G.R. No. 110571 March 10, 1994
This
FIRST LEPANTO CERAMICS, INC., petitioner,
vs.
THE COURT OF APPEALS and MARIWASA MANUFACTURING,
INC., respondents.
Castillo, Laman, Tan & Pantaleon for petitioner.
De Borja, Medialdea, Ata, Bello, Guevarra & Serapio for private
respondent.
NOCON, J.:
Brought to fore in this petition for certiorari and prohibition with
application for preliminary injunction is the novel question of where
and in what manner appeals from decisions of the Board of
Investments (BOI) should be filed. A thorough scrutiny of the
conflicting provisions of Batas Pambansa Bilang 129, otherwise
known as the "Judiciary Reorganization Act of 1980," Executive
Order No. 226, also known as the Omnibus Investments Code of
1987 and Supreme Court Circular No. 1-91 is, thus, called for.
Briefly, this question of law arose when BOI, in its decision dated
December 10, 1992 in BOI Case No. 92-005 granted petitioner First
Lepanto Ceramics, Inc.'s application to amend its BOI certificate of
registration by changing the scope of its registered product from
"glazed floor tiles" to "ceramic tiles." Eventually, oppositor Mariwasa
filed a motion for reconsideration of the said BOI decision while
oppositor Fil-Hispano Ceramics, Inc. did not move to reconsider the
same nor appeal therefrom. Soon rebuffed in its bid for
reconsideration, Mariwasa filed a petition for review with respondent
Court of Appeals pursuant to Circular 1-91.
Acting on the petition, respondent court required the BOI and
petitioner to comment on Mariwasa's petition and to show cause why
no injunction should issue. On February 17, 1993, respondent court
temporarily restrained the BOI from implementing its decision.
temporary restraining order lapsed by its own terms on March 9,
1993, twenty (20) days after its issuance, without respondent court
issuing any preliminary injunction.
On February 24, 1993, petitioner filed a "Motion to Dismiss Petition
and to Lift Restraining Order" on the ground that respondent court
has no appellate jurisdiction over BOI Case No. 92-005, the same
being exclusively vested with the Supreme Court pursuant to Article
82 of the Omnibus Investments Code of 1987.
On May 25, 1993, respondent court denied petitioner's motion to
dismiss, the dispositive portion of which reads as follows:
WHEREFORE, private respondent's motion to
dismiss the petition is hereby DENIED, for lack of
merit.
Private respondent is hereby given an inextendible
period of ten (10) days from receipt hereof within
which to file its comment to the petition.1
Upon receipt of a copy of the above resolution on June 4, 1993,
petitioner decided not to file any motion for reconsideration as the
question involved is essentially legal in nature and immediately filed
a petition for certiorariand prohibition before this Court.
Petitioner posits the view that respondent court acted without or in
excess of its jurisdiction in issuing the questioned resolution of May
25, 1993, for the following reasons:
I. Respondent court has no jurisdiction to entertain
Mariwasa's appeal from the BOI's decision in BOI
Case No. 92-005, which has become final.
II. The appellate jurisdiction conferred by statute
upon this Honorable Court cannot be amended or
superseded by Circular No. 1-91. 2
Petitioner then concludes that:
III. Mariwasa has lost it right to appeal . . . in this
case. 3
Petitioner argues that the Judiciary Reorganization Act of 1980 or
Batas Pambansa Bilang 129 and Circular 1-91, "Prescribing the
Rules Governing Appeals to the Court of Appeals from a Final Order
or Decision of the Court of Tax Appeals and Quasi-Judicial
Agencies" cannot be the basis of Mariwasa's appeal to respondent
court because the procedure for appeal laid down therein runs
contrary to Article 82 of E.O. 226, which provides that appeals from
decisions or orders of the BOI shall be filed directly with this Court, to
wit:
Judicial relief. — All orders or decisions of the
Board
(of Investments) in cases involving the provisions of
this Code shall immediately be executory. No appeal
from the order or decision of the Board by the party
adversely affected shall stay such an order or
decision; Provided, that all appeals shall be filed
directly with the Supreme Court within thirty (30)
days from receipt of the order or decision.
On the other hand, Mariwasa maintains that whatever "obvious
inconsistency" or "irreconcilable repugnancy" there may have been
between B.P. 129 and Article 82 of E.O. 226 on the question of
venue for appeal has already been resolved by Circular 1-91 of the
Supreme Court, which was promulgated on February 27, 1991 or
four (4) years after E.O. 226 was enacted.
Sections 1, 2 and 3 of Circular 1-91, is herein quoted below:
1. Scope. — These rules shall apply to appeals from
final orders or decisions of the Court of Tax Appeals.
They shall also apply to appeals from final orders or
decisions of any quasi-judicial agency from which an
appeal is now allowed by statute to the Court of
Appeals or the Supreme Court. Among these
agencies are the Securities and Exchange
Commission, Land Registration Authority, Social
Security Commission, Civil Aeronautics Board,
Bureau of Patents, Trademarks and Technology
Transfer, National Electrification Administration,
Energy Regulatory Board, National
Telecommunications Commission, Secretary of
Agrarian Reform and Special Agrarian Courts under
RA 6657, Government Service Insurance System,
Employees Compensation Commission, Agricultural
Inventions Board, Insurance Commission and
Philippine Atomic Energy Commission.
2. Cases not covered. — These rules shall not apply
to decisions and interlocutory orders of the National
Labor Relations Commission or the Secretary of
Labor and Employment under the Labor Code of the
Philippines, the Central Board of Assessment
Appeals, and other quasi-judicial agencies from
which no appeal to the courts is prescribed or
allowed by statute.
3. Who may appeal and where to appeal. — The
appeal of a party affected by a final order, decision,
or judgment of the Court of Tax Appeals or of a
quasi-judicial agency shall be taken to the Court of
Appeals within the period and in the manner herein
provided, whether the appeal involves questions of
fact or of law or mixed questions of fact and law.
From final judgments or decisions of the Court of
Appeals, the aggrieved party may appeal by
certiorari to the Supreme Court as provided in Rule
45 of the Rules of Court.
It may be called that Section 9(3) of B.P. 129 vests appellate
jurisdiction over all final judgments, decisions, resolutions, orders or
awards of quasi-judicial agencies on the Court of Appeals, to wit:
 (3) Exclusive appellate jurisdiction over all final
judgments, decisions, resolutions, orders, awards of
Regional Trial Courts and
quasi-judicial agencies, instrumentalities, boards or
commissions, except those falling within the
appellate jurisdiction of the Supreme Court in
accordance with the Constitution, 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.
The Intermediate Appellate Court shall have the
power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to
resolve factual issues raised in cases falling within
its original and appellate jurisdiction, including the
power to grant and conduct new trials or further
proceedings.
These provisions shall not apply to decisions and
interlocutory orders issued under the Labor Code of
the Philippines and by the Central Board of
Assessment Appeals.
Clearly evident in the aforequoted provision of B.P. 129 is the
laudable objective of providing a uniform procedure of appeal from
decisions of all quasi-judicial agencies for the benefit of the bench
and the bar. Equally laudable is the twin objective of B.P. 129 of
unclogging the docket of this Court to enable it to attend to more
important tasks, which in the words of Dean Vicente G. Sinco, as
quoted in our decision in Conde v. Intermediate Appellate Court is4
"less concerned with the decisions of cases that begin and end with
the transient rights and obligations of particular individuals but is
more intertwined with the direction of national policies, momentous
economic and social problems, the delimitation of governmental
authority and its impact upon fundamental rights.
In Development Bank of the Philippines vs. Court of Appeals, this
5
Court noted that B.P. 129 did not deal only with "changes in the rules
on procedures" and that not only was the Court of Appeals
reorganized, but its jurisdiction and powers were also broadened by
Section 9 thereof. Explaining the changes, this Court said:
. . . Its original jurisdiction to issue writs
of mandamus, prohibition, certiorari and habeas
corpus, which theretofore could be exercised only in
aid of its appellate jurisdiction, was expanded by (1)
extending it so as to include the writ of quo warranto,
and also (2) empowering it to issue all said
extraordinary writs "whether or not in aid of its
appellate jurisdiction." Its appellate jurisdiction was
also extended to cover not only final judgments of
Regional Trial Courts, but also "all final judgments,
decisions, resolutions, orders or awards of . . . quasi-
judicial agencies, instrumentalities, boards or
commissions, except those falling within the
appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the provisions of
this Act, and of sub-paragraph (1) of the third
paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of
1948," it being noteworthy in this connection that the
text of the law is broad and comprehensive, and the
explicitly stated exceptions have no reference
whatever to the Court of Tax Appeals. Indeed, the
intention to expand the original and appellate
jurisdiction of the Court of Appeals over quasi-
judicial agencies, instrumentalities, boards, or
commissions, is further stressed by the last
paragraph of Section 9 which excludes from its
provisions, only the "decisions and interlocutory
orders issued under the Labor Code of the
Philippines and by the Central Board of Assessment
Appeals." 6
However, it cannot be denied that the lawmaking system of the
country is far from perfect. During the transitional period after the
country emerged from the Marcos regime, the lawmaking power was
lodged on the Executive Department. The obvious lack of
deliberation in the drafting of our laws could perhaps explain the
deviation of some of our laws from the goal of uniform procedure
which B.P. 129 sought to promote.
In exempli gratia, Executive Order No. 226 or the Omnibus
Investments Code of 1987 provides that all appeals shall be filed
directly with the Supreme Court within thirty (30) days from receipt of
the order or decision.
Noteworthy is the fact that presently, the Supreme Court entertains
ordinary appeals only from decisions of the Regional Trial Courts in
criminal cases where the penalty imposed is reclusion perpetua or
higher. Judgments of regional trial courts may be appealed to the
Supreme Court only by petition for review on certiorari within fifteen
(15) days from notice of judgment in accordance with Rule 45 of the
Rules of Court in relation to Section 17 of the Judiciary Act of 1948,
as amended, this being the clear intendment of the provision of the
Interim Rules that "(a)ppeals to the Supreme Court shall be taken by
petition for certiorari which shall be governed by Rule 45 of the Rules
of Court." Thus, the right of appeal provided in E.O. 226 within thirty
(30) days from receipt of the order or decision is clearly not in
consonance with the present procedure before this Court. Only
decisions, orders or rulings of a Constitutional Commission (Civil
Service Commission, Commission on Elections or Commission on
Audit), may be brought to the Supreme Court on original petitions
for certiorari under Rule 65 by the aggrieved party within thirty (30)
days form receipt of a copy thereof. 7
Under this contextual backdrop, this Court, pursuant to its
Constitutional power under Section 5(5), Article VIII of the 1987
Constitution to promulgate rules concerning pleading, practice and
procedure in all courts, and by way of implementation of B.P. 129,
issued Circular 1-91 prescribing the rules governing appeals to the
Court of Appeals from final orders or decisions of the Court of Tax
Appeals and quasi-judicial agencies to eliminate unnecessary
contradictions and confusing rules of procedure.
Contrary to petitioner's contention, although a circular is not strictly a
statute or law, it has, however, the force and effect of law according
to settled jurisprudence. In Inciong v. de Guia, a circular of this
8 9
Court was treated as law. In adopting the recommendation of the
Investigating Judge to impose a sanction on a judge who violated
Circular No. 7 of this Court dated
September 23, 1974, as amended by Circular No. 3 dated April 24,
1975 and Circular No. 20 dated October 4, 1979, requiring raffling of
cases, this Court quoted the ratiocination of the Investigating Judge,
brushing aside the contention of respondent judge that assigning
cases instead of raffling is a common practice and holding that
respondent could not go against the circular of this Court until it is
repealed or otherwise modified, as "(L)aws are repealed only by
subsequent ones, and their violation or non-observance shall not be
excused by disuse, or customs or practice to the contrary." 10
The argument that Article 82 of E.O. 226 cannot be validly repealed
by Circular 1-91 because the former grants a substantive right which,
under the Constitution cannot be modified, diminished or increased
by this Court in the exercise of its rule-making powers is not entirely
defensible as it seems. Respondent correctly argued that Article 82
of E.O. 226 grants the right of appeal from decisions or final orders
of the BOI and in granting such right, it also provided where and in
what manner such appeal can be brought. These latter portions
simply deal with procedural aspects which this Court has the power
to regulate by virtue of its constitutional rule-making powers.
The case of Bustos v. Lucero distinguished between rights created
11
by a substantive law and those arising from procedural law:
Substantive law creates substantive rights . . . .
Substantive rights is a term which includes those
rights which one enjoys under the legal system prior
to the disturbance of normal relations (60 C.J., 980).
Substantive law is that part of the law which creates,
defines and regulates rights, or which regulates
rights and duties which give rise to a cause of
action, as oppossed to adjective or remedial law,
which prescribes the method of enforcing rights or
obtains a redress for their invasion.12
Indeed, the question of where and in what manner appeals from
decisions of the BOI should be brought pertains only to procedure or
the method of enforcing the substantive right to appeal granted by
E.O. 226. In other words, the right to appeal from decisions or final
orders of the BOI under E.O. 226 remains and continues to be
respected. Circular 1-91 simply transferred the venue of appeals
from decisions of this agency to respondent Court of Appeals and
provided a different period of appeal, i.e., fifteen (15) days from
notice. It did not make an incursion into the substantive right to
appeal.
filed directly with the Supreme Court, should now be brought to the
Court of Appeals.
