMINAL LAW; LIBEL; REPORT OF JUDICIAL PROCEEDINGS;


NEWSPAPER HEADLINES.Headlines to newspaper report of
judicial proceeding are "remarks or comments" within meaning of
section 8, Act No. 277 of the United States Philippine Commission,
and are punishable if libelous.

Per WILLARD and LADD, JJ., dissenting:

7.ID.; ID.; ID.; ID.Headlines to a privileged newspaper report of


judicial proceedings, if a fair index and nothing more of the
privileged article, are also privileged.

APPEAL from a judgment of the Court of First Instance of Manila.

The facts are stated in the opinion of the court.

F. G. Waite, for appellants.

Solicitor-General Araneta, for appellee.

COOPER, J.:
On May 23, 1902, a complaint was filed in the Court of First
Instance of the city of Manila against Fred L. Dorr and Edward F.
O'Brien, charging them with the publication of a false and
malicious libel against Seor Benito Legarda, one of the United
States Philippine Commissioners, by placing certain headlines or
caption above an article published in the "Manila Freedom," a
newspaper in the city of Manila, of which the defendant Fred L.
Dorr was the proprietor and the defendant Edward F. O'Brien was
the editor.

The following are the headlines or caption upon which the


prosecution is based:

"Traitor, seducer and perjurer. Sensational allegations against


Commissioner Legarda. Made of record and read

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United States vs. Dorr

in English. Spanish reading waived. Wife would have killed him.


Legarda pale and nervous."

The article over and above which the headlines were placed was a
report of certain judicial proceedings had in the Court of First
Instance of the city of Manila, in the criminal case of the United
States vs. Valdez for the offense of libel,1 and the report was a
copy taken from a document prepared by the attorney for Valdez,
in which the offer was made, as a defense, to prove the truth of
the material allegations contained in and which were the basis of
the complaint against Valdez. The facts offered to be proven were
published in the "Miau," a newspaper of which Valdez was editor,
and related to Seor Legarda, the prosecuting witness in the
Valdez case as well as in this case.

At that time, under the libel law, the truth of the libelous matter
was inadmissible as evidence. The judge of the Court of First
Instance excluded the proof tendered in the document, but
permitted it to be filed in the case, and the copy was taken from it
by one Vogel, the city reporter of the "Manila Freedom." The
report was handed by the reporter to the defendant O'Brien, the
editor of the paper, and the headlines were written by O'Brien,
and the report with the headlines thus prepared was published in
the "Manila Freedom" of date April 16, 1902.

The report seems to have been regarded by the prosecuting


attorney as privileged matter under section 7 of the Libel Act,
and, as before stated, the prosecution is based upon the matter
contained in the headlines.

On August 25, 1902, the defendants were tried and found guilty
of the offense charged in the complaint, and each was sentenced
to six months' imprisonment at hard labor and a fine of $ 1,000,
United States currency. From this judgment the defendants have
appealed to this court.

A demurrer was filed to the complaint, based upon the ground


that the facts charged in the complaint did not constitute a public
offense. This demurrer was overruled by the trial court, and an
exception to the ruling taken by the defendants.

During the course of the proceedings a motion was made by the


defendants asking that they be granted a trial by jury, as provided
for in Article III, section 2, of the Constitution of the United States,
and under the sixth amendment to the Constitution, which motion
was denied by the court, and an exception was also taken to this
ruling.
Before entering into a discussion of the case upon its merits, it
will be necessary to consider the questions of a preliminary
nature which have been raised in the assignment of errors and
brief of counsel for the appellants. The questions submitted may
be embraced within the following propositions:

(1) That by the treaty of peace between the United States and
Spain, ratified on the 11th day of April, 1899, the Philippine
Islands became a part of the United States;

(2) And being a part thereof, they are subject to the provisions of
section 2, Article III, of- the Constitution, and to the provisions
contained in the sixth amendment to the Constitution, by which in
all criminal cases a trial by jury is guaranteed;

(3) That Congress can exercise no power over the person or


property of a citizen beyond what the Constitution confers, nor
deny any right guaranteed to them by the Constitution.

Stated in its simple form, the proposition made is that the


provisions of the Constitution of the United States relating to jury
trials are in force in the Philippine Islands.

The determination of this question involves the consideration of


the political status of these Islands, the power of Congress under
the Constitution, and the nature of the constitutional provisions
relating to jury trials.

The political status of the Philippine Islands has been defined to a


large extent by the decision of the Supreme Court of the United
States in the case of Downes vs. Bidwell (182 U. S., 244), in which
case the status of Puerto Rico was directly involved.

The question in that case was whether merchandise brought into


the port of New York from Puerto Rico, after the ratification of the
treaty of peace with Spain and since

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United States vs. Dorr

the passage of the Foraker Act, is exempt from duty, and involved
the question whether the revenue clauses of the Constitution
extend of their own force to the newly acquired territories from
Spain, and whether the act is in contravention of the unif ormity
clause of the Constitution.

The conclusion was reached that the act in question was not
unconstitutional. In the consideration of the case an exhaustive
review was made of the powers of Congress to govern the
territories belonging to the United States, under the power to
acquire territory by treaty and the incidental right to govern such
territory, and under the clause of section 3, Article IV, of the
Constitution, which vests Congress with the power to dispose of
and make all needful rules and regulations respecting the territory
or other property of the United States. This review was made in
the light of the opinion of contemporaries, the practical
construction placed upon the Constitution by Congress, and the
decisions of the Supreme Court of the United States upon
questions arising thereunder. Distinctions were found to exist in
the application of the Constitution depending upon the relation
which was borne to the National Government whether by a State
or by the territories which belonged to certain States at the time
of the adoption of the Constitution, and which were situated
within the acknowledged limits of the United States, and such
territory as might be acquired by the establishment of a disputed
line; or by those which were acquired by cession from foreign
powers and to which the Constitution was extended by the treaty
under which they were ceded, sanctioned by Congress, or to
which the Constitution was expressly extended by Congressional
act; or by those territories acquired from a foreign power by
treaty, which have not been incorporated as a part of the United
States nor to which has been extended the Constitution by act of
Congress.

The following conclusions are deducible from the decision in that


case:

1. That Puerto Rico (to which the Philippines is equally situated)


did not by the act of cession from Spain to the

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United States vs. Dorr

United States become incorporated in the United States as a part


of it, but became territory pertaining to and belonging to the
United States.

2. That as to such territory Congress may establish a temporary


government, and in so doing it is not subject to all the restrictions
of the Constitution.

3. That the determination of what these restrictions are and what


particular provisions of the Constitution are applicable to such
territories involves an inquiry into the situation of the territory and
its relation to the United States.

4. That the uniformity provided for in the revenue clause of the


Constitution is not one of those restrictions upon Congress in its
government of the territory of Puerto Rico.
What is the character of these restrictions and how are they to be
ascertained and determined? And to what extent is the
Constitution in force and effect in these Islands?

Both Mr. Justice Brown, in delivering the majority opinion, and Mr.
Justice White, in delivering the concurring opinion, refer to these
constitutional restrictions.

In formulating certain propositions as his conclusions, Justice


White uses the following language:

"Whilst, therefore, there is no express or implied limitation on


Congress, in exercising its power to create local governments for
any and all of the territories, by which that body is restrained from
the widest latitude of discretion, it does not follow that there may
not be inherent, although unexpressed, principles which are the
basis of all free government which can not be with impunity
transcended. But this does not suggest that every express
limitation of the Constitution which is applicable has not force, but
only signifies that even in cases where there is no direct
command of the Constitution which applies, there may
nevertheless be restrictions of so f undamental a nature that they
can not be transgressed, although not expressed in so many
words in the Constitution."1

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1 182 U. 8.,290.

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United States vs. Dorr

He also says:

"Undoubtedly, there are general prohibitions in the Constitution in


favor of the liberty and property of the citizen which are not mere
regulations as to the form and manner in which a conceded power
may be exercised, but which are an absolute denial of all
authority under any circumstances or conditions to do particular
acts. In the nature of things, limitations of this character cannot
be under any circumstances transcended, because of the
complete absence of power.

"The distinction which exists between the two characters of


restrictions, those which regulate a granted power and those
which withdraw all authority on a particular subject, has in effect
been always conceded, even by those who most strenuously
insisted on the erroneous principle that the Constitution did not
apply to Congress in legislating for the territories, and was not
operative in such districts of country.''

Mr. Justice Brown in this connection quotes the following language


used by Mr. Justice Bradley in the case of the Mormon Church vs.
United States (136 U.S., 8., 1) :

"Doubtless Congress, in legislating for the Territories, would be


subject to those fundamental limitations in favor of personal
rights which are formulated in the Constitution and its
amendments; but those limitations would exist rather by
inference and the general spirit of the Constitution from which
Congress derives all its powers than by any express and direct
application of its provisions."1

Again he says:

"There are certain principles of natural justice inherent in the


Anglo-Saxon character which need no expression in constitutions
or statutes to give them effect, or to secure dependencies against
legislation manifestly hostile to their real interest."2

The case of the American Insurance Company vs. Canter (1 Pet.,


511) is a very interesting and instructive case which well
illustrates the difference in the application of constitutional
provisions to territories which are a part and within the United
States, and to those acquired from

______________

1 182 U. S., 268.

2 182 U. S., 280.

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PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

a foreign power by cession which have not been incorporated into


the United States, nor have had by act of Congress the
Constitution extended to them.

Florida was ceded by Spain to the United States, as was also the
Philippines.

The status of the Philippines at the present time is very similar to


that of Florida at the date of the act passed by the legislative
council of Florida, the constitutionality of which was considered in
the case of the American Insurance Company vs. Canter. The
statement of the case and the decision is taken from the opinion
of Justice Brown in the case of Downes vs. Bidwell, and is as
follows:

"This case originated in the district court of South Carolina for the
possession of 356 bales of cotton, which had been wrecked on the
coast of Florida, abandoned to the insurance companies, and
subsequently brought to Charleston. Canter claimed the cotton as
bona fide purchaser at a marshal's sale at Key West by virtue of a
decree of a territorial court consisting of a notary and five jurors,
proceeding under an act of the governor and legislative council of
Florida. The case turned upon the question whether the sale by
that court was effectual to divest the interest of the underwriters.
The district judge pronounced the proceedings a nullity, and
rendered a decree from which both parties appealed to the circuit
court. The circuit court reversed the decree of the district court
upon the ground that the proceedings of the court at Key West
were legal, and transferred the property to Canter, the alleged
purchaser.

"The opinion of the circuit court was delivered by Mr. Justice


Johnson of the Supreme Court, and is published in full in a note in
Peter's Reports. It was argued that the Constitution vested the
admiralty jurisdiction exclusively in the General Government; that
the legislature of Florida had exercised an illegal power in
organizing this court, and that its decrees were void. On the other
hand, it was insisted that this was a court of separate and distinct
jurisdiction from the courts of the United States, and as such its
acts were not to be reviewed in a foreign tribunal, such as was the
court of South Carolina; 'that the district

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United States vs. Dorr

of Florida was not part of the United States, but only an


acquisition or dependency, and as such the Constitution per se
had no binding effect in or over it.' 'It becomes, said the court,
'indispensable to the solution of these difficulties, that we should
conceive a just idea of the relation in which Florida stands to the
United States. * * * And, first, it is obvious that there is a material
distinction between the territory now under consideration and
that which is acquired from the aborigines (whether by purchase
or conquest) within the acknowledged limits of the United States,
as also that which is acquired by the establishment of a disputed
line. As to both these, there can be no question that the
sovereignty of the State or territory within which it lies, and of the
United States, immediately attach, producing a complete
subjection to all the laws and institutions of the two governments,
local and general, unless modified by treaty. The question now to
be considered relates to territories previously subject to the
acknowledged jurisdiction of another sovereign, such as was
Florida to the crown of Spain. And on this subject we have the
most explicit proof that the understanding of our public
functionaries is that the government and laws of the United
States do not extend to such territory by the mere act of cession.
For, in the act of Congress of March 30, 1822, section 9, we have
an enumeration of the acts of Congress which are to be held in
force in the territory; and in the tenth section an enumeration, in
the nature of a bill of rights, of privileges and immunities, which
could not be denied to the inhabitants of the territory if they came
under the Constitution by the mere act of cession. * * * These
States, this territory, and future States to be admitted into the
Union are the sole objects of the Constitution; there is no express
provision whatever made in the Constitution for the acquisition or
government of territories beyond those limits.' He further held
that the right of acquiring territory was altogether incidental to
the treaty-making power; that their government was left to
Congress; that the territory of Florida did 'not stand in the relation
of a State to the United States;' that the acts establishing a
territorial government

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United States vs. Dorr

were the constitution of Florida; that while under these acts the
territorial legislature could enact nothing inconsistent with what
Congress had made inherent and permanent in the territorial
government, it had not done so in organizing the court at Key
West."1

Justice Brown further cites from the opinion of Chief Justice


Marshall in this case, in which the latter held "that the judicial
clause of the Constitution, above quoted, did not apply to Florida;
that the judges of the superior courts of Florida held their office
for four years; that 'these courts are not constitutional courts in
which the judicial power conferred by the Constitution on the
General Government can be deposited;' that 'they are legislative
courts, created in virtue of the general right of sovereignty which
exists in the government,' or in virtue of the territorial clause of
the Constitution; that the jurisdiction with which they are invested
is not a part of judicial power of the Constitution, but is conferred
by Congress, in the exercise of those general powers which that
body possesses over the territories of the United States; and that
in legislating for them Congress exercises the combined powers of
the general and of State governments. The act of the territorial
legislature, creating the court in question, was held not to be
'inconsistent with the laws and Constitution of the United States/
and the decree of the circuit court was affirmed."2
Remarking upon this case, Justice Brown says:

"As the only judicial power vested in Congress is to create courts


whose judges shall hold their offices during good behavior, it
necessarily follows that, if Congress authorizes the creation of
courts and the appointment of judges for a limited time, it must
act independently of the Constitution, and upon territory which is
not part of the United States within the meaning of the
Constitution."3

The act of Congress of July 1, 1902, entitled "An Act temporarily


to provide for the administration of the affairs of civil government
in the Philippine Islands, and for other purposes," in section 5
extends to the Philippine Islands

_________________

1 182 U. S., 263.

2 182 U. S., 266.

3 182 U. S., 266.

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United States vs. Dorr

nearly all of the provisions of the Constitution known as the Bill of


Rights. But there was excepted from it the provisions of the
Constitution relating to jury trials contained in section 2, Article III,
and in the sixth amendment.
It becomes necessary for us to determine whether these
provisions of the Constitution of the United States relating to trials
by jury are in force in the Philippine Islands. It is difficult to
determine from the general statements contained in these
decisions what are "those fundamental limitations in favor of
personal rights which are formulated in the Constitution and its
amendments and which exist by inference."

It seems fairly deducible from all that has been said upon this
subject that such provisions are negative in character rather than
of a direct positive or affirmative nature, denying to Congress the
power to pass laws in contravention with such principles of the
Constitution.

If this is their nature and this be the true distinction, it cannot be


said that either Congress or the Philippine Commission have
passed any laws which would come within the inhibition of the
Constitution, or which tend to impair the right to trial by jury in
these Islands.

All that can be said is that, in extending the various provisions of


the Bill of Rights here, Congress has failed to extend those
provisions guaranteeing the right to trial by jury.

We will now turn to the consideration of the question as to


whether a violation of the right to a jury trial falls within the
inhibition arising from the existence of those fundamental
limitations in favor of personal rights mentioned in the decisions.

There are a number of cases cited in Downes vs. Bidwell


establishing the right to trial by jury in territories of the United
States, but these decisions have all arisen in cases relating to
territories which were a part of the United States and had been
incorporated as a part thereof and to which Congress had
expressly extended the Constitution.
In Webster vs. Reid (11 How., 437) it was held that the law of the
Territory of lowa which prohibited the trial

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PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

by jury of certain actions at law, founded on contract to recover


payment for services, was void; but, as it is said, this case is of
little value as bearing upon the question of the extension of the
Constitution to that Territory, inasmuch as the organic law of the
Territory of lowa enacted by Congress by its express provision
extended to lowa the laws of the United States, including the
ordinance of 1787 (which provided expressly for jury trials), so far
as they were applicable; and the case was put upon this ground.

In Callem vs. Wilson (127 U. S., 540) the defendant had been
convicted without jury trial, in the District of Columbia, but the
District of Columbia was not only within and a part of the United
States but had formed a part of the original States of Virginia and
Maryland.

In the case of Springville vs. Thomas (166 U. S., 707) it was held
that a verdict returned by less than the whole number of jurors
was invalid, because in contravention of the seventh amendment
to the Constitution and the act of Congress of April 7, 1874, which
provide that no party shall be deprived of the right of trial by jury
in cases cognizable at common law. This is, as stated by Mr.
Justice Brown, "obviously true with respect to Utah, since the
organic act of that Territory had expressly extended to it the
Constitution and laws of the United States."1
The other decisions cited by counsel for the appellants can all be
traced to the same principle; that is, that where Congress has
extended the laws and the Constitution to the territories, then
Congress would be inhibited by the Constitution from enacting a
law depriving persons living in such territories from the right to
trial by jury.

The only case which we have been able to discover arising under
an act of Congress, and which deprived a party of the right to a
trial by jury at a place where the Constitution had not been
extended by express provision, is the case of In re Ross (140 U. S.,
453). This was a case in which the American consular tribunal in
Japan,

_______________

1 182 U. S., 270.

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United States vs. Dorr

created by act of Congress under treaty with the Government of


Japan and vested with jurisdiction, to be exercised and enforced in
accordance with the laws of the United States, to try Americans,
had, in the exercise of this jurisdiction, convicted the defendant of
the crime of murder, and he was sentenced by that court to the
penalty of death.

It was held that "the guaranties it (the Constitution) affords


against accusation of capital or infamous crimes, except by
indictment or presentment by a grand jury, and for an impartial
trial by a jury when thus accused, apply only to citizens and
others within the United States, or who are brought there for trial
for alleged offenses committed elsewhere, and not to residents
and temporary sojourners abroad."1

It seems from this decision that the powers of Congress to enact a


law which would deprive a person of the right to a trial by jury is
expressly recognized, and that such legislation does not come
within the fundamental limitations in favor of personal rights, for
this act of Congress which operated upon citizens of the United
States abroad is recognized as a valid act of Congress.

The act is saved from the constitutional inhibition by reason that


in such country the Constitution of the United States does not
extend, and is not in force there, but the decision in this case
nevertheless establishes the doctrine that there is not upon
Congress an absolute and total inhibition under any and all
circumstances to enact a law in which a person is deprived of the
right to a trial by jury.

It may be further observed that if it should be held that the


constitutional provision guaranteeing the right to trial by jury has
been introduced here by the simple act of cession, there is no law
in existence to give such provision effect.

Trial by jury was unknown to the law in force in these Islands prior
to the date of cession, nor has the Philippine Commission passed
any law which would give it effect. Such provisions of a
constitution as those relating to trial by jury can hardly be
regarded as self-executing. It

________________

1 140 U.S., 464.


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PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

is necessary that there should be some legislation carrying them


into effect, such as laws prescribing the qualifications of persons
for jury duty, for the organization of juries and provisions of a like
character.

Suppose the Constitution has been extended here by force of the


cession of territory and that it should be held that there could be
no legal conviction for crime in the Philippines on account of the
absence of the law prescribing the qualifications of jurors or for
the organization of juries, and Congress, in the exercise of its
sound judgment, after a careful examination of the conditions
prevailing in such territory and in the exercise of its undoubted
right to govern the territory, should reach the conclusion that an
efficient territorial government could not be conducted in which
convictions for crime are dependent upon the verdict of juries, by
reason of the hostility of the inhabitants of such country to the
constituted authorities, or the lack of the qualification of the
people of the country or an extensive portion of it to perform jury
service, and should refuse to enact any law for jury trials, the
criminal laws in such event must remain unenforced and a state
of anarchy would be the result. In such case the question
assumes very much the nature of a political question, and the
judicial department might well hesitate to interfere indirectly with
Congress in the exercise of its judgment, and in the exercise of its
broad discretion in the government of a territory so situated.

It is contended, also, by counsel for the defendants, that Congress


could not lawfully authorize the Philippine Commission to enact
the libel law passed by it on October 24, 1901, under which the
defendants have been convicted. The objection to the law is
based upon the theory of the division of the Federal Government
into three branches, executive, legislative, and judicial, and that
the powers of legislation vested in Congress to make laws can not
be delegated by that department to the judgment, wisdom, or
patriotism of any other body or authority.

While the authorities cited in support of the general proposition


maintain the doctrine, there are well-known exceptions to the
general rule not referred to in these decisions, for the reason that
the decision of the case did not require their consideration. A well-
known exception is that of municipal corporations, upon which the
powers of legislation are commonly bestowed.

The case in question forms an exception to this general rule


equally well established. Congress, in the exercise of its power to
make rules and regulations for the government of the territories,
has often delegated the power of legislation to the territorial
government. The case of American Insurance Company vs. Canter
(1 Pet, 511), before cited, originated under an act of the governor
and legislative council of Florida, organizing a court and vesting in
it admiralty jurisdiction, and in which the jurisdiction of the court
was sustained by the Supreme Court of the United States.

Speaking of the power of Congress in creating territorial


governments, it is said in the case of De Lima vs. Bidwell (182 U.
S., 1) that "the power to establish territorial government has been
too long exercised by Congress and acquiesced in by the Supreme
Court to be deemed an unsettled question."

We reach the conclusion in this case:

1. That while the Philippine Islands constitute territory which has


been acquired by and belongs to the United States, there is a
difference between such territory and the territories which are a
part of the United States with reference to the Constitution of the
United States.

2. That the Constitution was not extended here by the terms of


the treaty of Paris, under which the Philippine Islands were
acquired from Spain. By the treaty the status of the ceded
territory was to be determined by Congress.

3. That the mere act of cession of the Philippines to the United


States did not extend the Constitution here, except such parts as
fall within the general principles of fundamental limitations in
favor of personal rights formulated in the Constitution and its
amendments, and which exist rather by inference and the general
spirit of the Constitution, and except those express provisions of
the Constitution which prohibit Congress from passing laws in
their contravention under any circumstances; that the provisions
contained in the Constitution relating to jury trials do not fall
within either of these exceptions, and, consequently, the right to
trial by jury has not been extended here by the mere act of the
cession of the territory.

4. That Congress has passed no law extending here the provision


of the Constitution relating to jury trials, nor were any laws in
existence in the Philippine Islands, at the date of their cession, for
trials by jury, and cousequently there is no law in the Philippine
Islands entitling the defendants in this case to such trial; that the
Court of First Instance committed no error in overruling their
application for a trial by jury.

We also reach the conclusion that the Philippine Commission is a


body expressly recognized and sanctioned by act of Congress,
having the power to pass laws, and has the power to pass the
libel law under which the defendants were convicted.

We will now pass to the third assignment of error, which is that


the headlines or caption of the article charged to be libelous were
legitimate deductions from a previous report of a public judicial
proceeding and were insufficient to constitute the offense of libel.

The testimony shows that the defendant Fred L. Dorr was the
proprietor, and that the defendant Edward F. O'Brien was the
editor, of the "Manila Freedom;" that the article upon which the
complaint is founded was published in the issue of that paper on
the 16th of April, 1902; that the privileged statements or report of
the judicial proceedings, the headlines of which are the basis of
the prosecution, arose on the trial of the case of the United States
vs. Valdez, in the Court of First Instance in the city of Manila, in
which case Valdez was charged with the offense of libel, the
complaining witness in that case being Seor Legarda, who was
also the complaining witness in this case; that counsel for the
defendant Valdez prepared a written statement of certain facts
and offered to prove the truth of these statements if permitted by
the court.

A copy of this statement was made by the reporter of

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United States vs. Dorr

the "Manila Freedom"one Vogelwhich, having been presented


to the defendant O'Brien, the editor, the latter prepared the
headlines or caption set forth in the complaint.

The attorney for the defendants, under his assignment of errors,


makes the proposition that the headlines or caption was a
legitimate deduction from the privileged report of the judicial
proceedings, and as such was itself a privileged publication. This
proposition is succinctly made and is easily understood; no
material facts are in dispute; our law of libel is contained in the
few sections in which the law upon this subject is concisely and
clearly stated, and renders it unnecessary to refer to text-books or
decisions of the courts of other jurisdictions. Thus the labors of
the court have been simplified in the determination of the case.

Section 1 of Act No. 277, Philippine Commission, gives the


following definition of libel:

"A libel is a malicious defamation, expressed either in writing,


printing, or by signs or pictures, or the like, or public theatrical
exhibitions, tending to blacken the memory of one who is dead, or
to impeach the honesty, virtue, or reputation, or publish the
alleged or natural defects of one who is alive and thereby expose
him to public hatred, contempt, or ridicule."

Did the matter contained in these headlines or caption have a


tendency to impeach the honesty, virtue, and reputation of the
injured party? We need not stop to discuss this question.

Was it a malicious defamation? This appears equally plain, for


section 3 is as follows:

"An injurious publication is presumed to have been malicious if no


justifiable motive for making it is shown."

No attempt has been made by the defendants to show a


justifiable motive, and the established presumption of law that
the publication was malicious must prevail. Nor has there been
any attempt made to show the truth of the matter contained in
the headlines.

But it is attempted to bring the headlines or caption within the


exception of privileged matter.

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PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

Section 7 of the act defines this character of privileged matter as


follows:

"No reporter, editor, or proprietor of any newspaper is liable to


any prosecution for a fair and true report of any judicial,
legislative, or other public official proceedings, or of any
statement, speech, argument, or debate in the course of the
same, except upon proof of malice in making such report, which
shall not be implied from the mere fact of publication."

Section 8 reads as follows:

"Libelous remarks or comments connected with matter privileged


by the last section receive no privilege by reason of being so
connected."

It follows, therefore, that the matter is libelous; that it was a


malicious publication as defined by law. The only question that
remains to be considered is, Were those headlines or caption
"remarks" or "comments" on the privileged matter?

The word "comment" is defined by Webster as a "remark,


observation, or criticism; gossip, discourse, talk; a note or
observation intended to explain, illustrate or criticise the meaning
of a writing, book, etc. Explanation, annotation, exposition."

The word "remark'' is defined by him as "an expression in speech


or writing of something remarked or noticed.

The mention of that which is worthy of attention or notice. A


casual observation, comment, or statement."
The headlines or caption comes within the definition of "remarks"
as given by Webster, in that it is "the mention of that which is
worthy of attention or notice," and they also fall within the
definition of the word "comment" defined as "a note or
observation intended to explain."

The defendants' counsel denominates the character of the


headlines or caption as a "legitimate deduction from the
privileged report."

The word "deduction" is defined by Webster as "that which is


deduced, or drawn from premises by a process of reason;
inference; acquisition."

It seems from these definitions that the word "deduction" convoys


about the same meaning as the words "comment" and " remark";
at least it would be as objectionable

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United States vs. Dorr

to make injurious deductions as to make injurious comments or


remarks.

To say that the headlines or caption is not a remark or comment


but an "epitome" or "index" of what is contained in the privileged
article is simply a play upon words, and it is useless to follow this
line of argument further.

The intention of the statute, as shown in sections 7 and 8, is that


the privileged matter should be a fair and true report, and must
stand alone as such. If headlines or captions are used, the matter
contained in them must not be remarks or comments of a libelous
nature.

If by any process additional significance is added, either by


display letters or by the arrangement of catchwords, under
whatever name they may be designated, it comes within the
denunciation of the statute.

That the headlines were not a part of the report prepared by


Vogel, the reporter who was present in the court and who made a
copy of the report, is shown in the testimony.

The defendant O'Brien, who, so far as the testimony shows, knew


nothing about the matter contained in the report except that
acquired by the reading of it after it was delivered to him, made
the headlines or caption.

It is said that it is the common practice in the United States to


make such headlines in display letters to render the necessary
assistance to the reader in determining whether he cares to read
the article.

It is immaterial what the real intention of those who write such


headlines may be; if such caption and headlines are libelous, the
writer must bear the consequences.

The law declares the motive of the writer, in the absence of proof
of justifiable motive and the truth of the matter, to be malicious.

The decisions of some of the courts of the United States have held
that an index of words contained in the privileged matter, when
fairly and truly made, will partake of the nature of the article
indexed; but, as we have shown, our law does not permit this. Nor
is it possible to reach the conclusion that the words contained in
the headlines are a fair index. No idea can be gathered from these
headlines of the real nature of what is contained in the published
article.
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PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

The privileged report was a written statement prepared by the


attorney in the Valdez case, in which an offer was made to prove
the truth of certain statements regarded as material in the
defense of the case and which was by the court excluded. This
was the general nature of the matter contained in the report. Can
anyone, by reading the headlines or caption, form any conception
as to the real nature of the document to which the headlines have
been prefixed?

It is also said that the headlines in this case are not worse than
the matter contained in the report. This may be admitted as true,
but in the eyes of the law there is a distinction. The injurious
matter contained in the report is regarded by the law as protected
by a privilege which should be extended to the report of judicial
proceedings, but here the privilege ends.

It is unnecessary to inquire why this distinction should be made. It


is sufficient that the law so makes it.

It is stated that there is not a word contained in the headlines or


caption which is not found in the privileged report. We have
attempted to show that this is immaterial. But this statement is in
fact incorrect. The sentences "sensational allegations against
Commissioner Legarda, made of record and read in English;
Spanish reading waived; wife would have killed him; Legarda pale
and nervous," are not found in the report. Nor can the sentence
"Legarda pale and nervous" even be deduced from anything
contained in the report, nor does it appear from the testimony to
have been in fact true. When the statement in writing was offered
and read before the court, according to the testimony in the case,
Seor Legarda was not at that time present in court.

We will notice briefly the character of the caption and headlines,


the effect of which can well be imagined.

The copy of the "Manila Freedom" containing the article is


attached to the record. An examination of it shows that the words
"traitor, seducer, and perjurer" were printed in large display
letters, and were of a size sufficient in the use of these words to
cover a space equal to that of three columns across the paper.
They were

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United States vs. Dorr

placed at the top of the first page of the paper. The other words
were in smaller type, but much larger than the ordinary type. It is
hard to conceive language stronger than that contained in the
three words "traitor, seducer, and perjurer."

No more effectual means could be adopted to destroy the good


name and fame of a person. More significant words can not be
found in the English language to impeach the honesty, reputation,
and virtue. By skillful selection the sting of the entire document
has been placed in the caption and headlines in such a manner
that in a literal sense "he who runs may read."

"We conclude that the publication of the caption and headlines in


the "Manila Freedom," upon which the information is based,
constituted the offense of libel; that the judgment is sustained by
the evidence; that the defendants, Fred L. Dorr and Edward F.
O'Brien, are guilty of the offense charged in the information; that
no error was committed in the trial of the case prejudicial to the
rights of the defendants, and that the judgment of the Court of
First Instance should be affirmed, with costs against the
defendants. It is so ordered.

Arellano, C. J., Torres and Mapa, JJ., concur.

WILLARD, J., with whom concurs LADD, J., dissenting:

The case presents two questions: (1) Were the headlines


privileged, and (2) if they were, was there express malice in
publishing them?

1. The important part of the article in question, and the only part
which contained any libelous matter, was the offer to prove
contained therein. This offer was actually made a part of the
record of the case on trial in the Court of First Instance. Under
section 7 of the libel law, the defendants had the right to publish
it if they did so without malice. The Government recognized this
right when it limited the charge in the complaint to the headlines
of the article, and it is not and can not be claimed that the
defendants are guilty of libel for publishing the article itself.

290

290

PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

Nothing could be worse or more libelous than the statements


contained in this offer. I do not wish to give them currency by
copying them here, but it is necessary to say that it was distinctly
charged in this offer, in so many words, that the complaining
witness in the case "seduced'' a girl living in his house. It was also
distinctly charged therein that he had added to his other crimes
those of treason and perjury. For the publication of these most
grave and unfounded charges the defendants are not prosecuted.

They are, however, prosecuted for placing over the article certain
headlines.

That headlines to a privileged article may be used can not be


doubted. The public must be able to get some idea of what a
newspaper article contains without reading it entirely through.
And it is not claimed that the defendants had not a right to put a
proper heading to this report. The question is, Was the one
actually used proper?

If the heading is a fair index, and nothing more, of the article, it is


as much privileged as the article itself. If it expresses the opinion
of the editor on the statements in the article, it is not privileged
as to such expressions. Such expressions of opinion are called in
our law comments and remarks. The rule is well illustrated in this
case, The words "Spanish reading waived" is a mere statement of
what the article contains. It expresses no opinion of the editor
upon any part of it. On the contrary, the word " sensational" in
connection with the word "alle-gations" is a comment or remark
and is not privileged. It says that in the opinion of the editor the
allegations made in the offer are sensational. It is not an index of
any statement of fact made in the article, but is an expression of
opinion upon such facts.

The headline "Legarda pale and nervous" can perhaps be


considered as an expression of opinion, although in this respect
there is a statement of fact to this effect. But this is unimportant,
for these words, even if not privileged, are not libelous. Neither is
the word "sensational" libelous.
It is claimed that the words "Traitor, seducer, perjurer"

291

VOL. 2, MAY 16, 1903

291

United States vs. Dorr

are not an index of the article, but are an expression of the


opinion of the editor that the complaining witness was a traitor,
seducer, and perjurer.

In order to determine this question it is necessary to consider the


whole of the headline and to consider it with reference to the
article itself. The mechanical necessities of newspaper
composition generally forbid the employment of complete
grammatical sentences in headlines. They must of necessity be
elliptical. The reader does not expect to find the whole thought
contained in the first two or three isolated words. It is necessary
to look at the whole of the headlines to ascertain this.

The case at bar illustrates this proposition. The first line consisting
of these three words of itself means nothing. The words are not
spoken of any person. In order to find out to whom they refer it is
necessary to go to the line below, in which, while it is learned that
they refer to Seor Legarda, it is also seen at the same time that
they were allegations made against him.

The necessity of reading the whole of the headlines in order to get


the meaning of the isolated words is illustrated by the other half
of this same page. On the first line are the words "Situation in
Hongkong." On the next line are the words "Health authorities
fighting the Asiatic cholera epidemic." The first line does not show
what feature of the situation in Hongkong is treated of in the
article. The second lines does not show where the health
authorities are taking action. It is only by reading them together
that one learns what the article is about.

Fairly construed, the headlines in question say that sensational


allegations of being a traitor, seducer, and perjurer have been
made against Commissioner Legarda. A person knowing nothing
about the case or the parties to it, reading the whole of the
headlines, could get no other idea from it. Omitting the word
"sensational" which has already been considered, this statement
is a fair index of the offer to prove which, as has been said before,
was the principal part of the article and the only libelous part.
That these crimes were plainly and distinctly, and in those very
words, alleged against him is shown by a reading of

292

292

PHILIPPINE REPORTS ANNOTATED

United States vs. Dorr

the offer to prove. It is difficult to see how anyone could make a


fair index of that offer without using those words. That was all
there was of it.

The result upon this branch of the case is that the headlines are
nothing more than a fair index of the article and are therefore
privileged with exception of the words "sensational" and "Legarda
pale and nervous," which are not libelous.

2. What has been said already leaves out of consideration the


question of malice.

By the express terms of section 7, if the defendants published this


judicial record with express malice, they are guilty.
The Government claims that there was express malice. It is not
apparent why, with such a claim, the Government did not
prosecute the defendants for publishing the article itself, for, as
we have said, it is infinitely worse in its details than the headlines.

The article with the headlines being privileged, the burden of


proving express malice was on the Government.

It relied upon two kinds of evidence. It claimed that the size of


type and the arrangement of the headlines proved malice. There
would be some force to this claim were it not for the fact that the
other headlines on the same page, to which we have referred, are
in the same size of type and the arrangement of the subheads is
identical with the one in question. Each one takes up one-half of
the page. Any presumption of malice in the use of large type for
the words "Traitor, etc.," is to my mind conclusively rebutted by
the use of the same size in printing the words "'Situation in
Hongkong/'

An examination of other numbers of this paper, offered in


evidence during the trial, shows that this size of type was in
frequent use for headlines of the most indifferent character.

The only other evidence introduced consisted of articles in other


numbers of the same paper relating to the same matter. These
stated the gravity of the charges made; the condition of the law in
regard to the presentation of the truth as a defense, and urged
that an investigation be had

293

VOL. 2, MAY 16, 1903

293

Benedicto vs. De la Rama


for the purpose of showing whether the charges were true or not.
There was no other proof of express malice.

It was proved at the trial that neither of the defendants knew


Commissioner Legarda even by sight. There was no evidence that
they had ever had dealings of any kind with him.

The newspaper articles do not show any express malice, and any
inference of that kind which could be drawn from them is, to my
mind, overcome by the proof that the defendants did not know
the person whom they are charged with having maliciously
libeled.

In conclusion it may be said that, while the defendants are not


guilty, the person who made this offer in court is, for the reasons
stated in my concurring opinion in the case of the United States
vs. Lerma,1 and if prosecuted for this libel could, as far as
appears from the record in this case, have been convicted.

The judgment should be reversed and the defendants acquitted.

Judgment affirmed.

_____________ [United States vs. Dorr, 2 Phil. 269(1903)]

500

SUPREME COURT REPORTS ANNOTATED

Mecano vs. Commission on Audit

G.R. No. 103982.December 11, 1992.*

ANTONIO A. MECANO, petitioner, vs. COMMISSION ON AUDIT,


respondent.

Statutes; Administrative Code of 1987; Implied repeal.In the


case of the two Administrative Codes in question, the
ascertainment of whether or not it was the intent of the
legislature to supplant the old Code with the new Code partly
depends on the scrutiny of the repealing clause of the new Code.
This provision is found in Section 27, Book VII (Final Provisions) of
the Administrative Code of 1987 which reads: Sec. 27. Repealing
Clause.All laws, decrees, orders, rules and regulations, or
portions thereof, inconsistent with this Code are hereby repealed
or modified accordingly. The question that should be asked is:
What is the nature of this repealing clause? It is certainly not an
express repealing clause because it fails to identify or designate
the act or acts that are intended to be repealed. Rather, it is an
example of a general repealing provision, as stated in Opinion No.
73, S. 1991. It is a clause which predicates the intended repeal
under the condition that a substantial conflict must be found in
existing and prior acts. The failure to add a specific repealing
clause indicates that the intent was not to repeal any existing law,
unless an irreconcilable inconsistency and repugnancy exist in the
terms of the new and old laws. This latter situation falls under the
category of an implied repeal.

Same; Same; Same.There are two categories of repeal by


implication. The first is where provisions in the two acts on the
same subject matter are in an irreconcilable conflict, the later act
to the extent of the conflict constitutes an implied repeal of the
earlier one. The second is if the later act covers the whole subject
of the earlier one and is clearly intended as a substitute, it will
operate to repeal the earlier law. Implied repeal by irreconcilable
inconsistency takes place when the two statutes cover the same
subject matter; they are so clearly inconsistent and incompatible
with each other that they cannot be reconciled or harmonized;
and both cannot be given effect, that is, that one law cannot be
enforced without nullifying the other. Comparing the two Codes, it
is apparent that the new Code does not cover nor attempt to
cover the entire subject matter of the old Code. There are several
matters treated in the old Code which are not found
_______________

* EN BANC.

501

VOL. 216, DECEMBER 11, 1992

501

Mecano vs. Commission on Audit

in the new Code, such as the provisions on notaries public, the


leave law, the public bonding law, military reservations, claims for
sickness benefits under Section 699, and still others.

Same; Same; Same.Lastly, it is a well-settled rule of statutory


construction that repeals of statutes by implication are not
favored. The presumption is against inconsistency and
repugnancy for the legislature is presumed to know the existing
laws on the subject and not to have enacted inconsistent or
conflicting statutes. This Court, in a case, explains the principle in
detail as follows: Repeals by implication are not favored, and will
not be decreed unless it is manifest that the legislature so
intended. As laws are presumed to be passed with deliberation
with full knowledge of all existing ones on the subject, it is but
reasonable to conclude that in passing a statute it was not
intended to interfere with or abrogate any former law relating to
some matter, unless the repugnancy between the two is not only
irreconcilable, but also clear and convincing, and flowing
necessarily from the language used, unless the later act fully
embraces the subject matter of the earlier, or unless the reason
for the earlier act is beyond peradventure renewed. Hence, every
effort must be used to make all acts stand and if, by any
reasonable construction, they can be reconciled, the later act will
not operate as a repeal of the earlier.

Administrative Code of 1917; Allowances in case of injury, death


or sickness incurred in performance of duty; Payment of
compensation under Employees Compensation Program does not
bar recovery under Sec. 699 of the Revised Administrative Code.
Regarding respondents contention that recovery under this
subject section shall bar the recovery of benefits under the
Employees Compensation Program, the same cannot be upheld.
The second sentence of Article 173, Chapter II, Title II (dealing on
Employees Compensation and State Insurance Fund), Book IV of
the Labor Code, as amended by P.D. 1921, expressly provides that
the payment of compensation under this Title shall not bar the
recovery of benefits as provided for in Section 699 of the Revised
Administrative Code x x x whose benefits are administered by the
system (meaning SSS or GSIS) or by other agencies of the
government.

PETITION for certiorari to review the decision of the Commission


on Audit.

The facts are stated in the opinion of the Court.

502

502

SUPREME COURT REPORTS ANNOTATED

Mecano vs. Commission on Audit

CAMPOS, JR., J.:


Antonio A. Mecano, through a petition for certiorari, seeks to
nullify the decision of the Commission on Audit (COA, for brevity)
embodied in its 7th Indorsement, dated January 16, 1992,
denying his claim for reimbursement under Section 699 of the
Revised Administrative Code (RAC), as amended, in the total
amount of P40,831.00.

Petitioner is a Director II of the National Bureau of Investigation


(NBI). He was hospitalized for cholecystitis from March 26, 1990
to April 7, 1990, on account of which he incurred medical and
hospitalization expenses, the total amount of which he is claiming
from the COA.

On May 11, 1990, in a memorandum to the NBI Director, Alfredo


S. Lim (Director Lim, for brevity), he requested reimbursement for
his expenses on the ground that he is entitled to the benefits
under Section 6991 of the RAC, the pertinent provisions of which
read:

Sec. 699. Allowances in case of injury, death, or sickness


incurred in performance of duty.When a person in the service of
the national government or in the service of the government of a
province, city, municipality or municipal district is so injured in the
performance of duty as thereby to receive some actual physical
hurt or wound, the proper Head of Department may direct that
absence during any period of disability thereby occasioned shall
be on full pay, though not more than six months, and in such case
he may in his discretion also authorize the payment of the
medical attendance, necessary transportation, subsistence and
hospital fees of the injured person. Absence in the case
contemplated shall be charged first against vacation leave, if any
there be.

xxx xxx

In case of sickness caused by or connected directly with the


performance of some act in the line of duty, the Department head
may in his discretion authorize the payment of the necessary
hospital fees.