WHEREFORE, in view of the foregoing reasons, the instant petition
for certiorari and prohibition with application for temporary restraining
order and preliminary injunction is hereby DISMISSED for lack of
merit. The Temporary Restraining Order issued on July 19, 1993 is
hereby LIFTED.
SO ORDERED.

The fact that BOI is not expressly included in the list of quasi-judicial
agencies found in the third sentence of Section 1 of Circular 1-91
does not mean that said circular does not apply to appeals from final
orders or decision of the BOI. The second sentence of Section 1
thereof expressly states that "(T)hey shall also apply to appeals from
final orders or decisions of any quasi-judicial agency from which an [G.R. No. L-34637. February 24, 1984.]
appeal is now allowed by statute to the Court of Appeals or the
Supreme Court." E.O. 266 is one such statute. Besides, the THE POLICE COMMISSION, represented by its Chairman,
enumeration is preceded by the words "(A)mong these agencies are CRISPINO M. DE CASTRO, Petitioner, v. HON. JUDGE
. . . ," strongly implying that there are other quasi-judicial agencies GUARDSON R. LOOD and SIMPLICIO C. IBEA, Respondents.
which are covered by the Circular but which have not been expressly
listed therein. More importantly, BOI does not fall within the purview
of the exclusions listed in Section 2 of the circular. Only the following
final decisions and interlocutory orders are expressly excluded from DECISION
the circular, namely, those of: (1) the National Labor Relations
Commission; (2) the Secretary of Labor and Employment; (3) the
Central Board of Assessment Appeals and (4) other quasi-judicial TEEHANKEE, J.:
agencies from which no appeal to the courts is prescribed or allowed
by statute. Since in DBP v. CA we upheld the appellate jurisdiction
13

of the Court of Appeals over the Court of Tax Appeals despite the
fact that the same is not among the agencies reorganized by B.P.
129, on the ground that B.P. 129 is broad and comprehensive, there
is no reason why BOI should be excluded from
Circular 1-91, which is but implementary of said law.
Clearly, Circular 1-91 effectively repealed or superseded Article 82 of
E.O. 226 insofar as the manner and method of enforcing the right to
appeal from decisions of the BOI are concerned. Appeals from
decisions of the BOI, which by statute was previously allowed to be
Petitioner Police Commission seeks the setting aside of the decision of
the defunct Court of First Instance (respondent court) of Rizal, Branch
VI, which declared null and void its decision in Administrative Case No.
48 dismissing private respondent Simplicio C. Ibea and instead
ordered then Municipal Mayor Braulio Sto. Domingo of San Juan, Rizal
to reinstate said respondent to his former position as policeman of the
same municipality with back salaries from the date of his suspension
up to the date of his actual reinstatement. Upon the filing of the
petition, the Court, at petitioner’s instance, issued a writ of preliminary
injunction restraining respondent court from executing the questioned
decision.
cha nrob les law li bra ry : red

Respondent Ibea had been dismissed from the police service by the
then Mayor Braulio Sto. Domingo (later on substituted during the
pendency of this case in the court below by incumbent Mayor Joseph
Ejercito Estrada) pursuant to the decision of petitioner commission
finding him guilty of serious irregularity in the performance of duty on
complaint of Jose Lee, Jr.
Respondent thereafter filed his complaint with respondent court
seeking his reinstatement. He was sustained by respondent court
which rendered its decision declaring the decision of the Police
Commission as null and void and ordered the town mayor to "reinstate
the plaintiff to his former position as patrolman in the Police
Department of San Juan, Rizal with back salaries and remunerations
pertaining to said position from the date of his suspension to the time
of his reinstatement to the service." Respondent court ruled that the
decision of petitioner commission was based on incomplete records as
there was no transcript of the testimonies of witnesses or minutes of
the proceedings before the Board of Investigators and that the
commission’s conclusion was without factual basis and was in violation
of administrative due process. Respondent court also ruled that the
question of the temporary status of the appointment of Ibea for lack of
civil service eligibility (which was raised in the court below by the
answer of Mayor Joseph Ejercito Estrada) had become moot and
academic upon respondent Ibea’s subsequent acquisition of a civil
service eligibility.
chan roble s.com.p h : virt ual law l ibra ry
Hence, this petition which this Court finds meritorious, as per the
assignment of errors made by the Solicitor General on behalf of
petitioner commission, as follows: jgc:c han robles. com.ph
"I The lower court erred in holding that respondent Simplicio C. Ibea
was deprived of due process of law because the Police Commission
decided Administrative Case No. 48 even without stenographic notes
taken of the proceedings of the case.
"II. The lower court erred in disturbing the findings of facts of the
Police Commission, an administrative agency duly vested by Republic
Act No. 4864 with the power and authority to render decision in
administrative cases against policemen and whose decision is final.
"III. The lower court erred in holding that the allegations on the
temporary status of the appointment of respondent Simplicio C. Ibea
for lack of civil service eligibility has been rendered moot and
academic upon the latter’s subsequent acquisition of a civil service
eligibility." cralaw vi rt ua1aw lib rary
The Court finds the errors assigned to be well taken.
1. Respondent court’s ruling against petitioner’s decision as falling
short of the legal requirements of due process, because it decided the
subject administrative case without stenographic notes (which were
not taken by the Board of Investigators) of the proceedings of the
case, was in error. Rep. Act No. 4864 does not provide that the Board
of Investigators shall be a "board of record," and as such it does not
provide for office personnel such as clerks and stenographers who may
be employed to take note of the proceedings of the board. The
proceeding provided for is merely administrative and summary in
character, in line with the principle that "administrative rules of
procedure should be construed liberally in order to promote their
object and to assist the parties in obtaining just, speedy and
inexpensive determination of their respective claims and defenses." 1
The formalities usually attendant in court hearings need not be present
in an administrative investigation, provided that the parties are heard
and given the opportunity to adduce their respective evidence.
The decision and resolution of petitioner commission amply show that
both complainant and respondent were given the opportunity to be
heard by the board and to adduce their respective evidence, which
were duly considered and taken into account in its decision. The
absence of the transcript of stenographic notes (which were not taken
by the board) in the records of the case submitted by the Board of
Investigators of San Juan, Rizal in the administrative proceeding
cannot be claimed to have deprived respondent of due process of law.
The report of investigation (which contained a summary report of what
transpired during the hearing of the case), the affidavit-complaint, and
respondent’s answer thereto, as well as the memoranda of the parties
were sufficient basis for the decision and resolution of the commission,
and substantially and essentially constituted the "records of the
investigation" required in Section 15 of Rep. Act No. 4864.
2. The record amply shows that petitioner’s decision was supported by
substantial evidence consisting of the affidavit-complaint (which was
duly affirmed when complainant Jose Lee, Jr. appeared and testified
before the board) and the documentary evidence duly marked by the
board as exhibits for the complainant (and which were not questioned
by respondent). As uniformly held by the Court, it is sufficient that
administrative findings of fact are supported by evidence on the
record, 2 or stated negatively, it is sufficient that findings of fact are
not shown to be unsupported by evidence. 3 As expounded by Justice
Laurel in the leading case of Ang Tibay v. Court of Industrial Relations,
4 substantial evidence is all that is needed to support an
administrative finding of fact, and substantial evidence is "such
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion." The commission’s reasons for having chosen to
believe the complaint filed by Mr. Jose Lee, Jr. as against respondent’s
defense were extensively discussed in its decision (Annex "n") and
reiterated in its resolution, thus:
jgc:chanro bles. com.ph
"A close perusal of the record shows that said affidavit was presented
by the complainant during the proceedings and its presentation was
not objected to by the respondent-petitioner. Hence, it became a part
of the records and therefore must be considered in the deliberation of
this case. Moreover, there are documents presented and incorporated
in the records of the case that are corroborative of the affidavit of the
complainant. Some of these documentary evidence are memorandum
of the complainant, copy of the police blotter, letter of the complainant
to Lt. Bautista, reply of the Clerk of Court to Jose Lee, Jr., a copy of
the decision of Cesar Cruz, Acting Municipal Judge of San Juan, Rizal
and the investigation report of Pat. Simplicio C. Ibea which was
eventually submitted though late. All these documents, one way or
another, corroborate the affidavit of the complainant. Hence, the
allegation that the affidavit is uncorroborated does not hold water." 5
The above-mentioned documentary evidence which convinced
petitioner as to the veracity of the charges against respondent were
certainly more than persuasive and substantial.
Respondent court therefore erred in choosing to believe the theory of
the defense put up by respondent Ibea on the equally erroneous
ground that there was no evidence to support the findings of the Police
Commission. In effect, respondent court substituted its own judgment
for that of the Police Commission which is final, contrary to the
prevailing principle that "in reviewing administrative decisions, the
reviewing court cannot reexamine the sufficiency of the evidence as if
originally instituted therein, and receive additional evidence that was
not submitted to the administrative agency concerned. The findings of
fact must be respected, so long as they are supported by substantial
evidence, even if not overwhelming or preponderant." 6
3. Since the appointment of Simplicio C. Ibea to the police force was
only temporary in nature for lack of civil service eligibility at the time,
the same was duly terminated upon his dismissal pursuant to the
commission’s decision. Respondent had no longer any legal right to be
reinstated to the service where the mayor does not want him
reinstated by extending him a new appointment as in the instant case.
Respondent court erred in holding that the allegations on the
temporary status of the appointment of private respondent Simplicio
C. Ibea for lack of civil service eligibility had been rendered moot and
academic upon the latter’s subsequent acquisition of a civil service
eligibility. Under the civil service law then in force, the fact that private
respondent subsequently became a civil service eligible did not ipso
facto render permanent the nature of his temporary appointment as to
make the question moot and academic. In fact under Section 24 (d) of
Republic Act No. 2260 (Civil Service Act of 1959), the law in force at
the time of Ibea’s appointment, a temporary appointment could not
exceed six months (now one year under R.A. 6040). That he was
allowed by the mayor to continue in the service even after the six-
months period was merely an extension of grace. Thus, as the Court
held in similar cases:jgc:chan roble s.com.p h
"Temporary appointments, under Section 682 of the Revised
Administrative Code, are limited to three months. Upon the expiration
of that period, a temporary appointee could be removed at will. Any
continuance thereafter as a temporary employee was an extension of
grace. The fact that petitioner became a civil service eligible did not
entitle him to a permanent appointment to the position. The power to
appoint is discretionary on the part of the appointing power.
Petitioner’s temporary appointment did not ripen, by virtue of his
acquisition of eligibility into one of permanence." 7
x x x
"Since his appointment is temporary, it did not confer upon appellant a
vested right to occupy in a permanent character the position to which
he was appointed. His civil service eligibility will avail him none." 8
In fine, since respondent Ibea was merely a temporary appointee, he
was subject to removal at any time without the necessity of following
the procedure set up by Republic Act No. 4864, for removal of police
officers, and regardless of the complaint filed against him. After his
services were terminated by former Mayor Sto. Domingo, his
reinstatement was no longer legally feasible in the face of incumbent
Mayor Estrada’s refusal to do so, considering that he held merely a
temporary appointment. chanrob les.com. ph : virtual law l ibrary
For "well-settled in this jurisdiction is the principle that when an
appointment is temporary, the same is terminable at the pleasure of
the appointing power, and no cause is required to be shown for such
termination." 9
ACCORDINGLY, the questioned decision of respondent defunct Court of
First Instance of Rizal, Branch VI, in Civil Case No. 12069 is hereby set
aside and the preliminary injunction issued against its enforcement is
hereby made permanent. No costs.
G.R. No. L-62664 November 12, 1987
MINISTER OF NATURAL RESOURCES, and DIRECTOR OF
LANDS, petitioners,
vs.
HEIRS OF ORVAL HUGHES, et al., respondents.
NARVASA, J.:
These proceedings lay bare a most blatant manifestation
of forum-shopping, a reprehensive manipulation of court
processes and proceedings which has succeeded in delaying
enforcement of an administrarive decision rendered more than
twenty (20) years ago, against which this court will extend its
correcting hand, not only to strike down those reprehensible
strategems but also to assure that the decision may, at long last,
be financially carried out.
The events that gave rise to the present contrversy go far back in
time, to the 'twenties' in fact. In 1924, a gentlemen by the name of
Orval Hughes was granted a lease by the Government over
agricultural land in Malalag, Davao, which had an approximate
area of 856 hectares. The lease set a term of 25 years. It actually
expired on May 25, 1953, having been extended for 3 years and
10 months. Orval hughes died during the Japanese Occupation
and was succeeded in the lease by his heirs.
Prior to the expiration of the lease, the Hughes Heirs filed
individual sales applications over 716 hectares of the land leased.
In 1949, a groupf of some 133 persons petitioned the Bureau of
Lands for the cancellation of the Hughes lease, alleging
abandonment and non-cultivation on the lessee's part, and for the
subdivision and allocation of the land among them. 1 The petition was
denied, the Bureau having found that the lessee had in thruth complied with the requirement
of cultivation imposed by the lease agreement. An appeal by the 133 petitioners to the
Secretary of Agriculture and Natural Resources proved unvailing. In a decision rendered on
June 2, 1953, the Secretary noted and sanctioned the continued possession by the Hughes
Heirs of the landholding despite the expiration of the lease on May 25, 1953, and declared
them entitled to acquire the same by purchase.