Director Lim then forwarded petitioners claim, in a 1st


Indorsement dated June 22, 1990, to the Secretary of Justice,

________________

1 As amended by R.A. No. 1232 dated June 7, 1955.

503

VOL. 216, DECEMBER 11, 1992

503

Mecano vs. Commission on Audit

along with the comment, bearing the same date, of Gerarda


Galang, Chief, LED of the NBI, recommending favorable action
thereof. Finding petitioners illness to be service-connected, the
Committee on Physical Examination of the Department of Justice
favorably recommended the payment of petitioners claim.

However, then Undersecretary of Justice Silvestre H. Bello III, in a


4th Indorsement dated November 21, 1990, returned petitioners
claim to Director Lim, having considered the statements of the
Chairman of the COA in its 5th Indorsement dated 19 September
1990, to the effect that the RAC being relied upon was repealed
by the Administrative Code of 1987.

Petitioner then re-submitted his claim to Director Lim, with a copy


of Opinion No. 73, S. 19912 dated April 26, 1991 of then Secretary
of Justice Franklin M. Drilon (Secretary Drilon, for brevity) stating
that the issuance of the Administrative Code did not operate to
repeal or abrogate in its entirety the Revised Administrative Code,
including the particular Section 699 of the latter.

On May 10, 1991, Director Lim, under a 5th Indorsement


transmitted anew Mecanos claim to then Undersecretary Bello for
favorable consideration. Under a 6th Indorsement, dated July 2,
1991, Secretary Drilon forwarded petitioners claim to the COA
Chairman, recommending payment of the same. COA Chairman
Eufemio C. Domingo, in his 7th Indorsement of January 16, 1992,
however, denied petitioners claim on the ground that Section 699
of the RAC has been repealed by the Administrative Code of 1987,
solely for the reason that the same section was not restated nor
re-enacted in the Administrative Code of 1987. He commented,
however, that the claim may be filed with the Employees
Compensation Commission, considering that the illness of
Director Mecano occurred after the effectivity of the
Administrative Code of 1987.

Eventually, petitioners claim was returned by Undersecretary of


Justice Eduardo Montenegro to Director Lim under a 9th
Indorsement dated February 7, 1992, with the advice that
petitioner elevate the matter to the Supreme Court if he so

_______________

2 Rollo, pp. 26-30

504

504

SUPREME COURT REPORTS ANNOTATED

Mecano vs. Commission on Audit


desires.

On the sole issue of whether or not the Administrative Code of


1987 repealed or abrogated Section 699 of the RAC, this petition
was brought for the consideration of this Court.

Petitioner anchors his claim on Section 699 of the RAC, as


amended, and on the aforementioned Opinion No. 73, S. 1991 of
Secretary Drilon. He further maintains that in the event that a
claim is filed with the Employees Compensation Commission, as
suggested by respondent, he would still not be barred from filing
a claim under the subject section. Thus, the resolution of whether
or not there was a repeal of the Revised Administrative Code of
1917 would decide the fate of petitioners claim for
reimbursement.

The COA, on the other hand, strongly maintains that the


enactment of the Administrative Code of 1987 (Exec. Order No.
292) operated to revoke or supplant in its entirety the Revised
Administrative Code of 1917. The COA claims that from the
whereas clauses of the new Administrative Code, it can be
gleaned that it was the intent of the legislature to repeal the old
Code. Moreover, the COA questions the applicability of the
aforesaid opinion of the Secretary of Justice in deciding the
matter. Lastly, the COA contends that employment-related
sickness, injury or death is adequately covered by the Employees
Compensation Program under P.D. 626, such that to allow
simultaneous recovery of benefits under both laws on account of
the same contingency would be unfair and unjust to the
Government.

The question of whether a particular law has been repealed or not


by a subsequent law is a matter of legislative intent. The
lawmakers may expressly repeal a law by incorporating therein a
repealing provision which expressly and specifically cites the
particular law or laws, and portions thereof, that are intended to
be repealed.3 A declaration in a statute, usually in its repealing
clause, that a particular and specific law, identified by its number
or title, is repealed is an express repeal; all others are implied
repeals.4

________________

3 School Dist. No. 45 vs. Board of County of Comira, 141 Kan. 108.

4 AGPALO, STATUTORY CONSTRUCTION 289 (1986).

505

VOL. 216, DECEMBER 11, 1992

505

Mecano vs. Commission on Audit

In the case of the two Administrative Codes in question, the


ascertainment of whether or not it was the intent of the
legislature to supplant the old Code with the new Code partly
depends on the scrutiny of the repealing clause of the new Code.
This provision is found in Section 27, Book VII (Final Provisions) of
the Administrative Code of 1987 which reads:

Sec. 27. Repealing Clause.All laws, decrees, orders, rules and


regulations, or portions thereof, inconsistent with this Code are
hereby repealed or modified accordingly.

The question that should be asked is: What is the nature of this
repealing clause? It is certainly not an express repealing clause
because it fails to identify or designate the act or acts that are
intended to be repealed.5 Rather, it is an example of a general
repealing provision, as stated in Opinion No. 73, S. 1991. It is a
clause which predicates the intended repeal under the condition
that a substantial conflict must be found in existing and prior acts.
The failure to add a specific repealing clause indicates that the
intent was not to repeal any existing law, unless an irreconcilable
inconsistency and repugnancy exist in the terms of the new and
old laws.6 This latter situation falls under the category of an
implied repeal.

Repeal by implication proceeds on the premise that where a


statute of later date clearly reveals an intention on the part of the
legislature to abrogate a prior act on the subject, that intention
must be given effect.7 Hence, before there can be a repeal, there
must be a clear showing on the part of the lawmaker that the
intent in enacting the new law was to abrogate the old one. The
intention to repeal must be clear and manifest;8 otherwise, at
least, as a general rule, the later act is to be construed as a
continuation of, and not a substitute for, the first act and will
continue so far as the two acts are the same from

_________________

5 Iloilo Palay and Corn Planters Association, Inc. vs. Feliciano, 13


SCRA 377 (1965).

6 CRAWFORD, CONSTRUCTION OF STATUTE 631 (1940 ed.).

7 Posadas vs. National City Bank, 296 U.S. 497, 80 L. Ed. 351
(1936)

8 Maceda vs. Macaraig, 197 SCRA 771 (1991).

506

506

SUPREME COURT REPORTS ANNOTATED


Mecano vs. Commission on Audit

the time of the first enactment.9

There are two categories of repeal by implication. The first is


where provisions in the two acts on the same subject matter are
in an irreconcilable conflict, the later act to the extent of the
conflict constitutes an implied repeal of the earlier one. The
second is if the later act covers the whole subject of the earlier
one and is clearly intended as a substitute, it will operate to
repeal the earlier law.10

Implied repeal by irreconcilable inconsistency takes place when


the two statutes cover the same subject matter; they are so
clearly inconsistent and incompatible with each other that they
cannot be reconciled or harmonized; and both cannot be given
effect, that is, that one law cannot be enforced without nullifying
the other.11

Comparing the two Codes, it is apparent that the new Code does
not cover not attempt to cover the entire subject matter of the old
Code. There are several matters treated in the old Code which are
not found in the new Code, such as the provisions on notaries
public, the leave law, the public bonding law, military
reservations, claims for sickness benefits under Section 699, and
still others.

Moreover, the COA failed to demonstrate that the provisions of


the two Codes on the matter of the subject claim are in an
irreconcilable conflict. In fact, there can be no such conflict
because the provision on sickness benefits of the nature being
claimed by petitioner has not been restated in the Administrative
Code of 1987. However, the COA would have Us consider that the
fact that Section 699 was not restated in the Administrative Code
of 1987 meant that the same section had been repealed. It
further maintained that to allow the particular provisions not
restated in the new Code to continue in force argues against the
Code itself. The COA anchored this argument on the whereas
clause of the 1987 Code, which states:

WHEREREAS, the effectiveness of the Government will be


enhanced by a new Administrative Code which incorporates in a

______________

9 Supra, note 7.

10 Supra, note 4.

11 Villegas vs. Subido, 41 SCRA 190 (1971).

507

VOL. 216, DECEMBER 11, 1992

507

Mecano vs. Commission on Audit

unified document the major structural, functional and procedural


principles and rules of governance; and

xxx x x x

It argues, in effect, that what is contemplated is only one Code


the Administrative Code of 1987. This contention is untenable.

The fact that a later enactment may relate to the same subject
matter as that of an earlier statute is not of itself sufficient to
cause an implied repeal of the prior act, since the new statute
may merely be cumulative or a continuation of the old one.12
What is necessary is a manifest indication of legislative purpose
to repeal.13
We come now to the second category of repealthe enactment of
a statute revising or codifying the former laws on the whole
subject matter. This is only possible if the revised statute or code
was intended to cover the whole subject to be a complete and
perfect system in itself. It is the rule that a subsequent statute is
deemed to repeal a prior law if the former revises the whole
subject matter of the former statute.14 When both intent and
scope clearly evince the idea of a repeal, then all parts and
provisions of the prior act that are omitted from the revised act
are deemed repealed.15 Furthermore, before there can be an
implied repeal under this category, it must be the clear intent of
the legislature that the later act be the substitute to the prior
act.16

According to Opinion No. 73, S. 1991 of the Secretary of Justice,


what appears clear is the intent to cover only those aspects of
government that pertain to administration, organization and
procedure, understandably because of the many changes that
transpired in the government structure since the enactment of
the RAC decades of years ago. The COA challenges the weight
that this opinion carries in the determination of this

________________

12 Valera vs. Tuason, 80 Phil. 823 (1948).

13 Jalandoni vs. Endaya, 55 SCRA 261 (1974).

14 People vs. Almuete, 69 SCRA 410, 414 (1976).

15 People vs. Benuya, 61 Phil. 208 (1916).

16 Supra, note 9.

508
508

SUPREME COURT REPORTS ANNOTATED

Mecano vs. Commission on Audit

controversy inasmuch as the body which had been entrusted with


the implementation of this particular provision has already
rendered its decision. The COA relied on the rule in administrative
law enunciated in the case of Sison vs. Pangramuyen17 that in
the absence of palpable error or grave abuse of discretion, the
Court would be loathe to substitute its own judgment for that of
the administrative agency entrusted with the enforcement and
implementation of the law. This will not hold water. This principle
is subject to limitations. Administrative decisions may be
reviewed by the courts upon a showing that the decision is
vitiated by fraud, imposition or mistake.18 It has been held that
Opinions of the Secretary and Undersecretary of Justice are
material in the construction of statutes in pari materia.19

Lastly, it is a well-settled rule of statutory construction that


repeals of statutes by implication are not favored.20 The
presumption is against inconsistency and repugnancy for the
legislature is presumed to know the existing laws on the subject
and not to have enacted inconsistent or conflicting statutes.21

This Court, in a case, explains the principle in detail as follows:


Repeals by implication are not favored, and will not be decreed
unless it is manifest that the legislature so intended. As laws are
presumed to be passed with deliberation with full knowledge of all
existing ones on the subject, it is but reasonable to conclude that
in passing a statute it was not intended to interfere with or
abrogate any former law relating to some matter, unless the
repugnancy between the two is not only ir-

_______________
17 84 SCRA 364 (1978).

18 Jaculina vs. National Police Commission, 200 SCRA 489 (1991);


Greenhills Mining Co. vs. Office of the President, 163 SCRA 350
(1988).

19 Philippine Global Communications, Inc. vs. Relova, 145 SCRA


385 (1986).

20 National Power Corporation vs. Hon. Zain B. Angas, G.R. Nos.


60225-26, May 8, 1992; Maceda vs. Macaraig, 197 SCRA 771
(1991); Maddumba vs. Government Service Insurance System,
182 SCRA 281 (1990); Larga vs. Ranada, Jr., 164 SCRA 18 (1988);
De Jesus vs. People, 120 SCRA 760 (1983).

21 U.S. vs. Palacio, 33 Phil. 208 (1916).

509

VOL. 216, DECEMBER 11, 1992

509

Mecano vs. Commission on Audit

reconcilable, but also clear and convincing, and flowing


necessarily from the language used, unless the later act fully
embraces the subject matter of the earlier, or unless the reason
for the earlier act is beyond peradventure renewed. Hence, every
effort must be used to make all acts stand and if, by any
reasonable construction, they can be reconciled, the later act will
not operate as a repeal of the earlier.22

Regarding respondents contention that recovery under this


subject section shall bar the recovery of benefits under the
Employees Compensation Program, the same cannot be upheld.
The second sentence of Article 173, Chapter II, Title II (dealing on
Employees Compensation and State Insurance Fund), Book IV of
the Labor Code, as amended by P.D. 1921, expressly provides that
the payment of compensation under this Title shall not bar the
recovery of benefits as provided for in Section 699 of the Revised
Administrative Code x x x whose benefits are administered by the
system (meaning SSS or GSIS) or by other agencies of the
government.

WHEREFORE, premises considered, the Court resolves to GRANT


the petition; respondent is hereby ordered to give due course to
petitioners claim for benefits. No costs.

SO ORDERED.

Narvasa (C.J.), Cruz, Feliciano, Padilla, Bidin, Grio-Aquino,


Regalado, Davide, Jr., Romero, Nocon, Bellosillo and Melo, JJ.,
concur.

Gutierrez, Jr., J., In the result.

Petition granted.

Note.Repeal by implication is not favored unless it is manifest


that the legislature so intended (Maceda vs. Macaraig, Jr., 197
SCRA 771).

o0o

________________

22 Smith, Bell & Co. vs. Estate of Maronilla, 41 Phil. 557 (1916).
[Mecano vs. Commission on Audit, 216 SCRA 500(1992)]

282

SUPREME COURT REPORTS ANNOTATED


Leveriza vs. Intermediate Appellate Court

No. L-66614. January 25, 1988.*

PRIMITIVO LEVERIZA, FE LEVERIZA, PARUNGAO & ANTONIO C.


VASCO, petitioners, vs. INTERMEDIATE APPELLATE COURT, MOBIL
OIL PHILIPPINES & CIVIL AERONAUTICS ADMINISTRATION,
respondents.

Contracts; Interpretation; Public Officers; Rule that mistakes of


government personnel should not affect public interest.The
billing of the petitioners by the Accounting Department of the CAA
if indeed it transpired, after the cancellation of Contract A is
obviously an error. However, this Court has already ruled that the
mistakes of government personnel should not affect public
interest. In San Mauricio Mining Company v. Aricheta (105 SCRA
391, 422), it has been held that as a matter of law rooted in the
protection of public interest, and also as a general policy to
protect the government and the people, errors of government
personnel in the performance of their duties should never deprive
the people of the right to rectify such error and recover what
might be lost or be bartered away in any actuation, deal or
transaction concerned. In the case at bar, the lower court in its
decision which has been affirmed by the Court of Appeals,
ordered the CAA to refund to the petitioners the amount of rentals
which was not due from them with 6% interest per annum until
fully paid.

Same; Same; Statutory Construction; When the words and


language of documents is clear and plain or readily
understandable by an ordinary reader thereof, there is absolutely
no room for interpretation or construction anymore.In Contract
A, it was categorically stated that it is the lessee (petitioner)
who will manage and operate the gasoline station. The fact that
Mobil Oil was mentioned in that contract was clearly not intended
to give approval to a sublease between petitioners and said
company but rather to insure that in the arrangements to be
made between them, it must be understood that after the

_______________

* THIRD DIVISION.

283

VOL. 157, JANUARY 25, 1988

283

Leveriza vs. Intermediate Appellate Court

expiration of the lease contract, whatever improvements have


been constructed in the leased premises shall be relinquished to
CAA. Thus, this Court held that the primary and elementary rule
of construction of documents is that when the words or language
thereof is clear and plain or readily understandable by any
ordinary reader thereof, there is absolutely no room for
interpretation or construction anymore. (San Mauricio Mining
Company v. Ancheta, supra).

Same; Same; Same; Administrative Law; Under 567 of the


Revised Administrative Code, the Civil Aeronautics Administration
has the authority to enter into Contracts of Lease for the
government.Under 567 of the Revised Administrative Code,
such contract of lease must be executed: (1) by the President of
the Philippines, or (2) by an officer duly designated by him or (3)
by an officer expressly vested by law. It is readily apparent that in
the case at bar, the Civil Aeronautics Administration has the
authority to enter into Contracts of Lease for the government
under the third category. Thus, as correctly ruled by the Court of
Appeals, the Civil Aeronautics Administration has the power to
execute the deed or contract involving leases of real properties
belonging to the Republic of the Philippines, not because it is an
entity duly designated by the President but because the said
authority to execute the same is, by law expressly vested in it.

Same; Same; Same; Same; General legislation must give way to


special legislation on the same subject.In this regard, this Court
ruled that another basic principle of statutory construction
mandates that general legislation must give way to special
legislation on the same subject, and generally be so interpreted
as to embrace only cases in which the special provisions are not
applicable (Sto. Domingo v. De los Angeles, 96 SCRA 139), that
specific statute prevails over a general statute (De Jesus v.
People, 120 SCRA 760) and that where two statutes are of equal
theoretical application to a particular case, the one designed
therefor specially should prevail (Wil Wilhensen, Inc. v. Baluyot, 83
SCRA 38).

PETITION for certiorari to review the decision of the Intermediate


Appellate Court, Castro-Bartolome, J.

The facts are stated in the opinion of the Court.

BIDIN, J.:

This is a Petition for Review on certiorari seeking the reversal of


the decision of the Intermediate Appellate Court, Third Division**
dated February 29, 1984 in AC-G.R. No. CV No. 61705 entitled
Mobil Oil Philippines, Inc., plaintiff-appellee vs. Primitivo Leveriza
Parungao, Antonio C. Vasco and Civil Aeronautics Administration,
defendants-appellants; Primitivo Leveriza, Fe Leveriza Parungao
and Antonio C. Leveriza, cross-defendant, affirming in toto the
decision of the trial court dated April 6, 1976.
As found by the trial court and adopted by the Intermediate
Appellate Court, the facts of this case are as follows:

Around three contracts of lease resolve the basic issues in the


instant case. These three contracts are as follows:

First Contract.For purposes of easy reference and brevity, this


contract shall be referred to hereinafter as Contract A. This is a
CONTRACT OF LEASE, executed between the REPUBLIC OF THE
PHILIPPINES, represented by Defendant CIVIL AERONAUTICS
ADMINISTRATION, as lessor, and ROSARIO C. LEVERIZA, as lessee,
on April 2, 1965, over a certain parcel of land at the MIA area,
consisting of approximately 4,502 square meters, at a monthly
rental of P450.20, for a period of 25 years, (Exhibit A, Exhibit I-
Leverizas, Exhibit I-CAA).

Second Contract.For purposes of easy references and brevity,


this contract shall be referred to hereinafter as Contract B. This is
a LEASE AGREEMENT, executed between ROSARIO C. LEVERIZA,
as lessor, and Plaintiff MOBIL OIL PHILIPPINES, INC., as lessee on
May 21, 1965, over 3,000 square meters of that SAME Parcel of
land subject of Contract A above mentioned, at a monthly rental
of P1,500.00, for a period of 25 years (Exhibit B, Exhibit 4-
Leverizas).

Third Contract.For purposes of easy reference and brevity, this


contract shall be referred to hereinafter as Contract C. This is a
LEASE AGREEMENT, executed between Defendant CIVIL
AERONAUTICS ADMINISTRATION, as lessor, and plaintiff MOBIL OIL
PHILIPPINES, INC., as lessee, on June 1, 1968 over that SAME
parcel of land (Lot A, on plan being a portion of Parcel, Psu 2031),
containing an area of 3,000 square meters more or less, at a
monthly rental of P.25 per square meter for the second 200
square meters, and P.20 per square meter for the rest, for a
period of 29 (sic) years. (Exhibit C).
There is no dispute among the parties that the subject matter of
the three contracts of lease above mentioned, Contract A,
Contract B, and Contract C, is the same parcel of land, with the
noted difference that

_______________

** Penned by Justice Floreliana Castro-Bartolome, and concurred


by Justices Jorge R. Coquia and Mariano A. Zosa.

285

VOL. 157, JANUARY 25, 1988

285

Leveriza vs. Intermediate Appellate Court

while in Contract A, the area leased is 4,502 square meters, in


Contract B and Contract C, the area has been reduced to 3,000
square meters. To summarize:

Contract Aa lease contract of April 2, 1965 between the


Republic of the Philippines, represented by Defendant Civil
Aeronautics Administration and Rosario C. Leveriza over a parcel
of land containing an area of 4,502 square meters, for 25 years.

Contract Ba lease contract (in effect a sublease) of May 21,


1965 between defendant Rosario C. Leveriza and plaintiff Mobil
Oil Philippines, Inc. over the same parcel of land, but reduced to
3,000 square meters for 25 years; and

Contract Ca lease contract of June 1, 1968 between defendant


Civil Aeronautics Administration and plaintiff Mobil Oil Philippines,
Inc., over the same parcel of land, but reduced to 3,000 square
meters, for 25 years.
It is important to note, for a clear understanding of the issues
involved, that it appears that defendant Civil Aeronautics
Administration as LESSOR, leased the same parcel of land, for
durations of time that overlapped to two lessees, to wit: (1)
Defendant Rosario C. Leveriza, and that plaintiff Mobil Oil
Philippines, Inc., as LESSEE, leased the same parcel of land from
two lessors, to wit: (1) defendant Rosario C. Leveriza and (2)
defendant Civil Aeronautics Administration, Inc., for durations of
time that also overlapped.

For purposes of brevity defendant Civil Aeronautics


Administration shall be referred to hereinafter as defendant CAA.

Rosario C. Leveriza, the lessee in Contract A and the lessor in


Contract B, is now deceased. This is the reason why her
successor-in-interest, her heirs, are sued, namely: Defendants
Primitivo Leveriza, her second husband, (now also deceased), Fe
Leveriza Parungao, her daughter by her second husband, and
Antonio C. Vasco, her son by her first husband. For purposes of
brevity, these defendants shall be referred to hereinafter as
Defendants Leveriza.

Plaintiff Mobil Oil Philippines, Inc., shall be referred to hereinafter


simply as the Plaintiff. (pp. 95-99, Record on Appeal).

Plaintiff in this case seeks the rescission or cancellation of


Contract A and Contract B on the ground that Contract A from
which Contract B is derived and depends has already been
cancelled by the defendant Civil Aeronautics Administration and
maintains that Contract C with the defendant CAA is the only valid
and subsisting contract insofar as the parcel of land, subject to
the present litigation is concerned. On the other hand, defendants
Leverizas claim that Contract A which is their contract with CAA
has never been legally cancelled and still valid and subsisting;
that it is Contract C between plaintiff and defendant CAA which
should be declared void.
Defendant CAA asserts that Exhibit A is still valid and
subsisting because its cancellation by Guillermo Jurado was
ineffective and asks the court to annul Contract A because of the
violation committed by defendant Leveriza in leasing the parcel of
land to plaintiff by virtue of Contract B without the consent of
defendant CAA. Defendant CAA further asserts that Contract C
not having been approved by the Director of Public Works and
Communications is not valid. x x x

xxx xxx xxx

After trial, the lower court render judgment on April 6, 1976 the
dispositive part of which reads:

WHEREFORE, after having thus considered the evidence of all


the parties, testimonial and documentary, and their memoranda
and reply-memoranda, this Court hereby renders judgment:

1. Declaring Contract A as having been validly cancelled on June


28, 1966, and has therefore ceased to have any effect as of that
date;

2. Declaring that Contract B has likewise ceased to have any


effect as of June 28, 1966 because of the cancellation of Contract
A;

3. Declaring that Contract C was validly entered into on June 1,


1968, and that it is still valid and subsisting;

4. Ordering defendant CAA to refund to defendants Leverizas the


amount of P32,189.30 with 6% per annum until fully paid;

5. Ordering defendants Leverizas to refund to plaintiff the amount


of P48,000.00 with 6% interest per annum until fully paid;

6. Dismissing defendants Leverizas four counterclaims against


plaintiff;
7. Dismissing defendants Leverizas cross-claim against defendant
CAA;

8. Dismissing defendant CAAs counterclaim against plaintiff;

9. Dismissing defendant CAAs counterclaim against defendant


Leverizas.

No pronouncements as to costs.

On June 2, 1976, defendant Leveriza filed a motion for new trial


on the ground of newly discovered evidence, lack of jurisdiction of
the court over the case and lack of evidentiary support of the
decision which was denied in the order of November 12, 1976
(Rollo, p. 17).

On July 27, 1976, the CAA filed a Motion for Reconsideration,


averring that because the lot lease was properly registered in the
name of the Republic of the Philippines, it was only the President
of the Philippines or an officer duly designated by him who could
execute the lease contract pursuant to Sec. 567 of the Revised
Administrative Code; that the Airport General Manager has no
authority to cancel Contract A, the contract entered into between
the CAA and Leveriza, and that Contract C between the CAA and
Mobil was void for not having been approved by the Secretary of
Public Works and Communications. Said motion was however
denied on November 12, 1976 (Rollo, p. 18).

On appeal, the Intermediate Appellate Court, being in full accord


with the trial court, rendered a decision on February 29, 1984, the
dispositive part of which reads:

WHEREFORE, finding no reversible error in the decision of the


lower court dated April 6, 1976, the same is hereby affirmed in
toto.

Hence, this petition.


The petitioners raised the following assignment of errors:

THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT


THE ADMINISTRATOR OF THE CIVIL AERONAUTICS
ADMINISTRATION (CAA) HAD THE STATUTORY AUTHORITY TO
LEASE, EVEN WITHOUT APPROVAL OF THE THEN SECRETARY OF
PUBLIC WORKS AND COMMUNICATIONS, REAL PROPERTY
BELONGING TO THE REPUBLIC OF THE PHILIPPINES.

II

THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT


THE ADMINISTRATOR OF THE CIVIL AERONAUTICS
ADMINISTRATION HAD STATUTORY AUTHORITY, WITHOUT THE
APPROVAL OF THE THEN SECRETARY OF PUBLIC WORKS AND
COMMUNICATIONS, TO CANCEL A LEASE CONTRACT OVER REAL
PROPERTY OWNED BY THE REPUBLIC OF THE PHILIPPINES, WHICH
CONTRACT WAS APPROVED, AS REQUIRED BY LAW, BY THE
SECRETARY.

III

THE INTERMEDIATE APPELLATE COURT ERRED WHEN IT

288

288

SUPREME COURT REPORTS ANNOTATED

Leveriza vs. Intermediate Appellate Court


RULED THAT THE CONTRACT OF SUBLEASE (CONTRACT B)
ENTERED INTO BETWEEN PETITIONERS PREDECESSOR-IN-
INTEREST AND RESPONDENT MOBIL OIL PHILIPPINES, INC. WAS
WITHOUT THE CONSENT OF THE ADMINISTRATOR OF THE CIVIL
AERONAUTICS ADMINISTRATION.

The petition is devoid of merit.

There is no dispute that Contract A at the time of its execution


was a valid contract. The issue therefore is whether or not said
contract is still subsisting after its cancellation by CAA on the
ground of a sublease executed by petitioners with Mobil Oil
Philippines without the consent of CAA and the execution of
another contract of lease between CAA and Mobil Oil Philippines
(Contract C).

Petitioners contend that Contract A is still subsisting because


Contract B is a valid sublease and does not constitute a ground
for the cancellation of Contract A, while Contract C, a
subsequent lease agreement between CAA and Mobil Oil
Philippines is null and void, for lack of approval by the
Department Secretary. Petitioners anchor their position on
Sections 567 and 568 of the Revised Administrative Code which
require among others, that subject contracts should be executed
by the President of the Philippines or by an officer duly designated
by him, unless authority to execute the same is by law vested in
some other officer (Petition, Rollo, pp. 15-16).

At the other extreme, respondent Mobil Oil Philippines asserts that


Contract A was validly cancelled on June 28, 1966 and so was
Contract B which was derived therefrom. Accordingly, it
maintains that Contract C is the only valid contract insofar as
the parcel of land in question is concerned and that approval of
the Department Head is not necessary under Section 32 (par. 24)
of the Republic Act 776 which expressly vested authority to enter
into such contracts in the Administrator of CAA (Comment; Rollo,
p. 83).

On its part, respondent Civil Aeronautics Administration took the


middle ground with its view that Contract A is still subsisting as
its cancellation is ineffective without the approval of the
Department Head but said contract is not enforceable because of
petitioners violation of its terms and conditions by entering into
Contract B of sublease without the consent of CAA. The CAA
further asserts that Contract C not having been approved by the
Secretary of Public Works and Communications, is not valid (Rollo,
p. 43). However, in its comment filed with the Supreme Court, the
CAA made a complete turnabout adopting the interpretation and
ruling made by the trial court which was affirmed by the
Intermediate Appellate Court (Court of Appeals), that the CAA
Administrator has the power to execute the deed or contract of
lease involving real properties under its administration belonging
to the Republic of the Philippines without the approval of the
Department Head as clearly provided in Section 32, paragraph
(24) of Republic Act 776.

The issue narrows down to whether or not there is a valid ground


for the cancellation of Contract A.

Contract A was entered into by CAA as the lessor and the


Leverizas as the lessee specifically for the purpose of operating
and managing a gasoline station by the latter, to serve vehicles
going in and out of the airport.

As regards prior consent of the lessor to the transfer of rights to


the leased premises, the provision of paragraph 7 of said Contract
reads in full:

7. The Party of the Second part may transfer her rights to the
leased premises but in such eventuality, the consent of the Party
of the First Part shall first be secured. In any event, such transfer
of rights shall have to respect the terms and conditions of this
agreement.

Paragraph 8 provides the sanction for the violation of the above-


mentioned terms and conditions of the contract. Said paragraph
reads:

8. Failure on the part of the Party of the Second Part to comply


with the terms and conditions herein agreed upon shall be
sufficient for revocation of this contract by the Party of the First
Part without need of judicial demand.

It is not disputed that the Leverizas (lessees) entered into a


contract of sublease (Contract B) with Mobil Oil Philippines
without the consent of CAA (lessor). The cancellation of the
contract was made in a letter dated June 28, 1966 of Guillermo P.
Jurado, Airport General Manager of CAA addressed to Rosario
Leveriza, as follows:

290

290

SUPREME COURT REPORTS ANNOTATED

Leveriza vs. Intermediate Appellate Court

(Letterhead)

June 28, 1966

Mrs. Rosario Leveriza

Manila International Airport


Madam:

It has been found out by the undersigned that you have sublet the
property of the CAA leased to you and by virtue of this, your lease
contract is hereby cancelled because of the violation of the
stipulations of the contract. I would like to inform you that even
without having sublet the said property the said contract would
have been cancelled as per attached communication.

Very truly yours,

For the Director:

(Sgd.) Illegible

(Typed)

GUILLERMO P. JURADO

Airport General Manager

Respondent Leverizas and the CAA assailed the validity of such


cancellation, claiming that the Airport General Manager had no
legal authority to make the cancellation. They maintain that it is
only the Secretary of Public Works and Communications, acting
for the President, or by delegation of power, the Director of Civil
Aeronautics Administration who could validly cancel the contract.
They do admit, however, and it is evident from the records that
the Airport General Manager signed For the Director. Under the
circumstances, there is no question that such act enjoys the
presumption of regularity, not to mention the unassailable fact
that such act was subsequently affirmed or ratified by the
Director of the CAA himself (Record on Appeal, pp. 108-110).

Petitioners argue that cancelling or setting aside a contract


approved by the Secretary is, in effect, repealing an act of the
Secretary which is beyond the authority of the Administrator. Such
argument is untenable. The terms and conditions under which
such revocation or cancellation may be made, have al-ready been
specifically provided for in Contract A which has already been
approved by the Department Head. It is evident that in the
implementation of aforesaid contract, the approval of said
Department Head is no longer necessary if not redundant.

It is further contended that even granting that such cancellation


was effective, a subsequent billing by the Accounting Department
of the CAA has in effect waived or nullified the rescission of
Contract A.

It will be recalled that the questioned cancellation of Contract A


was among others, mainly based on the violation of its terms and
conditions, specifically, the sublease of the property by the lessee
without the consent of the lessor.

The billing of the petitioners by the Accounting Department of the


CAA if indeed it transpired, after the cancellation of Contract A is
obviously an error. However, this Court has already ruled that the
mistakes of government personnel should not affect public
interest. In San Mauricio Mining Company v. Ancheta (105 SCRA
391, 422), it has been held that as a matter of law rooted in the
protection of public interest, and also as a general policy to
protect the government and the people, errors of government
personnel in the performance of their duties should never deprive
the people of the right to rectify such error and recover what
might be lost or be bartered away in any actuation, deal or
transaction concerned. In the case at bar, the lower court in its
decision which has been affirmed by the Court of Appeals,
ordered the CAA to refund to the petitioners the amount of rentals
which was not due from them with 6% interest per annum until
fully paid.

Petitioners further assail the interpretation of Contract A,


claiming that Contract B was a mere sublease to respondent
Mobil Oil Philippines, Inc. and requires no prior consent of CAA to
perfect the same. Citing Article 1650 of the Civil Code, they assert
that the prohibition to sublease must be expressed and cannot be
merely implied or inferred (Rollo, p. 151).

As correctly found by the Court of Appeals, petitioners in asserting


the non-necessity for a prior consent interprets the first sentence
of paragraph 7 of Contract A to refer to an assignment of lease
under Article 1649 of the Civil Code and not to a mere sublease. A
careful scrutiny of said paragraph of Contract A clearly shows
that it speaks of transfer of rights of Rosario

292

292

SUPREME COURT REPORTS ANNOTATED

Leveriza vs. Intermediate Appellate Court

Leveriza to the leased premises and not to assignment of the


lease (Rollo, pp. 48-49).

Petitioners likewise argued that it was contemplated by the


parties to Contract A that Mobil Oil Philippines would be the
owner of the gasoline station it would construct on the leased
premises during the period of the lease, hence, it is understood
that it must be given a right to use and occupy the lot in question
in the form of a sub-lease (Rollo, p. 152).

In Contract A, it was categorically stated that it is the lessee


(petitioner) who will manage and operate the gasoline station.
The fact that Mobil Oil was mentioned in that contract was clearly
not intended to give approval to a sublease between petitioners
and said company but rather to insure that in the arrangements
to be made between them, it must be understood that after the
expiration of the lease contract, whatever improvements have
been constructed in the leased premises shall be relinquished to
CAA. Thus, this Court held that the primary and elementary rule
of construction of documents is that when the words or language
thereof is clear and plain or readily understandable by any
ordinary reader thereof, there is absolutely no room for
interpretation or construction anymore. (San Mauricio Mining
Company v. Aricheta, supra).

Finally, petitioners contend that the administrator of CAA cannot


execute without approval of the Department Secretary, a valid
contract of lease over real property owned by the Republic of the
Philippines, citing Sections 567 and 568 of the Revised
Administrative Code, which provide as follows:

SEC. 567. Authority of the President of the Philippines to execute


contracts relative to real property.When the Republic of the
Philippines is party to a deed conveying the title to real property
or is party to any lease or other contract relating to real property
belonging to said government, said deed or contract shall be
executed on behalf of said government by the President of the
Philippines or by an officer duly designated by him, unless
authority to execute the same is by law expressly vested in some
other officer. (Italics supplied)

SEC. 568. Authority of national officials to make contract.


Written contracts not within the purview of the preceding section
shall, in the absence of special provision, be executed, with the
approval of the proper Department Head, by the Chief of the
Bureau or Office having control of the appropriation against which
the contract would create a

293

VOL. 157, JANUARY 25, 1988


293

Leveriza vs. Intermediate Appellate Court

charge; or if there is no such chief, by the proper Department


Head himself or the President of the Philippines as the case may
require.

On the other hand, respondent CAA avers that the CAA


Administrator has the authority to lease real property belonging
to the Republic of the Philippines under its administration even
without the approval of the Secretary of Public Works and
Communications, which authority is expressly vested in it by law,
more particularly Section 32 (24) of Republic Act 776, which
reads:

Sec. 32. Powers and Duties of the Administrator.Subject to the


general control and supervision of the Department Head, the
Administrator shall have, among others, the following powers and
duties:

xxx xxx xxx

(24) To administer, operate, manage, control, maintain and


develop the Manila International Airport and all government
aerodromes except those controlled or operated by the Armed
Forces of the Philippines including such power and duties as: x x x
(b) to enter into, make and execute contracts of any kind with any
person, firm, or public or private corporation or entity; (c) to
acquire, hold, purchase, or lease any personal or real property,
right of ways, and easements which may be proper or necessary:
Provided, that no real property thus acquired and any other real
property of the Civil Aeronautics Administration shall be sold
without the approval of the President of the Philippines. x x x

There is no dispute that the Revised Administrative Code is a


general law while Republic Act 776 is a special law nor in the fact
that the real property subject of the lease in Contract C is real
property belonging to the Republic of the Philippines.

Under 567 of the Revised Administrative Code, such contract of


lease must be executed: (1) by the President of the Philippines, or
(2) by an officer duly designated by him or (3) by an officer
expressly vested by law. It is readily apparent that in the case at
bar, the Civil Aeronautics Administration has the authority to
enter into Contracts of Lease for the government under the third
category. Thus, as correctly ruled by the Court of Appeals, the
Civil Aeronautics Administration has the power to execute the
deed or contract involving leases of real properties belonging to
the Republic of the Philippines, not because it is an entity duly
designated by the President but because the said authority to

294

294

SUPREME COURT REPORTS ANNOTATED

Leveriza vs. Intermediate Appellate Court

execute the same is, by law expressly vested in it.

Under the above-cited Section 32 (par. 24) of Republic Act 776,


the Administrator (Director) of the Civil Aeronautics
Administration by reason of its creation and existence,
administers properties belonging to the Republic of the Philippines
and it is on these properties that the Administrator must exercise
his vast power and discharge his duty to enter into, make and
execute contract of any kind with any person, firm, or public or
private corporation or entity and to acquire, hold, purchase, or
lease any personal or real property, right of ways and easements
which may be proper or necessary. The exception, however, is the
sale of properties acquired by CAA or any other real properties of
the same which must have the approval of the President of the
Philippines. The Court of Appeals took cognizance of the striking
absence of such proviso in the other transactions contemplated in
paragraph (24) and is convinced as we are, that the Director of
the Civil Aeronautics Administration does not need the prior
approval of the President or the Secretary of Public Works and
Communications in the execution of Contract C.

In this regard, this Court ruled that another basic principle of


statutory construction mandates that general legislation must
give way to special legislation on the same subject, and generally
be so interpreted as to embrace only cases in which the special
provisions are not applicable (Sto. Domingo v. De los Angeles, 96
SCRA 139), that specific statute prevails over a general statute
(De Jesus v. People, 120 SCRA 760) and that where two statutes
are of equal theoretical application to a particular case, the one
designed therefor specially should prevail (Wil Wilhensen, Inc. v.
Baluyot, 83 SCRA 38)

WHEREFORE, the petition is DISMISSED for lack of merit and the


decision of the Court of Appeals appealed from is AFFIRMEDin
toto.

SO ORDERED.

Gutierrez, Jr., Feliciano and Cortes, JJ., concur.

Fernan, J., no partrelated to a partner in the law firm


representing petitioner.

Petition dismissed. Decision affirmed.

Notes.Statutory exceptions are to be strictly but reasonably

295

VOL. 157, JANUARY 25, 1988


295

De Santos vs. Intermediate Appellate Court

construed. (Samson vs. CA, 145 SCRA 654.)

Provisions of the surety bond must be read in its entirety and


together with the contract between the parties. (NPC vs. CA, 145
SCRA 533.)

o0o [Leveriza vs. Intermediate Appellate Court, 157 SCRA


282(1988)]

162

SUPREME COURT REPORTS ANNOTATED

Luzon Development Bank vs. Association of Luzon Development


Bank Employees

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.

Labor Law; Arbitration; Words and Phrases; Arbitration, Defined.


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.

Same; Same; Same; Arbitration may be classified as either


compulsory or voluntary.Arbitration may be classified, on the
basis of the obligation on which it is based, as either compulsory
or voluntary.

Same; Same; Same; Compulsory Arbitration, Explained .


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. 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.

Same; Same; Same; Voluntary Arbitration, Explained.Under


voluntary arbitration, on the other hand, referral of a dispute by
the

_______________

* EN BANC.

163

VOL. 249, OCTOBER 6, 1995

163

Luzon Development Bank vs. Association of Luzon Development


Bank Employees

parties is made, pursuant to a voluntary arbitration clause in their


collective agreement, to an impartial third person for a final and
binding resolution.

Same; Same; Collective Bargaining Agreements; In the Philippine


context, the parties to a Collective Bargaining Agreement 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.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. 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).

Same; Same; Administrative Law; The voluntary arbitrator,


whether acting solely or in a panel, enjoys in law the status of a
quasijudicial agency but independent of, and apart from, the
NLRC since his decisions are not appealable to the latter.In
Volkschel Labor Union, et al. v. NLRC, et al., 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., 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.

Same; Same; Same; Words and Phrases; Governmental Agency


or Instrumentality, Explained.An instrumentality is anything
used as a means or agency. Thus, the terms governmental
agency or instrumentality are synonymous in the sense that
either of them is a means by which a government acts, or by
which a certain government act or function is performed. The
word instrumentality, with respect to a state contemplates an
authority to which the state delegates governmental power for
the performance of a state function.
164

164

SUPREME COURT REPORTS ANNOTATED

Luzon Development Bank vs. Association of Luzon Development


Bank Employees

Same; Same; B.P. 129; Jurisdiction; Appeals; The voluntary


arbitrator 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 Sec. 9 of B.P. 129.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.

Same; Same; Same; Same; Same; The decision or award of the


voluntary arbitrator or panel of arbitrators should be appealed to
the Court of Appeals.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.

Arbitration Law (RA 876); Under the Arbitration Law, the award or
decision of the voluntary arbitrator is equated with that of the
Regional Trial Courts.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. 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

165

VOL. 249, OCTOBER 6, 1995

165

Luzon Development Bank vs. Association of Luzon Development


Bank Employees

petitions of this nature for proper disposition.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari and


Prohibition.
The facts are stated in the opinion of the Court.

Eusebio P. Navarro, Jr. and Adolfo R. Fandalian for petitioner.

Ester S. Garcia for and in her own behalf.

Napoleon Banzuela, Jr. for private 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 ALDBEs
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 LDBs 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.
Luzon Development Bank vs. Association of Luzon Development
Bank Employees

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 be
bound by said arbitrators 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

_____________

1 Seide, A Dictionary of Arbitration (1970).

2 Ibid.

3 Art. 260, Labor Code.

167

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167

Luzon Development Bank vs. Association of Luzon Development


Bank Employees

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:
x x x. (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 x x x

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 Commis-

168
168

SUPREME COURT REPORTS ANNOTATED

Luzon Development Bank vs. Association of Luzon Development


Bank Employees

sion (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 x x x 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.,8on the settled


premise that the judgments of courts and awards of quasijudicial
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:

x x x xxx x x x (3) Exclusive appellate jurisdiction over all


final judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities
and Exchange Commission, the 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 x x x

Assuming arguendo that the voluntary arbitrator or the panel of


voluntary arbitrators may not strictly be considered as a
quasijudicial 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 re-
_________________

10 Art. 262-A, in relation to Art. 217 (b) and (c), Labor Code, as
amended by Sec. 9, R.A. 6715.

11 Executive Order No. 1008.

12 Laurens Federal Sav. And Loan Assn, v. South Carolina Tax


Commission, 112 S.E. 2d 716, 719, 236 S.C. 2.