Nothing daunted, the same group of 133 persons, now headed by
a certain Teodulfo Tocao, filed with the Office of the President in
November, 1955 an opposition to the sales applications of the
Hughes Heirs. They grounded their opposition on the claim that
they had themselves personally cultivated most of the land from
1945 to 1950, and the are cultivated by the Hughes Heirs
extended only over 50 hectares. The opposition was overruled
and dismissed on January 27, 1956. The oppositors moved for
reconsideration. The Department of Agriculture and Natural
Resources was required to comment. After having the matter
investigated, the Department submitted its recommendations to
the Office of the President. Thereafter an Amended Decision was
rendered by the Executive Secretary dated August 20, 1957,
awarding to the oppositors 399 out of the 716 hectares in
question, and to the Hughes Hiers, the remainder, 317 hectares,
each heir being allotted some 63 hectares, viz:
... (C)onsidering the extend of the improvements
introduced by the heirs of Orval Hughes, the
decision of this office dated October 18, 1956 is
hereby modified in the sense that each of the 133
 petitioners shall be alloted three (3) hectares each
of the 716 hectares in question and the remaining
317 hectares shall be divided among the heirs of
Orval Hughes who shall be given the preference
to choose from the area of 716 hectares the
particular portions to be covered by their
respective application.
This decision became final and executory. But the cxontrversy
was not ended. It was kept alive by the Hughes Heirs who
launched a series of actions in different courts in a stubborn,
persistent, repititious effort to strike down the judgement, or at
least to delay its enforcement to such an extent as might in due
time bring about dieheartenment and loss of interest on the part
of those who oppsed them.
The first of these actions was filed in the Court of First Instance of
Davao City where it was docketed as Civil Case No. 4685. that
was a suit praying for the annulment of the decision of the Office
of the president dated August 20, 1957 and for an injunction
against its implementation. it was dismissed by the Court of
Appeals on April 3, 1967. The dismissal was affirmed by the
Court of Appeals on January 18, 1971, and by this Court on
September 21, 1971.
The second suit was filed in the Court of First Instance of Quezon
City, where it was docketed as Civil Case No. Q-18569. It was
given the form of a special civil action for certiorari
and/or mandamus, the basic prayer being the nullification of the
award of the land by the Office of the President to the Tocao
Group 133 persons or so, and the proscription of the enforcement
of that Office's Amended Decision of August 20, 1957. the suit
was dismissed on May 21, 1974.
The third action was one for injunction, filed in the Court of First
Instance at Digos, Davao de Sur, where it was docketed as Civil
Case No. 918, seeking to prevent the District Land Officer from
administering the land and awarding it to the occupants, who
were, of course, the Tocao Group. This action suffered the same
fate as the first two. It was dimissed on Agusut 12, 1975.
The fourth proceeding also took the guise of an action for
injunction. It was filed in the Court of First Instance of Quezon
City, where it was docketed as Civil Case No. 1376. It basically
sought to prevent the defendants therein, inclusive of the Tocao
Group, from entering the land in question and harvesting
coconuts therein, and from molesting the pla intiff (the Hughes
Heirs) in their possession and enjoyment of the property. This,
too, was dismissed, the dismissal coming on October 12, 1979.
The fifth suit is that which had directly given rise to the appellate
proceedings at bar. It was commenced by the Hughes Heirs on
February 23, 1979 in the Court of First Instance of Davao, where
it was given the docket number, 1416. Named defendants were
the Minister of Natural Resources, the Director of Landa, the
provincial PACLAP (Presidential Action Committee on Lanfd
Problems), and two private individuals-German Tuzon and
Exequiel canancia-or their successors. Two causes of action
were alleged by the Hughes Heirs in their complaint. The first was
that the PACLAP Chairman had refused and still refused to
comply with PACLAP Special Order No. 7, enjoining the Special
Screening Committee (created to implement the decision of the
Office of the President of August 20, 1957) from performing acts
of administration over the 399-hectare portion of the land
previously subject of the Hughes lease, but had instead allowed
entry into the land and the harvest of coconuts therefrom to the
prejudice of said Hughes Heirs. The second was that the Director
of Lands had failed and refused to act on the Heirs' invidual sales
application of the 317 hectares allotted to them. They prayed inter
alia not only that the "Director of Lands be ordered to process
and adjudicate in accordance with the aforementioned decision
the sales application of the five 95) heirs of Orval hughes granting
to each of them sixty three (63) hectares," but also that they (the
Hughes Heirs) be allowed to continue the enjoyment of their
improvements in the 399-hectare portion of the property until
such time that their claims are finally resolved and/or their
improvements paid fully for."
In their answer, the defendants stressed that the complaint was
but a manuever of the Huges Hiers, like others in the past,
designed to perpetuate their occupation of the 399 hectares
already awarded to the Tocao Group. They asserted that contrary
to the Hughes Heirs' claim, defendasnt public officials had indeed
taken many steps to implement the decision of the Office of the
President of August 29, 1957, 2 but those steps had been
frustrated and negated by the various actions instituted by the
Hughes Heirs. The defendants also asserted that res
judicata barred this latest attempt to re-litigate the question of the
validity or enforcement of the Decision of August 20, 1957.3
On the day of the trial, March 24, 1982, the plaintiff heirs were
present but not their lawyer, Atty. Ismael Crisanto. The
Court 4 thereupon declared the plaintiffs non-suited it appearing
that Atty. Crisanto had been duly notified of the hearing, and
dissolved the writ of preliminary injunction earlier issued. 5 Atty.
Crisanto moved for reconsideration alleging lack of funds and
"stomach trouble and LBM" as causes for his failure to
appear. 6 The Court denied his motion, ruling that the grounds
therein set out did not constitute accident or excusable
negligence. 7
On petition for certiorari of the Hughes Heirs, the Court of
Appeals, 8 nullified the order of dismissal. It opined that—
... If the plaintiff is present, there is no basis for
the premise or assumption that the plaintiff has
lost interest in this case (Gumela vs. Aniana, CA
G.R. No. 31819-R, April 8, 1964), for the phrase
"failure to prosecute the action for an
unreasonable length of time" means
"unwillingness to proceed with the scheduled trial"
or failure to appear at a pre-trial (R.G. Martin, 1
Rules of Court, 1972 ed., 5 SCRA 1177;
Marigomen vs. Valencia, CA-G.R. No. 05635-R,
Sept. 19, 1977).
The Appellate Court went on to say that the policy of according
parties a chanceto ventilate their claims instead of throwing out
cases on procedural technicalities should have been applied in
this instance where there had been a previous opinion of the trial
court 9 to the effect that a sufficient cause of action existed in
plaintiffs' favor.
From this decision, the Minister of Natural Resources and the
Director of Lands have appealed to this Court on certiorari
positing grave error by the Court of Appeals in resolving the issue
only in its technical aspect without taking account of the factual
background of the case of the more weighty aspect of substantial
justice. They stress the futility of reinstating a case which is
patently without merit or foundation, involving naught but old
issues repeatedly ventilated by the Hughes Heirs and all resolved
adversely to them by judgments which had long since become
final. They also contend that Atty. Crisanto's motion for
reconsideration of the order of non-suit against his clients was
palpably insufficient in form and substance, not being
accompanied by substantion of the grounds relied upon for relief
or by an affidacit of merits.
The petitioners are correct. There is merit in their appeal. The
challenged judgment of the Appellate Court will be reversed.
The Appellate Tribunal failed to apprehend, in the first place, that
Atty. Crisanto's motion for reconsideration or, mor e properly,
motion for nre trial under Rule 37 of the Rules of Court, was
flawed by serious defects. Neither an affidavit of merit nor an
affidavit of the averred absolutory causes (as regards the lawyer's
failure to appear for trial) was appended to the motion, as
explicitly required by Section 2, Rule 37 in relation to Section 7,
Rule 133 of the Rules. 10 There was in otehr words no declaration under oath to
establish the counsel's claimed illness, conformably with the rule governing evidence on
motions. And there was no affidavit of merit setting out the facts claimed to constitute the
plaintiffs' valid and meritorious cause or causes of action. This is a fatal omission, absent
any circumstance on record of adequate weight to excuse or justify the same. 11
The Appellate Court also failed to consider the obvious fact that
the action commenced by the Hughes Heirs in the Trial Court-the
fifth in a series of actions given diverse guises and forms by said
heirs-was but a thinly veiled attempt to relitigate shopworn and
adjudicated issues, in a transparent effort to hold on to a 399-
hectare area of hteir predecessors' original leaseholding over
which they had already been allotted and assigned to other
persons, by decisionhs, administrative and judical, which had all
attained finality, the first having attained this state as early as
1957, thirty years back in time.
The Hughes heirs argue that the action at bar is different from
those previously instituted by them, the latter having sought
prevention of implementation of the decision of August 20, 1957
whereas the current action precisely sought implementation
thereof. The argument is clearly without merit. It flies in the teeth
of their prayer to be allowed to continue in possession of the 399-
hectare area which had been awarded to other persons upon the
flimsy excuse that they still had improvements thereon. But this
matter of the improvements would by now have been settled had
it not been for their recalcitrance. As early as 1978, the
administrative authorities were already set to make an inventory
and appraisal of those improvemtns, to be set-off against the
occupation fees owing from the Hughes Heirs; 12 but this, the Heirs have
effectively prevented up to now. They should not be permitted to so delay implementation of
the Decision of August 20, 1957 any longer, specially to the prejudice of the grantees of
said 399-hectare portion of the land in question. Their resort to forum shopping, to the filing
of repetitious suits in different courts, not only furnishes ground for giving their present
actions short shrift, but also lays the foundation for an inquiry into their liability for
constructive comtempt for having abused the processes of the courts, and their counsel's
own liability for the same sanction and such other additional administrative responsibility as
might be proper in the
premises. 13
Under these circumstances, the dismissal of the Hughes Heirs
complaint by the Trial Court was correct, and it was serious error
for the Court of Appeals to have ordered its reinstatement. A case
that bears no merit merely adds to the burden of an already
burdened Judiciary. This Court reiterates what it pointed out
many years back: 14
... (T)he dockets of the courts are so clogged with
cases most of which involve genuine
controversies needing urgent attention that it has
become the plain duty of judges enforceable by
mandamus to dismiss at the earliest opportunity
those which are shown to be, like the case at bar,
hopelessly without any possible cause of action,
even if they have to cast aside, whenever
necessary, in so dismissing them, minor flaws in
procedure which do not affect the jurisdiction of
the court nor the minimum requirements of due
process.
The exercise of the sound discretion vested in courts in resolving
motions to dismiss is not limited to the application of the technical
rules of procedure but extends to the application of the applicable
substantive legal provisions to the attendant facts and
circumstances in order that justice and fair play may be fully
accorded. 15
Parenthetically, the circumstances obtaining in the case at bar,
above specified, serve to distinguish the situation therein
comprehended from that in Dayo v. Dayo, 95 Phil. 703, cited by
the Court of Appeals in justification of its action.
WHEREFORE, the Decision of the Court of Appeals in CA-G.R.
No. 14269 subject of the present appeal, is REVERSED AND
SET ASIDE, and the Order of the Trial Court dated March 24,
1982, dismissing the complaint of the respondents Hughes Heirs
is REINSTATED AND AFFIRMED. The respondents, Heirs of
Orval Hughes, as well as their counsel, Atty. Ismael Crisanto, are
DIRECTED TO SHOW CAUSE IN WRITING, within ten (10) days
from notice of this judgment, why they should not be punished for
constructive contempt and/or otherwise disciplinary dealt with for
abuse of the processes of the courts for having instituted a series
of actions in different courts upon the same subject matter. Costs
against private respondents.
G.R. No. L-19180 October 31, 1963
NATIONAL DEVELOPMENT COMPANY, ET AL., petitioners-
appellees,
vs.
THE COLLECTOR OF CUSTOMS OF MANILA, respondent-
appellant.
Ross, Selph and Carrascoso for petitioners-appellees.
Office of the Solicitor General for respondent-appellant.
BAUTISTA ANGELO, J.:
The National Development Company which is engaged in the
shipping business under the name of "Philippine National Lines" is
the owner of steamship "S.S. Doña Nati" whose local agent in Manila
is A. V. Rocha. On August 4, 1960, the Collector of Customs sent a
notice to C.F. Sharp & Company as alleged operator of the vessel
informing it that said vessel was apprehended and found to have
committed a violation of the customs laws and regulations in that it
carried an unmanifested cargo consisting of one RCA Victor TV set
21" in violation of Section 2521 of the Tariff and Customs Code.
Inserted in said notice is a note of the following tenor: "The above
article was being carried away by Dr. Basilio de Leon y Mendez,
official doctor of M/S "Doña Nati" who readily admitted ownership of
the same." C.F. Sharp & Company was given 48 hours to show
cause why no administrative fine should be imposed upon it for said
violation.
C.F. Sharp & Company, not being the agent or operator of the
vessel, referred the notice to A. V. Rocha, the agent and operator
thereof, who on August 8, 1960, answered the notice stating, among
other things, that the television set referred to therein was not a
cargo of the vessel and, therefore, was not required by law to be
manifested. Rocha stated further: "If this explanation is not sufficient,
we request that this case be set for investigation and hearing in order
to enable the vessel to be informed of the evidence against it to
sustain the charge and to present evidence in its defense."
The Collector of Customs replied to Rocha on August 9, 1960 stating
that the television set in question was a cargo on board the vessel
and that he does not find his explanation satisfactory enough to
exempt the vessel from liability for violating Section 2521 of the Tariff
and Customs Code. In said letter, the collector imposed a fine of
P5,000.00 on the vessel and ordered payment thereof within 48
hours with a threat that he will deny clearance to said vessel and will
issue a warrant of seizure and detention against it if the fine is not
paid.