13 Govt. of P.I. v. Springer, et al., 50 Phil. 259, 334 (1927).

170

170

SUPREME COURT REPORTS ANNOTATED

Luzon Development Bank vs. Association of Luzon Development


Bank Employees

spect 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
entities18 not expressly excepted from the coverage of Sec. 9 of

_____________

14 Ciulla v. State, 77 N.Y.S. 2d 545, 550, 191 Misc. 528.

15 In re Turncocks Estate, 300 N.W. 155, 156, 238 Wis. 438.

16 In re Brown Co., D.C. Me., 36 F. Supp. 275, 277.

17 Gagne v. Brush, D.C.N.H., 30 F. Supp. 714, 716.

18 First Lepanto Ceramics, Inc. v. CA, et al., 231 SCRA 30 (1994).

171

VOL. 249, OCTOBER 6, 1995


171

Luzon Development Bank vs. Association of Luzon Development


Bank Employees

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.

Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan,


Mendoza, Francisco and Hermosisima, Jr., JJ., concur.
Narvasa (C.J.) and Melo, J., On leave.

Feliciano, J., In the result.

Case referred to the Court of Appeals.

_____________

19 Section 23, R.A. No. 876.

172

172

SUPREME COURT REPORTS ANNOTATED

Cordova vs. Labayen

Notes.Parties to sales contracts and/or bills of lading are bound


by arbitration clauses thereat. (Puromines, Inc. vs. Court of
Appeals, 220 SCRA 281 [1993])

Interpretation by arbitrators which is a faithful application of the


provisions of the Agreement does not have the effect of creating a
new contract. (Adamson vs. Court of Appeals, 232 SCRA 602
[1994])

o0o [Luzon Development Bank vs. Association of Luzon


Development Bank Employees, 249 SCRA 162(1995)]

538

SUPREME COURT REPORTS ANNOTATED

Iron and Steel Authority vs. Court of Appeals

G.R. No. 102976. October 25, 1995.*


IRON AND STEEL AUTHORITY, petitioner, vs. THE COURT OF
APPEALS and MARIA CRISTINA FERTILIZER CORPORATION,
respondents.

Actions; Parties; Pleadings and Practice; Those who can be parties


to a civil action may be broadly categorized into two (2) groups
i.e., persons, whether natural or juridical, and, entities authorized
by law.Rule 3, Section 1 of the Rules of Court specifies who may
be parties to a civil action: Section 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 persons such as
corporations, on the other hand; and (b) entities authorized by
law to institute actions.

______________

* THIRD DIVISION.

539

VOL. 249, OCTOBER 25, 1995

539

Iron and Steel Authority vs. Court of Appeals

Administrative Law; Government Owned and Controlled


Corporations; Government Agencies and Instrumentalities; The
Iron and Steel Authority (ISA) appears 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.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.

Same; Same; Same; Words and Phrases; The term Authority has
been used to designate both incorporated and non-incorporated
agencies or instrumentalities of the Government.It is worth
noting that the term Authority has been used to designate both
incorporated and non-incorporated agencies or instrumentalities
of the Government. Same; Same; Same; Agency; The ISA is an
agent or delegate of the Republic, while 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.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.

Same; Same; Same; Same; 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 reassumed by, the Republic of the Philippines, in the absence
of special provisions of law specifying some other disposition
thereof.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
instrumen-

540

540

SUPREME COURT REPORTS ANNOTATED

Iron and Steel Authority vs. Court of Appeals

tality 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.

Actions; Parties; Eminent Domain; The expiration of ISAs


statutory term did not by itself require or justify the dismissal of
the eminent domain proceedings.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 ISAs statutory term did not by itself
require or justify the dismissal of the eminent domain
proceedings.

Same; Same; Same; Pleadings and Practice; The non-joinder of


the Republic which occurred upon the expiration of ISAs statutory
term was not a ground for dismissal of the expropriation
proceedings.It is also relevant to note that the non-joinder of
the Republic which occurred upon the expiration of ISAs 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 courts own initiative at any stage of the
action and on such terms as are just. In the instant case, the
Republic has precisely moved to take over the proceedings as
party-plaintiff.

Same; Same; Same; Administrative Law; The Republic may


initiate or participate in actions involving its agents.In E.B.
Marcha Transport Company, Inc. v. Intermediate Appellate Court,
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. x x x

541

VOL. 249, OCTOBER 25, 1995

541

Iron and Steel Authority vs. Court of Appeals


Same; Same; Same; No new legislative act is necessary should
the Republic decide, upon being substituted for ISA, in fact to
continue to prosecute the expropriation proceedingsthe
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.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.

PETITION for review of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Angara, Abello, Concepcion, Regala & Cruz for private


respondent.

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

542

542

SUPREME COURT REPORTS ANNOTATED

Iron and Steel Authority vs. Court of Appeals

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 States power is
necessary to implement the construction of capacity which is
needed for the attainment of the objectives of the Authority;

xxx xxx x x x (Italics supplied)

P.D. No. 272 initially created petitioner ISA for a term of five (5)
years counting from 9 August 1973.1 When ISAs 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

______________

1 Second paragraph, Section 1, P.D. No. 272.

543

VOL. 249, OCTOBER 25, 1995

543
Iron and Steel Authority vs. Court of Appeals

(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 of


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
MCFCs 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 placed 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

______________

2 The relevant terms of LOI No. 1277 read as follows:

(2) In the event that NSC and MCFC fail to agree on the foregoing
within sixty (60) days from the date hereof, the Iron and Steel
Authority (ISA) shall exercise its authority under Presidential
Decree (PD) No. 272, as amended, to initiate the expropriation of
the aforementioned occupancy rights of MCFC on the subject
lands as well as the plant, structures, equipment, machinery and
related facilities, for and on behalf of NSC, and thereafter cede
the same to NSC. During the pendency of the expropriation
proceedings, NSC shall take possession of the property, subject to
bonding and other requirements of P.D. No. 1533.

xxx xxx x x x

544

544

SUPREME COURT REPORTS ANNOTATED

Iron and Steel Authority vs. Court of Appeals

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 MCFCs 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


MCFCs 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 courts 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:

______________

3 Section 1, Rule 3.

4 Section 16, Rule 3 of the Rules of Court reads:

Sec. 16. Duty of attorney upon death, incapacity or


incompetency of party.Whenever a party to a pending case
dies, becomes incapacitated or incompetent, it shall be the duty
of his attorney to inform the court promptly of such death,
incapacity or incompetency, and to give the name and residence
of his executor, administrator, guardian or other legal
representative.

545

VOL. 249, OCTOBER 25, 1995


545

Iron and Steel Authority vs. Court of Appeals

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 ISAs exercise of its delegated
authority to expropriate, had become ineffective as a result of the
delegates 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

______________

5 RTC Order dated 22 March 1989, p. 2; CA Rollo, p. 24.

546

546

SUPREME COURT REPORTS ANNOTATED

Iron and Steel Authority vs. Court of Appeals

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 ISAs 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 ISAs 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:

Section 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
persons 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:

Section 4. Powers and Functions.The Authority shall have the


following powers and functions:

xxx xxx xxx

547

VOL. 249, OCTOBER 25, 1995

547

Iron and Steel Authority vs. Court of Appeals

(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 States power is
necessary to implement the construction of capacity which is
needed for the attainment of the objectives of the Authority;

xxx xxx x x x

(Italics 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 Governmentin the following terms:

x x x 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 x x x

(Italics 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 Na-

______________

6 Section 2, Republic Act No. 6395, 10 September 1971.

7 Section 4, Presidential Decree No. 857, 23 December 1975.

548

548

SUPREME COURT REPORTS ANNOTATED

Iron and Steel Authority vs. Court of Appeals

tional 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 regula-

_______________

8 Section 2, Presidential Decree No. 757, 31 July 1975.

9 Section 3, Presidential Decree No. 334, 9 November 1973.

10 Section 1, Republic Act No. 4156, 20 June 1964.

11 Sections 3 and 5, Presidential Decree No. 1084, 4 February


1977.

12 Sections 3 and 4(k), Republic Act No. 2265, 19 June 1959.


549

VOL. 249, OCTOBER 25, 1995

549

Iron and Steel Authority vs. Court of Appeals

tory agencies, chartered institutions and government-owned or


controlled corporations.

xxx xxx x x x (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:

Section 3. Representative Parties.A trustee of an express 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. x x x. (Italics supplied)

550

550

SUPREME COURT REPORTS ANNOTATED

Iron and Steel Authority vs. Court of Appeals

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. (Italics 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 ISAs
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 ISAs 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 courts 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

______________

13 Rule 13, Section 11, Rules of Court. See, in this connection, St.
Anne Medical Center v. Parel (176 SCRA 755 [1989]), where the
petition had been filed in the name of St. Anne Medical Center
which was not a juridical person and where this Court invoked
Rule 3, Section 11 and impleaded the real party-in-interest.

14 147 SCRA 276 (1987).

551
VOL. 249, OCTOBER 25, 1995

551

Iron and Steel Authority vs. Court of Appeals

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. x x x15 (Italics 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 (Italics
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 ISAs exercise of its
delegated authority to expropriate, had become legally ineffecf
_______________

15 147 SCRA at 279.

16 146 SCRA at 279. In Lagazon v. Reyes (166 SCRA 386 [1988]),


the Court said that

the aim of [Rule 3, Section 11] is that all persons materially


interested, legally or beneficially, in the subject matter of the suit
should be made parties to it in order that the whole matter in
dispute may be determined once and for all in one litigation, thus
avoiding multiplicity of suits x x x. (166 SCRA at 392)

552

552

SUPREME COURT REPORTS ANNOTATED

Iron and Steel Authority vs. Court of Appeals

tive by reason of the expiration of the statutory term of the agent


or delegate, 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:

Section 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.(Italics 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

553

VOL. 249, OCTOBER 25, 1995


553

Iron and Steel Authority vs. Court of Appeals

eminent domain in behalf of the National Government, and direct


the Solicitor General, whenever he deems the action advisable, to
institute expropriation proceedings in the proper court. (Italics
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.

______________

17 Letter of 28 September 1988; Records, p. 1297.

554

554

SUPREME COURT REPORTS ANNOTATED

People vs. Sinatao

WHEREFORE, for all the foregoing, the Decision of the Court of


Appeals dated 8 October 1991 to the extent that it affirmed the
trial courts 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
pronouncements as to costs.

SO ORDERED.

Romero, Melo, Vitug and Panganiban, JJ., concur.

Judgment reversed and set aside. Case remanded to court a quo


for further proceedings.
Notes.Misjoinder of parties is not ground for dismissal of an
action. (Georg Grotjahn Gmbh & Co. vs. Isnani, 235 SCRA 216
[1994])

When the inquiry is focused on the legal existence of a body


politic, the action is reserved to the State in a proceeding for quo
warranto or any other direct proceeding. (Municipality of San
Narciso, Quezon vs. Mendez, 239 SCRA 11 [1994])

o0o [Iron and Steel Authority vs. Court of Appeals, 249


SCRA 538(1995)]

G.R. No. 145972. March 23, 2004.*

IGNACIA BALICAS, petitioner, vs. FACT-FINDING & INTELLIGENCE


BUREAU (FFIB), OFFICE OF THE OMBUDSMAN, respondent.

Administrative Law; Dismissals; Certiorari; The responsibility of


monitoring housing and land development projects is not lodged
with the DENR but with the HLURB as the sole regulatory body for
housing and land development; It was grave error for the
appellate court to sustain the Ombudsmans ruling that petitioner
should be dismissed from the service.The rationale for our
decision in Principe bears reiteration: the responsibility of
monitoring housing and land development projects is not lodged
with the DENR, but with the HLURB as the sole regulatory body for
housing and land development. Thus, we must stress that we find
no legal basis to hold petitioner, who is an officer of DENR, liable
for gross neglect of the duty pertaining to another agency, the
HLURB. It was grave error for the appellate court to sustain the
Ombudsmans ruling that she should be dismissed from the
service. The reinstatement of petitioner is clearly called for.

PETITION for review on certiorari of the decision and resolution of


the Court of Appeals.
The facts are stated in the opinion of the Court.

_______________

* SECOND DIVISION.

195

VOL. 426, MARCH 23, 2004

195

Balicas vs. Fact-Finding & Intelligence Bureau (FFIB),

Office of the Ombudsman

Law Firm of Lapea & Associates for petitioner.

The Solicitor General for respondent.

QUISUMBING, J.:

This petition for review on certiorari assails the Court of Appeals


decision1 dated August 25, 2000 and resolution2 of November 13,
2000 in CA-G.R. SP No. 56386, which affirmed the Ombudsmans
decision3 dismissing petitioner from government service for gross
neglect of duty in connection with the tragedy at the Cherry Hills
Subdivision in Antipolo City on August 3, 1999.

The antecedent facts as summarized in the Ombudsmans


decision are as follows:
Based on the evidence adduced by the complainant, the following
is the chronological series of events which led to the development
of the CHS (Cherry Hills Subdivision):

August 28, 1990Philjas Corporation, whose primary purposes,


among others are: to own, develop, subdivide, market and
provide low-cost housing for the poor, was registered with the
Securities and Exchange Commission (SEC).

February 19, 1991then City Mayor Daniel S. Garcia, endorsed to


the Housing and Land Use Regulatory Board (HLURB) the
proposed CHS.

Thereafter, or on 07 March 1991, based on the favorable


recommendations of Mayor Garcia, respondent TAN, issued the
Preliminary Approval and Locational Clearance (PALC) for the
development of CHS.

On July 5, 1991, then HLURB Commissioner respondent


TUNGPALAN issued Development Permit No. 91-0216 for land
development only for the entire land area of 12.1034 hectares
covered by TCT No. 35083 (now TCT 208837) and with 1,003
saleable lots/units with project classification B.P. 220 Model A-
Socialized Housing (p. 96, Records), with several conditions for its
development.

Three (3) days thereafter or on July 8, 1991, respondent


JASARENO, allowed/granted the leveling/earth-moving operations
of the development project of the area subject to certain
conditions.

_______________

1 Rollo, pp. 30-38. Penned by Associate Justice Hilarion L. Aquino,


with Associate Justices Buenaventura J. Guerrero and Mercedes
Gozo-Dadole concurring.
2 Id. at 39.

3 CA Rollo, pp. 26-79.

196

196

SUPREME COURT REPORTS ANNOTATED

Balicas vs. Fact-Finding & Intelligence Bureau (FFIB),

Office of the Ombudsman

On November 18, 1991, then HLURB Commissioner AMADO B.


DELORIA issued Certificate of Registration No. 91-11-0576 in favor
of CHS, with License to Sell No. 91-11-0592 for the 1,007
lots/units in the subdivision.

Eventually, on December 10, 1991, respondent POLLISCO issued


Small Scale Mining Permit (SSMP) No. IV-316 to Philjas to extract
and remove 10,000 cu. meters of filling materials from the area
where the CHS is located.

Thereafter, or on January 12, 1994, Philjas applied for a Small


Scale Mining Permit (SSMP) under P.D. 1899 with the Rizal
Provincial Government to extract and remove 50,000 metric tons
of filling materials per annum on CHS 2.8 hectares.

Thus, on January 17, 1994, respondent MAGNO, informed ELIEZER


I. RODRIGUEZ of Philjas that CHS is within the EIS System and as
such must secure ECC from the DENR. Philjas was accordingly
informed of the matter such that it applied for the issuance of ECC
from the DENR-Region IV, on February 3, 1994.

On March 12, 1994, an Inspection Report allegedly prepared by


respondent BALICAS, attested by respondent RUTAQUIO and
approved by respondent TOLENTINO re: field evaluation to the
issuance of ECC, was submitted.

Consequently, on April 28, 1994, upon recommendations of


respondent TOLENTINO, Philjas application for ECC was approved
by respondent PRINCIPE, then Regional Executive Director, DENR
under ECC-137-R1-212-94.

A Mining Field Report for SSMP dated May 10, 1994 was submitted
pursuant to the inspection report prepared by respondents
CAYETANO, FELICIANO, HILADO and BURGOS, based on their
inspection conducted on April 25 to 29, 1994. The report
recommended, among others, that the proposed extraction of
materials would pose no adverse effect to the environment.

Records further disclosed that on August 10, 1994, respondent


BALICAS monitored the implementation of the CHS Project
Development to check compliance with the terms and conditions
in the ECC. Again, on August 23, 1995, she conducted another
monitoring on the project for the same purpose. In both instances,
she noted that the project was still in the construction stage
hence, compliance with the stipulated conditions could not be
fully assessed, and therefore, a follow-up monitoring is proper. It
appeared from the records that this August 23, 1995 monitoring
inspection was the last one conducted by the DENR.

On September 24, 1994, GOV. CASIMIRO I. YNARES, JR., approved


the SSMP applied for by Philjas under SSMP No. RZL-012, allowing
Philjas to extract and remove 50,000 metric tons of filling
materials

197

VOL. 426, MARCH 23, 2004

197
Balicas vs. Fact-Finding & Intelligence Bureau (FFIB),

Office of the Ombudsman

from the area for a period of two (2) years from date of its issue
until September 6, 1996.4

Immediately after the tragic incident on August 3, 1999, a fact-


finding investigation was conducted by the Office of the
Ombudsman through its Fact-Finding and Intelligence Bureau
(FFIB), which duly filed an administrative complaint with the Office
of the Ombudsman against several officials of the Housing and
Land Use Regulatory Board (HLURB), Department of Environment
and Natural Resources (DENR), and the local government of
Antipolo.

The charge against petitioner involved a supposed failure on her


part to monitor and inspect the development of Cherry Hills
Subdivision, which was assumed to be her duty as DENR senior
environmental management specialist assigned in the province of
Rizal.

For her part, petitioner belied allegations that monitoring was not
conducted, claiming that she monitored the development of
Cherry Hills Subdivision as evidenced by three (3) monitoring
reports dated March 12, 1994, August 10, 1994 and August 23,
1995. She averred that she also conducted subsequent
compliance monitoring of the terms and conditions of Philjas
Environmental Compliance Certificate (ECC) on May 19, 1997 and
noted no violation thereon. She further claimed good faith and
exercise of due diligence, insisting that the tragedy was a
fortuitous event. She reasoned that the collapse did not occur in
Cherry Hills, but in the adjacent mountain eastern side of the
subdivision.
On November 15, 1999, the Office of the Ombudsman rendered a
decision imposing upon petitioner the supreme penalty of
dismissal from office for gross neglect of duty finding:

RESPONDENT BALICAS

Records show that she monitored and inspected the CHS [Cherry
Hills Subdivision] only thrice (3), to wit:

1. Inspection Report dated 12 March 1994

2. Monitoring Report dated 10 August 1994

3. Monitoring Report dated 23 August 1995

_______________

4 Rollo, pp. 30-32.

198

198

SUPREME COURT REPORTS ANNOTATED

Balicas vs. Fact-Finding & Intelligence Bureau (FFIB),

Office of the Ombudsman

Verily, with this scant frequency, how can respondent Balicas


sweepingly claim that there was no violation of ECC compliance
and that she had done what is necessary in accordance with the
regular performance of her duties. She herself recognized the fact
that the collapsed area is not the subdivision in question but the
adjacent mountain eastern side of the CHS. It is incumbent upon
her to establish the same in her monitoring and inspection reports
and make objective recommendations re: its possible adverse
effect to the environment and to the residents of the CHS and
nearby areas. Her defense that the position of the CHS shows the
impossibility of checking the would-be adverse effect clearly
established her incompetence. No expert mind is needed to know
that mountains cause landslide and erosion. Cherry Hills
Subdivision is a living witness to this.5

Petitioner seasonably filed a petition for review of the


Ombudsmans decision with the Court of Appeals. In its decision
dated August 25, 2000, the Court of Appeals dismissed the
petition for lack of merit and affirmed the appealed decision. It
found that the landslide was a preventable occurrence and that
petitioner was guilty of gross negligence in failing to closely
monitor Philjas compliance with the conditions of the ECC given
the known inherent instability of the ground where the subdivision
was developed. The appellate court likewise denied petitioners
motion for reconsideration in its resolution dated November 13,
2000.

Petitioner now comes to this Court for review on certiorari, under


Rule 45 of the Rules of Civil Procedure, of the appellate courts
decision. She alleges that the Court of Appeals committed serious
errors of law in affirming the Ombudsmans conclusion that:

1. There was gross negligence on the part of petitioner Balicas in


the performance of her official duties as Senior Environmental
Management Specialist (SEMS) of the Provincial Environment and
Natural Resources Office (PENRO) Province of Rizal, DENR Region
IV; and the alleged gross neglect of duty of petitioner warranted
the imposition of the extreme penalty of dismissal from the
service.

2. The landslide which caused the death of several residents of


the subdivision and the destruction of property is not a fortuitous
event and therefore preventible.6

_______________
5 CA Rollo, pp. 70-71.

6 Rollo, p. 16.

199

VOL. 426, MARCH 23, 2004

199

Balicas vs. Fact-Finding & Intelligence Bureau (FFIB),

Office of the Ombudsman

The main issues are whether or not the Court of Appeals


committed serious errors of law in: (1) holding petitioner guilty of
gross neglect of duty and (2) imposing upon her the extreme
penalty of dismissal from office.

In order to ascertain if there had been gross neglect of duty, we


have to look at the lawfully prescribed duties of petitioner.
Unfortunately, DENR regulations are silent on the specific duties
of a senior environmental management specialist. Internal
regulations merely speak of the functions of the Provincial
Environment and Natural Resources Office (PENRO) to which
petitioner directly reports.

Nonetheless, petitioner relies on a letter7 dated December 13,


1999 from the chief of personnel, DENR Region IV, which defines
the duties of a senior environmental management specialist as
follows:

1. Conducts investigation of pollution sources or complaints;

2. Review[s] plans and specifications of proposes (sic) or existing


treatment plants and pollution abatement structures and devices
to determine their efficiency and suitability for the kind, of
pollutants to be removed and to recommend issuance or denial of
permits;

3. Conducts follow-up inspection of construction of pollution


abatement/work and structures to oversee compliance with,
approved plans and specifications;

4. Recommends remedial measures for the prevention,


abatement and control of pollution;

5. Prepares technical reports on pollution investigation and


related activities; and

6. Performs related work as assigned.

It is readily apparent that no monitoring duty whatsoever is


mentioned in the said letter. The PENRO, on the other hand, is
mandated to:

1. conduct surveillance and inspection of pollution sources and


control facilities and undertake/initiate measures relative to
pollution-related complaints of the general public for appropriate
referral to the regional office;

_______________

7 CA Rollo, p. 416.

200

200

SUPREME COURT REPORTS ANNOTATED

Balicas vs. Fact-Finding & Intelligence Bureau (FFIB),


Office of the Ombudsman

2. comment on the project description, determine if the project


fall within the Environmental Impact Statement (EIS) System8 and
submit the same to the regional office; and

3. implement programs and projects related to environmental


management within the PENRO.9

In addition, the PENRO is likewise tasked to monitor the project


proponents compliance with the conditions stipulated in the ECC,
with support from the DENR regional office and the Environmental
Management Bureau.10 The primary purpose of compliance
monitoring is to ensure the judicious implementation of sound and
standard environmental quality during the development stage of
a particular project. Specifically, it aims to:

1. monitor project compliance with the conditions set in the ECC;

2. monitor compliance with the Environmental Management Plan


(EMP) and applicable laws, rules and regulations; and

3. provide a basis for timely decision-making and effective


planning and management of environmental measures through
the monitoring of actual project impacts vis--vis predicted
impacts in the EIS.11

Based on the foregoing, the monitoring duties of the PENRO


mainly deal with broad environmental concerns, particularly
pollution abatement. This general monitoring duty is applicable to
all types of physical developments that may adversely impact on
the environment, whether housing projects, industrial sites,
recreational facilities, or scientific undertakings.

_______________

8 Presidential Decree No. 1586 defines the EIS system as:


SECTION 2. Environmental Impact Statement System.There is
hereby established an Environmental Impact Statement System
founded and based on the environmental impact statement
required, under Section 4 of Presidential Decree No. 1151, of all
agencies and instrumentalities of the national government,
including government-owned or controlled corporations, as well
as private corporations, firms and entities, for every proposed
project and undertaking which significantly affect the quality of
the environment.

9 Revised Regulations on the Delineation of Functions and


Delegation of Authorities Pursuant to Executive Order No. 192.
DENR Administrative Order No. 38-90.

10 DENR Administrative Order No. 96-37.

11 Procedural Manual for DENR Administrative Order No. 96-37.

201

VOL. 426, MARCH 23, 2004

201

Balicas vs. Fact-Finding & Intelligence Bureau (FFIB),

Office of the Ombudsman

However, a more specific monitoring duty is imposed on the


HLURB as the sole regulatory body for housing and land
development. It is mandated to encourage greater private sector
participation in low-cost housing through (1) liberalization of
development standards, (2) simplification of regulations and (3)
decentralization of approvals for permits and licenses.12
P.D. No. 158613 prescribes the following duties on the HLURB
(then Ministry of Human Settlements) in connection with
environmentally critical projects requiring an ECC:

SECTION 4. Presidential Proclamation of Environmentally Critical


Areas and Projects.The President of the Philippines may, on his
own initiative or upon recommendation of the National
Environment Protection Council, by proclamation declare certain
projects, undertakings or areas in the country as environmentally
critical. No person, partnership or corporation shall undertake or
operate any such declared environmentally critical project or area
without first securing an Environmental Compliance Certificate
issued by the President or his duly authorized representative. For
the proper management of said critical project or area, the
President may by his proclamation reorganize such government
offices, agencies, institutions, corporations or instrumentalities
including the realignment of government personnel, and their
specific functions and responsibilities.

For the same purpose as above, the Ministry of Human


Settlements [now HLURB] shall: (a) prepare the proper land or
water use pattern for said critical project(s) or area(s); (b)
establish ambient environmental quality standards; (c) develop a
program of environmental enhancement or protective measures
against calamitous factors such as earthquake, floods, water
erosion and others; and (d) perform such other functions as may
be directed by the President from time to time. (Emphasis ours.)

The legal duty to monitor housing projects, like the Cherry Hills
Subdivision, against calamities such as landslides due to
continuous rain, is clearly placed on the HLURB, not on the
petitioner as PENRO senior environmental management specialist.
In fact, the law imposes no clear and direct duty on petitioner to
perform such narrowly defined monitoring function.

_______________
12 Executive Order No. 90, dated December 17, 1986.

13 Otherwise known as the Environmental Impact Statement


System law, which took effect on June 11, 1978.

202

202

SUPREME COURT REPORTS ANNOTATED

Balicas vs. Fact-Finding & Intelligence Bureau (FFIB),

Office of the Ombudsman

In the related case of Principe v. Fact-Finding and Intelligence


Bureau,14 this Court found Antonio Principe, regional executive
director for DENR Region IV who approved Philjas application for
ECC, not liable for gross neglect of duty. The Court reversed the
decision of the Court of Appeals and thereby annulled the
decision of the Ombudsman in OMB-ADM-09-661, dated
December 1, 1999, dismissing Principe from the government
service. We ordered his reinstatement with back pay and without
loss of seniority.15

The rationale for our decision in Principe bears reiteration: the


responsibility of monitoring housing and land development
projects is not lodged with the DENR, but with the HLURB as the
sole regulatory body for housing and land development. Thus, we
must stress that we find no legal basis to hold petitioner, who is
an officer of DENR, liable for gross neglect of the duty pertaining
to another agency, the HLURB. It was grave error for the appellate
court to sustain the Ombudsmans ruling that she should be
dismissed from the service. The reinstatement of petitioner is
clearly called for.
WHEREFORE, the petition is hereby GRANTED. The Court of
Appeals decision affirming the Ombudsmans dismissal of
petitioner IGNACIA BALICAS from office is REVERSED and SET
ASIDE, and petitioners REINSTATEMENT to her position with back
pay and without loss of seniority rights is hereby ordered.

SO ORDERED.

Puno (Chairman), Austria-Martinez, Callejo, Sr. and Tinga, JJ.,


concur.

Petition granted, assailed decision reversed and set aside.

Note.Certiorari lies where a court has acted without or in excess


of jurisdiction or with grave abuse of discretion. (Miranda vs.
Abaya, 311 SCRA 617 [1999])

o0o

_______________ [Balicas vs. Fact-Finding & Intelligence Bureau


(FFIB), Office of the Ombudsman, 426 SCRA 194(2004)]

516

SUPREME COURT REPORTS ANNOTATED

Malagas vs. Penachos, Jr.

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 VILLA-NUEVA, 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.

Administrative Law; Government instrumentality, defined; Iloilo


State College of Fisheries is a government instrumentality;
Applicability of P.D. 188.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 institutionrefers 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.

Government contracts; Public bidding requirement; Injunctions in


cases involving infrastructure projects.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.

_______________

* FIRST DIVISION.
517

VOL. 213, SEPTEMBER 3, 1992

517

Malagas vs. Penachos, Jr.

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 the purpose of its adoption.

Same; Same; Same.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
respondents 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.

Same; Same; Same; Liabilities of 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. 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.

PETITION for review of the decision of the Regional Trial Court of


Iloilo City, Br. 25.

The facts are stated in the opinion of the Court.

Salas, Villareal & Velasco for petitioners.

Virgilio A. Sindico for respondents.

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.

518

518

SUPREME COURT REPORTS ANNOTATED

Malagas vs. Penachos, Jr.

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 a 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, at 3
oclock in the afternoon.1

Petitioners Maria Elena Malaga and Josieleen Najarro, respectively


doing business under the name of B.E. Construction and Best Built
Construction, submitted their pre-qualification documents at two
oclock 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 oclock 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 PREC1 on time,
the PBAC refused without just cause to accept them. As a result,
they were not included in the list of prequalified 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.

______________

** Implementing Rules and Regulations on PD 1594 (Prescribing


Policies, Guidelines, Rules and Regulations for Government
Infrastructure Contracts) as amended. Official Gazette, Vol. 84,
No. 23, p. 3340-3365, June 6, 1988.
1 Annex A, Rollo, p. 134.

519

VOL. 213, SEPTEMBER 3, 1992

519

Malagas vs. Penachos, Jr.

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 issuing restraining orders, preliminary injunctions and
preliminary mandatory injunctions by P.D. 1818.

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
mandatory injunction in any case, dispute, or controversy
involving an 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 or
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 oclock 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 to 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

______________

2 Annex B, Rollo, p. 31.

3 142 SCRA 180.

520

520

SUPREME COURT REPORTS ANNOTATED

Malagas vs. Penachos, Jr.

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 clause 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 misdeeds (p. 188, italics 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 constructed 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 sheriffs 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 oclock of the given
date, 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 oclock in the morning.

3. Private respondents, for the purpose of inviting bidders to


participate, issued a mimeographed Invitation to Bid form,
which by

_______________
4 Annex F, Rollo, pp. 44-48.

521

VOL. 213, SEPTEMBER 3, 1992

521

Malagas vs. Penachos, Jr.

law (P.D. 1594 and Implementing Rules, Exh. B-1) is to contain the
particulars of the project subject of bidding for the purposes 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 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-
qualification documents was at 10 oclock of December 2, 1988,
and the opening of bids would be held at 1 oclock in the
afternoon of December 12, 1988. As of ten oclock in the morning

______________

5 Exhibit E-2, Rollo of Exhibits.

6 Exhibit E-3-a, Rollo of Exhibits.

522

522

SUPREME COURT REPORTS ANNOTATED

Malagas vs. Penachos, Jr.

of December 2, 1988, B.E. construction and Best Built


construction had filed only their letters of intent. At two oclock 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 estimated project cost is
from P1M to P5M, the issuance of plans, specifications and
proposal book forms should be 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 Contractors License was valid only until
September 30, 1988, while Best Builts 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

______________
7 Rollo, p. 87.

523

VOL. 213, SEPTEMBER 3, 1992

523

Malagas vs. Penachos, Jr.

controlled corporations. (Sec. 2 (5) Introductory Provisions).

The same Code describes a chartered institution thus:

Chartered institutionrefers 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.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 restrain-

______________

8 Presidential Decree No. 1523.

9 186 SCRA 704.

524

524

SUPREME COURT REPORTS ANNOTATED

Malagas vs. Penachos, Jr.

ing 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 to Prequalification
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 oclock 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.

______________
10 IB 13 1.2-19, Implementing Rules and Regulations of P.D. 1594
as amended.

525

VOL. 213, SEPTEMBER 3, 1992

525

Malagas vs. Penachos, Jr.

The notice advanced the cut-off time for the submission of


prequalification documents to 10 oclock in the morning of
December 2, 1988, and the opening of bids to 1 oclock 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,
noncompliance with the requirement will, as a general rule,
render the same void and of no effect.11 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.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 estimated 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 noncompliance
with the procedural rules on bidding which required strict
observance. The purpose of the rules implement-

______________

*** B.E. & Best Builts licenses were valid until June 30, 1989. (Ex.
P & O respectively: both were marked on December 28, 1988)

11 Caltex Phil. v. Delgado Bros., 96 Phil. 368.

12 51 CT. C1. 211, 214, 249, U.S. 313, 39 S. Ct. 300 25 Comp.
Gen. 859.

526

526

SUPREME COURT REPORTS ANNOTATED

Malagas vs. Penachos, Jr.

ing 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.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 respondents 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

_______________
13 Hannan v. Board of Education, 25 Okla. 372.

14 Johnson County Savings Bank, et al. v. City of Creston, 212


Iowa 929, 231 N.W. 705; Zottman v. San Francisco, 20 Cal. 96, 81
Am.

527

VOL. 213, SEPTEMBER 3, 1992

527

Malagas vs. Penachos, Jr.

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 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. 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

______________

Dec. 96; Richardson v. Grant County (c.c.) 27 F. 495; People v.


Gleason, 121 N.Y. 631; 25 N.E. 4; Wagner v. Milwaukee, 196 Wis.
328, 220 N.W. 207.

528

528

SUPREME COURT REPORTS ANNOTATED

Spartan Security & Detective Agency, Inc. vs. NLRC

Malaga and Josieleen Najarro nominal damages of 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.

Note.Public works projects may be undertaken by


administration or force account or by negotiated contract only in
exceptional cases, as provided in Section 4 of Presidential Decree
No. 1594, but the instant case does not fall under any of those
exceptional cases (Eslao vs. Commission on Audit, 195 SCRA 730).

o0o [Malagas vs. Penachos, Jr., 213 SCRA 516(1992)]

454

SUPREME COURT REPORTS ANNOTATED

Preclaro vs. Sandiganbayan

G.R. No. 111091. August 21, 1995.*

ENGINEER CLARO J. PRECLARO, petitioner, vs. SANDIGANBAYAN


and PEOPLE OF THE PHILIPPINES, respondents.

Anti-Graft and Corrupt Practices Act; Civil Service; Administrative


Law; Public Officers; Words and Phrases; Public Officer, Defined;
Public officer under Sec. 2(b) of R.A. 3019 includes elective and
appointive officials and employees, permanent or temporary,
whether in the Career Service and Non-Career Service.Petitioner
miscontrues the definition of public officer in R.A. No. 3019
which, according to Sec. 2(b) thereof includes elective and
appointive officials and employees, permanent or temporary,
whether in the classified or unclassified or exemption service
receiving compensation, even nominal, from the
government. . . . The word includes used in defining a public
officer in Sec. 2(b) indicates that the definition is not restrictive.
The terms classified, unclassified or exemption service were the
old categories of positions in the civil service which have been
reclassified into Career Service and Non-Career Service by PD 807
providing for the organization of the Civil Service Commission and
by the Administrative Code of 1987.

Same; Same; Same; Same; A private individual hired on a


contractual basis as Project Manager for a government
undertaking falls under the non-career service category of the
Civil Service and thus is a public officer as defined by Sec. 2(b) of
R.A. 3019.From the

_____________

* FIRST DIVISION.

455

VOL. 247, AUGUST 21, 1995

455

Preclaro vs. Sandiganbayan

foregoing classification, it is quite evident that petitioner falls


under the non-career service category (formerly termed the
unclassified or exemption service) of the Civil Service and thus is
a public officer as defined by Sec. 2(b) of the Anti-Graft & Corrupt
Practices Act (R.A. No. 3019).

Same; Same; Same; Same; The duties delineated in the contract


of services of a private individual hired for a government project
are subsumed under the phrase wherein the public officer in his
official capacity has to intervene under the law.Similarly,
petitioners averment that he could not be prosecuted under the
Anti-Graft & Corrupt Practices Act because his intervention was
not required by law but in the performance of a contract of
services entered into by him as a private individual contractor, is
erroneous. As discussed above, petitioner falls within the
definition of a public officer and as such, his duties delineated in
Annex B of the contract of services are subsumed under the
phrase wherein the public officer in his official capacity has to
intervene under the law. Petitioners allegation, to borrow a
cliche, is nothing but a mere splitting of hairs.

Same; Criminal Law; Criminal Procedure; Words and Phrases;


Proof beyond reasonable doubt, explained.Proof beyond
reasonable doubt does not mean that which produces absolute
certainty. Only moral certainty is required or that degree of proof
which produces conviction in an unprejudiced mind. We have
extensively reviewed the records of this case and we find no
reason to overturn the findings of the Sandiganbayan.

Same; Same; Same; Entrapment; Evidence; Witnesses; The failure


of the NBI to take photographs of the actual turn-over of the
money to petitioner is not fatal to the Peoples cause where the
testimony of those who witnessed the transaction are consistent,
logical and credible.The failure of the NBI to take photographs
of the actual turn-over of the money to petitioner is not fatal to
the Peoples cause. The transaction was witnessed by several
people, among whom were Engr. Resoso, Mr. Sta. Maria Jr. and the
NBI agents whose testimonies on the circumstances before,
during and after the turn-over are consistent, logical and credible.

Same; Same; Same; Same; Same; Same; Self-serving statements


do not prevail over the clear and competent testimony and report.
Petitioner insists that when his hands were placed under ultra-
violet light, both were found negative for flourescent powder. This
is petitioners own conclusion which is not supported by evidence.
Such self-serving

456

456

SUPREME COURT REPORTS ANNOTATED

Preclaro vs. Sandiganbayan

statement will not prevail over the clear and competent testimony
and the report submitted by the forensic expert of the NBI Ms.
Demelen R. dela Cruz, who was the one who conducted the test
and found petitioners right palmar hand positive for flourescent
powder, the same hand he used, according to witnesses Resoso
and Sta. Maria Jr., to get the money from the latter.

Same; Same; Same; Same; Same; Same; The Court finds


improbable and contrary to human experience the accuseds
claim that he was set up by the private contractor for no other
purpose but revenge on account of the formers failure to
recommend the latters company to perform the extra electrical
works.What we find improbable and contrary to human
experience is petitioners claim that he was set up by Engr. Sta.
Maria Sr. and Engr. Resoso for no other purpose but revenge on
account of petitioners failure to recommend the Sta. Maria
Construction to perform the extra electrical works. The
Sandiganbayan has aptly ruled on this matter, thus: For another,
the claim of accused that there was ill-will on the part of the
construction company is hardly plausible. It is highly improbable
for the company to embark on a malicious prosecution of an
innocent person for the simple reason that such person had
recommended the services of another construction firm. And it is
extremely impossible for such company to enlist the cooperation
and employ the services of the governments chief investigative
agency for such an anomalous undertaking. It is more in accord
with reason and logic to presuppose that there was some sort of a
mischievous demand made by the accused in exchange for
certain favorable considerations, such as, favorable
recommendation on the completeness of the project, hassle-free
release of funds, erasure of deductives, etc. Indeed, the rationale
for the occurrence of the meeting and the demand for money is
infinite and boundless.

PETITION for review of a decision of the Sandiganbayan.

The facts are stated in the opinion of the Court.

Rodolfo U. Jimenez Law Office for petitioner.

The Solicitor General for respondents.

KAPUNAN, J.:

On 14 June 1990, petitioner was charged before the


Sandiganbayan with a violation of Sec. 3(b) of R.A. No. 3019 as
amended, otherwise known as the Anti-Graft and Corrupt
Practices Act. The information against him read as follows:

457

VOL. 247, AUGUST 21, 1995

457

Preclaro vs. Sandiganbayan

That on or about June 8, 1990, or sometime prior thereto, in


Quezon City, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, a public officer,
being then the Project Manager/Consultant of the Chemical
Mineral Division, Industrial Technology Development Institute,
Department of Science and Technology, a component of the
Industrial Development Institute (ITDI for brevity) which is an
agency of the Department of Science and Technology (DOST for
brevity), wherein the Jaime Sta. Maria Construction undertook the
construction of the building in Bicutan, Taguig, Metro Manila, with
a total cost of SEVENTEEN MILLION SIX HUNDRED NINETY FIVE
THOUSAND PESOS (P17,695,000.00) jointly funded by the
Philippine and Japanese Governments, and while the said
construction has not yet been finally completed, accused either
directly requested and/or demanded for himself or for another,
the sum of TWO HUNDRED THOUSAND PESOS (P200,000.00),
claimed as part of the expected profit of FOUR HUNDRED SIXTY
THOUSAND PESOS (P460,000.00) in connection with the
construction of that government building wherein the accused
had to intervene under the law in his capacity as Project
Manager/Consultant of said constructionsaid offense having
been committed in relation to the performance of his official
duties.

CONTRARY TO LAW.1

On 20 July 1990, during arraignment, petitioner pleaded not


guilty to the charges against him.

On 30 June 1993, after trial on the merits, the Second Division of


the Sandiganbayan rendered judgment finding petitioner guilty
beyond reasonable doubt. The dispositive portion reads as
follows:

WHEREFORE, judgment is hereby rendered finding accused Claro


Preclaro y Jambalos GUILTY beyond reasonable doubt of the
Violation of Section 3, paragraph (b) of Republic Act No. 3019, as
amended, otherwise known as the Anti-Graft and Corrupt
Practices Act, and he is hereby sentenced to suffer an
indeterminate penalty ranging from SIX (6) YEARS and ONE (1)
MONTH, as the minimum, to TEN (10) YEARS and ONE (1) DAY, as
the maximum, perpetual disqualification from public office and to
pay the costs of this action.

SO ORDERED.2

_____________

1 Rollo, p. 31.

2 Id., at 65.

458

458

SUPREME COURT REPORTS ANNOTATED

Preclaro vs. Sandiganbayan

The antecedent facts are largely undisputed.

On 1 October 1989, the Chemical Mineral Division of the Industrial


Technology Development Institute (ITDI), a component of the
Department of Science and Technology (DOST) employed
Petitioner under a written contract of services as Project Manager
to supervise the construction of the ITDI-CMD (JICA) Building at
the DOST Compound in Bicutan, Taguig, Metro Manila.3

The contract was to remain in effect from October 1, 1989 up to


the end of the construction period unless sooner terminated.4
Petitioner was to be paid a monthly salary drawn from
counterpart funds duly financed by foreign-assisted projects and
government funds duly released by the Department of Budget
and Management.5
In November 1989, to build the aforementioned CMD Structure,
DOST contracted the services of the Jaime Sta. Maria Construction
Company with Engr. Alexander Resoso, as the companys project
engineer.6

How petitioner committed a violation of the Anti-Graft & Corrupt


Practices Act is narrated in the Comment of the Solicitor General
and amply supported by the records. The material portions are
hereunder reproduced:

x x x.

3. In the month of May, 1990, Alexander Resoso, Project Engineer


of the Sta. Maria Construction Company, was in the process of
evaluating a Change Order for some eletricals in the building
construction when petitioner approached him at the project site
(p. 11, 25, Ibid.).

4. Unexpectedly, petitioner made some overtures that expenses


in the Change Order will be deductive (meaning, charged to the
contractor by deducting from the contract price), instead of
additive (meaning, charged to the owner). Petitioner intimated
that he can forget about the deductive provided he gets
P200,000.00, a chunk of the contractors profit which he roughly
estimated to be around P460,000.00

______________

3 Respondents Comment, Rollo, p. 78; Petition, Rollo, p. 13.

4 Petition, Rollo, p. 13.

5 Respondents Comment, Rollo, p. 79.

6 Sandiganbayan Decision dated 30 June 1993; Rollo, p. 32.

459
VOL. 247, AUGUST 21, 1995

459

Preclaro vs. Sandiganbayan

(pp. 12-13, 22, Ibid.).

5. Having conveyed the proposal to Jaime Sta. Maria, Sr., the


owner of Sta. Maria Construction Company, Resoso thereafter
asked petitioner if he wanted a rendezvous for him to receive the
money. Petitioner chose Wendys Restaurant, corner E. Delos
Santos Avenue and Camias Street, on June 6, 1990 at around 8:00
oclock in the evening (p. 14, Ibid.).

6. However, Sta. Maria, Sr. asked for two (2) more days or until
the 8th of June, perceiving financial constraints (Ibid.).

7. Petitioner relented, saying O.K. lang with me because we are


not in a hurry. (p. 15, Ibid.) Petitioner was thereafter asked to
bring along the result of the punch list (meaning, the list of
defective or correctible works to be done by the contractor) (p.
15, Ibid.; p. 10, TSN, 18 Oct. 1991).

8. On 7 June 1990, Sta. Maria, Sr. and Resoso proceeded to the


National Bureau of Investigation (NBI) to report the incident (p.
15, 35, Ibid.).

9. The NBI suggested an entrapment plan to which Sta. Maria, Sr.


signified his conformity (p. 16, TSN, 12 Oct. 1990). Accordingly,
Sta. Maria, Sr. was requested to produce the amount of
P50,000.00 in P500.00 denomination to represent the grease
money (p. 37, TSN, 6 Sept. 1990).

10. The next day, or on 8 June 1990, Resoso delivered the money
to the NBI. Thereafter, the money was dusted with flourescent
powder and placed inside an attache case (pp. 16-17, Ibid.).
Resoso got the attache case and was instructed not to open it.
Similarly, he was advised to proceed at the Wendys Restaurant
earlier than the designated time where a group of NBI men
awaited him and his companion, Sta. Maria, Jr. (pp. 17-18, Ibid.).

11. Hence, from the NBI, Resoso passed by the Jade Valley
Restaurant in Timog, Quezon City, to fetch Sta. Maria, Jr. (Ibid.).

12. At around 7:35 p.m., Resoso and Sta. Maria, Jr. arrived at the
Wendys Restaurant. They were led by the NBI men to a table
previously reserved by them which was similarly adjacent to a
table occupied by them (pp. 18-19, Ibid.).

13. Twenty minutes later, petitioner arrived. Supposedly, the


following conversation took place, to wit:

JUSTICE BALAJADIA:

When Dave Preclaro arrived, what did he do?

We asked him his order and we talked about the punch list.

What was his comment about the punch list?

He told us that it is harder to produce small items than big ones.

460

460

SUPREME COURT REPORTS ANNOTATED


Preclaro vs. Sandiganbayan

How long did you converse with Engr. Claro Preclaro?

I think thirty minutes or so.

Was Preclaro alone when he came?

Yes, Your Honor.

x x x.

PROS. CAOILI:

When you talk[ed] about his punch list, did you talk about
anything else?

Engineer Sta. Maria, Jr., they were conversing with Dave Preclaro
and he told [him], O, paano na.

JUSTICE ESCAREAL:

Who said Paano na?

Engineer Sta. Maria, [Jr.]. And then Preclaro told [him],Paano,


How will the money be arranged and can I bring it? he said.
And then Jimmy Sta. Maria, Jr. told him it was arranged on two
bundles on two envelopes.

And then Dave Preclaro told, Puede and he asked Jimmy Sta.
Maria, Jr. if there is express teller and could he deposit during
night time but Engineer Sta. Maria, Jr. told him, I do not have any
knowledge or I do not have any express teller you can deposit. I
only know credit card.

PROS. CAOLI:

When Engr. Sta. Maria intervened and interviewed him that way,
was there anything that happened?

Jimmy Sta. Maria, Jr. handed two envelopes to Preclaro.

Did Claro Preclaro receive these two envelopes from Engineer Sta.
Maria?

Yes, sir. (Pp. 19-21, Ibid., See also pp. 13-14, TSN, 29 Oct.1990.)

14. From the moment petitioner received the two envelopes with
his right hand, thereafter placing them under his left armpit, he
was accosted by the NBI men (p. 22, TSN, 12 Oct. 1990).

15. A camera flashed to record the event. Petitioner instinctively


docked to avoid the taking of pictures. In such manner, the two
envelopes fell (p. 23, Ibid.).

16. The NBI men directed petitioner to pick up the two enve-
lopes. Petitioner refused. Hence, one of the NBI men picked up the
envelopes and placed them inside a big brown envelope (p. 27,
Ibid.).

17. Petitioner was thenceforth brought to the NBI for examina-

461

VOL. 247, AUGUST 21, 1995

461

Preclaro vs. Sandiganbayan

tion (p. 28, Ibid.).

18. At the NBI Forensic Chemistry Section, petitioners right


palmar hand was tested positive of flourescent powder. The same
flourescent powder, however, cannot be detected in petitioners T-
shirt and pants (p. 5, TSN, 29 Oct. 1990).7

x x x.

Thus, as brought out at the outset, an information was filed


against petitioner which, after due hearing, resulted in his
conviction by the Sandiganbayan. Not satisfied with the decision,
petitioner instituted the present petition for review, ascribing to
the Sandiganbayan the following errors:

1. THE SANDIGANBAYAN ERRED IN TAKING COGNIZANCE OF THE


CASE, INSTEAD OF DISMISSING IT FOR LACK OF JURISDICTION,
THE [PETITIONER] NOT BEING A PUBLIC OFFICER; and

2. THE SANDIGANBAYAN ERRED IN NOT RULING THAT NOT ALL


THE ELEMENTS OF THE OFFENSE CHARGED HAVE BEEN
ESTABLISHED BEYOND REASONABLE DOUBT AND/OR THAT THE
GUILT OF THE [PETITIONER] HAS NOT BEEN ESTABLISHED BEYOND
REASONABLE DOUBT.
We find the petition unmeritorious.

On the first issue, petitioner asserts that he is not a public officer


as defined by Sec. 2(b) of the Anti-Graft & Corrupt Practices Act
(R.A. No. 3019 as amended), because he was neither elected nor
appointed to a public office. Rather, petitioner maintains that he
is merely a private individual hired by the ITDI on contractual
basis for a particular project and for a specified period8 as
evidenced by the contract of services9 he entered into with the
ITDI. Petitioner, to further support his theory, alleged that he
was not issued any appointment paper separate from the
abovementioned contract. He was not required to use the bundy
clock to record his hours of work and neither did he take an oath
of office.10

_______________

7 Respondents Comment, Rollo, pp. 79-84.

8 Petition, Rollo, p. 12.

9 Id., at 12-13.

10 Id., at 11-12.

462

462

SUPREME COURT REPORTS ANNOTATED

Preclaro vs. Sandiganbayan

We are not convinced by Petitioners arguments.

Petitioner miscontrues the definition of public officer in R.A. No.


3019 which, according to Sec. 2(b) thereof includes elective and
appointive officials and employees, permanent or temporary,
whether in the classified or unclassified or exemption service
receiving compensation, even nominal, from the
government. . . .

The word includes used in defining a public officer in Sec. 2(b)


indicates that the definition is not restrictive. The terms
classified, unclassified or exemption service were the old
categories of positions in the civil service which have been
reclassified into Career Service and Non-Career Service11 by PD
807 providing for the organization of the Civil Service
Commission12 and by the Administrative Code of 1987.13 Non-
career service in particular is characterized by

(1)entrance on bases other than those of the usual test of merit


and fitness utilized for the career service; and (2) tenure which is
limited to a period specified by law, or which is coterminous with
that of the appointing authority or subject to his pleasure, or
which is limited to the duration of a particular project for which
purpose employment was made.

The Non-Career Service shall include:

(1) Elective officials and their personal or confidential staff;

(2) Secretaries and other officials of Cabinet rank who hold their
positions at the pleasure of the President and their personal or
confidential staff(s);

(3) Chairman and members of commissions and boards with fixed


terms of office and their personal or confidential staff;

(4)Contractual personnel or those whose employment in the


government is in accordance with a special contract to undertake
a specific work or job, requiring special or technical skills not
available in the employing agency, to be accomplished within a
specific period, which in no case shall exceed one year, and
performs or accomplishes
_____________

11 de Leon, Hector S. & de Leon, Hector M. Jr., Law on Public


Officers & Election Law (1990 ed.), pp. 64-66.

12 Promulgated on 6 October 1975.

13 Book V, Title I, Subtitle A, Chapter 2, Sec. 6(2).

463

VOL. 247, AUGUST 21, 1995

463

Preclaro vs. Sandiganbayan

the specific work or job, under his own responsibility with a


minimum of direction and supervision from the hiring agency; and

(5) Emergency and seasonal personnel. (Italics ours.)14

From the foregoing classification, it is quite evident that petitioner


falls under the non-career service category (formerly termed the
unclassified or exemption service) of the Civil Service and thus is
a public officer as defined by Sec. 2(b) of the Anti-Graft & Corrupt
Practices Act (R.A. No. 3019).

The fact that petitioner is not required to record his working hours
by means of a bundy clock or did not take an oath of office
became unessential considerations in view of the above-
mentioned provision of law clearly including petitioner within the
definition of a public officer.

Similarly, petitioners averment that he could not be prosecuted


under the Anti-Graft & Corrupt Practices Act because his
intervention was not required by law but in the performance of a
contract of services entered into by him as a private individual
contractor,15 is erroneous. As discussed above, petitioner falls
within the definition of a public officer and as such, his duties
delineated in Annex B of the contract of services16 are
subsumed under the phrase wherein the public officer in his
official capacity has to intervene under the law.17 Petitioners
allegation, to borrow a cliche, is nothing but a mere splitting of
hairs.

____________

14 Id., sec. 9.

15 Rollo, p. 15.

16 JOB DESCRIPTION (PROJECT MANAGER)

Check contractors daily activities to conform with schedule;

Check quality of construction;

Evaluate contractors accomplishments reports/billings;

Advise on time saving construction method;

Check adequacy of material supply for scheduled construction


scope of work;

Advise on adequacy of equipment and manpower.

17 Sec. 3(b), RA No. 3019, otherwise known as the Anti-Graft &


Corrupt Practices Act.

464

464

SUPREME COURT REPORTS ANNOTATED


Preclaro vs. Sandiganbayan

Among petitioners duties as project manager is to evaluate the


contractors accomplishment reports/billings18 hence, as
correctly ruled by the Sandiganbayan he has the privilege and
authority to make a favorable recommendation and act favorably
in behalf of the government, signing acceptance papers and
approving deductives and additives are some examples.19 All of
the elements of Sec. 3(b) of the Anti-Graft & Corrupt Practices Act
are, therefore, present.

Anent the second issue, we likewise find Petitioners allegations


completely bereft of merit.

Petitioner insists that the prosecution has failed to establish his


guilt beyond reasonable doubt and that the charges against him
should be rejected for being improbable, unbelievable and
contrary to human nature.

We disagree.

Proof beyond reasonable doubt does not mean that which


produces absolute certainty. Only moral certainty is required or
that degree of proof which produces conviction in an
unprejudiced mind.20 We have extensively reviewed the records
of this case and we find no reason to overturn the findings of the
Sandiganbayan.

Petitioner enumerates the alleged improbabilities and


inconsistencies in the testimonies of the prosecution witnesses.
We shall examine the testimonies referred to with meticulousness.

Petitioner asserts that it was improbable for him to have


demanded P200,000.00 from Engr. Resoso, when he could have
just talked directly to the contractor himself. It is quite irrelevant
from whom petitioner demanded his percentage share of
P200,000.00 whether from the contractors project engineer, Engr.
Alexander Resoso or directly from the contractor himself Engr.
Jaime Sta. Maria Sr. That petitioner made such a demand is all
that is required by Sec. 3(b) of R.A. No. 3019 and this element has
been sufficiently established by the testimony of Engr. Resoso,
thus:

____________

18 See Note 15.

19 Rollo, p. 301.

20 Sec. 2, Rule 133 of the Revised Rules on Evidence.

465

VOL. 247, AUGUST 21, 1995

465

Preclaro vs. Sandiganbayan

xxx

You said when you were computing your Change Order Mr.
Preclaro or Dave Preclaro whom you identified approached you,
what did you talk about?

He mentioned to me that we are deductive in our Change Order


three and four so after our conversation I told this conversation to
my boss that we are deductible in the Change Order three and
four and then my boss told me to ask why it is deductive.

Q
Did you ask the accused here, Dave Preclaro why it is considered
deductive?

Yes, sir.

What was his answer if any?

I asked him that my boss is asking me to ask you how come it


became deductive when my computation is additive and he told
me that I have done so much for your company already and then
he picked up cement bag paper bag and computed our alleged
profit amounting to One Hundred Sixty Thousand Pesos and then
he told me that he used to use some percentage in projects
maximum and minimum and in our case he would use a minimum
percentage and multiply to 460 and . . .

JUSTICE ESCAREAL:

What is 460?

P460,000.00 and he said take of the butal and get two

Hundred Thousand Pesos.

JUSTICE BALAJADIA:

What is the translation now?


WITNESS:

And he said disregard the excess and I will just get the
P200,000.00. (Italics ours.)

PROS. CAOILI:

What does he mean by that if you know?

I do not know sir. He just said, I will get the P200,000.00 and tell it
to your boss. (Italics ours.)

JUSTICE BALAJADIA:

What is P200,000.00?

It is Two Hundred Thousand Pesos.

PROS. CAOILI:

What did you answer him when he told you that?

He told me to forget the deductive and electrical and after that I


told my boss what he told me.

Who is your boss?

466
466

SUPREME COURT REPORTS ANNOTATED

Preclaro vs. Sandiganbayan

Santa Maria, Sr.

What was the reaction of your boss when you relayed the
message to Mr. Preclaro?

The next day he told me to ask Dave where and when to pick up
the money so the next day I asked Dave Where do you intend to
get the money, the Boss wanted to know.

What was the answer of Dave?

And he told me, Wendys Restaurant at 3:00 oclock.

When?

June 6, Wednesday.

When he told you that did you comply with June 6 appointment?

A
I told my boss what he told me again that the meeting will take
place at Wendys Restaurant corner Edsa and Camias Street at
around 8:00 oclock p.m. June 6, Wednesday.

What did your boss tell you?

The next day he told me to ask Dave.

What did your boss tell you?

My boss told me to ask Dave to postpone the meeting on June 6


to be postponed on June 8 at the same place and same time
because my boss is having financial problem.

Did you relay the postponement to Dave Preclaro?

Yes sir. I told what my boss told me.

What was his reaction?

Dave told me O.K. lang with me because we are not in a hurry.


Any way we are the ones to sign the acceptance papers and my
boss instructed me that on Friday to ask Dave to bring along the
result of the punch list and if possible also to bring along the
acceptance papers to be signed by Dave, Lydia Mejia and Dr. Lirag
the director.
Q

What happened next after meeting with Preclaro to relay the


postponement if any?

Nothing happened. The next day, Thursday the boss instructed


me to go with him to the NBI to give a statement.

Did you go to the NBI and report the incident to the NBI?

Yes sir.

Did you give a statement before any of the agents of the NBI?

Yes, sir.21

xxx

_____________

21 TSN, 6 September 1990, pp. 12-13.

467

VOL. 247, AUGUST 21, 1995

467

Preclaro vs. Sandiganbayan


Likewise, petitioners alleged refusal to see Mr. Jaime Sta. Maria,
Sr. when the latter tried to arrange meetings with him regarding
his demand22 does not weaken the cause against petitioner. It
does not at all prove that petitioner did not ask for money.
Conceivably, petitioner did not muster enough courage to ask
money directly from the contractor himself. Getting the amount
through the project engineer would be safer because if Mr. Sta.
Maria, Sr. had refused to give money, petitioner could always
deny having made the demand.

Petitioner contends that the percentage demanded in the amount


of P200,000.00 is too high considering that the estimated profit of
the contractor from the CMD project is only P460,000.00. In
petitioners words, this would scare the goose that lays the
golden egg.23 We reject this argument. The aforementioned
contractors profit is petitioners own computation as testified to
by Engr. Resoso:

xxx

I asked him that my boss is asking me to ask you how come it


became deductive when my computation is additive and he told
me that I have done so much for your company already and then
he picked up cement bag paper bag and computed our alleged
profit amounting to One Hundred Sixty Thousand Pesos and then
he told me that he used to use some percentage in projects
maximum and minimum and in our case he would use a minimum
percentage and multiply to 460 and . . . (Italics ours.)

JUSTICE ESCAREAL:

What is 460?

A
P460,000.00 and it ended to P215 thousand or P20,000.00 and he
said take of the butal and get the Two Hundred Thousand Pesos.
(Italics ours.)

JUSTICE BALAJADIA:

What is the translation now?

WITNESS:

And he said disregard the excess and I will just get the
P200,000.00.

______________

22 Id., Id. at 41-42.

23 Rollo, p. 17.

468

468

SUPREME COURT REPORTS ANNOTATED

Preclaro vs. Sandiganbayan

PROS. CAOILI:

What does he mean by that if you know?

A
I do not know sir. He just said, I will get the P200,000.00 and tell it
to your boss.24

xxx

The records, however, do not show the true and actual amount
that the Sta. Maria Construction will earn as profit. There is,
therefore, no basis for petitioners contention as the actual profit
may be lower or higher than his estimation.

Besides, as related by Engr. Resoso, petitioner considers the


P200,000.00 percentage proper compensation since he has
allegedly done so much for the Sta. Maria construction
company.25

Petitioner also argues that:

According to STA. MARIA, SR., they were deductive by


P280,000.00 (Id., pp. 34-35).

If STA. MARIA CONSRUCTION was deductive in the amount of


P280,000.00, why would the petitioner still demand P200,000.00
which would increase the contractors loss to P480,000.00!

It might have been different if the changes were additive where


STA. MARIA CONSTRUCTION would have earned more, thereby
providing motive for the petitioner to ask for a percentage!26

But this is precisely what petitioner was bargaining for


P200,000.00 in exchange for forgetting about the deductive27
and thus prevent the Sta. Maria Construction from incurring
losses.

Petitioners contention that it was impossible for him to make any


demands because the final decision regarding accomplishments
and billing lies with the DOST technical committee is
unacceptable. Petitioner is part of the abovementioned technical
committee as the ITDI representative consultant. This is part of
his duties under the contract of services in connection with which
he was employed by the ITDI. Even, assuming arguendo

_________________

24 TSN, 6 September 1990, pp. 12-13.

25 Id. at 12.

26 Rollo, p. 18.

27 TSN, 6 September 1990, p. 13.

469

VOL. 247, AUGUST 21, 1995

469

Preclaro vs. Sandiganbayan

that petitioner does not make the final decision, as supervisor/


consultant, his recommendations will necessarily carry much
weight. Engr. Resoso testified thus:

PROS. CAOILI:

As a Project Engineer to whom do you present your billing papers


accomplishment report or purchase order?

The billing paper was being taken cared of by the, of our office. I
personally do my job as supervisor in the construction.

Q
Do you have any counterpart to supervise the project from the
government side?

Yes, we have. Yes, the DOST have a technical Committee Infra-


Structure Committee and also the ITDI as its own representative.

Who composed the Technical Committee of the DOST?

A certain Engineer Velasco, Engineer Sande Banez and Engineer


Mejia.

How about the ITDI?

The ITDI representative composed of Dave Preclaro.

Who is this Dave Preclaro?

He is the consultant of ITDI. (Italics ours.)

xxx

ATTY. CAOILI:

As Project Engineer do you consult to any body regarding your


job?

A
First if there is any problem in the site I consult my boss.

PROS. CAOILI:

How about with the other consultants representing the ITDI and
DOST?

In the construction site we have meeting every Monday to discuss


any problem.

With whom do you discuss this problem?

The Infra-structure Committee of DOST and the Infrastructure


Committee of ITDI, the architect and the contractor. We had
weekly meetings.

What matters if any do you consult with Mr. Claro Preclaro?

ATTY. JIMENEZ:

No basis.

JUSTICE ESCAREAL:

They met on problems on Mondays.

ATTY. JIMENEZ:
But there is no mention of Preclaro specifically.

470

470

SUPREME COURT REPORTS ANNOTATED

Preclaro vs. Sandiganbayan

JUSTICE ESCAREAL:

With the representative of DOST and Preclaro.

ATTY. JIMENEZ:

Does that also mean that Preclaro is also among the


representatives he is going to consult with? Well any way . . .

JUSTICE ESCAREAL:

Witness may answer the question. Read back the question.

COURT STENOGRAPHER:

Reading back the question as ordered by the Court.

WITNESS:

A
Every Monday meeting we tackle with accomplishment report the
billing papers.28 (Italics ours.)

xxx

Petitioner also claims that the testimonies of the prosecution


witnesses regarding the entrapment itself are conflicting, doubtful
or improbable:

(aaa) according to RESOSO, only FOUR (4) P500 bills were dusted
with flourescent powder and used in the alleged entrapment.

Contradicting RESOSO, STA. MARIA, SR. said that he gave fifty


thousand (P50,000.00) pesos in P500 denomination to the NBI.29

There is no such inconsistency. Said witnesses were testifying on


two different subjects. Engr. Sta. Maria, Sr.s testimony touched on
the amount he gave the NBI for use in the entrapment while Engr.
Resosos declaration referred only to the number of bills dusted
with flourescent powder.

Petitioner, likewise, misappreciated the following testimony of


Resoso:

PROS. CAOILI:

What did he do with the two envelopes upon receiving the same?

Then he asked Jaime Sta. Maria, Jr. if there is bank teller express,
if he could deposit the money but Mr. Sta. Maria

_____________

28 Id. at 8-11
29 Rollo, p. 20.

471

VOL. 247, AUGUST 21, 1995

471

Preclaro vs. Sandiganbayan

said, I do not have, I only have credit cards.30

Petitioner intended to deposit the money in his own account not


that of Mr. Sta. Maria, Jr. He was merely inquiring from the latter if
there was an express teller nearby where he could make the
deposit. Mr. Sta. Maria Jr. himself testified as follows:

He asked me if there was express teller. I told him I do not know


then he asked me whether it is possible to deposit at the Express
Teller at that time. I told him I dont know because I have no
express teller card and he asked me how am I going to arrange,
how was it arranged if I will bring it, can I bring it. Then I told him
that it was placed in two envelopes consisting of 500 Peso bills
and then he said Okay na yan.31

The failure of the NBI to take photographs of the actual turnover


of the money to petitioner is not fatal to the Peoples cause. The
transaction was witnessed by several people, among whom were
Engr. Resoso, Mr. Sta. Maria Jr. and the NBI agents whose
testimonies on the circumstances before, during and after the
turn-over are consistent, logical and credible.

According to NBI Agent Francisco Balanban Sr., they purposely


took no photographs of the actual turn-over so as not to alert and
scare off the petitioner. During cross-examination Agent Balanban
Jr. stated:

xxx

Now, of course, this entrapment operation, you made certain


preparation to make sure that you would be able to gather
evidence in support of the entrapment?

Yes sir.

As a matter of fact you even brought photographer for the


purpose?

That is right sir.

And that photographer was precisely brought along to record the


entrapment?

Yes sir.

_______________

30 TSN, 6 September 1990, p. 21.

31 TSN, 29 October 1990, p. 13.

472
472

SUPREME COURT REPORTS ANNOTATED

Preclaro vs. Sandiganbayan

From the beginning to the end, that was the purpose?

At the time of the arrest sir.

ATTY. JIMENEZ:

From the time of the handing over of the envelopes until the
entrapment would have been terminated?

No sir we plan to take the photograph only during the arrest


because if we take photographs he would be alerted during the
handing of the envelopes. (Italics ours.)

So you did not intend to take photographs of the act of handing of


the envelopes to the suspect?

We intended but during that time we cannot take photographs at


the time of the handing because the flash will alert the suspect.
(Italics ours.)

JUSTICE ESCAREAL:
Why did you not position the photographer to a far distance place
with camera with telescopic lens?

We did not Your Honor.

ATTY. JIMENEZ:

So was it your intention to take photographs only at the time that


he is already being arrested?

Yes, sir.32

xxx

Petitioner insists that when his hands were placed under ultra-
violet light, both were found negative for flourescent powder. This
is petitioners own conclusion which is not supported by evidence.
Such self-serving statement will not prevail over the clear and
competent testimony and the report33 submitted by the forensic
expert of the NBI Ms. Demelen R. dela Cruz, who was the one who
conducted the test and found petitioners right palmar hand
positive for flourescent powder, the same hand he used,
according to witnesses Resoso and Sta. Maria, Jr., to get the
money from the latter.

xxx

Mrs. dela Cruz since when have you been a Forensic Chemist at
NBI?

Since 1981 sir.


_______________

32 TSN, 12 October 1990, pp. 29-30

33 Original Records, Exhibit H to H-4.

473

VOL. 247, AUGUST 21, 1995

473

Preclaro vs. Sandiganbayan

JUSTICE ESCAREAL:

By the way, is the defense willing to admit that the witness is a


competent as . . . . . . .

ATTY. JIMENEZ:

Admitted Your Honor.

PROS. CAOILI:

Madam Witness did you conduct a forensic examination in the


person of one Dave Preclaro y Jambalos?

Yes sir.

Q
If that person whom you examined is here in court would you be
able to recognize him?

ATTY. JIMENEZ:

We admit that the accused is the one examined by the witness.

ATTY. CAOILI:

Did you prepare the result of the examination in writing?

Yes sir.

PROS. CAOILI:

Showing to you Physic Examination No. 90-961 which for


purposes of identification has already been marked as Exh.H what
relation has this have with the report that you mentioned a while
ago?

This is the same report that I prepared sir.

How did you conduct such flourescent examination?

The left and right hands of the accused were placed under the
ultra violet lamp sir.

Q
What was the result?

It gave a . . . under the ultra violet lamp the palmar hands of the
suspect gave positive result for the presence of flourescent
powder.

What palmar hands?

Right hand sir.

What other examination did you conduct?

And also the clothing, consisting of the t-shirts and the pants were
examined. Under the ultra violet lamp the presence of the
flourescent powder of the t-shirts and pants cannot be seen or
distinguished because the fibers or the material of the cloth under
the ultra violet lamp was flouresce.

Please tell the Court why the t-shirts and pants under the ultra
violet lamp was flouresce?

474

474

SUPREME COURT REPORTS ANNOTATED

Preclaro vs. Sandiganbayan


A

The materials or the fibers of the clothings it could have been


dyed with flourescent dyes sir.34

xxx

What we find improbable and contrary to human experience is


petitioners claim that he was set up by Engr. Sta. Maria, Sr. and
Engr. Resoso for no other purpose but revenge on account of
petitioners failure to recommend the Sta. Maria Construction to
perform the extra electrical works.35

The Sandiganbayan has aptly ruled on this matter, thus:

For another, the claim of accused that there was ill-will on the
part of the construction company is hardly plausible. It is highly
improbable for the company to embark on a malicious
prosecution of an innocent person for the simple reason that such
person had recommended the services of another construction
firm. And it is extremely impossible for such company to enlist the
cooperation and employ the services of the governments chief
investigative agency for such an anomalous undertaking. It is
more in accord with reason and logic to presuppose that there
was some sort of a mischievous demand made by the accused in
exchange for certain favorable considerations, such as, favorable
recommendation on the completeness of the project, hasslefree
release of funds, erasure of deductives, etc. Indeed, the rationale
for the occurrence of the meeting and the demand for money is
infinite and boundless.36

As correctly pointed out by the Solicitor General, Engr. Sta. Maria,


Sr., who was then engaged in the construction of another DOST
building, would not risk his business or livelihood just to exact
revenge which is neither profitable nor logical. As we aptly stated
in Maleg v. Sandiganbayan:37
It is hard to believe that the complainant who is a contractor
would jeopardize and prejudice his business interests and risk
being blacklisted in government infrastructure projects, knowing
that with the institution of the case, he may find it no longer
advisable nor

______________

34 TSN, 29 October 1990, pp. 4-5.

35 Rollo, p. 25.

36 Id. at 296-297.

37 160 SCRA 623 (1988).

475

VOL. 247, AUGUST 21, 1995

475

Preclaro vs. Sandiganbayan

profitable to continue in his construction ventures. It is hardly


probable that the complainant would weave out of the blue a
serious accusation just to retaliate and take revenge on the
accused.

From the foregoing, the conclusion is inescapable that on the


basis of the testimonial and documentary evidence presented
during the trial, the guilt of petitioner has been established
beyond reasonable doubt.

WHEREFORE, the appealed decision of the Sandiganbayan is


hereby AFFIRMED.
SO ORDERED.

Padilla (Chairman), Davide, Jr., Bellosillo and Hermosisima, Jr.,


JJ., concur.

Judgment affirmed.

Notes.It is elementary law that a witness can testify only to


those facts which he knows of his own knowledge. (People vs.
Adofina, 239 SCRA 67 [1994])

Before the respondent in an action for recovery of unexplained


wealth under Republic Act No. 1379 can be required to submit
counter-affidavits and other supporting documents, the
complainant must first submit his affidavit and those of his
witnesses. (Olivas vs. Office of the Ombudsman, 239 SCRA 283
[1994])

o0o

[Preclaro vs. Sandiganbayan, 247 SCRA 454(1995)]

VOL. 293, JULY 23, 1998

141

Ople vs. Torres

G.R. No. 127685. July 23, 1998.*

BLAS F. OPLE, petitioner, vs. RUBEN D. TORRES, ALEXANDER


AGUIRRE, HECTOR VILLANUEVA, CIELITO HABITO, ROBERT
BARBERS, CARMENCITA REODICA, CESAR SARINO, RENATO
VALENCIA, TOMAS P. AFRICA, HEAD OF THE NATIONAL COMPUTER
CENTER and CHAIRMAN OF THE COMMISSION ON AUDIT,
respondents.
Constitutional Law; Administrative Law; Administrative Order No.
308; As a Senator, petitioner is possessed of the requisite
standing to bring suit raising the issue that the issuance of
Administrative Order No. 308 is a usurpation of legislative power.
As is usual in constitutional litigation, respondents raise the
threshold issues relating to the standing to sue of the petitioner
and the justiciability of the case at bar. More specifically,
respondents aver that petitioner has no legal interest to uphold
and that the implementing rules of A.O. No. 308 have yet to be
promulgated. These submissions do not deserve our sympathetic
ear. Petitioner Ople is a distinguished member of our Senate. As a
Senator, petitioner is possessed of the requisite standing to bring
suit raising the issue that the issuance of A.O. No. 308 is a
usurpation of legislative power. As taxpayer and member of the
Government Service Insurance System (GSIS), petitioner can also
impugn the legality of the misalignment of public funds and the
misuse of GSIS funds to implement A.O. No. 308.

Same; Same; Same; Administrative power is concerned with the


work of applying policies and enforcing orders as determined by
proper governmental organs.Administrative power is concerned
with the work of applying policies and enforcing orders as
determined by proper governmental organs. It enables the
President to fix a uniform standard of administrative efficiency
and check the official conduct of his agents. To this end, he can
issue administrative orders, rules and regulations.

Same; Same; Same; Administrative Order No. 308 involves a


subject that is not appropriate to be covered by an administrative
order.Prescinding from these precepts, we hold that A.O. No.
308

_______________

* EN BANC.
142

142

SUPREME COURT REPORTS ANNOTATED

Ople vs. Torres

involves a subject that is not appropriate to be covered by an


administrative order. x x x An administrative order is an ordinance
issued by the President which relates to specific aspects in the
administrative operation of government. It must be in harmony
with the law and should be for the sole purpose of implementing
the law and carrying out the legislative policy.

Same; Same; Same; Argument that Administrative Order No. 308


implements the legislative policy of the Administrative Code of
1987 rejected.We reject the argument that A.O. No. 308
implements the legislative policy of the Administrative Code of
1987. The Code is a general law and incorporates in a unified
document the major structural, functional and procedural
principles of governance and embodies changes in
administrative structures and procedures designed to serve the
people.

Same; Same; Same; Administrative Order No. 308 cannot pass


constitutional muster as an administrative legislation because
facially it violates the right to privacy.Assuming, arguendo, that
A.O. No. 308 need not be the subject of a law, still it cannot pass
constitutional muster as an administrative legislation because
facially it violates the right to privacy. The essence of privacy is
the right to be let alone.

Same; Same; Same; Any law or order that invades individual


privacy will be subjected by the Court to strict scrutiny.In no
uncertain terms, we also underscore that the right to privacy does
not bar all incursions into individual privacy. The right is not
intended to stifle scientific and technological advancements that
enhance public service and the common good. It merely requires
that the law be narrowly focused and a compelling interest justify
such intrusions. Intrusions into the right must be accompanied by
proper safeguards and well-defined standards to prevent
unconstitutional invasions. We reiterate that any law or order that
invades individual privacy will be subjected by this Court to strict
scrutiny.

KAPUNAN, J., Dissenting Opinion

Constitutional Law; Administrative Law; Administrative Order No.


308; The new identification system would tremendously improve
and uplift public service in our country to the benefit of Filipino
citizens and resident aliens.The new identification system would

143

VOL. 293, JULY 23, 1998

143

Ople vs. Torres

tremendously improve and uplift public service in our country to


the benefit of Filipino citizens and resident aliens. It would
promote, facilitate and speed up legitimate transactions with
government offices as well as with private and business entities.
Experience tells us of the constant delays and inconveniences the
public has to suffer in availing of basic public services and social
security benefits because of inefficient and not too reliable means
of identification of the beneficiaries.
Same; Same; Same; The Administrative Code of 1987 has
unequivocally vested the President with quasi-legislative powers
in the form of executive orders, administrative orders,
proclamations, memorandum orders and circulars and general or
special orders.The Administrative Code of 1987 has
unequivocally vested the President with quasi-legislative powers
in the form of executive orders, administrative orders,
proclamations, memorandum orders and circulars and general or
special orders. An administrative order, like the one under which
the new identification system is embodied, has its peculiar
meaning under the 1987 Administrative Code: SEC. 3.
Administrative Orders.Acts of the President which relate to
particular aspects of governmental operations in pursuance of his
duties as administrative head shall be promulgated in
administrative orders.

MENDOZA, J., Separate Opinion

Constitutional Law; Administrative Law; Administrative Order No.


308; Petitioner Blas F. Ople has no cause of action and, therefore,
no standing to bring the action.Given the fact that no right of
privacy is involved in this case and that any objection to the
Identification Reference System on the ground that it violates
freedom of thought is premature, speculative, or conjectural
pending the issuance of the implementing rules, it is clear that
petitioner Blas F. Ople has no cause of action and, therefore, no
standing to bring this action. Indeed, although he assails A.O. No.
308 on the ground that it violates the right of privacy, he claims
no personal injury suffered as a result of the Order in question.
Instead, he says he is bringing this action as taxpayer, Senator,
and member of the Government Service Insurance System.

144
144

SUPREME COURT REPORTS ANNOTATED

Ople vs. Torres

PETITION to review a decision of the Executive Secretary and the


Members of the Inter-Agency Coordinating Committee.

The facts are stated in the opinion of the Court.

Manuel Joseph R. Bretana III for petitioner.

The Solicitor General for respondents.

PUNO, J.:

The petition at bar is a commendable effort on the part of Senator


Blas F. Ople to prevent the shrinking of the right to privacy, which
the revered Mr. Justice Brandeis considered as the most
comprehensive of rights and the right most valued by civilized
men.1 Petitioner Ople prays that we invalidate Administrative
Order No. 308 entitled Adoption of a National Computerized
Identification Reference System on two important constitutional
grounds, viz.: one, it is a usurpation of the power of Congress to
legislate, and two, it impermissibly intrudes on our citizenrys
protected zone of privacy. We grant the petition for the rights
sought to be vindicated by the petitioner need stronger barriers
against further erosion.

A.O. No. 308 was issued by President Fidel V. Ramos on December


12, 1996 and reads as follows:

ADOPTION OF A NATIONAL COMPUTERIZED

IDENTIFICATION REFERENCE SYSTEM


WHEREAS, there is a need to provide Filipino citizens and foreign
residents with the facility to conveniently transact business with
basic service and social security providers and other government
instrumentalities;

WHEREAS, this will require a computerized system to properly and


efficiently identify persons seeking basic services on social

_______________

1 Dissenting Opinion of Justice Brandeis in Olmstead v. United


States, 277 U.S. 438, 478 [1928].

145

VOL. 293, JULY 23, 1998

145

Ople vs. Torres

security and reduce, if not totally eradicate, fraudulent


transactions and misrepresentations;

WHEREAS, a concerted and collaborative effort among the various


basic services and social security providing agencies and other
government instrumentalities is required to achieve such a
system;

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of


the Philippines, by virtue of the powers vested in me by law, do
hereby direct the following:

SECTION 1. Establishment of a National Computerized


Identification Reference System. A decentralized Identification
Reference System among the key basic services and social
security providers is hereby established.

SEC. 2. Inter-Agency Coordinating Committee. An InterAgency


Coordinating Committee (IACC) to draw-up the implementing
guidelines and oversee the implementation of the System is
hereby created, chaired by the Executive Secretary, with the
following as members:

Head, Presidential Management Staff

Secretary, National Economic Development Authority

Secretary, Department of the Interior and Local Government

Secretary, Department of Health

Administrator, Government Service Insurance System

Administrator, Social Security System

Administrator, National Statistics Office

Managing Director, National Computer Center

SEC. 3. Secretariat. The National Computer Center (NCC) is


hereby designated as secretariat to the IACC and as such shall
provide administrative and technical support to the IACC.

SEC. 4. Linkage Among Agencies. The Population Reference


Number (PRN) generated by the NSO shall serve as the common
reference number to establish a linkage among concerned
agencies. The IACC Secretariat shall coordinate with the different
Social Security and Services Agencies to establish the standards
in the use of Biometrics Technology and in computer application
designs of their respective systems.

SEC. 5. Conduct of Information Dissemination Campaign. The


Office of the Press Secretary, in coordination with the National
Statistics Office, the GSIS and SSS as lead agencies and other
concerned agencies shall undertake a massive tri-media
information

146

146

SUPREME COURT REPORTS ANNOTATED

Ople vs. Torres

dissemination campaign to educate and raise public awareness


on the importance and use of the PRN and the Social Security
Identification Reference.

SEC. 6. Funding. The funds necessary for the implementation of


the system shall be sourced from the respective budgets of the
concerned agencies.

SEC. 7. Submission of Regular Reports. The NSO, GSIS and SSS


shall submit regular reports to the Office of the President, through
the IACC, on the status of implementation of this undertaking.

SEC. 8. Effectivity. This Administrative Order shall take effect


immediately.

DONE in the City of Manila, this 12th day of December in the year
of Our Lord, Nineteen Hundred and Ninety-Six.

(SGD.) FIDEL V. RAMOS

A.O. No. 308 was published in four newspapers of general


circulation on January 22, 1997 and January 23, 1997. On January
24, 1997, petitioner filed the instant petition against respondents,
then Executive Secretary Ruben Torres and the heads of the
government agencies, who as members of the Inter-Agency
Coordinating Committee, are charged with the implementation of
A.O. No. 308. On April 8, 1997, we issued a temporary restraining
order enjoining its implementation.

Petitioner contends:

A. THE ESTABLISHMENT OF A NATIONAL COMPUTERIZED


IDENTIFICATION REFERENCE SYSTEM REQUIRES A LEGISLATIVE
ACT. THE ISSUANCE OF A.O. NO. 308 BY THE PRESIDENT OF THE
REPUBLIC OF THE PHILIPPINES IS, THEREFORE, AN
UNCONSTITUTIONAL USURPATION OF THE LEGISLATIVE POWERS
OF THE CONGRESS OF THE REPUBLIC OF THE PHILIPPINES.

B. THE APPROPRIATION OF PUBLIC FUNDS BY THE PRESIDENT FOR


THE IMPLEMENTATION OF A.O. NO. 308 IS AN UNCONSTITUTIONAL
USURPATION OF THE EXCLUSIVE RIGHT OF CONGRESS TO
APPROPRIATE PUBLIC FUNDS FOR EXPENDITURE.

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C. THE IMPLEMENTATION OF A.O. NO. 308 INSIDIOUSLY LAYS THE


GROUNDWORK FOR A SYSTEM WHICH WILL VIOLATE THE BILL OF
RIGHTS ENSHRINED IN THE CONSTITUTION.2

Respondents counter-argue:

A. THE INSTANT PETITION IS NOT A JUSTICIABLE CASE AS WOULD


WARRANT A JUDICIAL REVIEW;

B. A.O. NO. 308 [1996] WAS ISSUED WITHIN THE EXECUTIVE AND
ADMINISTRATIVE POWERS OF THE PRESIDENT WITHOUT
ENCROACHING ON THE LEGISLATIVE POWERS OF CONGRESS;
C. THE FUNDS NECESSARY FOR THE IMPLEMENTATION OF THE
IDENTIFICATION REFERENCE SYSTEM MAY BE SOURCED FROM THE
BUDGETS OF THE CONCERNED AGENCIES;

D. A.O. NO. 308 [1996] PROTECTS AN INDIVIDUALS INTEREST IN


PRIVACY.3

We now resolve.

As is usual in constitutional litigation, respondents raise the


threshold issues relating to the standing to sue of the petitioner
and the justiciability of the case at bar. More specifically,
respondents aver that petitioner has no legal interest to uphold
and that the implementing rules of A.O. No. 308 have yet to be
promulgated.