And considering that the Collector of Customs has exceeded his
jurisdiction or committed a grave abuse of discretion in imposing the
fine of P5,000.00 on the vessel without the benefit of an investigation
or hearing as requested by A. V. Rocha, the National Development
Company, as owner of the vessel, as well as A. V. Rocha as agent
and operator thereof, filed the instant special civil action of certiorari
with preliminary injunction before the Court of First Instance of
Manila against the official abovementioned. The court, finding the
petition for injunction sufficient in form and substance, issued ex
parte the writ prayed for upon the filing of a bond in the amount of
P5,00.00.
Respondent set up the following special defenses: (1) the court a
quo has no jurisdiction to act on matters arising from violations of the
Customs Law, but the Court of Tax Appeals; (2) assuming that it has,
petitioners have not exhausted all available administrative remedies,
one of which is to appeal to the Commissioner of Customs; (3) the
requirements of administrative due process have already been
complied with in that the written notice given by respondent to
petitioner Rocha clearly specified the nature of the violation
complained of and that the defense set up by Rocha constitute
merely a legal issue which does not require further investigation; and
(4) the investigation conducted by the customs authorities showed
that the television set in question was unloaded by the ship's doctor
without going thru the custom house as required by law and was not
declared either in the ship's manifest or in the crew declaration list.
On the basis of the stipulation of facts submitted by the parties, the
court a quo rendered decision setting aside the ruling of respondent
which imposes a fine of P5,000.00 on the vessel Doña Nati payable
within 48 hours from receipt thereof. The court stated that said ruling
appears to be unjust and arbitrary because the party affected has not
been accorded the investigation it requested from the Collector of
Customs.
Respondent interposed the present appeal.
When the customs authorities found that the vessel Doña Nati
carried on board an unmanifested cargo consisting of one RCA
Victor TV set 21" in violation of Section 2521 of the Tariff and
Customs Code, respondent sent a written notice to C. F. Sharp &
Company, believing it to be the operator or agent of the vessel, and
when the latter referred the notice to A. V. Rocha, the real operator
of the vessel, for such step as he may deem necessary to be taken
the latter answered the letter stating that the television set was not
cargo and so was not required by law to be manifested, and he
added to his answer the following: "If this explanation is not
sufficient, we request that this case be set for investigation and
hearing in order to enable the vessel to be informed of the evidence
against it to sustain the charge and to present evidence in its
defense. "Respondent, however, replied to this letter saying that said
television was a cargo within the meaning of the law and so he does
not find his explanation satisfactory and then and there imposed on
the vessel a fine of P5,00.00. Respondent even went further. He
ordered that said fine be paid within 48 hours from receipt with a
threat that the vessel would be denied clearance and a warrant of
seizure would be issued if the fine will not be paid. Considering this
to be a grave abuse of discretion, petitioners commenced the
present action for certiorari before the court a quo.
We find this action proper for it really appears that petitioner Rocha
was not given an opportunity to prove that the television set
complained of is not a cargo that needs to be manifested as required
by Section 2521 of the Tariff and Customs Code. Under said section,
in order that an imported article or merchandise may be considered a
cargo that should be manifested it is first necessary that it be so
established for the reason that there are other effects that a vessel
may carry that are excluded from the requirement of the law, among
which are the personal effects of the members of the crew. The fact
that the set in question was claimed by the customs authorities not to
be within the exception does not automatically make the vessel
liable. It is still necessary that the vessel, its owner or operator, be
given a chance to show otherwise. This is precisely what petitioner
Rocha has requested in his letter. Not only was he denied this
chance, but respondent collector immediately imposed upon the
vessel the huge fine of P5,000.00. This is a denial of the elementary
rule of due process.
True it is that the proceedings before the Collector of Customs
insofar as the determination of any act or irregularity that may involve
a violation of any customs law or regulation is concerned, or of any
act arising under the Tariff and Customs Code, are not judicial in
character, but merely administrative, where the rules of procedure
are generally disregarded, but even in the administrative
proceedings due process should be observed because that is a right
enshrined in our Constitution. The right to due process is not merely
statutory. It is a constitutional right. Indeed, our Constitution provides
that "No person shall be deprived of life, liberty, or property without
due process of law", which clause epitomize the principle of justice
which hears before it condemns, which proceeds upon inquiry and
renders judgment only after trial. That this principle applies with
equal force to administrative proceedings was well elaborated upon
by this Court in the Ang Tibay case as follows:
... The fact, however, that the Court of Industrial Relations
may be said to be free from the rigidity of certain procedural
requirements does not mean that it can, in justiciable case
coming before it, entirely ignore or disregard the
fundamental and essential requirements of due process in
trials and investigations of an administrative character.
 ... There are cardinal primary rights which must be respected the Commissioner of Customs. This may be true, but such step we
even in proceedings of this character. The first of these do not consider a plain, speedy or adequate remedy in the ordinary
rights is the right to a hearing, which includes the right of the course of law as would prevent petitioners from taking the present
party interested or affected to present his own case and action, for it is undisputed that respondent collector has acted in utter
submit evidence in support thereof. Not only must the party disregard of the principle of due process.
be given an opportunity to present his case and to adduce
evidence tending to establish the rights which he asserts but WHEREFORE, the decision appealed from is affirmed. No costs.
the tribunal must consider the evidence presented. While the
duty to deliberate does not impose the obligation to decide
right, it does imply a necessity which cannot be disregarded,
namely, that of having something to support its decision. No
only must there be some evidence to support a finding or
conclusion, but the evidence must be substantial. The
decision must be rendered on the evidence presented at the [G.R. No. 52439. July 12, 1991.]
hearing, or at least contained in the record and disclosed to
the parties affected. The Court of Industrial Relations or any PHILIPPINE NATIONAL BANK (PNB), NORMA A. VICTORINO,
of its judges, therefore, must act on its or his own DIOSDADO SOLIDUM, JR., DANTE FAJARDO, and GERMAN
independent consideration of the law and facts of the FABELLA, the latter in their official capacities as officers or
controversy, and not simply accept the views of a employees of PNB, Petitioners, v. HON. SIMPLICIO M.
subordinate in arriving at a decision. The Court of Industrial APALISOK, Presiding Judge, Court of First Instance, Branch 3,
Relations should, in all controversial questions, render its Zamboanga del Norte, and PRIMITIVO
decision in such a manner that the parties to the proceeding VIRTUDAZO, Respondents.
can know the various issues involved, and the reason for the
decision rendered. The performance of this duty is
inseparable from the authority conferred upon it. (Ang Tibay,
et al. v. The Court of Industrial Relations, et al., 40 O.G., No.
11, Supp. p. 29).

There is, therefore, no point in the contention that the court a

DECISION
quo has no jurisdiction over the present case because what is here
involved is not whether the imposition of the fine by the Collector of
Customs on the operator of the ship is correct or not but whether he
NARVASA, J.:
acted properly in imposing said fine without first giving the operator
an opportunity to be heard. Here we said that he acted improvidently
and so the action taken against him is in accordance with Rule 67 of
Fifty-one years ago, this Court laid down what it considered the
our Rules of Court. "cardinal primary rights" of due process which must be accorded to
parties in "trials and investigations of an administrative character,"
Another point raised is that petitioners have brought this action which have since been observed and applied with undeviating
prematurely for they have not yet exhausted all the administrative constancy. 1 These, as simply and succinctly stated by an
remedies available to them, one of which is to appeal the ruling to acknowledged authority on Constitutional Law, 2 are: jgc:chan roble s.com.p h
"(1) The right to a hearing, which includes the right to present one’s
case and submit evidence in support thereof.
(2) The tribunal must consider the evidence presented.
(3) The decision must have something to support itself.
(4) The evidence must be substantial.
(5) The decision must be rendered on the evidence presented at the
hearing, or at least contained in the record and disclosed to the parties
affected.
(6) The tribunal or body or any of its judges must act on its or his own
independent consideration of the law and facts of the controversy and
not simply accept the views of a subordinate in arriving at a decision.
(7) The board or body should, in all controversial questions, render its
decision in such a manner that the parties to the proceeding can know
the various issues involved, and the reason for the decision
rendered." cra law virt ua1aw li bra ry
Whether or not these norms were met by the petitioners in the matter
of the removal of Primitivo Virtudazo from his employment as credit
investigator/inspector of the Philippine National Bank (PNB), Dipolog
City Branch, is the principal issue in the special civil action
of certiorari at bar, initiated by petition of the Bank and some of its
officers. The petition was given due course. 3
The controversy originated from a "Memorandum of Specification of
Charges" issued by Norma A. Victorino (Assistant Vice President and
Manager of the Personnel Administration Department, PNB), which was
served on Virtudazo, then employed, as aforestated, as credit
investigator of PNB at its Dipolog Branch. 4 The memorandum read as
follows: 5
"This Office has found, after an evaluation of official reports, that a
prima facie case exists against you for Dishonesty and Violations of
Bank Rules and Regulations, committed as follows: jgc:chan roble s.com. ph
"On falsification of overtime record of attendance —
x x x at the formal investigation to be later scheduled. 11
"On authorized punching of bundy clock time card." cralaw virt ua1aw lib ra ry
Seasonably, and thru the Manager of the Dipolog Branch, German
Fabella, Virtudazo submitted a verified answer to which were attached
copies of documents in support of his defenses. 6 The answer "directly
travers(ed) . . . and den(ied) point by point the charges against him
(and) explain(ed) also that the error or discrepancy subject of the
charges was due to —
(a) mechanical defect or faulty functioning of the office bundy time
clock caused by continuous or intermittent electric power failures or
interruptions of the Visayan Electric Co., Inc.; and
(b) he did not authorize Mr. Rolando Palomares, a co-employee, to
punch-in his (Virtudazo’s) time card."cralaw virtua 1aw lib rary
Some two (2) months later, two of PNB’s personnel examiners,
Diosdado Solidum, Jr. and Dante Fajardo, went to Dipolog City to
conduct a fact-finding investigation in connection with the charges
against Virtudazo. 7 They interviewed and took down the statements
of four (4) PNB employees, namely: Rolando Palomares; Constancio
Adaro; Jaime Allesa; and Jose Nolido; this, in the absence of
Virtudazo.8
Virtudazo requested that he be allowed to confront and examine the
witnesses thus interviewed. He was told that the investigation was
merely a fact-finding inquiry and a formal investigation would follow.
He was not given a copy of the witnesses’ statements. 9
What happened instead was that Virtudazo was told that he would be
the next person interrogated. He asked for time to engage counsel
which was grudgingly given. He went to a few lawyers of his choice,
but as fate would have it, they had other commitments. Virtudazo
finally prevailed on Atty. Vicente Lubrico, whose offices happened to
be near those of the PNB Dipolog Branch, just to be present during his
questioning. He was thus interrogated by Messrs. Solidum and
Fajardo, represented by an attorney who had no prior notion of the
nature of the investigation or of the evidence against his client. 10
Virtudazo then asked that certain persons be called by Solidum and
Fajardo as his witnesses. Again he was told he could present witnesses
Notice of that formal investigation never came; this, notwithstanding
the recommendation of the fact-finding team that" (i)n view of the
flagrant violation of Bank rules and regulations, . . . (the team was)
recommending that this matter be endorsed to the Personnel
Administration Department for formal investigation." 12 What he did
get, on June 27, 1978 was a "memorandum" dated June 15, 1978,
addressed to him ("Thru: Mr. R.G. Perez, Vice President, Mindanao
Regional Office") and signed by Antonio F. Arce, as Officer-in-Charge,
Personnel Administration Department,13 the memorandum pertinently
reading as follows:jgc:cha nrob les.c om.ph
"SUBJECT: ADMINISTRATIVE CASE —
This is to inform you that, under B/Res. No. 853 of May 31, 1978, you
were found guilty of —
1. Dishonesty for falsifying your overtime record of attendance on
March 25, 30 & 31, 1977; and
2. Violation of Bank Rules and Regulations for authorizing Mr. Rolando
Palomares, NASECO Messenger to punch-in your time card on your
scheduled overtime from June 14 to 16, 1977.
Accordingly, as penalty, under said B/Res No. 853, it was —
‘RESOLVED, That, as the respondent has been found guilty as charged
of Dishonesty and Violation of Bank Rules and Regulations, Mr.
Primitivo Virtudazo be dismissed from the service of the Bank, without
benefits and with prejudice to reinstatement, effective upon receipt of
notice.
On July 11, 1978, Virtudazo filed thru counsel a motion for the
reconsideration of the decision as laconically described in the
memorandum. In his motion for reconsideration, he referred to the
memorandum as "the Decision" which he had received on June 27,
1978. 14 His motion was denied by the PNB Board on December 11,
1978, a fact communicated to Virtudazo by letter dated January 10,
1979. 15
Fifteen days later, Virtudazo’s counsel wrote to the Bank asking to be
furnished with a copy of the Board’s decision itself so that he might
either appeal to the Civil Service Commission or resort to judicial
action. The letter was never answered. He and his counsel also went to
the Bank’s main offices at Manila, to try to get a copy of the decision.
They saw several officers, Atty. Severino Cancio, Atty. Artemio Tipon,
Atty. Catalan, but never succeeded in getting a copy of the decision.