These submissions do not deserve our sympathetic ear. Petitioner


Ople is a distinguished member of our Senate. As a Senator,
petitioner is possessed of the requisite standing to bring suit
raising the issue that the issuance of A.O. No. 308

_______________

2 Petition, p. 9, Rollo, p. 11.

3 Comment, pp. 6, 9, 14, 15, Rollo, pp. 65, 68, 73-74.

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is a usurpation of legislative power.4 As taxpayer and member of
the Government Service Insurance System (GSIS), petitioner can
also impugn the legality of the misalignment of public funds and
the misuse of GSIS funds to implement A.O. No. 308.5

The ripeness for adjudication of the petition at bar is not affected


by the fact that the implementing rules of A.O. No. 308 have yet
to be promulgated. Petitioner Ople assails A.O. No. 308 as invalid
per se and as infirmed on its face. His action is not premature for
the rules yet to be promulgated cannot cure its fatal defects.
Moreover, the respondents themselves have started the
implementation of A.O. No. 308 without waiting for the rules. As
early as January 19, 1997, respondent Social Security System
(SSS) caused the publication of a notice to bid for the
manufacture of the National Identification (ID) card.6 Respondent
Executive Secretary Torres has publicly announced that
representatives from the GSIS and the SSS have completed the
guidelines for the national identification system.7 All signals from
the respondents show their unswerving will to implement A.O. No.
308 and we need not wait for the formality of the rules to pass
judgment on its constitutionality. In this light, the dissenters
insistence that we tighten the rule on standing is not a
commendable stance as its result would be to throttle an
important constitutional principle and a fundamental right.

II

We now come to the core issues. Petitioner claims that A.O. No.
308 is not a mere administrative order but a law and hence,
beyond the power of the President to issue. He alleges

_______________
4 Philconsa v. Enriquez, 235 SCRA 506 [1994]; Guingona v. PCGG,
207 SCRA 659 [1992]; Tolentino v. Commission on Elections, 41
SCRA 702 [1971].

5 Sanidad v. Commission on Elections, 73 SCRA 333 [1976];


Pascual v. Secretary of Public Works, 110 Phil. 331 [1960].

6 Invitation to Bid, Annex E to the Petition, Rollo, p. 50.

7 Annex B to Petitioners Reply, Rollo, p. 144.

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that A.O. No. 308 establishes a system of identification that is all-


encompassing in scope, affects the life and liberty of every
Filipino citizen and foreign resident, and more particularly,
violates their right to privacy.

Petitioners sedulous concern for the Executive not to trespass on


the lawmaking domain of Congress is understandable. The
blurring of the demarcation line between the power of the
Legislature to make laws and the power of the Executive to
execute laws will disturb their delicate balance of power and
cannot be allowed. Hence, the exercise by one branch of
government of power belonging to another will be given a stricter
scrutiny by this Court.

The line that delineates Legislative and Executive power is not


indistinct. Legislative power is the authority, under the
Constitution, to make laws, and to alter and repeal them.8 The
Constitution, as the will of the people in their original, sovereign
and unlimited capacity, has vested this power in the Congress of
the Philippines.9 The grant of legislative power to Congress is
broad, general and comprehensive.10 The legislative body
possesses plenary power for all purposes of civil government.11
Any power, deemed to be legislative by usage and tradition, is
necessarily possessed by Congress, unless the Constitution has
lodged it elsewhere.12 In fine, except as limited by the
Constitution, either expressly or impliedly, legislative power
embraces all subjects and extends to matters of general concern
or common interest.13

_______________

8 Government of the Philippine Islands v. Springer, 50 Phil. 259,


276 [1927].

9 Section 1, Article VI, 1987 Constitution.

10 Fernando, The Philippine Constitution, pp. 175-176 [1974].

11 Id., at 177; citing the concurring opinion of Justice Laurel in


Schneckenburger v. Moran, 63 Phil. 249, 266 [1936].

12 Vera v. Avelino, 77 Phil. 192, 212 [1936].

13 See concurring opinion of Justice Laurel in Schneckenburger v.


Moran, supra, at 266-267.

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While Congress is vested with the power to enact laws, the
President executes the laws.14 The executive power is vested in
the President.15 It is generally defined as the power to enforce
and administer the laws.16 It is the power of carrying the laws
into practical operation and enforcing their due observance.17

As head of the Executive Department, the President is the Chief


Executive. He represents the government as a whole and sees to
it that all laws are enforced by the officials and employees of his
department.18 He has control over the executive department,
bureaus and offices. This means that he has the authority to
assume directly the functions of the executive department,
bureau and office, or interfere with the discretion of its officials.19
Corollary to the power of control, the President also has the duty
of supervising the enforcement of laws for the maintenance of
general peace and public order. Thus, he is granted administrative
power over bureaus and offices under his control to enable him to
discharge his duties effectively.20

Administrative power is concerned with the work of applying


policies and enforcing orders as determined by proper
governmental organs.21 It enables the President to fix a uniform
standard of administrative efficiency and check the offi-

_______________

14 Government of the Philippine Islands v. Springer, 50 Phil. 259,


305 [1927].

15 Section 1, Article VII, 1987 Constitution.

16 Cruz, Philippine Political Law, p. 173 [1996].

17 Taada and Carreon, Political Law of the Philippines, vol. 1, p.


275 [1961].
18 Section 17, Article VII of the 1987 Constitution provides: Sec.
17. The President shall have control of all the executive
departments, bureaus and offices. He shall ensure that the laws
be faithfully executed.

19 Pelaez v. Auditor General, 15 SCRA 569, 583 [1965].

20 Sinco, Philippine Political Law, pp. 234-235 [1962].

21 Id., at 234.

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cial conduct of his agents.22 To this end, he can issue


administrative orders, rules and regulations.

Prescinding from these precepts, we hold that A.O. No. 308


involves a subject that is not appropriate to be covered by an
administrative order. An administrative order is:

Sec. 3. Administrative Orders.Acts of the President which relate


to particular aspects of governmental operation in pursuance of
his duties as administrative head shall be promulgated in
administrative orders.23

An administrative order is an ordinance issued by the President


which relates to specific aspects in the administrative operation of
government. It must be in harmony with the law and should be for
the sole purpose of implementing the law and carrying out the
legislative policy.24 We reject the argument that A.O. No. 308
implements the legislative policy of the Administrative Code of
1987. The Code is a general law and incorporates in a unified
document the major structural, functional and procedural
principles of governance25 and embodies changes in
administrative structures and procedures designed to serve the
people.26 The Code is divided into seven (7) Books: Book I deals
with Sovereignty and General Administration, Book II with the
Distribution of Powers of the three branches of Government, Book
III on the Office of the President, Book IV on the Executive Branch,
Book V on the Constitutional Commissions, Book VI on National
Government Budgeting, and Book VII on Administrative
Procedure. These Books contain provisions on the organization,
powers and general administration of the executive, legislative
and judicial branches of government, the organization and ad-

_______________

22 Id., at 235.

23 Section 3, Chapter 2, Title I, Book III, Administrative Code of


1987.

24 Cruz, Philippine Administrative Law, p. 18 [1991].

25 Third Whereas Clause, Administrative Code of 1987.

26 Fourth Whereas Clause, Administrative Code of 1987.

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ministration of departments, bureaus and offices under the


executive branch, the organization and functions of the
Constitutional Commissions and other constitutional bodies, the
rules on the national government budget, as well as guidelines for
the exercise by administrative agencies of quasi-legislative and
quasi-judicial powers. The Code covers both the internal
administration of government, i.e., internal organization,
personnel and recruitment, supervision and discipline, and the
effects of the functions performed by administrative officials on
private individuals or parties outside government.27

It cannot be simplistically argued that A.O. No. 308 merely


implements the Administrative Code of 1987. It establishes for the
first time a National Computerized Identification Reference
System. Such a System requires a delicate adjustment of various
contending state policiesthe primacy of national security, the
extent of privacy interest against dossiergathering by
government, the choice of policies, etc. Indeed, the dissent of Mr.
Justice Mendoza states that the A.O. No. 308 involves the all-
important freedom of thought. As said administrative order
redefines the parameters of some basic rights of our citizenry vis-
a-vis the State as well as the line that separates the
administrative power of the President to make rules and the
legislative power of Congress, it ought to be evident that it deals
with a subject that should be covered by law.

Nor is it correct to argue as the dissenters do that A.O. No. 308 is


not a law because it confers no right, imposes no duty, affords no
protection, and creates no office. Under A.O. No. 308, a citizen
cannot transact business with government agencies delivering
basic services to the people without the contemplated
identification card. No citizen will refuse to get this identification
card for no one can avoid dealing with government. It is thus clear
as daylight that without the ID, a citizen will have difficulty
exercising his rights and enjoying

_______________
27 See Cortes, Philippine Administrative Law, pp. 2-5 [1984].

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his privileges. Given this reality, the contention that A.O. No. 308
gives no right and imposes no duty cannot stand.

Again, with due respect, the dissenting opinions unduly expand


the limits of administrative legislation and consequently erodes
the plenary power of Congress to make laws. This is contrary to
the established approach defining the traditional limits of
administrative legislation. As well stated by Fisher: x x x Many
regulations however, bear directly on the public. It is here that
administrative legislation must be restricted in its scope and
application. Regulations are not supposed to be a substitute for
the general policy-making that Congress enacts in the form of a
public law. Although administrative regulations are entitled to
respect, the authority to prescribe rules and regulations is not an
independent source of power to make laws.28

III

Assuming, arguendo, that A.O. No. 308 need not be the subject of
a law, still it cannot pass constitutional muster as an
administrative legislation because facially it violates the right to
privacy. The essence of privacy is the right to be let alone.29 In
the 1965 case of Griswold v. Connecticut,30 the United States
Supreme Court gave more substance to the right of privacy when
it ruled that the right has a constitutional foundation. It held that
there is a right of privacy which can be found within the
penumbras of the First, Third, Fourth, Fifth and Ninth
Amendments,31 viz.:

_______________

28 Fisher, Constitutional Conflicts Between Congress and the


President, 4th ed., pp. 106-107.

29 Cooley on Torts, Sec. 135, vol. 1, 4th ed., [1932]; see also
Warren and Brandeis, The Right to Privacy, 4 Harvard Law
Review 193-220 [1890]this article greatly influenced the
enactment of privacy statutes in the United States (Cortes, I., The
Constitutional Foundations of Privacy, p. 15 [1970]).

30 381 U.S. 479, 14 L. ed. 2d 510 [1965].

31 AMENDMENT I [1791]

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Specific guarantees in the Bill of Rights have penumbras formed


by emanations from these guarantees that help give them life and
substance x x x. Various guarantees create zones of privacy. The
right of association contained in the penumbra of the First
Amendment is one, as we have seen. The Third Amendment in its
prohibition against the quartering of soldiers in any house in
time of peace without the consent of the owner is another facet of
that
_________________

Congress shall make no law respecting an establishment of


religion, or prohibiting the free exercise thereof; or abridging the
freedom of speech, or of the press; or the right of the people
peaceably to assemble, and to petition the Government for a
redress of grievances.

AMENDMENT III [1791]

No Soldier shall, in time of peace be quartered in any house,


without the consent of the Owner, nor in time of war, but in a
manner to be prescribed by law.

AMENDMENT IV [1791]

The right of the people to be secure in their persons, houses,


papers, and effects, against unreasonable searches and seizures,
shall not be violated, and no Warrants shall issue, but upon
probable cause, supported by Oath or affirmation, and particularly
describing the place to be searched, and the persons or things to
be seized.

AMENDMENT V [1791]

No person shall be held to answer for a capital, or otherwise


infamous crime, unless on a presentment or indictment of a
Grand Jury, except in cases arising in the land or naval forces, or
in the Militia, when in actual service in time of War or public
danger; nor shall any person be subject for the same offense to
be twice put in jeopardy of life or limb; nor shall be compelled in
any criminal case to be a witness against himself, nor be deprived
of life, liberty, or property, without due process of law; nor shall
private property be taken for public use, without just
compensation.

xxx

AMENDMENT IX [1791]

The enumeration in the Constitution, of certain rights,shall not be


construed to deny or disparage others retained bythe people.

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privacy. The Fourth Amendment explicitly affirms the right of the


people to be secure in their persons, houses, papers, and effects,
against unreasonable searches and seizures. The Fifth
Amendment in its Self-Incrimination Clause enables the citizen to
create a zone of privacy which government may not force him to
surrender to his detriment. The Ninth Amendment provides: The
enumeration in the Constitution, of certain rights, shall not be
construed to deny or disparage others retained by the people.

In the 1968 case of Morfe v. Mutuc,32 we adopted the Griswold


ruling that there is a constitutional right to privacy. Speaking thru
Mr. Justice, later Chief Justice, Enrique Fernando, we held:

x x x
The Griswold case invalidated a Connecticut statute which made
the use of contraceptives a criminal offense on the ground of its
amounting to an unconstitutional invasion of the right of privacy
of married persons; rightfully it stressed a relationship lying
within the zone of privacy created by several fundamental
constitutional guarantees. It has wider implications though. The
constitutional right to privacy has come into its own.

So it is likewise in our jurisdiction. The right to privacy as such is


accorded recognition independently of its identification with
liberty; in itself, it is fully deserving of constitutional protection.
The language of Prof. Emerson is particularly apt: The concept of
limited government has always included the idea that
governmental powers stop short of certain intrusions into the
personal life of the citizen. This is indeed one of the basic
distinctions between absolute and limited government. Ultimate
and pervasive control of the individual, in all aspects of his life, is
the hallmark of the absolute state. In contrast, a system of limited
government safeguards a private sector, which belongs to the
individual, firmly distinguishing it from the public sector, which
the state can control. Protection of this private sectorprotection,
in other words, of the dignity and integrity of the individualhas
become increasingly important as modern society has developed.
All the forces of a technological ageindustrialization,
urbanization, and organizationoperate to narrow the area of
privacy and facilitate intrusion into it. In modern

_______________

32 22 SCRA 424, 444-445.

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terms, the capacity to maintain and support this enclave of


private life marks the difference between a democratic and a
totalitarian society.

Indeed, if we extend our judicial gaze we will find that the right of
privacy is recognized and enshrined in several provisions of our
Constitution.33 It is expressly recognized in Section 3(1) of the Bill
of Rights:

Sec. 3. (1) The privacy of communication and correspondence


shall be inviolable except upon lawful order of the court, or when
public safety or order requires otherwise as prescribed by law.

Other facets of the right to privacy are protected in various


provisions of the Bill of Rights, viz.:34

Sec. 1. No person shall be deprived of life, liberty, or property


without due process of law, nor shall any person be denied the
equal protection of the laws.

Sec. 2. The right of the people to be secure in their persons,


houses, papers, and effects against unreasonable searches and
seizures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue
except upon probable cause to be determined personally by the
judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to
be seized.

x x x.

Sec. 6. The liberty of abode and of changing the same within the
limits prescribed by law shall not be impaired except upon lawful
order of the court. Neither shall the right to travel be impaired
except in the interest of national security, public safety, or public
health, as may be provided by law.

x x x.

_______________

33 Morfe v. Mutuc, 22 SCRA 424, 444 [1968]; Cortes, The


Constitutional Foundations of Privacy, p. 18 [1970].

34 Cortes, The Constitutional Foundations of Privacy, p. 18 [1970].

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Sec. 8. The right of the people, including those employed in the


public and private sectors, to form unions, associations, or
societies for purposes not contrary to law shall not be abridged.

Sec. 17. No person shall be compelled to be a witness against


himself.

Zones of privacy are likewise recognized and protected in our


laws. The Civil Code provides that [e]very person shall respect
the dignity, personality, privacy and peace of mind of his
neighbors and other persons and punishes as actionable torts
several acts by a person of meddling and prying into the privacy
of another.35 It also holds a public officer or employee or any
private individual liable for damages for any violation of the rights
and liberties of another person,36 and recognizes the privacy of
letters and other private communications.37 The Revised Penal
Code makes a crime the violation of secrets by an officer,38 the
revelation of trade and industrial secrets,39 and trespass to
dwelling.40 Invasion of privacy is an offense in

_______________

35 Article 26 of the Civil Code provides:

Art. 26. Every person shall respect the dignity, personality,


privacy and peace of mind of his neighbors and other persons.
The following and similar acts, though they may not constitute a
criminal offense, shall produce a cause of action for damages,
prevention and other relief:

(1) Prying into the privacy of anothers residence;

(2) Meddling with or disturbing the private life or family relations


of another;

(3) Intriguing to cause another to be alienated from his friends;

(4) Vexing or humiliating another on account of his religious


beliefs, lowly station in life, place of birth, physical defect, or
other personal condition.

36 Article 32, Civil Code.

37 Article 723, Civil Code.

38 Article 229, Revised Penal Code.

39 Articles 290-292, Revised Penal Code.

40 Article 280, Revised Penal Code.

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special laws like the Anti-Wiretapping Law,41 the Secrecy of Bank


Deposits Act42 and the Intellectual Property Code.43 The Rules of
Court on privileged communication likewise recognize the privacy
of certain information.44

Unlike the dissenters, we prescind from the premise that the right
to privacy is a fundamental right guaranteed by the Constitution,
hence, it is the burden of government to show that A.O. No. 308 is
justified by some compelling state interest and that it is narrowly
drawn. A.O. No. 308 is predicated on two considerations: (1) the
need to provide our citizens and foreigners with the facility to
conveniently transact business with basic service and social
security providers and other government instrumentalities and (2)
the need to reduce, if not totally eradicate, fraudulent
transactions and misrepresentations by persons seeking basic
services. It is debatable whether these interests are compelling
enough to warrant the issuance of A.O. No. 308. But what is not
arguable is the broadness, the vagueness, the overbreadth of A.O.
No. 308 which if implemented will put our peoples right to
privacy in clear and present danger.

The heart of A.O. No. 308 lies in its Section 4 which provides for a
Population Reference Number (PRN) as a common reference
number to establish a linkage among concerned agencies
through the use of Biometrics Technology and computer
application designs.

Biometry or biometrics is the science of the application of


statistical methods to biological facts; a mathematical analysis of
biological data.45 The term biometrics has now evolved

_______________
41 R.A. 4200.

42 R.A. 1405.

43 R.A. 8293.

44 Section 24, Rule 130 [C], Revised Rules on Evidence.

45 Biometry, Dorlands Illustrated Medical Dictionary, 24th ed.


[1965]. Biometry or biometrics is literally, the measurement
of living things; but it is generally used to mean the application of
mathematics to biology. The term is now largely obsolete as a bio-

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into a broad category of technologies which provide precise


confirmation of an individuals identity through the use of the
individuals own physiological and behavioral characteristics.46 A
physiological characteristic is a relatively stable physical
characteristic such as a fingerprint, retinal scan, hand geometry
or facial features. A behavioral characteristic is influenced by the
individuals personality and includes voice print, signature and
keystroke.47 Most biometric identification systems use a card or
personal identification number (PIN) for initial identification. The
biometric measurement is used to verify that the individual
holding the card or entering the PIN is the legitimate owner of the
card or PIN.48

A most common form of biological encoding is finger-scanning


where technology scans a fingertip and turns the unique pattern
therein into an individual number which is called a biocrypt. The
biocrypt is stored in computer data banks49 and becomes a
means of identifying an individual using a service. This technology
requires ones fingertip to be scanned every time service or
access is provided.50 Another method is the retinal scan. Retinal
scan technology employs optical technology to map the capillary
pattern of the retina of the eye. This technology produces a
unique print similar to a fingerprint.51 Another biometric method
is known as the artificial nose. This device chemically analyzes
the unique

_______________

logical science since mathematical or statistical work is an


integral part of most biological disciplines (The Dictionary of
Science [1993]).

46 Biometric Identification,
http://www.afmc.wpafb.af.mil/=organizations/HQ-
AFMC/LG/LSO/LOA/bio.html; see also Biometrics Explained-
Section-1, http://www.ncsa.com/services/consortia/cbdc/-
sec1.html.

47 Id.

48 Id.

49 Or in microchips of smart cards and magnetic strips of bank


cards.

50 Privacy at Risk, Finger-scanning for Ideology and Profit


[1998], file:///DI/commentary.html.

51 Biometric Identification, http://www.afmc.wpafb.af.mil/-


organizations/HQ-AFMC/LG/LSO/LOA/bio.html.

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combination of substances excreted from the skin of people.52


The latest on the list of biometric achievements is the
thermogram. Scientists have found that by taking pictures of a
face using infrared cameras, a unique heat distribution pattern is
seen. The different densities of bone, skin, fat and blood vessels
all contribute to the individuals personal heat signature.53

In the last few decades, technology has progressed at a galloping


rate. Some science fictions are now science facts. Today,
biometrics is no longer limited to the use of fingerprint to identify
an individual. It is a new science that uses various technologies in
encoding any and all biological characteristics of an individual for
identification. It is noteworthy that A.O. No. 308 does not state
what specific biological characteristics and what particular
biometrics technology shall be used to identify people who will
seek its coverage. Considering the banquet of options available to
the implementors of A.O. No. 308, the fear that it threatens the
right to privacy of our people is not groundless.

A.O. No. 308 should also raise our antennas for a further look will
show that it does not state whether encoding of data is limited to
biological information alone for identification purposes. In fact,
the Solicitor General claims that the adoption of the Identification
Reference System will contribute to the generation of population
data for development planning.54 This is an admission that the
PRN will not be used solely for identification but for the generation
of other data

_______________
52 The Libertarian Library: Facing Up to Biometrics, The Mouse
Monitor, The International Journal of Bureau-Rat Control [1998],
http://www.cyberhaven.com/libertarian/biomet.html.

53 Id. The thermogram is so accurate that it can tell identical


twins apart and cannot be fooled by cosmetic surgery or
disguises, including facial hair.

54 An updated national population register will provide a suitable


base for all types of planning and programming of government
facilities and services (Memorandum of the Solicitor General, p.
20, Rollo, p. 210).

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with remote relation to the avowed purposes of A.O. No. 308.


Clearly, the indefiniteness of A.O. No. 308 can give the
government the roving authority to store and retrieve information
for a purpose other than the identification of the individual
through his PRN.

The potential for misuse of the data to be gathered under A.O. No.
308 cannot be underplayed as the dissenters do. Pursuant to said
administrative order, an individual must present his PRN
everytime he deals with a government agency to avail of basic
services and security. His transactions with the government
agency will necessarily be recordedwhether it be in the
computer or in the documentary file of the agency. The
individuals file may include his transactions for loan availments,
income tax returns, statement of assets and liabilities,
reimbursements for medication, hospitalization, etc. The more
frequent the use of the PRN, the better the chance of building a
huge and formidable information base through the electronic
linkage of the files.55 The data may be gathered for gainful and
useful government purposes; but the existence of this vast
reservoir of personal information constitutes a covert invitation to
misuse, a temptation that may be too great for some of our
authorities to resist.56

We can even grant, arguendo, that the computer data file will be
limited to the name, address and other basic personal information
about the individual.57 Even that hospitable assumption will not
save A.O. No. 308 from constitutional infirmity for again said order
does not tell us in clear and categorical terms how these
information gathered shall be han-

_______________

55 Simitis, Reviewing Privacy in an Information Society,


University of Pennsylvania Law Review, vol. 135:707, 717 [March
1985].

56 Sloan, I. Law of Privacy Rights in a Technological Society, p. 6


[1986].

57 Respondent GSIS, through counsel, claims that the basic


information shall be limited to the individuals full name, place of
birth, date of birth, photograph, signature and thumbmark
(Comment of Respondent GSIS, p. 6, Rollo, p. 101).

162

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dled. It does not provide who shall control and access the data,
under what circumstances and for what purpose. These factors
are essential to safeguard the privacy and guaranty the integrity
of the information.58 Well to note, the computer linkage gives
other government agencies access to the information. Yet, there
are no controls to guard against leakage of information. When the
access code of the control programs of the particular computer
system is broken, an intruder, without fear of sanction or penalty,
can make use of the data for whatever purpose, or worse,
manipulate the data stored within the system.59

It is plain and we hold that A.O. No. 308 falls short of assuring that
personal information which will be gathered about our people will
only be processed for unequivocally specified purposes.60 The
lack of proper safeguards in this regard of A.O. No. 308 may
interfere with the individuals liberty of abode and travel by
enabling authorities to track down his movement; it may also
enable unscrupulous persons to access confidential information
and circumvent the right against self-incrimination; it may pave
the way for fishing expeditions by government authorities and
evade the right against unreasonable searches and seizures.61
The possibilities of abuse and misuse of the PRN, biometrics and
computer technology are accentuated when we consider that the
individual lacks control over what can be read or placed on his ID,
much less verify the correctness of the data encoded.62 They

_______________

58 Otani, K. Information Security in the Network Age, 70


Philippine Law Journal, 1, 9 [1995].
59 Cortes, I., The Constitutional Foundations of Privacy, p. 12
[1970].

60 Simitis, Reviewing Privacy in an Information Society,


University of Pennsylvania Law Review, vol. 135:707, 740 [March
1987].

61 Ibid., p. 718.

62 The right to control the collection, maintenance, use, and


dissemination of data about oneself is called informational
privacy (Hancock, G., Californias Privacy Act: Controlling
Governments Use of Information? 32 Stanford Law Review No. 5,
p. 1001 [May

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threaten the very abuses that the Bill of Rights seeks to


prevent.63

The ability of a sophisticated data center to generate a


comprehensive cradle-to-grave dossier on an individual and
transmit it over a national network is one of the most graphic
threats of the computer revolution.64 The computer is capable of
producing a comprehensive dossier on individuals out of
information given at different times and for varied purposes.65 It
can continue adding to the stored data and keeping the
information up to date. Retrieval of stored data is simple. When
information of a privileged character finds its way into the
computer, it can be extracted together with other data on the
subject.66 Once extracted, the information is putty in the hands
of any person. The end of privacy begins.

Though A.O. No. 308 is undoubtedly not narrowly drawn, the


dissenting opinions would dismiss its danger to the right to
privacy as speculative and hypothetical. Again, we cannot
countenance such a laidback posture. The Court will not be true
to its role as the ultimate guardian of the peoples liberty if it
would not immediately smother the sparks that endanger their
rights but would rather wait for the fire that could consume them.

We reject the argument of the Solicitor General that an individual


has a reasonable expectation of privacy with regard

_______________

1980]. The right to make personal decisions or conduct personal


activities without intrusion, observation or interference is called
autonomy privacy (Hill v. NCAA, 865 P. 2d 633, 652-654 [Cal.
1994].

63 Hosch, The Interest in Limiting the Disclosure of Personal


Information: A Constitutional Analysis, Vanderbilt Law Review,
vol. 36:139, 142 [Jan. 1983].

64 Miller, Personal Privacy in the Computer Age, The Challenge


of a New Technology in an Information-Oriented Society, 67
Michigan Law Review 1091, 1119 [1969]; see also Cortes, supra,
at 13.

65 Cortes, I. The Constitutional Foundations of Privacy, p. 12


[1970].

66 Id.

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SUPREME COURT REPORTS ANNOTATED

Ople vs. Torres

to the National ID and the use of biometrics technology as it


stands on quicksand. The reasonableness of a persons
expectation of privacy depends on a two-part test: (1) whether by
his conduct, the individual has exhibited an expectation of
privacy; and (2) whether this expectation is one that society
recognizes as reasonable.67 The factual circumstances of the
case determine the reasonableness of the expectation.68
However, other factors, such as customs, physical surroundings
and practices of a particular activity, may serve to create or
diminish this expectation.69 The use of biometrics and computer
technology in A.O. No. 308 does not assure the individual of a
reasonable expectation of privacy.70 As technology advances, the
level of reasonably expected privacy decreases.71 The measure
of protection granted by the reasonable expectation diminishes as
relevant technology becomes more widely accepted.72 The
security of the computer data file depends not

_______________

67 Rakas v. Illinois, 439 U.S. 128, 143-144 [1978]; see the


decision and Justice Harlans concurring opinion in Katz v. United
States, 389 U.S. 347, 353, 361, 19 L. ed. 2d 576, 583, 587-589
[1967]; see also Southard, Individual Privacy and Governmental
Efficiency: Technologys Effect on the Governments Ability to
Gather, Store, and Distribute Information (Computer/Law Journal,
vol. IX, pp. 359, 367, note 63 [1989]).
68 Kennedy, Note: Emasculating a States Constitutional Right to
Privacy: The California Supreme Courts Decision in Hill v. NCAA,
Temple Law Review, vol. 68:1497, 1517 [1995].

69 Id.

70 Southard, supra, at 369.

71 Id.; see also Laurence H. Tribe, The Constitution in


Cyberspace: Law and Liberty Beyond the Electronic Frontier,
Keynote Address at the First Conference on Computers, Freedom
and Privacy, at Jim Warren & Computer Professionals for Social
Responsibility [1991].

72 As one author has observed, previously, one could take steps


to ensure an expectation of privacy in a private place, e.g.,
locking of doors and closing of curtains. Because advances in
surveillance technology have made these precautions
meaningless, the expectation of the privacy they offer is no
longer justifiable and reasonableSouthard, supra, at 369.

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only on the physical inaccessibility of the file but also on the


advances in hardware and software computer technology. A.O. No.
308 is so widely drawn that a minimum standard for a reasonable
expectation of privacy, regardless of technology used, cannot be
inferred from its provisions.

The rules and regulations to be drawn by the IACC cannot remedy


this fatal defect. Rules and regulations merely implement the
policy of the law or order. On its face, A.O. No. 308 gives the IACC
virtually unfettered discretion to determine the metes and bounds
of the ID System.

Nor do our present laws provide adequate safeguards for a


reasonable expectation of privacy. Commonwealth Act No. 591
penalizes the disclosure by any person of data furnished by the
individual to the NSO with imprisonment and fine.73 Republic Act
No. 1161 prohibits public disclosure of SSS employment records
and reports.74 These laws, however, apply to records and data
with the NSO and the SSS. It is not clear whether they may be
applied to data with the other government agencies forming part
of the National ID System. The need to clarify the penal aspect of
A.O. No. 308 is another reason why its enactment should be given
to Congress.

Next, the Solicitor General urges us to validate A.O. No. 308s


abridgment of the right of privacy by using the rational
relationship test.75 He stressed that the purposes of A.O. No. 308
are: (1) to streamline and speed up the implementation of basic
government services, (2) eradicate fraud by avoiding duplication
of services, and (3) generate population data for development
planning. He concludes that these purposes justify the incursions
into the right to privacy for the means are rationally related to the
end.76

We are not impressed by the argument. In Morfe v. Mutuc,77 we


upheld the constitutionality of R.A. 3019, the Anti-

_______________

73 Section 4, Commonwealth Act No. 591 [1940].

74 Sections 24 [c] and 28 [e], R.A. 1161, as amended.

75 Citing Morfe v. Mutuc, 22 SCRA 424, 445 [1968].


76 Comment of the Solicitor General, p. 16, Rollo, p. 75.

77 Op. cit., note 76.

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SUPREME COURT REPORTS ANNOTATED

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Graft and Corrupt Practices Act, as a valid police power measure.


We declared that the law, in compelling a public officer to make
an annual report disclosing his assets and liabilities, his sources of
income and expenses, did not infringe on the individuals right to
privacy. The law was enacted to promote morality in public
administration by curtailing and minimizing the opportunities for
official corruption and maintaining a standard of honesty in the
public service.78

The same circumstances do not obtain in the case at bar. For one,
R.A. 3019 is a statute, not an administrative order. Secondly, R.A.
3019 itself is sufficiently detailed. The law is clear on what
practices were prohibited and penalized, and it was narrowly
drawn to avoid abuses. In the case at bar, A.O. No. 308 may have
been impelled by a worthy purpose, but, it cannot pass
constitutional scrutiny for it is not narrowly drawn. And we now
hold that when the integrity of a fundamental right is at stake,
this Court will give the challenged law, administrative order, rule
or regulation a stricter scrutiny. It will not do for the authorities to
invoke the presumption of regularity in the performance of official
duties. Nor is it enough for the authorities to prove that their act
is not irrational for a basic right can be diminished, if not
defeated, even when the government does not act irrationally.
They must satisfactorily show the presence of compelling state
interests and that the law, rule, or regulation is narrowly drawn to
preclude abuses. This approach is demanded by the 1987
Constitution whose entire matrix is designed to protect human
rights and to prevent authoritarianism. In case of doubt, the least
we can do is to lean towards the stance that will not put in danger
the rights protected by the Constitution.

The case of Whalen v. Roe79 cited by the Solicitor General is also


off-line. In Whalen, the United States Supreme Court was
presented with the question of whether the State of New York
could keep a centralized computer record of the names and
addresses of all persons who obtained certain drugs pur-

_______________

78 Id., at 435.

79 429 U.S. 589, 51 L ed. 2d 64 [1977].

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suant to a doctors prescription. The New York State Controlled


Substances Act of 1972 required physicians to identify patients
obtaining prescription drugs enumerated in the statute, i.e., drugs
with a recognized medical use but with a potential for abuse, so
that the names and addresses of the patients can be recorded in
a centralized computer file of the State Department of Health. The
plaintiffs, who were patients and doctors, claimed that some
people might decline necessary medication because of their fear
that the computerized data may be readily available and open to
public disclosure; and that once disclosed, it may stigmatize them
as drug addicts.80 The plaintiffs alleged that the statute invaded
a constitutionally protected zone of privacy, i.e., the individuals
interest in avoiding disclosure of personal matters, and the
interest in independence in making certain kinds of important
decisions. The U.S. Supreme Court held that while an individuals
interest in avoiding disclosure of personal matters is an aspect of
the right to privacy, the statute did not pose a grievous threat to
establish a constitutional violation. The Court found that the
statute was necessary to aid in the enforcement of laws designed
to minimize the misuse of dangerous drugs. The patient-
identification requirement was a product of an orderly and
rational legislative decision made upon recommendation by a
specially appointed commission which held extensive hearings on
the matter. Moreover, the statute was narrowly drawn and
contained numerous safeguards against indiscriminate disclosure.
The statute laid down the procedure and requirements for the
gathering, storage and retrieval of the information. It enumerated
who were authorized to access the data. It also prohibited public
disclosure of the data by imposing penalties for its violation. In
view of these safeguards, the infringement of the patients right
to privacy was justified by a valid exercise of police power. As we
discussed above, A.O. No. 308 lacks these vital safeguards.

_______________

80 Some of the patients were children whose parents feared


would be stigmatized by the States central filing system.

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SUPREME COURT REPORTS ANNOTATED

Ople vs. Torres

Even while we strike down A.O. No. 308, we spell out in neon that
the Court is not per se against the use of computers to
accumulate, store, process, retrieve and transmit data to improve
our bureaucracy. Computers work wonders to achieve the
efficiency which both government and private industry seek.
Many information systems in different countries make use of the
computer to facilitate important social objectives, such as better
law enforcement, faster delivery of public services, more efficient
management of credit and insurance programs, improvement of
telecommunications and streamlining of financial activities.81
Used wisely, data stored in the computer could help good
administration by making accurate and comprehensive
information for those who have to frame policy and make key
decisions.82 The benefits of the computer has revolutionized
information technology. It developed the internet,83 introduced
the concept of cyberspace84 and the information superhighway
where the individual, armed only with his personal computer, may
surf and search all kinds and classes of information from libraries
and databases connected to the net.

_______________

81 Sloan, Law of Privacy Rights in a Technological Society, p. 4


[1986].

82 Southard, Individual Privacy and Governmental Efficiency:


Technologys Effect on the Governments Ability to Gather, Store,
and Distribute Information, IX Computer/Law Journal 359, 360
[1989].

83 The Internet is a decentralized network interconnected by the


TCP/IP protocol. The Net was started as a military network
ARPANET in 1969 by the US Department of Defense for the
purpose of networking main frame computers to prepare against
missile weapons. It opened to public research organizations and
universities in 1983 and has been interconnected with commercial
networks since 1990 (Kazuko Otani, Information Security in the
Network Age, Philippine Law Journal, vol. 70:1, 2 [1995]).

84 Cyberspace is a place located in no particular geographical


location but available to anyone, anywhere in the world, with
access to the internet (Darrel Menthe, Jurisdiction in Cyberspace:
A Theory of International Spaces 4 Mich. Tel. Tech. L. Rev. 3 (April
23, 1998),
<http://www.law.umich.edu/mttlr/volfour/menthe.html>.

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In no uncertain terms, we also underscore that the right to privacy


does not bar all incursions into individual privacy. The right is not
intended to stifle scientific and technological advancements that
enhance public service and the common good. It merely requires
that the law be narrowly focused85 and a compelling interest
justify such intrusions.86 Intrusions into the right must be
accompanied by proper safeguards and well-defined standards to
prevent unconstitutional invasions. We reiterate that any law or
order that invades individual privacy will be subjected by this
Court to strict scrutiny. The reason for this stance was laid down
in Morfe v. Mutuc, to wit:

The concept of limited government has always included the idea


that governmental powers stop short of certain intrusions into the
personal life of the citizen. This is indeed one of the basic
distinctions between absolute and limited government. Ultimate
and pervasive control of the individual, in all aspects of his life, is
the hallmark of the absolute state. In contrast, a system of limited
government safeguards a private sector, which belongs to the
individual, firmly distinguishing it from the public sector, which
the state can control. Protection of this private sectorprotection,
in other words, of the dignity and integrity of the individualhas
become increasingly important as modern society has developed.
All the forces of a technological ageindustrialization,
urbanization, and organizationoperate to narrow the area of
privacy and facilitate intrusion into it. In modern terms, the
capacity to maintain and support this enclave of private life marks
the difference between a democratic and a totalitarian society.87

_______________

85 Southard, supra, at 361-362.

86 Id.; White v. Davis, 533 P. 2d 222 [Cal. 1975]; City of Sta.


Barbara v. Adamson, 610 P. 2d 436 [Cal. 1980]. In his concurring
opinion in Whalen v. Roe, Justice Brennan stated that a statute
that deprives an individual of his privacy is not unconstitutional
only if it was necessary to promote a compelling state interest
(429 U.S. 589, 606-607, 51 L. ed. 2d 64, 77-78).

87 Morfe v. Mutuc, supra, at 444-445 citing Emerson, Nine


Justices in Search of a Doctrine, 64 Michigan Law Review 219,
229 [1965].

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Ople vs. Torres

IV

The right to privacy is one of the most threatened rights of man


living in a mass society. The threats emanate from various
sourcesgovernments, journalists, employers, social scientists,
etc.88 In the case at bar, the threat comes from the executive
branch of government which by issuing A.O. No. 308 pressures
the people to surrender their privacy by giving information about
themselves on the pretext that it will facilitate delivery of basic
services. Given the record-keeping power of the computer, only
the indifferent will fail to perceive the danger that A.O. No. 308
gives the government the power to compile a devastating dossier
against unsuspecting citizens. It is timely to take note of the well-
worded warning of Kalvin, Jr., the disturbing result could be that
everyone will live burdened by an unerasable record of his past
and his limitations. In a way, the threat is that because of its
recordkeeping, the society will have lost its benign capacity to
forget.89 Oblivious to this counsel, the dissents still say we
should not be too quick in labelling the right to privacy as a
fundamental right. We close with the statement that the right to
privacy was not engraved in our Constitution for flattery.

IN VIEW WHEREOF, the petition is granted and Administrative


Order No. 308 entitled Adoption of a National Computerized
Identification Reference System declared null and void for being
unconstitutional.

SO ORDERED.

Bellosillo and Martinez, JJ., concur.

Narvasa (C.J.), Melo and Quisumbing, JJ., We join Justices


Kapunan & Mendoza in their DISSENTS.
_______________

88 See Shils, Privacy: Its Constitution and Vicissitudes, Law and


Contemporary Problems, vol. 31, pp. 301-303 [1966].

89 Harry Kalvin, Jr., The Problems of Privacy in the Year 2000,


Daedalus, vol. 96, pp. 876-879 [1967].

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Regalado, J., In the result. Davide, Jr., J., In the result and I
join Mr. Justice Panganiban in his Separate Opinion.

Romero, J., Please see Separate Opinion.

Vitug, J., See Separate Opinion.

Kapunan, J., See Dissenting Opinion.

Mendoza, J., Please see Dissenting Opinion.

Panganiban, J., Please see Separate Opinion.

Purisima, J., I join in Justice Mendozas dissent.

SEPARATE OPINION

ROMERO, J.:

What marks off a man from a beast?


Aside from the distinguishing physical characteristics, man is a
rational being, one who is endowed with intellect which allows
him to apply reasoned judgment to problems at hand; he has the
innate spiritual faculty which can tell, not only what is right but,
as well, what is moral and ethical. Because of his sensibilities,
emotions and feelings, he likewise possesses a sense of shame. In
varying degrees as dictated by diverse cultures, he erects a wall
between himself and the outside world wherein he can retreat in
solitude, protecting himself from prying eyes and ears and their
extensions, whether from individuals, or much later, from
authoritarian intrusions.

Piercing through the mists of time, we find the original Man and
Woman defying the injunction of God by eating of the forbidden
fruit in the Garden. And when their eyes were opened, forthwith
they sewed fig leaves together, and made

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SUPREME COURT REPORTS ANNOTATED

Ople vs. Torres

themselves aprons.1 Down the corridors of time, we find man


fashioning fig leaves of sorts or setting up figurative walls, the
better to insulate themselves from the rest of humanity.

Such vague stirrings of the desire to be left alone, considered


anti-social by some, led to the development of the concept of
privacy, unheard of among beasts. Different branches of
science, have made their own studies of this craving of the
human spiritpsychological, anthropological, sociological and
philosophical, with the legal finally giving its imprimatur by
elevating it to the status of a right, specifically a private right.
Initially recognized as an aspect of tort law, it created giant waves
in legal circles with the publication in the Harvard Law Review2 of
the trail-blazing article, The Right to Privacy, by Samuel D.
Warren and Louis D. Brandeis.

Whether viewed as a personal or a property right, it found its way


in Philippine Constitutions and statutes; this, in spite of the fact
that Philippine culture can hardly be said to provide a fertile field
for the burgeoning of said right. In fact, our lexicographers have
yet to coin a word for it in the Filipino language. Customs and
practices, being what they have always been, Filipinos think it
perfectly natural and in good taste to inquire into each others
intimate affairs.

One has only to sit through a televised talk show to be convinced


that what passes for wholesome entertainment is actually an
invasion into ones private life, leaving the interviewee
embarrassed and outraged by turns.

With the overarching influence of common law and the recent


advent of the Information Age with its high-tech devices, the right
to privacy has expanded to embrace its public law aspect. The Bill
of Rights of our evolving Charters, a direct transplant from that of
the United States, contains in essence facets of the right to
privacy which constitute limitations on the far-reaching powers of
government.

_______________

1 3 Genesis 7.

2 4 Harvard Law Review, 193-220 (1890).

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So terrifying are the possibilities of a law such as Administrative


Order No. 308 in making inroads into the private lives of the
citizens, a virtual Big Brother looking over our shoulders, that it
must, without delay, be slain upon sight before our society turns
totalitarian with each of us, a mindless robot.

I, therefore, VOTE for the nullification of A.O. No. 308.

SEPARATE OPINION

VITUG, J.:

One can appreciate the concern expressed by my esteemed


colleague, Mr. Justice Reynato S. Puno, echoing that of the
petitioner, the Honorable Blas F. Ople, on the issuance of
Administrative Order No. 308 by the President of the Philippines
and the dangers its implementation could bring. I find it hard,
nevertheless, to peremptorily assume at this time that the
administrative order will be misused and to thereby ignore the
possible benefits that can be derived from, or the merits of, a
nationwide computerized identification reference system. The
great strides and swift advances in technology render it
inescapable that one day we will, at all events, have to face up
with the reality of seeing extremely sophisticated methods of
personal identification and any attempt to stop the inevitable may
either be short-lived or even futile. The imperatives, I believe,
would instead be to now install specific safeguards and control
measures that may be calculated best to ward-off probable ill
effects of any such device. Here, it may be apropos to recall the
pronouncement of this Court in People vs. Nazario1 that
As a rule, a statute or [an] act may be said to be vague when it
lacks comprehensible standards that men of common intelligence
must necessarily guess at its meaning and differ as to its
application. It is repugnant to the Constitution in two respects:
(1) it vio-

_______________

1 165 SCRA 186.

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SUPREME COURT REPORTS ANNOTATED

Ople vs. Torres

lates due process for failure to accord persons, especially the


parties targeted by it, fair notice of the conduct to avoid; and (2)
it leaves law enforcers unbridled discretion in carrying out its
provisions and becomes an arbitrary flexing of the Government
muscle.2

Administrative Order No. 308 appears to be so extensively drawn


that could, indeed, allow unbridled options to become available to
its implementors beyond the reasonable comfort of the citizens
and of residents alike.

Prescinding from the foregoing, and most importantly to this


instance, the subject covered by the questioned administrative
order can have far-reaching consequences that can tell on all
individuals, their liberty and privacy, that, to my mind, should
make it indispensable and appropriate to have the matter
specifically addressed by the Congress of the Philippines, the
policy-making body of our government, to which the task should
initially belong and to which the authority to formulate and
promulgate that policy is constitutionally lodged.

WHEREFORE, I vote for the nullification of Administrative Order


No. 308 for being an undue and impermissible exercise of
legislative power by the Executive.

SEPARATE OPINION

PANGANIBAN, J.:

I concur only in the result and only on the ground that an


executive issuance is not legally sufficient to establish an
allencompassing computerized system of identification in the
country. The subject matter contained in AO 308 is beyond the
powers of the President to regulate without a legislative
enactment.

I reserve judgment on the issue of whether a national ID system is


an infringement of the constitutional right to privacy or of the
freedom of thought until after Congress passes,

_______________

2 At p. 195.

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if ever, a law to this effect. Only then, and upon the filing of a
proper petition, may the provisions of the statute be scrutinized
by the judiciary to determine their constitutional foundation. Until
such time, the issue is premature; and any decision thereon,
speculative and academic.1

Be that as it may, the scholarly discussions of Justices Romero,


Puno, Kapunan and Mendoza on the constitutional right to privacy
and freedom of thought may still become useful guides to our
lawmakers, when and if Congress should deliberate on a bill
establishing a national identification system.

Let it be noted that this Court, as shown by the voting of the


justices, has not definitively ruled on these points. The voting is
decisive only on the need for the appropriate legislation, and it is
only on this ground that the petition is granted by this Court.

DISSENTING OPINION

KAPUNAN, J.:

The pioneering efforts of the executive to adopt a national


computerized identification reference system have met fierce
opposition. It has spun dark predictions of sinister government
ploys to tamper with the citizens right to privacy and ominous
forecasts of a return to authoritarianism. Lost in the uproar,
however, is the simple fact that there is nothing in the whole
breadth and length of Administrative Order No. 308 that suggests
a taint of constitutional infirmity.

A.O. No. 308 issued by President Fidel V. Ramos on 12 December


1996 reads:

_______________
1 Basic is the doctrine that constitutional issues should not be
used to decide a controversy, if there are other available grounds,
as in this case. (See Justice Isagani Cruz, Constitutional Law, 1995
ed., pp. 29-31.)

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Ople vs. Torres

ADMINISTRATIVE ORDER NO. 308

ADOPTION OF A NATIONAL COMPUTERIZED

IDENTIFICATION REFERENCE SYSTEM

WHEREAS, there is a need to provide Filipino citizens and foreign


residents with the facility to conveniently transact business with
basic services and social security providers and other government
instrumentalities;

WHEREAS, this will require a computerized system to properly and


efficiently identify persons seeking basic services and social
security and reduce, if not totally eradicate, fraudulent
transactions and misrepresentations;

WHEREAS, a concerted and collaborative effort among the various


basic services and social security providing agencies and other
government instrumentalities is required to achieve such a
system;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of
the Philippines, by virtue of the powers vested in me by law, do
hereby direct the following:

SECTION 1. Establishment of a National Computerized


Identification Reference System. A decentralized Identification
Reference System among the key basic services and social
security providers is hereby established.

SEC. 2. Inter-Agency Coordinating Committee. An InterAgency


Coordinating Committee (IACC) to draw-up the implementing
guidelines and oversee the implementation of the system is
hereby created, chaired by the Executive Secretary, with the
following as members:

Head, Presidential Management Staff

Secretary, National Economic Development Authority

Secretary, Department of the Interior and Local Government

Secretary, Department of Health

Administrator, Government Service Insurance System

Administrator, Social Security System

Administrator, National Statistics Office

Managing Director, National Computer Center

SEC. 3. Secretariat. The National Computer Center (NCC) is


hereby designated as secretariat to the IACC and as such shall
provide administrative and technical support to the IACC.

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Ople vs. Torres

SEC. 4. Linkage Among Agencies. The Population Reference


Number (PRN) generated by the NSO shall serve as the common
reference number to establish a linkage among concerned
agencies. The IACC Secretariat shall coordinate with the different
Social Security and Services Agencies to establish the standards
in the use of Biometrics Technology and in computer application
designs of their respective systems.

SEC. 5. Conduct of Information Dissemination Campaign. The


Office of the Press Secretary, in coordination with the National
Statistics Office, the GSIS and SSS as lead agencies and other
concerned agencies shall undertake a massive tri-media
information dissemination campaign to educate and raise public
awareness on the importance and use of the PRN and the Social
Security Identification Reference.

SEC. 6. Funding. The funds necessary for the implementation of


the system shall be sourced from the respective budgets of the
concerned agencies.

SEC. 7. Submission of Regular Reports. The NSO, GSIS and SSS


shall submit regular reports to the Office of the President, through
the IACC, on the status of implementation of this undertaking.

SEC. 8. Effectivity. This Administrative Order shall take effect


immediately.

DONE in the City of Manila, this 12th day of December in the year
of Our Lord, Nineteen Hundred and Ninety-Six.

In seeking to strike down A.O. No. 308 as unconstitutional,


petitioner argues:
A. THE ESTABLISHMENT OF A NATIONAL COMPUTERIZED
IDENTIFICATION REFERENCE SYSTEM REQUIRES A LEGISLATIVE
ACT. THE ISSUANCE OF A.O. NO. 308 BY THE PRESIDENT OF THE
REPUBLIC OF THE PHILIPPINES IS, THEREFORE, AN
UNCONSTITUTIONAL USURPATION OF THE LEGISLATIVE POWERS
OF THE CONGRESS OF THE REPUBLIC OF THE PHILIPPINES.

B. THE APPROPRIATION OF PUBLIC FUNDS BY THE PRESIDENT FOR


THE IMPLEMENTATION OF A.O. NO. 308 IS AN UNCONSTITUTIONAL
USURPATION OF THE EXCLUSIVE

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Ople vs. Torres

RIGHT OF CONGRESS TO APPROPRIATE PUBLIC FUNDS FOR


EXPENDITURE.

C. THE IMPLEMENTATION OF A.O. NO. 308 INSIDIOUSLY LAYS THE


GROUNDWORK FOR A SYSTEM WHICH WILL VIOLATE THE BILL OF
RIGHTS ENSHRINED IN THE CONSTITUTION.

The National Computerized Identification Reference System, to


which the NSO, GSIS and SSS are linked as lead members of the
IACC is intended to establish uniform standards for ID cards
issued by key government agencies (like the SSS)1 for the
efficient identification of persons.2 Under the new system, only
one reliable and tamper-proof I.D. need be presented by the
cardholder instead of several identification papers such as
passports and drivers license,3 to be able to transact with
government agencies. The improved ID can be used to facilitate
public transactions such as:
1. Payment of SSS and GSIS benefits

2. Applications for drivers license, BIR TIN, passport, marriage


license, death certificate, NBI and police clearances, and business
permits

3. Availment of Medicare services in hospitals

4. Availment of welfare services

5. Application for work/employment

6. Pre-requisite for voters ID.4

The card may also be used for private transactions such as:

1. Opening of bank accounts

2. Encashment of checks

3. Applications for loans, credit cards, water, power, telephones,


pagers, etc.

4. Purchase of stocks

5. Application for work/employment

_______________

1 SSS, Primer on the Social Security Card & A.O. No. 308, p. 1.

2 Id., at 2.

3 Ibid.

4 Ibid.

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6. Insurance claims

7. Receipt of payments, checks, letters, valuables, etc.5

The new identification system would tremendously improve and


uplift public service in our country to the benefit of Filipino
citizens and resident aliens. It would promote, facilitate and speed
up legitimate transactions with government offices as well as with
private and business entities. Experience tells us of the constant
delays and inconveniences the public has to suffer in availing of
basic public services and social security benefits because of
inefficient and not too reliable means of identification of the
beneficiaries.

Thus, in the Primer on the Social Security Card and


Administrative Order No. 308 issued by the SSS, a lead agency in
the implementation of the said order, the following salient
features are mentioned:

1. A.O. 308 merely establishes the standards for I.D. cards issued
by key government agencies such as SSS and GSIS.

2. It does not establish a national I.D. system; neither does it


require a national I.D. card for every person.

3. The use of the I.D. is voluntary.

4. The I.D. is not required for delivery of any government service.


Everyone has the right to basic government services as long as
he is qualified under existing laws.

5. The I.D. cannot and will not in any way be used to prevent one
to travel.
6. There will be no discrimination. Non-holders of the improved
I.D. are still entitled to the same services but will be subjected to
the usual rigid identification and verification beforehand.

The issue that must first be hurdled is: was the issuance of A.O.
No. 308 an exercise by the President of legislative power properly
belonging to Congress?

_______________

5 Id., at 3.

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It is not.

The Administrative Code of 1987 has unequivocally vested the


President with quasi-legislative powers in the form of executive
orders, administrative orders, proclamations, memorandum
orders and circulars and general or special orders.6 An
administrative order, like the one under which the new
identification system is embodied, has its peculiar meaning under
the 1987 Administrative Code:

SEC. 3. Administrative Orders.Acts of the President which relate


to particular aspects of governmental operations in pursuance of
his duties as administrative head shall be promulgated in
administrative orders.
The National Computerized Identification Reference System was
established pursuant to the aforequoted provision precisely
because its principal purpose, as expressly stated in the order, is
to provide the people with the facility to conveniently transact
business with the various government agencies providing basic
services. Being the administrative head, it is unquestionably the
responsibility of the President to find ways and means to improve
the government bureaucracy, and make it more professional,
efficient and reliable, specially those government agencies and
instrumentalities which provide basic services and which the
citizenry constantly transact with, like the Government Service
Insurance System (GSIS), Social Security System (SSS) and
National Statistics Office (NSO). The national computerized ID
system is one such advancement. To emphasize, the new
identification reference system is created to streamline the
bureauracy, cut the red tape and ultimately achieve
administrative efficiency. The project, therefore, relates to, is an
appropriate subject and falls squarely within the ambit of the
Chief Executives administrative power under which, in order to
successfully carry out his administrative duties, he has been
granted by law quasi-legislative powers, quoted above.

_______________

6 Secs. 2 to 7, Chapter 2, Title I, Book III of the Administrative


Code of 1987.

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Understandably, strict adherence to the doctrine of separation of
powers spawns differences of opinion. For we cannot divide the
branches of government into water-tight compartments. Even if
such is possible, it is neither desirable nor feasible. Bernard
Schwartz, in his work Administrative Law, A Casebook, thus
states:

To be sure, if we think of the separation of powers as carrying out


the distinction between legislation and administration with
mathematical precision and as dividing the branches of
government into watertight compartments, we would probably
have to conclude that any exercise of lawmaking authority by an
agency is automatically invalid. Such a rigorous application of the
constitutional doctrine is neither desirable nor feasible; the only
absolute separation that has ever been possible was that in the
theoretical writings of a Montesquieu, who looked across at foggy
England from his sunny Gascon vineyards and completely
misconstrued what he saw.7

A mingling of powers among the three branches of government is


not a novel concept. This blending of powers has become
necessary to properly address the complexities brought about by
a rapidly developing society and which the traditional branches of
government have difficulty coping with.8

It has been said that:

The true meaning of the general doctrine of the separation of


powers seems to be that the whole power of one department
should not be exercised by the same hands which possess the
whole power of either of the other departments, and that no one
department ought to possess directly or indirectly an overruling
influence over the others. And it has been held that this doctrine
should be applied only to the powers which because of their
nature are assigned by the constitution itself to one of the
departments exclusively. Hence, it does not necessarily follow
that an entire and complete separation is either desirable or was
ever intended, for such a complete separation would be
impracticable if not impossible; there may beand fre-

______________

7 Schwartz, Bernard, Administrative Law, A Casebook, Fourth


Edition 1994, pp. 78-79.

8 Carlo Cruz, Philippine Administrative Law, 1991 ed., pp. 1-3.

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quently areareas in which executive, legislative, and judicial


powers blend or overlap; and many officers whose duties cannot
be exclusively placed under any one of these heads.

The courts have perceived the necessity of avoiding a narrow


construction of a state constitutional provision for the division of
the powers of the government into three distinct departments, for
it is impractical to view the provision from the standpoint of a
doctrinaire. Thus, the modern view of separation of powers rejects
the metaphysical abstractions and reverts instead to a more
pragmatic, flexible, functional approach, giving recognition to the
fact that there may be a certain degree of blending or admixture
of the three powers of the government. Moreover, the doctrine of
separation of powers has never been strictly or rigidly applied,
and indeed could not be, to all the ramifications of state or
national governments; government would prove abortive if it were
attempted to follow the policy of separation to the letter.9

In any case, A.O. No. 308 was promulgated by the President


pursuant to the quasi-legislative powers expressly granted to him
by law and in accordance with his duty as administrative head.
Hence, the contention that the President usurped the legislative
prerogatives of Congress has no firm basis.

II

Having resolved that the President has the authority and


prerogative to issue A.O. No. 308, I submit that it is premature for
the Court to determine the constitutionality or unconstitutionality
of the National Computerized Identification Reference System.

Basic in constitutional law is the rule that before the court


assumes jurisdiction over and decide constitutional issues, the
following requisites must first be satisfied:

1) there must be an actual case or controversy involving a conflict


of rights susceptible of judicial determination;

_______________

9 16 Am. Jur. 2d, Constitutional Law, Sec. 299.

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2) the constitutional question must be raised by a proper party;


3) the constitutional question must be raised at the earliest
opportunity; and

4) the resolution of the constitutional question must be necessary


to the resolution of the case.10

In this case, it is evident that the first element is missing. Judicial


intervention calls for an actual case or controversy which is
defined as an existing case or controversy that is appropriate or
ripe for determination, not conjectural or anticipatory.11 Justice
Isagani A. Cruz further expounds that (a) justifiable controversy
is thus distinguished from a difference or dispute of a hypothetical
or abstract character or from one that is academic or moot. The
controversy must be definite and concrete, touching the legal
relations of parties having adverse legal interests. It must be a
real and substantial controversy admitting of special relief
through a decree that is conclusive in character, as distinguished
from an opinion advising what the law would be upon a
hypothetical state of facts . . . .12 A.O. No. 308 does not create
any concrete or substantial controversy. It provides the general
framework of the National Computerized Identification Reference
System and lays down the basic standards (efficiency,
convenience and prevention of fraudulent transactions) for its
creation. But as manifestly indicated in the subject order, it is the
InterAgency Coordinating Committee (IACC) which is tasked to
research, study and formulate the guidelines and parameters for
the use of Biometrics Technology and in computer application
designs that will define and give substance to the new system.13
This petition is, thus, premature considering that the IACC is still
in the process of doing the leg work and has yet to codify and
formalize the details of the new system.

_______________

10 Board of Optometry v. Colet, 260 SCRA 88 (1996).


11 Ibid.

12 Isagani A. Cruz, Philippine Political Law, 1991 ed., p. 235.

13 Sec. 2, A.O. No. 308.

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The majority opines that the petition is ripe for adjudication even
without the promulgation of the necessary guidelines in view of
the fact that respondents have begun implementation of A.O. No.
308. The SSS, in particular, has started advertising in newspapers
the invitation to bid for the production of the I.D. cards.14

I beg to disagree. It is not the new system itself that is intended to


be implemented in the invitation to bid but only the manufacture
of the I.D. cards. Biometrics Technology is not and cannot be used
in the I.D. cards as no guidelines therefor have yet been laid down
by the IACC. Before the assailed system can be set up, it is
imperative that the guidelines be issued first.

III

Without the essential guidelines, the principal contention for


invalidating the new identification reference systemthat it is an
impermissible encroachment on the constitutionally recognized
right to privacyis plainly groundless. There is nothing in A.O. No.
308 to serve as sufficient basis for a conclusion that the new
system to be evolved violates the right to privacy. Said order
simply provides the systems general framework. Without the
concomitant guidelines, which would spell out in detail how this
new identification system would work, the perceived violation of
the right to privacy amounts to nothing more than mere surmise
and speculation.

What has caused much of the hysteria over the National


Computerized Identification Reference System is the possible
utilization of Biometrics Technology which refers to the use of
automated matching of physiological or behavioral characteristics
to identify a person that would violate the citizens
constitutionally protected right to privacy.

The majority opinion has enumerated various forms and methods


of Biometrics Technology which if adopted in the

_______________

14 Annex E, Petition.

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National Computerized Identification Reference System would


seriously threaten the right to privacy. Among which are biocrypt,
retinal scan, artificial nose and thermogram. The majority also
points to certain alleged deficiencies of A.O. No. 308. Thus:

1) A.O. No. 308 does not specify the particular Biometrics


Technology that shall be used for the new identification system;

2) The order does not state whether encoding of data is limited to


biological information alone for identification purposes;
3) There is no provision as to who shall control and access the
data, under what circumstances and for what purpose; and

4) There are no controls to guard against leakage of information,


thus heightening the potential for misuse and abuse.

We should not be overwhelmed by the mere mention of the


Biometrics Technology and its alleged, yet unfounded farreaching
effects.

There is nothing in A.O. No. 308, as it is worded, to suggest that


the advanced methods of the Biometrics Technology that may
pose danger to the right of privacy will be adopted.

The standards set in A.O. No. 308 for the adoption of the new
system are clear-cut and unequivocably spelled out in the
WHEREASES and body of the order, namely, the need to provide
citizens and foreign residents with the facility to conveniently
transact business with basic service and social security providers
and other government instrumentalities; the computerized
system is intended to properly and efficiently identify persons
seeking basic services or social security and reduce, if not totally
eradicate fraudulent transactions and misrepresentations; the
national identification reference system is established among the
key basic services and social security providers; and finally, the
IACC Secretariat shall coordinate with different Social Security and
Services Agencies to establish the standards in the use of
Biometrics Technology. Consequently, the choice of the particular
form and extent of Biometrics Technology that will be applied and
the parameters for its use (as will be defined in the guidelines)

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Ople vs. Torres

will necessarily and logically be guided, limited and circumscribed


by the afore-stated standards. The fear entertained by the
majority on the potential dangers of this new technology is thus
securedly allayed by the specific limitations set by the above-
mentioned standards. More than this, the right to privacy is well-
ensconced in and directly protected by various provisions of the
Bill of Rights, the Civil Code, the Revised Penal Code, and certain
special laws, all so painstakingly and resourcefully catalogued in
the majority opinion. Many of these laws provide penalties for
their violation in the form of imprisonment, fines, or damages.
These laws will serve as powerful deterrents not only in the
establishment of any administrative rule that will violate the
constitutionally protected right to privacy, but also to would-be
transgressors of such right.

Relevant to this case is the ruling of the U.S. Supreme Court in


Whalen v. Roe.15 In that case, a New York statute was challenged
for requiring physicians to identify patients obtaining prescription
drugs of the statutes Schedule II category (a class of drugs
having a potential for abuse and a recognized medical use) so the
names and addresses of the prescription drug patients can be
recorded in a centralized computer file maintained by the New
York State Department of Health. Some patients regularly
receiving prescription for Schedule II drugs and doctors who
prescribed such drugs brought an action questioning the validity
of the statute on the ground that it violated the plaintiffs
constitutionally protected rights of privacy.

In a unanimous decision, the US Supreme Court sustained the


validity of the statute on the ground that the patient identification
requirement is a reasonable exercise of the States broad police
powers. The Court also held that there is no support in the record
for an assumption that the security provisions of the statute will
be administered improperly. Finally, the Court opined that the
remote possibility that judicial supervision of the evidentiary use
of particular items of stored

_______________

15 429 US 589 (1977).

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information will not provide adequate protection against


unwarranted disclosures is not a sufficient reason for invalidating
the patient-identification program.

To be sure, there is always a possibility of an unwarranted


disclosure of confidential matters enormously accumulated in
computerized data banks and in government records relating to
taxes, public health, social security benefits, military affairs, and
similar matters. But as previously pointed out, we have a
sufficient number of laws prohibiting and punishing any such
unwarranted disclosures. Anent this matter, the observation in
Whalen vs. Roe is instructive:

x x x. We are not unaware of the threat to privacy implicit in the


accumulation of vast amounts of personal information in
computerized data banks or other massive government files. The
collection of taxes, the distribution of welfare and social security
benefits, the supervision of public health, the direction of our
Armed Forces and the enforcement of the criminal laws all require
the orderly preservation of great quantities of information, much
of which is personal in character and potentially embarrassing or
harmful if disclosed. The right to collect and use such data for
public purposes is typically accompanied by a concomitant
statutory or regulatory duty to avoid unwarranted disclosures. x x
x16

The majority laments that as technology advances, the level of


reasonably expected privacy decreases. That may be true.
However, courts should tread daintily on the field of social and
economic experimentation lest they impede or obstruct the march
of technology to improve public services just on the basis of an
unfounded fear that the experimentation violates ones
constitutionally protected rights. In the sobering words of Mr.
Justice Brandeis:

To stay experimentation in things social and economic is a grave


responsibility. Denial of the right to experiment may be fraught
with serious consequences to the Nation. It is one of the happy
incidents of the federal system that a single courageous State

_______________

16 Id., at 77.

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may, if its citizens choose, serve as a laboratory; and try novel


social and economic experiments without risk to the rest of the
country. This Court has the power to prevent an experiment. We
may strike down the statute which embodies it on the ground
that, in our opinion, the measure is arbitrary, capricious or
unreasonable. We have power to do this, because the due process
clause has been held by the Court applicable to matters of
substantive law as well as to matters of procedure. But in the
exercise of this high power, we must be ever on our guard, lest
we erect our prejudices into legal principles. If we would be
guided by the light of reason, we must let our minds be bold.17

Again, the concerns of the majority are premature precisely


because there are as yet no guidelines that will direct the Court
and serve as solid basis for determining the constitutionality of
the new identification system. The Court cannot and should not
anticipate the constitutional issues and rule on the basis of
guesswork. The guidelines would, among others, determine the
particular biometrics method that would be used and the specific
personal data that would be collected, provide the safeguards (if
any) and supply the details on how this new system is supposed
to work. The Court should not jump the gun on the Executive.

III

On the issue of funding, the majority submits that Section 6 of


A.O. No. 308, which allows the government agencies included in
the new system to obtain funding from their respective budgets,
is unconstitutional for being an illegal transfer of appropriations.

It is not so. The budget for the national identification system


cannot be deemed a transfer of funds since the same is
composed of and will be implemented by the member
government agencies. Moreover, these agencies particularly the
GSIS and SSS have been issuing some form of identification

_______________
17 New State Ice Co. v. Liebmann, 285 US 262 (Dissenting
Opinion) cited in Whalen v. Roe, 249 US 589.

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or membership card. The improved ID cards that will be issued


under this new system would just take the place of the old
identification cards and budget-wise, the funds that were being
used to manufacture the old ID cards, which are usually
accounted for under the Supplies and Materials item of the
Government Accounting and Auditing Manual, could now be
utilized to fund the new cards. Hence, what is envisioned is not a
transfer of appropriations but a pooling of funds and resources by
the various government agencies involved in the project.

WHEREFORE, I vote to dismiss the petition.

SEPARATE OPINION

MENDOZA, J., dissenting:

My vote is to dismiss the petition in this case.

First. I cannot find anything in the text of Administrative Order No.


308 of the President of the Philippines that would warrant a
declaration that it is violative of the right of privacy. So far as I
can see, all the Administrative Order does is

establish an Identification Reference System involving the


following service agencies of the government:
Presidential Management Staff

National Economic Development Authority

Department of the Interior and Local Government

Department of Health

Government Service Insurance System

Social Security System

National Statistics Office

National Computer Center

create a committee, composed of the heads of the agencies


concerned, to draft rules for the System;

direct the use of the Population Reference Number (PRN)


generated by the National Census and Statistics Office as the
common reference number to link the participating agencies into
an Identification Reference System, and the adoption by the
agencies of standards in

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the use of biometrics technology and computer designs; and

provide for the funding of the System from the budgets of the
agencies concerned.

Petitioner argues, however, that the implementation of A.O. No.


308 will mean that each and every Filipino and foreign resident
will have a file with the government containing, at the very least,
his PRN and physiological biometrics such as, but not limited to,
his facial features, hand geometry, retinal or iris pattern, DNA
pattern, fingerprints, voice characteristics, and signature
analysis.

In support of his contention, petitioner quotes the following


publication surfed from the Internet:

The use of biometrics is the means by which an individual may be


conclusively identified. There are two types of biometric
identifiers: Physical and behavioral characteristics. Physiological
biometrics include facial features, hand geometry, retinal and iris
patterns, DNA, and fingerprints. Behavioral characteristics include
voice characteristics and signature analysis.1

I do not see how from the bare provisions of the Order, the full
text of which is set forth in the majority opinion, petitioner and
the majority can conclude that the Identification Reference
System establishes such comprehensive personal information
dossiers that can destroy individual privacy. So far as the Order
provides, all that is contemplated is an identification system
based on data which the government agencies involved have
already been requiring individuals making use of their services to
give.

For example, under C.A. No. 591, 2(a) the National Statistics
Office collects by enumeration, sampling or other methods,
statistics and other information concerning population . . . social
and economic institutions, and such other statistics

_______________

1 Congress Poised To Mandate Government Registration and


Tracking of All Americans, Privacy International, February 1996;
IDCARD.HTM at www.involved.com (emphasis by petitioner).
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as the President may direct. In addition, it is in charge of the


administration of the Civil Register,2 which means that it keeps
records of information concerning the civil status of persons, i.e.,
(a) births, (b) deaths, (c) marriages and their annulments, (d)
legitimations, (e) adoptions, (f) acknowledgments of natural
children, (g) naturalizations, and (h) changes of name.3

Other statutes giving government agencies the power to require


personal information may be cited. R.A. No. 4136, 23 gives the
Land Transportation Office the power to require applicants for a
drivers license to give information regarding the following: their
full names, date of birth, height, weight, sex, color of eyes, blood
type, address, and right thumbprint;4 while R.A. No. 8239, 5
gives the Department of Foreign Affairs the power to require
passport applicants to give information concerning their names,
place of birth, date of birth, religious affiliation, marital status,
and citizenship.

Justice Romero, tracing the origin of privacy to the attempt of the


first man and woman to cover their nakedness with fig leaves,
bemoans the fact that technology and institutional pressures have
threatened our sense of privacy. On the other hand, the majority
would have none of the Identification Reference System to
prevent the shrinking of the right to privacy, once regarded as
the most comprehensive of rights and the right most valued by
civilized men. 5 Indeed, techniques such as fingerprinting or
electronic photography in banks have become commonplace. As
has been observed, the teaching hospital has come to be
accepted as offering medical services that compensate for the
loss of the isolation of the sickbed; the increased capacity of
applied sciences to utilize more and more kinds of data and the
consequent calls for such data have weakened traditional
resistance to disclosure. As the

_______________

2 C.A. No. 591, 1(f).

3 Act No. 3753, 1.

4 R.A. No. 4136, 23.

5 Dissenting Opinion of Justice Brandeis in Olmstead v. United


States, 438, 478 (1928).

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area of relevance, political or scientific, expands, there is strong


psychological pressure to yield some ground of privacy.6

But this is a fact of life to which we must adjust, as long as the


intrusion into the domain of privacy is reasonable. In Morfe v.
Mutuc,7 this Court dealt the coup de grace to claims of
latitudinarian scope for the right of privacy by quoting the
pungent remark of an acute observer of the social scene, Carmen
Guerrero-Nakpil:

Privacy? Whats that? There is no precise word for it in Filipino,


and as far as I know any Filipino dialect and there is none because
there is no need for it. The concept and practice of privacy are
missing from conventional Filipino life. The Filipino believes that
privacy is an unnecessary imposition, an eccentricity that is
barely pardonable or, at best, an esoteric Western afterthought
smacking of legal trickery.8

Justice Romero herself says in her separate opinion that the word
privacy is not even in the lexicon of Filipinos.

As to whether the right of privacy is the most valued right, we


do well to remember the encomiums paid as well to other
constitutional rights. For Professor Zechariah Chafee, The writ of
habeas corpus is the most important human rights provision in
the fundamental law. 9 For Justice Cardozo, on the other hand,
freedom of expression is the matrix, the indispensable condition,
of nearly every other form of freedom.10

_______________

6 Paul A. Freund, Privacy: One Concept or Many, in PRIVACY 188


(R. Pennock and J. Chapman, eds., 1971).

7 22 SCRA 424 (1968).

8 Id., at 445, n. 66.

9 Zechariah Chafee, The Most Important Human Right in the


Constitution, 32 BOSTON UNIV. LAW REV. 143 (1947), quoted in
Gumabon v. Director of Prisons, 37 SCRA 420, 423 (1971) (per
Fernando, J.).

10 Palko v. Connecticut, 302 U.S. 319, 327, 82 L.Ed. 288, 293


(1937).

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The point is that care must be taken in assigning values to


constitutional rights for the purpose of calibrating them on the
judicial scale, especially if this means employing stricter
standards of review for regulations alleged to infringe certain
rights deemed to be most valued by civilized men.

Indeed, the majority concedes that the right of privacy does not
bar all incursions into individual privacy . . . [only that such]
incursions into the right must be accompanied by proper
safeguards and well-defined standards to prevent unconstitutional
invasions.11 In the case of the Identification Reference System,
the purpose is to facilitate the transaction of business with service
agencies of the government and to prevent fraud and
misrepresentation. The personal identification of an individual can
facilitate his treatment in any government hospital in case of
emergency. On the other hand, the delivery of material
assistance, such as free medicines, can be protected from fraud
or misrepresentation as the absence of a data base makes it
possible for unscrupulous individuals to obtain assistance from
more than one government agency.

Second. Thus, the issue in this case is not really whether A.O. No.
308 violates the right of privacy formed by emanations from the
several constitutional rights cited by the majority.12 The question
is whether it violates freedom of thought and of conscience
guaranteed in the following provisions of our Bill of Rights (Art.
III):

SEC. 4. No law shall be passed abridging the freedom of speech,


of expression, or of the press, or the right of the people peaceably
to assemble and petition the government for redress of
grievances.

SEC. 5. No law shall be made respecting an establishment of


religion, or prohibiting the free exercise thereof. The free exercise
and enjoyment of religious profession and worship, without dis-

_______________

11 Majority Opinion, pp. 30-31.

12 The majority cites Art. III, 1, 2, 6, 8, and 17 of the


Constitution.

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crimination or preference, shall be forever be allowed. No


religious test shall be required for the exercise of civil or political
rights.

More specifically, the question is whether the establishment of


the Identification Reference System will not result in the
compilation of massive dossiers on individuals which, beyond
their use for identification, can become instruments of thought
control. So far, the text of A.O. No. 308 affords no basis for
believing that the data gathered can be used for such sinister
purpose. As already stated, nothing that is not already being
required by the concerned agencies of those making use of their
services is required by the Order in question. The Order simply
organizes service agencies of the government into a System for
the purpose of facilitating the identification of persons seeking
basic services and social security. Thus, the whereas clauses of
A.O. No. 308 state:

WHEREAS, there is a need to provide Filipino citizens and foreign


residents with the facility to conveniently transact business with
basic services and social security providers and other government
instrumentalities;

WHEREAS, this will require a computerized system to properly and


efficiently identify persons seeking basic services and social
security and reduce, if not totally eradicate, fraudulent
transactions and misrepresentations;

WHEREAS, a concerted and collaborative effort among the various


basic services and social security providing agencies and other
government instrumentalities is required to achieve such a
system;

The application of biometric technology and the standardization


of computer designs can provide service agencies with precise
identification of individuals, but what is wrong with that?

Indeed, A.O. No. 308 is no more than a directive to government


agencies which the President of the Philippines has issued in his
capacity as administrative head.13 It is not a

_______________

13 ADMINISTRATIVE CODE OF 1987, Bk. III, Tit. I, Ch. I, 3


provides:

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Ople vs. Torres

statute. It confers no right; it imposes no duty; it affords no


protection; it creates no office.14 It is, as its name indicates, a
mere administrative order, the precise nature of which is given in
the following excerpt from the decision in the early case of Olsen
& Co. v. Herstein:15

[It] is nothing more or less than a command from a superior to an


inferior. It creates no relation except between the official who
issues it and the official who receives it. Such orders, whether
executive or departmental, have for their object simply the
efficient and economical administration of the affairs of the
department to which or in which they are issued in accordance
with the law governing the subject-matter. They are
administrative in their nature and do not pass beyond the limits of
the department to which they are directed or in which they are
published, and, therefore, create no rights in third persons. They
are based on, and are the product of, a relationship in which
power is their source and obedience their object. Disobedience to
or deviation from such an order can be punished only by the
power which issued it; and, if that power fails to administer the
corrective, then the disobedience goes unpunished. In that
relationship no third person or official may intervene, not even the
courts. Such orders may be very temporary, they being subject to
instant revocation or modification by the power which published
them. Their very nature, as determined by the relationship which
produced them, demonstrates clearly the impossibility of any
other person enforcing them except the one who created them.
An attempt on the part of the courts to enforce such orders would
result not only in confusion but, substantially, in departmental
anarchy also.16
Third. There is no basis for believing that, beyond the
identification of individuals, the System will be used for illegal
purposes. Nor are sanctions lacking for the unauthorized use

_______________

SEC. 3. Administrative Orders.Acts of the President which relate


to particular aspects of governmental operation in pursuance of
his duties as administrative head shall be promulgated in
administrative orders.

14 See Norton v. Shelby County, 118 U.S. 425, 442, 30 L.Ed. 178,
186 (1886).

15 32 Phil. 520 (1915) (emphasis added).

16 Id., at 532.

196

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SUPREME COURT REPORTS ANNOTATED

Ople vs. Torres

or disclosure of information gathered by the various agencies


constituting the System. For example, as the Solicitor General
points out, C.A. No. 591, 4 penalizes the unauthorized use or
disclosure of data furnished the NSO with a fine of not more than
P600.00 or imprisonment for not more than six months or both.

At all events, at this stage, it is premature to pass on the claim


that the Identification Reference System can be used for the
purpose of compiling massive dossiers on individuals that can be
used to curtail basic civil and political rights since, if at all, this
can only be provided in the implementing rules and regulations
which have yet to be promulgated. We have already stated that
A.O. No. 308 is not a statute. Even in the case of statutes,
however, where implementing rules are necessary to put them
into effect, it has been held that an attack on their
constitutionality would be premature.17 As Edgar in King Lear
puts it, Ripeness is all.18 For, to borrow some more
Shakespearean lines,

The canker galls the infants of the spring

Too oft before their buttons be disclosd.19

That, more than any doctrine of constitutional law I can think of,
succinctly expresses the rule on ripeness, prematurity, and
hypothetical, speculative, or conjectural claims.

Of special relevance to this case is Laird v. Tatum.20 There, a


class suit was brought seeking declaratory and injunctive relief on
the claim that a U.S. Army intelligence surveillance of civilian
political activity having a potential for civil disorder exercised a
present inhibiting effect on [respondents] full expression and
utilization of their First Amendment

_______________

17 Garcia v. Executive Secretary, 204 SCRA 516 (1991).

18 King Lear, Act V, Sc. ii, line 9.

19 Hamlet, Act I, Sc. iii, lines 41-42.

20 408 U.S. 1, 33 L.Ed.2d 154 (1972).

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Ople vs. Torres

rights. In holding the case nonjusticiable, the U.S. Supreme


Court, in an opinion by Chief Justice Burger, said:21

In recent years this Court has found in a number of cases that


constitutional violations may arise from the deterrent, or
chilling, effect of governmental regulations that fall short of a
direct prohibition against the exercise of First Amendment rights.
[Citation of cases omitted] In none of these cases, however, did
the chilling effect arise merely from the individuals knowledge
that a governmental agency was engaged in certain activities or
from the individuals concomitant fear that, armed with the fruits
of those activities, the agency might in the future take some other
and additional action detrimental to that individual. Rather, in
each of these cases, the challenged exercise of governmental
power was regulatory, proscriptive, or compulsory in nature, and
the complainant was either presently or prospectively subject to
the regulations, proscriptions, or compulsions that he was
challenging . . . .

[T]hese decisions have in no way eroded the established


principle that to entitle a private individual to invoke the judicial
power to determine the validity of executive or legislative action
he must show that he has sustained or is immediately in danger
of sustaining a direct injury as the result of that action . . . .

The respondents do not meet this test; [the] alleged chilling


effect may perhaps be seen as arising from respondents
perception of the system as inappropriate to the Armys role
under our form of government, or as arising from respondents
beliefs that it is inherently dangerous for the military to be
concerned with activities in the civilian sector, or as arising from
respondents less generalized yet speculative apprehensiveness
that the Army may at some future date misuse the information in
some way that would cause direct harm to respondents.
Allegations of a subjective chill are not an adequate substitute
for a claim of specific present objective harm or a threat of
specific future harm; the federal courts established pursuant to
Article III of the Constitution do not render advisory opinions.
United Public Workers v. Mitchell, 330 US 75, 89, 91 L. Ed. 754,
766, 67 S Ct 556 (1947).

Fourth. Given the fact that no right of privacy is involved in this


case and that any objection to the Identification Refer-

_______________

21 Id., 408 U.S. at 13-14, 33 L.Ed.2d at 163-164.

198

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SUPREME COURT REPORTS ANNOTATED

Ople vs. Torres

ence System on the ground that it violates freedom of thought is


premature, speculative, or conjectural pending the issuance of the
implementing rules, it is clear that petitioner Blas F. Ople has no
cause of action and, therefore, no standing to bring this action.
Indeed, although he assails A.O. No. 308 on the ground that it
violates the right of privacy, he claims no personal injury suffered
as a result of the Order in question. Instead, he says he is bringing
this action as taxpayer, Senator, and member of the Government
Service Insurance System.
Insofar as petitioner claims an interest as taxpayer, it is sufficient
to say that A.O. No. 308 does not involve the exercise of the
taxing or spending power of the government.

Insofar as he purports to sue as a member of the GSIS, neither


does petitioner have an interest sufficient to enable him to litigate
a constitutional question. Petitioner claims that in providing that
the funds necessary for implementing the System shall be taken
from the budgets of the concerned agencies, A.O. No. 308 violates
Art. VI, 25(5) which provides:

No law shall be passed authorizing any transfer of appropriations;


however, the President, the President of the Senate, the Speaker
of the House of Representatives, the Chief Justice of the Supreme
Court, and the heads of Constitutional Commissions may, by law,
be authorized to augment any item in the general appropriations
law for their respective offices from savings in other items of their
respective appropriations.

But, as the Solicitor General states:

Petitioners argument is anchored on two erroneous assumptions:


one, that all the concerned agencies, including the SSS and the
GSIS, receive budgetary support from the national government;
and two, that the GAA is the only law whereby public funds are
appropriated. Both assumptions are wrong.

The SSS and GSIS do not presently receive budgetary support


from the National Government. They have achieved self-
supporting status such that the contributions of their members
are sufficient to finance their expenses. One would be hard
pressed to find in the GAA an appropriation of funds to the SSS
and the GSIS.

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Ople vs. Torres

Furthermore, their respective charters authorize the SSS and the


GSIS to disburse their funds (Rep. Act No. 1161 [1954], as
amended, Sec. 25; Pres. Decree No. 1146 [1977], as amended,
Sec. 29) without the need for a separate appropriation from the
Congress.

Nor as Senator can petitioner claim standing since no power of


Congress is alleged to have been impaired by the Administrative
Order in question.22 As already stated, in issuing A.O. No. 308,
the President did not exercise the legislative power vested by the
Constitution in Congress. He acted on the basis of his own powers
as administrative head of the government, as distinguished from
his capacity as the Executive. Dean Sinco elucidates the crucial
distinction thus:

The Constitution of the Philippines makes the President not only


the executive but also the administrative head of the government.
. . . Executive power refers to the legal and political function of
the President involving the exercise of discretion. Administrative
power, on the other hand, concerns itself with the work of
applying policies and enforcing orders as determined by proper
governmental organs. These two functions are often confused by
the public; but they are distinct from each other. The President as
the executive authority has the duty of supervising the
enforcement of laws for the maintenance of general peace and
public order. As administrative head, his duty is to see that every
government office is managed and maintained properly by the
persons in charge of it in accordance with pertinent laws and
regulations.
. . . The power of control vested in him by the Constitution makes
for a strongly centralized administrative system. It reinforces
further his position as the executive of the government, enabling
him to comply more effectively with his constitutional duty to
enforce the laws. It enables him to fix a uniform standard of
administrative efficiency and to check the official conduct of his
agents. The decisions of all the officers within his department are
subject to his

_______________

22 Philconsa v. Enriquez, 235 SCRA 506 (1994); Gonzales v.


Macaraig, 191 SCRA 452 (1990); Raines v. Byrd, No. 96-1671, June
26, 1997 (Legislators whose votes have been sufficient to defeat
[or enact] a specific legislative act have standing to sue if that
legislative action goes into effect [or does not go into effect], on
the ground that their votes have been completely nullified.)

200

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SUPREME COURT REPORTS ANNOTATED

Ople vs. Torres

power of revision, either on his own motion or on the appeal of


some individual who might deem himself aggrieved by the action
of an administrative official. In case of serious dereliction of duty,
he may suspend or remove the officials concerned.23

For the foregoing reasons, the petition should be DISMISSED.

Petition granted, Administrative Order No. 308 declared null and


void.
o0o

_______________

23 VICENTE G. SINCO, PHILIPPINE POLITICAL LAW, 234-235 (11th


ed., 1962) (emphasis added).

201 [Ople vs. Torres, 293 SCRA 141(1998)]

VOL. 192, DECEMBER 18, 1990

363

Maceda vs. Energy Regulatory Board

G.R. Nos. 95203-05. December 18, 1990.*

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.*

OLIVER O. LOZANO, petitioner, vs. ENERGY REGULATORY BOARD


(ERB), PILIPINAS SHELL PETROLEUM CORPORATION, CALTEX
(PHIL.), INC., and PETRON CORPORATION, respondents.