16
Virtudazo then filed a complaint with the Court of First Instance at
Dipolog City against the PNB and certain of its officers praying for
reinstatement to his former position and the payment of damages.17
He also alleged that "no appeal could as yet be made to the Civil
Service Commission as no decision was furnished to plaintiff from
which an appeal could be taken." cralaw virt ua1aw lib rary
The defendants filed an answer setting forth specific denials and such
affirmative defenses as failure to exhaust administrative remedies and
that defendants had "acted in accordance with law." 18
After due proceedings, the Trial Court issued a pre-trial order
assigning several dates for the trial of the case. 19 In that same order,
the Court pointed out that a formal investigation should have, but was
not, conducted; the prior, preliminary fact-finding inquiry was held
"secretly, without the presence of the plaintiff," depriving him "of his
right to cross-examine . . . (the) witnesses" interrogated; and that the
plaintiff had not been served with copy of the decision.
Two (2) motions for reconsideration of that order were filed for the
defendants by the PNB lawyers, 20 and their attorneys based at
Dipolog City. 21 They alleged that Virtudazo’s claim that he had not
been given a copy of the decision was untrue, for he had filed a
"Motion for Reconsideration and/or New Trial" in which he declared
that he had "received a copy of the Decision on June 27, 1978, and
this motion for reconsideration and or new trial is filed well within the
reglementary period." 22 The PNB and its co-defendants insisted that
—
1) jurisdiction over the case was lodged, not in the Trial Court, but in
the Merit System Board created by PD No. 1409;
2) Virtudazo had no cause of action against them because —
a) he had failed to exhaust administrative remedies by omitting to
elevate "his case to the Merit System Board/Civil Service Commission;
and
b) the administrative charge against him being serious and the
evidence of his guilt strong, "his summary dismissal was sanctioned
under Section 40 (a) of Presidential Decree No. 807." cralaw vi rtua 1aw lib rary
The motions were denied by the Trial Court. 23 The Court reiterated its
view that Virtudazo "was never investigated formally;" that the receipt
by him of a copy of the decision was "no argument that the decision
has been rendered after a formal investigation of the charges against
him;" that he could not appeal to the Merit System Board "because he
was not formally investigated and because he had been dismissed . . .
before his receipt of copy of said decision, at which time the
reglementary period for appeal . . . had already lapsed;" and that
Section 38 (c) of RD 807 "is very explicit as to the holding of a formal
investigation although a Respondent. . . makes no request for it when
from the allegations of the complaint and his answer thereto . . . the
merits of the case cannot be decided judiciously without conducting
such an investigation." 24
It is this resolution which the petitioners would have this Court nullify
and set aside in the certiorariaction at bar.
The evidence discloses that the two personnel examiners sent by the
Bank’s Main Office to the Dipolog Branch to conduct a fact-finding
inquiry into the charges against Virtudazo were explicitly asked by the
latter that: (1) he be given time to retain counsel of his choice before
he was interrogated; (2) he be permitted to confront and cross-
examine the witnesses interviewed, or at least be given a copy of their
written statements; and (3) certain persons be called and interviewed
as his (Virtudazo’s) own witnesses. 25 All these requests were
peremptorily turned down with the assurance, however, that a formal
investigation would later be scheduled at which he could presumably
be represented by counsel selected at more leisure, confront and
cross-examine the witnesses against him, and adduce evidence in his
own behalf Indeed, the personnel examiners did subsequently
recommend that Virtudazo’s case be referred to the Personnel
Administration Department for formal investigation. 26 The record
further discloses that no formal investigation was ever scheduled and
the PNB Board’s decision dismissing Virtudazo was rendered without
that formal investigation ever being held. chan roble s virtual law lib rary
The record further reveals that despite Virtudazo’s repeated and
insistent requests, he was never given a copy of the decision of the
PNB Board of Directors, mentioned in the Memorandum of Antonio F.
Arce, the Officer in Charge of the Bank’s Personnel Administration
Department, supra. 27
The petitioner Bank would however justify its dismissal of Virtudazo
without formal hearing by adverting to Section 40 (a) of Presidential
Decree No. 807, viz.: jgc:chan roble s.com.p h
"SEC. 40. Summary Proceedings. — No formal investigation is
necessary and the respondent may be immediately removed or
dismissed if any of the following circumstances is present: chanro b1es vi rtua l 1aw li bra ry
(a) When the charge is serious and the evidence of guilt is strong.
x x x"
The trouble is, the Bank’s own fact-finders, despite their opinion that
prima facie there had been "flagrant violations of Bank rules and
regulations," had recommended that a formal investigation be
conducted. That recommendation was obviously impelled by the fact
that Virtudazo’s formal answer had traversed the accusations against
him and there was a not unreasonable possibility that if allowed to
present evidence, as he was then demanding, the allegations of that
answer would be substantiated and destroy the prima facie evidence of
guilt collated by the fact-finders. Implicit in that recommendation, in
other words, is that although standing alone, the proofs of Virtudazo’s
guilt were strong, the possibility could not be discounted that said
proofs could be overcome by the evidence that Virtudazo was insisting
on submitting. Be this as it may, the recommendation of the very
investigators of the Bank that a formal hearing be had of the charges
is inconsistent with the subsequent view expressed by the Bank that
no such formal hearing was necessary, a virtual assertion that it was
inutile to allow Virtudazo to adduce evidence as no proof on his part
could possibly negate the proofs already gathered by the investigators
against him.
Upon these considerations, the Court holds inapplicable the provisions
of Section 40 (a) of PD 807, invoked by petitioner Bank. Given the
facts, the provisions properly applicable are paragraphs (a) and (c) of
Section 38, PD 807, reading as follows:jgc:chan roble s.com.p h
"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 chief of
agencies, or regional directors, or upon sworn, written complaint of
any other persons.
x x x.
(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 vs.
documents, the merits of the case cannot be decided judiciously COURT OF APPEALS and TRIUMPH SAVINGS
without conducting such an investigation.
BANK, respondents.
x x x"
Sycip, Salazar, Hernandez & Gatmaitan for petitioners.
The Bank contends, too, that Virtudazo’s failure to exhaust
administrative remedies is fatal to his judicial action. The contention is
Quisumbing, Torres & Evangelista for Triumph Savings Bank.
rendered innocuous and inconsequential by the circumstance
established in the record that Virtudazo had been denied due process.
As already pointed out, he was not given a copy of the judgment
discharging him from his employment on account of serious
misconduct, hence, he was not informed of the various issues involved
BELLOSILLO, J.:
and the reason for the decision rendered; neither was the evidence on
which that decision was based disclosed to him; and he was not
accorded an opportunity to present his case and submit evidence in his May a Monetary Board resolution placing a private bank under
behalf, and not given a copy of the decision. The proceedings having receivership be annulled on the ground of lack of prior notice and
been conducted without according to Virtudazo the "cardinal primary hearing?
rights of due process" guaranteed to every party in an administrative
or quasi-judicial proceeding, 28 said proceedings must be pronounced
null and void. The case thus comes within one of the recognized This petition seeks review of the decision of the Court of Appeals
exceptions to the doctrine of exhaustion of administrative remedies, in CA G.R. S.P. No. 07867 entitled "The Central Bank of the
i.e.: the administrative action for which relief is sought is so patently Philippines and Ramon V. Tiaoqui vs. Hon. Jose C. de Guzman
illegal as to be deemed to have been done without or in excess of and Triumph Savings Bank," promulgated 26 September 1986,
jurisdiction, 29 or the question involved is purely a legal one. 30
which affirmed the twin orders of the Regional Trial Court of
WHEREFORE, the petition for certiorari is DENIED for lack of merit, Quezon City issued 11 November 19851 denying herein
with costs against petitioners. petitioners' motion to dismiss Civil Case No. Q-45139, and
directing petitioner Ramon V. Tiaoqui to restore the private
SO ORDERED. management of Triumph Savings Bank (TSB) to its elected board
of directors and officers, subject to Central Bank comptrollership.2

The antecedent facts: Based on examination reports submitted by

the Supervision and Examination Sector (SES), Department II, of
the Central Bank (CB) "that the financial condition of TSB is one
of insolvency and its continuance in business would involve
probable loss to its depositors and creditors,"3 the Monetary
Board (MB) issued on 31 May 1985 Resolution No. 596 ordering
G.R. No. 76118 March 30, 1993 the closure of TSB, forbidding it from doing business in the
Philippines, placing it under receivership, and appointing Ramon
V. Tiaoqui as receiver. Tiaoqui assumed office on 3 June 1985.4
THE CENTRAL BANK OF THE PHILIPPINES and RAMON V.
TIAOQUI, petitioners,
On 11 June 1985, TSB filed a complaint with the Regional Trial
Court of Quezon City, docketed as Civil Case No. Q-45139,
against Central Bank and Ramon V. Tiaoqui to annul MB
Resolution No. 596, with prayer for injunction, challenging in the
process the constitutionality of Sec. 29 of R.A. 269, otherwise
known as "The Central Bank Act," as amended, insofar as it
authorizes the Central Bank to take over a banking institution
even if it is not charged with violation of any law or regulation,
much less found guilty thereof.5
On 1 July 1985, the trial court temporarily restrained petitioners
from implementing MB Resolution No. 596 "until further orders",
thus prompting them to move for the quashal of the restraining
order (TRO) on the ground that it did not comply with said Sec.
29, i.e., that TSB failed to show convincing proof of arbitrariness
and bad faith on the part of petitioners;' and, that TSB failed to
post the requisite bond in favor of Central Bank.
On 19 July 1985, acting on the motion to quash the restraining
order, the trial court granted the relief sought and denied the
application of TSB for injunction. Thereafter, Triumph Savings
Bank filed with Us a petition for certiorariunder Rule 65 of the
Rules of Court6 dated 25 July 1985 seeking to enjoin the
continued implementation of the questioned MB resolution.
Meanwhile, on 9 August 1985; Central Bank and Ramon Tiaoqui
filed a motion to dismiss the complaint before the RTC for failure
to state a cause of action, i.e., it did not allege ultimate facts
showing that the action was plainly arbitrary and made in bad
faith, which are the only grounds for the annulment of Monetary
Board resolutions placing a bank under conservatorship, and that
TSB was without legal capacity to sue except through its
receiver.7
On 9 September 1985, TSB filed an urgent motion in the RTC to
direct receiver Ramon V. Tiaoqui to restore TSB to its private
management. On 11 November 1985, the RTC in separate orders
denied petitioners' motion to dismiss and ordered receiver
Tiaoqui to restore the management of TSB to its elected board of
directors and officers, subject to CB comptrollership.
Since the orders of the trial court rendered moot the petition
for certiorari then pending before this Court, Central Bank and
Tiaoqui moved on 2 December 1985 for the dismissal of G.R. No.
71465 which We granted on 18 December 1985.8
Instead of proceeding to trial, petitioners elevated the twin orders
of the RTC to the Court of Appeals on a petition for certiorari and
prohibition under Rule 65.9 On 26 September 1986, the appellate
court, upheld the orders of the trial court thus —
Petitioners' motion to dismiss was premised on
two grounds, namely, that the complaint failed to
state a cause of action and that the Triumph
Savings Bank was without capacity to sue except
through its appointed receiver.
Concerning the first ground, petitioners
themselves admit that the Monetary Board
resolution placing the Triumph Savings Bank
under the receivership of the officials of the
Central Bank was done without prior hearing, that
is, without first hearing the side of the bank. They
further admit that said resolution can be the
subject of judicial review and may be set aside
should it be found that the same was issued with
arbitrariness and in bad faith.
The charge of lack of due process in the
complaint may be taken as constitutive of
allegations of arbitrariness and bad faith. This is
not of course to be taken as meaning that there
must be previous hearing before the Monetary
Board may exercise its powers under Section 29
of its Charter. Rather, judicial review of such
action not being foreclosed, it would be best
should private respondent be given the chance to
show and prove arbitrariness and bad faith in the
issuance of the questioned resolution, especially
so in the light of the statement of private
respondent that neither the bank itself nor its
officials were even informed of any charge of
violating banking laws.
In regard to lack of capacity to sue on the part of
Triumph Savings Bank, we view such argument
as being specious, for if we get the drift of
petitioners' argument, they mean to convey the
impression that only the CB appointed receiver
himself may question the CB resolution appointing
him as such. This may be asking for the
impossible, for it cannot be expected that the
master, the CB, will allow the receiver it has
appointed to question that very appointment.
Should the argument of petitioners be given
circulation, then judicial review of actions of the
CB would be effectively checked and foreclosed
to the very bank officials who may feel, as in the
case at bar, that the CB action ousting them from
the bank deserves to be set aside.
xxx xxx xxx
On the questioned restoration order, this Court
must say that it finds nothing whimsical, despotic,
capricious, or arbitrary in its issuance, said action
only being in line and congruent to the action of
the Supreme Court in the Banco Filipino Case
(G.R. No. 70054) where management of the bank
was restored to its duly elected directors and
officers, but subject to the Central Bank
comptrollership.10
On 15 October 1986, Central Bank and its appointed receiver,
Ramon V. Tiaoqui, filed this petition under Rule 45 of the Rules of
Court praying that the decision of the Court of Appeals in CA-
G.R. SP No. 07867 be set aside, and that the civil case pending
before the RTC of Quezon City, Civil Case No.
Q-45139, be dismissed. Petitioners allege that the Court of
Appeals erred —
(1) in affirming that an insolvent bank that had
been summarily closed by the Monetary Board
should be restored to its private management
supposedly because such summary closure was
"arbitrary and in bad faith" and a denial of "due
process";
(2) in holding that the "charge of lack of due
process" for "want of prior hearing" in a complaint
to annul a Monetary Board receivership resolution
under Sec. 29 of R.A. 265 "may be taken as . .
allegations of arbitrariness and bad faith"; and
(3) in holding that the owners and former officers
of an insolvent bank may still act or sue in the
name and corporate capacity of such bank, even
after it had been ordered closed and placed under
receivership.11
The respondents, on the other hand, allege inter alia that in
the Banco Filipino case,12 We held that CB violated the rule on
administrative due process laid down in Ang Tibay vs. CIR (69
Phil. 635) and Eastern Telecom Corp. vs. Dans, Jr. (137 SCRA
628) which requires that prior notice and hearing be afforded to
all parties in administrative proceedings. Since MB Resolution
No. 596 was adopted without TSB being previously notified and
heard, according to respondents, the same is void for want of due
process; consequently, the bank's management should be
restored to its board of directors and officers.13
Petitioners claim that it is the essence of Sec. 29 of R.A. 265 that
prior notice and hearing in cases involving bank closures should
not be required since in all probability a hearing would not only
cause unnecessary delay but also provide bank "insiders" and
stockholders the opportunity to further dissipate the bank's
resources, create liabilities for the bank up to the insured amount
of P40,000.00, and even destroy evidence of fraud or irregularity
in the bank's operations to the prejudice of its depositors and
creditors. 14 Petitioners further argue that the legislative intent of
Sec. 29 is to repose in the Monetary Board exclusive power to
determine the existence of statutory grounds for the closure and
liquidation of banks, having the required expertise and
specialized competence to do so.
The first issue raised before Us is whether absence of prior notice
and hearing may be considered acts of arbitrariness and bad faith
sufficient to annul a Monetary Board resolution enjoining a bank
from doing business and placing it under receivership. Otherwise
stated, is absence of prior notice and hearing constitutive of acts
of arbitrariness and bad faith?
Under Sec. 29 of R.A. 265,15 the Central Bank, through the
Monetary Board, is vested with exclusive authority to assess,
evaluate and determine the condition of any bank, and finding
such condition to be one of insolvency, or that its continuance in
business would involve probable loss to its depositors or
creditors, forbid the bank or non-bank financial institution to do
business in the Philippines; and shall designate an official of the
CB or other competent person as receiver to immediately take
charge of its assets and liabilities. The fourth paragraph,16 which
was then in effect at the time the action was commenced, allows
the filing of a case to set aside the actions of the Monetary Board
which are tainted with arbitrariness and bad faith.
Contrary to the notion of private respondent, Sec. 29 does not
contemplate prior notice and hearing before a bank may be
directed to stop operations and placed under receivership. When
par. 4 (now par. 5, as amended by E.O. 289) provides for the
filing of a case within ten (10) days after the receiver takes charge
of the assets of the bank, it is unmistakable that the assailed
actions should precede the filing of the case. Plainly, the
legislature could not have intended to authorize "no prior notice
and hearing" in the closure of the bank and at the same time
allow a suit to annul it on the basis of absence thereof.
In the early case of Rural Bank of Lucena, Inc. v. Arca
[1965],17 We held that a previous hearing is nowhere required in
Sec. 29 nor does the constitutional requirement of due process
demand that the correctness of the Monetary Board's resolution
to stop operation and proceed to liquidation be first adjudged
before making the resolution effective. It is enough that a
subsequent judicial review be provided.
Even in Banco Filipino, 18 We reiterated that Sec. 29 of R.A. 265
does not require a previous hearing before the Monetary Board
can implement its resolution closing a bank, since its action is
subject to judicial scrutiny as provided by law.
It may be emphasized that Sec. 29 does not altogether divest a
bank or a non-bank financial institution placed under receivership
of the opportunity to be heard and present evidence on
arbitrariness and bad faith because within ten (10) days from the
date the receiver takes charge of the assets of the bank, resort to
judicial review may be had by filing an appropriate pleading with
the court. Respondent TSB did in fact avail of this remedy by
filing a complaint with the RTC of Quezon City on the 8th day
following the takeover by the receiver of the bank's assets on 3
June 1985.
This "close now and hear later" scheme is grounded on practical
and legal considerations to prevent unwarranted dissipation of the
bank's assets and as a valid exercise of police power to protect
the depositors, creditors, stockholders and the general public.
In Rural Bank of Buhi, Inc. v. Court of Appeals,19 We stated that
— monetary, banking and credit system of the
. . . due process does not necessarily require a
prior hearing; a hearing or an opportunity to be
heard may be subsequent to the closure. One can
just imagine the dire consequences of a prior
hearing: bank runs would be the order of the day,
resulting in panic and hysteria. In the process,
fortunes may be wiped out and disillusionment will
run the gamut of the entire banking community.
We stressed in Central Bank of the Philippines v. Court of
Appeals20 that —
. . . the banking business is properly subject to
reasonable regulation under the police power of
the state because of its nature and relation to the
fiscal affairs of the people and the revenues of the
state (9 CJS 32). Banks are affected with public
interest because they receive funds from the
general public in the form of deposits. Due to the
nature of their transactions and functions, a
fiduciary relationship is created between the
banking institutions and their depositors.
Therefore, banks are under the obligation to treat
with meticulous care and utmost fidelity the
accounts of those who have reposed their trust
and confidence in them (Simex International
[Manila], Inc., v. Court of Appeals, 183 SCRA 360
[1990]).
It is then the Government's responsibility to see to
it that the financial interests of those who deal
with the banks and banking institutions, as
depositors or otherwise, are protected. In this
country, that task is delegated to the Central Bank
which, pursuant to its Charter (R.A. 265, as
amended), is authorized to administer the
Philippines. Under both the 1973 and 1987
Constitutions, the Central Bank is tasked with
providing policy direction in the areas of money,
banking and credit; corollarily, it shall have
supervision over the operations of banks (Sec. 14,
Art. XV, 1973 Constitution, and Sec. 20, Art. XII,
1987 Constitution). Under its charter, the CB is
further authorized to take the necessary steps
against any banking institution if its continued
operation would cause prejudice to its depositors,
creditors and the general public as well. This
power has been expressly recognized by this
Court. In Philippine Veterans Bank Employees
Union-NUBE v. Philippine Veterans Banks (189
SCRA 14 [1990], this Court held that:
. . . [u]nless adequate and
determined efforts are taken by
the government against distressed
and mismanaged banks, public
faith in the banking system is
certain to deteriorate to the
prejudice of the national economy
itself, not to mention the losses
suffered by the bank depositors,
creditors, and stockholders, who
all deserve the protection of the
government. The government
cannot simply cross its arms while
the assets of a bank are being
depleted through mismanagement
or irregularities. It is the duty of the
Central Bank in such an event to
step in and salvage the remaining
resources of the bank so that they
may not continue to be dissipated
 or plundered by those entrusted
with their management.
Section 29 of R.A. 265 should be viewed in this light; otherwise,
We would be subscribing to a situation where the procedural
rights invoked by private respondent would take precedence over
the substantive interests of depositors, creditors and stockholders
over the assets of the bank.
Admittedly, the mere filing of a case for receivership by the
Central Bank can trigger a bank run and drain its assets in days
or even hours leading to insolvency even if the bank be actually
solvent. The procedure prescribed in Sec. 29 is truly designed to
protect the interest of all concerned, i.e., the depositors, creditors
and stockholders, the bank itself, and the general public, and the
summary closure pales in comparison to the protection afforded
public interest. At any rate, the bank is given full opportunity to
prove arbitrariness and bad faith in placing the bank under
receivership, in which event, the resolution may be properly
nullified and the receivership lifted as the trial court may
determine.
The heavy reliance of respondents on the Banco Filipino case is
misplaced in view of factual circumstances therein which are not
attendant in the present case. We ruled in Banco Filipino that the
closure of the bank was arbitrary and attendant with grave abuse
of discretion, not because of the absence of prior notice and
hearing, but that the Monetary Board had no sufficient basis to
arrive at a sound conclusion of insolvency to justify the closure. In
other words, the arbitrariness, bad faith and abuse of discretion
were determined only after the bank was placed under
conservatorship and evidence thereon was received by the trial
court. As this Court found in that case, the Valenzuela, Aurellano
and Tiaoqui Reports contained unfounded assumptions and
deductions which did not reflect the true financial condition of the
bank. For instance, the subtraction of an uncertain amount as
valuation reserve from the assets of the bank would merely result
in its net worth or the unimpaired capital and surplus; it did not
reflect the total financial condition of Banco Filipino.
Furthermore, the same reports showed that the total assets of
Banco Filipino far exceeded its total liabilities. Consequently, on
the basis thereof, the Monetary Board had no valid reason to
liquidate the bank; perhaps it could have merely ordered its
reorganization or rehabilitation, if need be. Clearly, there was in
that case a manifest arbitrariness, abuse of discretion and bad
faith in the closure of Banco Filipino by the Monetary Board. But,
this is not the case before Us. For here, what is being raised as
arbitrary by private respondent is the denial of prior notice and
hearing by the Monetary Board, a matter long settled in this
jurisdiction, and not the arbitrariness which the conclusions of the
Supervision and Examination Sector (SES), Department II, of the
Central Bank were reached.
Once again We refer to Rural Bank of Buhi, Inc. v. Court of
Appeals,21 and reiterate Our pronouncement therein that —
. . . the law is explicit as to the conditions
prerequisite to the action of the Monetary Board to
forbid the institution to do business in the
Philippines and to appoint a receiver to
immediately take charge of the bank's assets and
liabilities. They are: (a) an examination made by
the examining department of the Central Bank; (b)
report by said department to the Monetary Board;
and (c) prima facie showing that its continuance in
business would involve probable loss to its
depositors or creditors.
In sum, appeal to procedural due process cannot just outweigh
the evil sought to be prevented; hence, We rule that Sec. 29 of
R.A. 265 is a sound legislation promulgated in accordance with
the Constitution in the exercise of police power of the state.
Consequently, the absence of notice and hearing is not a valid
ground to annul a Monetary Board resolution placing a bank
under receivership. The absence of prior notice and hearing
cannot be deemed acts of arbitrariness and bad faith. Thus, an
MB resolution placing a bank under receivership, or
conservatorship for that matter, may only be annulled after a
determination has been made by the trial court that its issuance
was tainted with arbitrariness and bad faith. Until such
determination is made, the status quo shall be maintained, i.e.,
the bank shall continue to be under receivership.
As regards the second ground, to rule that only the receiver may
bring suit in behalf of the bank is, to echo the respondent
appellate court, "asking for the impossible, for it cannot be
expected that the master, the CB, will allow the receiver it has
appointed to question that very appointment." Consequently, only
stockholders of a bank could file an action for annulment of a
Monetary Board resolution placing the bank under receivership
and prohibiting it from continuing operations.22 In Central Bank v.
Court of Appeals, 23 We explained the purpose of the law —
. . . in requiring that only the stockholders of
record representing the majority of the capital
stock may bring the action to set aside a
resolution to place a bank under conservatorship
is to ensure that it be not frustrated or defeated by
the incumbent Board of Directors or officers who
may immediately resort to court action to prevent
its implementation or enforcement. It is presumed
that such a resolution is directed principally
against acts of said Directors and officers which
place the bank in a state of continuing inability to
maintain a condition of liquidity adequate to
protect the interest of depositors and creditors.
Indirectly, it is likewise intended to protect and
safeguard the rights and interests of the
stockholders. Common sense and public policy
dictate then that the authority to decide on
whether to contest the resolution should be
lodged with the stockholders owning a majority of
the shares for they are expected to be more
objective in determining whether the resolution is
plainly arbitrary and issued in bad faith.
It is observed that the complaint in this case was filed on 11 June
1985 or two (2) years prior to 25 July 1987 when E.O. 289 was
issued, to be effective sixty (60) days after its approval (Sec. 5).
The implication is that before E.O
. 289, any party in interest could institute court proceedings to
question a Monetary Board resolution placing a bank under
receivership. Consequently, since the instant complaint was filed
by parties representing themselves to be officers of respondent
Bank (Officer-in-Charge and Vice President), the case before the
trial court should now take its natural course. However, after the
effectivity of E.O. 289, the procedure stated therein should be
followed and observed.
PREMISES considered, the Decision of the Court of Appeals in
CA-G.R. SP No. 07867 is AFFIRMED, except insofar as it
upholds the Order of the trial court of 11 November 1985 directing
petitioner RAMON V. TIAOQUI to restore the management of
TRIUMPH SAVINGS BANK to its elected Board of Directors and
Officers, which is hereby SET ASIDE.
Let this case be remanded to the Regional Trial Court of Quezon
City for further proceedings to determine whether the issuance of
Resolution No. 596 of the Monetary Board was tainted with
arbitrariness and bad faith and to decide the case accordingly.
SO ORDERED.
CASE DIGEST : PHILCOMSAT VS.
ALCUAZ
G.R. No. 84818 December 18, 1989 PHILIPPINE
COMMUNICATIONS SATELLITE CORPORATION, petitioner, vs.
JOSE LUIS A. ALCUAZ, as NTC Commissioner, and NATIONAL
TELECOMMUNICATIONS COMMISSION, respondents.
Facts: The petition before us seeks to annul and set aside an Order
1 issued by respondent Commissioner Jose Luis Alcuaz of the
National Telecommunications Commission
Herein petitioner is engaged in providing for services involving
telecommunications. Charging rates for certain specified lines that
were reduced by order of herein respondent Jose
AlcuazCommissioner of the National Telecommunications
Commission. The rates were ordered to be reduced by fifteen
percent (15%) due to Executive Order No. 546 which granted the
NTC the power to fix rates. Said order was issued without prior
The respondent admits that the questioned order was issued
pursuant to its quasi-judicial functions. It, however, insists that notice
and hearing are not necessary since the assailed order is merely
incidental to the entire proceedings and, therefore, temporary in
nature but the supreme court said that While respondents may fix a
temporary rate pending final determination of the application of
petitioner, such rate-fixing order, temporary though it may be, is not
exempt from the statutory procedural requirements of notice and
hearing
The Supreme Court Said that it is clear that with regard to rate-fixing,
respondent has no authority to make such order without first giving
petitioner a hearing, whether the order be temporary or permanent.