Energy Regulatory Board; Due Process; Executive Order 172;


While under E.O. 172, a hearing is indispensable, the Board is not
precluded from ordering, ex parte, a provisional increase in the
price of petroleum products.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

_______________

* EN BANC.

364

364

SUPREME COURT REPORTS ANNOTATED

Maceda vs. Energy Regulatory Board

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. x x
x 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 3, 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.

Same; Oil Price Stabilization Fund; The OPSF must not be


understood to be a funding designed to guarantee oil firms'
profits; It is 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.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.

PARAS, J., Dissenting:

Energy Regulatory Board; Due Process; The ERB gravely abused


its discretion in approving the increase in oil prices without a prior
hearing; "Public Interest" necessitated a prior hearing.In fixing
the oil prices complained of, the Energy Regulatory Board (ERB)
gravely abused its discretion(1) in approving the prices without
due process of law, and (2) in exercising the taxing power in gross
violation of the 1987 Constitution which vests such power only in
Congress. With respect to due process, it will be noted that it is
Sec. 3(e) (and not Sec. 8) of Ex. Order No. 172 which should apply
to the instant case (and

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365

Maceda vs. Energy Regulatory Board

therefore a hearing is essential) for it is Sec. 3(e) that refers to


"the temporary adjustment of the levels of prices of petroleum
products" or instances "when public interest so requires." Sec. 8,
which is relied upon by the majority opinion, does NOT speak of
price increases. Additionally it is clear that in the instant case,
"public interest" [also mentioned in Sec. 3 (e)] necessitated a
prior hearing.

Same; Taxation; When revenue is earned by the government from


the consuming public (except when only licenses are concerned),
there is an exercise of the taxing power.Anent the
unconstitutional use of the taxing power, the decision of the
majority says that "the Board Order authorizing the proceeds
generated by the increases" is "authorized by Presidential Decree
No. 1456, as amended by Executive Order No. 137" (See Decision,
pp. 7-8). Assuming that such is authorized by law, still a law, no
matter how imperative, cannot prevail over the Constitution which
grants only to Congress the power to tax. And indeed, there can
be no denying the fact that when revenue is earned by the
government from the consuming public (except when only
licenses are concerned) there is an exercise of the taxing power.
PETITION to review the order of the Energy Regulatory Board.

The facts are stated in the opinion of the Court.

Padilla, Jimenez, Kintanar and Asuncion Law Firm for petitioner.

Diosdado L. Mendiola and Armando Batara for Pilipinas Shell.

Alikpala, De Guzman, Gamboa for Petron Corporation.

Joselia Poblador for Caltex, Philippines.

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

366

366
SUPREME COURT REPORTS ANNOTATED

Maceda vs. Energy Regulatory Board

Avturbo

1.8664

Kerosene

1.2400

Diesel Oil

1.2400

Fuel Oil

1.4900

Feedstock

1.4900

LPG

0.8487

Asphalts

2.7160

Thinners

1.71211

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
P 3.2697 per liter

Shell

2.0338 per liter

Petron

2.00 per liter2

and meanwhile, for provisional authority to increase temporarily


such wholesale posted prices pending further proceedings.

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

_______________

1 Rollo, 45.

2 Id., 32.

3 Id., 44-45.
4 He is the petitioner in G.R. Nos. 95203-05.

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367

Maceda vs. Energy Regulatory Board

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 can not be allowed since the respondents oil
companies had not exhausted their existing oil stock which they
had bought at old prices and that they can not 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

_______________

5 He is the other petitioner in G.R. Nos. 95119-21.

6 It is the intervenor in G.R. Nos. 95203-05.

368

368

SUPREME COURT REPORTS ANNOTATED

Maceda vs. Energy Regulatory Board

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.

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 3, 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

369

VOL. 192, DECEMBER 18, 1990

369

Maceda vs. Energy Regulatory Board

of the proceeding. The Board, of course, is not prevented from


conducting a hearing on the grant of provisional authoritywhich
is of course, the better procedurehowever, it can not 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
applicationsi.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 depletedas 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, can not 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.

The Board Order authorizing the proceeds generated by the

________________

7 Nos. 78888-90, 79501-03, 79590-92, June 23, 1988, 162 SCRA


521.

8 Supra, at 535.

370

370

SUPREME COURT REPORTS ANNOTATED

Maceda vs. Energy Regulatory Board

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 can not 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.

371

VOL. 192, DECEMBER 18, 1990

371

Maceda vs. Energy Regulatory Board

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.

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 constitu-

372

372

SUPREME COURT REPORTS ANNOTATED

Maceda vs. Energy Regulatory Board

tional 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.), No part, formerly counsel for Cebu Shell Corp.

Melencio-Herrera, J., No part; related by affinity to the


Chairman, ERB.

Paras, J., I dissent (see separate opinion).

Feliciano, J., On leave.

Padilla, J., No part; related to Sen. Maceda's counsel.

DISSENTING OPINION

PARAS, J.:

I dissent.

In fixing the oil prices complained of, the Energy Regulatory Board
(ERB) gravely abused its discretion

(1) in approving the prices without due process of law, and

(2) in exercising the taxing power in gross violation of the 1987


Constitution which vests such power only in Congress.

With respect to due process, it will be noted that it is Sec. 3(e)


(and not Sec. 8) of Ex. Order No. 172 which should apply to the
instant case (and therefore a hearing is essential)1 for it is Sec.
3(e) that refers to "the temporary adjustment of the levels of
prices of petroleum products" or instances "when public interest
so requires." Sec. 8, which is relied upon by the majority opinion,
does NOT speak of price increases. Additionally it is clear that in
the instant case, "public interest" [also mentioned in

________________
1 The majority opinion itself concedes that when Sec. 3(e) is
applicable, a hearing is indispensable (See Decision, p. 6).

373

VOL. 192, DECEMBER 18, 1990

373

Maceda vs. Energy Regulatory Board

Sec. 3 (e)] necessitated a prior hearing.

Anent the unconstitutional use of the taxing power, the decision


of the majority says that "the Board Order authorizing the
proceeds generated by the increases" is "authorized by
Presidential Decree No. 1456, as amended by Executive Order No.
137" (See Decision, pp. 7-8). Assuming that such is authorized by
law, still a law, no matter how imperative, cannot prevail over the
Constitution which grants only to Congress the power to tax. And
indeed, there can be no denying the fact that when revenue is
earned by the government from the consuming public (except
when only licenses are concerned) there is an exercise of the
taxing power.

I am of course aware of the dangerous economic quagmire to


which our country has been plunged by the sadism precipitating
the Middle East crisis, but certainly one error cannot be corrected
by another error. Besides there are more significant and clear-cut
reasons for our economic crisis: namely, the intentional
depreciation (actually, a devaluation) of our already demeaned
currency, our unfortunate liberalization of imports, and our slavish
subservience to the dictates of the IMF.

Petitions dismissed.
Note.Alleged lack of notice of public hearing in NEA's approval
of increase in electric rates of the electricity cooperative, not
tenable, where the consensus and members of the cooperative,
and the consumers are already represented by the Board of
Directors whom they elected. (National Electrification
Administration (NEA) vs. Mendoza, 138 SCRA 632.)

o0o

[Maceda vs. Energy Regulatory Board, 192 SCRA 363(1990)]

782

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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.

Actions; Declaratory Relief; Jurisdiction; The Supreme Court does


not possess original jurisdiction to entertain petitions for
declaratory relief.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.
Such is vested in the Regional Trial Courts. 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.

Administrative Law; Commission on the Settlement of Land


Problems (COSLAP); Origin.The COSLAP was created by virtue of
Executive Order No. 561 dated September 21, 1979. Its
forerunner was the Presi-

_______________

* SECOND DIVISION.

783

VOL. 353, MARCH 7, 2001

783

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

dential 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.

Same; Same; Statutory Construction; Ejusdem Generis; Words and


Phrases; Agency of the Government, Department, Bureau
Office, Instrumentality, Defined; Applying the principle in
statutory construction of ejusdem 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, section 3(2) of Executive Order 561
patently indicates that the COSLAPs dispositions are binding on
administrative or executive agencies.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 COSLAPs determinations, 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. A department, on
the other hand, refers to an executive department created by
law. Whereas, a bureau is understood to refer to any, principal
subdivision of any department. 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. 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

784

784

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

corporations. Applying the principle in statutory construction of


ejusdem 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, section 3(2) of Executive Order 561 patently
indicates that the COSLAPs dispositions are binding on
administrative or executive agencies. The history of the COSLAP
itself bolsters this view. Prior enactments enumerated its member
agencies among which it was to exercise a coordinating function.

Same; Same; Words and Phrases; Quasi-judicial Function,


Explained; The COSLAP discharges quasi-judicial functions.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.
Same; Same; Separation of Powers; Administrative agencies are
not considered courtsthey are neither part of the judicial system
nor are they deemed judicial tribunals; The doctrine of separation
of powers observed in our system of government reposes the
three (3) great powers into its three (3) branchesthe legislative,
the executive, and the judiciaryeach department being co-equal
and coordinate, and supreme in its own sphere, and, accordingly,
the executive department may not, by its own fiat, impose the
judgment of one of its own agencies, upon the judiciary.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. The doctrine of separation of powers observed in our
system of government reposes the three (3) great powers into its
three (3) branchesthe legislative, the executive, and the
judiciaryeach 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.

785

VOL. 353, MARCH 7, 2001

785

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems
Actions; Pleadings and Practice; Forum Shopping; Words and
Phrases; Forum shopping exists when a party repetitively avails
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.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.

Same; Same; Same; Same; Statutory Construction; Supreme


Court Administrative Circular No. 04-94s use of the word shall
imports an imperative obligation inconsistent with the idea of
discretion.The said Administrative Circulars use of the auxiliary
verb shall imports an imperative obligation x x x inconsistent
with the idea of discretion. Hence, compliance therewith is
mandatory.

Same; Same; Same; The certification against forum shopping


must be executed by the plaintiff or principal party, and not by his
counselthe 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.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. 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
frem 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.

786

786

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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.

Same; Same; Same; The willful attempt by a party 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.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.

Same; Same; Same; Forum shopping is evident where the


elements of litis pendentia or res judicata are present.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 ones case.

Same; Same; Same; A partys willful and deliberate act of forum


shopping is punishable by summary dismissal of the actions filed.
In view of the foregoing, all that remains to be done is the
imposition of the proper penalty. A partys willful and deliberate
act of forum shopping is punishable by summary dismissal of the
actions filed. The summary dismissal of both COSLAP Case No. 98-
253 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 pending.
787

VOL. 353, MARCH 7, 2001

787

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

SPECIAL CIVIL ACTION in the Supreme Court. Prohibition.

The facts are stated in the opinion of the Court.

Solomon R. Chungalao for petitioner URDHI.

Marissa J. Madrid-Dacayanan for private respondents.

DE LEON, JR., J.:

Before us is a petition for prohibition and declaratory relief


seeking the annulment of a status quo order1 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 latters 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

_______________

1 Annex B of the Petition, Rollo, p. 32.

2 Memorandum Order No. 85 dated April 30, 1987.

788

788

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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 action5 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-

_______________

3 HIGC likewise agreed to act as originator in a separate


memorandum of agreement for one other applicant, the 11501
Association, Inc., of a different portion of Dominican Hills.

4 Annex E of the Petition, Rollo, p. 77.


5 Complaint, Annex F of the Petition, Rollo, pp. 79-83.

6 Annex G of the Petition, Rollo, p. 84.

789

VOL. 353, MARCH 7, 2001

789

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

R before Branch 61 of the same court. The complaint7 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 Engineers 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 petition10 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 Engineers 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:

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]?

_______________

7 Annex W of the Petition, Rollo, pp. 85-91.

8 Annex T of the Petition, Rollo, pp. 92-93.

9 CA-G.R. CV No. 53326.

10 Annex A-1 of the Petition, Rollo, pp. 26-31.

790

790

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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.

_______________

11 Tano, et al. v. Socrates, et al., 278 SCRA 154, 172 (1997).


12 In relation thereto, Section 1, Rule 63 of the 1997 Rules of Civil
Procedure states: Who may file petition.Any person interested
under a deed, will, contract or other written instrument, whose
rights are affected by a statute, executive order or regulation,
ordinance, or any other governmental regulation may, before
breach or violation thereof, bring an action in the appropriate
Regional Trial Court to determine any question of construction or
validity arising, and for a declaration of his rights or duties,
thereunder, xxxx

791

VOL. 353, MARCH 7, 2001

791

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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 formers,


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 fanners; cause the
speedy settlement of such conflicts in accordance with priorities
or policies established by the Committee; and

_______________

13 The membership of the committee was as follows:

Secretary of Agriculture and Natural Resources ..............

Chairman

Small Farmers Commission Chairman ..............................

Action Officer

Deputy Governor, Land Authority .......................................

Member

Undersecretary of Justice ......................................................

Member

Undersecretary of National Defense ...................................

Member
PANAMIN Chairman ............................................................

Member

Chief of Constabulary .............................................................

Member

Commissioner on National Integration ..............................

Member

Director of Lands .....................................................................

Member

Director of Forestry .................................................................

Member

Agrarian Counsel ....................................................................

Member

Land Registration Committee ..............................................

Member

792

792

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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,

_______________

14 The composition of the committee was likewise changed. Thus:

Secretary of Natural Resources .............................................

Chairman

PANAMIN Secretary ..............................................................

Member
Deputy Executive Secretary ...................................................

Member

Undersecretary of Agriculture ...............................................

Member

Undersecretary of Justice .......................................................

Member

Undersecretary of Agrarian Reform .....................................

Member

Undersecretary of National Defense ....................................

Member

Chief of Constabulary ..............................................................

Member

Commissioner of Land Registration .....................................

Member

Chief, Citizens Legal Assistance Office ................................

Member

Director of Lands ......................................................................

Member

Director of Forest Development .............................................

Member

Director of Mines ......................................................................

Member

793
VOL. 353, MARCH 7, 2001

793

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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 fol-
lowing 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

_______________

15 Currently, the COSLAP is a constituent unit of the Department


of Justice, per Book IV, Title III, Chapter 11, section 32 of
Executive Order No. 292, otherwise known as The Revised
Administrative Code of 1987. The provision reads: The
Commission on the Settlement of Land Problems shall be
responsible for the settlement of land problems involving small
landowners and members of cultural minorities. It shall also
perform such other functions, as are now or may hereafter be
provided by law.

794

794

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

(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 Commissioner, 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 COSLAPs 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 COSLAPs 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

_______________

16 181 SCRA 599, 607-608 (1990).

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United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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 judiciarys 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 COSLAPs determinations,
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 an executive

_______________

17 Commissioner of Internal Revenue, et al. v. Santos, et al., 277


SCRA 617, 630 (1997).

18 Section 2, Introductory Provisions, Executive Order No. 292,


otherwise known as the Administrative Code of 1987.

796

796

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems
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

_______________

19 Id. The definition adds: For purposes of Book IV, this shall
include any instrumentality, as herein defined, having or assigned
the rank of a department, regardless of its name or designation.

20 Id. The second sentence of the definition states: For purposes


of Book IV, this shall include any principal subdivision or unit of
any instrumentality given or assigned the rank of a bureau,
regardless of actual name or designation, as in the case of
department-wide regional offices.

21 Id.

22 Id. Definitions of a regulatory agency, chartered institution,


and government-owned or controlled corporation are as follows:
(11) Regulatory agencyrefers to any agency expressly vested
with jurisdiction to regulate, administer or adjudicate matters
affecting substantial rights and interest of private persons, the
principal powers of which are exercised by a collective body, such
as a commission, board or council. (12) 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.
(13) Government-owned or controlled corporationrefers 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
through its instrumentalities either wholly, or where applicable as
in the case of stock corporations, to the extent of at least fifty-one
(51) per cent of its capital stock: Provided, that government-
owned or controlled corporations may be further categorized by
the Department of the Budget, the Civil Service Commission, and
the Commis-

797

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797

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

the principle in statutory construction of ejusdem 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 COSLAPs dispositions are binding
on administrative or executive agencies. 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) branchesthe legislative, the executive,
and the judiciaryeach 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

_______________

sion on Audit for purposes of the exercise and discharge of their


respective powers, functions and responsibilities with respect to
such corporations.

23 PNOC Shipping and Transport Corporation v. Court of Appeals,


297 SCRA 402, 422 (1998).
24 Midland Insurance Corporation v. Intermediate Appellate Court,
143 SCRA 458, 462 (1986).

25 2 Am Jur 2d, Administrative Law 29.

798

798

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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 party 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

_______________

26 Section 1, Article VIII, 1987 Constitution.

27 Gatmaytan v. Court of Appeals, 267 SCRA 487, 500 (1997).

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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 party, [italics
supplied]

xxx xxx xxx

The said Administrative Circulars use of the auxiliary verb shall


imports an imperative obligation x x x 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,
_______________

28 Don Tino Realty and Development Corporation v. Florentino,


314 SCRA 1?7, 204-205 (1999); Codoy v. Calugay, 312 SCRA 333,
342 (1999).

29 Robern Development Corporation v. Quitain, 315 SCRA 150,


160 (1999); Melo v. Court of Appeals, 318 SCRA 94, 102 (1999).
The circular is mandatory likewise for labor cases (e.g., Maricalum
Mining Corporation v. National Labor Relations Commission, 298
SCRA 378, 384 [1998]), and election cases (Loyola v. Court of
Appeals, 245 SCRA 477, 484 [1995]).

800

800

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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 respondents case
merely because her complaint was not based on petitioners
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 treatmentin
terms of imposable sanctionsbetween 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

_______________

30 Melo v. Court of Appeals, supra.


31 Escorpizo v. University of Baguio, 306 SCRA 497, 503 (1999);
Far Eastern Shipping Company v. Court of Appeals, 297 SCRA 30,
53 (1998).

801

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801

United Residents of Dominican Hill, Inc. vs. Commission on the


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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 Appeals33 that:

Private respondents 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

_______________

32 Fil-Estate Golf and Development, Inc. v. Court of Appeals, 265


SCRA 614, 633 (1996).

33 269 SCRA 664, 671-674 (1997).

802

802

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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 subjudice 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 respondents 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 judice rule 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 subjudice rule. At best, the Makati court may hear the
case only with respect to the alleged injury suffered by private
respondent after the Paraaque 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 ASSOCIATIONS counsel, Atty. Conrado Villamor Catral, Jr.

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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 ones case.35

In view of the foregoing, all that remains to be done is the


imposition of the proper penalty. A partys 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

_______________

34 Petitioners in COSLAP Case No. 98-253 who also claimed


damages in Civil Case No. 3382-R include Ponciano Basilan, Pacito
Moises, Dionisio Anas, Noli Dangla, Napoleon Ballesteros,
Domingo Canutab, Marcelino Gabriano and Jonathan de la Pea.
(See Rollo, pp. 67-68)

35 Firestone Ceramics, Inc. v. Court of Appeals, 313 SCRA 522


(1999).

36 Prubankers Association v. Prudential Bank & Trust Company,


302 SCRA 74, 84 (1999).

804
804

SUPREME COURT REPORTS ANNOTATED

United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems

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 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 (Chairman), Mendoza, Quisumbing and Buena, JJ.,


concur.

Petition granted, status quo order set aside. Petition in COSLAP


Case No. 98-253 and in Civil Case No. 3316-R dismissed.

Notes.The term Authority has been used to designate both


incorporated and non-incorporated agencies or instrumentalities
of the Government. (Iron and Steel Authority vs. Court of Appeals,
249 SCRA 538 [1995])

The powers of the Executive, the Legislative and the Judiciary to


save the life of a death convict do not exclude each other for the
simple reason that there is no higher right than the right to life.
(Echegaray vs. Secretary of Justice, 301 SCRA 96 [1999])
Under the principle of ejusdem generis, where general words
follow an enumeration of 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. (Philippine Basketball Association vs.
Court of Appeals, 337 SCRA 358 [2000])

o0o

[United Residents of Dominican Hill, Inc. vs. Commission on the


Settlement of Land Problems, 353 SCRA 782(2001)]

VOL. 459, JUNE 8, 2005

491

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

G.R. No. 141523. June 8, 2005.*

DAVAO NEW TOWN DEVELOPMENT CORPORATION, petitioner, vs.


COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS
(COSLAP), public respondent, ARIEL ONDE, EUGENE C. CAASI,
BIENVENIDA C. PORTUGUESE, CRESENCIANO CHING, FLORA
DIONGSON, ALEX DIONGSON, FERMIN CARAZO, ANA DELEBIOS,
ROMY CARAZO, ANA DELEBIOS, ROMY BETONIO, FELIX DELEBIOS,
REMEDIOS DEJOS, ROSINI CASTILLO, PABLO CALLA, FLORIANO
LAWAN, ROMEO LUMANSOC, MERCEDITA PALBAN, FELICIDAD C.
UGPAY, RUPERTO TOLEDO, DAVID BRILLANTES, GERARDO
CANCERAN, SUSANA CARAZO, PABLITO WABINGA, CLAUDIO
CANCERAN, FORTUNATA SORILLA, EXUPERIO PADILLA, ALBERT
SORILLA, JEAN SORILLA, FORTUNE SORILLA, WILFREDO SEGOVIA,

_______________
* SECOND DIVISION.

492

492

SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

PROTACIO SEGOVIA, EDUARDO SEGOVIA, EDUARDO GABOTO,


SERVANDO PADILLA, ALRINO CANCERAN, LARRY SABELEONA,
ALICE C. LAGURA, IGNACIO PADILLA, LYSA CANCERAN, CRISTITUTO
BAON, AGUSTINA BUNANI, LEANDRO ABINA, MARTINO PADILLA,
FRANSISCO SANORA, MARILOU CANCERAN, AVELINO DURABAN,
PRIMITIVA CANA, LILIA VELASQUEZ, CIPRIANO GABATO,
NATIVIDAD CAUTIVER, ERNESTO GABATO, SPOUSES AGAPITO and
ELENOR CAPAROSO, RUEL CAPAROSO, JOSUE A. LAYON, BRYAN
CAPAROSO, and MARIA S. STA. CRUZ, private respondents.

Commission on the Settlement of Land Problems (COSLAP);


Jurisdictions; Certiorari; Appeals; Appeals from the COSLAP may
not be brought directly before the Supreme Court but must be
elevated to the Court of Appeals but where the assailed
Resolution is void, the Supreme Court may entertain the petition
for certiorari notwithstanding the failure of the petitioner to
appeal the Resolution to the Court of Appeals; If a decision is
rendered without jurisdiction and therefore a nullity, the same
may be attacked at anytime.The Court is not unmindful of the
explicit directive in Sy v. Commission on the Settlement of Land
Problems, where it was held that appeals from the COSLAP may
not be brought directly before the Court in view of Rule 45,
Section 1 but must be elevated to the Court of Appeals under Rule
43 of the Rules of Civil Procedure in the same manner that orders,
resolutions or decisions of other quasi-judicial agencies are
directly appealable to the Court of Appeals. As correctly pointed
out by the Office of the Solicitor General (OSG), however, in view
of the nullity of the assailed Resolution, the Court may entertain
the petition notwithstanding the failure of petitioner to appeal the
Resolution to the Court of Appeals. If a decision is rendered
without jurisdiction and therefore a nullity, the same may be
attacked anytime. While certiorari as a remedy may not be used
as a substitute for an appeal, especially for a lost appeal, this rule
should not be strictly enforced if the petition is genuinely
meritorious. The Court has given due course to petitions for
certiorari although appeal is the proper remedy where the
equities of the case warranted such action, mindful that
dismissals based on technicalities are looked upon with disfavor.

Same; Same; Same; Same; Motions for Reconsideration; Where


the order is a patent nullity, as where the court a quo has no
jurisdiction, or where the questions raised in the certiorari
proceeding have been duly

493

VOL. 459, JUNE 8, 2005

493

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

raised and passed upon in the lower court, the filing of a motion
for reconsideration is not necessary for a petition for certiorari to
be given due courseto require petitioner to question COSLAPs
jurisdiction in a motion for reconsideration as a condition
precedent for the filing of the instant petition could only be an idle
exercise.It is significant to note that the instant petition does
not show that petitioner has filed a motion for reconsideration of
the assailed Resolution before respondent COSLAP, which is a
condition precedent in order that this petition for certiorari shall
be given due course. The general rule that the filing of a motion
for reconsideration before resort to certiorari will lie is intended to
afford the public respondent an opportunity to correct any factual
or fancied error attributed to it by way of re-examination of the
legal and factual aspects of the case. However, this rule is subject
to certain recognized exceptions. Where the order (or a resolution
as in the case at bar), is a patent nullity, as where the court a quo
has no jurisdiction, or where the questions raised in the certiorari
proceeding have been duly raised and passed upon in the lower
court, the filing of a motion for reconsideration is not necessary
for a petition for certiorari to be given due course. As will be
shown later, COSLAP was totally without jurisdiction in taking
cognizance of the case. This was correctly pointed out by
petitioner even before the assailed Resolution was issued by
COSLAP. To require petitioner to question COSLAPs jurisdiction in
a motion for reconsideration as a condition precedent for the filing
of the instant petition could only be an idle exercise.

Same; Same; Same; Same; Same; Exceptions to the Requirement


of Prior Motion for Reconsideration.The recognized exceptions
where the special civil action for certiorari will lie even without
filing a motion for reconsideration includes: (a) where the order is
a patent nullity, as where the court a quo has no jurisdiction; (b)
where the questions raised in the certiorari proceeding have been
duly raised and passed upon by the lower court, or are the same
as those raised and passed upon in the lower court; (c) where
there is an urgent necessity for the resolution of the question and
any further delay would prejudice the interests of the Government
or of the petitioner or the subject matter of the action is
perishable; (d) where, under the circumstances, a motion for
reconsideration would be useless; (e) where petitioner was
deprived of due process and there is extreme urgency for relief;
(f) where, in a criminal case, relief from an order of arrest is
urgent and the granting of such relief by the trial court is
improbable; (g) where the proceedings in the lower court are a
nullity for lack of due process; (h) where the proceedings was ex
parte or in which the

494

494

SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

petitioner had no opportunity to object; and (l) where the issue


raised is one purely of law or where public interest is involved.

Same; Same; Administrative Law; Administrative agencies, like


the COSLAP, are tribunals of limited jurisdiction and as such could
wield only such as are specifically granted to them by the
enabling statutes; The law does not vest jurisdiction on the
COSLAP over any land dispute or problem.Administrative
agencies, like the COSLAP, are tribunals of limited jurisdiction and
as such could wield only such as are specifically granted to them
by the enabling statutes. Under the law, the COSLAP has two
options in acting on a land dispute or problem lodged before it,
namely: (a) refer the matter to the agency having appropriate
jurisdiction for settlement/resolution; or (b) assume jurisdiction if
the matter is one of those enumerated in paragraph 2(a) to (e) of
the law, if such case is critical and explosive in nature, taking into
account the large number of parties involved, the presence or
emergence of social unrest, or other similar critical situations
requiring immediate action. In resolving whether to assume
jurisdiction over a case or to refer the same to the particular
agency concerned, the COSLAP has to consider the nature or
classification of the land involved, the parties to the case, the
nature of the questions raised, and the need for immediate and
urgent action thereon to prevent injuries to persons and damage
or destruction to property. The law does not vest jurisdiction on
the COSLAP over any land dispute or problem.

Same; Same; Same; The instances when COSLAP may resolve


land disputes are limited only to those involving public lands or
lands of the public domain or those covered with a specific license
from the government, such as a pasture lease agreement, a
timber concession, or a reservation grant.The instances when
COSLAP may resolve land disputes are limited only to those
involving public lands or lands of the public domain or those
covered with a specific license from the government such as a
pasture lease agreement, a timber concession, or a reservation
grant. The Cuison property is private property, having been
registered under the Torrens system in the name of petitioner.
Thus, the government has no more control or jurisdiction over it.
The parties claiming the Cuison property are herein petitioner and
private respondents. None of them is a squatter, patent lease
agreement holder, government reservation grantee, public land
claimant or occupant, or a member of any cultural minority. The
dispute between the parties was not critical and explosive in
nature so as to generate social tension or unrest, or a critical
situation which required immediate action.

495

VOL. 459, JUNE 8, 2005

495

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)
Same; Same; Same; Executive Order (EO) No. 561; Statutory
Construction; Ejusdem Generis; Where general words follow an
enumeration of 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 as clear as those specifically
mentioned.It is true that under paragraph 2(e) of E.O. No. 561,
the COSLAP may assume jurisdiction over complaints involving
other similar land problems of grave urgency. Where general
words follow an enumeration of 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 as clear as those
specifically mentioned. In the instant case, the dispute is between
parties claiming to be agrarian reform beneficiaries and a private
property owner over a parcel of land which does not form part of
the public domain. Clearly, the instant dispute cannot be
characterized to be of the same kind as those enumerated under
paragraph 2(a) to (d) of E.O. No. 561. In relation to this, private
respondents complaint falls squarely within the jurisdiction of the
DAR. Private respondents Position Paper avers that they are
agricultural lessees and beneficiaries of an agricultural land
whose CLOAs have been improperly cancelled by the DAR. There
is no dispute that the issue of the validity of the cancellation of
private respondents CLOAs is within the competence of the DAR.
As provided by Section 50 of Republic Act (R.A.) No. 6657, the
DAR is vested with the primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation
of agrarian reform except those falling under the exclusive
jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR).

Same; Same; Same; Same; Agrarian Reform Law; R.A. No. 6657;
Neither R.A. No. 6657 nor E.O. No. 561 creating the COSLAP vests
the latter and the DAR concurrent jurisdiction in respect to
disputes concerning the implementation of agrarian reform laws.
The grant of exclusive and primary jurisdiction over agrarian
reform matters on the DAR implies that no other court, tribunal, or
agency is authorized to resolve disputes properly cognizable by
the DAR. Neither R.A. No. 6657 nor E.O. No. 561 creating the
COSLAP vests the latter and the DAR concurrent jurisdiction in
respect to disputes concerning the implementation of agrarian
reform laws. Instead of hearing and resolving the case, COSLAP
should have simply referred private respondents complaint to the
DAR or DARAB, where another case involving the same parties,
the same property and the same issues was pending on appeal.

496

496

SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

Same; Same; Same; Same; The Courts pronouncement in Baaga


v. Commission on the Settlement of Land Problems, (181 SCRA
599 [1990]), which vests COSLAP the power to resolve land
disputes, does not confer upon COSLAP blanket authority to
assume every matter referred to it.COSLAP filed its own
comment to the petition, arguing that to divest itself of
jurisdiction over the subject matter will defeat the purpose of its
creation. It cited this Courts pronouncement in Baaga vs.
Commission on the Settlement of Land Problems, which
pertinently states: . . . It is true that Executive Order No. 561
provides that the COSLAP may take cognizance of the 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 word
may does not mean that the COSLAPs jurisdiction is merely
confined to the above-mentioned cases. The provisions of the said
Executive Order are clear that 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 abovementioned
proviso, which vests COSLAP the power to resolve land disputes,
does not confer upon COSLAP blanket authority to assume every
matter referred to it. Its jurisdiction is confined only to disputes
over lands in which the government has proprietary or regulatory
interest. Moreover, the land dispute in Baaga involved parties
with conflicting free patent applications which was within the
authority of PACLAP to resolve, unlike that of the instant case
which is exclusively cognizable by the DAR.

Same; Same; Same; Jurisdiction is the authority to hear and


determine a cause, the right to act in a caseit is conferred by
law and not by mere administrative policy of any court or tribunal.
Jurisdiction is the authority to hear and determine a causethe
right to act in a case. It is conferred by law and not by mere
administrative policy of any court or tribunal. It is determined by
the averments of the complaint and not by the defense contained
in the answer. Thus, it is the allegations in private respondents
complaint questioning the validity of the cancellation of their
CLOAs which effectively characterized the dispute to be within the
competence of the DAR to the exclusion of respondent COSLAP.

497
VOL. 459, JUNE 8, 2005

497

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

Same; Same; Same; COSLAP is not empowered to review


decisions of the DARAB or the Provincial Adjudicator or any other
quasi-judicial agency for that matter.COSLAP is not empowered
to review decisions of the DARAB or the Provincial Adjudicator or
any other quasi-judicial agency for that matter. In their Position
Paper, private respondents questioned the validity of the DARAB
and the Provincial Adjudicators order of cancellation of private
respondents CLOAs and of the governments certificate of title
over the Cuison property on the ground that the Republic of the
Philippines was not impleaded in those cases. Private
respondents recourse from the decision of the DARAB in DARAB
Case No. 2362, affirming the Provincial Adjudicators order of
cancellation of the compulsory acquisition proceedings, is to
appeal the decision of the DARAB to the Court of Appeals within
the reglementary period. Respondent COSLAP cannot arrogate the
duty of directing the DAR to reinstate the CLOAs of private
respondents because the same falls within the competence of the
DAR subject to the appellate review of the Court of Appeals.
Insofar as the assailed Resolution delved on the propriety of the
rulings of the DARAB in DARAB Case No. 2362 and of the
Provincial Adjudicator in DARAB Case No. XI-10-12-DC-93, the
Court finds COSLAP to have exceeded its quasi-judicial functions.

Same; Same; Land Titles; COSLAP has no jurisdiction to order the


reinstatement of a title over a piece of land.COSLAP exceeded
its jurisdiction in ordering the reinstatement of the governments
title over the Cuison property. Well-settled is the rule that a
torrens title, as a rule, is conclusive and indefeasible. Proceeding
from this, P.D. No. 1529, Sec. 48 provides that a certificate of title
shall not be subject to collateral attack and cannot be altered,
modified, or canceled except in a direct proceeding.

Same; Same; Actions; Words and Phrases; The attack is direct


where the object of an action or proceeding is to annul or set
aside such judgment, or enjoin its enforcement, while the attacks
is indirect or collateral when, in an action to obtain a different
relief, an attack on the judgment is nevertheless made as an
incident thereof.When is an action an attack on a title? It is
when the object of the action or proceeding is to nullify the title,
and thus challenge the judgment pursuant to which the title was
decreed. The attack is direct when the object of an action or
proceeding is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is indirect or
collateral when, in an action to obtain a different relief, an attack
on the judgment is nevertheless made as an incident thereof. As
noted by private respondents in their Position Paper, COSLAP

498

498

SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

directed the Register of Deeds to reinstate the certificate of title


on the Cuison property in the name of the Republic of the
Philippines. Therefore, the complaint of private respondents
before COSLAP sought an alteration petitioners certificate of title
which COSLAP has no authority to order pursuant to Section 48 of
P.D. 1529.

Same; Same; Same; Forum Shopping; The ambiguous terminology


employed in E.O. No. 561 provides an ideal breeding ground for
forum-shopping.In United Residents of Dominican Hill, Inc. v.
Commission on the Settlement of Land Problems, the Court
observed that by reason of the ambiguous terminology employed
in E.O. No. 561, the power to assume jurisdiction granted to the
COSLAP provides an ideal breeding ground for forum-shopping.
There is forum-shopping when the actions involve the same
transactions, the same essential facts and circumstances.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari and


Prohibition.

The facts are stated in the opinion of the Court.

Delfin B. Agcaoili, Jr. for private respondents.

TINGA, J.:

This is a special civil action for certiorari and prohibition with


application for the issuance of a writ of preliminary injunction with
temporary restraining order to annul the Resolution of public
respondent Commission on Settlement of Land Problems
(COSLAP) in COSLAP Case No. 98-343 and to restrain COSLAP
from enforcing the same for lack of jurisdiction.

Subject of the instant petition is a huge tract of land consisting of


131.2849 hectares situated at Sto. Nio, Tugbok, Davao City,
which was a portion of a bigger landholding belonging to the late
Roman Cuison, Jr. The latter mortgaged the property to the
Philippine Banking Corporation (Bank), which, after emerging as
the highest bidder in the foreclosure proceedings, consolidated its
ownership over the property and subdivided the land into two
parcels, namely: the first, covered by TCT No. T-162663; and the
second, covered by TCT No. T-162664, which is the property
subject of the instant dispute (Cuison property).
499

VOL. 459, JUNE 8, 2005

499

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

Sometime in 1989, the government acquired the Cuison property


for distribution to the beneficiaries of the Comprehensive Agrarian
Reform Program (CARP). Among the beneficiaries were herein
private respondents who are members of the Sto. Nio Farmers
Cooperative (SNFC), Association of Agrarian Reform Beneficiaries
(ARBA) and Nagkahiusang Mag-uuma ng Ramie (NAMAR-FADC-
KMP). Private respondents were individually issued with
certificates of land ownership awards (CLOAs). After compulsory
acquisition proceedings, the certificate of title issued in the name
of the Republic of the Philippines was cancelled and replaced by
TCT No. CL-850 issued in the names of the aforesaid
organizations.

Claiming that the disputed property had already been classified


as urban/urbanizing and therefore beyond the coverage of the
CARP, the Bank filed a complaint docketed as DARAB Case No. XI-
10-12-DC-93 on September 23, 1993 with the Office of the
Provincial Adjudicator. Named respondents were the Regional
Director for Region XI of the Department of Agrarian Reform
(DAR), the Provincial Agrarian Reform Officer, the Municipal
Agrarian Reform Officer, the Register of Deeds of Davao City,
SNFC, ARBA and NAMAR-FADC-KMP.1

Respondent officials therein and SNFC stood by their assertion


that the Cuison property was agricultural as per certification
issued on June 30, 1990 by the Regional Officer of the Housing
and Land Use Regulatory Board (HLURB). In addition, they
questioned the city zoning ordinance classifying the Cuison
property as urban/urbanizing for being without the approval of
the HLURB.

Evidence presented by the Bank consisted of a certification issued


by the HLURB on October 13, 1993 correcting its prior
classification that the Cuison property was agricultural and a
written official classification from the Davao City Zoning
Administrator stating that Resolution No. 984, Ordinance No. 363,
series of 1982 categorized the Cuison property as
urban/urbanizing.

On February 7, 1994, the Provincial Adjudicator rendered a


decision finding that the Cuison property was not agricultural land

_______________

1 Annex C, Comment for Private Respondents, Rollo, pp. 152-


160.

500

500

SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

and, therefore, outside the coverage of the CARP because as early


as 1982, it had already been classified as urban/urbanizing.2
The Provincial Adjudicator granted the Banks prayer to nullify the
compulsory acquisition proceedings with respect to the Cuison
property and directed the Register of Deeds of Davao City to
cancel the CLOAs issued to the beneficiaries and to reinstate TCT
No. T-162664 in the name of the Bank. After reinstatement of the
Banks title over the Cuison property, herein petitioner Davao New
Town Development Corporation acquired the property and caused
the cancellation of TCT No. T-162664 and the issuance of TCT No.
T-210500 in its name. Subsequently, the Cuison property was
further subdivided into seven (7) parcels now covered by TCT Nos.
T-224628 to 224634 all registered in the name of petitioner.

Respondents in DARAB Case No. XI-10-12-DC-93 appealed the


decision of the Provincial Adjudicator to the Department of
Agrarian Reform Adjudicatory Board (DARAB), where petitioner
intervened as the new owner of the Cuison property. The Bank
opposed the appeal docketed as DARAB Case No. 2362.

While the appeal was pending, private respondents filed an


unnumbered case with the Provincial Adjudicator against
petitioner and the Register of Deeds of Davao City, praying for a
writ of preliminary injunction and the restoration of their CLOAs
and of TCT No. CL-850. They alleged that while the decision of the
Provincial Adjudicator in DARAB Case No. XI-10-12-DC-93 was
seasonably appealed, the Register of Deeds cancelled TCT No. CL-
850 and reinstated the Banks certificate of title to the Cuison
property. They also claimed that petitioner had introduced
preliminary works on the Cuison property and was poised to
forcibly eject private respondents from the premises.3 The
undocketed case filed anew with the Provincial Adjudicator was
consolidated with DARAB Case No. 2362.

On May 28, 1997, the DARAB rendered a decision in DARAB Case


No. 2362, partially affirming the Provincial Adjudicators

_______________

2 Annex D, Comment for Private Respondents, id., at pp. 161-


167.
3 Solicitor Generals Comment, id., at p. 235.

501

VOL. 459, JUNE 8, 2005

501

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

decision in DARAB Case No. XI-10-12-DC-93. The DARAB also


ordered the Bank and petitioner to solidarily pay the disturbance
compensation in favor of the beneficiaries.4 In ruling that the
Cuison property was outside the coverage of the comprehensive
agrarian reform program, the DARAB relied on the Department of
Justice (DOJ) Opinion No. 44, Series of 1990 as interpreted in
Natalia Realty, et al. v. DAR,5 where it was held that lands
converted to non-agricultural uses by government agencies prior
to the effectivity of the Comprehensive Agrarian Reform Law are
outside the coverage of agrarian reform. According to the DARAB,
since the Cuison property had been classified by the city
government as a site for human settlements and relocation prior
to June 15, 1988, the Cuison property cannot be categorized as an
agricultural land.

On July 31, 1997, petitioner filed a manifestation to bring to the


DARABs attention the July 27, 1997 compromise agreement
executed by the parties, namely: petitioner Davao New Town
Development Corporation, SNFC, ARBA, Philippine Banking
Corporation, and NAMAR-FADC-KMP, and the Legal Assistance
Division of the Provincial Agrarian Reform Office. The compromise
agreement stated, among others, that petitioner had agreed to
give the beneficiaries disturbance compensation and to process
the titling of beneficiaries homelots in exchange for the latters
peaceful evacuation of the Cuison property and non-interference
with petitioners projects in the area.

The DARAB conducted a hearing on August 1, 1997 where the


parties manifested their knowledge of and concurrence to the
import of the terms and conditions of the compromise agreement.
Thus, on August 14, 1997, the DARAB issued a Resolution6
denying private respondents motion for reconsideration of the
DARAB decision and considered the case closed and terminated.

On September 25, 1997, herein private respondents filed a


complaint for Injunction With Prayer for Preliminary and
Mandatory

_______________

4 Annex C, Petition, id., at p. 38.

5 225 SCRA 278 (1992).

6 Annex D, Petition, Rollo, p. 57.

502

502

SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

Injunction, Damages, and Restraining Order with the Office of the


Provincial Adjudicator of the Department of Agrarian Reform.
Named respondents in the complaint were herein petitioner, the
Bank, the Regional Director of the DAR, the Provincial Agrarian
Reform Officer, the Municipal Agrarian Reform Officer and the
Register of Deeds of Davao City. The complaint, docketed as
DARAB Case No. XI-1382-DC-97 and hereafter referred to as the
second DARAB case, alleged that the decision of the Provincial
Adjudicator in DARAB Case No. XI-10-12-DC-93 which was
affirmed by the DARAB on appeal was null and void for failure to
implead the Republic of the Philippines as the real party-in-
interest in a suit for cancellation of the certificate of title issued in
the name of the Republic. Private respondents also claimed that
they were not made parties to the proceedings in DARAB Case No.
XI-10-12-DC-93 and to the execution of the July 27, 1997
compromise agreement.7

During the pendency of the second DARAB case, private


respondents filed with the Regional Trial Court, Branch 15, Davao
City, Civil Case No. 26-897-98, entitled Ariel Onde, et al. v. Davao
New Town Development Corporation and Timothy Te. In an Order8
issued on February 18, 1998, Judge Jesus U. Quitain dismissed the
case on the ground of forum-shopping in view of similarity of
parties, prayer, reliefs and remedies sought in Civil Case No. 26-
897-98 and in the second DARAB case which was pending before
the Provincial Adjudicator.