In the Case at bar the NTC didn’t scheduled hearing nor it did give
any notice to the petitioner

Arsenio Lumiqued vs Apolonio

notice and hearing.

Exevea
Under Section 5 of Republic Act No. 5514, petitioner was exempt
from the jurisdiction of the then Public Service Commission, now
respondent NTC. However, pursuant to Executive Order No. 196
issued on June 17, 1987, petitioner was placed under the
jurisdiction, control and regulation of respondent NTC

Issue: Whether or Not E.O. 546 is unconstitutional. FACTS:

Arsenio P. Lumiqued was the Regional Director of The Department of

Held: In Vigan Electric Light Co., Inc. vs. Public Service Commission Agrarian Reform – Cordillera Autonomous Region.
the Supreme Court said that although the rule-making power and
even the power to fix rates- when such rules and/or rates are meant
On Nov. 16, 1989 Jeannette Ober Zamudio charged Lumiqued with
to apply to all enterprises of a given kind throughout the Philippines-
Malversation through falsification of public documents. He allegedly
may partake of a legislative character. Respondent Alcuaz no doubt
contains all the attributes of a quasi-judicial adjudication. Foremost is falsified gasoline receipts amounting to Php 44,172.46 and made
the fact that said order pertains exclusively to petitioner and to no unliquidated cash advances amounting to Php 116,000.00. Zamudio also
other
charged him with oppression and harassment after being relieved without
just cause after filing the 2 cases against Lumiqued.
May 20, 1992 Acting Justice Secretary Eduardo Montenegro issued
Department Order No. 145, creating a committee to investigate complaints
against Lumiqued.
June 23, 1992 Lumiqued submitted his affidavit alleging that the reason
the cases were filed against him was to extort money from him. He also
admitted that his average daily consumption was 108.45Li which is an
aggregate consumption of the 5 service vehicle issued to him and that the
receipts were turned over to him by drivers for reimbursement.
July 3 and 10 Committee hearings on the complaints were conducted and
Lumiqued was not assisted by a counsel since he was confident that he can
defend himself.
July 17, 1992 he was unable to attend the third hearing since he suffered a
stroke on July 10.
July 31, 1992 Investigating Committee issued a report finding Lumiqued
liable for all charges against him
December 17, 1992 Lumiqued filed a motion for reconsideration.
April 1, 1993 The Committee informed Lumiqued that the report was
already forwarded to the President.
May 12, 1993 President Ramos issued AO No 52 finding Lumiqued
administratively liable for dishonesty in the alteration of 15 gas receipts
and he was dismissed from service.
August 31, 1993 Lumiqued filed a Petition for appeal which was denied. He
then file a second motion for reconsideration, alleging that he was denied
constitutional right to counsel during the hearing.
September 28, 1993 The second motion was denied.
May 19, 1994 Lumiqued passed away.
Petitioners fault the investigating committee for its failure to inform
Lumiqued of his right to counsel during the hearing. They maintained that
his right to counsel could not be waived unless the waiver was in writing
and in the presence of a counsel.
ISSUE:
WON the right to have a counsel during an administrative hearing is
necessary.
HELD:
NO. Lumiqued, a Regional Director of a major department in the executive
branch of the government, graduated from the University of the
Philippines (Los Baos) with the degree of Bachelor of Science major in
Agriculture, was a recipient of various scholarships and grants, and
underwent training seminars both here and abroad. Hence, he could have
defended himself if need be, without the help of counsel, if the truth were
on his side. This, apparently, was the thought he entertained during the
hearings he was able to attend.
The right to counsel is not indispensable to due process unless required by
the Constitution or the law.
In administrative proceedings, the essence of due process is simply the
opportunity to explain one's side. One may be heard, not solely by verbal
presentation but also, and perhaps even much more creditably as it is
more practicable than oral arguments, through pleadings. An actual
hearing is not always an indispensable aspect of due process. As long as a
party was given the opportunity to defend his interests in due course, he
cannot be said to have been denied due process of law, for this
opportunity to be heard is the very essence of due process.Moreover, this
constitutional mandate is deemed satisfied if a person is granted an
opportunity to seek reconsideration of the action or ruling complained of.
Lumiqueds appeal and his subsequent filing of motions for reconsideration
cured whatever irregularity attended the proceedings conducted by the
committee.
VICENTE VILLAFLOR, substituted by his heirs, petitioner,
vs.
COURT OF APPEALS and NASIPIT LUMBER CO.,
INC., respondents.
G.R. No. 95694 October 9, 1997
Facts:
The Petitioner bought a large tract of land containing one
hundred forty (140) hectares to four (4) different owners in
1940. The land was part of the public domain, but the
petitioners predecessor in interest over which he acquired the
property, have been in open, exclusive and notorious
possession of the same for sometime. After acquisition,
petitioner asserts exclusive rights thereof for more than fifty
(50) years.
In 1946, petitioner entered into a lease agreement with
respondent Nasipit Lumber Co.Inc. However, an “Agreement
for the Relinquishment of Rights” was entered into by both
parties in 1950. The respondent having complied all the
requirements agreed upon, assumed ownership and
possession of the property since then. Respondent corporation
likewise filed a sales application in 1950 over the property to
bolster his claim which the Bureau of Land otherwise granted
on the same year as proof of an “Order of Award” issued.
In 1974 or twenty four (24) years had passed, when petitioner,
questioned and made several collateral and extraneous claims
against the respondent. However, the Bureau of Lands
dismissed the claim, arguing that petitioner no longer has any
substantial rights to question the validity of acquisition of the
respondent and the subsequent issuance of free patent by the
Bureau of Lands. Unperturbed, petitioner filed a motion for
reconsideration at the Ministry of Natural Resources which
likewise dismissed the petition.
On July 6, 1978, petitioner filed a complaint in the trial court for
“Declaration of Nullity of Contract ( Deed of Relinquishment of
Rights), Recovery of Possession (of two parcels of land
subject of the contract), and Damages” at about the same time
that he appealed the decision of the Minister of Natural
Resources to the Office of the President. On January 28,
1983, petitioner died. Petitioner’s heir substituted in his behalf
to pursue the claim. The trial court in Butuan City who initially
take cognizance of the case ordered the case dismissed, on
the grounds that: (1) petitioner admitted the due execution and
genuineness of the contract and was estopped from proving its
nullity, (2) the verbal lease agreements were unenforceable
under Article 1403 (2) (e) of the Civil Code, and (3) his causes
of action were barred by extinctive prescription and/or laches.
The heirs appealed to the CA which likewise rendered
judgment of dismissal by upholding the lower court’s ruling.
ISSUE:
Whether or not the sale is valid.
HELD:
No. The provision of the law is specific that public lands can
only be acquired in the manner provided for therein and not
otherwise(Sec. 11, CA. No. 141, as amended). In his sales
application, petitioner expressly admitted that said property
was public land. This is formidable evidence as it amounts to
an admission against interest. The records show that Villaflor
had applied for the purchase of lands in question with this
Office (Sales Application V-807) on 2 December 1948. There
is a condition in the sales application to the effect that he
recognizes that the land covered by the same is of public
domain and any and all rights he may have with respect
thereto by virtue of continuous occupation and cultivation are
relinquished to the Government of which Villaflor is very much
aware. It also appears that Villaflor had paid for the publication
fees appurtenant to the sale of the land. He participated in the
public auction where he was declared the successful bidder.
He had fully paid the purchase price thereof. It would be a
height of absurdity for Villaflor to be buying that which is
owned by him if his claim of private ownership thereof is to be
believed. The area in dispute is not the private property of the
petitioner.
It is a basic assumption of public policy that lands of whatever
classification belong to the state. Unless alienated in
accordance with law, it retains its rights over the same as
dominus. No public land can be acquired by private persons
without any grant, express or implied from the government. It
is indispensable then that there be showing of title from the
state or any other mode of acquisition recognized by law. Such
sales applicant manifestly acknowledged that he does not own
the land and that the same is a public land under the
administration of the Bureau of Lands, to which the application
was submitted, all of its acts prior thereof, including its real
estate tax declarations, characterized its possessions of the
land as that of a “sales applicant”. And consequently, as one
who expects to buy it, but has not as yet done so, and is not,
therefore, its owner.
The rule on the interpretation of contracts (Article 1371) is
used in affirming, not negating, their validity. Article
1373,which is a conjunct of Article 1371, provides that, if the
instrument is susceptible of two or more interpretations, the
interpretation which will make it valid and effectual should be
adopted. In this light, it is not difficult to understand that the
legal basis urged by petitioner does not support his allegation
that the contracts to sell and the deed of relinquishment are
simulated and fictitious. Simulation occurs when an apparent
contract is a declaration of a fictitious will, deliberately made
by agreement of the parties, in order to produce, for the
purpose of deception, the appearance of a juridical act which
does not exist or is different from that which was really
executed. Such an intention is not apparent in the agreements.
The intent to sell, on the other hand, is as clear as daylight.
The fact, that the agreement to sell (7 December 1948) did not
absolutely transfer ownership of the land to private
respondent, does not how that the agreement was simulated.
Petitioner‟s delivery of the Certificate of Ownership and
execution of the deed of absolute sale were suspensive
conditions, which gave rise to a corresponding obligation on
the part of the private respondent, i.e., the payment of the last
installment of the consideration mentioned in the Agreement.
Such conditions did not affect the perfection of the contract or
prove simulation Nonpayment, at most, gives the vendor only
the right to sue for collection. Generally, in a contract of sale,
payment of the price is a resolutory condition and the remedy
of the seller is to exact fulfillment or, in case of a substantial
breach, to rescind the contract under Article 1191 of the Civil
Code. However, failure to pay is not even a breach, but merely
an event which prevents the vendor‟s obligation to convey title
from acquiring binding force.
The requirements for a sales application under the Public Land
Act are: (1) the possession of the qualifications required by
said Act (under Section 29) and (2) the lack of the
disqualifications mentioned therein (under Sections 121,
122,and 123). Section 121 of the Act pertains to acquisitions of
public land by a corporation from a grantee: The private
respondent, not the petitioner, was the direct grantee of the
disputed land. Sections 122 and 123 disqualify corporations,
which are not authorized by their charter, from acquiring public
land; the records do not show that private respondent was not
so authorized under its charter.
G.R. No. 109093 November 20, 1995
LOPE MACHETE, NICASIO JUMAWID, SANTIAGO JUMAWID,
JOHN JUMAWID, PEDRO GAMAYA, RENATO DELGADO,
FERNANDO OMBAHIN, MATIAS ROLEDA, PASIANO BARO,
IGNACIO BARO, MAMERTO PLARAS and JUSTINIANO
VILLALON, petitioners,
vs.
COURT OF APPEALS and CELESTINO
VILLALON, respondents.
BELLOSILLO, J.:
Are Regional Trial Courts' vested with jurisdiction over cases for
collection of back rentals from leasehold tenants?
On 21 July 1989 private respondent Celestino Villalon filed a
complaint for collection of back rentals and damages before the
Regional Trial Court of Tagbilaran City against petitioners Lope
Machete, Nicasio Jumawid, Santiago Jumawid, John Jumawid,
Pedro Gamaya, Renato Delgado, Fernando Ombahin, Matias
Roleda, Pasiano Baro, Ignacio Baro, Mamerto Plaras and
Justiniano Villalon. The complaint alleged that the parties entered
into a leasehold agreement with respect to private respondent's
landholdings at Poblacion Norte, Carmen, Bohol, under which
petitioners were to pay private respondent a certain amount or
percentage of their harvests. However, despite repeated
demands and with no valid reason, petitioners failed to pay their
respective rentals. Private respondent thus prayed that petitioners
be ordered to pay him back rentals and damages.
Petitioners moved to dismiss the complaint on the ground of lack
of jurisdiction of the trial court over the subject matter. They
contended that the case arose out of or was connected with
agrarian relations, hence, the subject matter of the complaint fell
squarely within the jurisdiction of the Department of Agrarian
Reform (DAR) in the exercise of its quasi-judicial powers under
Sec. 1, pars. (a) and (b), Rule II of the Revised Rules of the
Department of Agrarian Reform Adjudication Board (DARAB).
On 22 August 1989 the trial court granted the motion to
dismiss,1 and on 28 September 1989 denied the motion for
reconsideration.2
Private respondent sought annulment of both orders before
respondent Court of Appeals which on 21 May 1992 rendered
judgment reversing the trial court and directing it to assume
jurisdiction over the case3 on the basis of its finding that —
. . . The CARL (RA 6657) and other pertinent laws
on agrarian reform cannot be seen to encompass
a case of simple collection of back rentals by
virtue of an agreement, as the one at bar, where
there is no agrarian dispute to speak of (since the
allegation of failure to pay the agreed rentals was
never controverted in the motion to dismiss) nor
the issue raised on application, implementation,
enforcement or interpretation of these laws.4
On 18 January 1993 the appellate court rejected the
motion for
reconsideration.5
Petitioners maintain that the alleged cause of action of private
respondent arose from an agrarian relation and that respondent
appellate court failed to consider that the agreement involved is
an agricultural leasehold contract, hence, the dispute is agrarian
in nature. The laws governing its execution and the rights and
obligations of the parties thereto are necessarily R.A. 3844,6 R.A.