On December 1, 1998, the Provincial Adjudicator rendered a


decision in the second DARAB case and ordered petitioner to pay
herein private respondents disturbance compensation.9 Both
parties appealed to the DARAB, which appeal remains unresolved
to date.

Herein private respondents, who are members of SNFC, again


referred their complaint with another agency, this time, COSLAP.

_______________

7 Annex B, Petition, Rollo, pp. 25-27.

8 Annex E, Petition, id., at p. 65.


9 Annex F, Petition, id., at pp. 67-77.

503

VOL. 459, JUNE 8, 2005

503

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

On December 10, 1998, COSLAP issued a subpoena on petitioner


directing the latter and PBC to appear for an investigation on the
case docketed as COSLAP Case No. 98-343.10 At the scheduled
investigation no representative from COSLAP appeared. On
January 18, 1999, COSLAP issued another subpoena on petitioner
directing the latter to appear for another investigation.11 In light
of the opposition raised by petitioner that it was not served a
written complaint, the scheduled investigation was deferred for
the second time.

Upon urgent ex-parte motion by private respondents, COSLAP


issued a status quo order12 on January 14, 1999 enjoining
petitioner from disturbing the peaceful possession of private
respondents in the Cuison property. Petitioner filed a motion on
January 25, 1999, seeking the dismissal of the case for lack of
jurisdiction of COSLAP and the lifting of the status quo order.13
Without ruling on petitioners motion, COSLAP issued an order
directing the parties to submit their respective position papers.
Only private respondents complied,14 after which the case was
deemed submitted for decision.

On December 21, 1999, COSLAP issued the assailed Resolution15


in COSLAP Case No. 98-343, upholding its jurisdiction over the
case and declaring the decision of the Provincial Adjudicator in
the second DARAB case as not binding upon the Republic and
private respondents who were not impleaded in said case. The
dispositive portion of the Resolution reads:

WHEREFORE, premises considered, judgment is hereby rendered


as follows:

1. Directing the Register of Deeds to reinstate the title of the land


subject matter of this instant case in the name of the Republic of
the Philippines;

_______________

10 Annex G, Petition, id., at p. 78.

11 Annex H, Petition, id., at p. 79.

12 Annex I, Petition, id., at p. 80.

13 Annex J, Petition, id., at pp. 81-83.

14 Annex L, Petition, id., at pp. 86-95.

15 Annex A, Petition, id., at pp. 20-24.

504

504

SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

2. Directing the DAR to reinstate the CLOAs in the name of the


Farmer beneficiaries;
3. Directing the Davao Newtown Development Corporation to
peacefully turn-over the possession of the property and to pay
reasonable damages to the farmer beneficiaries.

SO ORDERED.16

Hence, the instant petition.

Although the petition is captioned as a petition for review on


certiorari under Rule 45 of the Rules of Civil Procedure (with
prohibition and application for the issuance of a writ of
preliminary injunction with temporary restraining order) and
pursuant to Section 3, Executive Order (E.O.) No. 561, series of
1979, the Court shall properly treat the same as an original action
for certiorari and prohibition under Rule 65 of the Rules on
account of the jurisdictional question raised therein and the reliefs
sought.

The instant petition seeks to nullify the assailed Resolution of


respondent Commission and to restrain respondent Commission
from enforcing the same for lack of jurisdiction and for grave
abuse of discretion amounting to lack or in excess of
jurisdiction.17 Petitioner alleges that respondent Commission
acted with grave abuse of discretion when it refrained from
passing upon the jurisdictional questions raised in its motion to
dismiss and that respondent Commission had threatened to
immediately enforce said patently void resolution, thereby
rendering petitioner without any plain, adequate and speedy
remedy in the ordinary course of law.18 When any tribunal, board
or officer exercising judicial or quasi-judicial functions has acted
without or in excess of its or his jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction, and there
is no appeal, nor any plain, speedy and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or
_______________

16 Id., at p. 24.

17 Id., at p. 5.

18 Id., at p. 6.

505

VOL. 459, JUNE 8, 2005

505

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

modifying the proceedings of such tribunal, board or officer, and


granting such incidental reliefs as law and justice may require.19

The Court is not unmindful of the explicit directive in Sy v.


Commission on the Settlement of Land Problems,20 where it was
held that appeals from the COSLAP may not be brought directly
before the Court in view of Rule 45, Section 121 but must be
elevated to the Court of Appeals under Rule 43 of the Rules of
Civil Procedure in the same manner that orders, resolutions or
decisions of other quasi-judicial agencies are directly appealable
to the Court of Appeals.

As correctly pointed out by the Office of the Solicitor General


(OSG), however, in view of the nullity of the assailed Resolution,
the Court may entertain the petition notwithstanding the failure of
petitioner to appeal the Resolution to the Court of Appeals. If a
decision is rendered without jurisdiction and therefore a nullity,
the same may be attacked anytime.22 While certiorari as a
remedy may not be used as a substitute for an appeal, especially
for a lost appeal, this rule should not be strictly enforced if the
petition is genuinely meritorious.23 The Court has given due
course to petitions for certiorari although appeal is the proper
remedy where the equities of the case warranted such action,
mindful that dismissals based on technicalities are looked upon
with disfavor.24

Furthermore, it is significant to note that the instant petition does


not show that petitioner has filed a motion for reconsideration of
the assailed Resolution before respondent COSLAP, which is a
condition precedent in order that this petition for certiorari shall

_______________

19 Section 1, Rule 65 of the Rules of Civil Procedure.

20 417 Phil. 378; 365 SCRA 49 (2001).

21 Id., at p. 393; p. 60.

22 Limpangog v. Court of Appeals, 377 Phil. 355, 360; 319 SCRA


341, 345 (1999), citing Leonor v. Court of Appeals, 256 SCRA 69
(1996).

23 China Banking Corporation v. Members of the Board of


Trustees, Home Development Mutual Fund, 366 Phil. 913, 921;
307 SCRA 443, 450 (1999).

24 People v. Court of Appeals, 361 Phil. 492, 498; 308 SCRA 687,
699

(1999).

506

506
SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

be given due course. The general rule that the filing of a motion
for reconsideration before resort to certiorari will lie is intended to
afford the public respondent an opportunity to correct any factual
or fancied error attributed to it by way of re-examination of the
legal and factual aspects of the case. However, this rule is subject
to certain recognized exceptions.25 Where the order (or a
resolution as in the case at bar), is a patent nullity, as where the
court a quo has no jurisdiction, or where the questions raised in
the certiorari proceeding have been duly raised and passed upon
in the lower court, the filing of a motion for reconsideration is not
necessary for a petition for certiorari to be given due course.26 As
will be shown later, COSLAP was totally without jurisdiction in
taking cognizance of the case. This was correctly pointed out by
petitioner even before the assailed Resolution was issued by
COSLAP. To require petitioner to question COSLAPs jurisdiction in
a motion for reconsideration as a condition precedent for the filing
of the instant petition could only be an idle exercise.

_______________

25 Sevillana v. I.I. (International) Corp., G.R. No. 99047, April 16,


2001, 356 SCRA 451, 462.

26 The recognized exceptions where the special civil action for


certiorari will lie even without filing a motion for reconsideration
includes: (a) where the order is a patent nullity, as where the
court a quo has no jurisdiction; (b) where the questions raised in
the certiorari proceeding have been duly raised and passed upon
by the lower court, or are the same as those raised and passed
upon in the lower court; (c) where there is an urgent necessity for
the resolution of the question and any further delay would
prejudice the interests of the Government or of the petitioner or
the subject matter of the action is perishable; (d) where, under
the circumstances, a motion for reconsideration would be useless;
(e) where petitioner was deprived of due process and there is
extreme urgency for relief; (f) where, in a criminal case, relief
from an order of arrest is urgent and the granting of such relief by
the trial court is improbable; (g) where the proceedings in the
lower court are a nullity for lack of due process; (h) where the
proceedings was ex parte or in which the petitioner had no
opportunity to object; and (l) where the issue raised is one purely
of law or where public interest is involved (Tan v. Sandiganbayan,
354 Phil. 463, 469-470; 292 SCRA 452, 457-458 [1998]).

507

VOL. 459, JUNE 8, 2005

507

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

Now, the core issue of whether or not COSLAP has jurisdiction


over the matter. Petitioner mainly argues that respondent
Commission was without jurisdiction in entertaining private
respondents complaint and in promulgating the assailed
Resolution because the matter falls within the primary and
exclusive original jurisdiction of the DARAB.

A reading of private respondents Position Paper submitted to the


COSLAP and the assailed Resolution in relation to the laws
creating the COSLAP compels the Court to declare the nullity of
the COSLAP proceedings, including the assailed Resolution which
was issued in excess of its jurisdiction.
First. The dispute between petitioner and private respondents
over the Cuison property is not cognizable by COSLAP. An account
of the laws creating COSLAP and its predecessor is in order.

COSLAP was created on September 21, 1979 by virtue of E.O. No.


561. Its forerunner was the Presidential Action Committee on Land
Problems (PACLAP) founded on July 31, 1970 pursuant to E.O. 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 that time, the PACLAP did not
exercise quasi-judicial functions.27

On March 19, 1971, E.O. No. 305 was issued reconstituting the
PACLAP. Apart from its policy-making, oversight and investigative
duties, E.O. No. 305 vested the PACLAP with adjudicatory powers
phrased in broad terms, to wit:

_______________

27 United Residents of Dominican Hill, Inc. v. Commission on the


Settlement of Land Problems, G.R. No. 135945, March 7, 2001,
353 SCRA 782, 790.

508

508
SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

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; [emphasis supplied]

....

Thereafter, the PACLAP was reorganized pursuant to Presidential


Decree (P.D.) No. 832 dated November 27, 1975. The law created
a Policy Body to formulate its policies and submit them for its
approval and an Executive Committee to implement its policies
and be in charge of its overall operations. In the general language
of P.D. No. 832, the adjudicatory power of PACLAP was retained
and impliedly vested in the Executive Committee, thus:

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;

...

4. Evolve and implement a system of procedure for the speedy


investigation and resolution of land disputes or problems at
provincial level, if possible;

In addition, the PACLAP was authorized to issue subpoena and


subpoena duces tecum for the appearance of witnesses and the
production of records, books and documents before it.28 Notably,
P.D. 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 COSLAP by virtue of E.O. No.
561. Compared to the previous enabling laws of respondent
COSLAP, E.O. No. 561 enumerated the instances of COSLAPs
exercise of adjudicatory functions, as follows:

_______________

28 Section 2, P.D. No. 832.

509

VOL. 459, JUNE 8, 2005

509

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

SECTION 3. Powers and Functions.The Commission shall have


the following powers and functions:

...

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 and procedures 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.
[emphasis added]

Administrative agencies, like the COSLAP, are tribunals of limited


jurisdiction and as such could wield only such as are specifically
granted to them by the enabling statutes.29 Under the law, the
COSLAP has two options in acting on a land dispute or problem
lodged before it, namely: (a) refer the matter to the agency
having

_______________

29 Longino v. General, et al., G.R. No.147956, February 16, 2005,


451 SCRA 423.
510

510

SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

appropriate jurisdiction for settlement/resolution; or (b) assume


jurisdiction if the matter is one of those enumerated in paragraph
2(a) to (e) of the law, if such case is critical and explosive in
nature, taking into account the large number of parties involved,
the presence or emergence of social unrest, or other similar
critical situations requiring immediate action. In resolving whether
to assume jurisdiction over a case or to refer the same to the
particular agency concerned, the COSLAP has to consider the
nature or classification of the land involved, the parties to the
case, the nature of the questions raised, and the need for
immediate and urgent action thereon to prevent injuries to
persons and damage or destruction to property. The law does not
vest jurisdiction on the COSLAP over any land dispute or
problem.30

The instances when COSLAP may resolve land disputes are limited
only to those involving public lands or lands of the public domain
or those covered with a specific license from the government such
as a pasture lease agreement, a timber concession, or a
reservation grant. The Cuison property is private property, having
been registered under the Torrens system in the name of
petitioner. Thus, the government has no more control or
jurisdiction over it. The parties claiming the Cuison property are
herein petitioner and private respondents. None of them is a
squatter, patent lease agreement holder, government reservation
grantee, public land claimant or occupant, or a member of any
cultural minority.31 The dispute between the parties was not
critical and explosive in nature so as to generate social tension or
unrest, or a critical situation which required immediate action.32

It is true that under paragraph 2(e) of E.O. No. 561, the COSLAP
may assume jurisdiction over complaints involving other similar
land problems of grave urgency. Where general words

_______________

30 Ibid.

31 Under Section 32, Chapter 11, Title III, Book IV of The Revised
Administrative Code of 1987, the COSLAP shall also be
responsible for the settlement of land problems involving small
landowners and members of cultural minorities.

32 Supra note 29 at 21.

511

VOL. 459, JUNE 8, 2005

511

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

follow an enumeration of 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 as clear as those
specifically mentioned. In the instant case, the dispute is between
parties claiming to be agrarian reform beneficiaries and a private
property owner over a parcel of land which does not form part of
the public domain. Clearly, the instant dispute cannot be
characterized to be of the same kind as those enumerated under
paragraph 2(a) to (d) of E.O. No. 561.

In relation to this, private respondents complaint falls squarely


within the jurisdiction of the DAR. Private respondents Position
Paper avers that they are agricultural lessees and beneficiaries of
an agricultural land whose CLOAs have been improperly cancelled
by the DAR. There is no dispute that the issue of the validity of
the cancellation of private respondents CLOAs is within the
competence of the DAR. As provided by Section 50 of Republic Act
(R.A.) No. 6657, the DAR is vested with the primary jurisdiction to
determine and adjudicate agrarian reform matters and shall have
exclusive original jurisdiction over all matters involving the
implementation of agrarian reform except those falling under the
exclusive jurisdiction of the Department of Agriculture (DA) and
the Department of Environment and Natural Resources (DENR).

The grant of exclusive and primary jurisdiction over agrarian


reform matters on the DAR implies that no other court, tribunal, or
agency is authorized to resolve disputes properly cognizable by
the DAR. Neither R.A. No. 6657 nor E.O. No. 561 creating the
COSLAP vests the latter and the DAR concurrent jurisdiction in
respect to disputes concerning the implementation of agrarian
reform laws.

Instead of hearing and resolving the case, COSLAP should have


simply referred private respondents complaint to the DAR or
DARAB, where another case involving the same parties, the same
property and the same issues was pending on appeal.

COSLAP filed its own comment to the petition, arguing that to


divest itself of jurisdiction over the subject matter will defeat the

512

512
SUPREME COURT REPORTS ANNOTATED

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

purpose of its creation.33 It cited this Courts pronouncement in


Baaga vs. Commission on the Settlement of Land Problems,34
which pertinently states:

. . . It is true that Executive Order No. 561 provides that the


COSLAP may take cognizance of the 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 word may does not mean that the
COSLAPs jurisdiction is merely confined to the above-mentioned
cases. The provisions of the said Executive Order are clear that
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.35

The abovementioned proviso, which vests COSLAP the power to


resolve land disputes, does not confer upon COSLAP blanket
authority to assume every matter referred to it. Its jurisdiction is
confined only to disputes over lands in which the government has
proprietary or regulatory interest. Moreover, the land dispute in
Baaga involved parties with conflicting free patent applications
which was within the authority of PACLAP to resolve, unlike that of
the instant case which is exclusively cognizable by the DAR.

COSLAP also points out that by petitioners own admission in its


motion to dismiss, the Cuison property is not agricultural land
covered by agrarian reform laws; thus, COSLAP may assume
jurisdiction over the dispute.

Jurisdiction is the authority to hear and determine a causethe


right to act in a case. It is conferred by law and not by mere
administrative policy of any court or tribunal. It is determined by
the

_______________

33 Rollo, p. 105.

34 G.R. No. 66386, January 30, 1990, 181 SCRA 599, 607-608.

35 Id., at pp. 607-608.

513

VOL. 459, JUNE 8, 2005

513

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

averments of the complaint and not by the defense contained in


the answer.36 Thus, it is the allegations in private respondents
complaint questioning the validity of the cancellation of their
CLOAs which effectively characterized the dispute to be within the
competence of the DAR to the exclusion of respondent COSLAP.

Second. COSLAP is not empowered to review decisions of the


DARAB or the Provincial Adjudicator or any other quasi-judicial
agency for that matter. In their Position Paper, private
respondents questioned the validity of the DARAB and the
Provincial Adjudicators order of cancellation of private
respondents CLOAs and of the governments certificate of title
over the Cuison property on the ground that the Republic of the
Philippines was not impleaded in those cases. Private
respondents recourse from the decision of the DARAB in DARAB
Case No. 2362, affirming the Provincial Adjudicators order of
cancellation of the compulsory acquisition proceedings, is to
appeal the decision of the DARAB to the Court of Appeals within
the reglementary period. Respondent COSLAP cannot arrogate the
duty of directing the DAR to reinstate the CLOAs of private
respondents because the same falls within the competence of the
DAR subject to the appellate review of the Court of Appeals.
Insofar as the assailed Resolution delved on the propriety of the
rulings of the DARAB in DARAB Case No. 2362 and of the
Provincial Adjudicator in DARAB Case No. XI-10-12-DC-93, the
Court finds COSLAP to have exceeded its quasi-judicial functions.

Third. COSLAP exceeded its jurisdiction in ordering the


reinstatement of the governments title over the Cuison property.
Well-settled is the rule that a torrens title, as a rule, is conclusive
and indefeasible. Proceeding from this, P.D. No. 1529, Sec. 48
provides that a certificate of title shall not be subject to collateral
attack and cannot be altered, modified, or canceled except in a
direct proceeding.

_______________

36 Arranza, et al. v. BF Homes, et al., 389 Phil. 318, 329; 333


SCRA 799, 812 (2000).

514

514

SUPREME COURT REPORTS ANNOTATED


Davao New Town Development Corporation vs. Commission on
the Settlement of Land Problems (COSLAP)

When is an action an attack on a title? It is when the object of the


action or proceeding is to nullify the title, and thus challenge the
judgment pursuant to which the title was decreed. The attack is
direct when the object of an action or proceeding is to annul or
set aside such judgment, or enjoin its enforcement. On the other
hand, the attack is indirect or collateral when, in an action to
obtain a different relief, an attack on the judgment is nevertheless
made as an incident thereof.37 As noted by private respondents
in their Position Paper, COSLAP directed the Register of Deeds to
reinstate the certificate of title on the Cuison property in the
name of the Republic of the Philippines. Therefore, the complaint
of private respondents before COSLAP sought an alteration
petitioners certificate of title which COSLAP has no authority to
order pursuant to Section 48 of P.D. 1529.

Another overriding point. In United Residents of Dominican Hill,


Inc. v. Commission on the Settlement of Land Problems,38 the
Court observed that by reason of the ambiguous terminology
employed in E.O. No. 561, the power to assume jurisdiction
granted to the COSLAP provides an ideal breeding ground for
forum-shopping.39 There is forum shopping when the actions
involve the same transactions, the same essential facts and
circumstances.40

Private respondents complaint before the COSLAP questioned the


validity of the cancellation of the compulsory acquisition of the
Cuison property, private respondents CLOAs and the
governments certificate of title over the property on the ground
that the real parties in interest were not impleaded in the
proceedings before the Provincial Adjudicator and the DARAB.
Private respondents had previously raised the same issue when it
filed the second DARAB case before the Office of the Provincial
Adjudicator whose
_______________

37 Mallilin, Jr. v. Castillo, 389 Phil. 153, 165; 333 SCRA 628, 640
(2000).

38 G.R. No. 135945, March 7, 2001, 353 SCRA 782 (2001).

39 Id., at p. 795.

40 Progressive Development Corporation v. Court of Appeals, et


al., 361 Phil. 566, 583-584; 301 SCRA 637, 655 (1999).

515

VOL. 459, JUNE 8, 2005

515

Davao New Town Development Corporation vs. Commission on


the Settlement of Land Problems (COSLAP)

decision thereon is presently on appeal before the DARAB. There


is no question that private respondents are guilty of forum
shopping.

WHEREFORE, the petition for certiorari is hereby GRANTED. The


assailed Resolution dated December 21, 1999 issued by
respondent Commission on the Settlement of Land Problems in
COSLAP Case No. 98-343 is SET ASIDE. Private respondents
complaint in COSLAP Case No. 98-343 is DISMISSED for lack of
jurisdiction and forum shopping. Costs against private
respondents.

SO ORDERED.

Austria-Martinez (Actg. Chairman), Callejo, Sr. and Chico-


Nazario, JJ., concur.
Puno (Chairman), J., On Official Leave.

Petition granted, assailed resolutions set aside. Private


respondents complaint in COSLAP dismissed.

Note.Only judicial review of decisions of administrative agencies


made in the exercise of their quasi-judicial function is subject to
the exhaustion doctrine. (Association of Philippine Coconut
Desiccators vs. Philippine Coconut Authority, 286 SCRA 109
[1998])

o0o [Davao New Town Development Corporation vs.


Commission on the Settlement of Land Problems (COSLAP), 459
SCRA 491(2005)]

VOL. 207, MARCH 31, 1992

689

Beja, Sr. vs. Court of Appeals

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.

Administrative Law; Suspension; Preventive suspension distinct


from the administrative penalty of removal from office such as
one mentioned in Sec. 8 (d) of P.D. No. 857.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. 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

________________

* EN BANC.

690

690

SUPREME COURT REPORTS ANNOTATED

Beja, Sr. vs. Court of Appeals

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.

Same; Same; 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.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.

Same; Same; Preventive suspension 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.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. 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.

Same; Same; 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.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,

691
VOL. 207, MARCH 31, 1992

691

Beja, Sr. vs. Court of Appeals

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.

PETITION for certiorari to review the decisions of the Court of


Appeals. Aldecoa, Jr., J.

The facts are stated in the opinion of the Court.

Rogelio Zosa Bagabuyo for petitioner.

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

_______________

1 Petitioner was referred to as Fidencio Y. Beja in the


proceedings below. He appears as Fidencio Y. Beja, Sr. for the
first time in this forum.

692

692

SUPREME COURT REPORTS ANNOTATED

Beja, Sr. vs. Court of Appeals

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 in-dorsed 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 O. 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:

________________

2 Case No. 89-053.

3 Two other cases involving substantially the same issues were


likewise referred by the Court to the Court of Appeals: G.R. Nos.
86468-69 (Leopoldo F. Bungubung v. Hon. Reinerio O. Reyes, et
al.) and G.R. No. 86646 (Reinerio O. Reyes, et al. vs. Cristeto O.
Dinopol, et al.).

693

VOL. 207, MARCH 31, 1992

693

Beja, Sr. vs. Court of Appeals

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 decision4 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

__________________

4 Penned by Justice Venancio D. Aldecoa, Jr. and concurred in by


Justices Fidel P. Purisima and Abelardo M. Dayrit.

5 Petition, p. 3; Rollo, p. 4.

694

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SUPREME COURT REPORTS ANNOTATED

Beja, Sr. vs. Court of Appeals

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. (Italics 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 pen-

________________
6 Petition, pp. 13-14; Rollo, pp. 14-15.

7 Bautista v. Peralta, L-21967, September 29, 1966, 18 SCRA 223,


225-226.

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Beja, Sr. vs. Court of Appeals

alty 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 qualifiedly rules 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 Philip-

_______________

8 Sec. 42, P.D. No. 807.

9 Orbos v. Bungubung, G.R. No. 92358, November 21, 1990, 191


SCRA 563.

696

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SUPREME COURT REPORTS ANNOTATED

Beja, Sr. vs. Court of Appeals

pine 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, Sec. 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 be left to the discretion or judgment of
the executive officer of the agency or corporation. In the event
that the

_______________

10 Sec. 18(a).

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Beja, Sr. vs. Court of Appeals

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 years 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 corporations operating and capital budget
shall be subject to the departments examination, review,
modification and approval. (Italics 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
Departments 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:

_______________

11 Sec. 38 (2), par. (b).

12 Sec. 39 (2).

698

698
SUPREME COURT REPORTS ANNOTATED

Beja, Sr. vs. Court of Appeals

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 x x x (Italics 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

_______________

13 SEC. 38. Procedure in Administrative Cases Against Non-


Presidential Appointees.(a) Administrative proceedings may be
commenced against a subordinate officer or employee by the
head of department or office of equivalent rank, or head of local
government, or chiefs of agencies, or regional directors, or upon
sworn written complaint of any other persons.

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699

Beja, Sr. vs. Court of Appeals

facts may the PPA General Manager impose the proper penalty in
accordance with law. It is the latter action which requires the

_______________

(b) In the case of a complaint filed by any other persons, the


complainant shall submit sworn statements covering his
testimony and those of his witnesses together with his
documentary evidence. If on the basis of such papers a prima
facie case is found not to exist, the disciplining authority shall
dismiss the case. If a prima facie case exists, he shall notify the
respondent in writing, of the charges against the latter, to which
shall be attached copies of the complaint, sworn statements and
other documents submitted, and the respondent shall be allowed
not less than seventy-two hours after receipt of the complaint to
answer the charges in writing under oath, together with
supporting sworn statements and documents, in which he shall
indicate whether or not he elects a formal investigation if his
answer is not considered satisfactory. If the answer is found
satisfactory, the disciplining authority shall dismiss the case.

(c) Although a respondent does not request a formal


investigation, one shall nevertheless be conducted when from the
allegations of the complaint and the answer of the respondent,
including the supporting documents, the merits of the case
cannot be decided judiciously without conducting such an
investigation.

(d) The investigation shall be held not earlier than five days nor
later than ten days from the date of receipt of respondents
answer by the disciplining authority, and shall be finished within
thirty days from the filing of the charges, unless the period is
extended by the Commission in meritorious cases. The decision
shall be rendered by the disciplining authority within thirty days
from the termination of the investigation or submission of the
report of the investigator, which report shall be submitted within
fifteen days from the conclusion of the investigation.

(e) The direct evidence for the complainant and the respondent
shall consist of the sworn statement and documents submitted in
support of the complaint or answer, as the case may be, without
prejudice to the presentation of additional evidence deemed
necessary but was unavailable at the time of the filing of the
complaint or answer, upon which the cross-examination, by
respondent and the complainant, respectively, shall be based.
Following cross-examination, there may be redirect and recross-
examination.

(f) Either party may avail himself of the services of counsel and
may require the attendance of witnesses and the production of
documentary evidence in his favor through the compulsory
process of

700

700

SUPREME COURT REPORTS ANNOTATED

Beja, Sr. vs. Court of Appeals

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 may elevate 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

_______________

subpoena or subpoena duces tecum.

(g) The investigation shall be conducted only for the purpose of


ascertaining the truth and without necessarily adhering to
technical rules applicable in judicial proceedings. It shall be
conducted by the disciplining authority concerned or his
authorized representative. The phrase any other party shall be
understood to be a complainant other than those referred to in
subsection (a) hereof.

14 Under the last paragraph of Sec. 36 of P.D. No. 807, the


disciplining authority may impose the penalty of removal from the
service, transfer, demotion in rank, suspension for not more than
one year without pay, fine in an amount not exceeding six
months salary, or reprimand.

701
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701

Beja, Sr. vs. Court of Appeals

executory except when the penalty is removal, in which case the


same shall be executory only after confirmation by the
department head.

x x x xxx x x x (Italics 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 AABs 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 is REMANDED to the PPA whose General

_______________

15 Respondents Comment, p. 1; Rollo, p. 85.

16 Lupo v. Administrative Action Board, G.R. No. 89687,


September 26, 1990, 190 SCRA 69.

702

702

SUPREME COURT REPORTS ANNOTATED

Beja, Sr. vs. Court of Appeals

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.

Feliciano, J., On leave.


Padilla, J., No part; related to respondent Honorable Reinerio O.
Reyes.

Bellosillo, J., No part.

Power of PPA General Manager affirmed; jurisdiction of DOTC


reversed; AAB decision null and void.

Note.Interruption on the administrative investigation caused by


petitioners own fault or upon his own request shall not be
counted in computing the 90-day statutory limit of suspension
(Layug vs. Quisumbing, 182 SCRA 46).

o0o

[Beja, Sr. vs. Court of Appeals, 207 SCRA 689(1992)]

196

SUPREME COURT REPORTS ANNOTATED

Eugenio vs. Civil Service Commission

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.

Civil Service Law; P.D. No. 1; Career Executive Service Board;


Career Executive Service Board (CESB) was created by P.D. No. 1
on September 1, 1974.The controlling fact is that the Career
Executive Service Board (CESB) was created by Presidential
Decree (P.D.) No. 1 on September 1, 1974 which adopted the
Integrated Reorganization Plan.
Same; Same; Same; As CESB was created by law, it can only be
abolished by the legislature.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.

Same; Same; Same; CESB was intended to be an autonomous


entity, albeit administratively attached to respondent
Commission.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. 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.

Administrative Law; Civil Service Law; Purpose of attaching one


functionally inter-related government agency to another is to
attain policy and program coordination.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.

PETITION for review of a resolution of the Civil Service


Commission.

The facts are stated in the opinion of the Court.

Mauricio Law Office for petitioner.

PUNO,J.:
The power of the Civil Service Commision 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 Commission2 passed Resolution No. 93-
4359,viz:

_______________

1 Together with twenty-six (26) others.

2 Patricia A. Sto. Tomas (Chairman), Ramon P. Ereneta, Jr.,


(member) and Thelma P. Gaminde (member).

198

198

SUPREME COURT REPORTS ANNOTATED

Eugenio vs. Civil Service Commission

RESOLUTION NO. 93-4359


WHEREAS, Section 1(1) of Article IX-B provides that the Civil
Service shall be administered by the Civil Service Commission, x x
x;

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, progressiveness and
courtesy in the civil service, x x x;

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 on 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

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VOL. 243, MARCH 31, 1995

199

Eugenio vs. Civil Service Commission

petitioner, dated June 7, 1994, the Honorable Antonio T. Carpio,


Chief Presidential Legal Counsel, stated:

x x x

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.

x x x.

You may, however, bring a case before the appropriate court to


settle the legal issues arising from the 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.

200
200

SUPREME COURT REPORTS ANNOTATED

Eugenio vs. Civil Service Commission

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 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

_______________

3 On February 13, 1995, respondent CSC manifested that the


President appointed petitioner to a CESO rank on January 9, 1995.
Her appointment, however, has not rendered moot the broader
issue of whether or not the abolition of Career Executive Service
Board is valid.

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Eugenio vs. Civil Service Commission

The controlling fact is that the Career Executive Service Board


(CESB) was created by Presidential Decree (P.D.) No. 1 on
September 1, 19744 which adopted the Integrated Reorganization
Plan. Article IV, Chapter I, Part III of the said Plan provides:

Article IVCareer 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 Board, 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.

xx x

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.
(Italics 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,5viz:

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 is 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

_______________

4 P.D. No. 1 was later amended by P.D. No. 336 and P.D. No. 367
on the composition of the CESB; P.D. No. 807 and E.O. No. 292
(Administrative Code of 1987) reiterated the functions of the
CESB. The General Appropriations Acts from 1975 to 1993 also
uniformly appropriated funds for the CESB.

5 63 AM JUR 2d section 30.

202

202

SUPREME COURT REPORTS ANNOTATED

Eugenio vs. Civil Service Commission

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:

Section17. 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
to carry out their respective functions. As an 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:

x x x

(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

203

VOL. 243, MARCH 31, 1995

203

Eugenio vs. Civil Service Commission

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 Commissions 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 benefits 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.

204

204

SUPREME COURT REPORTS ANNOTATED

Eugenio vs. Civil Service Commission

(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


Commissions 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
coordi-

_______________

6 Reorganization Panel Reports, Vol. II, pp. 16 to 49 as cited in


Petition, p. 17.

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205

Eugenio vs. Civil Service Commission

nation. 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 the 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, Mendoza and
Francisco, JJ., concur.

Petition granted, resolution annulled and set aside.

Note.Purposes of reorganization is that it is a process of


restructuring the bureaucracys organizational and functional
setup, to make it more viable in terms of economy, efficiency,
effectiveness and make it more responsive to the needs of its
public clientele as authorized by law. (Simon vs. Civil Service
Commission, 215 SCRA 410 [1992])

o0o [Eugenio vs. Civil Service Commission, 243 SCRA


196(1995)]

VOL. 331, APRIL 27, 2000

227

Ley son, Jr. vs. Office of the Ombudsman

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.

Coconut Levy Funds; Classes.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. These funds actually have four (4) general
classes: (a) the Coconut Investment Fund created under R.A. No.
6260; (b) the Coconut Consumers Stabilization Fund created
under P.D. No. 276;
_______________

* SECOND DIVISION.

228

228

SUPREME COURT REPORTS ANNOTATED

Leyson, Jr. vs. Office of the Ombudsman

(c) the Coconut Industry Development Fund created under P.D.


No. 582; and, (d) the Coconut Industry Stabilization Fund created
under P.D. No. 1841. The various laws relating to the coconut
industry were codified in 1976. On 21 October of that year, P.D.
No. 961 was promulgated. On 11 June 1978 it was amended by
P.D. No. 1468 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).
From this fund thus created, or the CIIF, shares of stock in what
have come to be known as the CIIF companies were purchased.

Same; Police Power; Taxation; The coconut levy funds were raised
by the states police and taxing powers such that the utilization
and proper management thereof were certainly the concern of the
Government.We then stated in COCOFED that the coconut levy
funds were raised by the States 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.
Government Owned and Controlled Corporations (GOCC);
Requisites; 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.
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 thatWhile 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

229

VOL. 331, APRIL 27, 2000

229

Leyson, Jr. vs. Office of the Ombudsman

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. 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.

Same; Ombudsman; Where there is no showing that certain


corporations, majority of whose shares are owned by the UCPB-
CIIF, are vested with functions relating to public needs whether
governmental or proprietary in nature, they are not within the
scope of the Ombudsmans jurisdiction.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. 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.

230

230

SUPREME COURT REPORTS ANNOTATED

Leyson, Jr. vs. Office of the Ombudsman

Actions; Pleadings and Practice; Forum Shopping; Words and


Phrases; 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; There is no forum shopping where the cause
of action in the case before the Ombudsman is for violation of the
Anti-Graft and Corrupt Practices Act while the cause of action
pending before the trial court is for collection of a sum of money
plus damages.A brief note on private respondents charge of
forum shopping. Executive Secretary v. Gordon 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.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.


The facts are stated in the opinion of the Court.

Dioscoro P. Timtiman, Jr. for petitioner.

Lope R. Torres for private respondents.

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 (l)-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. How-

231

VOL. 331, APRIL 27, 2000

231

Leyson, Jr. vs. Office of the Ombudsman

ever, 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.
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 contractunilateral cancellation of valid and existing
contract; (b) bad faithfalsification of documents and reports to
stop the operation of MT Transasia; (c) manipulationinfluenced
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.

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

_______________

1 Rollo, pp. 21-22.

232
232

SUPREME COURT REPORTS ANNOTATED

Leyson, Jr. vs. Office of the Ombudsman

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

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.
PCGG4 and Republic v. Sandiganbayan5 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

_______________
2 Resolution of Graft Investigation Officer II David B. Corpuz
approved by Director Angel C. Mayoralgo, Assistant Ombudsman
Abelardo L. Aportadera and Ombudsman Aniano A. Desierto;
Rollo, p. 22.

3 Rollo, pp. 56-57.

4 G.R. No. 75713, 2 October 1989, 178 SCRA 236.

5 G.R. No. 96073, 16 February 1993, En Banc Resolution.

6 G.R. No. 72553, 2 December 1986, 146 SCRA 137.

7 Annexes, K, L to L-l, and M to M-1 of Petition; Rollo, pp.


80-84.

233

VOL. 331, APRIL 27, 2000

233

Leyson, Jr. vs. Office of the Ombudsman

respondents Antiporda and Torralba are public officers subject to


the jurisdiction of the Ombudsman.

Petitioner alleges next that public respondents 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.

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 petitioners 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.

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.
These funds actually have four (4) general classes: (a)

234

234

SUPREME COURT REPORTS ANNOTATED

Leyson, Jr. vs. Office of the Ombudsman


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. 96112 was
promulgated. On 11 June 1978 it was amended by P.D. No.
146813 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
industries).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.

We then stated in COCOFED that the coconut levy funds were


raised by the States 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

_______________

8 Effective 19 June 1971.


9 Effective 20 August 1973.

10 Effective 14 November 1974.

11 Effective 2 October 1981.

12 Coconut Industry Code.

13 Revised Coconut Industry Code.

14 Sec. 9, PD No. 1468.

235

VOL. 331, APRIL 27, 2000

235

Leyson, Jr. vs. Office of the Ombudsman

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.

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.

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%

_______________

15 See Note 7.

236

236

SUPREME COURT REPORTS ANNOTATED

Leyson, Jr. vs. Office of the Ombudsman

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.

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. Gordon16 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.

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.

Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.

_______________
16 G.R. No. 134171, 18 November 1998, 298 SCRA 736.

237

VOL. 331, APRIL 28, 2000

237

Philippine Aeolus Automotive United Corporation vs. NLRC

Petition dismissed, resolution affirmed.

Notes.Even vested rights may be taken away by the State in the


exercise of its absolute police power. (Atok BigWedge Mining
Company vs. Intermediate Appellate Court, 261 SCRA 528 [1996])

As a general rule, the power to tax is an incident of sovereignty


and is unlimited in its range, acknowledging in its very nature no
limits, so that security against its abuse is to be found only in the
responsibility of the legislature which imposes the tax on the
constituency who are to pay it. (Mactan Cebu International Airport
Authority vs. Marcos, 261 SCRA 667 [1996])

o0o [Ley son, Jr. vs. Office of the Ombudsman, 331 SCRA
227(2000)]

VOL. 451, FEBRUARY 16, 2005

413

People vs. Sandiganbayan

G.R. Nos. 147706-07. February 16, 2005.*

PEOPLE OF THE PHILIPPINES, petitioner, vs. THE HONORABLE


SANDIGANBAYAN (Fifth Division) and EFREN L. ALAS, respondents.
Sandiganbayan; Jurisdiction; Government-Owned or Controlled
Corporation (GOCCs); Philippine Postal Savings Bank (PPSB); The
Philippine Postal Savings Bank is a government-owned or
controlled corporation organized and incorporated under the
Corporation Code as a subsidiary of the Philippine Postal
Corporation (PHILPOST).Section 2(13) of EO 292 defines
government-owned or controlled corporations as follows: x x x
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 x x x and to facilitate
postal service by receiving collections and making payments,
including postal money orders.

Same; Same; Same; Same; 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, in effect, retained the jurisdiction of the anti-graft court as
defined under Article XIII, Section 5 of the 1973 Constitution.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
_______________

* THIRD DIVISION.

414

414

SUPREME COURT REPORTS ANNOTATED

People vs. Sandiganbayan

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)
Same; Same; Same; Same; The fact that 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 clearly reveals its intention to include such
officials of GOCCs with original charters and those organized and
incorporated under the Corporation Code within the jurisdiction of
the Sandiganbayan whenever they are involved in graft and
corruption.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.

415

VOL. 451, FEBRUARY 16, 2005

415

People vs. Sandiganbayan

Same; Same; Same; Same; Ombudsman; Statutory Construction;


When the law does not distinguish, we should not distinguish;
Corollarily, Article XI, Section 12 of the 1987 Constitution includes
officers and employees of government-owned or controlled
corporations, likewise without any distinction.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.

PETITION for review on certiorari of a decision of the


Sandiganbayan.

The facts are stated in the opinion of the Court.

The Solicitor General for the People.

Ramon Y. Gargantos for private respondent.

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 informations1 for violation of
Section 3(e) of RA 3019, otherwise known as the Anti-Graft and
Corrupt Practices Act, were filed with the

_______________
1 Docketed as Criminal Cases Nos. 25750-25751.

416

416

SUPREME COURT REPORTS ANNOTATED

People vs. Sandiganbayan

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, x x x

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

417

VOL. 451, FEBRUARY 16, 2005

417

People vs. Sandiganbayan

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 petition3 arguing, in essence, that

_______________

2 Resolution dated February 15, 2001, Annex A, Rollo, pp. 18-22.


3 Rollo, pp. 2-17.

418

418

SUPREME COURT REPORTS ANNOTATED

People vs. Sandiganbayan

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 2926 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

_______________

4 EO No. 292.

5 Comment, Rollo, pp. 38-49.

6 Administrative Code of 1987.

419

VOL. 451, FEBRUARY 16, 2005

419

People vs. Sandiganbayan

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 x x x 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,

_______________

7 Articles of Incorporation of PPSB, Annex C, Rollo, pp. 27-35.

420
420

SUPREME COURT REPORTS ANNOTATED

People vs. Sandiganbayan

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 79758 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 82499 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
_______________

8 Entitled: ACT TO STRENGTHEN THE FUNCTIONAL AND


STRUCTURAL ORGANIZATION OF THE SANDIGANBAYAN,
AMENDING FOR THAT PURPOSE PD 1606, AS AMENDED.

9 Entitled: AN ACT FURTHER DEFINING THE JURISDICTION OF THE


SANDIGANBAYAN. AMENDING FOR THE PURPOSE PRESIDENTIAL
DECREE NO. 1606, AS AMENDED, PROVIDING FUNDS THEREFOR,
AND FOR OTHER PURPOSES.

421

VOL. 451, FEBRUARY 16, 2005

421

People vs. Sandiganbayan

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.

422

422

SUPREME COURT REPORTS ANNOTATED

People vs. Sandiganbayan

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.

_______________

10 230 Phil. 232; 146 SCRA 137 (1986).

423

VOL. 451, FEBRUARY 16, 2005

423

Longino vs. General


SO ORDERED.

Panganiban (Chairman), Sandoval-Gutierrez, Carpio-Morales


and Garcia, JJ., concur.

Petition granted, assailed resolution reversed and set aside.

Notes.The Sandiganbayan may not review, revise, or reverse


the findings of the Court of Appeals in relation to which the
Sandiganbayan, a special court with special and limited
jurisdiction, is inferior. (Pajaro vs. Sandiganbayan, 160 SCRA 763
[1988])

The power to investigate and to prosecute granted by law to the


Ombudsman is plenary and unqualified. It pertains to any act or
omission of any public officer or employee when such act or
omission appears to be illegal, unjust, improper or inefficient. The
law does not make a distinction between cases cognizable by the
Sandiganbayan and those cognizable by regular courts. (Uy vs.
Sandiganbayan, 354 SCRA 651 [2001])

o0o [People vs. Sandiganbayan, 451 SCRA 413(2005)]