66577 and other pertinent agrarian laws. Considering that the
application, implementation, enforcement or interpretation of said
laws are matters which have been vested in the DAR, this case is
outside the jurisdiction of the trial court.
The petition is impressed with merit. Section 17 of E.O.
2298 vested the DAR with quasi-judicial powers to determine and
adjudicate agrarian reform matters as well as exclusive original
jurisdiction over all matters involving implementation of agrarian
reform except those falling under the exclusive original jurisdiction
of the Department of Agriculture and the Department of
Environment and Natural Resources in accordance with law.
Executive Order 129-A, while in the process of reorganizing and
strengthening the DAR, created the DARAB to assume the
powers and functions with respect to the adjudication of agrarian
reform cases.9 Section 1, pars. (a) and (b), Rule II of the Revised
Rules of the DARAB explicitly provides —
Sec. 1. Primary, Original and Appellate
Jurisdiction. — The Agrarian Reform Adjudication
Board shall have primary jurisdiction, both original
and appellate, to determine and adjudicate all
agrarian disputes, cases, controversies, and
matters or incidents involving the implementation
of the Comprehensive Agrarian Reform Program
under Republic Act No. 6657, Executive Orders
Nos. 229, 228 and 129-A, Republic Act No. 3844
as amended by Republic Act No. 6389,
Presidential Decree No. 27 and other agrarian
laws and their implementing rules and regulations.
Specifically, such jurisdiction shall extend over but
not be limited to the following: (a) Cases involving
the rights and obligations of persons engaged in
the cultivation and use of agricultural land covered
by the Comprehensive Agrarian Reform Program
(CARP) and other agrarian laws, (b) Cases
involving the valuation of land, and determination
and payment of just compensation, fixing and
collection of lease rentals, disturbance
compensation, amortization payments, and similar
disputes concerning the functions of the Land
Bank . . .
In Quismundo v. Court of Appeals,10 this Court interpreted the
effect of Sec. 17 of E.O. 229 on P.D. 946, which amended R.A.
3844, the agrarian law then in force —
The above quoted provision (Sec. 17) should be
deemed to have repealed11 Sec. 12 (a) and (b) of
Presidential Decree No. 946 which invested the
then courts of agrarian relations with original
exclusive jurisdiction over cases and questions
involving rights granted and obligations imposed
by presidential issuances promulgated in relation
to the agrarian reform program.
Formerly, under Presidential Decree No. 946,
amending Chapter IX of Republic Act No. 3844,
the courts of agrarian relations had original and
exclusive jurisdiction over "cases involving the
rights and obligations of persons in the cultivation
and use of agricultural land except those
cognizable by the National Labor Relations
Commission" and "questions involving rights
granted and obligations imposed by laws,
Presidential Decrees, Orders, Instructions, Rules
and Regulations issued and promulgated in
relation to the agrarian reform program," except
those matters involving the administrative
implementation of the transfer of land to the
tenant-farmer under Presidential Decree No. 27
and amendments thereto which shall be
exclusively cognizable by the Secretary of
Agrarian Reform.12
In 1980, upon the passage of Batas Pambansa
Blg. 129, otherwise known as the Judiciary
 Reorganization Act, the courts of agrarian
relations were integrated into the regional trial
courts and the jurisdiction of the former was
vested in the latter courts.13
However, with the enactment of Executive Order
No. 229, which took effect on August 29, 1987,
fifteen (15) days after its release for publication in
the Official Gazette,14 the regional trial courts were
divested of their general jurisdiction to try agrarian
reform matters. The said jurisdiction is now vested
in the Department of Agrarian Reform.
On 15 June 1988 R.A. 6657 was passed containing provisions
which evince and support the intention of the legislature to vest in
the DAR exclusive jurisdiction over all agrarian reform
matters.15 Section 50 thereof substantially reiterates Sec. 17 of
E.O. 229 thus —
Sec. 50. Quasi-Judicial Powers of the DAR. —
The DAR is hereby vested with 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) . . .
Section 3, par. (d), thereof defines the term "agrarian
dispute" as referring to any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship
or otherwise, over lands devoted to agriculture, including
disputes concerning farm workers' associations or
representation of persons in negotiating, fixing,
maintaining, changing or seeking to arrange terms or
conditions of such tenurial arrangements.
However it may be mentioned in passing that the Regional Trial
Courts have not been completely divested of jurisdiction over
agrarian reform matters. Section 56 of R.A. 6657 confers "special
jurisdiction" on "Special Agrarian Courts," which are Regional
Trial Courts designated by this Court — at least one (1) branch
within each province — to act as such. These Regional Trial
Courts designated as Special Agrarian Courts have, according to
Sec. 57 of the same law, original and exclusive jurisdiction over:
(a) all petitions for the determination of just compensation to
landowners, and (b) the prosecution of all criminal offenses under
the Act.16
Consequently, there exists an agrarian dispute in the case at
bench which is exclusively cognizable by the DARAB. The failure
of petitioners to pay back rentals pursuant to the leasehold
contract with private respondent is an issue which is clearly
beyond the legal competence of the trial court to resolve.
The doctrine of primary jurisdiction does not warrant a court to
arrogate unto itself the authority to resolve a controversy the
jurisdiction over which is initially lodged with an administrative
body of special competence.17
Thus, respondent appellate court erred in directing the trial court
to assume jurisdiction over this case. At any rate, the present
legal battle is "not altogether lost" on the part of private
respondent because as this Court was quite emphatic
in Quismundo v. Court of Appeals,18 the resolution by the DAR is
to the best advantage of the parties since it is in a better position
to resolve agrarian disputes, being the administrative agency
presumably possessing the necessary expertise on the matter.
Further, the proceedings therein are summary in nature and the
department is not bound by the technical rules of procedure and
evidence, to the end that agrarian reform disputes and other
issues will be adjudicated in a just, expeditious and inexpensive
proceeding.19
WHEREFORE, the decision of respondent Court of Appeals as
well as its resolution denying reconsideration is REVERSED and
SET ASIDE. The orders of the Regional Trial Court of Tagbilaran
City dated 22 August and 28 September 1989 are REINSTATED.
Consequently, let the records of this case be immediately
transmitted to the appropriate Department of Agrarian Reform
Adjudication Board (DARAB) for proper adjudication in
accordance with the ruling in Vda. de Tangub v. Court of
Appeals 20 and reiterated in Quismundo v. Court of Appeals,21 as well as pertinent
agrarian laws.
SO ORDERED.
TEOTICO VS. AGDA
197 SCRA 675
FACTS
Democrito Agda Sr. was appointed on June 16,
1984, as Chief, Fiber Industry Development Authority by
Cesar C. Lanuza, former Administrator of FIDA and was
designated Acting Regional Administrator for FIDA
Regions I and II. On November 13, 1987, three months
before the local elections, which was held on January 18,
1987, Agda was reassigned by former FIDA Administrator
Lanuza to the FIDA main office and designated Epitacio
E. Lanuza, Jr. as officer-in-charge (OIC) of FIDA Region
1. On December 15, 1987, Agda requested the Civil
Service Commission (CSC) to stay the implementation of
Special Order No. 219. On January 7, 1988, Teotico
implemented said Special Order 219, despite the fact that
Agda requested the Civil Service Commission to stop the
implementation of the said Special Order 219. On
January 12, 1988, Agda requested Teotico to defer the
implementation of said Special Order No. 219. Teotico
again implemented Special Order 219, requiring
petitioner to submit his accomplishment report. Agda
requested Teotico to defer the implementation of said
special order, considering that the same has not yet been
resolved by the Secretary of Agriculture. On December
11, 1987, former FIDA Administrator designated Wilfredo
G. Siguritan as officer-in-charge of FIDA Region 1 Onn
March 9, 1988, FIDA Region 1 administrator Siguritan
requested the Agda through Teotico to require Agda to
turn over to him the keys of the vault in FIDA Region 1
and on March 14, 1988, Teotico implemented Special
Order No. 219, requiring Agda to turn over said keys to
OIC Seguritan. On March 16, 1988, Agda requested the
Secretary of Agriculture to defer the implementation of
said special order pending resolution of said office. On
March 23, 1988, Teotico implemented Special Order 219
by instituting administrative charges against Agdape for
insubordination prejudicial to the best interest of the
service. On April 4, 1988, Teotico placed Agda under
preventive suspension, effective April 6, 1988. Agda
requested respondent Teotico to give him twenty (20)
days from April 11, 1988, within which to submit his
explanation to the formal administrative charges. Teotico
granted him an extension of only five days from receipt of
memorandum. Agda sent a letter to the Commission on
Elections, inquiring if Special Order No. 219, series of
1987, of Administrator Lanuza was referred and
submitted to it for approval three days before its
implementation. The Commission, informed private
respondent that records of the Department do not show
that aforesaid Special Order was submitted or referred to
this Commission for approval. Agda filed with the court a
Petition for Certiorari, Prohibition and Injunction with
preliminary injunction and restraining order against
Teotico and the three (3) members of the FIDA-AC. The
court granted said petition and ordered to immediately
reinstate Democrito O. Agda, Sr., from his previous
position as Fiber Regional Administrator, FIDA Region I,
with full back wages and allowances mandated by law.
ISSUES
1. Whether or not Agda was appointed as Fiber
Regional Administrator, FIDA Region I.
2. Whether or not Agda failed to exhaust
administrative remedy as mandated by P. D. 807.
RULING
1. No. Agda was not appointed as Fiber Regional
Administrator, FIDA Region I, but as CHIEF FIBER
DEVELOPMENT OFFICER, he was not appointed to any
specific station. He was merely designated as Acting
Regional Administrator For FIDA Regions I and II.
Not having been appointed to any specific station,
he could be tranferred or assigned to any other place by
the head of office where in the opinion of the latter his
services may be utilized more effectively.
Temporary appointments or appointments in an
acting capacity are terminable at the pleasure of the
appointing authority. Agda can neither claim a vested
right to the station to which he was assigned nor to
security of tenure thereat. Accordingly, private respondent
could be re-assigned to any place and Special Order No.
219 dated 13 November 1987 reassigning private
respondent at the Office of the Administrator of the FIDA
"in the interest of the service" was in order. Although
denominated as "reassignment", it was in fact a mere
detail in that office.
2. Yes. Agda made no attempt to avail of this remedy.
The Civil Service Decree, P.D. No. 807, allows transfer,
detail and re-assignment. If the employee concerned
believes that there is no justification therefore, he "may
appeal his case to" the Civil Service Commission.
Unless otherwise ordered by the Commission, the
decision to detail an employee shall be executory. Agda
invoked the appellate jurisdiction of the Commission
when he filed his Urgent Petition To Stay Implementation
and Nullify the Special Order in question with the Civil
Service Commission. It does not, however, appear to
that he exerted genuine and sincere efforts to obtain an
expeditious resolution thereof. What appears to be clear
is that he used its pendency as an excuse for his refusal
to comply with the memorandum of Teotico of 7 January
1988 and the routing slip request of 11 March 1988 for
the key to the safety
vault.chanrblesvirtualawlibrary chanrobles virtual law
library
 Furthermore, even in the cases of transfer or detail
within the probihited period prior to an election, an
aggrieved party is provided an appropriate administrative
remedy. Again Agda made no attempt to avail of this
remedy. In his Urgent Petition to Stay Implementation
and Nullify Special Order No. 219, nothing is mentioned
about a violation of the ban on transfer or detail. The
reason seems too obvious. Until he filed the Amended
Petition before the court below he did not consider his re-
assignment per Special Order No. 219 as a violation of
the ban on transfer or detail during the three-month
period before the
election.chanroblesvirtualawlibrary chanrobles virtual law
library
Not having yet fully exhausted the existing
adequate administrative remedy which he already took
advantage of, Agda cannot be permitted to abandon it at
his chosen time and leisure and invoke the jurisdiction of
regular courts.
Paat v. Court of Appeals
G.R. No. 111107
10 January 1997
Facts:
On May 19, 1989, the truck of private respondent Victoria de
Guzman was seized by DENR because the driver could not produce
the required documents for the forest products found concealed in
the truck. Four days later, Petitioner Jovito Layugan, CENRO, issued
an order of confiscation and asked the owners to submit an
explanation why the truck should not be forfeited within fifteen
days. Private respondent, however, failed to do so. R.E.D. Rogelio
Baggayan of DENR sustained Layugan's action of confiscation and
ordered the forfeiture of the truck. de Guzman filed a letter of
reconsideration but was subsequently denied. The letter was
forwarded to the Secretary of DENR pursuant to the respondent’s
wishes. During the pendency of the resolution, however, the
respondent filed a suit for replevin. The petitioners filed a motion to
dismiss but was later denied by the RTC. Their motion for
reconsideration was likewise denied and the petition for certiorari
filed before the Court of Appeals affirmed the decision of the RTC.
Hence, this petition.
Issue:
Whether or not the confiscation of the truck was valid.
Held:
Yes. The suit for replevin is never intended as a procedural tool to
question the orders of confiscation and forfeiture issued by the
DENR in pursuance to the authority given under P.D. 705, as
amended. The provision of Section 68 of P.D. 705 before its
amendment by E.O. 277 and the provision of Section 1 of E.O. No.
277 amending the aforementioned Section 68 could never be
clearer.